Monthly Archives: December 2016

MOAs for mining projects set to go before NEC


Post Courier | December 23, 2016

SEVEN of the memorandum of agreements (MOA) for the mining projects in the country have been completed and will be submitted to the National Executive Council (NEC) for approval in January, 2017. This is from the Mineral Resources Authority (MRA) while giving an update on the status of these agreements.

Each of the operating mining projects have in place an MOA that sets out the benefits sharing arrangements between the National Government, the host provincial and local level governments and the immediate mine area landowners. The MOAs are reviewed periodically as agreed by the stakeholders.

Those completed are for the Ramu mine in Madang Province, Simberi (New Ireland), Hidden Valley (Morobe), Ok Tedi (Western Province), Tolokuma (Central) and Sinivit (East New Britain). MRA’s managing director Philip Samar told the Post-Courier that once they have been approved by the NEC, the actual signing ceremony will be held at each of these project sites.

“This is to allow the project stakeholders to witness such an occasion,” Mr Samar said.

Also completed is Woodlark in Milne Bay, which is one of the two new approved mining projects. He said the review process for Porgera, Lihir and Crater Mountain are yet to be completed. The current exercise will continue in 2017 along with the country’s first ever deep sea mine – Solwara-1.

Mr Samar said this will be the first time that any government has submitted more than one revised MOA in the last 10 years.

He said one of the improvements that the MRA is embarking on to improve is administration and transparency of the revised MOAs by making allowances for autonomous parties to administer each of them, and to facilitate annual meetings where the independent auditor presents the implementation scorecards for each of them.

“This way all parties will be held to fully account for the implementation of their commitments on an annual basis,” he said.


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Ramu nickel mine still to achieve full output and deliver tangible benefits


MCC vice president Wang Baowen meets local supporters

RamuNico thanks LOs for support

Post Courier | December 28, 2016

PREVAILING low world prices on nickel, cost reduction and production issues were matters that the developers of the Ramu mine in Madang had to contend with in 2017. The environment would have been made even tougher, had it not been for the support of the landowners of the four impact areas of the country’s lone nickel and cobalt mine. This was acknowledged and the landowners thanked, at a Christmas party its Community Affairs Department hosted for them in Madang last Wednesday.

In attendance was the miner’s vice president Wang Baowen.

“Despite these financial deficits, we have overcome most of the technical problems with improved management system, and today our product output has improved with low operational costs.

“We hope that the nickel price improves soon, so we can earn some profits and deliver to our project partners.

“Social security, including landowners’ expectations on employment and business opportunities are major challenges as well. This happens everywhere and our project is no exception. We fully understand the expectation of our landowners,” Mr Baowen said.

Peter Tai, chairman of Maigari who spoke on behalf of his three colleagues Tobby Bare (Kurumbukari Mine), Sama Melambo(Basamuk Refinery) and  Jeffrey Kinang (Coastal Pipeline), thanked the company for its support and continued operation in-spite of the economic challenges. Mr Tai, while vowing their continued support, had also cited some outstanding issues and urged both the government and the developer to ensure a resolve.

Chairman of RamuNiCo umbrella company, Raibus Limited, Steven Saud representing all project landowner companies acknowledged that 2016 has been a tough year for RamuNiCo and landowner businesses due to the global economic situation affecting all PNG companies. He thanked the company for not quitting.

General manager of Community Affairs, Martin Paining said RamuNiCo project is unique in PNG and urged the landowners to support it until the economic climate is healthy so all parties can benefit.

“So we have a situation and environment to understand each other well and work for common benefit,” Mr Paining said.

Meanwhile, the vice president said:

“RamuNiCo management endeavours to bring the project operation to successful production design capacity of 100 per cent soon and deliver tangible benefits to all our partners including you all here today.”

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Papua New Guinea’s Frieda River project still faces obstacles, says Managing Director Fred Hess

Image: PanAust’s Fred Hess. Source: Business Advantage International

PanAust’s Fred Hess. Source: Business Advantage International

EMTV News | 29 December 2016

PanAust [owned by the Chinese company, Guandong Rising Assets Management] is keen to start development of the Frieda River copper-gold project, Managing Director Fred Hess told the Papua New Guinea Mining and Petroleum Investment Conference in Sydney last week. But he warned there are many obstacles to overcome before a final decision to go ahead with the mine.

Hess said the nature of the resource at Frieda River in West Sepik Province is well understood, noting that the project ‘has been known about’ for almost 50 years.

‘We are now in the phase where we are waiting for permit approval to take place,’ he told the conference.

‘Realistically, with the elections due next year, and with the size and complexity of the project, we are expecting that may take a while to get through to completion.

‘Once that process is finished, we then sit down and look at what the environment is like for making an investment decision and essentially there are a number of conditions that will have to be met in order for us to proceed to that investment decision.’

‘The embankment will take up about 40 per cent of the total capital cost of the project.’

Environmental issues

Hess described the project as a substantial open cut mining operation dominated by a very large storage facility.

‘That facility is designed to take the tailings from the processing plant and the waste from the mine and all of that sits behind a very large embankment,’ he said.

Hess said the embankment will take up about 40 per cent of the total capital cost of the project.

‘It doesn’t produce any copper but it is a necessary requirement in order to produce copper,’ he told delegates.

