Monthly Archives: April 2013

Rio Tinto says ‘its’ Bougainville mine is viable

ABC Radio Australia

The Rio-Tinto mine that sparked the civil war on Papua New Guinea’s island of Bougainville is economically viable and could be re-opened in as little as 6 years.

Bougainville Copper, the Rio subsidiary that owns the mine lease, has just completed an order of magnitude study which shows the project is viable.
It is more than a decade since the war ended but sensitivities remain.

Presenter: Jemima Garrett [Oz taxpayers funding more good news mining stories]
Speaker: Bougainville Copper’s Managing Director, Peter Taylor, Former President, James Tanis

Bougainville Copper’s Managing Director, Peter Taylor, has not set foot on the island since the war but has been working towards the re-opening of the mine.

The order of magnitude study released at the company’s Annual General Meeting in Port Moresby is a first look at mine viability.

Even with commodity prices down, Mr Taylor is optimistic.

GARRETT: The mine has the potential to produce 170,000 tonnes of copper a year and half a million ounces of gold – putting it in the top ten gold and copper mines globally.  Start-up costs are estimated at around 5 billion dollars.

TAYLOR: I’ve estimated that it is about a six year project but that is on the basis of us getting access so we are not starting the clock now. It really depends on getting to the mine site and having a look what is there and confirming some of the assumptions we have made in that order of magnitude study.

GARRETT: More than 10,000 people died as a result of the civil war.
Bougainville went from being PNG’s most prosperous province to a no-go zone with barely a school or a hospital operating.

Since the signing of the Peace Agreement in 2001 Bougainvilleans have been focussing on putting their lives and their economy back together.

That has prompted a reassessment of the value of Rio Tinto’s mine at Panguna.
President John Momis is in favour of re-opening the mine and is preparing the way for detailed Bougainville wide discussions.

Former President, James Tanis, spent the war years fighting alongside rebel leader, Francis Ona.

TANIS: I come from a guerrilla army that fought against the Panguna mine but I have come to notice that there is already mining on Bougainville. After the conflict people now know the value of the stone under the ground. It has made me realise that mining is an industry that will be an important part of the Bougainville economy.

GARRETT:There is still a small minority of people who are strongly against re-opening of the Bougainville copper mine. How will you avoid bloodshed if there is a re-opening of the mine?

TANIS: I do believe we should re-open it but we have to be careful on how we follow the process, meaning that we have a small minority group and it is important that we listen to them, try to understand where they are coming from and come up with a solution that accommodates everybody.

GARRETT: Talking counts for a lot on Bougainville. Bougainville Copper, MD Peter Taylor, says the negotiations to re-open the mine will not be rushed.

TAYLOR: What I have said to the Bougainville government and the landowners is I want them to set the agenda. I want them to tell me what it is that they want. So they will bring their agenda to the negotiating table and obviously we may have to compromise. But the different approach is going to be ..it won’t be driven as it was in the first place by an Administration from Australia. It will be from day One negotiations between the people on the ground, the landowners in the mine site, the government of Bougainville and the other population of Bougainville.

GARRETT: Overseeing the negotiations will be the Board of Bougainville Copper which includes former Prime Minister Sir Rabbie Namaliu and its latest recruit, the widely respected former PNG community services Minister Dame Carol Kidu.

KIDU: As I am the first woman to go on there maybe I can bring some new perspectives. In terms of the corporate social responsibility I am very keen to get into that work later when it is appropriate.I am also interested to pursue the agendas of gender and social inclusion to ensure that, try to maximise any benefits and minimise the damage.

GARRETT: Conflict over mine revenue and environmental impacts fuelled the war on Bougainville. James Tanis hopes modern mangement will make the difference.

TANIS: Panguna was negotiated in the 1960s when there was little knowledge on environmental issues mining brings. Technology has improved. Maybe with better technology, better environment policies and legislation, maybe we have a future with mining on Bougainville.

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Filed under Australia, Environmental impact, Financial returns, Human rights, Papua New Guinea

Foreign owned mining industry warns govt not to touch its profits

A warning of a downturn in mining in PNG

ABC Radio Australia

Papua New Guinea’s Chamber of Mines and Petroleum says the global mining boom is definitely over and a current down turn, is likely to have a big impact on capital spending on exploration and financing for many existing and planned projects in PNG.

