Tag Archives: PNG development

Maru Supports Morobe’s Stand On No ‘Fly In Fly Out’

Ummm… “The best resource project that I have seen in my lifetime is the Bougainville copper mining project”.

Post Courier | January 18, 2019

National Planning Richard Maru has come out publicly to support the stance taken by the Morobe provincial government to oppose ‘fly in fly out’ arrangement for workers of the Wafi-Golpu project.

This is the first time a very senior member of Government has come out on the issue that has been a critical mainstay of discussions and forums by landowners and leaders alike in the Morobe province.

Minister Maru said if there was one thing that his government was taking away from mineral development, it was learning from previous Governments mistakes to not getting the best deal for the country.

“In this new deals that we want to put together for this country, under the new mining agreement for Wafi Golpu and Freida and even the second LNG project we are going to make sure that Papua New Guinea benefits more than any other resource projects in the past.

“I want place on record, this morning (yesterday) that I support the position taken by the Governor of Morobe and the people of Morobe that there will be no fly in fly out in the Wafi Golpu project.

“As planning minister we are already planning for a township at Nadzap and long term employees for Wafi-Golpu as far as I am concerned must live in Morobe and the income they generate must be used in Papua New Guinea, spent in Papua New Guinea, so we get back GST and the money must re-circulate within our economy,” Minister Maru said yesterday.

He said the situation where all resources are being depleted, all the monies end up in other countries all contribute to current issues being such as foreign currency shortages.

“As planning minister I do not support that, I want to see maximum benefit, families living here better, schools being built with the support of the resource companies, better towns being built.

“I want to say this and I make no apology to anyone. The best resource project that I have seen in my lifetime is the Bougainville copper mining project.

“They not only built a copper mine, they built a town, the best hospital, a supermarket, they provided international schools and all the families who were there and the benefits trickled around Bougainville.”

He said the model of BCL is need in the country.

“This is what will help to keep up the maximum revenue flows within this country and make sure that our country and this people will benefit of the wealth of our resources.”

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In Papua New Guinea, Exxon’s giant LNG project fuels frustration

Locals walk along a small beach where an LNG) carrier, Kumul, is docked at the ExxonMobil operated LNG plant at Caution Bay, located on the outskirts of Port Moresby in Papua New Guinea, November 19, 2018. Picture taken November 19, 2018. REUTERS/David Gray

Jonathan BarrettTom Westbrook | Reuters | January 17, 2019

From her red-roofed home near Papua New Guinea’s capital of Port Moresby, Isabelle Dikana Iveiri overlooks a giant plant used by Exxon Mobil Corp to liquefy billions of dollars’ worth of natural gas before it is shipped to Asian buyers.

Dikana Iveiri can also see swaths of muddy shoreline, where mangroves have been felled for firewood by locals who don’t have electricity, gas, or money to buy either.

The $19 billion Exxon-led PNG LNG project was supposed to be a game-changer for PNG, a vast South Pacific archipelago beset by poverty despite its wealth of natural resources.

But much of the promised riches, through taxes to the government, royalties to landowners and development levies to communities, have arrived well below Exxon’s own commissioned forecasts, if at all, according to landowners, the World Bank and the PNG government.

“My family has been here a long time,” said Dikana Iveiri, one of several landowners interviewed by Reuters near the PNG LNG plant. “Our royalties are not going well; they are using our land but not paying us properly,” she said referring to both Exxon, which pays the royalties and the government, which distributes them.

Since gas exports began more than four years ago, Dikana Iveiri said she had received just one royalty payment in 2017. She was expecting about 10,000 kina ($2,885) based on information given to her by the government and community leaders. She said she received 600 kina.

Exxon, community leaders and the government did not comment on Dikana Iveiri’s specific situation but in a statement to Reuters, Exxon said distribution of royalties and benefits to the LNG plant site landowners started in 2017. Cash payments to individual landowners would depend on how many landowners were in a precinct and were just one of the benefits communities received, Exxon said. 