‘It is distinctive in the sense that PNG has traditionally taken cheaper forms of tailings and waste disposal routes.

‘But, because of the issues that we have with Frieda River being upstream from the Sepik River, this is the solution we have come up with which we think addresses all the environmental issues that are so important to a project like this succeeding.

Hydro power

‘The other special part of this project is that, because of the size of the embankment, because of the size of the catchment it sits in and the amount of water that falls as rain and gets collected in the catchment, and because of the height of the embankment, the opportunity to produce hydro-electric power also presents itself.

‘There are no free lunches. We must be mindful of the risks of developing large scale projects.’

‘That makes it a unique storage facility in our assessment in being able to store not only tailings, mining waste and water but it can generate a return in terms of hydro electricity.’

World scale deposit

Hess said the project is of national significance, describing it as a ‘world scale deposit’ that is in the top 10 undeveloped copper deposits in the world. He said it will create many jobs for locals, but he warned that there are challenges.

‘There are no free lunches. We must be mindful of the risks of developing large scale projects. Frieda River has substantial logistical challenges. It is inland; there are no roads.

‘It is ‘crucial not to jeopardise the livelihoods and environment for all those people downstream.’

‘For access to the site for the main logistics required you go up the Sepik River for 600 kilometres and then you need a road for another 100 kilometres, up to the actual mine site.

‘If you look at the terrain, it is relatively mountainous and it has a high level of rainfall all year round. That makes a challenging environment in terms of building stable structures and just undertaking the whole construction effort.’

Hess added that downstream of the project is ‘some 30,000 people who are very mindful and watchful of what is happening upstream’. He said it is ‘crucial not to jeopardise the livelihoods and environment for all those people downstream.’


Hess said there are no port facilities capable of supporting the mine and no electricity grid. ‘There are no roads. We are significantly infrastructure-challenged in this location. That challenge represents an additional capital burden to the project.

‘When making an investment that is multi-billion dollar, you want to have confidence over those multiple political cycles that the policy environment will remain constant.’

‘Over the last four or five years there has been a significant decline in the price of copper and that represents a significant challenge to making an investment decision. Notwithstanding the recent jump, it still represents a long term challenge. What will the copper price be in order to support an investment decision?

‘The other major risk we face is the policy environment in which we invest. This project, to generate a return, will probably take at least two political cycles in PNG and to actually realise the benefits of those returns, many more political cycles.

‘When making an investment that is multi-billion dollar, you want to have confidence over those multiple political cycles that the policy environment will remain constant, support investment decisions and underpin confidence that we are doing the right thing by investing in PNG and not some other jurisdiction.’


Hess added that the potential rewards are substantial, balancing the risk. He said the existing resource base of 2.5 billion tonnes of ore is ‘not closed off’ and that there are further opportunities.

‘We have a lot of confidence in developing the project. But I want to make it clear that we have to overcome a number of challenges.’

PanAust [owned by GRAM] controls 80% of the Freida River project, with Highlands Pacific the remaining 20%. As with all mining projects in PNG, the State has the option to buy in to up to 30% of the project prior to the granting 0f a special mining lease. PanAust applied for a Special Mining Lease in June 2016.

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Tibetans in anguish as Chinese mines pollute their sacred grasslands

Landscape along the road from Xining to Yushu in Qinghai province. (Giulia Marchi/For The Washington Post)

Landscape along the road from Xining to Yushu in Qinghai province. (Giulia Marchi/For The Washington Post)

With the Chinese expanding their mining interests in Papua New Guinea, is the pollution and desecration being suffered in Tibet a foretaste of the anguish to come in PNG? 

Simon Denyer | Washington Post | December 26 2016

High in western China’s Sichuan province, in the shadow of holy mountains, the Liqi River flows through a lush, grassy valley dotted with grazing yaks, small Tibetan villages and a Buddhist temple. But there’s ­poison here.

A large lithium mine not only desecrates the sacred grasslands, villagers say, but spawns deadly pollution. The river used to be full of fish. Today, there are hardly any. Hundreds of yaks, the villagers say, have died in the past few years after drinking river water.

China’s thirst for mineral ­resources — and its desire to exploit the rich deposits under the Tibetan plateau — have spread ­environmental pollution and ­anguish for many of the herders whose ancestors lived here for thousands of years.

The land they worship is under assault, and their way of life is threatened without their consent, the herders say.

“Old people, we see the mines and we cry,” a 67-year-old yak herder said, requesting anonymity for fear of retribution. “What are the future generations going to do? How are they going to survive?”

A local environmentalist, who also declined to be named to avoid backlash from the authorities, said he had done an oral survey of local opinion and found that Tibetans would oppose mining projects even if companies promised to share profits with local communities, to fill in mines after they were exhausted, and to return sites to their natural state.

“God is in the mountains and the rivers, these are the places that spirits live,” he said. “When mining comes and the grassland is dug up, people believe worse disasters will come. It destroys the mountain god.”

Salt deposits at the Jiajika lithium mine in Tagong township in China’s western Sichuan province, seen in August. Local herders have protested at least twice against the mine, saying it has polluted the Liqi River and killed fish and yaks downstream. (Simon Denyer/The Washington Post)

Salt deposits at the Jiajika lithium mine in Tagong township in China’s western Sichuan province, seen in August. Local herders have protested at least twice against the mine, saying it has polluted the Liqi River and killed fish and yaks downstream. (Simon Denyer/The Washington Post)

‘We just knew they had lied’

It was in 2009 that toxic chemicals from the Ganzizhou Rongda Lithium mine first leaked into the river, locals say, killing their livestock and poisoning the fish.

