Barrick cuts power supply at PNG mine amid legal standoff

FILE PHOTO: Souvenir luggage tags are displayed at a Barrick Gold Corp at the Prospectors and Developers Association of Canada (PDAC) annual conference in Toronto, Ontario, Canada March 1, 2020. REUTERS/Chris Helgren

SINGAPORE (Reuters) - Barrick Gold Corp ABX.TO will reduce power supply to townships near its Porgera gold mine in Papua New Guinea, the mine's operator said on Thursday, to save costs amid a deepening standoff with the government over mining rights.

Canada’s Barrick, the world’s second-biggest gold miner, was refused an extension of its expired lease on the mine in April, with the government citing unrest and pollution concerns.

It stopped production and said in a statement from mine operator Barrick (Niugini) Ltd that “due to necessary cost reductions” electricity the mine provides free to nearby communities would from Friday only be supplied for 12 hours a day.

Barrick is challenging the lease refusal and the reduction in power supply may increase pressure on the government to find a solution.

Barrick and China's Zijin Mining Group 601899.SS each own 47.5% of the Porgera mine and last week approached the World Bank's International Centre to try to settle the dispute.

A spokesman for PNG Prime Minister James Marape had no immediate response on Thursday. Marape has previously said the government intended to operate the mine itself.

Reporting by Tom Westbrook; Editing by Robert Birsel