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The Extractive Industry Transparency Initiative in Papua New Guinea: Just more corporate greenwashing?

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Papua New Guinea has recently signed up to the international Extractive Industry Transparency Initiative, but is EITI a good thing for the people impacted by the oil gas and mining industries? Or is EITI just another form of corporate green washing?

There are a number of arguments that support the view that EITI allows governments and the mining industry to look good while not delivering any tangible benefits for local populations:

  • EITI endorses and supports the idea that large-scale foreign-owned extractive industries are a good option for non-industrialized countries like Papua New Guinea. But in truth this is the wrong model of development.
  • EITI was established in 2002 but has not been shown to have a positive impact on governance, corruption or poverty in those countries where it has been adopted.
  • EITI ignores the negative social and environmental impacts of mining.
  • EITI focuses on just one part of government financial flows and ignores where the money that governments receive actually ends up.
  • Perversely, EITI may encourage more foreign companies to invest in more mines, oil and gas projects, causing yet more social and environmental problems and increasing the divide between rich and poor.
  • There is no vetting of the companies that are allowed to participate in EITI and many of its supporters have a bad track record on the environment and human rights
  • EITI sucks up civil society time and other resources that could be more usefully spent in other areas.

EITI does, however, offer some positives:

  • Knowing how much individual companies pay to the treasury each year may provide useful information for civil society and communities.
  • EITI meetings provide a forum in-country where civil society can meet with government and industry and raise issues of concern.

But how far do these positives outweigh the negatives?

EITI is itself very circumspect about its possible benefits. On its website it describes its benefits to civil society as being “increasing the amount of information in the public domain about those revenues that governments manage on behalf of citizens, thereby making governments more accountable”. 

Interestingly, EITI does not claim any benefits for the wider public or communities living around the resource industries.

What is EITI?

The Extractive Industry Transparency Initiative is a non for profit organisation registered in Norway and based in Oslo. It is funded by governments and industry.

EITI provides a global voluntary standard it says is designed to promote open and accountable management of natural resource revenues. EITI says it seeks to strengthen government and company systems, inform public debate, and enhance trust.

In each implementing country EITI is supported by a coalition of governments, companies and civil society groups.

EITI is cautious in its claims about the benefits of its standard. It merely says that by encouraging greater transparency “some of the potential negative impacts [of extractive resource industries] can be mitigated”. 

The EITI Standard

The EITI maintains the EITI Standard. Countries that implement the Standard are required to make full disclosure of all taxes and other payments made by oil, gas and mining companies to the government in an annual EITI Report. The oil, gas and mining companies are also required to disclose what they pay to the government.

The report allows citizens to see how much their government is receiving from their country’s oil, gas and mineral resources.

The EITI Standard sets the requirements countries must meet in order to be recognized first as an EITI Candidate and ultimately as an EITI Compliant country.

The Standard is overseen by the international EITI Board, with members from governments, companies and civil society

Currently 29 countries are EITI compliant and 17 are EITI candidates, as shown in this map:

eiti country-map

EITI in PNG

In March 2014 PNG was accepted as an EITI Candidate.

As an EITI Candidate, PNG must start disclosing payments and other data about its oil gas and mining sector, including information on license holders and license allocations, production data and other information.

PNG is required to publish its first EITI Report by 19 March 2016. If it is not published by then PNG will be suspended from EITI.

PNG must meet all of the requirements in the EITI Standard within three years (by March 2017)  to be recognized as EITI Compliant.

Each EITI country is required to establsih a Multi-stakeholder group made up of government, company, and civil society representatives to oversee the EITI implementation.

As PNG has been accepted as a candidate country the PNG MSG is required to publish a report stating the efforts PNG has undertaken to meet the EITI Requirements. The report for 2014 is required to be published by 1 July 2015.

Lucas Alkan in the Treasury Department is the PNG government’s National Coordinator for EITI

History

EITI was developed as a response to the ‘Publish What You Pay’ campaign against extractive industry companies in the 1990’s and early 2000’s. The PWYP campaign was led by Global Witness, Human Rights Watch and Oxfam.

