AAP Finance

PNG wants to keep 40% of Wafi-Golpu gold

By AAP Newswire

Papua New Guinea wants to keep 40 per cent of gold produced from the proposed Wafi-Golpu project, the country's commerce minister says, creating a potential hurdle to an agreement with co-owners Newcrest Mining and Harmony Gold.

The miners had been hoping to secure a mining lease over the major gold and copper deposit this year before a change in PNG's leadership and a shift in minerals policy led to delays.

"We'd like to see Newcrest come to the negotiating table on this," Commerce and Industry Minister Wera Mori told Reuters late on Thursday.

"They get 60 per cent of the production, we get 40 per cent. If they don't like it we'll mine it ourselves - we own the resources."

Mori said the government could offer concessions on duties and taxes as part of the negotiations and he said he was confident a deal would be struck.

Newcrest and Harmony each own 50 per cent of Wafi-Golpu, while the PNG government has the right to purchase an equity interest.

A Newcrest spokesman said Mori's opinions did not reflect the view of the PNG cabinet.

"The minister for commerce has nothing to do with mining. He has no accountability or involvement with negotiations with resource companies," the spokesman said.

"We know Minister Mori well and look forward to discussing this matter with him further."

Attempts to reach PNG's mining minister were unsuccessful. Harmony was not immediately available to comment.

Newcrest shares on the ASX were down 2.9 per cent to $33.48 at 1500 AEST.

Near the port city of Lae, the project is forecast to hit an annual production peak in 2025 of 320,000 ounces of gold and 150,000 tonnes of copper, according to the project website.

The proposed policy changes are part of PNG's push to transform its mineral-rich economy amid a perceived lack of benefits flowing from resources projects back to communities.

PNG is also negotiating to take a bigger share of the Porgera goldmine as part of lease-renewal talks with joint venture partners Barrick Gold Corp and Zijin Mining Group.

It has also sought concessions from French giant Total SA over a $US13 billion ($A19 billion) plan to expand gas exports.

The Wafi-Golpu gold would be processed in-country, creating a downstream industry for PNG, Mori said.

He said PNG wanted to build up its gold bullion reserves, acting as a peg for its kina currency.

PNG's central bank currently fixes its currency to a narrow US dollar band, propping up the kina's value while creating a shortage of dollars available in the Pacific nation.