Tag Archives: MCC

Scott Waide: Will PNG project reviews mean more benefits for landowners?

This year is a crucial year for Papua New Guinea’s mining industry as important players – in Hela, Porgera and Madang – are being examined over their performance. 

Scott Waide | April 7, 2019

Just into the fourth month of 2019, and resource projects in Papua New Guinea have come under scrutiny.

Early last month, senior ministers of government, including Petroleum Minister Fabian Pok, traveled to Komo in Hela for meetings with landowners of the gas project.

After 15 years, there is some progress. Or at least that’s the positive spin to it.

There appears to be some indication that royalties locked away due to legal battles and tangled by bureaucratic red tape were going to be paid – but only after landowner identification processes.

Finance Minister James Marape told the media three months ago, that K300 million (NZ$132 million) is parked at the Central Bank ready to be released. But landowners or people claiming to be landowners had to follow a process of “landowner identification” in order to be paid the money.

There is some hope of an end to disputes. However, the final settlement is still a long way off. That’s the reality. Many of the elders died waiting for the royalty payments they were promised.

Since becoming a new province, there is still a lot that needs to be ironed out. The Hela provincial government still has to work its way through layers of bureaucratic processes that continue to favour the Southern Highlands in terms of royalty payments from the gas project.

It’s all that and a lot more.

Background to complexities
Understanding the background to the complexities of the resource project in Hela means going back some 20 years when oil extraction ended and the promise of Papua New Guinea becoming the Saudi Arabia and Dubai of the Pacific faded as the crude oil taps shut off.

It is against that backdrop that the neighbouring Enga province is now looking at the Porgera mine’s renegotiation through a wardens’ hearing. This is a process that is reopened after the end of a mining lease.

Landowners and the Enga provincial government are looking at a bigger slice of revenues and benefits.

What did they get over the last 30 years? That’s a point of contention for pro-mining and anti-mining proponents.

What is visible to the international community is the campaigns against alleged atrocities committed against local people in Porgera and the desperate push by locals to get what little crumbs they can from a mine that has existed for 30 years on their land.

For the first time in more than three decades, it appears the national government is speaking a different language: One that calls for greater benefits into government coffers and landowner pockets.

This rhetoric has come after 30 years of gold extraction, 500 shipments of liquefied natural gas and billions of dollars worth of round log exports.

Production-based tax
In Lae, during the opening of the Central Bank’s Currency Processing Facility, Deputy Prime Minister Charles Abel talked about a production-based tax. Instead of a profit-based tax for resource projects which will be signed from 2019 onwards.

The general thinking from the national government is that a profits based tax can be deceptive leaving the government with very little to collect if a mining company declares losses or breaks even.

While Porgera discusses mine benefits, a similar process is happening in Madang. Triggered by an agreement between the Chinese and the PNG Governments, Ramu Nickel’s expansion is in discussions ongoing between the government and the developer.

The processes are long and drawn out. The risk is that without proper representation, landowners could be left with another raw deal for several more decades before another opportunity for renegotiation presents itself.

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Ramu NiCo rethinking expansion

The National aka The Loggers Times | March 26, 2019

RAMU NicO Nico Management (MCC) in Madang will reconsider its decision on the planned K5 billion expansion programme, vice-president Wang Baowen announced last Thursday.
He said the company was reconsidering its earlier announcement to expand the mine because of the costs involved.
Baowen said the company was yet to finish some of its obligations in its memorandum of agreement which expired last year.
He said the agreement must look after expectations and benefits of landowners, including stakeholders like the national government, provincial government, local level government and landowners.
Ramu NiCo Management, which runs the Ramu nickel and cobalt mine, announced a planned K5 billion expansion of the mine during Apec last year.
The announcement has created controversy among the landowners and other stakeholders.
Prime Minister Peter O’Neill and Madang Governor Peter Yama both said mine expansion would be guaranteed only after the current agreement was reviewed.
Yama said the agreement review would ensure more benefits go to the landowners and stakeholders.
“The Ramu nickel mine expansion will wait till we conduct the review,” O’Neill said when he visited Usino-Bundi district last month.
Landowners of the Kurumbukari mining area at Enekwai threatened to shut the mine’s water supply in December when they heard about the expansion.

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Tuke, Yama Want Fresh Deal For Ramu Mine

Politician’s love to make fancy promises – but do they ever actually deliver?

Post Courier | March 19, 2019

MINING Minister Johnson Tuke has said, before he signs any documents regarding the Ramu NiCo project, he needs to understand what is there for the landowners.

“When I understand and am really convinced then I will sign the agreement for the expansion, otherwise that will not happen,” Mr Tuke said.

