Tension Rise in Bilateral Relations Between China and Papua New Guinea (PNG) After Lease Renewal Denied on China-Led Gold Mine
On May 1, Papua New Guinea’s (PNG) National Court issued a ruling mandating the PNG government to open negotiations with mining company venture, Barrick Niugini Limited (BNL), the Canadian-Chinese operator of the country’s Porgera gold mine. BNL – a 50–50 joint venture between China’s state-owned, Zijin Mining and Canadian-listed, Barrick Gold Corporation – was denied renewal of its 20-year mining lease for the Porgera mine earlier this week by the PNG government. Currently, the Porgera mine accounts for approximately 10% of Papua New Guinea total exports.
The lease rejection appears to have come as a surprise to BNL, and tensions have escalated to the level of Chinese embassy involvement. In a letter to the Prime Minister, the Chairman of the Board of Zijin Mining threatened that a negative outcome with regard to the Porgera mine could harm PNG’s bilateral relationship with China. In alignment, China’s Ministry of Foreign Affairs publicly demanded that the legitimate interests of Chinese companies be “effectively protected.” It is noteworthy that Beijing remains Papua New Guinea’s largest creditor, as Chinese entities increased investment in the South Pacific islands in recent years.
BNL’s operation of the site, however, has led to some local protest and concerns. The Porgera mine has been associated with environmental damage, including the pollution of water sources, which has harmed local agriculture, sparking complaints from Papua New Guineans living and farming near the mine, who claim that mining operations have done little to benefit the local economy.
Zijin has also stated that if a mining lease extension is not granted, it could lead to the removal of critical installations and facilities at the mine, as well as its inevitable closure. The PNG government has indicated that it is willing to nationalize the project to ensure the continuation of mining operations. Associated parties are expected to reconvene on May 8 for the court’s final decision.