Benefit sharing remains a great challenge


Cyril Gare | PNG Blogs | 17 October 2016

Resource development, ownership, and fair and equal sharing of benefits accrued from development projects such as mining and oil and gas remain a biggest challenge yet for Papua New Guinea 41 years on as an Independent country.

And the people of Londolovit on Lihir island, New Ireland province are among one such group of resource owners who are still searching for a correct matrix to balance the scale.

They own the traditional Londolovit river where Newcrest Mining Limited (NML) operator of the Lihir Gold Limited (LGL) extracts water for its operations since 1995.

Their fight is three fold between LMALA (Lihir Mining Area Landowners Association) who are owners of the “gold”, LGL, and State.

Their issues have been to:

  • get LMALA to acknowledge them as “water” resource owners and remit adequate benefit as possible under the Integrated Benefit Package (IBP) of the Lihir mine Agreement which stand is justified on the premise that water is fundamental in gold processing without water there will be no gold;
  • LGL to acknowledge and sign a new water use and impact agreement with them as the current water impact agreement was obsolete since it was first created in 1998 and does not include payment for water use except environment impact; and
  • State to acknowledge them as original and traditional owners of the Londolovit river and not State as stipulated in the Environment Act 2000 so that State to create a separate facility (trust account) for them to share with State all monies paid to State by LGL as issuer of water permit and “owner” (in their stead) of Londolovit river. 

It has been four years since the search for answers began. Delegation after delegation and costly trips between Lihir and Port Moresby were taken only to become a “football” kicked here and there between MRA (Mineral Resources Authority) and CEPA (Conservation and Environment Protection Authority) each shrugging off liability and responsibility alike over the Londolovit water resource owners’ issue.

It was in February this year after LGL refused to become a party in a new proposed Londolovit river water use and impact agreement that prompted the Office of the Chief Secretary Isaac Lupari (Office of the Prime Minister and National Executive Council) to show some sign of interest and intervention.

Directions were issued to CEPA to re-look at the issues of the Londolovit community. This also prompted the Minister for Environment, Conservation and Climate, Hon. John Pundari to intervene and getting CEPA off its comfort zone at the Beemobile building at Gordons.

LGL had refused to become a party to sign on a new proposed water use and impact agreement that will supersede the obsolete Supplementary Agreement of 1998 which only cater for a minimal payment of K300,000 per annum for environment impacts on their traditional Londolovit river where LGL has a weir which extracts water for its mining operations.

The creation of the Londolovit Sagomana Association (LSA) through the Investment Promotion Authority (IPA) on 16th February, 2016 was a breath of relief and new lease of energy and confidence to further pursue their long standing water fight.

On the 09th September, 2016, LSA Chairperson, Ms. Roselyne Arau led a small delegation to Port Moresby and held talk with Minister Pundari.

Among others, the K113 million claim against LGL for water extraction “over and above” permitted rates were discussed. Failure by State (CEPA) to effectively regulate and monitor water extraction by LGL according to the conditions of the water permit was also discussed with the view for State to admit liability for negligence.

The good Minister agreed to look into these outstanding issues and sort these issues before Christmas out once and for all. Prior to doing so, he arranged for an advance team led by CEPA’s Deputy Managing Director, Mr. Dilu Muguwa to travel to Lihir for fact finding and for a report to be presented to him within two weeks.

The advance team travelled to Lihir on October 11, met with LSA on October 12 and went through a total of nine (9) terms of references (OR) set by Environment Ministry and returned to Port Moresby on October 13.

As a State Team comprising officers from State Solicitor, MRA, CEPA, and department of PM and NEC is set to follow suit on October 24, the people of Londolovit were grateful of Minister Pundari and Chief Secretary, Ambassador Isaac Lupari for their interventions and are hoping for better soon.

In its six page written submission to CEPA’s advance team, LSA stated among other issues and demands that: “Water and Gold are two different resources. Under the existing benefit sharing arrangements such as the Integrated Benefit Package (IBP) only “gold” resource owners through LMALA tend to enjoy all the benefits compared to “water” resource owners and rest of the impacted surrounding communities on Lihir island. Although water remains the single most important resource needed to process gold, this fact has been long overlooked since the start of the mine in 1995/1997.

“The IBP is subject to jurisdiction of the LMALA management which experience so far has proven that LMALA was only bias and lack the virtue of ‘equal and fair sharing’ of benefits to the water supplying community of Londolovit and or other impacted surrounding communities. Perhaps this is to do with the mineral resource development regime in the country where “gold” resource owners are given more recognition by State and developers than “water” resource owners in mining activity areas in PNG.

“Poor management resulting in recent investigations (Business Audit) into the affairs of LMALA can only further confirm the general feeling of mistrust for LMALA management and its executives among the impacted communities on Lihir island.

“What we want:  The formation of the Londolovit Sagomana Association (LSA) which was registered with the Investment Promotion Authority on the 16th February, 2016 was an affirmation for succession away from the umbrella of LMALA who has failed to adequately stand for and in the interest of the Londolovit water resource owners since 1997.

Among others, LSA’s principal objectives in the Association’s Constitution are simply straight to the point: 

  • to conduct, encourage, promote, advance and administer development aspirations of the Londolovit people from the proceeds of Londolovit River Weir where the Lihir Gold Limited (LGL) is extracting water from for its mine operations; and 
  • to act, at all times, on behalf of and in the interest of the Members and the Association as a mining impact community. 
  • In a letter dated 14th March, 2016 to Coordinator of the Lihir Agreement Review (LAR) committee, LSA blatantly stated: “We intend to pursue our own interest as “water” resource owners in the Lihir gold project for a separate benefit package of our own. We want to have nothing to do with LMALA and the LAR process. 
  • LMALA and LGL to honour all outstanding benefits owed to Londolovit under IBP. 
  • MRA (Mining Warden) and LGL to review and honour all outstanding benefits/compensation owed to Londolovit under LMP 34 and ME 73 tenements. 
  • Option A – State to create a trust account where payments receive from LGL for the “use” of water is shared with Londolovit as traditional (original) owners of the water. The metamorphosis ‘State’ is supposed to be “custodian” to properties of traditional and customary landowners and not itself “owner”. The sacrosanctity of customary/traditional properties rights is in this way lost and stolen by this beast forever. 
  • Option B – State to intervene and impose on the LGL to review its decision why it refused to become a party to the new proposed water agreement by LSA (Londolovit). This proposed water agreement stemmed from Recommendation # 4 of the CEPA sanctioned Londolovit River Environmental Audit Report –August 2015 by Moroka Pty Ltd. 
  • Option C – All State, LGL and LSA to become parties to an all new proposed water agreement over the Londolovit river for its use, impact, and benefit sharing with the view to reaching a long lasting win win situation for all parties in future. 
  • State and LGL to resolve to an amicable outcome and pay K113 million as compensation to the Londolovit people for over extraction of their water illegally.
  • LMALA and LGL to honour all outstanding benefits owed to Londolovit under IBP. 
  • Copy of the Business Development Audit Report be provided to us forthwith for perusal and record.
  • Until Londolovit is more involved and participating from the benefits from the Lihir mining operation Lihir Agreement Review (LAR) is insignificant to the Londolovit water resource owners at its current stage. 

At the time of meeting (October 12) in Lihir, the LAR process attended by a State Team, LMALA, and LGL was in progress in Kavieng without LSA attendance after request by LAR coordination team was turned down.

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Filed under Financial returns, Papua New Guinea

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