Category Archives: Papua New Guinea

Govt Announces Action To Resolve Basamuk Los Concerns

Landowners forced to take out media adverts to make Minister aware of human rights and other serious issues relating to MCC and the Ramu mine refinery

Post Courier | November 15, 2018

Minister for Mining Johnson Tuke has announced immediate action will take place to address the concerns of the Basamuk Limestone landowners of Madang Province.

Speaking from Goroka, yesterday, Mr Tuke said he was not aware of the alleged criticisms nor the human rights abuses and complaints made by the landowners until he sighted the one-page overly media release in this paper yesterday.

Mr Tuke said that he would in the next couple of days summon all concerned parties to his office for answers.

“I appreciate the concerns of the Basamuk landowners and I am now very aware of the matter so in the coming days I will call up the MCC and Ramu NiCo Management, the Mineral Resources Authority, Department of Mineral Policy and Geo-Hazards Management, CEPA, and other government agencies involved in this matter to sit with me and tell me what is going on,” he said.

“As the minister responsible for this mega industry, I cannot allow things like this to remain unattended to because our people, the landowners, are important in the mining equation just as the investors who bring in the dollars and development into our mining areas.”

Mr Tuke has asked that all landowners give him time to deal with the issues they have outlined and not take the matter into their own hands.

“I am just as concerned as you are so I ask you my people not to take any actions that will undermine the positive developments that are currently being initiated by the O’Neill-Abel Government, Governor Peter Yama and the Madang Provincial Government, and your local members Jimmy Uguro of Usino-Bundi, Peter Sapia of Rai Coast, and Ramu NiCo Management (MCC) Limited for the betterment of Madang,’’ he said.

“I ask you not to set up roadblocks and cause any other disturbances that may affect production because I as your minister, will take this matter up and seek the answers you desire.

“I will make sure the company MCC will be answerable and attend to all the outstanding issues.”

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Major Project Agreements Must Be Reviewed To Benefit PNG

There have been many complaints of a lack of benefits coming from the LNG project Photo: RNZI/Johnny Blades

The Current Business Model and Tax Concessions are Cheating PNG of Revenues and Landowner Benefits

Post Courier | November 15, 2018

In the period leading up to and eventual start of the multi-billion kina PNG liquefied natural gas (LNG) project in 2014, there was much fanfare and grandstanding of the promise/premise that the project would single-handedly transform PNG.

In fact, the project has delivered some much-needed tangible developments in terms of major infrastructure, additional employment and spin-off business opportunities as well as foreign exchange revenue. However, there are still many unresolved issues that demand National Government’s most swift and appropriate remedial action.

On October 30 2018, it was reported (Post-Courier) complaints by Paguale Kekero resources landowners association from Southern Highlands Province over benefits from the PNG LNG project. The report referred to major clans with population of over 2000 people “left in the dark on LNG project benefits” – royalty and equity payments.

Their complaints followed a public statement on October 25 2018 by Mineral Resource Development Company (MRDC) Managing Director Augustine Mano of PNG LNG pipeline landowners receiving benefits. The concerns relate to Paguale Kekero resource owners not signing any agreement in the Umbrella Benefits Sharing Agreement under the Greenfield and future generations benefits.

The Paguale Kekero landowners concerns are among numerous other claims and counter-claims, be the genuine, not genuine or combination of both. So, the over-orchestrated myth of massive and immediate socio-economic transformation in the livelihood of resource owners, others in the project area and PNG as a whole is increasingly becoming a far-fetch tale.

PNG-wide, similar sentiments have been expressed over resource ownership, equity participation and the sharing of wealth generated from mineral, oil and gas reserves. As more resource owners become aware of their missed opportunities, there is mounting support from indigenous people for greater benefit from what is taken out of their land and sea.

They are rightly doing so because if anyone, these people and their ancestors have been living on and off that land or sea for over 40,000 years from one generation to next. Whilst PNG authorities continue to grapple with this contentious issue, plans are afoot for the ownership of resources to be transferred from the State as is the norm currently to the resource owners.

There has also been numerous calls for a comprehensive review of existing memorandum of agreements (MOAs) with project developers and provinces they are located. Some serious questions remain unanswered in the manner in which past governments proceeded to signing certain major project agreements. In fact, these are still burning issues that need government action by way of review of project agreements.

In that way, many landowner related issues and concerns, equity participation, wealth sharing and tax revenue can be addressed and resolved amicably.

