How will the Chinese fight back now?

Three months ago, following the court injunction that stops the Chinese building a marine waste dumping system for their Ramu nickel mine, we asked the question where do the Chinese go next?

Of the four options we laid out then (moving the case, appealing, changing the law and removing the Plaintiff’s lawyer) the Chinese have tried three – and failed each time.

So how can we expect them to fight back now the Supreme Court has confirmed the injunctions stay in place?

1. They are going to threaten to pack up and go home

We can expect to hear plenty in the media about how much the injunction is costing the Chinese. About how they are running out of money. And about how they will soon have to pack up and go home. This is all complete nonsense. The Chinese have no limit to the funds they have to invest in the Ramu mine and they know that if they have to, they can safely treat and dispose of the mine waste on land. They would rather avoid the cost and the effort of course, but at the end of the day they will stay whatever happens in the court cases.

2. They will pressure other companies to say PNG is no longer a ‘safe investment option’

Yes, the Chinese will roll out the Chamber of Mines and other friendly puppets to say how much this is affecting the business climate and investment prospects. But again, we know that this is just more bullshit. PNG is crawling with mine exploration companies and nobody else is seriously suggesting they are going to shut up shop just because the Chinese are having a hard time. Also remember, mining and oil companies operate in plenty of countries with tight environmental and social protections – hell the Chinese even said Rudd’s proposed 40% super tax in Australia was okay and wouldn’t affect them investing in Australia

3. They will play the victim

Lets all get ready for the sob story. We are the victims here the Chinese will say. The PNG government invited us in. We have complied with all the laws. We have all the permits. But now we are losing millions of $ every day. Well sorry guys. You KNEW the marine dumping was a least cost worst environmental outcome option. You KNEW marine dumping is banned by your own government in China. You KNEW the landowners had not even been identified let alone consulted. You KNEW all this but you went ahead regardless. You are the guilty one here NOT the victim.

4. They will continue to pressure the PNG and Madang govts to buy off the landowners

We have already seen Prime Minister Somare being sent by the Chinese to offer the landowners K40 million to drop their opposition to the marine dumping. Expect to see plenty more of this over the coming weeks and also Governor Amet being pushed to play a bigger and bigger role as a puppet for the Chinese.

5. They will get their spiv landowners to start bullying and harassing the plaintiffs

The Chinese have already tried using their little group of landowner thugs to intimidate the court plaintiff’s – but thus far they have usually been too drunk to inflict any real damage. But now will the Chinese start trying to get them better organised? Might they even resort to arming them and encouraging some more full blooded tribal fighting? Or even try using their own security forces in attacks on the landowners? We certainly hope not.

If nothing else, it is certainly going to continue to be a very interesting time in Madang Province over the next few weeks and months!



Filed under Corruption, Environmental impact, Financial returns, Human rights, Mine construction

6 responses to “How will the Chinese fight back now?

  1. deb chapman

    be interesting to see if these predictions will be as prescient as your last ones…you are hitting the nail right on the head! good work. to be warned is to be prepared and i suspect that these are going to become true too soon too! keep up the struggle with passion and wisdom, just as you have been, and we’ll see what happens next! warm wishes, d

  2. dexter bland

    I’m afraid your understanding of investment principles isn’t very good.

    The Chinese government (who are by far the biggest investor in resource projects worldwide) have spent $1.5 billion on a project that had all the required permits and approvals, was strongly supported by the government (both at the time of investment and now), and the risk is now that a court may block them from ever operating it.

    This throws into doubt all future (and present if you include the LNG project) investment in the country. It implies there is no-one with the authority to approve a project, and that all government decisions can be overturned by an arbitrary legal action brought by anyone at any time.

    The resource potential of PNG is very good, but the sovereign risk in doing business here is the highest in the world. These projects cost billions to develop and investment decisions aren’t taken lightly. The Chinese have possibly the highest risk tolerance, but they’ve already had their fingers burnt. If there isn’t a satisfactory resolution to this situation it will be an absolute disaster for PNG.

