Barrick fights public relations battle in Papua New Guinea

While Barrick Gold (ABX-T, ABX-N) has decided to push ahead and build the Pascua Lama mine atop the Andean glaciers straddling Chile and Argentina,  it is dealing with headaches on the ground in the highlands of tropical Papua New Guinea.

The Toronto-headquartered gold major is having to fend off complaints from some Papuans regarding its joint-venture mine site in the country. Papuans are saying police are brutally evicting them from their homes near Barrick’s joint-venture mine in Enga province.  

Photographs published recently on the internet of huts in flames near Barrick’s Porgera gold mine, 600 km northwest of Port Moresby, have become an irritant for the gold major.

Reportedly, police are burning down the homes of illegal miners living near the mine.

Jethro Tulin, executive officer of the Akali Tange Association, a Porgera land-owners group, travelled to Ottawa last week to protest the police action at Barrick’s annual general meeting.

It has been reported that the police increased their presence in the area in late April to deal with illegal artisanal mining in the area and related social problems in the communities around Porgera including crime and drug and alcohol abuse. Authorities also issued an alcohol ban in the area.

“It is our understanding that the police tore down approximately 50 temporary shacks that were illegally occupying part of the mining lease as part of an effort to address the illegal mining problem and curb associated violence and drug and alcohol abuse,”  explained Vince Borg, Barrick’s executive vice president of corporate communications.

Since the Porgera mine went into production in the early 1990s, internal migration to the area has resulted in a population explosion from about 4,000 to 5,000 people to roughly 40,000 or 50,000, Barrick says. (Barrick acquired its interest in the mine from Placer Dome in 2006.)

Borg also explained that police are faced daily with armed men and some women who illegally invade the Porgera mine to steal gold.

“In the middle of the night hundreds of individuals will climb down the face wall of the open pit, which is quite steep, and steal ore,” he said. “Most of them are armed with machetes and they take the ore and then go and process it offsite.”

Borg also argued that Tulin of the Akali Tange Association who flew to Canada to protest the evictions before Barrick’s annual general shareholder meeting last week, leads a group of largely non-local people who have moved to the area and illegally established shanties on Porgera’s mining lease at the edge of the operating mine.

“He is trying to extract compensation for people who now wish to be paid to move off the mining lease despite the fact that they have never had title to the land in question,” he says. “Mr. Tulin is representing them for a portion of any settlement they may get — that is, for profit. That is not exactly a “grass roots human rights activist” in most people’s minds.”

In 2008, Barrick’s share of production from Porgera was about 627,000 oz. gold at cash costs of US$417 per oz. The company’s share of proven and probable mineral reserves at Dec. 31, 2008 was estimated at 7.8 million oz. gold.

This year Barrick expects Porgera will produce 550,000 ounces to 600,000 oz. gold at cash costs of US$500-$525 per oz.