Lihir Gold mulls paying income tax

Business, Main Stories


LIHIR Gold Ltd (LGL) may start paying income tax to the National Government at the end of this year or next year.
But this would depend on this year’s financial performance, according to Josie Brophy, LGL’s corporate communications manager.
“It is important to remember that while LGL has not yet been required to pay tax in PNG, the company makes a very significant direct contribution to PNG’s economy every year,” Ms Brophy said while responding to queries on the status of LGL’s tax holiday.
The precise amount of tax payable over the 15- year period was highly dependent on the gold price which was difficult to accurately predict over such an extended period, and so no exact amount was immediately available.
Mines Minister and Deputy Prime Minister Sir Puka Temu said he was briefed on LGL’s income tax status and from that, he said: “In terms of tax to the Government, I believe they will start paying next year.”
Sir Puka also acknowledged LGL’s continuous contributions to the local community.
Ms Brophy said in 2008 alone, LGL contributed more than K530 million to the country through the payment of royalties, levies and production taxes, payments to the local community, salaries to the employees, and payments to PNG suppliers, among other payments.
“LGL is in a very strong position in 2010 … we have growing production from three strongly-performing mines in three countries, low cash costs, and the gold price continues to hold firm at record levels”.
LGL will release among others, specific guidance on its production targets for this year on Friday when the company releases the Fourth Quarter 2009 Production Report.
Ms Brophy said over the past five years, LGL had successfully undertaken a range of initiatives to transform the company, increasing production and reducing unit costs.
“The million ounce plant upgrade (MOPU) is an example of another initiative to help LGL achieve greater profitability over the coming years,” she said of the upgrade work that is being carried out on the existing plant.
MOPU needs a capital investment of US$700 million (K2.7 billion) plus an additional US$160 million (K432 million) on a power plant.
Work on MOPU made good progress last year and remains on schedule and on budget and is expected to be commissioned next year-end.
 “The investment in MOPU will help ensure that LGL remains profitable and continues to produce gold at Lihir Island for many more years to come.
“This, in turn, will enhance returns to our shareholders, the local community and the PNG economy, and will provide important career opportunities for our employees.
 “LGL will be a much stronger company, and our cornerstone Lihir Island operation will emerge as a more reliable and consistent producer for many years into the future.”