Tag Archives: Mining Act

Unauthorised Miners To Be Fined

Post Courier | September 27, 2018

The Mineral Resources Authority has started ridding unauthorized semi mechanized or mechanized mining in the country.

Unauthorized alluvial mining is predominant in the Wau and Bulolo areas of Morobe Province.

Illegal alluvial miners face a fine of up to K10,000 or prison term of up to four years.

Recently MRA issued 13 stop work notices to individuals engaged in the illegal activities in Wau and Bulolo.

MRA stated such activities are not only illegal but pose substantial environmental and safety risks to miners themselves and the surrounding communities.

MRA’s acting managing director Nathan Mosusu appealed to the miners to adhere to the regulatory requirements, which is part of MRA’s regulatory compliance responsibilities.

Mr Mosusu said MRA has in the past demonstrated its openness and commitment to developing the alluvial sector in collaboration with miners, but it is the miners’ obligation to ensure they operate in compliance.

“I am asking miners to work with MRA for the betterment of the sector. Together we can achieve results,” Mr Mosusu said.

The Mining Act 1992, section 167 states – a person shall not carry on exploration or mining on any land unless he is duly authorised under this Act.

The MRA said the deaths of alluvial miners from cave-ins caused by unauthorised mining activities, and failures to adhere to safety requirements have become common.

It said tunneling and sluicing as part of these unauthorised operations has damaged local roads especially between Wau and Bulolo.

The Wau and Bulolo areas have a long history of alluvial mining that dates back to the 1920s.

At present, there are 81 active alluvial mining tenements and 50 inactive historic tenements granted under the previous mining legislation.

The 50 historic tenements are yet to be converted to alluvial leases recognised under the current Mining Act 1992. Once converted, the terms of these converted tenements would then ensure key safety and environmental aspects of mining operations are regulated appropriately.

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‘Reform PNG’s Resource Ownership Laws’

Henzy Yakham | Post Courier | September 12, 2018

The conversation on ownership of natural resources has intensified in recent times with the issue moved from the simmer-back to hot-and the front-burner.

In the forefront and pressing for revolutionary reforms in the resource ownership regime are two of PNG’s founding statesmen – Sir Julius Chan and Sir Mekere Morauta.

Both Sir Julius and Sir Mekere played very significant roles during pre-independence years as architects to craft the foundations of PNG’s currency, banking and financial institutions, which in succeeding years underwent further reforms to improve their service delivery.

Today, the two former prime ministers are calling for changes to the resource ownership laws so that the original inhabitants of land and sea where the natural resources are found have fair and equitable benefits. In November 2013, despite not attending a Madang meeting of governors from maritime provinces due to prior confirmed official engagements, Sir Julius provided a brief paper to his colleagues on the development of PNG’s extractive industries, ownership of natural resources and related issues. Included in the brief was Sir Julius’ stance that land/resource owners’ rights to own natural resources on and under their land and sea as his proposed remedies in the mining industry.

The brief highlighted a number of aspects in which PNG has failed to structure the mining industry for maximum value to PNG and its citizens. With the brief were comparisons of mineral royalty rates of PNG (which are among the lowest in the world), and other countries which include:

Poland: 10 per cent contained metal value
Ghana: 3 -12 per cent sliding with price
Canada: 15 per cent (British Columbia) taxable income; 18 per cent (Ontario) of taxable income 20 per cent; (Quebec) of taxable income
Mozambique: 10 -12 per cent diamond; 5-8 per cent precious metals
Mexico: 8 per cent gold
Botswana: 10 per cent diamonds; 5 per cent precious metals
United States: 12.5 – 16 per cent Oil; 8 – 20 per cent precious metals
Papua New Guinea: 2 per cent gold; 2 per cent copper

Sir Julius maintains that PNG’s mining regime is grossly distorted and unfair because billions of kina are earned, but the real land, and resources owners simply do not realise their fair share of the benefits.