The project employs nearly 2,600 workers, 82 percent of whom are Papua New Guinean and Exxon said it has invested $360 million to build infrastructure and pay for training and social programs.

“We could not be more pleased to see how the benefits are flowing to the communities at the LNG plant site, to see how investments are being made in important infrastructure such as schools and health that demonstrates the process is a good one and it works,” ExxonMobil PNG Managing Director Andrew Barry told a mining and energy conference in Sydney in December.

Barry said Exxon was hoping royalties would begin flowing in the pipeline and upstream areas “in the not too distant future”.

The government admits it has made mistakes.

PNG Prime Minister Peter O’Neill, who was part of the government but not the leader in 2009, said many of the disputes around PNG LNG stemmed from the way the government and Exxon proceeded with the project without first resolving landowner claims.

“It should have been done before, it wasn’t only for Exxon and the partners but even the government at the time did not do the proper clan vetting, proper identification of the land owners – they allowed this project to go on without that,” O’Neill told Reuters.

Treasury, the treasurer, and the Prime Minister’s spokesman declined to provide responses to Reuters’ questions about the project.

GAS-POWERED MONEY SPINNER

PNG LNG was completed ahead of schedule and exported 8.3 million metric tonnes in 2017, compared to its anticipated design capacity of 6.9 million tonnes, according to the project’s website.

Exxon does not disclose the project’s revenue or profits but research house Morningstar estimates it has generated $18.8 billion in revenue for Exxon and its partners since production started in 2014.

The project’s break-even price of around $7.40 per million British Thermal Units (mBTU) compares favorably to an average over $10/mBTU for eight recent gas projects in the region, according to analysis by consultancy Wood Mackenzie and Credit Suisse.

“The plant capacity has performed phenomenally,” Credit Suisse analyst Saul Kavonic told Reuters. “On cost, it’s much lower than peers … it’s got an ample resource base and it’s got a well-disciplined operator in the form of Exxon.”

The project’s contribution to Papua New Guinea’s economy and government finances is less clear.

PNG’s Treasury does not report project income figures, but government budget papers show tax revenue flowing from PNG LNG has been well below expectations.

In its 2012 budget, the PNG government estimated it would receive $22 billion in revenue over the project’s life to 2040.

In November, the government slashed its revenue forecast in half to $11 billion over the life of the project.

It identified 11 tax concessions, which along with a drop in gas prices, amounted to hundreds of millions in kina in annual revenue forgone.

A 2017 World Bank analysis found the project partners had negotiated favorable methods of calculating royalties to the government that allowed them to take various deductions. 

Combined with tax concessions, the project created “a complex web of exemptions and allowances that effectively mean that little revenue is received by government and landowners,” the World Bank said.

Exxon did not respond to questions regarding the World Bank findings and the World Bank declined to provide further comment.

Exxon’s partners, which include Australian-listed Oil Search Ltd and Santos Ltd, and a subsidiary of Japan’s JXTG Holdings Inc, referred Reuters’ questions to Exxon.

Exxon said in a statement to Reuters the project has generated 5 billion kina in revenue for the government and landowners via taxes, royalty and benefit payments. The figure includes revenue to the PNG state-owned stakeholders.

“SOME MISTAKES”

A second LNG project, Papua LNG, led by France’s Total with Exxon and Oil Search as minority partners, is scheduled to finalize an agreement with the PNG government in early 2019.

Papua LNG, a new gasfield using the same but expanded processing plant, could commence production as soon as 2024, according to Total. Analysts estimate it will cost around $13 billion.

“The experience of the first project developed by Exxon and Oil Search, there was some criticism, some mistakes,” Total CEO Patrick Pouyanne told Reuters in an interview in Port Moresby, referring to relations with landowners.

“Some lessons (are) being taken out … around the management of landowners and trying to engage at an early stage with them.”

Total has agreed to an undisclosed annual minimum payment to the government and to reserve some gas for local industry, he said.

Exxon did not respond to requests for comment on Pouyanne’s statements.

In its statement, Exxon acknowledged that “distribution of royalties and benefits in some project areas were delayed since the start of production due to court action by a small number of landowners which prevented the relevant government departments from completing their administrative processes.”