“The whole river stank, and it was full of dead yaks and dead fish,” said one man downstream in the village of Balang, who declined to be named for fear of retribution. Another pollution outbreak and a protest by villagers in 2013 forced the government to order production temporarily stopped, locals said.

“Then ... officials came to the village to try to persuade people,” the man said. “They said we have to have the mine but promised they would take time to fix the pollution problem before reopening it.”

But in April, just after mining restarted, fish began dying again, ­locals said. “That’s when we just knew they had lied,” the man said.

In May, residents staged a second protest, scattering dead fish on a road in the nearby town of Tagong. The protesters were surrounded by dozens of baton-wielding riot police. Again the government stepped in, issuing a statement to “solemnly” promise that the plant would not reopen until the “environmental issues” were solved.

But the problem at the Jiajika mine is not an isolated one. Across Tibetan parts of China, protests regularly erupt against mineral extraction, according to a 2015 report by Tibet Watch.


China is focused on copper and gold extraction from Tibet but is also exploiting a whole range of minerals “with increasing intensity,” including chromium, iron, lithium, iron, mercury, uranium and zinc — as well as fossil fuels such as coal, oil and natural gas, the report said.

Although China boasts of its ­development work in western ­regions where Tibetans live — hauling millions out of poverty and nearly doubling life expectancy over the past five decades — the report argued that much of the transport and other infrastructure in the region is aimed at extracting minerals rather than benefiting residents. Projects usually import workers from other parts of China, seldom employing Tibetans in significant numbers.

When protests break out, ­China’s response “has generally been heavy-handed,” with authorities seeking to politicize the protests, Tibet Watch wrote.

Understanding those risks, ­Tibetan communities sometimes use creative ways to get their message across.

When hundreds of people gathered in August 2013 in Zadoi county in Qinghai province to protest against mining on what they considered to be a holy mountain, they flew Chinese flags to demonstrate their loyalty to the state and erected posters and placards quoting President Xi Jinping’s words on the need to balance economic growth and environmental protection.

It didn’t help. Police and paramilitary forces arrived in large numbers and fired bullets above the crowd, according to campaigners at Free Tibet. The group said eight people were arrested and many more injured.

A camp at a lead and zinc mine in the high-altitude village of Xingniangda in the southern part of Qinghai province. Only Han Chinese work there. (Giulia Marchi/For The Washington Post)

A camp at a lead and zinc mine in the high-altitude village of Xingniangda in the southern part of Qinghai province. Only Han Chinese work there. (Giulia Marchi/For The Washington Post)

In the villages outside Xiaosumang township in Qinghai, residents blame a lead and zinc mine for the deterioration of the grasslands for miles around, and even for falling harvests of caterpillar fungus, a highly prized health cure that is the backbone of the local economy.

Contaminated water from the mine, residents said in a joint letter to the authorities in 2010, not only killed their livestock but also caused people who drank it to die of cancer, they said.

“Over the years, many herders would sigh and say: ‘Life can’t go on like this anymore. Even drinking has become a big issue for people living on the grasslands,’” the letter said.

A May 2009 protest in the village of Xizha prompted a severe crackdown, the letter said, with guns and tear gas used, seven women severely beaten, and 12 men blindfolded, detained and tortured.

Authorities threatened to cancel poverty-alleviation grants, including income and housing subsidies, if anyone in the region brought up the issue of environmental protection again, the letter said, adding that the crackdown “caused great fear to spread in our hearts.”

Whether the mine is truly the culprit for all the grasslands’ ills is another matter — climate change, for example, is probably an important factor. But that doesn’t soothe local anger.

“When I was young, there was more grass, more flowers, it was really beautiful here,” said a 27-year-old man in a valley downstream from the lead and zinc mine. “Now you see it’s less beautiful every year. People see all this and they are not really sure what happened, so they think it must be the mine.”

A woman washes clothes near the Jiajika lithium mine in Tagong township in China’s western Sichuan province. Local say the mine has polluted the Liqi River and killed fish and yaks. (Simon Denyer/The Washington Post)

A woman washes clothes near the Jiajika lithium mine in Tagong township in China’s western Sichuan province. Local say the mine has polluted the Liqi River and killed fish and yaks. (Simon Denyer/The Washington Post)

A conflict without end

In Jiajika, 300 miles to the southeast, the commercial pressure to reopen the lithium mine is mounting. The element is a vital component in rechargeable batteries used in cars, smartphones, laptops and other electronic and electrical items. Demand — and prices — are skyrocketing.

Last January, Youngy Co. Ltd., the parent company of Ganzizhou Rongda Lithium, promised investors that the local government would step up efforts to reopen the mine in March.

That same month, an article in the local Ganzi Daily newspaper outlined the authorities’ dream of making the area “China’s lithium capital,” calling Jiajika the biggest lithium mine in the world with proven reserves of 1.89 million metric tons and even greater ­potential. Three companies, including Rongda, will invest 3.4 billion yuan ($510 million) in the site by 2020, the article said.

