Tag Archives: Landowners

ExxonMobil’s project in PNG is economic parasitism

Still from Ian Shearn’s 2013 documentary When We Were Hela, which investigates the ExxonMobil LNG project in Papua New Guinea. Photograph: Ian Shearn

PNG was lulled with wildly unrealistic modelling. It would be dangerous to conclude that this couldn’t happen to Australia

Scott Ludlam | The Guardian | 2 May 2018

The OED defines a parasite as “an organism that lives in or on an organism of another species (its host) and benefits by deriving nutrients at the other’s expense.” Parasitic relationships exist throughout the natural world and are defined by their one-sided nature. Ticks, mites, tapeworms: they all get something for nothing, and in all cases you’re better off without them.

Exxon’s Liquefied Natural Gas (LNG) project in the highlands of Papua New Guinea provides a distressing case study of large-scale economic parasitism. A new economic analysis of the project by Jubilee Australia quantifies the ways in which the resource industry can drain the life out of an economy while providing less than nothing in return. That it was pulled off with Australian taxpayers’ assistance is even more damning.

There have been any number of warning signs. Last year in a budget estimates session, I was keen to understand how Australian officials representing our export credit agency Efic could justify lending half a billion dollars to the project. After all, ExxonMobil advertises itself as “the world’s largest publicly traded international oil and gas company”, declaring revenues of nearly a quarter of a trillion US dollars in 2017. Why they would need Australian taxpayer assistance to get a gas project off the ground seemed highly suspect. At the time, the company was celebrating the 300th shipment of LNG from the project’s export terminal, and yet the landowners in Hela hadn’t been paid any royalties. Predictably, this was raising tensions in the area and there were – and are – very real fears that the project could end up triggering an armed insurgency.

The resource industry spends a fortune downplaying the negative social and environmental consequences of its presence. Their arguments generally gravitate to the simple appeal that the economic benefits more than compensate for the costs to country and culture.

The Jubilee report craters this line of argument, demonstrating that the economy of PNG would have been better off without the project. It was co-written by executive director of the Jubilee Australia Research Centre Dr Luke Fletcher and economist Paul Flanagan, who has held senior roles within treasury departments in both Australia and PNG. It puts hard numbers to the economic case against the project, demonstrating that since it started up, household incomes have fallen, employment has fallen, government expenditure has fallen, and imports have fallen. It shows how a combination of project economics and policy decisions made by the PNG government combine to act as a net drag on the economy. Buoyed by wildly unrealistic predictions of the flood of tax revenues that the project would unleash, the PNG government went on a debt-fuelled spending spree, sending the budget sharply into deficit. The Jubilee report details how in 2012, PNG prime minister Peter O’Neill told a mining and petroleum conference in Sydney “… we are borrowing now certain in the knowledge the revenue inflows from mining and LNG projects will make repayment manageable.”

We know how this story ends. ExxonMobil paid about “one-thousandth of its expected share of LNG sales from the project” in 2016. The company’s aggressive use of tax havens and clever drafting of the deal between the parasite company and the host government are all it takes for the revenues to vanish into a thicket of holding companies and a PO box in the Bahamas.

The Jubilee report was instantly dismissed as “fake news” by O’Neill, lending a Trumpian flavour to the unrepentant gouging of the people and landscape of PNG by a foreign oil and gas multinational. O’Neill has since admitted he hasn’t read the report.

Professor of economics Michael Hudson has some words of warning for people trying to rid themselves of economic parasites. “In nature, parasites don’t simply attach themselves to a host and suck out blood, or take the surplus in an economy. In order to do that, they have to numb the host. They need an anesthetic so that the host doesn’t realize it’s being bitten.”

The anesthetic comes in the form of economic modelling used by project backers and beneficiaries to lend an aroma of scientific legitimacy to their cause. In this instance, wildly unrealistic Acil Tasman (now Acil Allen) modelling commissioned by ExxonMobil in 2008 provides a textbook case of why these documents should be treated with utmost suspicion. The Jubilee report demonstrates how Exxon’s economists-for-hire were about as wrong as it is possible to be in their hallucinations of employment, tax revenues and a doubling of the size of the host economy.

The PNG LNG project has it all. Dispossession of traditional landholders and non-payment of royalties. 7.9 million tonnes of fossil gas exported and then discharged into the atmosphere every year. Aggressive tax avoidance by Exxon and its commercial partners. Outstanding returns for Exxon shareholders , and a half-billion dollar soft-loan by Australian taxpayers to make the whole venture stack up.

