Monthly Archives: November 2018

Nautilus Solwara 1 on the verge of bankruptcy as APEC Summit heads to Papua New Guinea

On 17-18 November, 21 heads of state will come to Port Moresby for the Asia-Pacific Economic Cooperation (APEC) summit. Set against a backdrop of debts and a declining economy the Nautilus Solwara 1 project speaks volume to another PNG Government failed investment that will be a further economic burden to the country.

Sir Arnold Amet, former Papua New Guinean Attorney General and Minister for Justice Papua New Guinea, “Nautilus is propped up by USD 15 million in loans from its two major shareholders, it’s been forced to reduce its workforce and to terminate contracts for the construction of equipment.”[1]

“Even the production support vessel crucial to Nautilus operations has had to be shelved due to failure to pay the shipyard constructing it.[1] And Nautilus is now virtually worthless with its shares at a new record low of less than 10 cents each.”[3]

Canadian company Nautilus is still desperately seeking funds for its flagship Solwara 1 deep sea mining project. Commercial operation has been delayed year after year since it received its licence to mine the floor of the Bismarck sea in 2011. In a last-ditch bid to finance Solwara 1, Nautilus’s two largest shareholders, Russian mining company Metalloinvest and Omani conglomerate MB Holdings, have formed a new company whose sole job is to secure funding for the Solwara 1 project [4]. However, their attempts have failed. 

Sir Amet continued, “Nautilus is due to repay the USD 15 million loans to Metalloinvest and MB Holdings on 8 January. How will it achieve this? There’s no likelihood of production starting until the end of 2019 or even later.”

“I’m really worried that the PNG Government invested heavily to purchase 15% of a company that will be a burden to our economy. Our country’s over-extended finances may have to contend with a 15% stake in Nautilus’ bankruptcy.”

Sir Amet emphasised, “Wiser investors such as Anglo American and Loews Corporation got rid of their shares early this year to reduce their exposure to risk[5]. The PNG Government should terminate its contract with Nautilus now before it sacrifices even more of our nation’s funds.”   

“In light of PNG hosting the APEC Summit at the end of this week it is important to highlight risky commercial ventures such as Nautilus Solwara 1 project that have used scarce public funds over environmental safeguards, regulatory frameworks and the livelihoods of our coastal peoples.”

________________________________________________________

Notes

[1] Management Discussion and Analysis of Financial Condition and Results of Operations, Nautilus Minerals, 10 August 2018 http://www.nautilusminerals.com/irm/PDF/2056_0/MDAfortheperiodendedJune302018

[2] ‘Nautilus notified of rescission of shipbuilding contract’, media release, Nautilus Minerals, 4 July 2018, http://www.nautilusminerals.com/irm/PDF/2049_0/Nautilusnotifiedofrescissionofshipbuildingcontract; ‘Nautilus Minerals tanks on shipbuilding contract cancellation’, Mining.com, 4 July 2018 http://www.mining.com/nautilus-minerals-tanks-shipbuilding-contract-cancellation/

[3] https://ramumine.wordpress.com/2018/11/05/nautilus-minerals-sets-new-1-year-low/

[4] Nautilus signs funding mandate with major shareholders, Nautilus Minerals press release, October 11 2017, http://www.nautilusminerals.com/irm/PDF/1929_0/Nautilussignsfundingmandatewithmajorshareholders

[5] ‘Anglo American to exit stake in deep sea mining company’, Financial Times, 5 May 2018 https://www.ft.com/content/ad58aee6-4fad-11e8-a7a9-37318e776bab

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Wafi-Golpu project expected in June 2019

Cedric Patjole | Loop PNG | November 11, 2018

Newcrest Limited expect the awarding of the Special Mining Lease for the Wafi-Golpu Project in June next year.

Speaking at the Company’s Investor Conference, Executive General Manager, Craig Jetson, said the project has a wonderful ore body and is project of national significance to PNG.

The Investor Conference was held ion Sydney, Australia, on October 26th .

Jetson said following the submission of the Environmental Impact Statement (EIS) in June this year, the company are working with the PNG Government to finalize the necessary agreements to be required to enable them to approve the Special Mining Lease (SML).

“One thing for sure is that Wafi-Golpu is project of national significance to PNG, so there is a lot of excitement in PNG about this project, and they see it as a big part of the economic development of the nation,” said Jetson.

