If you think about the past, resources or commodities around the world have made wealth for people and that can be a very good thing. Where the resources are relative to the more developer countries can be where one can quickly see attitudes change. If the resources are in the more developed countries, environmental concerns are now at the forefront, if you look back at history you will see across the country making resource ghost towns. What happens to the environment and who makes profits or money from the commodities is changing or perhaps finally changing to meet the realities of more citizens.
In article by Niall McGee, Mining Reporter for the Globe and Mail, Barrick Gold Corp has a new partnership agreement with the Papua New Guinea (PNG) for its Porgera gold mine.
PNG will own 51% of the mine up from 5% and Barrick and China’s Zijin Mining Group will own 49% down from 95%. Barrick will be the operator of the mine and front the entire cost of reopening the site.
The theory is part of a loaf is better than no loaf, as the mine is presently shut down. The mine is 5% of Barrick’s portfolio of mines but the grade is rich and it is a relatively low cost operation. The cost is about $985 and with gold trading in the range of $1,740, the mine will generate profits.
The mine has been in operations since 1990 and Barrick became an operator after it bought Placer Dome. The mine was closed after the New Guinea government refused to issue a mining permit saying it was owed $191 million in back taxes. PNG’s President James Marape vowed to the citizens it would seek more lucrative agreements with foreign operators of the country’s resources assets.
Linking to dividend paying stocks, companies in the commodity business for years had a one sided operation with taking the commodities out of the earth, in return for jobs and some economic interests. It has taken many years before the country where the commodity is located has been seen as a partner. In relatively low cost operations, there is still many millions of dollars to be made and spread out to the company and the country where it is operated. When the country operates the mine, often times it assures the company of stability of production and operation and that is a good thing. Attitudes to commodity extraction take years to change, will they as a society we move to move sustainability discussions?
There are more questions than answers, till the next time – to raising questions.