We’d be dangerously wrong to conclude that this kind of parasitic resource-curse afflicts only our less fortunate neighbours: ExxonMobil pays no tax in Australia, either. While we do what we can to help the people of PNG wring some kind of redress from this debacle, we also need an honest diagnosis of the amount of anesthetic being applied here at home.


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Filed under Financial returns, Papua New Guinea

Tuke Praised For Alluvial Mining Plans

Post Courier | March 12, 2018

PLANS to reserve alluvial mining for locals has attracted praise from local landowner companies across the country.

Minister for Mining Johnson Tuke said he wants to enable locals to build up wealth and capital to prosper in the next stages of the mining-especially in the mineral rich areas.

An aspiring umbrella landowner company, Tundaka PNG Limited of Mt Tundaka exploration licence area, applauded the move.

The new prospect is located in Enga’s Kandep district along the border with Magarima in Hela.

“As the chairman of the umbrella company, I congratulate Mr Tuke and support this initiative to empower landowners to the landowners to venture into such lucrative businesses on extractive industries,” chairman Pokya Pea said.

He said to break the barrier of landowners being the collectors of royalties only and spectators in their own resource developments is the step in the right direction.

“We can’t be bystanders for foreigners to extract our valuable resources and giving us 2.5 per cent only as equity share especially in the extractive industries.

“The proposal, when established, will strengthen our economy through setting up our bullion bank and financially empowered,” he said.

Mr Pea called on the government to amalgamate the Mineral Resource Authority and the Department of Geo-hazards Management to bring about new extractive projects as well as to build the capital wealth of people.

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Filed under Financial returns, Papua New Guinea

Niuminco moves to 100% ownership of Edie Creek mine

More foreign companies trading PNG resources as if PNG laws and landowners didn’t exist

PNG Resources | August 07, 2017

ASX-listed Niuminco Group Limited is now the 100% owner of the historic Edie Creek gold mine in PNG after completing an agreement to purchase the final 17% interest it did not hold.
The company has acquired the 17% interest in the in the Edie Creek mining leases held by former Joint Venture partner Mincor Resources NL’s subsidiary Mincor PNG Limited (to be renamed Niuminco EC Limited) by purchasing the ordinary shares in that company.
The purchasing company is one of Niuminco’s PNG subsidiaries, Niuminco Edie Creek Limited.
The purchase price of $150,000 is payable two years from the completion date in cash or shares (at Niuminco’s election), or earlier should Niuminco sell the leases to a third party.
Should Niuminco choose to pay in shares, the share price will be the 30 day VWAP for the 30 trading days immediately preceding the date of the notice of election by Niuminco.

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Filed under Financial returns, Papua New Guinea

Rio Tinto’s window opens for Bougainville Copper exit

burnt out truck at the Panguna mine

A lone copper dump truck  burned out during the crisis. Photo: Ian Booth.

Rowan Callick | The Australian

Rio Tinto’s review of its controlling stake in Bougainville Copper, now in its ninth month, is considering the options not only of a trade sale but also of giving its shares away, possibly to a charitable trust.

A year ago the mining giant gave away its 19.1 per cent shareholding in Northern Dynasty, owner of the Pebble copper-gold project in Alaska, to two Alaskan charitable foundations.

Rio owns 53.38 per cent of the Papua New Guinea mine, closed by conflict in 1989, that still contains copper and gold worth more than $50 billion, as well as possessing a recently reconfirmed exploration licence.

The mine, which would cost an estimated $6.5bn or more to reopen, is also owned 19.06 per cent by the Papua New Guinea national government, and 27.36 per cent by other shareholders through its ASX listing.

In the current commodity environment, even the largest miners are not contemplating starting — or restarting — a massively expensive project at a stroke, preferring instead to work green-fields sites less ambitiously, gradually building up output.

Rio has waited patiently for its social licence to mine to be restored but despite the desire of the Bougainville Autonomous Government, under its president John Momis, to restore mining revenues — with no clear income alternative in sight — landowner issues have not been fully resolved.

And under new mining legislation passed by the Bougainville parliament recently, all resources are owned by traditional landowners, while the national government based in Port Moresby continues to insist that geological resources remain the property of the state.

Apart from Rio, there are few potential alternatives with the capacity to rebuild the mine, except for a handful of other international miners and some large Chinese corporations.