Companies argued that rather than publishing what they paid the campaign should target government who should publish what they received

The idea of EITI was devised by the British government in 2002 (as British Petroleum or BP was one of the big targets of the PWYP campaign)

The Norwegian government was one of the early supporters of EITI, hence the EITI secretariat is based in Oslo.

Funding

The EITI secretariat has an annual budget of $5 million which comes from governments (62%) and industry (37%).

Stakeholders

EITI is a coalition of governments, companies, investors and civil society organisations, who are all represented on the EITI Board.

About 90 Companies are involved in EITI including Barrick, BHP, ExxonMobil, Newcrest, and Rio Tinto.

NGOs involved include Global Witness, Oxfam and Transparency International

Criticisms

The wrong model of development

EITI uncritically endorses and supports the wrong model of development. It is based on the idea that large-scale foreign-owned extractive industries can improve the livelihoods of rural people. This is a model of development that in Papua New Guinea contradicts and undermines the National Goals and Directive Principles in the Constitution.

No impact on governance, corruption or poverty

Transparency International’s annual reports on corruption and a study by EITI itself show that in EITI compliant countries their have not been any appreciable improvements in governance, reduction in corruption or poverty alleviation. EITI compliant countries do not perform any better than their non-compliant peers. Many of the countries that are EITI compliant have long histories of corruption, civil violence and dictatorships and most of them retain low levels of citizen participation in politics, weak accountability systems, and corruption.

Ignores social and environmental impacts

EITI ignores the social, human rights and environmental impacts of resource industries and allows participation by countries and companies with appalling social responsibility records. EITI does not just divert attention away from these key issues it provides governments and companies with a veneer of respectability

EITI ignores where the money ends up

EITI only deals with one part of the money chain, receipts by government. It does not follow how that money is used or where it ends up. EITI does not police how officials eventually make use of payments made by the corporations.  EITI also does not address upstream activities, such as procurement, which involves large sums of money and can be a source of corruption.Therefore EITI takes focus and attention away from fighting corruption and stopping the stealing of public monies.

EITI can encourage more investment by foreign companies

By providing a veneer of respectability EITI can encourage more foreign companies to open mines or new oil and gas projects. As EITI explains, it can provide ‘an improved investment climate by providing a clear signal to investors and international financial institutions that the government is committed to greater transparency’. This can benefit foreign resource companies by reducing their “political and repetitional risks”, reducing “political instability” and help companies promote their investment as a benefit to the country.

No vetting of companies

There are more than 90 companies involved in EITI including some of the worlds biggest mining, oil and gas companies. There is no vetting of the companies that are allowed to participate in EITI and some have very bad human rights and environmental records. Involvement in EITI allows them to poetry themselves in a good light.

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PNG locals shut down Newcrest Mining’s Lihir mine

“They manage landowner issues well, these incidents are infrequent but it is part of life up there.”

Landowners are seeking talks over the benefits package relating to the Lihir mine in Papua New Guinea.

Landowners are seeking talks over the benefits package relating to the Lihir mine in Papua New Guinea.

Peter Ker | Fairfax Media

Newcrest Mining’s fractious relationship with sections of the community in Papua New Guinea is continuing to cause headaches as the Lihir mine suffers another unplanned shutdown at the hands of angry locals.

Lihir, which ranks as Newcrest’s second most important asset, was shut for 36 hours over the long weekend after members of the local community entered the gold mining and processing areas to place ginger plants.

The ginger plants are a symbolic way of demonstrating a dispute and are effectively a call for talks over the benefits package that flows from the the mine to locals.

In its statement to the market, Newcrest said “local commercial interests” were involved in the incident, which the miner believes was illegal.

It is not the first time that members of the Lihir Islands community have interrupted operations at the mine: there was a similar interruption (which also involved the ginger plants) in August 2012.

Newcrest said on Tuesday it had recently agreed with the landowner groups in May for an audit to be conducted into the allocation of benefits from the mine, with the PNG Mineral Resources Authority to lead the audit.

