Gold price to weaken: Report

THE International Monetary Fund forecasts a weakening of the gold price next year but will remain at around US$1,600 (K5,610.12) per ounce up to 2024, according to a report.
According to the Institute of National Affairs discussion paper titled Economic impact of the Porgera mine: 1990 to 2019 and Loss of Income from Suspension of Operations, it was 23 per cent higher than the average for the 2016 to 2019 period. The report stated that the price of gold increased substantially in 2019 and during the first 10 months of 2020.
“Based on the price forecast, it is reasonable to assume that a conservative estimate of the lost income for the economy for one year from the suspension of the Porgera operation would be the outcome for 2019 and would be three times that value for a three year suspension of the mine,” the report stated.
It said based on these assumptions, the total financial contribution in the 2019 prices would be at least K1.1 billion for one year and at least K3.3 billion for three years.
“The impacts on Porgera and Enga constitute about 40 per cent of the total impact,” the report stated.
“The biggest single category impact is for national and local operations contracts comprising 39 per cent of the total loss, followed by the loss of tax revenue at the national level which constitutes about 34 per cent of the total foregone economic benefit.”
It said the total financial contribution of the mine for the period 1990 to 2019 was K13.2 billion which is equivalent to K26.6 billion in 2019 prices. The total comprised taxes paid to the Government, royalties, compensation and donations, infrastructure expenditure, local and national operations contracts and local and national wages (excluding expatriates).
The royalties were paid to the Enga government, Porgera Development Authority, landowners and a children’s trust.