In a nutshell, he has been pushing for among others:

– Royalties raised to 10 per cent f.o.b. annual revenues;
– SSG raised to 10 per cent f.o.b. annual revenues and SSG payments should be made directly from the company to the province;
– Tax Credit raised to 10 per cent of assessable income and funds should be placed in an account the year of eligibility with no time limit on the use of funds;
– The State receive at least 30 per cent equity in all mining projects free of charge, and should convey a significant portion of this equity to the province, the LLG and the landowners;
– Twenty per cent (20 per cent) of all royalties, special support grants, tax credit and dividends from equity holdings be placed in a separate account to be used for development projects in non-mining provinces; and
– The Mining Act 1992 be comprehensively reviewed and amended, specifically such that ownership of all minerals on and below the sea is vested in the province in whose waters minerals are located.

PNG’s Mining Act 1992, states that all minerals existing on, in, or below the surface of any land in PNG, water lying in any land in PNG, are the property of the State. During colonial rule, the mining and petroleum laws of PNG were adopted based on Australian precedents, giving the powers of ownership of resources in the Administrator. Under the common law of England, minerals belong to the owner of the land under which they are found.

The British Common Law, inherited by Australian colonies upon white settlement, included a presumption that the owner of the land is entitled to all that lies above and below the surface.

Natural resources such as minerals were regarded as part of the land in which they naturally occurred and accordingly passed into private ownership upon Crown grant of the land. Despite these arguments, in the end the Australian Statutory Law in place during colonial times prevailed over both PNG law and British Common Law, this was formalised in the Mining Act 1992. However, it is very clear that State ownership violates both traditional PNG law and British Common Law.

In April 2013, Sir Julius told the Parliamentary Referral Committee on Minerals and Energy inquiry into the review of Mining Act 1992 that under current laws, PNG simply gives away all its wealth and then buys it back at an exorbitant price.

On August 19, 2013, Sir Julius was the Keynote Speaker at the Department of Mineral Policy and Geohazards Management (DMPGM) organised regional consultation meetings in Kokopo, East New Britain Province on the proposed changes to Mining Act 1992. There, he outlined the way in which the mining regime in PNG has failed the people and the way it should be changed for the greater benefit of the people and provinces.

On May 14, 2009, Sir Julius proposed reforms in natural resource ownership laws in a motion tabled in Parliament.
The underlying intention of the motion was for the transfer of the resource ownership to landowners of where the resources are found. As well, the motion proposes for increased benefits for landowners, provincial governments and the country in general.

Sir Julius argues that as a direct consequence of the arrogation of all mineral, oil and gas reserves on land and below the land and sea by the State have been a massive give-away of the national wealth of PNG.

On September 4, 2018, Sir Mekere asked Prime Minister Peter O’Neill a series of questions based on important national issues raised by Sir Julius in his reply to the inaugural address of the Governor General in opening this Parliament.

Sir Mekere prefaced his question to Mr O’Neill by quoting Sir Julius “to remember that in our democracy the final power is the power of the people. We are here for one reason only – to serve the people”.

“I want to take a wider view of the challenges we face. For though we have some short-term problems to tackle, I fear there are even more grave problems looming over us.

“I have never known a time when our country was in greater peril.”

After quoting Sir Julius, Sir Mekere asked Mr O’Neill what the government position on Sir Julius’ recommendations among others to:

– Increase the level of royalties from the current 2 per cent to 10 per cent;
– Increase the level of Special Support Grant and the Tax Credit Scheme;
– Establish a Trust Fund in which 20 per cent of revenues of mining provinces would be paid to distribute to non-mining provinces;
– Revise the Mining Act 1992 and the Oil and Gas Act 1998 to vest ownership of resources in the people;
– Introduce a Derivation Grant for mining and petroleum provinces of 5 per cent of the value of resources originating in that province;
– Increase Autonomy of Provinces, provinces “that demonstrate capacity to manage their own affairs. The autonomy was to cover administrative and financial autonomy and autonomy over non-renewable and renewable resources.

Answering Sir Mekere’s questions, Mr O’Neill said “the Mining Act is under review at present and I will not pre-empt the discussions and the outcomes of that review that is taking place.

“The Mining Minister and his team are already well advanced in those discussions. There will be an opportunity for this Parliament to look through that review and the new Mining Act, which will address all these issues, including royalties, the powers of the provinces with respect to the mining activities in those provinces and the management of the trust funds.

“There has been a gross abuse in the management of some of the trust funds and we are all aware and are trying to correct that as we move forward.