It is believed the weekend’s incident, which saw police called to the mine, may be linked to that audit.

Some PNG businesses have also expressed concerns about being overlooked for lucrative contract work at the Lihir mine.

Like most miners, Newcrest has been reviewing contracts in a search for savings, and some Lihir locals were angry when a shipping contract was awarded to an international company earlier this year.

The PNG Mineral Resources Authority could not be reached on Tuesday.

Despite production of gold at the mine being interrupted by the weekend’s incident, Newcrest said production guidance for the year to June 30 would not be affected.

“The continued predictable and lawful operation of the Lihir gold mine and plant contributes to the long-term sustainable benefit of all stakeholders, including the host community. Newcrest is committed to working with landowners and all levels of government to create that outcome,” the company said.

Lihir has under-performed since being acquired by Newcrest in 2010, but in recent months it has finally shown signs of improvement.

Gold production at Lihir was 11 per cent higher in the March quarter than in the December quarter, while the costs of production were 12 per cent lower over the same period.

Morgans analyst James Wilson said the improvement program put in place by new Newcrest boss Sandeep Biswas was bringing results.

“Newcrest have posted some very strong quarters of late, the March quarter was exceptional at Lihir and has probably been an insulating factor for incidents like this,” he said in regard to the weekend’s incident.

“They manage landowner issues well, these incidents are infrequent but it is part of life up there.”

Newcrest shares closed 23 cents lower at $13.44.

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Police sent to reopen Lihir gold mine after locals use taboo plant to demand talks with Newcrest

PNG custom deemed ‘illegal’ by foreign mining company

Heavily armed police squad deployed on company behalf 

PHOTO: The gorgor is made from the twisted leaves of a ginger plant. (Newcrest)

The gorgor is made from the twisted leaves of a ginger plant. (Newcrest)

Liam Cochrane | ABC News

Heavily armed police have flown to Lihir Island to re-open Papua New Guinea’s largest gold mine after landowners halted operations and demanded talks with Australian company Newcrest Mining Ltd.

The mine shut down on Saturday afternoon, when local landowners placed taboo ginger plants known as gorgors at the mine pit and other sites, which is a traditional signal they want to hold discussions with the company.

The local landowners said their Integrated Benefits Package (IBP), which was due to be reviewed in 2012, was now three years behind schedule.

They also cited breaches of mine development activities, tendering of Lihirian business to “outside interests” and environmental damage as reasons for their discontent.

“We are not asking for something new, our revised agreements are not new, these are agreements Newcrest has not honoured,” Nimamar Local Level Government president Ambrose Silul said.

A heavily armed 17-member police mobile squad was deployed to Lihir, a small island group east of PNG’s New Ireland, and arrived on Sunday to remove the symbolic gorgors.

Newcrest confirmed the gold mine shut down for approximately 36 hours and called the landowner’s use of the gorgors “illegal” under an agreement signed in May.

“The MRA [Mineral Resource Authority] has previously provided notice that the power to disrupt mining operations resides solely under the authority of the MRA and any action outside of that is deemed illegal,” Newcrest said in a statement to the ABC.

“A temporary disruption to operations at Lihir was experienced while a return to an agreed formal process to resolve concerns raised by some of the community and other local stakeholders was discussed.

“Operations will scale back up this evening.”

Miner has failed us: landowners

A landowner representative defended the traditional use of the taboo ginger plants as a call for dispute resolution.

“What we have to be clear about is that the placement of gorgor is the Lihirian peaceful way of saying we have a dispute and we must come to the table to negotiate and resolve any issues relating to this dispute,” Lihir Mining Area Landowners Association chairman James Laketan said.

The Newcrest gold mine was shut down after landowners on Lihir Island used an arrangement of ginger plant leaves to signal they would like to call for dispute resolution. (Flickr: Chronox73)

The Newcrest gold mine was shut down after landowners on Lihir Island used an arrangement of ginger plant leaves to signal they would like to call for dispute resolution. (Flickr: Chronox73)

Landowner groups also singled out Newcrest general manager Craig Jetson as a hindrance to further talks.

