An applicant for a mining lease, other than the state applicant, must provide proof of readily available funds in its operating bank account of no less than 50% of the total projected capital costs upon lodgement of the application, as a precondition to the grant of a mining lease (section 62(a)(v)). We assume that the reference to ‘operating bank account’ means the bank account of a licence holder in a bank in PNG.
Furthermore, the Bill provides that the holder of a mining lease whose RMCP has been approved must submit financial assurance that supports the performance of the RMCP obligations, to ensure that the state may not be liable for meeting the costs of the performance of closure obligations.
Under the Bill, the holder of a mining lease whose RMCP is approved, will not be able to commence any mining or related operations until this financial assurance has been submitted.
The financial assurance must be 20% of the total RMCP cost of implementation, and should include a letter of credit; insurance company bond; security interests in unencumbered assets; or other forms of financial assurance. The remaining 80% of the full cost is expected to be paid by the mining lease holder in annual instalments into a trust fund, established for the purpose, two years before the planned closure. This amount must be reviewed and updated every time the RMCP is updated.