He Chengkun, Youngy’s media officer, said an official investigation had established that the plant was not responsible for killing fish in 2013 or this year.

“The local government has made it clear it is nothing to do with our company,” he said. “They are looking into it and have already zoomed in on some suspects.”

He said the plant has been closed since late 2013 because of problems relating to land acquisition and denied that it had restarted operations in April, as locals claimed.

Nevertheless, across the Tibetan plateau, resource extraction, land grabs and environmental destruction remain flash points for conflict between Tibetans and the authorities, said Free Tibet Director Eleanor Byrne-Rosengren, reflecting both local grievances and the wider problem that Tibetans do not have the right to decide what happens to Tibet and its resources.

“Those resources feed the demands of Chinese industry instead of the needs of the Tibetan people,” she said. “That is why their environment is put at risk and their rights are trampled upon, and why we can expect to see this conflict played out repeatedly in the future.”

Xu Yanjingjing contributed to this report.

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Papua New Guinea’s oil and gas boom – blessing or curse?


Resource extraction projects in Papua New Guinea have a decidedly mixed history. Will things be different this time around?

  • A deadly conflict is currently raging in Hela Province, home to the country’s largest gas project – the conflict does not directly relate to the gas plant there, but some fear the facility could be targeted.
  • After a bidding war between multinationals, plans are moving forward to begin exploration of additional offshore gas fields.
  • Despite its wealth of natural resources, Papua New Guinea remains one of the poorest countries in the world. Analysts say it is a classic example of the “resource curse” – a country where rich resources are associated with low levels of democracy and overall economic development.

David Hutt | Mongabay | 22 December 2016

Papua New Guinea announced last week that it is deploying its military to quell violence in Hela Province, home to the country’s largest oil and gas project.  Tribal conflict in the area has turned deadly this month, raising concerns about human rights and public safety as well as the potential impact on the operations of the PNG LNG (liquefied natural gas) project, operated by ExxonMobil.

The company is not directly implicated in the conflict. However, Prime Minister Peter O’Neill told Australia’s ABC news service the government would ask ExxonMobil and Australia’s Oil Search, a partner in the PNG LNG project, to provide logistical support to boost the security operation. The plant has also been a recent target of anger in the highlands. In August, local landowners blockaded roads leading to a natural gas facility in Central Province, demanding delayed royalty payments. This month, with tension mounting in the area, landowners reportedly threatened violence against the plant if a promised equity deal falls through.

Papua New Guinea is a country in transition. Perhaps best known for lost tribes and uncharted land, today PNG is hurtling into the 21st century – a shift that is clearly causing more than a few growing pains. While its past remains an integral part of its present, many of the country’s leaders are hopeful its abundant natural resources will provide the funds necessary for PNG to become a modern and prosperous state. The conflict currently raging in the highlands demonstrates the pitfalls of this process.

Customary landowner Auwagi Sekapiya of the Ubei Clan, Kosuo tribe. Photographed here in 2003 in front of a bulldozer, he was angry that a logging road destroyed his sago swamp. Photo courtesy of Sandy Scheltema/Greenpeace.

Customary landowner Auwagi Sekapiya of the Ubei Clan, Kosuo tribe. Photographed here in 2003 in front of a bulldozer, he was angry that a logging road destroyed his sago swamp. Photo courtesy of Sandy Scheltema/Greenpeace.

For decades, the mining of gold, copper and other minerals has been the mainstay of PNG’s extractive economy. More recently, oil and gas have become some of country’s most important exports.

In September, both the American oil giant Exxon Mobil and  Oil Search bought 40 percent shares in two separate offshore explorations permits in the Gulf of Papua. Peter Botten, managing director of Oil Search, said the maritime area, almost 150 kilometers (93 miles) off the capital Port Moresby, has “significant gas potential.” The purchase followed a bidding war between Exxon Mobil and Oil Search for shares in InterOil, a Singapore-Papua New Guinea company that offers investors a way into the Elk-Antelope gas field, believed to be one of the largest untapped gas deposits in Asia. The bidding war, which included France’s Total part-funding Oil Search’s bid, was credited by analysts as a sign of companies’ faith in improving international oil and gas prices and Papua New Guinea’s importance for the industry.

The potential profits from oil and gas extraction are enormous, but extracting it poses risks to the environment. “Like other forms of resource [extraction] in Papua New Guinea, oil and gas extraction is promoted as a model of development,” said Natalie Lowrey, Communications Coordinator for the Deep  Sea Mining Campaign. “But, as has been seen with large scale mining, logging and palm oil, there is the ongoing concern that it provides very little financial benefit for ordinary people as well as environmental destruction.”

River in the rainforest near Mt. Bosavi. New Guinea’s rainforests are the third-largest in the world. Photo courtesy of Markus Mauthe/Greenpeace.

River in the rainforest near Mt. Bosavi. New Guinea’s rainforests are the third-largest in the world. Photo courtesy of Markus Mauthe/Greenpeace.

According to conservation biologist Richard Steiner, the risks could be “very high,” particularly for offshore extraction. “Oil is a very toxic substance, and if or when it is spilled, it can cause long-term, even permanent ecological harm, as with the 1989 Exxon Valdez spill in Alaska,” he told Mongabay.  A number of spills have already occurred in waters of Papua New Guinea. In August 1993, Oil Search, a major player in oil and gas in PNG, caused a spill, although it initially denied such an event took place; it was only the work of local media that forced the company to admit to the spill three months later. Then, in 2012, Oil Search once again announced that a spill had taken place, though described it to the press as only a “minor incident” of a “small number of oil droplets.”