    • Tiffany

      Oh Peter, sorry, Dexter – that is just rubbish.

      All Government Decisions in any common law system have always been able to be overturned or restrained by a Court. This is not new nor limited to PNG. BUT they can only be overturned if there is a proper legal reason for doing so – not on the unsubstantiated whim of anyone. By making such ridiculous comments, you not only offend against the Judges involved, but the common law legal system as a whole. The only way the dumping will be stopped is if it can be proved by people with direct interests (the Rai Coast landowners) that laws have been broken or will be broken by allowing the dumping to proceed. Otherwise the dumping will proceed.

      Courts don’t overturn government decisions just because they are asked to. And if you believe that they do, maybe PNG isn’t the place for you or your like-minded investor colleagues.

      Are you seriously saying that as a matter of policy it is OK for governments to issue permits or make decisions and it doesn’t matter if the decisions breach laws, the decisions should be implemented regardless of how many laws are broken or rights are breached ??? That Courts shouldn’t ever interfere in Government decisions ?

      We all know that that is in fact the actual position in China, that judicial decisions are scrutinised by the political arm of government and must be sanctioned before they can be delivered, but sorry, that is not the situation in PNG, England, Australia, Canada or any common law jurisdiction. And all investors know that.

      This is a democracy. A cornerstone principle of any democracy is that of separation of powers. This is not a new concept and shouldn’t come as a surprise to you that it is entrenched in our governmental system here (it’s written into the Constitution – it’s not just a principle or a doctrine here).

      Are you seriously saying that, for example, if a developer paid K10 million for a permit and it was given without any of the investigations under the Act, and the developer effectively “bought” a permit, that the decision to grant the permit shouldn’t be challenged – or at least the actions under the permit shouldn’t be restrained ???? What happened if the developer just threatened the permit-giver with a gun and got the permit that way ? What happens if the developer doesn’t use overt illegality but either includes lies in its application or omits relevant facts so the opposite of the real situation is portrayed in its application ?????

      Where do you draw the line ? When is it OK to ignore illegality ??? When is an interested person – that is one whose property or personal rights are adversely effected by a government decision – allowed to challenge or stop the effect of a decision of government? Is it, as you seem to suggest, that such a person isn’t allowed to challenge a government decision however illegal it may be, if some money has been spent by the developer ????

      Sorry, Dexter, there are some things money just can’t buy.

      I wholeheartedly disagree with you that this action or ANY action that seeks to enforce laws or rights should frighten investment. Any decent investor would prefer that laws are obeyed and people’s rights not breached – as a functioning legal system also protects their investments.

      The only institution that is keeping this country stable for investment is the Judiciary. Like it or not, we all know that we will be given a fair hearing in our Court cases, and that a decision will be given according to law.

      I can’t tell you how many decent developers and particularly employees of such developers have personally contacted me and informed me that they support the Rai Coast action. Incidentally, at AGM after AGM of the PNG Chamber of Mines and Petroleum, Greg always complains in his report of the failures of relevant government departments to do what they are supposed to do and that these failures are an impediment to development/investment. Making the system accountable HELPS decent developers as they can have certainty in their dealings.

      No-one in PNG can state that they did not know that there was widespread concern about submarine tailings disposal at Basamuk. This includes all shareholders in the developer. The government in June 2008 announced in the media that it had commissioned an independent report to properly review sea dumping of tailings in PNG in the past and the likely impact of such dumping at Basamuk, as a result of widely published concerns by many sectors of society in PNG, including the Catholic Bishops Conference and the National Fisheries Authority. Yet the developer went ahead, full steam allegedly, according to the newspapers. We don’t even have to final report yet. Ain’t no innocent surprised victims here.

      Sorry, whoever you are, your predicts of vast doom and gloom won’t fly with the majority of people in PNG and/or decent investors.