“I can assure you, that the people of Papua New Guinea, particularly the landowners will get a better share of the benefits of the resource development in this country.

“That is the priority of this government and we will continue to pursue it through the mining review which is now being conducted and is still continuing.”

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Chamber Urges Govt To Review Proposed Mining Act Amendments

Extractive industries are worried their rape of PNG might be about to come to an end.

They pay the government less than 2% of revenue, K400 million from exports of K25 billion in 2017; but they don’t want to have to pay a single toea more!

Post Courier | August 19, 2018

The PNG Chamber of Mines and Petroleum continues to encourage government to undertake an independent review of the proposed amendments to the Mining Act 1992.

The chamber maintained that this was to ensure full understanding of the economic implications of the revised Act on the economy of the country.

President of the PNG Chamber of Mines and Petroleum, Gerea Aopi said stable government policies and favorable investment climate are critical for future growth in the PNG resource sector, and that the proposed changes to the Mining Act would undermine PNG’s investment attractiveness.

“While we support the PNG government’s prerogative to update the legislation to meet the challenges of the 21st century, some of the amendments would pose significant deterrents for investment in future mining projects and would be a serious impediment to the operation of current mines in PNG,” Mr Aopi said.

“When investors assess the investment risk and return potential of a country, they look at the legislative and policy framework as well as the total cost of doing business, including the levels of existing infrastructure to support a project.

“This calculation includes mining legislation, as well as taxation, fiscal and other policies. Considering this whole package, PNG has a high total government ‘take’ when compared to other countries.

“Independent modelling has shown that whilst PNG royalties in isolation might not be as high as other jurisdictions, the total take when including all taxes – including royalties, corporate tax, state equity and dividend withholding tax – is at the higher end of most countries. This is combined with a very low score on the World Bank’s Ease of Doing Business scale.”

The Chamber believes there is huge potential for further development opportunities in the mining and petroleum sectors in the next three to five years, delivering benefits to the people of PNG, but these will not proceed unless investors are confident of the legal, fiscal and regulatory environment in PNG.

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Call to review the unjust, primitive and self-harming laws of Papua New Guinea

Resource Owners Federation of PNG | 22 May, 2018

The PNG Chamber of Mining and Petroleum made statements last week claiming that the PNG mining laws are uncompetitive, in view of the government’s recent amendment to the Mineral Resources Authority (MRA) Act of 2005 and the proposed amendment to the Mining Act 1992. Their statements are untrue and are designed to scare off the National Parliament from amending the laws so that the mining companies can continue to reap all the benefits of mining in the country, whilst keeping the landowners and citizens who own the resources poor, as they have been successfully doing for decades.  The Resource Owners Federation of Papua New Guinea believes that, although the Mining Act 1992, needs to be reviewed, it should not be reviewed for the benefit of the mining and petroleum companies, but for the benefit of the country and its citizens.

The United Nation’s High Commissioner of Human Rights, during his visit to Papua New Guinea, in early February 2018, observed among others that; “Papua New Guinea was a resource-rich country but much of its population lives in abject poverty, with acute malnutrition rates in some areas comparable to Yemen, and minimal access to quality healthcare and education”.

The UN High Commissioner’s observations are an accurate assessment of Papua New Guinea, being a country that was “so rich, but yet so poor”.  Such assessment, is yet another official condemnation of the country’s state of affairs, in relation to the social and economic conditions of the country and its people. A significant reason for such condemnation is that, our natural resources have been managed in a way that all the benefits of the mining and petroleum projects are transferred to foreign shareholders, with nothing or very little being left for the country and its citizens. Such an official negative assessment from the United Nations must therefore, result in significant corrective actions to be taken by the State and its representatives, by way of reviewing the country’s inappropriate laws and policies.

The High Commissioner further went on to observe that; “it has strong civil society activists but there is little room for them to influence Government Policy“. The Federation and citizens have been calling on the National leaders of the country and the government over many years to review the Mining Act of 1992, on the basis that the country and its landowner citizens were not receiving a fair share of the profits from the mining and petroleum projects. The Mining Act 1992, proclaims the State’s ownership of all minerals found in any land, including and especially customary land, which land are owned by the traditional landowners throughout the country. The Federation is of the view that the State’s compulsory acquisition of minerals held under any traditional or customary lands without paying just compensation, as required by section 53 of the Constitution of Papua New Guinea, is unlawful. It is also in breach of the Article 17, of the Universal Declaration of Human Rights, which states that; “everyone has the right to own property alone or in association with others and no one shall be arbitrarily deprived of his property.”