He said he had discussed with Prime Minister Peter O’Neill the licence that government will issue for the expansion must be under a new agreement.

Mr Tuke said many mining companies usually say they will only give according to the MoA, however, there must be some form of kindness and humility when dealing with the local landowners whose land and water were given away for the project.

Madang Governor Peter Yama said the new expansion plan for the Ramu project will be properly discussed and he, as the head of the province, must be convinced that the people of Madang receive more benefits.

He said the old agreement that was signed before the construction and the operation of the Ramu Nickel Project must be done away with.

“The new agreement will be renegotiated, and the old agreement will be no more,”

He said that the Prime Minister Peter O’Neill during his visit to Usino had publicly announced that the new agreement will be a fresh start. Mr Yama said he is in full support of a new agreement for the Ramu NiCo Project, and stressed that all the parties that will be signing the agreement including the National Government, the provincial government, and the developer Ramu NiCo (MCC) must make sure the agreement provides better benefits to the people of Madang.

This is particularly for those from the impacted communities, the developer Ramu NiCo, Madang province, and the country.

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No Ramu extension until benefits are guaranteed: Govt

‘Ramu nickel mine is the worst ever State negotiated mine with no benefits to the locals’ – Yama

Loop PNG | February 12, 2019

Prime Minister Peter O’Neill has announced there will be no extension of the Memorandum of Agreement (MoA) for the Ramu NiCo mine in Madang Province.

The initial MoA was signed in 2000 and expired in March 2018. It is now due for a review, however the Prime Minister announced last Friday that there will be no agreement until government is sure there is fair benefit for the people and the State.

“The mine agreement has expired and we will renegotiate so that our people benefit most. Bai yumi stap na lukluk tasol ah? Nogat! Nogat! Em blong yumi. Yumi mas gat sampla sher stap insait. Bai yumi stretim, Gavana bai yumi stretim, mark my words. Yumi mas lukautim ol pipol blong yumi pastaim,” O’Neill said. (Will we just stand and watch? No! No! This is for us. We must have some share in this. We will fix this, Governor we will fix this, mark my words. We must first take care of our people.)

He told Governor Peter Yama that they had a big task ahead to negotiate the new terms and conditions of the new agreement.

Yama expressed passionately that the Ramu NiCo mine was the worst ever State negotiated mine with no benefits to the locals in Kurumbukari and Basamuk. Concerns have also been raised that other minerals apart from nickel and cobalt have been extracted and exported.

“The people of Basamuk must have spin off businesses. They must have good roads, good housing, health centres, schools, water supply and electricity. Right now Rai Coast and Usino-Bundi are the least developed districts in the country despite being hosts of the Ramu NiCo mine and also the Ramu Agro Industry for Usino Bundi,” Governor Yama said.

Minister for National Planning, Richard Maru, visited Basamuk last Thursday and met with the mine operator, MCC, and encouraged all stakeholders to now focus on a way forward that will benefit the company, province, landowners and the State.

At the moment, the State is not an equity partner in the mine project. There has not been any corporate tax and no Goods & Services Tax paid by the company since production began in 2012.

Furthermore, there is no benefit sharing agreement for the landowners in the project. Minister Maru said in the future, MoA’s must have benefit sharing agreements where landowners, the host province and the State must have shares in the project. This will be the case for Wafi-Golpu Mine, the Frieda Copper Mine and any other upcoming mines in the country.

“MCC is not the enemy, we are partners in development and so in the negotiations for the new MoA, we must ensure win-win situation for all parties involved,” Minister Maru said.

He said Madang had the economic potential and opportunity to double and triple its internal revenue and become a major economic hub in the Momase region. Minister Maru challenged Governor Yama and all the other MPs from Madang to focus, cooperate, communicate more for the greater good of the province.

Minister Maru is certain MCC has by now recovered its initial investments in the mine. This also explains why the Ramu mine is looking to invest a further US$2 billion to double production. The State, provincial government and landowners must now take up equity in this lucrative mine under the new agreement that the Government will take on together with MCC. The challenge now is to properly identify the landowners and Mineral Resources Authority (MRA) must ensure this exercise immediately by MCC.

In saying that the company must not feel that it has to solve all the problems in the area, Minister Maru encouraged MCC management to participate in the new-look Infrastructure Tax Credit Scheme which will be launched in March. He also urged the company to work with the PNG Government to seek grant funding from the Chinese government to build most needed infrastructure in the Usino-Bundi and Rai Coast districts.

The particular focus would be to build a highway between Erima to Saido and other roads, health and education facilities within these two districts.