Even if nothing goes wrong, developing PNG’s petroleum industry will inevitably have a huge environmental impact. “Exploration and extraction of oil and gas will bring mass amounts of infrastructure, like pipelines and shipping, potentially resulting in land clearing,” Lowrey says. Take, for example, ExxonMobil’s PNG LNG Project, which began production in 2014.  The project sources gas from seven fields across the country, most onshore. Gas is transferred by a 407-kilometer-long (253 miles) subsea pipeline and a 292 kilometer (181 mile) onshore pipeline to two production facilities, where the gas is liquefied before being loaded onto ocean-going tankers that are then shipped across the region. As part of this project, the following had to be built: nine new wells in one onshore field; a new airstrip for the delivery of heavy duty machinery; more than 700 kilometers (435 miles) of pipeline; and the expansion of the docks for transport. And this was only a fraction of the infrastructure needed for the project.

Others are more concerned about the potential social impacts of such projects. “There is comparatively minimal environmental impacts, mainly due to the innovative construction of underground pipelines by Chevron in the early 1990s. Compared to mining, the footprint is small,” Emma Gilberthorpe, a Senior Lecturer at the University of East Anglia’s School of International Development, told Mongabay. “However, the social impacts are enormous, mainly initiated by the influence of cash royalties and conflicts over ownership.”

Women crossing a river on the way to Mt. Bosavi in Southern Highlands Province. Photo courtesy of Markus Mauthe/Greenpeace.

Women crossing a river on the way to Mt. Bosavi in Southern Highlands Province. Photo courtesy of Markus Mauthe/Greenpeace.

In a 2007, essay titled Fasu Solidarity: A Case Study of Kin Networks, Land Tenure, and Oil Extraction in Kutubu, Papua New Guinea Gilberthorpe explored the impacts of the country’s first commercial oil field development, located in the southern highlands. The use of cash royalties and “the imposition of centralized judicial constructs of corporate landholding groups” radically altered the traditional, social interactions between kin groups and communities. “Males are becoming isolated from pre-oil exchange networks, and females are becoming isolated within villages,” she wrote. More recently, the protests in Central Province show the potential for social unrest when expectations about cash royalties go unmet.

The extraction the country’s abundant resources, especially oil and gas, was supposed to transform the country and its economy. But it hasn’t, writes Charles Yala, Director of the National Research Institute, a local think tank: “The petro-oil-gas dollars [are] disappearing into thin air, leaving behind an impoverished nation,” he wrote in Business Advantage PNG. Despite the wealth the industry has created, Yala says the economic situation remains dire: getting to and from the country remains difficult and costly; accommodation can be more expensive than in most Southeast Asian capitals; internet access is poor; electricity supply is scant; and the government does not do enough to allow smaller businesses to prosper.

Even people in government admit that oil and gas revenue won’t solve all of the country’s problems. In June 2015, Finance Minister James Marape announced that the importance of Liquefied natural gas (LNG) to the economy was a “myth.” He added: “We are clouding our vision thinking that LNG is a waterfall of money. It is how we maximize use of all the resources in this country that will unlock our development potential.”

A tree kangaroo, one of the many incredibly rare species living in PNG’s lowland forests. Pictured here at the Melbourne zoo. Photo courtesy of Tom Jefferson/Greenpeace.

A tree kangaroo, one of the many incredibly rare species living in PNG’s lowland forests. Pictured here at the Melbourne zoo. Photo courtesy of Tom Jefferson/Greenpeace.

In October, an analysis by Development Policy Center, a  think tank ran out of the Australian National University, estimated that while PNG’s mineral exports in the first quarter of 2015 were worth $1.6 billion,  government revenue for this sector amounted to just $8 million, or roughly 0.5 percent of the total value. Some of this, the article noted, was likely due to a lag in between exports being made and taxes on them being paid, as well as changes in how the state receives its share of the sector’s profits.  Nevertheless, it concluded that “what the numbers illustrate most clearly are the effects of price volatility in the sector, and the subsequent, highly uneven returns to the government.” This volatility make it “extremely difficult for governments to manage these flows effectively, and makes strategic development planning difficult,” the report noted.

“In this regard, and others, Papua New Guinea certainly exhibits many of the classic markers of the ‘curse’,” the paper noted – referring to the theory that countries possessing an abundance of natural resources tend to have less democracy, less economic growth and worse overall development than countries without such resources. While not universal, the paradox of the “resource curse” has been found in countries across the world, particularly those without a history of good governance.

In an effort to sustainably manage the money derived from oil and gas, the prospect of creating a sovereign wealth fund has been on the table since 2011. It finally came into law in July 2015, was scheduled to come into operation this year – reports now point to a 2017 launch date. Many oil-rich countries have developed such ways of re-investing oil and gas profits for long-term profit, with Norway leading the way with a fund worth almost $890 billion, making every Norwegian a millionaire, in theory. (Norway has also helped other countries develop their own funds, including Papua New Guinea’s neighbor, Timor-Leste.)

