All Business Exist In The PESTEL Surroundings: The Pogera Mine Case Is A Good Example

The Pogera Mine case is a good example of all the elements of PESTEL coming into play.

By Hon Philip Aja Undialu MP (Governor of Hela)

To those that may have some queries regarding PMJM's decision to take back Porgera, here are few points I've listed to help us understand the issue. Read and have your say.

1. There was no need for the government to have any advance negotiations with Barrick before the decision. It would have been in breach of the Mining Act. Any negotiation held prior to the decision would have seen as preemptive of the decison, which would have attracted legal implications.

2. Implication on fall in Barrick's shares is none of our concern. PNG is a sovereign nation of it's own, therefore not obliged to Barrick and its shareholders in any way!

3. Under the Mining Development Contract (MDC), once the lease expires or is refused for renewed as in this case, Barrick has 12 months to close down the mine and decommission and repatriate its assets. However, the MDC also provides for an option to the State to acquire the mine assets on fair market value.

4. At the present, Barrick owes the State huge sum of money in tax liabilities. The state is looking at the option of offsetting the tax liabilities against Barrick using Barrick's own mine assets at fair market value.

5. The landonwers have filed an international arbitration claim for US$13.27 billion against the State under various basis, including environment damages, failure to resettle, etc.

6. The MDC provides that the State is indemnified by Barrick of all liabilities that lies against it (State) consequential to the operation of the mine by the Operator Barrick.

7. The current contractual arrangements in place are that the State held two separate agreements with the LOs and developer, i.e. a) MOA between LOs and State of 1989 that allows the LOs to lease their land to the State to sublease to developer for Mining purpose; and 2) the MDC held between the State and Developer to operate the mine. Because of the principle of 'privy of contract', the LOs are barred from making claims directly against Barrick. As such the LOs have sued the State, who is then indemnified by Barrick pursuant to the MDC held between the State and Barrick.

8. PMJM in his announcement has asked Barrick to continue to operate the Mine, to finalize an arrangement of a transitional plan, and slowly walk through it until such time Barrick is ultimately phased out of Porgera. There is NO NATIONALISATION of Porgera Mine. Barrick is misleading its shareholders and can be reoorted to Toronto Stock Exchange.

9.However Barrick insist that they don't want the State to take over the mine. Instead they want to shut down the mine and go to Court on the basis that as the present holder of the tenement, they somehow have a right of renewal to the tenement, a fabricated and misconstrued right they profess to have to save their shares from plunging. They also foresaw that huge liabilities from the Los claim awaits them, and therefore, as much as possible want to retain the lease to continue to manipulate the State using excuses like revene, tax, and all that crap.

10.The point is, its is prudent to wait for few months to get the mine up and running and increase our revenue portfolio, than to allow Barrick for plunder our resources for another 20 years by giving us bones.

11. Regarding investor confidence, we must refrain from being manipulated with the twisted economics professed by the industry that 'The Devlopers are the scarce resources that every nation must maximise to develope their deposits'. The real economics in resource sector is that 'in a world of depleting nonrenewable natural resources, every nation must maximise the resource to improve the lives of their citizens'. The resource is the subject of the economics, and not the bloody developers.

12. The shutdown is part of the process under the MDC, and we should not panic.

13. Barrick is simply making news to save its shares from dropping on the Stock Market, which is none of our concern.

14. Every intellectual in PNG must seize this opportunity, to test our knowledge and compete with the world. We must make our people proud and rally behind the government's decision, and restart the mine.

15. After the announcement, Gazette was done Yesterday. Following that, a 30 days Notice will be served. In that notice, reasons of refusal to new licence will be outlines. Environmental damages, Community resettlement concerns, Tax Liabilities, denying preemptive rights and illegal sale of 45% mine shares without notice to the Minister Subject to the Mining Act and Shareholders Agreement, etc will be given. A 12months transition process will set into motion. All Subject to the MDC and Mining Act.

16. Barrick must within the 30 days Notice will have to inform the Nation and its shareholders what they will do with the US$13B clails filed by LOs at the Sydney International Arbitration before crying for lease extention. State must bring International Watch Groups and NGOs to see for themselves what Barrick has done to the Porgera Community, Strickland River covering four provinces of Enga, Hela, Sandaun and Western Provinces. The internasional Community will soon know who is telling the truth. They should know the rationale behind refusal to grant extention of lease.

17. Barrick should not misled its shareholders, Toronto Stock Market, and the International Community that PNG has Nationalised Porgera Mine. The mine assets remain property of Barrick. All will be valued and fully settled within the 12months period. Likewise, Barrick should pay whats due to PNG. Both assets and liabilities will be assessed by professional groups. Hence, Battick must at first instance must apologise to the Government and the nation for the misleading press release now read by International Community. PNG remains investor Friendly destination and our guests like Barrick who has benefitted so much from Porgera and left so much damage to the Community should not try to tarnish our International reputation.

I hope this clarifies some concerns you all have.