“Right at the outset when we started working through the process of the permitting with the Government we established an agreed timeline that we’d work on towards getting those permits completed and that timeline see’s us having the permits before June next year.”

He said they were fortunate to work with such a wonderful ore body and its perfectly suited to the technology they have been developing over the last 10 years.

“The beauty of Wafi -Golpu is that we can take all those learning’s from Cadia and apply them to a brand new ore body and really take the next generation of our cave-in technology forward.

“So it’s a pretty exciting time for us, we are in the process of obtaining our permits from the Papua New Guinea government, once we get those permits the project is ready to go. So the project has been extensively studied over a long period of time, and it is project ready.”

The Wafi -Golpu Project is a joint venture between subsidiaries of Newcrest Mining Limited and Harmony Gold Mining Company Limited.

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Govt Concerned Over Delay On Review Of Mine Laws

The  Deputy PM needs to get his story straight. Last month he warned against rushing new mining projects saying ‘We want economic integration, but not economic exploitation’. ‘Papua New Guinea must make sure that integration takes place at a pace that allows local institutions, industry and local businesses to develop.’ If not, Abel said, ‘sophisticated financial and political capital’ will systematically dispossess the country’s natural resources and put them into the hands of foreigners’.

Now its seems he is happy to rush ahead with new mines regardless of the consequences for PNG and local communities…

Matthew Vari | Post Courier | November 8, 2018

Deputy Prime Minister Charles has expressed his concern over the prolonged review process of the proposed Mining Act amendments into the industry, citing a critical juncture in existing and new investment decisions in the sector.

He said while it is the prerogative of government to review laws, in this case 26 years since the 1992 Act was changed, he said government is aware of concerns from the mining industry which it shared as it keenly negotiates key projects such as the Wafi-Golpu Joint Venture Project.

“Governments have a responsibility to periodically review legislation based on experience,’’ Mr Abel said.

“Sufficed to say that this will be an ongoing consultative process, I know there have been concerns raised by the mining industry and we take them onboard.

“But I would hope that those issues don’t affect some of the projects that are imminent.

“People have made investment decisions and commitments based on the existing legislation and I would hope that we can negotiate those projects under the existing legislation and grandfather (exempt from requirements of new legislation affecting previous rights, privileges, or practices) them.’’

He said while the mining legislative review has been under way for a long time in relation to the proposed amendments when passed should cover prospectively rather than some of the projects that are imminent.

“I would hope that that review process does not interfere too much with some of the existing ongoing negotiations of the current projects under current licensing obligations,’’ he said.

“I don’t want to get bogged down in mining reviews and legislative reviews and good projects that are in hand that can benefit the country greatly under the existing legislation should not be delayed or investors shouldn’t be punished because of a protracted process reviewing legislation.”

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Saonu Raises Concerns On Wafi-Golpu Mining Lease

Post Courier | November 9, 2018

Morobe Governor Ginson Saonu has raised concerns on the pending signing of a special mining lease between the developer of the Wafi-Golpu mine in Morobe Province and the government during the APEC summit next week.

He cited sources from social media who had released a report saying there was already a memorandum of agreement in place, established by the Mining Act.

The issue was interrupted by a court case and the signing of the special mining lease is expected to take place in 2019.

Mr Saonu directed his concerns to the Prime Minister Peter O’Neill during question time in Parliament.

“Would you please confirm or deny, whether the government has agreed to sign a heads of agreement at the APEC Summit? Why was the Morobe provincial government and stakeholders not consulted?’’ Mr Saonu asked.

‘‘If the proposed signing of the heads of agreement is true, will you inform all the stakeholders landowners, state entities and the people of Morobe on what the agreement is all about?’’

He went on to ask the prime minister if it was still necessary to continue and complete the due process and what would be the legal consequences of abandoning the process.

In response Mr O’Neill said: “Mr Speaker our government has appointed a state negotiating team. Technical people from the Mining Department, Treasury, State Solicitors office and other government agencies are dealing directly with Wafi Golpu developers, particularly Newcrest and Harmony.

“They continue to discuss the way forward in continuing to develop this mine The negotiations are still in its early stages and there have been no briefings to cabinet or to the prime minister.

“I don’t see any mine development agreement being signed around APEC and certainly any agreement that needs to be signed will be in full consultation with Morobe provincial government and the people of Wau Bulolo particularly the landowners.”

