Tag Archives: Ok Tedi

Large-scale Mines and Local Politics: Between New Caledonia and Papua New Guinea

Download the chapters in PDF format

  1. Large-Scale Mines and Local‑Level Politics (PDF, 0.2MB) – Colin Filer and Pierre-Yves Le Meur 
  2. From Anticipation to Practice: Social and Economic Management of a Nickel Plant’s Establishment in New Caledonia’s North Province (PDF, 0.8MB) – Jean-Michel Sourisseau, Sonia Grochain and David Poithily 
  3. Social and Environmental Transformations in the Neighbourhood of a Nickel Mining Project: A Case Study from Northern New Caledonia (PDF, 1.7MB) – Matthias Kowasch 
  4. The Boakaine Mine in New Caledonia: A Local Development Issue? (PDF, 0.1MB) – Christine Demmer 
  5. Conflict and Agreement: The Politics of Nickel in Thio, New Caledonia (PDF, 0.1MB) – Pierre-Yves Le Meur 
  6. Contesting the Goro Nickel Mining Project, New Caledonia: Indigenous Rights, Sustainable Development and the Land Issue (PDF, 0.2MB) – Claire Levacher 
  7. Dissecting Corporate Community Development in the Large-Scale Melanesian Mining Sector (PDF, 0.4MB) – Glenn Banks, Dora Kuir-Ayius, David Kombako and Bill F. Sagir 
  8. Negotiating Community Support for Closure or Continuation of the Ok Tedi Mine in Papua New Guinea (PDF, 0.3MB) – Colin Filer and Phillipa Jenkins 
  9. Disconnected Development Worlds: Responsibility towards Local Communities in Papua New Guinea (PDF, 0.3MB) – John Burton and Joyce Onguglo 
  10. Gender Mainstreaming and Local Politics: Women, Women’s Associations and Mining in Lihir (PDF, 0.1MB) – Susan R. Hemer 
  11. Migrants, Labourers and Landowners at the Lihir Gold Mine, Papua New Guinea (PDF, 1.4MB) – Nicholas A. Bainton 
  12. Bougainville: Origins of the Conflict, and Debating the Future of Large-Scale Mining (PDF, 0.2MB) – Anthony J. Regan 
  13. Between New Caledonia and Papua New Guinea (PDF, 0.1MB) – Colin Filer and Pierre-Yves Le Meur 
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Filed under Environmental impact, Financial returns, Human rights, New Caledonia, Papua New Guinea

Mining industry to extract K11 billion from PNG in 2017

K11 billion mining revenue for 2017
Cedric Patjole | PNG Loop | October 4, 2017

K11 billion in mineral revenue is expected to be generated from both large and small scale mining in 2017.

This is based on gures reported from January to August, according to the Mineral Resources Authority (MRA).

The MRA says this revenue is the result of continued overall increases in mineral commodity prices, production and ore exports.

In a statement, the MRA says the estimated K11 billion revenue represents an increase of 13.4 percent against 2016 mineral revenue, underpinning an ongoing upward trend in mineral receipts which will boost the economy.

Based on gures from operating mines in the country, major projects expect to surpass results from 2016.

Ok Tedi Mine forecasts indicate a 2017 end of year outturn of an additional K700 million, with revenue potentially exceeding K2.7 billion.

Lihir is also turning in another solid performance and revenue forecasts indicate an increase in 2016 of around K200 million, exceeding K3.7 billion for the full year.

Ramu operations still continue to suffer from regulatory and compliance issues, however 2017 production has improved and could exceed 2016’s disruptive year by K300 million.

Revenue from the newly re-opened Kainantu mine is estimated at over K8 million from the first two shipments. Unfortunately the mine suffered a significant setback with illegal damage caused by landowners and this will take some months to recover from.

Simberi mine continues to generate revenue despite moving towards closure next year, coincident with the expiry of their mining lease.

Porgera and the alluvial sector are maintaining reasonably steady positions, while Hidden Valley mine has entered its temporary closure phase. Loss of revenue during this period will hopefully be made up by Kainantu once they return to production.

The Tolukuma mine remains problematic as they struggle with tenement and regulatory issues as well as funding, all of which is hindering a return to production under new owners, Asidokona.

Crater Mountain mine is also a icted by nancial di culties with the failure of a capital raising, but it is hoped that the board and management changes will nally see some positive results from this small operation shortly.

The MRA says while gold still represents an ‘unhealthy’ 68.75 percent of PNG mineral revenue, this percentage has been whittled away by the increase in copper, nickel and cobalt providing that widening of the mineral base’.

The gold price has again uctuated wildly with a recent spike on the back of international tensions surrounding North Korea’s nuclear ambitions, hitting over $USD1340 early in September, only to have now dropped back below $USD1290.

Copper, nickel and cobalt have also continued to rise erratically in recent months with copper hitting a 52 week high of $USD3.13/lb in September.

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Thirty years a ‘world class’ mine and still no doctor in the local hospital

Kiunga is just 137km from the ‘world class’ Ok Tedi mine and is the main port for the dispatch and receipt of goods and services from the mine. All the mine concentrate is filtered, dried and stockpiled in Kiunga before being shipped.