The Ramu NiCo mine has a 135km slurry pipeline that runs through Usino-Bundi and Rai Coast districts.

Minister Maru also maintained that mines should do away with the fly-in fly-out arrangement and return to the model of the Bougainville Copper Limited where mining townships must be built at the mine sites.

Governor Yama also supported the position of the Government of Morobe and the Tutumang Government that there shall be no “Fly in Fly Out”, for the Wafi -Golpu Mine Project and other Mines and Resource Projects into the future.

“We will maximize revenue flows from all these projects to go to the local people, landowners and to our Government and to remain in the country. Hospitals, schools, a township and other utility services are built there. There’s no reason why we shouldn’t use this model,” Maru said.

“If we want to allow the revenue from these mines to rotate within PNG and help build our country, in the form of taxes, employment and so on, we must walk away from the fly-in fly-out arrangement.”

Maru said the Government is committed to build a highway from Erima to Saidor in Rai Coast District to assist the people living along these areas access markets and services and is seeking the support of the Chinese government to focus their development grants away from Port Moresby to two the remote districts of Usino- Bundi and Rai Coast, which hosts the only Chinese owned mine in Papua New Guinea, the Ramu NiCo Mine.

A State Negotiation Team will be put together as soon as possible to commence discussion of the future of the mine and its stakeholders, including the State and the landowners.

The Prime Minister himself announced that he will chair the State negotiating team with the Madang Governor as key members of the State Negotiating Team.

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No tax paid by Ramu nickel mine

Terms Of Mine Extension To Be Renegotiated

Post Courier | February 11, 2019

Prime Minister Peter O’Neill, has announced there will be no extension of the Memorandum of Agreement (MoA) for the Ramu Nico in Madang province.

The initial MoA was signed in 2000 and expired in March 2018. It is now due for a review, however the Prime Minister announced last Friday that there will be no agreement until government is sure there is a fair benefit for the people and the State.

“The mine agreement has expired and we will renegotiate so that our people benefit most. Bai yumi stap na lukluk tasol ah? Nogat! Nogat! Em blong yumi. Yumi mas gat sampla share stap insait. Bai yumi stretim, Governor bai yumi stretim, mark my words. Yumi mas lukautim ol pipol blong yumi pastaim,” Mr O’Neill said.

He told Mr Yama they had a big task ahead to negotiate the terms and conditions of the new agreement.

Mr Yama said the Ramu Nico mine was the worst state-negotiated mine, with no benefits to the locals in Kurumbukari and Basamuk. Concerns have also been raised that minerals, apart from nickel and cobalt, have been extracted and exported.

“The people of Basamuk must have spin-off businesses. They must have good roads, good housing, health centers, schools, water supply and electricity. Right now, Rai Coast and Usino-Bundi are the least developed districts in the country despite being hosts of the Ramu Nico mine and the Ramu Agro Industry,” he said.

National planning minister Richard Maru visited Basamuk on Thursday last week and met with the mine operator, MCC, and encouraged all stakeholders to now focus on a way forward that will benefit the firm, province, landowners and the state.

At the moment, the state is not an equity partner in the mine project.

There has not been any corporate tax and no goods and services tax paid by the firm since production started in 2012.

Furthermore, there is no benefit sharing agreement for the landowners in the project.

Mr Maru said in the future, MoAs must have benefit-sharing agreements where landowners, the host province and the state must have shares in the project.

This will be the case for Wafi-Golpu mine, the Frieda Copper mine and any other new mines.

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Prices affecting Ramu mine sales: Chairman

 The National aka The Loggers Times | January 22, 2019

RAMU NiCo Management (MCC) Ltd in Madang is facing severe sales problem.
This was announced by the company’s chairman Zong Shaoxing during its annual working conference on Friday.
Zong said last year, the company sold 25,525 tonnes of nickel and 2388 tonnes of cobalt, which were only 75.05 per cent and 72.06 per cent of the annual plan of sales, leaving 11,704 tonnes of nickel unsold.
He said the main reason was that a large number of customers had requested to cancel or reduce orders due to worldwide economic downturn.
Nickel and cobalt prices plummeted.
As a result, the country’s major nickel/cobalt mine developer had no choice but to cut product price and reduce price coefficient.
Company president Gao Yongxue reiterated the chairman’s statement in saying 2018 had been another challenging year for it.
“Prices for our products have fallen dramatically and we have had some difficulty in selling our product,” he said.
“Once more, we have serious financial issues to deal with.”
Zong said the company would continue its high and stable production with all technical and economic targets delivered, securing the company’s leading position in the industry with high profitability and survivability, setting a new benchmark for global peers.
He said in 2019, MCC must make every effort to increase inventory turnover, prioritise capital efficiency and safety, boost revenue and be adaptable to the changing market environment.
Zong urged MCC to take advantage of its new energy project, balance sales volume and metal discount coefficient, make breakthroughs in expanding the market and achieve annual sales and production targets.
He said MCC must continue to optimise production organisation, improve work efficiency, create new production records and achieve the profit target.