Papua New Guinea’s fund will be split into three sections, according to an interview with the High Commissioner of Papua New Guinea to Australia, Charles Lepani. The Future Generation Fund is intended to put aside money for the decades to come; the Infrastructure Fund to revitalize what is needed today; and the Budget Stabilization Fund to support the country’s growing budget.

A mountain hut in the highlands of Papua New Guinea. Photo courtesy of Markus Mauthe/Greenpeace.

A mountain hut in the highlands of Papua New Guinea. Photo courtesy of Markus Mauthe/Greenpeace.

Again, there is a concern that its sovereign wealth fund might itself become another curse. In Timor-Leste, analysts have spoken of the government’s overuse of the fund to boost the state budget, which could lead to it being empty within a decade. Experts have warned that politicians in Papua New Guinea must provide accountability and expertise when managing the fund, so money for future generations is not wasted. The biggest task for future governments will be tackle corruption in the face of a slosh of new petrodollars. Transparency International’s latest index on corruption perception, in 2015, put Papua New Guinea 139th out of 168 countries. Without effectively tackling this endemic practice, the money available for necessary social projects and infrastructure development could slip away from the state’s coffers.

Another concern is that politicians look to the oil and gas industry, as the sovereign wealth fund, as a silver-bullet, and fails to plan for a future of less dependency on natural resources. When asked if the oil and gas sector could sustain the economy of Papua New Guinea, Gilberthorpe responded that it couldn’t on its own. “And not sustainably. Without a diversified economy Papua New Guinea is putting itself in the firing line of the resource curse,” she said. “The country needs to develop beyond natural resource extraction to more sustainable forms of economic development if it is to have a sustained economic growth.”

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Shedding PNG blood for corporate interest – didn’t we learn?

Bougainville ... "A crisis that could have been avoided, saving many lives and preventing the destruction of a people and their future had the Papua New Guinea government exercised restraint. Image: Gary Juffa/File

Bougainville … “A crisis that could have been avoided, saving many lives and preventing the destruction of a people and their future had the Papua New Guinea government exercised restraint”. Image: Gary Juffa/File

Gary Juffa | December 22, 2016

The deployment of military troops to Hela province is reminiscent of tragic events that unfolded about 28 years ago that sparked off a crisis and left more then 20,000 Papua New Guineans dead.

When Bougainvilleans decried the unfair treatment of landowners, pollution and lack of the government’s care for fairness and future, the government reacted by sending Mobile Force troops. Their brutal effort at reprisal triggered off one of the bloodiest moments in Papua New Guinea’s short history as an independent nation.

It is to be forever known as the Bougainville Crisis.

A crisis that could have been avoided, saving many lives and preventing the destruction of a people and their future had the government exercised restraint.

Instead, the Bougainville Crisis saw our blood shed for corporate interest in a bloody 10-year struggle.

We are still rebuilding, still recovering.

Will things ever return to normal? Who knows. We can only hope.

Fundamental lesson

The fundamental lesson from that terrible period for Papua New Guinea should be that such confrontations should be avoided as much as possible, and peaceful options be exhausted first and that human consideration supersede corporate interest.

Diplomacy and tact and traditional means of conflict resolution must be exhausted before any such decision is even considered.

Even then there are a variety of possible meditation platforms such as having third party negotiators and international organisations be considered to broker a peaceful way forward.

Some 300 shipments of liquefied natural gas (LNG) have left our shores with not a single toea returning to landowners. Of course there is bitterness and a sense of anxiety and much concern as to whether they will see any benefit at all.

What are the possible outcomes of the troop deployment?

Do the benefits justify the effort?

All it will take is one mistake that may result in injury or death and we will have another crisis on our hands.

And Hela has the grave potential to be far worse then Bougainville…no doubt foreign intervention would be on the cards.

I hope common sense prevails and we find peaceful resolutions and not the kind of use of force that may lead to regrettable events in the future.


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‘Casper octopod under threat from deep sea mining’

The "Casper" octopod was spotted last year

The “Casper” octopod was spotted last year

Helen Briggs | BBC News | 19 December 2016

A deep sea octopod, dubbed “Casper” after the film ghost because of its appearance, could be at risk from mining, scientists say.

The animal, possibly a new species, was discovered last spring at depths of more than 4,000 metres (2.5 miles).

Studies suggest females nurture their eggs for several years on parts of the seabed that contain valuable metals.

Commercial companies are interested in harvesting metals and minerals from the bottom of the ocean.

There are growing concerns about the future impact of mining on life in the deep sea, much of which has yet to be discovered and categorised.

The octopus lays its eggs on the dead stalks of sponges, attached to rocky crusts which are rich in metals like manganese.

The female then protects the eggs as they grow, perhaps for a number of years.

“The brooding observation is important as these sponges only grow in some areas on small, hard nodules or rocky crusts of interest to mining companies because of the metal they contain,” said Autun Purser, of the Alfred Wegener Institute’s Helmholtz Centre for Polar and Marine Research in Germany.

“The removal of these nodules may therefore put the lifecycle of these octopods at risk.”

The “Casper” octopod was spotted last year by the camera of a submersible vessel remotely operated by NOAA off Necker Island near Hawaii.

A type of octopus without fins, it crawls along the seafloor.

Jon Copley of the University of Southampton, who is not connected with the new research, said the record for octopus mothers keeping vigil over their eggs is four years, by another deep-sea species in the Pacific.

