ROWAN CALLICK | The Australian
NEWCREST MINING IS FACING FLAK not only from its shareholders and from the price of gold slumping to a three-year low, but from political royalty in its main field of operations, Papua New Guinea.
Julius Chan, the governor of New Ireland Province — where Newcrest, Australia’s biggest goldminer, operates one of its largest mines, Lihir Gold — has launched a surprisingly bitter attack on the company.
At a press conference, he called on Newcrest to leave the province, accusing it of deceit, arrogance and incompetence.
Sir Julius, a former prime minister and the father of Mining Minister Byron Chan, said he was “sick and tired” of hearing Newcrest say that the bottom has fallen out of the gold price.
“All I can say is, Newcrest is in trouble not because of the gold price, it is because of the lack of management,” he said.
Sir Julius was especially critical of Newcrest’s involvement in a scheme whereby resource companies receive PNG tax credits in return for providing agreed contributions to local infrastructure.
He said: “In 2011, Newcrest told us they would provide 157 million kina over five years for the tax credit scheme. Then, earlier this year, they told us there would have to be severe cuts in the scheme” — which, he said, New Ireland’s people had waited for 18 years to come on stream.
Sir Julius said: “When I met with the top management of Newcrest shortly after their takeover of Lihir in late 2010, I asked: ‘Have you done full due diligence on the purchase?’ and ‘Do you understand the failure of Lihir Gold to provide any benefits under the tax credit scheme for the past 15 years?’ “
As prime minister, Sir Julius had described the Ok Tedi mine as PNG’s “pot of gold”. He now wants to review the mining regime to place landowners in the driving seat for approvals, and for receiving revenues.
A Newcrest spokesman said yesterday: “We are in discussions with Sir Julius, we meet with him on a regular basis, including on the tax credit scheme. Our position is that we are meeting our commitments under the scheme. And we have made significant contributions to the province and to Lihir” in recent years.
He said Sir Julius was present at a ceremony a fortnight ago to mark the handing over of about $1.8m for the upgrade of high schools in New Ireland, and that 11 other projects were under way in the first round of the tax credit scheme, as decided through a joint planning committee with the provincial government.
Further projects would follow. Even though the mine is not required to pay tax this year, chiefly because of the fall in the gold price, the spokesman said “we are still committed to the tax credit scheme projects”.
He said it was “absolutely commendable” that Sir Julius was “trying to secure resources for his province . . . But he should also understand that our commitments are being made and met.”