Mr O’Neill said any understanding reached with the developer was about the program going forward.

‘‘There would not be any legally binding agreement but for the benefits of investors and potential financiers of the project, the government and its developers wants to give a clear position about its intentions to develop the mine,” he said.

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First $25,221 Distributed To 100 Landowners As ‘Fair Share’ Of Mineral Royalties In Vatukoula

Minister for Lands and Mineral Resources, Faiyaz Koya (middle) handed out cheques to 100 Nasomo landowners under the right of landowners to a fair share of mineral royalties. It came at Vatukoula on November 6, 2018. Photo: Charles Chambers

US$300 each a ‘fair share’ – really? 

Fiji Sun | 7 November 2018

Tis the season to be jolly.

Yesterday marked the day that the right of landowners to a fair share of mineral royalties for the extraction of minerals under their land comes to fruition.

Thanks to the Prime Minister Voreqe Bainimarama and his FijiFirst Government

It marks a milestone event not only for the landowners but also for the mining sector and also the Government of Fiji.

The Minister for Industry, Trade, Tourism, Lands and Mineral Resources Faiyaz Koya yesterday disbursed the fair share of mineral royalties to landowners of Nasomo, where $65,221 was distributed to 100 landowners.

The landowners will receive $652.21 each.

Mr Koya said: “It is not a one off payment but a series of payments depending on the amount of mineral being mined by Vatukoula Gold Mine as it operates and continues to mine below your land. 

Share of royalty

“The share of the royalty is for the gold mining at Vatukoula Gold Mine by the Vatukoula Gold Mine Ltd (VGML).

“I would also like to acknowledge the Vatukoula Gold Mine for paying the mining royalty initially to the Mineral Resources Department.”

Mr Koya thanked the landowners of Nasomo that were involved in the consultation with staff of the Ministry of Lands and Minerals in particular the Turaga ni Koro, the Trustees for the Nasomo Landowners in working with staff of the Mineral Resources Department in sorting out issues and making this historical day possible.

mr Koya said: “This fair share payout to landowners is in recognition of their contribution to national development through the use of their land for the purpose of mining.

“This will also assist in socio-economic development and economic empowerment of indigenous landowning communities and boost local economic activity in rural areas, improve quality of life as per vision of the government for equitable benefit sharing.

“I hope that these monies which the Government has shared with you today will be put to good use for the benefit of your families and community and harmonious existence with other stakeholders of the mining community.

“This Government not only talks about caring for all landowners in Fiji, in this case for iTaukei landowners of Nasomo, but backs up its talk with actions such as this, indeed actions speak louder than Words on this historic and milestone occasion.”

Normal practise

Section 30 of Fiji’s 2013 Constitution mentions that all minerals are owned by the state. It provides for the owners of any particular land (irrespective whether customary or freehold) or of any particular registered customary fishing rights to be entitled to receive a fair share of royalties or other money paid to the state in respect of the grant by the state of rights to mine minerals from the land or the seabed in the area of those fishing rights.

“The normal practise is for the royalty to be retained by the state as the owners of minerals under Fiji’s Mining Act,” Mr Koya said.

“However the current government had passed legislation in the May sitting of parliament giving effect to section 30 of the constitution thus allowing the sharing of royalty in this case with native landowners.

“This is the new way of benefit sharing in mineral development in our beloved country where mineral royalty is shared equitably amongst landowners for the betterment of all concerned.

“This “fair share” law is the first of its kind in Fiji (and the region) and the landowners of Nasomo are the first landowners to receive this fair share of Mineral Royalty under the 2013 constitution.

“This proves Government’s continues effort to care for landowners in the utilisation of their land and in this instant for the added benefit for the provision of land for mining whether directly on the surface or indirectly as in case.”

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Nautilus and Barrick Gold guilty of double standards

International Mining Companies have Colonial and Racist Double Standards

A case study comparing the performance of Canadian mining companies in their home country to their performance overseas has found dramatic double standards.

The the study has been published by the prestigious Peter Allard School of Law at the University of British Columbia.

The report finds Canadian mining companies have been involved in major human rights violations in developing nations including slavery and forced labour, violence against unarmed protestors, sexual violence against women and gang rapes.

