PNGs proposed mineral ownership law frightens investors

Radio Australia

The Papua New Guinea government is proposing to give ownership of the country’s vast mineral resources to landowners.

The proposal comes from Mining Minister Byron Chan who says its time for landowners to share in the nation’s wealth.

PNG is undergoing a resources boom not unlike Australia’s with high commodity prices and new exploration finds encouraging foreign investment.

But the industry says the Minister’s proposal comes as a shock that will create chaos and scare off investors.

Correspondent: Karon Snowdon
Speakers: Dr Colin Filer, Australian National University, Convenor, Asia Pacific Resource Management program; Simon Ekanda, landowner representative from the Highlands; Greg Anderson, Executive Director, Chamber of Mines and Petroleum

SNOWDON: There’s an election due next year in PNG. And the economy is booming with growth this year expected to reach 11 per cent. The mining industry which employs 30-thousand people and supplies an astonishing 80 percent of export earnings is pushing into new territory. Newcrest Gold for example announced this week it needs more time to explore the vast resource of its new Wafi-Golpu project because it’s larger than first thought.

Mining Minister Byron Chan says his proposed legislation will hand ownership from the government to land owners and affect new projects. He says not enough of the country’s wealth reaches the people who remain often in poverty.

CHAN: We’d like to replace that, possibly, almost immediately, to revert the ownership back to the land-owner, then relinquish the state from owning anything, from six foot below land and sea. That’s what we’re looking into, right now.

SNOWDON: The minister doesn’t think there will be problems or that existing agreements will be be thrown into chaos, under a dual system.

CHAN: We’re proposing an amendment that will look into future licences, et cetera. The current agreements won’t be affected. All of these things are currently being undertaken now by the Department, so that there won’t be chaos. And the landowners will have more relationship with the mining companies themselves, the government stands just as a regulator.

SNOWDON: Greg Anderson, Executive Director of the Chamber of Mines represents the companies in the mining and petroleum industries. He says he will seek clarification from the government but in principle, opposes the plan which in his words is naive.

ANDERSON: I think it’s just going to be a nightmare. But there’re many questions that arise with that. if the landowners are under-resourced, and they’re going to be shareholders in the project, who’s going to pay for it? Where’s the money going to come from? What’s going to happen to royalties? How can you run a dual system? I don’t think it’s going to work, and if you’ve got a policy that’s completely ill-defined, uncertain, nobody’s going to invest on something that’s uncertain. You’ll scare off the explorers, like you wouldn’t believe.

SNOWDON: Simon Ekanda is a landowner representative from the Highlands.

SIMON: Constitution recognises the customary law. And the customary law gives the landowners that right. We already own it, and you’ll see how this country can move, the next five years, when this law has been changed, and people will money in their pockets. Now, the government has taken away that right. That is creating beggars in this country.

SNOWDON: PNG could be facing a controversy similar to one raging at the moment in Australia over the ownership of resources. Farmers don’t own minerals under their land, the government does, and can give miners the right to explore even when farmers don’t approve.

With strong commodity prices and miners aggressively taking up options, the battle is heating up in some areas over farming verses mining. The similarities between Australia and PNG lie with the assumption that underground and seabed resources are owned by the state, even where customary law recognises landowners’ surface rights.

Dr Colin Filer, Convenor of the Asia pacific Resource Management program at the Australian National University says it’s difficult to change the law.

FILER: Ownership of customary land is well-entrenched in legislation and in the Constitution and everybody recognises that. The question about stuff under the ground – there’re only two countries in the world at the moment, where landowners can be the owners of sub-surface mineral resources, and that’s in the United States and Canada, to a certain degree. There’s no country in the world that I know of, which grants ownership of sub-surface mineral resources to customary landowners, whose rights, it must be said, have not yet been established anyway, because nobody knows who they are, until such time as the process of land owner identification takes place.

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9 Comments

Filed under Financial returns, Papua New Guinea

9 responses to “PNGs proposed mineral ownership law frightens investors

  1. Aba damu

    What Byron is saying is just another of the many government political propaganda in preparation for 2012 election.

    I would rather suggest, instead the districts of the provinces where there is mining should form a mining alliance corperative society and replace the current MRA where the indigenous peoples rep comprising of land owners become the only rightful voice for the indigenous people.

    Chan should understand that the World bank is funding all the Common Wealth Countries of the mineral resources. As such if the new government is formed next year, all the sweet talks like what chan (O’Niel/Namah) is barking will be hiden under the carpet, indigenous people will still be protesting agains the developers for unequal distribution of gain sharing.
    No government in its right frame of mind would want to scare off the investors from such policy.
    Leave the current policy as is where it is, but MRA be replaced with indigenous people mining alliance corperative society.
    Aba damu, Astrolabe bay

    • VISIONARY

      The current policies stands only to benefit the investors more then the resources owners and that has been so since independence,so after 40 years of poverty and struggling to survive in their own land,a land so rich in natural resources,who in their right mind would not want change.
      Despite the set back in the bill not being passed,the supream law of the land the constitutions allows for the citizens to take ownership of what is in the perimeter of their customary land.
      And there are some investors who are honest and they support the truth that resoures owners should benefit more from these projects then they are now..

    • Wesely

      Think this through a bit more.

  2. End of the Mining Boom for PNG

    Abu
    Who will look after the peoples of PNG who do not have resources on their land?
    How could PNG continue to aspire to be a modern fledgling democracy if only a few of its citizens own all of the wealth, as is proposed by Chan and his father?
    Why do the peoples of PNG think their circumstance is so unique that non of the learn lessons of history apply?
    Australian governments do not hold rights to Minerals in te ground because of any issues about the doctrine of Terra Nullius, its that way because they want to have a democratic and egalitarian society.
    Chan has no idea whatsoever about mining, social policy or the reality of life in the 21st century.
    It would be a terrible thing indeed for PNG to go the way of Zimbabwe.

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