Prime Minister Hon. James Marape has announced that the Government’s Position Paper on the Wafi-Golpu Mine in Morobe has been delivered to Joint Venture Partners, Newmont and Harmony. The Government is now awaiting a response from the two companies before moving forward with the issuance of the Mine Development Contract (MDC) and Special Mining Lease (SML).
This statement was made following a meeting held on Friday, September 6, 2024, in Port Moresby, attended by State Negotiating Team (SNT) Chairman Mr. Dairi Vele, Deputy Prime Minister and Lae MP Hon. John Rosso, Morobe Governor Hon. Luther Wenge, and Community Development Minister and Huon Gulf MP Hon. Jason Peter.
“The SNT has been negotiating with the two joint venture partners on what benefits Papua New Guinea gets from the Wafi-Golpu project. That includes our 30 per cent equity, financing of that equity, value of the 3 per cent royalty, local content, and others,” said Prime Minister Marape.
He emphasised the importance of not delaying the project, stating: “As we prepare to release the SML, work must start immediately, rather than being delayed as we have seen in other projects. The project is now one or two meetings away from the MDC being signed and issuance of SML.
“The joint venture partners have received the SNT’s recommendations on August 8, 2024, and we are waiting for them to respond. I have requested Newmont and Harmony to respond at the earliest so the MDC can be signed and the SML issued.”
Prime Minister Marape noted that the Wafi-Golpu project is expected to operate for over 40 years, and the Government is focused on ensuring all agreements are finalised before the commencement of operations, drawing lessons from the Lihir Mine in New Ireland, which does not pay corporate tax.
“We want to make sure that we get the total 55 per cent economic benefits we want to get out of the project,” the Prime Minister said.
The Prime Minister highlighted that the terms for the Wafi-Golpu project were captured in the Framework Memorandum of Understanding (MoU) signed in April 2023 between the State and the joint venture partners. This MoU will serve as the foundation for the MDC and SML.
Key provisions under the Framework MoU include:
- The State and Papua New Guinea gaining 55 per cent of the project economics.
- State equity at 30 per cent, with 10 per cent carried, of which Morobe and the landowners will receive the carried equity.
- A 2 per cent tax for fiscal stability, in addition to the full 30 per cent tax.
- Royalty at 3 per cent with no deductions.
- An additional US$394 million committed by Newmont and Harmony for social and community infrastructure, supplementing the Government’s K1.2 billion Infrastructure and Business Development (IBD) grant.
- A local content forum will be convened with developers, the Morobe Provincial Government, and landowners, where the Government will push for local content to exceed 80 per cent during both the construction phase and ongoing operations.
- An additional profits tax was secured, but a concession was made on dividends
- withholding tax.
- Personal income tax was excluded from being treated as the company’s contributions, unlike in the Lihir project.
- The SML will be initially issued for 30 months, during which the investors must complete Front End Engineering Design (FEED) and reach a Final Investment Decision (FID) to qualify for an extension. Upon reaching FID, Kumul Minerals Holdings Ltd (KMHL) will be required to make equity contributions through a cash call.
