Barrick to Seek Arbitration If It Can’t Settle PNG Mine Dispute
(Bloomberg) -- Barrick Gold Corp. plans to take Papua New Guinea to international arbitration if it can’t settle a dispute over its giant gold mine in the country.
In April, the government said it wouldn’t renew Barrick’s right to operate the Porgera gold mine, a decision Barrick’s chief executive officer said was “tantamount to nationalization without due process.” The company has said its local joint-venture unit will pursue all legal options to defend its interests and recover damages.
Barrick, one of the world’s two largest gold producers, said Friday that it has served a notice of dispute in PNG. It said the government’s refusal to extend its mining lease is in violation of the country’s investment treaty with Australia, where Barrick’s unit that operates the mine is based.
“If the dispute cannot be resolved through consultations and negotiations, Barrick PD has elected to refer the dispute to arbitration before the World Bank’s International Centre for Settlement of Investment Disputes,” the company said in a statement.
Barrick co-owns the operation with Chinese partner Zijin Mining Group Co. In an April filing with the Hong Kong exchange, Zijin also said that if negotiations fail, the joint venture would pursue all legal avenues to protect its investment.
Barrick’s share of the gold from Porgera accounted for about 5% of its global production of the metal in 2019. The miner has previously said that with proper investment, Porgera has the potential to become a top global asset. In May, Barrick was forced to cut its 2020 production guidance by 200,000 ounces as a result of the stand-off, and last month it said it planned to dismiss most of the mine’s workforce.
The decision to deny Barrick’s mining rights appears to be part of a broader move by Prime Minister James Marape to secure better deals from foreign companies involved in the country’s resource extraction.
“Barrick continues to advocate for a negotiated solution to an extension of the Porgera mining lease on terms that would be beneficial to all stakeholders,” Barrick said on Friday.
©2020 Bloomberg L.P.