Exxon said it was committed to assisting the government ensure landowners receive royalty and equity dividends as soon as practicable.

Disputes have broken out within communities near PNG LNG facilities as landowners fight to have their claims recognized.

Some clashes have been fatal, said Highlands clan leader Johnson Tape, one of 16 clan leaders with a claim over the Komo Air Field, used by the Exxon project.

“Our clans fought each other, but now there is peace; we are one team fighting Exxon,” said Tape.

Christopher Havieta, the governor of Gulf Province, where gas fields for the new project are located, said locals wanted to avoid the experiences of Exxon’s PNG LNG.

“It was a foundation project and so a lot of exemptions were made and the end result is we have a lot of social problems that have risen up.”

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Police monitor tension at Wafi-Golpu mine

Police Commander : “It appears that all the oil, gas, mining and fishing projects happening around the country are faced with such problems”

Jimmy Kalebe | The National aka The Loggers Times | January 17, 2019

A SECTION of the police Mobile Squad 15 in Morobe has been deployed since last Friday to monitor the situation at Wafi-Golpu mine, Morobe police commander Alex N’Drasal says.

N’Drasal said yesterday that the situation was still tense and police were there to make sure law and order problems and other issues did not get out of hand.

Police were deployed after a stop-work notice was put out by some people claiming to be landowners of the mine.

Employees have not been turning up to work since.

N’Drasal said police would be there at the mine stir until the situation was under control and normalcy restored.

“Police are also there to make sure that properties are not damaged and workers are not disturbed or harassed,” he said.

“The mine site is quiet now and many employees have decamped while a skeleton staff still maintained in the area.”

N’Drasal said on Monday that two opposition clans fought each other after one group tried to burn a stop-work banner that was placed by the other last Friday.

“It appears that all the oil, gas, mining and fishing projects happening around the country are faced with such problems,” N’Drasal said.

He said all the members of parliament, leaders and representatives in Morobe should work together to address the issue.

“In many cases, it is the leaders who create the situation and allow for such inconveniences among the Government, developers and the landowners.”

N’Drasal said the Government had to be very careful when making decisions in relation to such impact projects, because when not careful, such problems arise.

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Governor: ‘The safety of the Sepik River is non-negotiable’

East Sepik Governor, Alan Bird

Bird Needs More Views On Frieda Mine

Post Courier | January 17, 2019

EAST Sepik Governor Allan Bird will be seeking wider consultations on the proposed Frieda Mine for a more informed, truthful and transparent decision.

“Before we talk about Frieda consultations, I want everyone to know that I have listened to both sides of the argument and I have decided that the issue is too important for a small group or individual to take a decision in isolation,” Mr Bird said yesterday.

“Let us start by thinking about the Sepik River people for a moment, more particularly where we see them in 20 or 30 years time. Where do they see themselves in that timeframe?

“Will they still be fisher folk? Living a semi subsistence life, selling carvings and other artifacts and performing traditional dances for tourists? Or will more of them desire a decent education, a career or start a business and move to live in a town or city? The current generation might be happy living the traditional lifestyle but what about the younger generation? Is it fair to them that those of us on land see them as suppliers of fish for our sustenance? Is that where they should remain?

“Would a large scale mine, managed safely and properly add value to this process of change or badly managed do the opposite?

“There are no easy answers. Perhaps the answer lies in between. I have no doubt the River people are best placed to tell us their views of the future.”

Mr Bird said that he expected the East Sepik provincial government to do the right thing by everyone, to be fair and transparent, to give each stakeholder an opportunity, without fear, without intimidation to discuss their concerns (pros and cons) regarding Frieda Mine.

He said the provincial government would to take into account the desires of Telefomin Sepiks, Kopar Sepiks and every Sepik in between. “Let us not exclude PanAust as a stakeholder,” he said.

“This year we will have a team of experts look at the EIS and the mine development proposal. On a personal level my only concern is the safety of the river. Anything else, be they benefits for river people, landowners, etc are negotiable.