If this species is similar, then it could be particularly vulnerable to disturbance by deep-sea mining, he said.

“This discovery shows how we need far greater understanding of fundamental ecology – and far greater knowledge of the natural history of individual species – in deep-sea environments being targeted for future mining, before its potential impacts can really be assessed,” Dr Copley told BBC News.

Metal-rich deposits

The German and US researchers investigated deep sea environments using remotely operated vehicles, and towed camera surveys, between 2011 and 2016.

They observed 29 octopods from two distinct species on the bottom of the Pacific Ocean off the Hawaiian Archipelago and in part of the Peru Basin.

Two octopods were seen to be brooding clutches of eggs that were laid on stalks of dead sponges, which require manganese to grow and stay attached to these rocky crusts or nodules.

“These nodules look a bit like a potato, and are made up of rings of different shells of metal-rich layers,” said Dr Purser.

“They are interesting to companies as many of the metals contained are “high-tech” metals, useful in producing mobile phones and other modern computing equipment, and most of the land sources of these metals have already been found and are becoming more expensive to buy.”

The scientists say the future of octopods and other animals, large and small, must be considered when managing “commercially attractive, yet bio-diverse and poorly understood deep sea ecosystems”.

The research is published in the journal, Current Biology.

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MRA says government policy welcomes coal mining


Mayur yet to submit application for lease

Rosalyn Albaniel | Post Courier | December 21,2016

MINERAL Resources Authority (MRA) says no application has been made for a mining lease for coal to date.

However, it says mining for this mineral is permissible under the government’s open policy on minerals, exploration and development.

MRA was responding to questions put to it by the Post-Courier on government’s policy on coal and the likely implications that it may be contrary to the climate change agreements PNG has signed.

This is in light of announcements by Australian based Mayer Resources of their intention to mine coal in the Gulf Province for the power plants they are proposing to build in Lae, Madang and Port Moresby.

“Obviously MRA cannot comment on matters it is not involved in such as PNG’s international and other treaty commitments-that is a matter for those familiar with those arrangements.

“Let me be very clear the MRA has not received any contrary instructions from government on the development of coal mines. Until and unless we do, we continue to maintain the government’s open policy on minerals (including coal) exploration and development,” MRA managing director Philip Samar told the Post-Courier.

Mr Samar said from the outset while there had been some exploration, no mining lease had been granted as yet, adding that any such application would require an environmental permit issued by the Conservation and Environmental Protection Authority (CEPA).

“Part of CEPA’s assessment would include the matters being raised about environmental concerns over coal.

“Mayur Resources, Waterford and Pacific Mining Partners are some of a number of companies who have been exploring for coal in PNG for a number of years. Waterford recently presented a report on PNG coal potential, based on its findings to date,” he said.

He said exploration licenses are valid for two years and may be renewed, provided the tenement holder has been compliant with the license terms and performed its work program.

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Papua New Guinea troops to protect huge Exxon-Mobil gas project


John Braddock  | World Socialist Web Site | 19 December 2016

The Papua New Guinea (PNG) government announced on Friday that it will deploy military personnel to stop “violence” near the country’s biggest resources installation, the Exxon-Mobil Liquefied Natural Gas (LNG) project.

Troops will be sent to Hela Province in the highlands where the authorities claim dozens of people have died in tribal conflict in recent months. Prime Minister Peter O’Neill said the military call-out would last six months, beyond national elections due next year. The government is asking Exxon-Mobil and Oil Search—the two main companies involved in the LNG project—for “logistical support” for the operation.

O’Neill said the military would work with police to conduct security operations. He stated: “These problems have the potential to impact on the upcoming election as well as the operation of important projects in the area…. Police will have full powers to ensure law and order and to deal with people who seek to cause trouble.”

According to the PNG Post-Courier, the deployment will address the “continuous and sporadic tribal fights fueled by the use of heavy firearms.” Finance Minister James Marape, whose electorate is affected, had pushed for an official state of emergency to be declared. This would provide extended powers to the police and the military to suppress what Marape called the “gun-toting cowboys of Hela.” The declaration was not made only because of the time required for parliamentary approval.

The security and viability of the ExxonMobil operation is a key concern in Washington. In November 2010, then US Secretary of State Hillary Clinton visited PNG and noted that the US Export-Import Bank was helping finance the ExxonMobil project. Speaking to a Congressional committee in 2011, she declared: “Let’s put aside the moral, humanitarian, do-good side of what we believe in, and let’s just talk, you know, straight realpolitik. We are in a competition with China … ExxonMobil is producing it [natural gas]. China is in there every day in every way trying to figure out how it’s going to come in behind us, come in under us.”

Exxon-Mobil’s former chairman, Rex Tillerson, has been nominated as US secretary of state by President-elect Donald Trump. If ratified by the Senate, Tillerson would be directing Washington’s foreign policy, including in countries where ExxonMobil has commercial interests. O’Neill has welcomed Tillerson’s nomination, describing him as a “very good and genuine friend” of PNG.

The explosive situation in Hela Province points to deepening social tensions and anti-establishment sentiment as a result of the government’s sweeping austerity measures. In October, five Electoral Commission officials were attacked while on their way to replace an election manager in the Southern Highlands. Last month, two men were shot dead when the Hela provincial governor’s convoy, which included two members of parliament, was stopped by armed men. Police responded by burning houses and gardens in a purported attempt to flush out those responsible.

