Gold refinery non-economical: PNG Chamber of Resources and Energy
The PNG Chamber of Resources and Energy [PNG CORE] has slammed claims by the National Gold Corporation, on the expected returns for annual gold production and profits for the country.
The 506-page bill has sparked outrage and concerns among the public and stakeholders.
PNG CORE President Anthony Smare says there are challenges with a refining business as there is need for significant volume and accreditation with a recognized exchange, that allows one to sell gold.
Currently PNG only produces a maximum of 1.5 ounces of gold with about 100-thousand tonnes, from alluvial mining.
Mr. Smare said, “our problem is that, a lot of our gold that we produce is not capable of been refined.
"OK Tedi produces concentrate, that's mainly copper with a little bit of gold locked in its lattice. It has to be processed offshore to release the gold.
"Hidden valley produces mainly silver with a little bit of gold. Kainantu produces a concentrate of gold with some silver and some other properties that has to be processed as a concentrate before the gold is released. That has to be processed offshore.
"The only gold that a local refinery can process is the alluvial gold that the country produces.”
Mr. Smare made a comparison between Perth Mint, the largest refiner in the region and the proposed Corporation.
He said, Perth Mint produces 16 million ounces of gold per year, with a profit of US$26.2 million or over K90 million, while the Corporation is claiming that it will make 63.8 million US dollars or close to K230 million, with just 1.5 million ounces of gold:
“It processes about 90% of Australia's production and about 90% of the region's production. Lihir is one of the world's largest gold mines. Its actual profit is 26.2 million dollars a year from processing 16 million ounces of gold. The numbers don't make sense."
Smare further stated that the profit margin on the Perth Mint is 0.17%.
"They're claiming that they will make a 4.2% return. So they're going to make three times the profit of the Perth Mint. They're going to process 10% of the volume."
Prime Minister James Marape says the Bill will benefit the country
Meanwhile, Prime Minister James Marape said “establishing a gold refinery locally will permit us as a nation to take stock and manage our resources better and contribute far better economically to our Gross Domestic Product, compared to what it is now, thus promote economic growth and sustainability locally like never before."
He also gave assurance that the National Gold Corporation Bill 2024 is designed to benefit PNG without negatively impacting existing mining businesses or their contracts.
“This Bill in no way intends to disarm mining businesses of their contracts, or deter investors on their return upon investment. In fact, this government wants to add value to the mining industry of the country. We will give you an option to refine your golds locally and if you so wish sell your gold at world market price locally,” Mr Marape said.
The Bill which is already on National Parliament notice paper, will not be brought to the floor anytime sooner, as the government had already agreed for a nationwide stakeholders consultation.
Prime Minister Marape said his government is open to dialogue.
“We are open to views and advice from industry professionals or the general public on this Bill, and that is why we are having this consultation. We have made our stance and intention on the Bill clear for the benefit of Papua New Guinea. But if you have other views on this, you are free to tell us where we can improve things, so that this Bill is properly presented in Parliament, where everyone knows what it will bring about into the future."