      I hope, whatever the outcome of the case, that in the future, government agencies will properly and independently assess and scrutinise applications and developers will be more ecologically aware in their environmental plans, and both will ensure that the correct persons/landowners effected by any development are identified and consulted with from the beginning, rather than allowing land disputes to carry on for 11 years and pretending that dealing with puppet landowner associations is proper consultation.

      PNG has to live with the consequences of mining development long after the developers have packed up and left and long after the politicians have spent whatever money PNG actually receives from the mining. That is why it is important to get things right before the process starts, and that is why the Courts must always supervise decisions of public servants to ensure that laws are not broken and people’s rights are not abused. It is as plain as that.

  3. dexter bland

    You are obviously far more appraised of the specifics of this case than I am. You’re suggesting that laws were broken in the granting of the permits, well I haven’t heard these allegations before, so it would help if you were more specific.

    If its simply a case that someone doesn’t want a development to proceed – for whatever reason – then that is not a valid reason to stop it once a permit has been granted. There is a process to go through to gain these authorizations and a huge amount of money has been spent on the understanding that the development was legal. Now a court can effectively declare those authorizations worthless, well is there someone in PNG who IS able to provide a valid permit that can’t be challenged? If not then how can anyone think of investing in any project there? Any project can be declared illegal whether or not there is a valid reason.

    There is currently a shopping center development going on nearby me at the moment. I don’t like it much because the work starts early and its going to lead to more traffic. However I have to accept that the developer went through a process that included an environmental and neighborhood impact study, community consultation and the like and these things also serve a common good if they inconvenience me somewhat. The relevant authorities approved these permits after being satisfied with the development plans, and if I really don’t like it I can apply political pressure, but I can’t take the developer to court if they are working within their permits. If that were a possibility then I can assure you that no-one would invest, and nothing would ever get built.

    BTW who is Peter?

    • Fed up

      dexter bland stop confusing the issues and certainly STOP scaremongering.

      the issue with this DSTP was that the permit was granted even BEFORE the draft SAMS report was finalised and released. this report is still not published officially. if this was the report that the government was relying on to issue the permit to the chaiko’s then obviously something is terribly wrong there. can see with your big eyes why the issuance of the permit to construct the DSTP was done under extremely controversial circumstances??? can you see now, huh?? or do you still need me to spoon feed you??

      we are not as stupid as you obviously are to buy bullshit from anyone, including scaremongers like you.

      mate we understand the concepts of sovereign risk and are doingeverything to enhance PNG’s reputation as an investment destination where our laws and the good old common sense is respected in the investment and development process.

      in every democracy, regardless of whoever issues a permit, that permit is ILLEGAL if the process in issuing that permit has been illegal. maybe only in China is it legal regardless. and maybe in people like dexter’s world too.

  4. watchman

    Dexter, with respect, there is no comparison between the Rai coast situation and your “shopping centre development” experience. A permit is only legal at face value. If you believe, as the Rai coast plaintiffs do in their case, that due process hasn’t been followed in the issuance of a permit then you have every right to challenge the development. Public officials are not infallible – that is the basic premise of admin law. The courts are inundated with cases (incl. those brought by developers like Ramu Nickel) each year challenging the decisions of public officials. Clearly this has had no major deterrent impact on inbound investment. Please don’t trivialise the issue by likening it to the “inconvenience” you now feel by having a shopping centre development at your doorstep. We are talking about literally hundreds of tons of tailings waste being disposed into the ocean, a place which has been the lifeblood of the Rai coast people for centuries. The difference between them and you is that you have the luxury of always moving house if the “inconvenience” becomes unbearable. Unfortunately for them they will be stuck with what is thrown at them. The majority of people are not against the mine but it needs to be done properly. No country – certainly not those in the developed world – will tolerate any investment that involves breaking laws and taking shortcuts.

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