“Craig Jetson has failed us. Therefore, we will only negotiate with the developer’s chief executive officer who is based in Canberra, Australia,” Mr Silul said.

The Lihir gold mine is located in an extinct volcanic crater and is believed to be one of the world’s largest gold deposits.

Since production commenced at the mine in 1997, the site has produced more than 9 million ounces of gold.

Newcrest’s website says around 90 per cent of the mine’s 5,000 employees are Papua New Guineans.

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Hidden Valley miner’s value plummets

Hidden Valley miner hits trouble in the financial markets

Harmony Gold losses over 25% of its value in four weeks

Hidden Valley mine

Hidden Valley mine

Company Shares of Harmony Gold Mining Company Limited Drops by -9.46%

Rick Lambert | News Watch International

Harmony Gold Mining Company Limited has lost 9.46% during the past week and dropped 25.97% in the last 4 weeks. The shares are however, marginally negative as compared to the S&P 500 for the past week with a loss of 8.83%. Harmony Gold Mining Company Limited has underperformed the index by 25.14% in the last 4 weeks. Investors should watch out for further signals and trade with caution.

On July 21, 2014 The shares registered one year high of $3.29 and one year low was seen on June 5, 2015 at $1.34. The 50-day moving average is $1.73 and the 200 day moving average is recorded at $2.06. S&P 500 has rallied 7.25% during the last 52-weeks.

Company shares have received an average consensus rating of Hold for the current week Shares of Harmony Gold Mining Company Limited ended Friday session in red amid volatile trading. The shares closed down 0.04 points or 2.9% at $1.34 with 1,857,850 shares getting traded. Post opening the session at $1.36, the shares hit an intraday low of $1.34 and an intraday high of $1.37 and the price vacillated in this range throughout the day. The company has a market cap of $584 million and the number of outstanding shares has been calculated to be 436,187,000 shares. The 52-week high of Harmony Gold Mining Company Limited is $3.29 and the 52-week low is $1.34.

Harmony Gold Mining Company Limited is a gold-mining and exploration company. The Company has operations in South Africa and Papua New Guinea (PNG). The Company has 11 underground mines, one open-pit mine and several surface operations, mostly in South Africas Witwatersrand Basin, as well as in the Kraaipan Greenstone Belt. In PNG, the Company has a 50% joint venture with Newcrest Mining Limited in the Hidden Valley open-pit gold and silver mine, the Wafi-Golpu project, and extensive exploration tenements. Its own (100%-owned) exploration portfolio focuses principally on highly-prospective areas in PNG. As of June 30, 2013, the Companys mining operations reported total proved and probable reserves of 51.5 million ounces (including gold equivalent ounces), primarily from South African sources. During the fiscal year ended June 30, 2013 (fiscal 2013), the Company processed 20.7 million tons of ore.

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Bainimarama points the finger at other Pacific nations for selling out, greed and destroying their environments

“Fiji is not a nation where development comes at any price. This nation cannot be bought. We insist that the preservation of our environment must always come first”.

“We have seen what has happened in other parts of the Asia Pacific when greed and the abandonment of proper process has caused long-term environmental harm.

“We will never, ever, make the same mistake.”

Fiji PM walks the talk on green growth

Nemani Delaibatiki | Fiji Sun

It is abundantly clear that Prime Minister Voreqe Bainimarama walks the talk on the Government’s commitment to protect our resources and environment.

His announcement that the Namosi gold and copper project, Namosi Joint Venture (NJV), is on hold, is a perfect example.

He said: “We have yet to be satisfied that the necessary environmental protections can be met.”

He said some of the commitment “comes at considerable cost.”

Mr Bainimarama made the statement when he launched the Green Growth Framework for Fiji document in Suva on Monday.

Referring to the Namosi mine project, he said: “The revenue from this mine could make Fiji wealthier, ease our budgetary constraints and provide our people with a range of extra services.