The National lamented in May that Hela had become a “troublesome province.” Its development and prosperity had “looked secured by the multi-billion kina LNG project.” Despite the money pouring into the district, the paper complained, not a week went by “without police reports of tribal fights, murders, sorcery-related killings and other lawless activities.”

None of the promised benefits from the LNG projects to improve ordinary people’s living standards has been realised. ExxonMobil invested heavily in PNG chiefly to profit from low labour and start-up costs. The company began shipping exports to Asian markets two years ago, delivering a boost to the country’s output. This year, however, the deepening global economic crisis has produced a precipitous drop in LNG prices to $US6.45 per million British thermal units (Btu) from a peak of $19.70 in 2014.

Traditional landowners are now threatening to physically attack the LNG plant over the government’s failure to pay promised royalties and equity in the project. The landowners are owed $1 billion kina ($A400 million) in royalties.

In August landowners blockaded the ExxonMobil plant in protest at the lack of payments, disrupting the flow of gas. The government deployed 60 police as the dispute threatened to erupt into another major crisis. This followed the violent suppression of an eight-week student strike calling for O’Neill’s resignation over corruption charges and a series of unofficial strikes by sections of workers.

The government finally promised to meet its outstanding financial commitments to the landowners, but is now claiming the money has been held up by court proceedings and delays in landowner identification. Australian National University student Michael Main, who is studying in the area, told ABC News that people are getting sick of waiting for the payments.

“There’s tremendous resentment and frustration directed almost exclusively towards politicians,” he said.

The landowners are also threatening to create “chaos” if the government does not honour another deal to give them equity. The government-owned company Kumul Petroleum Holdings has withdrawn an offer to finance the landowners’ purchase of 4.27 percent of the LNG project. The landowners need to find more than $US1 billion to buy the equity before their option expires at the end of 2016.

The turmoil in Hela is symptomatic of the country’s worsening economic and social crisis. The government’s 2017 budget, handed down in November, contained a 3.5 percent spending cut and a two-year pay freeze for public servants. Under new housing-benefits tax proposals, workers living in company-provided housing could lose more than half of their fortnightly salary from next year.

The assault on living standards has fuelled a series of struggles by students and sections of the working class, including doctors, nurses, pilots and dock workers. Two thousand health support workers voted overwhelming in November to strike for three weeks over pay and working conditions. Last week, bus drivers in Port Moresby struck over the death of a driver who was allegedly beaten by police officers. The ruling elite is relying on the trade unions to suppress this movement and shut down strikes.

O’Neill has responded to the escalating social disaster and emerging opposition with preparations for further repression. After a National Security Advisory Council meeting in July, a new National Security Joint Task Force, including police and military personnel, was established to “quell increasing internal security threats.” The deployment of troops to protect the ExxonMobil LNG site is another step in this agenda.


Filed under Financial returns, Human rights, Papua New Guinea

Chan calls for changes to PNG Mining Act before polls

Governor of PNG's New Ireland Province, Julius Chan. Photo: RNZI/ Peter Kinjap

Governor of PNG’s New Ireland Province, Julius Chan. Photo: RNZI/ Peter Kinjap

The Governor of Papua New Guinea’s New Ireland province has come out in support of calls for changes to the Mining Act before next year’s elections.

Sir Julius Chan, who is a former PNG prime minister, said he backs statements by Hidden Valley’s Nakuwi Landowner’s Association that citizens should have more ownership of mineral extraction operations.

The association is frustrated at long delays to a revised agreement regarding the Newcrest’s Hidden Valley mine in Morobe province that would guarantee landowners and local communities more benefits.

In recent years elements of the government have indicated the Mining Act could be modified to give landowners more control of the wealth from mining.

However, speaking at this month’s PNG Mining and Petroleum Investment Conference in Sydney, the prime minister Peter O’Neill ruled out any changes to the Act before the 2017 elections.

The Mining minister Byron Chan echoed this.

But Mr Chan’s father, Sir Julius, said PNG people have suffered for too long under a Mining Act that literally steals the wealth from their land.

He said that the level of royalties which mining companies pay in PNG compared to overseas “completely screws the landowners and provinces”.

“Our people are getting almost nothing from the huge amount of wealth coming from their ground,” he complained. “It all goes to the company and the National Government, and none of it comes back to the people.”

Sir Julius criticised the O’Neill government for reneging on various promises made to him in return for his party’s support for the formation of the coalition in 2012.

This included commitments on renegotiating the Memorandum of Agreement for the Lihir Gold Mine in New Ireland.

“Government has dragged its feet for literally four years, ever since 2012 when the MoA came up for the regular five-year review,” he explained.

“National Government should be protecting the rights and the interests of the landowners and people, but instead it just delays and acts as the stooge for the Mining companies. This has to stop “

The New Ireland governor said his administration fully supported the Nakuwi Landowners in their intent to shut down the Hidden Valley Mine unless government signs a new MoA.

Sir Julius said it is time for Mining Provinces and landowners to come together to insist on a fair deal from the great wealth that is coming out of their land.

“I think we need to sit down together and come to agreement on how we want the entire mining regime, the entire mining system, to work.”


Filed under Financial returns, Papua New Guinea