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Landowner anger grows about continuing mining destruction

Peter S Kinjap | PNG Attitude | January 21, 2019

One of the world’s largest underdeveloped copper and gold deposits on the Frieda River, a tributary of the Sepik, is opposed by local indigenous landowners and all right-thinking Papua New Guineans.

The Frieda River deposit is thought to contain 13 million tonnes of copper and 20 million ounces of gold and tens of thousands of people fear the likelihood of serious river system contamination and the threat to the ecosystem that supports them.

A spokesman for environment group Project Sepik, Emmanuel Peni, said there was widespread opposition to the mine’s development plan.

“From Iniok village, which is where the barges and ships stop at the Frieda River, right down to the mouth of the Sepik, people are against the mine,” Peni said.

“They are concerned about possible contamination of the river system and the destruction of the environment along the Frieda and the Sepik River system.”

The East Sepik Provincial government and the national government had not yet responded to the concerns and grievances that have been raised.

Land in the Papua New Guinea context means the natural environment including land, rivers and seas.

In Madang Province, the landowners of Basamuk, Begesin, Ramu and Kurumbukari villages are affected by the Ramu nickel mine in various ways.  The Chinese state-owned mine has been polluting the beautiful coastal seas and people have been denied their food gardens and fishing waters.

In a recent documentary, ‘Uprooted’, the people clearly showed their pain about the river system contamination and the environmental destruction. They are fearful of losing their land to large scale development.

The deep sea tailings placement (DSTP) method of mine waste management and disposal which the Ramu mine proposed and was approved by the PNG government is causing a lot of environmental destruction and river contamination. 

“I belong to the government and the government belongs to me,” Martin Dampat, a Mindere landowner, said in the documentary. “How can it abandon me? It must do all that it can to ensure that I am able to feed myself.

“It has the ability to do so. But, if it chooses not to, then I know the government has no concern for me.  We have reached our limits. We have done all we can. They’ve rejected everything we’ve said.

“We feel we can’t do anything anymore. Some have given up trying,” he said.

“There is a great heaviness in all our hearts. I don’t think anyone can remove it from within us. We will go. But our grandchildren bear hardships even greater that what we’re experiencing.”

Another disgruntled landowner, John Oma from Ganglau Landowner Company, said: “They don’t have the land to grow their food. They won’t have an ocean to catch their fish.

“Where will they eat from? Nowhere. Great hardship awaits them. We won’ be able to avoid the troubles that will come. It’s the same sea. Life will be difficult for them too.”

And Sama Mellombo from the Pommern Land Group in Ramu said:

“It’s a fearful feeling when you think about the health effects on people and the inhabitants of the seas. If we take action now to tell China to find an alternative method, I think that’s the right approach. Find an alternative method instead of dumping waste into the sea. We live by the sea.”

Former Madang governor, Sir Arnold Amet, said:

“The government has endorsed the actual deep sea tailings deposit and an environmental plan. I think it is our assurance that the laying down of the pipe will not affect the lives of our people.  

“And the whole project has been signed and sealed by the national government and relevant agencies.”

A confused landowner from Ramu said:

“We hear that the minister has come. We hear that the member has come. We hear that the mine boss has come. But we’re confused. For the people here in Mindere and Ganglau, we feel like we’re about to die because we don’t have a Father. Our Father – the government – isn’t here.”

Bong Dampat, a mother and a Mindere villager, said:

“We fear for our children’s future. It’s going to be a long time. When waste dumped here, unborn children could be affected. The government and the company must pay attention. They cannot ignore us. What kind of a future will our children have? They have to pay attention.

“When a mining development contract allowed the Chinese to own and operate the mine, there was no concept of safety or environmental standards.  It was a cowboy operation. You did whatever you wanted and it didn’t matter if you were injured. It seems they came with a set of rules that didn’t comply with the rules of our country.”

“This is not a fight against development. No. That isn’t why we’re campaigning,” said Ramu landowner Michael Kasuk.

“We are fighting to protect and save our environment, our forests, our land, our river systems and our seas because our existence is connected to the land, forests, river systems and the sea,” Mr Kasuk said.

Peter S Kinjap is a freelance journalist, email pekinjap@gmail.com

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