But the window of opportunity for an exit is looking reasonably favourable now, while the prospect for the medium to longer term appears more shaded.

The prospect of a change of leadership on Bougainville, with an election due there at the end of May, injects a note of potential uncertainty.

At the Port Moresby end, Prime Minister Peter O’Neill is leading a government with rare political strength — and has the appetite for the state to run mines. But PNG’s history shows this may not last forever.

Mr Momis has warned Mr O’Neill to reveal any dealings with Rio.

The PNG Prime Minister confirmed that “we have had discussions with other shareholders of on a range of issues including the reopening of the mine and the disposal of shares by existing shareholders including Rio Tinto”. But, he added, “there are no secret deals”.

The Bougainville government’s concern was aroused by information it had received that law firm Norton Rose Fulbright, which works for Rio internationally, had received instructions to handle the sale of Rio’s shares. A Norton Rose spokesman decline to comment.


Filed under Financial returns, Papua New Guinea

Fiji government tries to quieten landowner opposition to Newcrest exploration

Ministry, landowners meet over exploration issues

Vuniwaqa Bola-Bari | Fiji Times

THE Lands and Mineral Resources Ministry deputy permanent secretary Malakai Nalawa today met with members of the Nawaisomo clan to iron out issues regarding the exploration work by the Namosi Joint Venture.

The landowners were today informed that all that has been done at this stage was exploration of the land for minerals but no mining has been done, thus lease money will only be given once the lease of their land is allowed when the company feels that they should mine the land for its minerals.

But if minerals are not found, landowners will get compensation for  the exploration work with accordance to damage done during the time of exploration by the company.

The meeting was held at the Namosi Provincial Office in Navua.

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Filed under Exploration, Fiji, Financial returns

Barrick Gold kompensesan moni long reip long Porgera ino inap

Porgera gold mine

Em hap blong Porgera Mine long Enga Proince long PNG (Credit: Audience Submitted)

Caroline Tiriman | ABC Radio Australia

Igat bikepal heve i stap yet long sait long kompensesan moni Brarrick Gold i peim long ol meri sampela wokman ibin reipim ol long Pogera.

Odio: Kay Kuamugle, meri husat ibin helpim ol meri em ol security guard i bin reipim ol long Porgera Mine long Enga long PNG

Ol kompensesan moni em Barrick Gold Mining kampani blong Canada, ibin baem ol mama na ol yangpla meri bihaen long ol sekiuriti gard ibin rapim ol long PNG Pogera Mine, em ino inap.

Despla toktok ikam long Kay Kuamugle, meri husat ibin helpim ol meri em ol security guard i bin rapim ol long Porgera Mine.

Barrick Gold emi wanpla bikpla Gold mining kampani tru long wold na emi bin tok oraet long baem compensation igo long 11pla meri bihaen long oli bin tok bai oli bringim wari blong ol igo long wanpla kot long America.

Sampla long ol despla meri em ol man ibin rapim ol em ol yangpla meri tru, em krismas blong ol ibin stap olsem wanpla ten foa.

Kay Kuamugle itok olsem laif blong ol despla meri nau i bagarap olgeta long wonem Barrick Gold i bagarapim graon blong ol na oli save kisim pipia long Gold mine blong lukautim sidaon blong ol.

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Filed under Human rights, Papua New Guinea

Solomons govt remains against untreated mine water release

gold ridge

Radio New Zealand

The Solomon Islands government has reinforced its position against the release of untreated water from the tailings dam of the country’s closed goldmine.

The Ministry of Mines, Energy and Rural Electrification and the Ministry of Environment, Conservation, Meteorology and Disaster Management concludes that the main water at the tailings facility at Gold Ridge mine is unsafe.

In a torrent of newly released information, the government has delivered a long list of reasons for its position against the untreated release of water from the Gold Ridge dam.

Some of the reasons include a critique of the sampling methods used in the recently released WHO tests on water quality which declared the tailings water safe.

The government also cites a lack of consideration of the longterm cumulative effect on the environment and the belief that allowing the release of untreated water into the environment would set a bad precedent for future mining activities in the country.

The government also in its statement revealed that its initial negotiations to purchase the mine from Australian owners St Barbara involved a price tag of around 76 million US dollars.

This is an amount Solomon Island taxpayers no longer have to fork out as the government has since backed out of the deal which is now left in the hands of local land owning communities in the mine area and an unnamed foreign investor.

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Filed under Environmental impact, Human rights, Solomon Islands