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Papua New Guinea

Legislation

  • Mining Act 1992 (as amended)
  • Environment Act 2000 (as amended)

Regulatory Risk Rating

Severe
Regulatory Risk

Regulatory Corruption Risk

Very High
Regulatory Corruption Risk

Corruption Exposure Risk

Moderate
Corruption Exposure Risk
Regulatory Risk Rating Factors Risk Level
First Come / First Serve Subscribe
Application Criteria Subscribe
Duration Subscribe
Right to Renew Subscribe
Competing Licences Subscribe
Mineral Coverage Subscribe
Right to Mine Subscribe
Criteria for Mining Rights Subscribe
Tenure Subscribe
Surface Rights Subscribe
Government Take Subscribe
Transfer Rights Subscribe
Change of Control Subscribe
EIA Process Subscribe
Power to Revoke Subscribe
Age of Legislation Subscribe
Other Factors Subscribe

Much like close neighbour Australia’s mining laws, Papua New Guinea’s Mining Act provides a comprehensive legal framework that falls short of model investment standards primarily as a result of the high levels of discretion held by the State and the various State authorities. This issue may well be addressed via the negotiation of a separate agreement which may set out how discretion shall be exercised, and those entering the jurisdiction would be wise to take such option, as this could alter the risk profile considerably. That being said, the Mining Act is also a relatively dated piece of legislation, and the country has been grappling with potential reform for many years. Such reform is now being driven by increasingly nationalistic policies and the Marape government is fighting hard to attempt to obtain greater benefits from the country’s natural resources. In recent times, the direction of reform has been increasingly alarming – with ideas to introduce mandatory production sharing arrangements seen as a potential death knell for the country’s industry. The recent dispute with Barrick Gold over the Porgera mine looks likely to end with an agreement granting the State a majority ownership of the project and it is hoped that this does not result in reform which is structured around such high levels of State participation. For now, the legal risk remains severe; it is hoped that in the future we see that improve, rather than witness a slide into the critical risk bracket.

Contents

Legislation

  • Mining Act 1992 (as amended)
  • Environment Act 2000 (as amended)

Regulatory Risk Rating

Severe
Regulatory Risk

Regulatory Corruption Risk

Very High
Regulatory Corruption Risk

Corruption Exposure Risk

Moderate
Corruption Exposure Risk
Regulatory Risk Rating Factors Risk Level
First Come / First Serve Subscribe
Application Criteria Subscribe
Duration Subscribe
Right to Renew Subscribe
Competing Licences Subscribe
Mineral Coverage Subscribe
Right to Mine Subscribe
Criteria for Mining Rights Subscribe
Tenure Subscribe
Surface Rights Subscribe
Government Take Subscribe
Transfer Rights Subscribe
Change of Control Subscribe
EIA Process Subscribe
Power to Revoke Subscribe
Age of Legislation Subscribe
Other Factors Subscribe

Overview

Papua New Guinea (PNG) is rich in natural resources which are a key part of its economy. In 2019, the country’s resources industry accounted for 88% of exports and 28% of GDP. Amongst significant commodities are natural gas, crude oil, copper, gold, cobalt, nickel and silver. The mining industry has experienced both busts and booms over the last 50 years and the country’s economy continues to be significantly impacted by rises and falls in commodity prices. Whilst exploration interest was relatively strong at the start of the millennium, investment has started to decrease in recent years as on-going attempts at mining law reform continue to have a detrimental impact on investor perceptions. The country continues to pursue significant legal reform, causing divisions between the current government and industry stakeholders. In 2020, major Barrick Gold had its application for renewal of its mining right rejected, with the government subsequently awarding the right to its State backed mining company. Though an agreement was ultimately reached between the two parties, based on a majority ownership interest being issued to the State, it is likely that this narrative will further impact future investment. It is hoped that there will be a change in course for future reform, but investors should track developments in this regard when assessing PNG’s investment potential.

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