The proposed National Gold Corporation Bill 2022 will effectively create a gold monopoly, which will be disastrous for PNG’s mining sector and the economy of Papua New Guinea.
In a statement, the PNG Chamber of Resources and Energy (CORE) said the Bill aims to implement a shareholder agreement signed between the National Government and a small Singaporean company, Refinery Holdings Pte Limited.
“The Bill does this by requiring that all gold mined or recovered in PNG can only be refined by National Mint, a private company that is ultimately through a private company called the National Gold Corporation, majority owned and controlled by the small Singaporean company. The Bill does not require the National Mint company to refine gold in PNG, giving it the right to refine or process gold in any foreign country, however, the Bill bans any other person from operating a gold refinery in PNG,” explained the Chamber.
“The Bill effectively seeks to invalidate the marketing arrangements and contract put in place by major mines for the sale of their gold internationally for the best price, putting at risk the financial sustainability of those mines. This Bill will negatively impact investment confidence of investors and financiers whose support is required for the new PNG mining projects that the State is currently promoting.
“Additionally, alluvial miners will be deprived from the ability to seek the highest price for their gold, since they will not be permitted to sell gold to existing gold exporters, as the National Mint will solely control the export of refined gold from PNG. This means that alluvial miners will no longer have the right to sell gold to the buyer of their choice for the best price but to this private company at the rate the buyer chooses, no matter how low the price is.
“PNG CORE is concerned that such extraordinary powers are being given so unnecessarily to a majority-owned and controlled foreign company.
“A world-class gold refinery can be built in Port Moresby or Lae for less than K60 million; a figure that should be affordable for any of the State entities such as Kumul Minerals or Kumul Consolidated, and much of the expertise in refining gold already exists in PNG as Unitech has produced mineral processing engineers for over 30 years. Such a refinery does not require all the rights and powers that the Bill is trying to vest in the privately owned National Gold Corporation and its subsidiary entities, the National Mint and the National Gold Bank.
“The Bill, in order to establish this regulated gold monopoly, provides significant powers to the private company, over-riding over two dozen other laws, and marginalising or weakening the powers of a number of existing state agencies such as the Bank of PNG, the Mineral Resources Authority and the Police.
“PNG CORE is alarmed that the Bill is proposing that these subsidiary companies of the National Gold Corporation, ultimately majority owned and controlled by the small Singaporean company, to be created to hold PNG’s gold reserves, issue legal tender and have sole right to provide legal currency to Bank of PNG. It is usually the sovereign right of an independent State, through its central bank or central treasury, to hold gold reserves or to issue currency and CORE believes that this right should be retained by the Bank of PNG, including its power to regulate foreign exchange and gold exports, and not provided to a private entity.
“PNG CORE is alarmed about the proposed introduction of a ‘Gold Police’, who along with employees of the company, are vested with the ability to arm themselves outside the Firearms Act and have sweeping powers to search and seize property and detain Papua New Guineans. This raises alarms over potential overreach and abuse. CORE believes that the Royal PNG Police Constabulary is the only valid police force in the country and should be supported and funded. Furthermore, given the state of gun violence in PNG, CORE believes that all usage of guns in PNG by private citizens should be regulated by the Firearms Act and no legislative exceptions provided to the employees of the National Gold Corporation and its subsidiaries.
“The Bill’s provision for an unconditional state guarantee to be provided for the obligations of the majority foreign owned National Gold Corporation, National Gold Mint, and National Gold Bank is unparalleled and raises concerns about the implications for PNG’s fiscal responsibility and international reputation. Given the low capital cost for a PNG-based refinery, a state guarantee should not be necessary.
“Therefore, PNG CORE calls for urgent consultations with the National Government for a more collaborative and transparent approach to addressing the goals of establishing a locally owned gold refinery, while ensuring that it does not compromise the existing mining operations and the competitive market for gold trading which benefits all Papua New Guineans.
“The Chamber remains open to constructive dialogue and partnership with the government to find a balanced and mutually beneficial solution for all stakeholders involved.”