The Mining Act 1992, as it stands and for the above reasons, is a primitive, unjust and self-harming law, which must be reviewed in its entirety, so that ownership of minerals is retained by the customary landowners. Minerals can still be mined only after development agreements are reached between the landowners and mining companies. Such arrangements have and are already in force, in many states of the United States of America. Under such an arrangement, the State stands to collect taxes from both the landowners and the mining companies. All parties then benefit from a project, in contrast to Papua New Guinea in the past and today, where the landowners are the ultimate losers.

The recent amendment of the MRA Act 2005, was justified in that, the mining industry members were regulating themselves from 2005 to 2018, after having gained a significant number of seats on the Board of the Authority.  The MRA was therefore seen as an organization that was run by the mining industry for its own benefit and against the interest of the country and its citizens. The Chamber of Mining and Petroleum now calls the amendment uncompetitive, because of their exclusion from the Board that they controlled for many years to their benefit but to the detriment of the landowners, the country and its citizens. The Federation challenges the Chamber of Mining and Petroleum to identify any government in the western world that would allow the mining industry to take over the enforcement of its mining laws against itself. We would think that such a practice, if allowed, would be deemed to be corrupt and therefore unlawful.

The UN High Commissioner further went on to say that; “the government urgently needs to build a stronger nexus with its people, so it can better serve their needs in this vast and diverse land.”  He saidthat it was unacceptable that many businesses had been granted licenses to engage in the extractive industries without the free, prior and informed consent of the people living on the affected lands…

 The Federation believes that the amendments to the Mining Act 1992, the MRA Act 2005 and the Petroleum Act 1998 are three laws which must be amended so that those citizens who are owners of the land under which any mineral or petroleum are found, are recognized by law, as the owners of those resources. This then will be the beginning of a new era, where the State will be building a stronger nexus with its people going forward.

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PNG can overide Bougainville laws – PM

Panguna mine. Photo: Wellington Chocolate Factory

Radio New Zealand | 26 April 2018

Decisions by the Bougainville parliament can be overidden by the national parliament, the Papua New Guinea prime minister says.

Peter O’Neill made the comment to news agency Reuters after the Autonomous Bougainville Government (ABG) announced earlier this month that it was placing an indefinite moratorium on a resumption of mining at Panguna.

Its president, John Momis, said the ABG imposed the ban as it did not want to disrupt preparations for Bougainville’s independence referendum next year.

Grievances caused by the mine were central to the outbreak of civil war in 1989, a 10-year conflict that cost over 20,000 lives.

When asked about the moratorium, Mr O’Neill said that the “constitution and the overall legislation from the national government is the one that underpins all the other legislation”.

“It’s subject to the main laws,” he said.

The vast Panguna copper and gold mine once generated nearly half of PNG’s annual export revenue.

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Chamber concerned with passing of MRA bill

ENN | 27 February 2018

The Chamber President, Gerea Aopi, said today the MRA has been a success story for Papua New Guinea and the Government.

“The Chamber and the mining industry believe that the performance of MRA over the last decade is a credit to Government, and the excellent operating standards within the mining sector are an indicator of the good work of the regulator. It would be a tragedy for all mining industry stakeholders if this progress is lost,” Aopi said in a statement. 

“MRA has managed the regulatory environment for mining, as an arm of government, in a firm, fair and responsible manner. It has earned the respect and support of industry and other stakeholders, including landowners, and contributed to rising professional standards throughout the mining sector.”

Aopi said mineral exploration and production companies have three major concerns about the legislative changes:

  1. Removal of direct industry representation on the MRA Board
  2. The doubling of the production levy rate from 0.25 percent to 0.5 percent and
  3. The allocation and remittance of 35 percent of the annual production levies directly to the Department of Mineral Policy & Geohazards Management.

