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5 May 2020


PNG: Renewal of Porgera gold mine lease rejected over environmental and social concerns; Zijin warns of damage to bilateral relations

“Zijin warns Papua New Guinea of China anger over end of gold mine lease”, 29 April 2020

China’s Zijin Mining has warned Papua New Guinea that its failure to renew the lease of a gold mine it jointly owns with Barrick Gold Corp there could damage bilateral relations.

Papua New Guinea… said it would not renew a 20-year mining lease at its Porgera gold mine, citing environmental damage and social unrest even as gold prices have soared to more than seven-year highs.

Barrick (Niugini) Limited (BNL), the local venture in which both miners [Barrick Gold and Zijin Mining Group] have a 47.5% stake, suspended operations… saying the government had not given it formal notification that it would not renew the lease, or any details of a planned transition.

Zijin, which is a state-controlled company, said that Papua New Guinea needed to conduct negotiations to extend the mining lease in good faith, and that a failure to resolve the issue could impair relations between the two countries.

“As a Chinese enterprise, Zijin would like to contribute to the existing good economic, trade, cultural and inter-governmental relations between China and PNG,” Chen Jinghe, chairman of Zijin’s board said in a letter addressed to Papua New Guinea’s Prime Minister James Marape.

“However, if Zijin’s investment in Porgera mine is not properly protected by the PNG government, I am afraid there will be significant negative impact on the bilateral relations between China and PNG,” he said in the letter… seen by Reuters. Chen’s office confirmed the letter had been sent.

China’s Ministry of Foreign Affairs didn’t immediately respond to a faxed request for comment. China’s embassy in Port Moresby did not immediately respond to an emailed request for comment. The office of Papua New Guinea’s Prime Minister did not respond to a request for comment…

The BNL joint venture had run into opposition from local landowners and residents. Critics say the Porgera mine has polluted the water and created other environmental and social problems, with minimal economic benefits for locals…

Both miners have said they would pursue all legal means to protect their interests and recover damages.

Zijin also said that it understood the need for greater benefits distribution among governments, landowners and stakeholders…