National Gold Corporation Bill worries chamber

The PNG Chamber of Resources and Energy (PNG CORE) is concerned that no consultation was done by the Government with the industry and stakeholder on the National Gold Corporation Bill 2022. PNG CORE in a letter urges Prime Minister James Marape and the Mining Minister to agree for a pathway forward. Below are excerpts from the letter to Marape:

Grave concerns over the proposed National Gold Corporation Bill 2022
“As you know, the PNG resources and energy industry has generally supported the Government’s agenda for downstream processing and has worked in partnership with the Government to promote PNG as an investment destination. This partnership is illustrated by the PNG Asia Investment Conference in Hong Kong and the PNG Resources and Energy Investment Conference in Sydney in 2023. And after discussions at the Hong Kong conference, the recent signing of an MOU between Kumul Minerals and MCC Ramu Nico to explore the potential of downstream processing of base metals in PNG.
“However, it is with grave concern that the proposed National Gold Corporation Bill and its serious implications for PNG’s mining sector and PNG as an investment destination generally. We request urgent consultations with the Government to discuss the significant ramifications of the Bill in its present form.”

No meaningful consultation
“We are disappointed that there has been no substantive or meaningful consultation undertaken at all by the Government with industry and relevant stakeholders on the Bill. This is despite our efforts to engage since 2021 when the Government announced a new deal to set up a gold bullion project.
“At the meeting on Nov 18, 2021, between the PNG CORE Council members and yourself, and a few of your senior ministers including the then Mining Minister Johnson Tuke, you agreed that consultation between Government and industry would occur to review the National Gold Corporation Bill 2021 before progressing any further. A parliamentary committee comprising senior members of parliament, including Hon Don Polye and Hon Garry Juffa, was set up to oversee this consultation in 2021.
“Our CORE Council members met with Polye and the committee on Nov 24, 2021, where we requested that there should be further dialogue between the Government and the industry.
“More importantly, we requested that the industry access and review the documentation of the gold refinery and also for the industry to make available their relevant confidential information in order for a well-informed engagement and inputs/suggestions to be provided under a non-disclosure agreement for all parties to protect all information.
“Since then, the CORE has made multiple requests to the relevant Government agencies to hold these conversations but to no avail. Our last letter to you expressing this same matter is dated Sept 8, 2023. However, we have not had any meaningful consultations with the Government. Now that the PNG State Solicitor has provided his clearance on the National Gold Corporation Bill 2022, a clear signal that the Government has progressed with this legislation without consultation and input from the industry that would be negatively impacted.
“We are urgently undertaking a detailed review of the Bill and the policy. However, given our deep concerns regarding the Bill. There are many significant changes proposed in the Bill which will have serious ramifications for the mining sector and the country more generally.”

Undermining of existing project agreements
“At the meeting in Nov 2021, you kindly assured the chamber that your government would honour existing project agreements for operating mines and other existing contractual arrangements. However, the proposed Bill, in its current form, proposes to invalidate existing mine development contracts, including long-term marketing arrangements, which will impact existing financial obligations of operating mines and their ongoing operation. These proposed changes will have a significant detrimental effect on investor confidence, particularly at a time when PNG is trying to progress the development of Wafi-Golpu and Frieda gold/copper projects and other smaller projects in PNG.”

Application of the Bill to all precious metals
“The Bill extends the meaning of gold under Section 4 to include all precious metals, whether in concentrate form, bars, coins, other goods, or instruments. Hence, its implementation is far-reaching and will impact the broader mining industry.”

Dangers of Statutory Monopoly
“The worldwide oversupply of gold refining capacity and extremely low refining costs make it challenging for any party to construct, operate, and obtain accreditation for a globally competitive, financially sustainable gold refinery in PNG. The establishment of a monopoly over any commodity can lead to unintended and highly detrimental consequences, as demonstrated by the ongoing fuel crisis.
“The gold monopoly effectively removes competition in the sector preventing PNG’s large and thriving alluvial gold industry, populated by thousands of Papua New Guinean alluvial gold miners, from being able to seek the best local price for their gold which could have devastating impacts on the communities that rely on alluvial gold mining for economic support.”

Extraordinary powers to be exercised by the National Gold Corporation, National Gold Mint,
“The proposed legislation grants exceptional powers to the National Gold Corporation (NGC), National Gold Authority, National Gold Mint and related entities. These powers will be extended to enforcement by a Gold Police with draconian powers of search, seizure, and arrest, raising serious concerns about overreach and abuse of power. The Bill under Subdivision F-Central Bank Supervision prevents the Bank of PNG from using its full powers under the Bank and Financial Institutions Act. “Section 72 of the Bill gives the National Gold Bank exclusive functions as the holder of gold and international reserves replacing the mandate of the Bank of PNG. Additionally, and extraordinarily, the Bill gives the National Gold Mint, a privately owned entity, the sovereign authority to issue legal tenders and exclusive rights to issue legal currency for the BPNG.”

Lack of transparency regarding the Gold Corporation and its shareholders
“Very little information has been provided about the Gold Corporation’s administrative structure and governance or about the identity of its international partners and shareholders. With the absence of transparency and the capacity for independent oversight of this critical monopoly, there is a potential for a lack of accountability. What is clear from the Bill is that the majority of control and authority of the supervising boards rests with the foreign shareholder through appointment rights of five out of eight directors, including the role of Chairman.
Furthermore, its concerning that despite its minority shareholding and its limited influence on the governance of the entities, the Bill proposes to legislate that the State is providing an unlimited unconditional state guarantee for all of the payment obligations of the NGC, the National Gold Bank, and the National Mint in respect of their respective gold purchase, refining, barring, minting and or sale activities under the Bill.”

Request for postponement
“In response to our concerns, we kindly request the postponement of the presentation of the Bill to Parliament. This would allow time for a genuine, open, and transparent consultation process, thus engaging constructively with all relevant stakeholders who are critical to commenting on ensuring the Bill serves the interest of PNG.
“PNG CORE is committed to facilitating dialogue, gathering expert opinions, and incorporating industry insights to reach a consensus with the PNG Government that will serve the best interests of PNG and its mining and energy sectors.
“We would be grateful if you and the mining minister could make time to meet with the council members of the PNG CORE to discuss these concerns further and agree on a pathway forward.”