The government must take heed of these concerns and start reviewing major project agreements. The underlying objective must be to cater for increased local equity participation by way of buying shares in these big resource development projects.

On May 14 2013, former Public Enterprises Minister Ben Micah while answering questions in Parliament alluded to the loss of millions of kina in tax revenue resulting from tax exemptions. Mr Micah’s comments may not have attracted much attention, but what he said then is still relevant day and needs follow-up action. There is nothing wrong for the government to admit fault, but take appropriate remedial actions to correct any wrongs of the past in PNG’s national interest and benefit.

A government decision for comprehensive review of agreements the State had entered into with developers in major projects would be well-received and welcomed nationwide. There are numerous concerns and un-answered questions that need clarification for and on behalf of the majority PNG citizens.

Today, questions are still asked why the Ramu Nickel project agreement was signed in China.

What input did relevant PNG State agencies, including Justice and Attorney General, Department of Finance, Commerce and Industry, Customs and Internal Revenue Commission and the Madang Provincial Government have in the Ramu Nickel project?

In December 2013, some agreements were reached and the review of the Ramu Nickel agreement was concluded and signed by relevant stakeholders. That is exactly why reviews in all project agreements are necessary and should be done within the time frame specified in such MOAs.

It must be mandatory and strictly adhered to by all parties. Failure by any of the parties to that MOA should be made to heavily compensate any breaches. There need to be a review of the current business model of the PNG LNG Project.

The review must reveal how exactly PNG entities and individual citizens are benefiting from all segments of the PNG LNG Project.
As it is, PNG is mostly benefiting from only one segment of the project while foreign investors take away much of the profits generated from the other segments.

This is because at the time of signing the project agreement the government then rejected outright the professional and technical advice in adopting the business plan. The LNG Project was and still is far important to the future economic health and well-being of PNG. It single-handedly underpins the future economic advancement of PNG.

This was fully recognised by then government and the technical team was task to deliver the project within the ambit of this objective. The technical team was convinced that the business model for the LNG Project had to be structured in the way, so that PNG and landowners were drivers of the projects, rather than mere bystanders, if the above objective was to be realised.

Under the business plan recommended by the technical team, The National Government, provincial governments, local level governments, landowners and other PNG citizens were to have fully participated through share equity in all segments of the project.

This means, under the aborted business model, various PNG entities and groups would have invested and benefit in all segments from upstream, pipeline, processing facilities, shipping and marketing. Unfortunately, this one-in-a-life time investment opportunities for PNG citizens was denied when the government opted to adopting a totally different business model. There were serious concerns and perception among various stakeholders that the originally well-intended ideals of this project was hijacked.

The Ministerial Committee on the LNG Project appointed by the National Executive Council totally ignored and ultimately rejected the business model recommended by the technical team.

Under the current model, the State, provincial governments and landowners are to participate ONLY at the UPSTREAM, by exercising their 22.5 per cent rights under the Oil and Gas legislation. Other than that they have no participation or interests in other segments of the project, namely pipeline, processing facility, marketing and shipping.

Under the current business model, the State and the landowners are complete bystanders, with no tangible control and ownership in the project. This business model defeats original Government policy ambition as well as political and economic aspirations of PNG.

If is it not too late and so there should be review into the business model of the PNG LNG Project to allow the National Government, provincial governments, local level governments, super funds, national owned businesses and individuals to buy shares in all segments of the project.

The current business model must be re-structured to enable maximum participation of government, landowners, and provincial governments, in all segment of the LNG Project.

Allow PNG and its citizens to retain the majority ownership of the complete PNG LNG project chain.

The government should also review the substantial tax exemptions given to the PNG LNG project. This government is in the best possible position to carry out a thorough review of all tax and fiscal exemptions granted to the developers of the PNG LNG project.

Among the concessions for review should include:

  • 30 per cent Corporate Tax rate;
  • Waiver of the 2 per cent Fiscal Stability premium;
  • Foundation Volume pf 10.5tcf;
  • State Carry;
  • Excise and Import Duty Exceptions during construction phase;
  • Special Tax Credits;
  • Applicable Interest to State’s back-in Costs; and
  • Oil to Gas Tax rate Conversion.

The concessions could well have resulted in losses of hundreds of millions of kina in State revenue. The government is morally obliged and duty bound to direct for full review of all major projects so that shares are floated for PNG owned entities and individuals buy into the projects. Then only can PNG citizens boasting of benefiting from resources found in their land and sea. Otherwise so-called landowners and PNG people are fighting among ourselves for bones and crumbs.