The Chamber’s outgoing President, Doctor Ila Temu says there has been a significant drop in gold prices in recent times and with lower commodity prices, it will impact PNG government’s 2013 budget and planned expenditure.

Presenter: Firmin Nanol
Speaker: Doctor Ila Temu, Country Manager for Barrack Gold, PNG’s Chamber of Mines and Petroleum elected Oil Search Managing Director, Gerea Aopi New Crest Mining’s Country Manager, Peter Aitsi

Doctor Ila Temu who is also Country Manager for Barrack Gold in PNG says the Chamber wants the government to help planned and existing mining and petroleum projects get off the ground quickly.
He says the drop in gold prices and related impact on the mining sector could make potential investors think twice before investing in PNG.

Dr Temu says the PNG government needs to honour outstanding commitments both to landowners and developers of certain projects.He says the government also needs to build build and improve existing infrastructure in certain project areas so those projects could get off the ground soon.

Barrick Gold’s PNG Country Manager, Dr Ila Temu says Barrick is also considering selling some of its projects in Australia due to the current global down turn in the mining boom.

He has also cautioned that the PNG government’s 2013 budget will be impacted because revenue projections were based on high gold prices before the current down turn and drop in gold prices.

PNG’s Chamber of Mines and Petroleum elected Oil Search Managing Director, Gerea Aopi as its new President during its annual general meeting last week.

Mr Aopi says the government needs to improve efficiency in its public service to ensure projects which are under exploration stage and others nearing completion before full production could finish soon.

He says the chamber will discuss certain issues affecting the industry with the government.

Meanwhile, the Chamber has urged the government to reconsider its position on a proposed review of its taxation regime.

The review panel include two former Internal Revenue Commissioners Sir Nagora Bogan and David Sode and former Australian Treasurer Peter Costello.

The Committee has started work already and is expected to submit its report and recommendations by the end of June this year.

The outgoing President Dr Ila Temu says the mining and petroleum sectors already pay well and above their normal company tax and it should not increase further.

The Chamber’s Senior Vice President and New Crest Mining’s Country Manager, Peter Aitsi also cautioned the government to be mindful of its expenditure.

PNG’s Chamber of Mines and Petroleum is the peak industry association which represents the interest of over two hundred companies operating mining and petroleum projects in PNG.

President Gerea Aopi, Senior Vice President Peter Aitisi, Vice President Richard Kassman and out-going President Dr Ila Temu in a joint news conference issued the caution in Port Moresby today.

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Filed under Financial returns, Papua New Guinea

Panguna landowners association wants mine reopened

Post Courier via Islands Business

Landowners of the Panguna Mine in Central Bougainville have reaffirmed their stand that they want the mine to be reopened.

The assurance was delivered by an executive member of the United Panguna Mine Affected Landowners Association (UPMALA) during the 3rd Regional Forum on Panguna Negotiations that was held in Buin, South Bougainville, early this week.

The UPMALA is an umbrella organisation made up of the nine landowner associations from the mine’s affected communities.

UPMALA executive Chief Michael Pariu said they supported the Autonomous Bougainville Government’s (ABG) decision to reopen the Panguna mine because they see that it will generate and boost the ABG’s revenue which will then be used to bring about tangible developments in Bougainville.

The ABG has identified the reopening of the mine as a priority issue because it will generate the revenue which could be used to address all pressing needs and issues currently facing Bougainville.
At the moment Bougainville is only raising about K6 million annually which is not enough to address and sustain Bougainville’s needs before the referendum period.

Chief Pariu said they understood the financial situation of the ABG, therefore they were also supporting the decision to reopen the mine.

Pariu added that they would stand behind any decision which would benefit the landowners, all Bougainvilleans and the ABG.

He also clarified misleading reports, saying that it was the Me’ekamui faction and their supporters who have been going against the reopening of the mine, and not the landowners as what many people have been thinking.

He, however, said UPMALA had already started discussions to try and lure them to their side to support the reopening of the mine.

Chief Pariu is now appealing to all factions and people in Bougainville to be united with the ABG in its drive to facilitate moves towards the reopening of the mine.