The Ok Tedi mine has been exporting gold silver and copper for over 30 years, precious metals with a value that runs to many billions of dollars; but the local hospital has not had a doctor for 20 years…

World Class!

Hospital without a doctor for 20 years

Jacklyn Sirias | The National aka The Loggers Times | August 11, 2017
THE Kiunga district hospital in Western has been without a doctor for more than 20 years, Nursing Services director Thomas Tepend says.
He told The National in Kiunga that the hospital operation was being run by 29 staff made up of 19 community health workers and 10 nurses including himself.
“I have been working with the hospital for more than 14 years now. The last government doctor left us in 1997,” he said.
Tepend said they usually get more than 100 patients a day.
“The big projects in the province are attracting a lot of people and the population has increased,” he said.
“Thus the number of patients we receive per day has also increased.”
Tepend said government funding at times failed to reach them because of the hospital’s remote location.
In 2009, the hospital entered a public-private partnership which saw Ok Tedi Mining Limited through the North Fly Development Programme contribute funding and support.
It enabled the hospital to recruit two medical officers, an anaesthetist and a hospital administrator.
One of the medical officers, Dr Asael Kaptigau, said under the arrangement, they were trying to rebuild the health system.
“Under the PPP structure, we come in to assist the hospital where we can in terms of the health programmes in the province,” he said.
He said their two-year contract would expire next year.
He urged the health department to send government doctors before their contract expired.

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Ok Tedi Mining Ltd damaged by O’Neill

O’Neill may have turned the Ok Tedi mine into a corporate disaster, as Morauta claims below, but Morauta can hardly claim that under his leadership the outcomes for the poor people of Western Province were any better…  

Mekere Morauta | 14 June 2017

At a rally in Kiunga today, the former Prime Minister and current chairman of PNG Sustainable Development Program Ltd, Sir Mekere Morauta, told Western Province people the sad story of the Ok Tedi mine since Prime Minister Peter O’Neill took it in 2013.

He told them that the latest annual financial results are a disgrace, and confirm his worst fears about Mr O’Neill’s expropriation without compensation in 2013.

“They show that a well-managed and very profitable company under PNGSDP’s majority ownership has been turned into a corporate disaster under Mr O’Neill, as I predicted,” Sir Mekere said.

“OTML made a loss of K350 million in 2015, by far the largest in its history and far outstripping the K15 million loss caused by the very severe drought in 1997. The company never made a loss under PNGSDP majority ownership.

“This is Mr O’Neill’s dirty little secret. He and the OTML Board micro-managed by Dr Jacob Weiss have tried to hide the loss by not publishing OTML’s 2015 Annual Review, or its 2015 and 2016 quarterly financial results.

There is no explanation anywhere in the latest 2016 Annual Review to account for a loss of this magnitude.

“The only explanation can be the waste and mismanagement we have come to expect of the O’Neill Government.”

Mr O’Neill has decimated OTML profits. Under PNGSDP, average annual profits were almost K1.2 billion a year; under Mr O’Neill they are just K100 million.

OTML used to be the biggest taxpayer in PNG, which helped the national Government pay for education, health and infrastructure maintenance.

Under PNGSDP average annual taxes were K640 million; under Mr O’Neill they are just K100 million. OTML paid practically NO company tax at all in 2015 and 2016.

PNGSDP’s profitable and well run mine delivered large dividends: K288 million a year was paid on average to the State and the people of Western Province. A further K426 million a year went to PNGSDP.

After administration costs (which are capped), two-thirds was saved in the Long Term Fund and one-third went to the Development Fund to support programs for the people of Western Province and PNG.

Under Mr O’Neill total dividends have fallen to just K68 million a year on average, and no dividends at all were paid in 2013 and 2015. Only K150 million was paid in 2016 compared to K723 million in 2012, PNGSDP’s last full year of ownership.

PNGSDP received K5.5 billion in dividends from OTML between 2002 and 2012. Two-thirds of these dividends were invested in the Long Term Fund to be used after the mine closes. The balance of the LTF at the end of March 2017 had grown to K4.3 billion ($US1.36 billion).

Moreover, the LTF remains safe and well protected from the tentacles of the octopus.

One-third of these dividends (about K1.8 billion) were used for development programs in PNG and especially Western Province.

In total Western Province received more than K4.7 billion in direct benefits from OTML and PNGSDP: K2.0 billion in royalties, CMCA and other payments, K1.7 billion in dividends from OTML, K400 million for Kiunga-Tabubil road maintenance and more than K600 million in development projects from PNGSDP.

In October 2013, shortly after the expropriation of PNGSDP’s shares in OTML, Sir Mekere warned that OTML faced the same fate as the Tolukuma gold mine under state ownership:

State ownership “would spell disaster for Ok Tedi. Tolukuma has been ruined since it was turned into a State-Owned Enterprise, and instead of an asset it has become a huge liability. Ok Tedi will suffer the same fate. It will die a long and painful death. There will be risks to jobs and wages. There will be a lower standard of operations, including in workplace health and safety. The quality of environmental management will fall. Transparency and accountability will be compromised, especially in the area of contracts.”