“The safety of the Sepik River is non-negotiable.”

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21st Century slavery in PNG

Martyn Namorong via Twitter | January 15, 2019

This is 21st Century slavery where, in 2018:

PNG Workers paid K3.8 Billion in taxes

Companies paid K1.7 Billion in taxes

And mining and petroleum companies paid JUST K774 million

IRC exceeds 2018 target

Carmella Gware | Loop PNG | January 11, 2019

The Internal Revenue Commission says 2018 was a successful year for them as they had exceeded their tax collection target.

K7.9 billion was the 2018 budget target for the Internal Revenue Commission, or IRC.

The Commissioner of Tax, Dr Alois Daton, said the IRC successfully collected and transferred K8 billion to the Waigani Public Account last year.

The total gure is 8.4 percent higher than government projections at the time of budget 2018, and 5.2 percent higher than government’s revised projections in the Mid-Year Economic Fiscal Outlook.

“In terms of corporate income tax, we brought in K1.7 billion and that is 8 percent above 2017 collections,” outlined Dr Daton.

“In relation to salary and wages tax – this is where good employers pay their money in – we brought in K3.8 billion, which is 3 percent above the 2017 collections.”

Similarly, a rebound in global oil prices saw the IRC collect K774 million in mining and petroleum taxes compared to K113 million in 2017.

Dr Daton said however, income from areas like partnerships and personal income tax did not do too well, falling by 34 percent.

Apart from that, strong growth rates were registered in other forms of income, where dividend withholding tax increased by 12 percent, interest withholding tax by 25 percent while royalty withholding tax increased by 20 percent.

“There was also a massive increase in departure tax; departure tax is paid by international travelers and it’s APEC-related travel that was able to push the departure tax up. So that was double the amount we collected in 2017.”

Tax collections were also higher for bookmakers and gaming companies, indicating higher disposable incomes amongst the public in 2018.

“It appears that there is a lot more disposable income so Papua New Guineans had a lot more money to go and spend.”

The IRC said negative growth was recorded in management fee withholding tax, training levy and other sundry IRC receipts.

Their outstanding performance was attributed to the rst year of reforms under the Medium Term Revenue Strategy, where the Commission increased its service capacity and public engagement.

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Rising tide of opposition to large-scale mining in Papua New Guinea

Porgera Landowners protest against Barrick Gold (2018).

PNG Mine Watch

Opposition to large-scale mining in Papua New Guinea is becoming more and more visible as communities become much more vocal in expressing their anger and disapproval.

Both existing and proposed new mines are feeling the heat from landowners who are realising the benefits they are promised are illusory and it is they and their families who suffer the severe negative environmental and social consequences of large-scale resource extraction.

Landowners in Enga have lodged a US$13 billion claim against the government over unfilled promises and environmental and social damage from the Porgera mine. The miner is owned by Barrick Gold and Zijin Mining and has been operating since 1989.

Meanwhile landowners in Madang are petitioning the government not to allow a planned K5 billion expansion of the Ramu nickel mine and they want the existing Basamuk refinery shut down. Again, it is the lack of tangible benefits and the environmental and social costs that are angering local people.

Proposed new mines in Morobe and the Sepik are also facing opposition.

Last week, landowners in Morobe forced the evacuation of the site of the proposed Wafi-Golpu mine. They are unhappy at the terms of an MOU agreement signed by the government with the mine owners, Harmony Gold and Newcrest Mining.

The landowners protest is supported by Morobe governor Ginson Saonu, who has already declared his opposition to the mine:

“People are not like before, when they had no knowledge, no idea, no education to read what’s happening in other parts of the world where there is environmental damage and so forth. Everybody is knowledgeable about what’s happening in other mines around the world, and even in Papua New Guinea like Ok Tedi, Bougainville and others.

The governor has identified agriculture and tourism as better development options in his Province.

At the same time, the Morobe Provincial government has passed a resolution rejecting the MOU for the mine and landowners living along the coast have declared their opposition to the planned dumping of toxic tailings in their seas.