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Filed under Environmental impact, Financial returns, Papua New Guinea

Newcrest says it remains committed to Fiji

Rosi Doviverata | Fiji Sun

Newcrest Mining Limited remains committed to the Namosi project in Fiji.

This is despite reports of future action to “simplify and reduce activity” across its business in Australia and the Pacific.

Greg Morris, Namosi Joint Venture country manager, said Newcrest remains committed to the Namosi project.

“Namosi is an exploration project, not an operating mine,” he stressed.

“The Namosi Joint Venture has completed the current phase of studies and exploration drilling activities in the Wainavadu Valley and at Waisoi with exploration drilling now focus

Works continue
Work will continue on the draft environmental impact assessment for the Waisoi project.

The Namosi Joint Venture is a group of three companies which have come together to explore for and potentially mine mineral resources in the Namosi and Naitasiri provinces.

The joint venture is made up of Newcrest Mining Limited (69.94 per cent), Mitsubishi Materials Corporation (28.06 per cent)  and Nittetsu Mining Co. Ltd (2 per cent)

Newcrest is the operator and manager of the Namosi project.

Plunging gold prices
In Australia, the recent plunge in gold price continues to take its toll on its fourth-biggest mineral export industry. Newcrest Mining hasn’t been spared.

In its March-quarter results, Newcrest revealed that production costs of mines across Australasia are unprofitable at current gold prices.

The report said that with its major projects ramping up and the more challenging external environment, Newcrest will review all of its business activities, particularly those related to higher cost current or future production.

It revealed that it had already axed 150 jobs from its Melbourne and Brisbane offices as part of a cost-cutting regime.

About Newcrest Mining
Newcrest is one of the world’s top five gold mining companies by reserves and market capitalisation. It operates mines in four countries, and has a global workforce exceeding 19,000.

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Filed under Exploration, Fiji

PNG mining jobs to be taken by Fijians

Labour Ministry to scrutinize PNG job recruitment

Mika Loga | Fiji Broadcasting Corporation

Labour Minister Jone Usamate says, his Ministry will thoroughly scrutinize proposals for job recruitments to Papua New Guinea.

The Fiji Trade Mission to PNG last week has opened the doors for job opportunities in the country especially in the mining sector.

Usamate says, government had sent travel agencies to PNG to gauge the opportunities available in the country and are to present proposals upon their return.

The Labour Minister says, the agencies are registered with government.

FBC News understands landowner companies who own mines in PNG have expressed interest in employing locals as office workers, security gaurds and mine workers.

Ministry to ensure protection of workers

Tevita Vuibau | Fiji Times

THE Ministry of Labour is working to ensure the rights and welfare of workers moving under the Melanesian Spearhead Group Skills Movement Scheme are protected.

Speaking at the 2013 World OHS Day Celebrations in Suva, Minister for Labour Jone Usamate said there were many opportunities for employment in MSG countries under the scheme.

“Skills movement for instance — Papua New Guinea has got a lot of openings with the Liquefied Natural Gas and the minerals industry there and in fact that there is also jobs for security,” Mr Usamate said.

“The role of my ministry is to ensure that if people are sent across to another country to work that they are not exploited.”

Mr Usamate said that one of the recruitment agencies was currently in PNG to scope out the job situation.

“They are there to make sure that if we send people, they are well looked after.”

He said the ministry had a responsibility to Fijian workers.

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Filed under Fiji, Financial returns, Papua New Guinea

PNG Government Information on it’s Sovereign Wealth Fund

Via Masalai blog

Download pdf copy of the SWF Information Paper (350kb).

Introduction

This Public Information Paper was produced to educate the general public on the establishment of the Sovereign Wealth Fund (SWF) of PNG. This need arose because based on various presentations on the SWF, it became apparent the general public has limited knowledge and understanding of it.

The Paper is intended to be simple as much as possible for the purpose of educating the general public. Detailed information, including technical information on the SWF, can be obtained from the respective website of the Department of Treasury or the Bank of Papua New Guinea.

Purpose

Active stakeholder participation is needed to enhance the visibility, governance and transparency and accountability of the SWF. Educating the public on the Fund will not only improve their understanding of this important government initiative but would assist them becoming active stakeholders in the management of the fund, when the fund is fully established.

