Tag Archives: Mining Act

PNG resource extraction law at stake

“The truth is that our country is at a crisis point. If we do not correct some very serious faults and failures in how we approach the extraction of resources such as minerals, gas and oil we will not only continue to fail to deliver progress to our people, we will put the very survival of our country at peril.”

Editorial | The Sunday Bulletin | 2 December 2018

THIS week Papua New Guinea’s expanding resources industry will be showcased at a three-day PNG Mining and Petroleum Investment Conference.

Widely regarded as the nation’s premier international conference, will be held from 3 to 5 December 2018 at Sydney’s Hilton Hotel in Australia.

We understand that speakers will include the PNG Prime Minister, Peter O’Neill, along with a number of government ministers who will provide delegates with insights into the government’s policies in areas such as energy and environmental protection.

The PNG Chamber of Mines & Petroleum in its media release hinted that an important project that will be featured during the conference is the country’s upcoming Papua LNG project, of which a Memorandum of Understanding on this project was signed by the project’s joint venture partners Oil Search, Total and ExxonMobil and the PNG Government during the summit.

The Wafi-Golpu project, a 50-50 joint venture project owned by Australian-owned Newcrest Mining, and South African mining giant Harmony Gold which early works is expected to start in a few years will be a main draw-card for conference delegates.

While the current focus is showcasing our vast mining and petroleum potential to prospecting investors, there is a real need to correct PNG’s mining laws.

The review of mining legislation (The Mining Act 1992) is long overdue in Papua New Guinea. There have been some attempts made in recent times but nothing is forthcoming. How serious Government is about this review? It seems to have been carried out with very little urgency.

We have seen very little in the way of radical suggestions for changes in the way mining is done in Papua New Guinea.

For the truth is that our country is at a crisis point. If we do not correct some very serious faults and failures in how we approach the extraction of resources such as minerals, gas and oil we will not only continue to fail to deliver progress to our people, we will put the very survival of our country at peril.

We need a new vision for resource extraction. We need to make some hard decisions, not just make little changes around the edges. For example, we need to decide that the people own the resources. Not the government. Not outsiders. It’s the people. And we need to ensure that there is an equitable distribution of the benefits – not only to landowners, the affected areas, provinces and government, but to the entire nation. This is what our country cries for today, and this is what we must provide.

But to develop a strategy of sustainable prosperity, we must first understand the mistakes we have made in the past and continue to make. Someone must tell this story or we will never correct our mistakes.

The Mining Act 1992. That Act declares: ‘All minerals existing on, in or below the surface of any land in Papua New Guinea, including any minerals contained in any water lying on any land in Papua New Guinea, are the property of the State’.

The Oil and Gas Act 1998 makes a similar declaration in respect of oil and gas reserves throughout PNG.

The State has unilaterally wrested ownership of all wealth on or below the ground from the people who owned those resources for 40,000 years.

What we need now is for the government to change the much talked about Mining Act 1992 so that our resource owners get a fair share of the resource wealth that’s derived from their land.

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Introduction Of Mining Bill Pushed To Next Year

Mining Minister Johnson Tuke

Post Courier | December 5, 2018

Mining Minister Johnson Tuke told the Mining and Petroleum Conference in Sydney that proposed amendments to the Mining Act (1992) will be made next year.
He said this despite previous indication of last month being the sitting that would introduce the proposed amendments.
Citing concerns from the industry and the need for independent review from within government circles, he said the amendment would still take place nonetheless citing an over 9 years consultative period.
“One of the principle priority for my ministry was to ensure the proposed mining bill is introduced in parliament in the November session in accordance with the NEC decision No 8 of 2018,’’ he said.
“The ministry had put together a working team comprising the Department of Mineral Policy and Geohazards Management, the Mineral Resources Authority, the Department of Treasury and the Office of the State Solicitor and the First Legislative Council under the oversight of the Chief Secretary to Government to prepare the mining bill for introduction in parliament, however, certain considerations have pushed the introduction of the mining bill to 2019.
“Let me say at this juncture that the mining bill and the new policies are necessary for the effective regulation of the mining industry in PNG.
“The review of the mining act was done by Papua New Guineans on both sides of the table who are well experienced in their respective fields of employment.
“The nine years of review, which three, specifically with the mining industry is testament to the scrutiny the review has undertaken.”
He also assured the industry and potential investors that the policy and legislative changes proposed by government intend to establish a foundation for growth and prosperity for the country in the years to come.
“The aspiration to protect the rights and interests of our investors is of paramount interest to the government,’’ Mr Tuke said.
“By the same token, the aspiration to ensure the rightful benefits are due to our people is also of paramount interest to the government.
“Finding the balance that best serves our collective interests and aspirations is what we have to do collectively in a responsible manner.
“While the industry has the duty to serve its respective boards, we as the leaders of the country also have the responsibility ultimately to serve our people.”

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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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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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