Addendum 48: Porgera Gold Mining Area

Additional information for Chapter 25 - Back to the Highlands at Wabag and discovering gold at Mt Kare

The Porgera gold mine is PNG’s second largest mine, and is situated in Enga Province at the head of the Porgera Valley at an altitude of 2,200 to 2,900 metres. It is located 600 kilometres northwest of Port Moresby, and 130 kilometes west of Mt Hagen, in a remote highlands area, and in a region of high rainfall, landslides, and frequent earthquakes.

Considered to be one of the world’s top 10 producing gold mines, it has both Open Pit and Underground mining operations.

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Porgera began production in 1990 by the operator at that time Placer Dome which was subsequently acquired by Barrick Gold.  Barrick shares trade on the New York Stock Exchange under the symbol GOLD, and on the Toronto Stock Exchange under the symbol ABX. To date Porgera has produced more than 16 million ounces of gold, more than 3 million ounces of silver, and earned more than K4 billion kina.

In 2009, out of a total of 2,427 employees at the mine, 93.49% were PNG nationals - 1,606 were Porgerans, 33 other Engans, 630 other PNG nationals, and 158 were expatriates.

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It provides at least 1.5 MegaWatts power supply to Porgera communities for free, and it also provides free support for local institutions including Paiam Hospital and the Porgera Development Authority. Annual tax revenue streams, royalties and equity distribution payments totalled more than K500 million in 2019.

The mine has been closed and has been under care and maintenance since April 2020 after the PNG Government denied an extension to the mining lease.

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In 2020 and 2021 Porgera assisted PNG by undertaking Covid-19 Testing and Vaccination programmes.

The mine has been described as both a blessing and a curse for the locals.

In an article sourced online 10 September, 2023 from the Australian National University’s Crawford School of Public Policy ANU College of Asia & the Pacific at https://devpolicy.org/blessings-curse-and-lessons-from-the-porgera-goldmine-20230621/ “Mining in PNG: blessings, curse and lessons from the Porgera goldmine” by Andrew Anton Mako, a visiting lecturer and project coordinator for the ANU-UPNG Partnership (which is funded by the Department of Foreign Affairs and Trade), dated 21 June, 2021 he describes “As a result of the mine, the lives of the people of Porgera changed dramatically within a generation, from traditional community to urban-based life. A new township was built with a modern hospital, a new high school (which <he> attended), and an international school for children of the Special Mining Lease (SML) area. Business thrived ……”

But “People from all over the country …. settled in Porgera, resulting in a population increase in the district from 4,000 to over 70,000 now. This has created tensions, which have led to fierce fighting. This preceded but has been worsened by the mine closure, with the current ongoing fighting leading to many deaths, and destruction of much property. The once peaceful mining township is now dangerous and unsafe, even with the presence of reinforced military and police.

The three decades of mining have led to significant environmental degradation. Much of the land on the fringes of the mine is unfit for human settlement and farming due to landslips caused by dumping of waste rocks. The relocation of landowners who still live on the edges of the mine has been hindered, among other things, by population increase and complicated kinship ties.

Because of a lack of arable land for farming, and lack of proper financial literacy, the landowners became dependent on the regular royalty and compensation payments from the mine. The population increase over time also meant each landowner received less money. These payments have now ceased with the mine closure, as well as due to ongoing disputes between landowner factions. Thousands are facing financial hardship, and are being thrown into poverty, as the mine closure prolongs.

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The following are important lessons going forward for the new Porgera mine, and for the resource sector in PNG more generally.

• All stakeholders, especially the people and the government, must be made aware that the minerals will run out eventually, and plans must be drawn up accordingly.

• School education (for both SML and other surrounding communities) should be given prominence to ensure children continue with education past high school. An educated population will drive the development of the Porgera - Paiela district and its people after the eventual closure of the mine. The same goes for PNG more broadly.

• Landowners must be taught financial literacy skills, so that they can invest some of the mine proceeds in sustainable living ventures rather than consuming them all.

• Long-term funds should be considered for landowning communities to sustain important services such as health, education and infrastructure development after the closure of the mine. Such funds should be ring-fenced with stringent governance and legal mechanisms to prevent looting by unscrupulous actors.

• Issues of land ownership are complex in PNG, and require careful negotiation with all relevant stakeholders.

The 20-year life on the Porgera mine when it resumes will determine the future of the mine’s landowners and the Porgera - Paiela district as a whole. If the mine’s proceeds are once again squandered, it will be more of the same: environmental degradation, violence”, (rape of more than 100 local women has alleged to have occurred), “population influx, corruption, disputes, and poverty. If, however, they are managed and invested carefully, a new day will dawn.”

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In August 1994, eleven workers were killed when a blast destroyed the Dyno Wesfarmers explosives factory at the Porgera Gold Mine. The explosion left a crater 40 meters wide and 15 meters deep, damaging property up to 2 kilometers away. The cause of the accident was never determined. The co-author Jane Rybarz remembers working in a shared office building in Cairns at that time and being deeply saddened on hearing of the death of a Dyno employee who had also been working in the Cairns shared office space.

On 3 March 2012, five people were killed and at least one person was injured in a routine blast at the mine. Police said the victims had entered the mine illegally to search for gold. The three survivors were arrested and charged with trespassing. Illegal mining squatters continue to be a problem for the mine operators.