This Public Information Paper provides information useful for educating the public on the SWF, which is new to PNG. It starts with a private or public Kina savings account, as an example, because many people are familiar with bank accounts. The Paper draws on the familiar features and uses of a Kina savings account to help educate the general public on what the SWF is, as it has many features of a Kina savings account. The main difference is the currency of the account; the SWF is denominated in foreign currency whereas a private or public savings account is held in Kina.

The Paper uses the private or public savings account to describe the SWF of Papua New Guinea, its purpose, how it will operate and the reasons for investing moneys in the Fund. It also provides other general information on the government institutions, committees, donors, work plans and processes being followed at present to fully establish the SWF.

1. A Kina Savings Account and Sovereign Wealth Fund

a. Personal Kina Savings Account

If you have a personal Kina account with a bank, you can make deposits into the account from sales (say, copra), fortnightly salary, bonus, and gifts from friends. You then make withdrawals from that account to pay for food, drinks, school fees, PMV fare, and so forth. If your total withdrawal is less then total deposits, then you have a positive savings in your account. If your expenses are more than deposits, you end up spending all the deposits in the account.

b. Public Kina Savings Account

The government also operates a Kina account (Waigani Public Account) with the Bank of Papua New Guinea (Central Bank). Company income tax revenues, duties, personal income tax, goods and services tax (GST), and other tax revenues are deposited into the account. It makes withdrawals from the account to pay public servants, buy medicines and supplies for hospitals and clinics, build infrastructure (roads, airports, wharves, and bridges) and undertake many other public expenses. If withdrawals for public expenses are less than deposits, then the government has positive savings in its account. If, however, expenses are more than the deposits, the government ends up spending all the deposits in the account.

c. Sovereign Wealth Fund

The SWF is simply another government savings account established outside Papua New Guinea (PNG) in foreign currency. The government will deposit incomes from mineral taxes and dividends from profits into that account in foreign currency. The reasons for depositing public moneys into the account are to reduce exchange rate losses (from converting foreign currency into Kina and back into foreign currency) and reconcile
and account for all taxes and dividends.

When Kina deposits in the account with the Central Bank are more than withdrawals for Kina expenses, the government does not make any withdrawals from the SWF. In this case, foreign currency deposits into the SWF will increase. These accumulated funds in the SWF will then be invested outside PNG to earn additional income for PNG.

If the withdrawals for Kina expenses are more than the deposits in the Kina account with the Central Bank, the government will withdraw funds from SWF to cover the shortfall. In other words, withdrawals from SWF would help the government fund additional public expenditures.

The SWF operates in the same or similar way as a private or a public savings account. The only difference is that SWF account is located in another country and held in a foreign currency, whereas a personal or a public savings account is located in PNG in Kina.

2. Purpose of Sovereign Wealth Fund

The SWF serves three purposes: (a) it helps the government to smooth out large or wide variations in revenue inflows to the national government budget that are associated with PNG’s exports (b) provide funding to support the social and economic development objectives of the government, including long-term social and economic development programmes; and (c) it helps the government save and invest surplus public moneys outside PNG for later use when it is needed.

3. Sovereign Wealth Fund Design

a. Ownership, Administration and Spending

The offshore foreign currency account will be owned by the government of PNG. The management of the account and overseas investments will be from PNG. All withdrawals from the account will be spent on the provision of infrastructure development and maintenance and delivery of socioeconomic services vital for the economic and social advancement of PNG.

b. National Budget

The government will establish in law the rules for both deposits into the account and withdrawals from the foreign currency account. Withdrawals from SWF must be accounted for in the National Budget and approved by Parliament for spending by the government. Rules do not allow the government to spend SWF withdrawals outside of the national budget.

c. Investments Outside Papua New Guinea

Any surplus funds in the foreign currency account must be invested outside PNG. The government will issue a set of guidelines (Investment Mandate) that will govern all investments abroad.

The government will not control or interfere with the management of investments abroad. The extent of its involvement is limited to issuance of an Investment Mandate.