Sir Mekere said his predictions had come true. “Mr O’Neill has killed Western Province’s Golden Goose.”

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TOO LITTLE LAND, TOO MUCH CONFLICT

Mining communities continue to disagree over the use of sparse land


Mining activity, for years now, has been an issue of serious environmental dispute to the communities it affects – particularly in developing countries. Once land is used for mining activity, it becomes unusable for many other large industries in resource rich developing countries, such as farming and forestry. Particularly Impacting communities in developing countries, largely due to a lack of governmental regulation and structure in the face of such projects. Although conflict resolution strategies have been attempted to address this long standing issue, it seems as though, community consultation; coordination of governments; compensation packages and working partnerships between large and small scale miners, is what’s required, but hardly done successfully. 

Shelina Assomull | PNG Blogs | June 2, 2017

Despite the gloom and doom, there is a lot to be said about mining creating economic growth within communities. In Canada, mining accounts for approximately 15% of national exports and 4-5% GDP, with 340,000 Canadians gained high paying employment due to the works. Similarly, is the case in Zambia, with 20% accounting for GDP, 90% of export earnings, and 15% of the country’s workforce in mining.

With figures like these it is hard to see what is so troublesome about land use for mining activity, however, the issue lies in the way that the implementation of large scale mining projects often causes an unwilling relocation or resettlement of the present communities. This can impair the freedom of movement they are accustomed to, and consequently force them to alter things that are customary to their cultures and traditions. As well as this it can cause environmental damage to their homeland, in the form of removing large tracks of forest, and contamination, chemical spillage collapses of tailing dams and heavy metals leaching. Alongside this is the further threat of foreign disease entering their communities, through foreign persons entering. Castro & Nielson have commented the situation can be, “severe and debilitating, resulting in violence, resource degradation, the undermining of livelihoods and the uprooting of communities.”

Alongside the conflicting wishes of the people and the projects, are the projects and other industries. Land is scarce, and whilst miners are fighting for it, farmers and ranchers want a piece of the pie too. This is highly fuelled by these operations continual conduct outside of the law, making it harder to assess and regulate. As well as this are the clashes between small scale and large scale miners themselves as both parties tend to fight for land in the regions, fuelling conflicts between communities at all levels in the region. Small scale miners are unwilling to let go of the land due to unwillingness to relocate as well as strong cultural ties to the areas, rooted in their ancestry. Although licensing systems have been implemented for small scale miners, it is not organised enough and often results in a ‘double booking’ of land for small scale miners on large scale mining projects’ land. This has resulted in a multitude of violent clashes between the two parties, only serving to destroy the land further. This is exemplified in the case of Ghana where disputes have caused productive land to disappear, with 1.05% of cropland and 1.26% of forest cover lost to desertification, industrialization and urbanisation, every year.

A recurrent theme though out the issue of land use in mining communities is the social implications versus the financial gains. A clear example of this, is the negative cultural impact that new projects can have on aboriginal and indigenous communities, and the monetary compensation they may be offered to subdue this. Land being using for mining in indigenous areas, impairs self-determination to the land, their right to peacefully maintain their culture (the land being a historical part of this), as well as threats to their traditional knowledge of the area. This is often tackled monetarily, by offering compensation. As in Goldfields’, Ghana’s Tarkwa mine where compensation for those affected included housing, improved sanitation facilities, compensation for crops, efficient storm water drainage and an allowance of US$1000. However, sometimes this economic boost does not rectify the cultural losses these people experience.

BHP’s activity in Ok Tadi Mine in Papua New Guinea is an example that encompasses many of the problems discussed. Although outputs from the mine account for at least 16% of annual export earnings and 10% of national GDP, it has also destroyed 1000km2 of virgin natural rainforest as well as water pollution due to chemical residue decreasing fish populations. This highly affected the Wopkaimin communities in the region, and left many of them displaced. Although the community chose to surrender small areas of land for money, much lobbying had to be done to ensure they received adequate treatment in this situation. BHP settled in a US$6.6 million compensation fee, however a package of US$56 million was initially promised. Promises being unfulfilled are the key reason for unresolved land use mining conflicts.

The only resolution to this highly neglected issue is to ensure that residents in the communities are kept informed of mining on goings through visits to mines, surveys, partnerships in industries, liaising with the community and provided public communities, so that there is a stronger interaction between the community, and the company. Finally, compensation needs to go beyond monetary measures, because it cannot make up for cultural losses, this can be done by providing natural resources to replace those lost, improving communities’ skills and employment prospects and encouraging local hire to ensure economic prosperity centres around the community the land mine affects. This will require increased communication, consultation and cooperation, on behalf of the government, the companies and the communities.

However, for as long as these issues remain in developing countries, the desperation to enjoy potential economic contributions from these mining projects, will always force these communities to have to consider a loss of their culture and land for a gain in their wallets.

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