The proposed Frieda river mine, to be developed by the Chinese company Guandong Rising Assets Management, is also facing strong opposition from landowners worried about the impacts of mining on the Sepik river, which is their lifeblood.

Communities have been organising their own protest meetings and have banned Mineral Resource Authority representatives from entering some areas.

Similarly, communities around the abandoned Panguna mine on Bougainville, have successfully petitioned against any moves to reopen the mine, forcing the Autonomous Bougainville Government and governor John Momis into an embarrassing climb down.

In another blow to the mining industry, Nautilus Minerals is on the brink of financial collapse, unable to complete preparations for its proposed experimental seabed mine, Solwara 1. Local communities and environmentalists have been waging a long running campaign against the mine.

Although the PNG government still seems determined to press ahead with new mining operations, the resistance from local communities, both those affected by existing mines and those threatened by the new operations, shows no signs of abating .

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Disgruntled Landowners Shut Down Billion Dollar Gold And Copper Project

Melisha Yafoi | Post Courier | January 14, 2019

THE US$5 billion (K16.7 billion) Wafi-Golpu gold and copper project in Morobe Province has been shut down.

This shutdown took effect last Friday when about 100 men claiming to be landowners threatened to enter the exploration and development site following opposition to the memorandum of understanding which was signed between the State and the developer Wafi-Golpu Joint Venture in Port Moresby last December.

The WGJV Executive Project Director, Bryan Bailie stressed that “the safety of our personnel is paramount and that we will not put them at risk. As such, all non-essential personnel were evacuated as a precautionary measure.”

Activities at the exploration site are currently suspended pending assurance that law and order has been re-established.

A disappointed mining Minister Johnson Tuke said this shutdown is uncalled for and the actions taken by these parties to raise their grievances is a sense of a criminal act.

He explained that the state has gone into an engagement with the company to develop an understanding with the state and the developer.

Reports on the ground say all staff were evacuated to safety leaving the project site deserted since Friday after protestors threatened to enter the exploration camp unless it was evacuated and work immediately stopped.

Mr Tuke said that in most cases as far as history is concerned in any mining aspects before a initial mine starts there had to be form of an agreement to give comfort and in most cases and instances companies did not have the money.

He said there were certain institutions which had access to huge chunks of money so companies go out to the fields to conduct explorations to identify and come up with the resource and when they find the resource they have to run through a financial institution to look for money and financial institutions have their own criteria as to go about releasing the money to investors.

“So the government in its wisdom has given the consent to the company that this project is a priority to the company so that’s the relationship that we have established.

“And for people to go and conduct a shutdown is uncalled for, the understanding is with the State.

“It’s not the provincial government or the landowners or anybody else, the common law is that anything that is six feet beneath the earth belongs to the State, the State has all the legitimate power to act on its people,” Mr Tuke said.

He said what they have done is within the law, within the Act so for people to go out and stop the mine is unnecessary.

“It is a sense of criminal act there has to be an appropriate authority to do so the government will still provide leadership and bring this project into fruition and that is not the appropriate forum to talk about all these,” he said.

“I have already instituted a development forum that is still in progress. We can see that challenge but a challenge has to be taken in a appropriate action and this is outside of the context and I condemn those actions undertaken by some elements.

“They probably have some of their own issues if there is some degree of politics amongst themselves, they should not demonstrate to the company if they think that there is some certain issues that needs to be resolved they need to handle it within their own communities.”

Mr Tuke said said for them to take it to a broad degree or a standing where it now becomes a common knowledge to PNG is not good enough and Wafi-Golpu is a very relevant project because in the next 10 to 20 years Porgera and Ok Tedi might shutdown.

“We are still a mining country and we need to take on board this Wafi-Golpu project so that it in the years to come that will be in the place that the two mines will go down so that it can generate revenue to our country and that’s basically what we are trying to do,” he said.

They made known their grievances but I think it’s not appropriate for them to go that far because they are certain forms which we have not exhausted them all yet and we just started the process and we are still into it and we have a long way to go and we will still go through that,” he said.

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