4. Management of Sovereign Wealth Fund Investments Abroad

a. Government

The government, through the Minister for the Department of Treasury (DoT), will issue an Investment Mandate setting out the general investment parameters for SWF Board to comply with. The Board will use the Investment Mandate to guide it to develop its investment policies (strategies) for the asset portfolio (collection of assets) to invest in. The Investment Mandate and investment policies and instructions will be implemented through the Administrative Secretariat of the Board.

b. SWF Board

The SWF will be managed by an independent SWF Board for-and-on behalf of the government. An independent board will be appointed through a bipartisan appointment process. The Board will comprise members with relevant experience in financial and and economic matters and governance and be persons of integrity, sound mind and good reputation. The Board’s key function is to oversee the investment and management of the SWF assets, on the Government’s behalf and with consideration to the Investment Mandate.

c. Role of Department of Treasury and the Minister

The Department of Treasury will ensure that the investment and SWF asset management and withdrawals from SWF for spending in PNG comply with the rules approved by the government. It will also ensure that SWF withdrawals follow the normal national budget process and approved by the government for spending.

Once the Sovereign Wealth Fund is established the Treasurer will be the Minister responsible for the policy matters for the Fund. The Treasurer has legislated responsibility for issuing the Investment Mandate, in consultation with the SWF Board, as well as reviewing and considering Fund reports from the Board. The Treasurer is also the Minister responsible for establishing the SWF.

d. Secretariat to the SWF Board

The Secretariat will oversee the daily operations of the SWF for the Board. Its three main roles are to:

  • provide information on investment markets to the SWF board;
  • give effect to the Board’s investment policies (strategies) guidelines and instructions; and
  • provide information to the board on the appointment of external fund managers and custodian.

e. Fund Managers

The SWF Board will appoint reputable Fund Managers through an open, competitive and transparent process to make investments abroad on its behalf. The Fund Managers will be appointed to invest funds as instructed by the SWF Board.

f. Custodian

The SWF Board will need to appoint a reputable Custodian for the safe keeping of the SWF assets.

5. Reasons for Investing Outside Papua New Guinea

a. Inflation and Value of the Kina

When large sums of money from the PNG LNG project flow into the domestic banking system, it would likely stimulate demand for bank loans which would be spent on purchasing goods and services in PNG and from abroad. The increase in demand would drive up the prices of goods and serves and reduce the value of the Kina. It could create livelihood hardships for families and affect investments and operations of businesses and the government. Investing outside of PNG therefore reduces the amount of money in the country which will assist to reduce inflation.

b. Exchange Rate
When large sums of foreign currency flow into the economy, it would make the Kina increase in value, or appreciate, against other currencies. The increase in the value of the Kina would make our exports more expensive for purchasing countries, which could lead to a fall in the demand for our exports abroad. This could lower household incomes for those who depend of cash crop production to sustain their livelihood and to pay for services such as school fees for children, medical services and transportation.

c. Domestic Investment Opportunities

PNG economy does not offer a variety of investment opportunities than those which are normally available in developed countries; Unites States, for example. By investing in financial markets overseas, the surplus funds which are not immediately required by the government for spending in PNG are able to earn interest. This will over time provide the Government with more funds with which to provide public goods and services

d. Better Public Funds Management

The creation of a SWF will provide an opportunity for PNG to better manage public funds than it has done in the past. The SWF will improve transparency and accountability around the use by the Government of mining and petroleum revenues and dividends. The use of an independent SWF Board will ensure that the assets in the SWF are invested overseas without bias

e. Transparency and Accountability of Public Funds

Transparency in reporting and accounting of public funds had been a particularly sensitive issue in PNG. Loss of public funds and the lack of responsibility to account for those funds had left a great deal of public distrust for public finance management.

As a start, to address this problem, the SWF is subject to its own rules based on international best practice on transparency and accountability.           

6. Government Agencies

a. Key Government Agencies

The key government agencies that are involved in the work on establishing the SWF are the Department of Treasury, the Bank of Papua New Guinea, the Ministry of Public Enterprise and State Investments, the Department of National Planning and Monitoring, the Department of Prime Minister and National Executive Council and the Department of Justice and Attorney General. The heads of these agencies meet at regular meetings to discuss and make decisions on the SWF work and policy and other issues arising.

b. Co-Opt Members

The co-opt government members involved in the work on establishing the SWF are the Internal Revenue Commission, the National Roads Authority, the Department of Transport, the Office of Higher Education and the Department of Works. Co-opt members attend meetings with the key government agencies on as-and-when required, to discuss issues relevant to their area of responsibilities.