Aopi said the initial impetus for the establishment of MRA was provided by the European Union, which decided after the severe 1997 drought that the strengthening of the regulatory regime for mining would contribute significantly to diversification of the PNG economy and help mitigate unexpected emergencies such as drought.

An initial 50 million Euro grant (about K200 million) under a mining sector support program in 2002 led to the implementation of a range of projects and detailed discussions and planning between all stakeholders. This laid the groundwork for the establishment of MRA, which began operations in 2006.

The MRA was also created so that it can be adequately funded, and effectively regulate an industry that was very critical to the PNG economy. 

“Successive PNG Governments have benefitted from the independent role played by MRA in regulating the minerals sector, including the operational and safety aspects of PNG’s mines which have enable PNG mining operations to be benchmarked against global standards,” stated Aopi.

“By not allowing industry representation on the MRA Board, the Government has effectively negated the intent of the original legislation of ensuring effective and efficient administration and regulation of the mining sector through a meaningful involvement of industry and private sector at the Board level.”

Aopi said the doubling of the production levy was a de facto increase in tax and an additional burden on existing and future mining projects, even though the current levy has proved to be adequate for the funding of MRA operations.

“The new Act will see 35 percent of the increased levy diverted directly for the use of the Department of Mineral Policy and Geohazards Management. These funds can also be used for State obligations under Project Agreements entered into by the State and for ‘development initiatives’ within project areas approved by the MRA Board.

“The industry is gravely concerned the diversion of funding to outside activities may lead to a deterioration of MRA’s capacity.

“This is wrong and a major shift in Government policy, under which an industry tax levy can be used to directly fund another Department outside the budgetary process and to underwrite social obligations of the State managed by MRA as well as the Department of Mineral Policy and Geohazards Management.”

Aopi said for many years, successive Governments have reaffirmed their confidence in the MRA “model”.

“Why are we making these changes now to weaken a very important Government body that has performed exceptionally well? The benefit of having an effective regulator over many years can clearly be seen in the professional way issues are managed in the mining sector.

“Indeed, it is a working model that is being discussed by Government and industry to be applied to the oil and gas sector to help manage the issues impacting their operations,” he said.

The Chamber is also very concerned about the Government’s delay in expediting an independent process to review amendments to the Mining Act as agreed to between Government and the industry.

This was an important undertaking it made in 2017 to ensure changes to the legislation were fair and represented the interest of all stakeholders, including the Government.

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Mining Policies Need To Be Reviewed: Minister

Minister For Mining Johnson Tuke Says The Policies Governing The Mining Sector In Papua New Guinea Need To Be Revisited.

Matthew Vari | Post Courier | February 22, 2018

Minister for Mining Johnson Tuke says the policies governing the mining sector in Papua New Guinea need to be revisited.

He said much of the legislations governing the sector are still from the colonial era.

Mr Tuke said with the strong support from Prime Minister O’Neill and government caucus he is determined to take stock of benefits to landowners that make changes for the country to have a greater share in its own wealth.

“I think all our mining policies are more or less colonial. Are we still in the colonial times? We are moving forward,” Mr Tuke said.

“Leaders like Sir Julius Chan have all learnt their mistakes, and are telling me to move forward. The decisions conducted then were suitable for that time. This time has different underpinning. We have take heed of it and move ahead.”

Mr Tuke said he plans for all new mines to provide community obligation concessions.

“We have been for far too long reaped. This is high time; there will never be another time. It needs courage and determination. This government is determined.”

Mr Tuke commended Prime Minister Peter O’Neill for his leadership in ensuring changes do take place for the country’s mining sector.

“There has never been a time any consecutive government has thought so much of its people. I have started off with MRA and I will pursue with mining policy and acts.”

“I am adamant and I will fight vigorously until I pass the mining policy (review). I think 40 years is enough and we are overqualified to develop new policies.”

“I have got to do one or two things, I have to make abnormal decisions that will stimulate many others but affect a few.”

He said with the mining industry a huge contributor to the national purse much of its activities have been done behind the curtain. Something Tuke says he wants to change.

“I want everybody to know the system, the guidelines, the policy and the process, because once it (minerals) is gone, it is gone. You can’t renew that so our people have to know what they (developers) are doing.”

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