Barrick faces multi-billion dollar suit over Porgera mine

Barrick faces multi-billion dollar suit over Porgera mine

Porgera mine.

Canada's Barrick Gold (NYSE, TSX:ABX), in the midst of a worldwide assets sale to help reduce net debt by at least $3 billion, has something else to worry about these days, as the firm is now facing a legal threat in Papua New Guinea.

A group of landowners announced Thursday they have submitted a position statement to Barrick, and its subsidiary Barrick Niugini, outlining “irreparable losses” as a result of social, economic and environmental damages caused by the Porgera gold mine.

The alliance, called Justice Foundation for Porgera (JFP), claims property-owners’ subsistence and livelihoods were “catastrophically changed” as a result of the near doubling of the open-pit mining rate. They also argue that Barrick Niugini breached agreements pertaining to environmental standards, the relocation of displaced landowners and the number of fly-in, fly-out workers to the region.

In an emailed statement, Barrick said it has reviewed JFP's submission, but believes it has no legal merit as determined by the State Solicitor of Papua New Guinea after analyzing a similar position statement issued in 2013.

"As manager of the Porgera Joint Venture, Barrick is committed to constructive dialogue with all of its stakeholders. The mine maintains a number of formal channels for landowners and other groups to raise issues of concern on an ongoing basis.

"[However] Barrick believes the claims put forward by the Justice Foundation for Porgera have no legal merit."

Porgera, which produced 493,000 ounces last year, is one of Barrick’s assets up for sale in Australia. Located in PNG’s highlands, the operation is expected to fetch close to $100m.

Image courtesy of Barrick Gold.