7. International Donors

a. Technical Assistance

Technical assistance for work on SWF is being provided by various international donors. The donors provide advice on policy and governance development, administrative processes and public awareness programs on SWF.

b. Capacity Building

Local capacity building is an important element of work process underway to establish and operate the SWF. In the period prior to the establishment of SWF, donor technical assistance is part of local capacity building. In the period after the SWF establishment, donor assistance will also be sought for both shortterm (secondment and on-the-job training) and longterm training (post-graduate education) to build local capacity on SWF investments and assets management.

8. Decision-Making Process

a. Inter-departmental Sovereign Wealth Fund Working Group (Technical Committee) and Composition

This is the main technical group that convenes at regular meetings to discuss policy, legislative and administrative matters affecting work on SWF.

Its membership is comprised of the Department of Treasury, the Bank of Papua New Guinea, the Ministry of Public Enterprise and State Investments, the Department of National Planning and Monitoring, the Department of Prime Minister and National Executive Council and the Department of Justice and Attorney General.

b. Modelling Team and Composition

This is a sub-group of the Technical Committee which is responsible for all the economic modelling work and discusses its finding at Technical Committee meetings. The group comprises members from the Department of Treasury, the Bank of PNG and the Department of National Planning and Monitoring.

c. Implementation Secretariat and Composition

This is a sub-group of the Technical Committee. Its role is to develop policy, legislative and administrative papers for review and discussions at the Technical Committee meetings. It has officers from the Department of Treasury the Bank of Papua New Guinea, the Department of National Planning and Monitoring and the Department of Justice and Attorney General.

d. Secretaries Committee and Composition

This is a decision-making committee. It comprises the department secretaries and heads of Department of Treasury, Bank of Papua New Guinea, Department of National Planning and Monitoring, Department of Justice and Attorney General, Department of Prime Minister and National Executive Council and Ministry of Public Enterprise and State Investments. It convenes at regular meetings to review and make decisions on matters of policy, legal and administration submitted by the Technical Committee. This committee also updates the Minister for Department of Treasury (Treasurer), Ministerial Sectoral Economic Committee and the National Executive Council on SWF work progress.

e. Minister

The Minister for Treasury (DoT), as per the ministerial determination, is responsible for making policy submissions and obtaining NEC decisions on them for implementation by the Secretaries Committee and Technical Committee.

f. Ministerial Sectoral Economic Committee

This is a sub-committee of Ministerial Economic Committee which is chaired by the Treasurer. It convenes to review and approves policy submissions relating to SWF, before they submitted by the Treasurer to National Executive Council.

g. National Executive Council

The National Executive Council is chaired by the Prime Minster as chairman. It convenes to review and makes decisions on policy submissions made by the Treasurer. Its decisions are returned to the Treasurer for implementation through the Secretaries Committee.

9. SWF Work Progress Updates

a. National Executive Council

The National Executive Council (NEC) is provided with updates on the progress on SWF work on a quarterly basis.

b. Public Information Disclosure

In addition to the National Executive Council update, the general public will be informed on the progress on SWF work by way of a written update from time to time. It will be released when work progress has reached a sufficient stage for release to the general public. Some of the disclosure is being done at various
seminars or forums.

10. Sovereign Wealth Fund Work

a. Phase 1

In March 2010, the National Executive Council established a joint Department of Treasury and Bank of Papua New Guinea Working Group (Joint Working Group) to:

(i) assess the appropriateness of the current framework;
(ii) seek feedback from international donor institutions and other appropriate Governments;
(iii) canvass possible options for Government consideration, including the possible creation of an offshore fund to manage windfall revenues arising from the PNG LNG project; and
(iv) report back to the National Executive Council by 30 June 2010.

