A Papua New Guinea (PNG) court dealt a fresh blow to China’s largest gold producer, Zijin Mining Group Co. Ltd., by refusing to review a government takeover of the $1 billion-a-year gold mine Zijin and Canadian partner Barrick Gold Corp. operated there until earlier this year.

It’s the latest development in a lengthy legal dispute that started in April, when the PNG government denied an application from Barrick Niugini Ltd. (BNL), Zijin’s local joint venture, to extend its lease on the Porgera gold mine.

BNL said it would appeal the decision to the PNG Supreme Court. It has also applied for international arbitration with the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) over the government’s decision to grant a fresh 20-year lease on the mine to state-backed Kumul Minerals Holdings in August.

For Zijin, which spent nearly $300 million for a 47.5% share of the mine five years ago, it’s been a big blow. At the time of purchase, there were just four years left on the lease to dig out the precious metal.

BNL applied for a 20-year extension in July 2017, two years before the lease was to expire. The government response came in April: No.

The decision by PNG Prime Minister Joseph Marape to take over the mine, who couched his announcement in nationalistic rhetoric, drew an angry response from the operators, which expected the lease to be renewed, with BNL describing it as “tantamount to nationalization.”

Meanwhile Zijin President Chen Jinghe appeared to threaten geopolitical strife in a letter to the PNG leader asking him to consider the impact that a collapse in talks could have on the country’s relations with China.

You can read the story on Caixin Global. 

And for more detail, read Caixin’s feature on how Zijin lost the rights to this Pacific island gold mine. 

Contact editor Flynn Murphy (flynnmurphy@caixin.com).