“But Fiji is not a nation where development comes at any price. This nation cannot be bought. And we insist that the preservation of our environment must always come first,” he said.

Mr Bainimarama said: “We have seen what has happened in other parts of the Asia Pacific when greed and the abandonment of proper process has caused long-term environmental harm.

“And I know I speak for every Fijian when I say we will never, ever, make the same mistake.”

He said achieving a Green Growth economy sometimes required sacrifices and “we are willing to make them.”

“In the sure knowledge that the true wealth of a nation will always be judged on the protection of its resources, their sustainable use and the wealth of the natural legacy we leave to our children and grandchildren,” he said.

“The entire ethos of my Government is to leave no Fijian behind and to meet the needs and aspirations of everyone.

“So our vision for national development is, above all, an inclusive one – to forge a national consensus.

“The best way for Fiji to move forward is to ensure that no project gets the green light unless it passes the sustainability test and is in the interest of all Fijians.”

Mr Bainimarama has not minced his words. They are crystal clear.

They are music to the ears of the Green Party and many of us who treasure our natural resources and our beautiful, clean environment.

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Lihir execs get the chop from Newcrest

Newcrest Mining chief executive Sandeep Biswas says the leadership restructure will create a single point of accountability for the Lihir turnaround. Photo: Arsineh Houspian

Newcrest Mining chief executive Sandeep Biswas says the leadership restructure will create a single point of accountability for the Lihir turnaround. Photo: Arsineh Houspian

Two senior Newcrest Mining executives depart in company reshuffle

Yolanda Redrup | The Age

Two senior executives will leave Newcrest Mining following a management reshuffle that the company says reflects better its focus on turning around the underperforming Lihir gold mine and pushing ahead with the Golpu exploration project.

Minerals executive general manager Colin Moorhead and internal operations executive general manager David Woodall are leaving Newcrest later this year, the company said in a statement to the market.

Mr Moorhead has been with the company for 28 years.

Chief executive Sandeep Biswas said the newly created role of chief development officer, which will be filled by Michael Nossal, “has been created to consolidate all business development and growth opportunities into one focused area”.

“I have made further changes to the organisation to reflect the increasing intensity of efforts on progressing the Golpu project, to create a single point of accountability for the Lihir turnaround and to increase attention on driving further improvements at existing operations,” he said.

The Lihir gold mine in Papua New Guinea, which represents about 55 per cent of Newcrest’s book value, has been underperforming and in January analysts said there had been no sign of a turnaround.

Newcrest bought Lihir Gold, which included a mine on Lihir Island in Papua New Guinea, for about $10 billion in 2010.

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Fiji: SEEP clears the air

Vuniwaqa Bola-Bari | The Fiji Times

THE Social Empowerment Education Program (SEEP) was never influential in the decision making by Namosi landowners with regards to the Namosi Joint Venture project.

The Waisoi people of Namosi have gone through different companies for the past 43 years and are now with the Namosi Joint Venture.

SEEP acting director Leo Nainoka informed youths at the Natural Resources Management Youth Symposium that they had only worked with the landowners in connecting them with government.

Mr Nainoka said many had always had a misconception of SEEP being involved in decisions made by the landowners.

“People have attributed some of the work in Namosi to SEEP, I’d like to state here that this is a big misconception. The work in Namosi is really to be attributed to the people in Namosi,” Mr Nainoka said.

He said the people of Namosi had been through 43 years of exploration with various companies such as Central Mining Finance, AMEX and ANGLO.

“These are companies that through the 43 years the Namosi people have been through them; they have experienced different companies.”

Mr Nainoka said a lot of people had always linked SEEP with the Namosi project.

“We were invited by TLC (iTaukei Lands Commission) to create a space for dialogue, to discuss and the people themselves made the decision.

“And we tried to link them with relevant stakeholders like the Mineral Resources Department but it’s not that SEEP went in there and influenced their decision.

“Sometimes when development comes in there’s already fragmentation and it can deepen the fragmentation to another level, this is something that we need to watch.”

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