The Joint Working Group completed its report (the Report) in June 2010. The Report recommended the creation of an offshore fund. It also recommended the establishment of a Secretaries Committee to oversee the development and establishment of an offshore
fund. The National Executive Council approved the Report and its recommendations in November 2010, and commenced the process of setting up an offshore fund. Subsequent work led to a change in the name from Offshore Fund to Sovereign Wealth Fund.

b. Phase 2

Work re-started in February 2011 to commence legislative drafting for the establishment of the Sovereign Wealth Fund of PNG. Legislative work was completed in October of the same year and a bill on SWF Organic Law and a Constitutional Amendment were submitted to NEC and Parliament for their approval. Parliament gave its final approval on the SWF Organic Law and Constitutional Amendment in February 2012.

c. Phase 3

The final phase in establising the SWF began in March 2012 to develop the enabling Acts of Parliament and Regulations for the SWF Organic Law and to setup the Administrative structures to fully establish and manage the SWF. In addition, policy work is progressing on:

  • SWF Board Selection Process;
  • Stabilisation Fund;
  • Development Fund;
  • Higher Education Endowment Fund (Account);
  • policy responsibilities of the Department of Treasury;
  • the SWF Board Secretariat; and
  • Infrastructure Authority         

11. Engagement with the General Public and International Stakeholders

a. Public Consultations and Awareness

The SWF work involves engagement with the general public and international donors. This engagement is done through public consultations and public awareness forums. For public consultations, the Government will seek valuable comments and suggestions from the public on key government policies relating to the SWF. Comments and suggestions are incorporated and contribute to the Government’s final policy decision. Part of this process also involves consulting other countries that either have established or are establishing their SWFs.

Public awareness forums are organized to inform the general public on the progress of SWF work and decisions made. The objective of public awareness is to educate the public on SWF and to promote its transparency.

The discussions below provide information on public consultations and awareness forums that were held or are being planned for Phase 1, Phase 2 and Phase 3 of SWF work.

b. Phase 1

In 2010 public consultations were held in Port Moresby. The audience comprised the general public, key government agencies and institutions, international donors and the private sector. Their feedback was incorporated into the final Report of the Joint Working Group.

A presentation was made in London to an international audience in May 2010. It received positive and helpful comments which were incorporated into the final Report.

c. Phase 2

In 2011 the members of the Technical Committee, through a video conference, consulted the Mongolians on the progress on establishment of sovereign wealth funds in that country. The members also went to Chile in July 2011 and consulted various government institutions, government owned enterprises and the Central Bank of Chile (CBC) on how Chile has established and manages its sovereign wealth funds. Consultations with the Mongolians and Chile provided valuable inputs to the work on Constitutional Amendment and the bill on the SWF Organic Law. There were no public consultations held in PNG during phase 2 of the work on SWF.

A number of public awareness forums were held in Kokopo, Alotau, Lae and Mt. Hagen in the fourth quarter of 2011 to inform the general public on the Bill to establish the SWF.

d. Phase 3

There are plans to conduct public consultations on various components of SWF work set out under Phase 3 of 10 above. The general public will be informed on the venues and when the consultations will be held, when specific components of the SWF work reaches the public consultation stage.

The Implementation Secretariat is preparing a timetable on public awareness on the SWF work set out under phase 3 of 10 above. The general public will be advised on the mode and dates and venues on the various types of public awareness to disseminate information on SWF to the public.

12. Communication

For more information, please visit: Department of Treasury, or Bank of Papua New Guinea

Contact SWF Implementation Secretariat on phone 343 7152 / 343 7155 / 323 5600 or email swfforum@treasury.gov.pg on PNG SWF matters.

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Filed under Corruption, Financial returns, Papua New Guinea

Corporate accountability and gutting the US Alien Tort Statute

Jonathan Kolieb* | The Conversation


The US Supreme Court has handed down a landmark decision that will have drawn sighs of relief from corporate boardrooms in Australia and around the world.

Kiobel v. Royal Dutch Petroleum was brought by Nigerian citizens (now residing in the United States), alleging that Royal Dutch Petroleum, Shell and their local subsidiary aided and abetted the Nigerian government to commit serious human rights abuses against the local Ogoni people of the oil-rich Niger Delta in the 1990s.

The case was brought under the Alien Tort Statute (ATS) – an obscure law that was passed by the first US Congress in 1789 in an effort to combat piracy. The ATS states that US courts:

have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.

