NATIONAL GOLD CORPORATION BILL WILL BE DESTRUCTIVE TO PNG’S SOVEREIGNTY AND ECONOMY

The Papua New Guinea Chamber of Resources & Energy (PNG CORE) has written to the Prime Minister requesting urgent consultations on the serious negative impacts of the proposed National Gold Corporation Bill on existing mining projects, grassroots alluvial gold miners, PNG’s financial sector, the Bank of PNG, the Mineral Resources Authority (MRA), the police and other state agencies as well as on international investment confidence in PNG.   

Although the Prime Minister promised consultations in 2021 with the industry, and a parliamentary committee that included Hon Don Polye and Hon Garry Juffa was appointed, no meaningful consultation has occurred. The industry has been blindsided by the resurrection of the Bill. 

Key concerns of PNG CORE regarding the Bill:

The Bill creates a National Gold Corporation, National Gold Bank, and National Gold Mint to be majority owned by a foreign company but taking key powers from the Bank of PNG and the MRA, including holding the country’s gold reserves, the sovereign right to issue legal tender, and regulation of gold exports.  The issuing of national currency is a sovereign right usually reserved to the country’s central bank but for the first time, the Bill proposes to also give this right to a Singaporean-based company. 

• No obligation to refine in PNG: Despite the Bill providing extraordinary regulatory monopoly powers over PNG’s gold sector to entities controlled by the foreign company, the likely catastrophic impact on PNG’s gold sector, the erosion of the mandate of state agencies such as the Bank of PNG and the Mineral Resources Authority, and the unlimited unconditional state guarantee provided by the State, PNG CORE is shocked to note that the Bill does not require the proponents of the National Gold Corporation to build a gold refinery in PNG and allows it to send gold overseas to be refined and processed if it so wishes. 

• Impact on existing and future mines:  The Bill seeks to override existing project agreements for PNG’s existing mines, which will jeopardise existing financial arrangements for these projects and undermine viability and investor and financing confidence in current proposed new mines. 

• Broad Application: The Bill’s extension to encompass all precious metals, not just gold, introduces a layer of complexity and broad impact that could have unforeseen consequences across the mining sector.

• Statutory Monopoly Concerns: The Bill’s attempt to establish a statutory monopoly in a global context of oversupply and minimal refining costs is fundamentally flawed. Such a strategy, especially if enforced by statutory compulsion, poses grave risks to the stability and sustainability of the gold sector in PNG.

• Excessive Powers and Marginalization of State Agencies: The extraordinary powers granted to the National Gold Corporation and related entities risk duplicating and overshadowing the roles of established state agencies. The introduction of a “Gold Police” with sweeping powers to search, seize, and detain Papua New Guineans raises alarms over potential overreach and abuse, which can be done at the request of the foreign company.

• Unprecedented State Guarantee: The Bill’s provision for an unconditional state guarantee to be provided for the obligations of the 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.

• Transparency and Accountability Issues: The lack of detailed information on the administrative structure, governance, capital resources and relevant experience and shareholders of the foreign owner of the National Gold Corporation undermines transparency and accountability, essential for the fair and effective management of national resources.

This destructive Bill will have significant negative impacts on the gold sector, relevant state agencies and the economy in general. PNG CORE urges the National Government to engage transparently with the industry and not to progress this Bill to parliament.