Despite the international condemnation of these actions, Canada has failed regulate the behaviour of its companies in their overseas operations.

The study provides a comparison of the regulatory regime for extractive companies operating in Canada versus that in Papua New Guinea.

The study shows how Canadian companies operating in Papua New Guinea, Nautilus Minerals and Barrick Gold, fail to maintain the same standards that apply in their home country.

The double standards apply across the whole spectrum of their operations including environmental assessment and consultation, forced evictions and other human rights abuses, violence and access to the courts, access to information and respect for free prior informed consent.

The report calls for mining companies to apply the same practices and standards across all countries where they operate and for accountability to be enforceable in their home nations.

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BHP Billiton facing £5bn lawsuit from Brazilian victims of dam disaster

Ruined homes in the small town of Bento Rodrigues, Brazil after the disaster. Photograph: Felipe Dana/AP

Action launched in Liverpool against Anglo-Australian mining company after 2015 tragedy that killed 19 people

Jonathan Watts | The Guardian | 6 November 2018 

The worst environmental disaster in Brazil’s history has triggered one of the biggest legal claims ever filed in a British court.

The Anglo-Australian mining company BHP Billiton is being sued for about £5bn by Brazilian victims of the Samarco dam collapse in Mariana three years ago.

The class action case was filed in the Liverpool high court on Monday by the UK-based SPG Law on behalf of 240,000 individuals, 24 municipal governments, 11,000 businesses, a Catholic archdiocese and the Krenak indigenous community.

Nineteen people died after toxic waters from the failed tailings dam surged through the village of Bento Rodrigues on 5 November 2015. The sludge destroyed hundreds of homes, devastated fisheries, contaminated forests and left hundreds of thousands of dwellers along the Doce River without drinking water.

It emerged that the company had accurately predicted the risks in a worst-case assessment made six months earlier. Prosecutors charged senior executives of the dam operator Samarco Mineração with homicide and accused its parent companies – Vale and BHP Billiton – of environment damage.

A civil case has been filed in Brazilian courts, but the plaintiffs believe they have more chance to get fair and speedy compensation in Britain than in their home country, where courts can take more than a decade to reach a judgement and compensation offers are far short of the damages incurred.

Lawyers in the UK say that, in certain cases, they will seek 10 to 20 times the damages being offered to individuals in Brazil. For example, individuals who lost their water supply for two weeks have been offered £200 in Brazil whereas £2,000 to £4000 will be claimed in the UK. Fishermen who have only been offered £20,000 each to cover the losses associated with three years’ worth of catches will be seeking 20 years’ worth of future losses based on the slow pace of river recovery. Local governments will demand lost tax revenues and compensation for increased health and unemployment costs.

If jurisdiction in the UK is accepted, the lawsuit is likely to raise the international profile of the case. The first hearing would be next summer and the case could last two to five years. Representatives from the affected communities will be called to testify in Liverpool along with expert witnesses, including Brazilian lawyer Érica Gorga.

Tom Goodhead of the Anglo-American SPG Law firm said many of the plaintiffs suffered catastrophic losses yet received almost no compensation after three years in contravention of Brazilian law which says full damages should be paid and the environment be completely restored after an accident.

“Brazil’s courts are cripplingly slow,” he said. “The main purpose of filing this case in the UK is to move at greater speed and to seek a greater amount. People have been let down by the politicians and the courts. We tell them there is no guarantee of winning, but we will put up a proper fight on their behalf.”

The law firm will work on a no-win no-fee basis, taking a maximum of 30% of any compensation they are able to secure for the plaintiffs. This will not be levied in the case of the indigenous community. SPG Law has already spent £1.5m on the case and estimates future costs of £18m, according to Goodhead.

BHP Billiton has yet to respond to a request for a comment, but in previous statements to the Guardian, Samarco, Vale and BHP Billiton said they rejected the charges, that safety had been and remained a priority and that the dam complied with Brazilian legislation. The companies have said they would defend their employees and executives.

Separately from the civil action in Brazil, the three companies made a deal with the federal and state governments in March 2016 to carry out repair, restoration and reconstruction programmes. They have spent more than $1bn on a huge clean-up and relief operation, separate from civil actions launched by prosecutors.

Samarco has paid about $6.7m in fines levied separately by the state government of Minas Gerais. BHP has also announced that it is working on restoring the affected area through a charitable foundation.

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