Barrick to take PNG to Supreme Court over Porgera dispute

Matthew Hall 2 September 2020 (Last Updated September 2nd, 2020 17:07)

In April, the Papua New Guinea (PNG) government denied an application from Barrick Gold to extend its rights at the Porgera gold mine. Following a lengthy dispute, Barrick’s request for judicial review of the decision has been dismissed by PNG’s National Court. With Barrick now set to take this to the Supreme Court for appeal, Mining Technology catches up with the dispute so far.

Barrick to take PNG to Supreme Court over Porgera dispute
Operations at Porgera have been on hold since the dispute began in April. Image credit: Porgera Joint Venture.

Barrick, along with partner Zijin Mining, has been in a high-profile dispute with the PNG government after the country’s Prime Minister James Marape rejected an application for a lease extension at the site back in April.

“In the best interests of the state, especially in light of the environmental damages, claims and resettlements issues, the Special Mining Lease will not be renewed,” Marape said.

Barrick Niugini, the joint-owned subsidiary of Barrick and Zijin that operates Porgera, said that the refusal to extend its mining licence was “tantamount to nationalisation without due process” and violated the government’s legal obligations to the company.

Barrick Niugini had applied for an extension in 2017 that would have renewed its rights for 20 years and had previously been engaging with the PNG government on that matter. Barrick claims that despite “assurances” and “numerous encouraging conversations”, neither the Prime Minister nor anyone on behalf of the government proposed alternative terms to an extension, or indicated that the application would be denied.

Following the government decision, operations at Porgera were temporarily halted. At the time, Barrick said that if the parties were not able to reach an end to the dispute through negotiation, it would take the matter to international arbitration.

This week, PNG’s National Court dismissed Barrick’s request for a review of the decision, a request which Barrick will now seek to take to the country’s Supreme Court.

Barrick Niugini respond to the dismissal

In a press release, Barrick Niugini confirmed its intent to appeal the National Court’s dismissal of its judicial review request. The company disagrees with the grounds for the dismissal and said the dismissal was not based on the “substantive grounds” advanced by Barrick Niugini in its application for judicial review.

“The company also notes the Prime Minister has confirmed that his government purportedly granted a special mining lease at Porgera to Kumul Mineral Holdings Limited, the State’s vehicle for participating in mining projects,” the statement said.

Barrick Niugini said it intends to take steps to legally challenge the purported grant, which it considers to be “unlawful and invalid” under the laws of PNG. Barrick has also raised part of its dispute with the World Bank’s International Centre for Settlement of Investment Disputes.

Barrick Niugini “will continue to defend its rights and interests in accordance with the laws of Papua New Guinea, and pursuant to the terms and conditions of long-standing prior agreements that are binding on the Government of Papua New Guinea,” the firm said in its statement.

Effects of the dispute

The ongoing dispute over the future of the Porgera mine has escalated on both sides, with the latest move from Barrick to take matters to the Supreme Court and World Bank only adding more fuel to the fire. Marape, who said the lease was not extended owing to environmental and community concerns, this week said he wanted to reopen the mine “at the earliest”, according to Mining.com.

Operations at Porgera have been halted since the dispute began, with further battles expected to prolong the disruption. The dispute has had a material effect on Barrick, which cut its 2020 production guidance by 200,000 ounces following the closure. The country is also asking Barrick and Zijin to pay $191m in back taxes, arising from tax audits of Barrick Niugini conducted between 2006 and 2015. Barrick has also disputed this request, claiming it has no merit.

The Porgera mine employs over 3,300 PNG nationals and contributes around 10% of the country’s exports – last year Porgera produced almost 600,000 ounces of gold. Coinciding with record-high gold prices caused by the Covid-19 pandemic, all parties involved will be seeking a speedy restart to operations, though the terms of that restart are going to be hard-fought for whichever side comes out on top.