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PNG experimental seabed mining project another ‘failed investment’, says ex-minister

The proposed production method for Solwara 1 Project. Image Nautilus

Pacific Media Centre | November 14, 2018

The controversial Nautilus Solwara 1 deep sea mining project has been accused of being another Papua New Guinean government “failed investment” on the verge of bankruptcy, claim campaigners citing a former attorney-general.

In a statement by the Deep Sea Mining Campaign, former PNG Attorney-General and Minister for Justice Sir Arnold Amet is quoted as saying:

“Nautilus is propped up by US$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.”

“Even the production support vessel crucial to Nautilus operations has had to be shelved due to failure to pay the shipyard constructing it,” he said.

“And Nautilus is now virtually worthless with its shares at a new record low of less than 10c  each.”

Deep Sea Mining Campaign said Nautilus was still desperately seeking funds for its flagship Solwara 1 deep sea mining project, while its commercial operation had been delayed ever since it first received its licence to mine the floor of the Bismarck Sea in 2011.

As a final attempt to save Solwara 1, Nautilus’s two largest shareholders, Russian mining company Metalloinvest and Omani conglomerate MB Holdings, formed a new company to secure funding for the Solwara 1 project, but this rescue attempt has gone in vain.

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

Economic burden

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

Sir Arnold stated his position by urging the PNG government to terminate the contract with Nautilus so save the country’s money.

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

“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.”

Papua New Guinea is hosting the 2018 Asia Pacific Economic Cooperation (APEC) summi later this week, which is said to have been a huge financial load for the economically challenged country.

While the PNG government prepares for the summit, the country is going through many health crises including re-emerging of eradicated disease such as polio, violations of human rights against the people of Paga Hill, and extravagant spending for 40 Maserati luxury sedans, reports Pauline Mago-King of Asia Pacific Report.

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Amend Resource Ownership Law: Group

Yombi Kep | Post Courier | November 13, 2018

The Resource Owners Federation of Papua New Guinea applauded the move made by former Primes Ministers, Sir Julius Chan and Sir Mekere Morauta in Parliament to change ownership laws in the country.

In a statement, the federation said that it appreciates the admissions by Sir Julius Chan and Sir Mekere Morauta in September parliament sitting, that the ownership laws of the country are wrong and needed to be changed to restore ownership of mineral and petroleum resources by those who own the land beneath which the resources are found.

“The Resource Owners Federation of Papua New Guinea is pleased to note that the leaders of the country are realising they have in the past been deceived into giving up their mineral and petroleum resources free of charge to foreign companies and their shareholders, without any direct or indirect benefit to the country and its citizens including and especially the resource owners,” the federation said.

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Ramu Nico Plants Cocoa Trees In Mine Rehabilitation

Post Courier | November 13, 2018

Ramu NiCo Mine’s environment section at Kurumbukari mine in Madang Province began planting cocoa seedlings in the mined out areas of the Kurumbukari plateau as part of its mine environment rehabilitation.

More than 250 cocoa seedlings were delivered recently by the company’s Sustainable Agriculture section of the Community Affairs Department to KBK Mine Environment Section of the company’s HSE Department under the supervision of Allan Wahwah and Alex Kambual and planted at Mine Pit Two area.

The aim is to explore the growth rates and adaptability of cocoa, eagle wood and sandal wood in the mined out areas at KBK Mine.

Eagle wood and sandalwood are yet to be transported from the Forest Research Institute in Lae to KBK Mine for rehabilitation.

Mr Wahwah said that it may take a year or two to establish the assumptions and then recommendations would be proposed for mass planting. He said there are plans to raise KBK native seeds present in the KBK primary forest.

However, these will all be captured in a new memorandum of understanding (MoU) which he had developed and had already circulated within the company.

Mr Wahwah, a former agriculturist from PNG CCI, who now works with Ramu NiCo (MCC) Community Affairs planned with Mr Kambual to come up with cocoa planting at the mined out areas as part of rehabilitation. He said more collaboration between Ramu NiCo Community Affairs Agriculture section and the HSE Environment team was needed to carry out rehabilitation using cash crop as part of the sustainable source of income for the local landowners of KBK in the future..

He said CA Agriculture team would do an in-house training for the environment team at KBK on cocoa management practices.

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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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