Papua New Guinea Mining Bill 2025 — Public Consultation Draft

Mechanism

The Mining Bill 2025 is the most comprehensive overhaul of PNG's mineral regulatory framework in 33 years, replacing the Mining Act 1992 with a hybrid production-sharing / concessional model that institutionalises Prime Minister Marape's "Take Back PNG" resource-nationalist doctrine at the statutory level.

State equity (Part III / State Participation): The Bill formalises the State's right to acquire up to 30% equity in any new mining project on deferred-payment terms — a meaningful expansion of the historical 22.5% Mineral Resources Development Company (MRDC) equity option exercised at Porgera (Ok Tedi-era precedent), Lihir (LGL buyout), Ramu NiCo (PNG shares via MRDC), and Hidden Valley. The deferred-payment mechanism means the State's cost is financed from its future production share, reducing the upfront fiscal barrier while permanently diluting project-level investor equity.

Royalty tier (Part V / Fiscal Arrangements):

• 5% of gross revenue (life-of-mine) where the State exercises its equity option
• 10% of gross revenue (life-of-mine) where the State does not take equity

This represents a significant uplift from the existing royalty regime (typically 2% under the 1992 Act for most tenements). The 10% rate for non-equity projects creates a strong pressure on investors to accept State equity participation, structurally replicating the Congolese/DRC and Indonesian hilirisasi precedents where the "equity-or-tax" structure effectively mandates host-government shareholding.

Local-processing offtake mandate (Part VI / Domestic Processing): Mining-lease holders must offer at least 50% of mine production to domestic smelters, refineries, or secondary- processing plants where such capacity exists and can process competitively. This is a downstream-value-capture obligation templating Indonesia's minerals-downstreaming (hilirisasi) policy and Zambia's 2024 Minerals Regulation Commission Act. In practice, PNG's smelting and refinery infrastructure is nascent (Porgera/Hidden Valley gold doré are largely exported unprocessed to refineries in Australia, Singapore, and Switzerland), so the "where such capacity exists" carve-out limits near-term disruption — but creates the statutory predicate for future mandatory processing obligations as domestic infrastructure is built.

Mine-closure financial-assurance (Part IX): A new rehabilitation + mine-closure + post- closure-monitoring regime introduces closure-bond obligations and long-term monitoring requirements, addressing the legacy of abandoned mine rehabilitation failures (Ok Tedi tailings pipeline; Panguna/BCL stranded-liability precedent) and aligning PNG with ICMM and IRMA international standards.

Regulatory architecture: Consolidates policy under DMPGM (ministerial-level strategic oversight) with operational permitting and compliance delegated to the Mineral Resources Authority (MRA). This dual-tier structure follows the post-2015 reform trajectory begun with the MRA Act 2005.

Downstream implications

• State equity as template: PNG's 30% deferred-payment equity structure is likely to

spread through Pacific-basin host-country policy playbooks: Indonesia (already at 51% mandatory equity), Philippines (proposed Mining Fiscal Regime Act), and Solomon Islands (proposed mining-code overhaul) are all watching this reform cycle.

• Royalty uplift impact on project economics: The move from ~2% to 5–10% gross-revenue

royalties materially compresses project-level IRRs for copper-gold developments in the Wafi- Golpu / Yandera / Frieda River pipeline. For projects NOT grandfathered, the royalty uplift alone could push marginal projects below feasibility thresholds at current copper/gold prices.

• Company-page-tier relevance: Newmont (NEM) and Harmony Gold (HAR) hold 50%/50% of

Wafi-Golpu (grandfathered), limiting near-term impact — but their future growth projects in PNG will be subject to the new regime. Barrick's Porgera position is subject to the 2023 New Porgera Amendment Act framework (see responds_to), not the general Mining Bill.

• Gold doré export flows: The 50% local-processing mandate, if operationalised, would

redirect PNG gold doré from offshore refineries (ABC Refinery Sydney, UBS Switzerland) to a planned domestic refinery — similar to the trajectory Ghana followed with its Precious Minerals Marketing Company mandate.

Open questions

• Will the Bill pass before the September 2025 Independence Day target, or will it carry into

the 2026 parliamentary calendar following consultation-extension requests from industry?

• Does the Frieda River / PanAust grandfathering survive intact in the enacted version, or

will the 50% processing mandate be applied at the Development Forum stage?

• Will the domestic-processing obligation be operationalised via ministerial regulation

(giving future governments discretion over timing) or hardcoded into the primary legislation?

• What equity-acquisition price mechanism will apply for the 30% State option — book value,

fair market value, or a blended formula, and who adjudicates disputes?