In the past two decades, human rights activists rediscovered the little-used ATS and employed it as a means to hold large multi-national corporations accountable for human rights abuses committed in far-flung countries.

Australian companies have not been immune from this wave of ATS litigation. One of the highest-profile ATS cases in the US involved allegations against Australian mining company, Rio Tinto, for environmental destruction of Bougainville’s environment and complicity in serious human rights abuses committed by the Papua New Guinean government when it used military force to quell an island uprising.

Rio Tinto had appealed to the US Supreme Court, but the appellants in Kiobel beat them to the punch. And so it was Kiobel that became the vehicle for the US Supreme Court to consider the limits of the ATS. Now, due to their decision, it seems highly unlikely that Rio Tinto will ever need to plead their case before the US Supreme Court.

The US Supreme Court decided that the “presumption against extra-territoriality applies” to claims brought pursuant to the ATS. In simple terms, the court has decided that you cannot employ the ATS to sue foreign companies for conduct in foreign lands in US courts any longer.

A key plank in the court’s reasoning was its wariness to entangle US courts in matters with “direct foreign policy consequences” for the US government. Incidentally, in reaching their decision the court relied upon their own 2010 decision in Morrison v. National Australia Bank – yet another case involving an Australian-based corporate defendant.

In the months to come, as human rights activists and victims of atrocities come to grips with the shutting down of one promising legal avenue in which to pursue justice, they will necessarily be searching for another forum in which to do so. And they just might find it here in Australia.

Indeed, Australia may very well become the epicentre of the next round of corporate accountability trials.

Australian courts are a potentially fertile, but largely untested, ground for pursuing human rights litigation against corporations, Australian or foreign. Nevertheless, potential criminal and civil legal claims are foreseeable in Australian courts against today’s corporate wrongdoers.

Australia is a signatory to the Rome Statute that established the International Criminal Court and as such has incorporated international crimes into Australian criminal law. Under these criminal laws domestic Australian courts have the authority to prosecute people and corporations for international crimes, including crimes against humanity, war crimes and genocide. Importantly, companies could be held to account for complicity in any such crimes committed by governments or militaries of countries where they operate.

There is also potentially a range of civil claims that victims of such heinous crimes could bring against any alleged corporate bad actors, seeking monetary compensation from them. While Australia does not have a statute equivalent to the ATS, ordinary tort law might be utilised.

Many of the judicial hurdles to succeed in an ATS claim are not applicable to the Australian legal scene. Australian has a looser notion of forum non conveniens, a principle that requires a claim to be brought in the most appropriate forum, which makes it more amenable to cases involving misconduct in foreign countries.

The presumption against extra-territoriality that the US Supreme Court has employed to gut the ATS of much of its force, is turned on its head in the Australian context. That is, the relevant provisions of the Australian criminal code are explicitly extra-territorial in nature.

The intent behind their incorporation was precisely to proscribe certain conduct wherever it may occur on the globe in Australia or elsewhere, unbounded by Australian territorial jurisdiction. Although there is a question of whether Australian courts can exercise universal jurisdiction, existing case law suggests there can be a strong presumption for the prosecution of grave international crimes.

Therefore, it is possible that foreign-based multinational companies such as Shell and Royal Dutch Petroleum, as well as Australian-based companies such as Rio Tinto, could face the prospect of legal action against them in Australia for the very same sorts of alleged misconduct that they have had to defend in US courts.

Australia has not experienced waves of human rights litigation against corporations to date. The sole Australian case against a corporate defendant alleging human rights and environmental abuses abroad was launched against BHP Billiton in the 1990s related to its operations of the Ok Tedi mine in the Fly region of Papua New Guinea. The case was settled out of court.

Last week’s US Supreme Court judgment in Kiobel v. Royal Dutch Petroleum has greatly narrowed the scope of the ATS to be employed as an effective means of legal redress for victims of corporate misconduct. With this renewed motivation for victim groups to consider the alternatives, as well as Australia’s permissive legal environment, this may mean that such cases may be heading to our shores in the not too distant future.

*PhD candidate in Law and Sessional Lecturer in American Politics at University of Melbourne

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