Tag Archives: PNG development

Police target ‘illegal’ activities at Barrick’s Porgera mine: Houses razed but no arrests

Aerial view of police operation in Wangima, Porgera — image Barrick Niugini

Martyn Namorong | Namorong Report | 28 March 2017

Barrick Niugini Limited has confirmed allegations made by the Akali Tange Association that a Papua New Guinea police operation on the 25th of March led to the destruction of homes belonging to the villagers of Wangima near the giant Porgera gold mine.

The Wangima settlement is located on the slopes of Mt Peruk on the perimeter of the Porgera Mine pit.

According to Mr McDiyan Robert Yapari of the Akali Tange Association of Porgera, “PNG police Mobile Units forcefully evicted residents from Wingima village near Barrick’s Porgera gold mine and burnt down some 150 houses.” Yapari further alleged that no prior warning was given to the residents of Wangima.

Barrick has however disputed these claims and said in a statement that “approximately 18 structures were removed in the police operation.”

Barrick further added that the “police operation was conducted under warrants issued by the Porgera District Court, and that notices of eviction had been previously provided by police to persons residing unlawfully in the operation area.”

However according to Mr Yapari, locals claim that the police had informed them that they were acting on company orders. Mr Yapari further claimed that this was “the third time Barrick and its allies are burning down Wingima Village.”

Yapari further alleged that several women were sexually assaulted and men were beaten during the raid.

Barick and the Porgera Joint Venture management have responded to these allegations by appointing former Chief Ombudsman Mr Ila Geno, the Independent Observer of Porgera Police Operations, to investigate the reports.

Porgera mine management distanced themselves from the raid stating “that mine personnel had no involvement in or prior knowledge of the police operation.”

However Mr Yapari pinned the blame squarely on the mine management stating “you are paying for the food and accommodation and fuel of the police, and they are guarding your gold, you have a responsibility.”

Yapari called for an independent investigation into the matter and for partners in the Porgera Joint Venture to provide humanitarian assistance.

Barrick has urged the government of PNG to investigate the police operation and has stated that it will consider any requests for humanitarian assistance.

The Porgera Gold Mine employs over 2,500 Papua New Guineans, and over the life of the mine it has contributed approximately 10% of Papua New Guinea’s total annual exports.

On an annual basis, the Porgera Gold Mine pays more than K34 million on royalties, over K109 million on taxes and duties to the National Government, more than K9 million on the Government-owned Tax Credit Scheme (TCS), spends over K3 million on highway maintenance, and over K1 million annually on donations, among other benefits from the mine.

The mine has however been dogged by human rights abuses including the infamous rapes of local women by mine employees. A quasi-judicial settlement of that matter has been heavily criticized by international legal experts including the Harvard School of Law.

Location of Wangima settlement relative to the Porgera Mine — image Barrick Niugini

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PNG Mine Watch in Top 15 mining websites worldwide

PNG Mine Watch has been internationally recognised as the 13th most influential source of mining news on the web by FEEDSPOT, punching above its weight alongside many commercial mining news websites.

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LNG landowner frustrations rising again in PNG

Hides landowners met several times with the government to discuss outstanding LNG Project payments. Photo: Supplied

Radio New Zealand | 21 March 2017

Papua New Guinea’s major LNG Liquefied Natural Gas or LNG project could be shut down again due to simmering landowner frustrations.

Landowners in the Highlands province of Hela say the government has let them down again by not following through on promised benefits from the multi-billion dollar gas project.

The landowners mounted a protest blockade of the project’s conditioning plant in Hides last August.

In response the government signed an agreement to address landowners’ grievances over lack of benefits and equity arrangements within thirty days

Hides landowner representative Andy Hamaga said government did not honour their promise.

“Unfortunately to date they haven’t done anything. We are looking at options, whether to take them to court, or go with the national arbitration, or go go back again and shut down the whole (LNG Project) operations before the general election,” he said.

At the time of last year’s blockade of the LNG plant, in response the government said the delays in royalty payments to landowners were due to complications over identifying genuine landowners.

The Petroleum and Energy minister Nixon Duban said that it was in the best interests of Hela to ensure that the right beneficiaries would be getting the payments.

“This project is going to be here for a long time,” Mr Duban explained at the time.

“We cannot make a mess and pay the wrong people. And so the onus is on the state to ensure it’s done properly. Whether we take one year or a couple of months, we must ensure it is done properly.”

However, Mr Hamaga said this was misleading.

“The state minister is not giving us the actual information,” he said.

“They were supposed to do this clan vetting and landowner social mapping thing before we signed the big Umbrella Benefit Agreement we have signed in 2009. I think they’re using this one as an excuse.”

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How the free market failed Australia and priced them out of their own gas supply

While Asia is enjoying low prices for Australian gas, back home things are getting worse. (Origin Energy)

Ian Verrender | Business Editor | ABC News

Fashion has a habit of turning full circle.

Remember that old shirt, the super tight one with the stretchy material and weird collar that you found at the bottom of the wardrobe? What on Earth possessed you to buy it, you wonder. What were you thinking?

For anyone who lived through the ’70s, the memories of those fashion crimes often come back to haunt us.

It was also an era when free market ideology began to assert itself in public policy. And with good reason.

Government-run businesses were inefficient, bloated and bureaucratic. Letting them loose would free up scarce public funds, competition would lower prices and scarce resources would be allocated with the greatest efficiency.

When Margaret Thatcher came to power in the UK in the 1980s, she unleashed a wave of privatisations that transformed the economy and contributed to decades of economic growth.

It didn’t take long for the fad to gain ground here. Government-owned businesses from airlines to banks and insurance companies were jettisoned.

Even vital infrastructure like roads, telecommunications and power generators were flogged to the highest bidder with little thought about the long-term consequences.

But have we gone too far? Free market theory, while it’s terrific in theory, has some almighty shortcomings and, as we now are discovering, may not be the economic cure-all we once imagined.

Suddenly, the winds have shifted. Business leaders talk in hushed tones, openly uttering a phrase once considered unmentionable: market failure.

In the past few days, there has even been a call for part nationalisation of our energy industry from a free market wheeler dealer. More on that later.

A fortnight ago, competition chief Rod Sims let fly with his annual swipe at the fee-gouging taking place at our airports.

Airlines and the travelling public were forking out an extra and largely unnecessary $1.6 billion in fees.

What’s going on with gas?

The problems arise when the business being sold is a monopoly, when the buyer, having paid an exorbitant price, is given carte blanche to extract its tonne of flesh. The benefits flow from the community to private interests, often offshore.

Generally, we’re talking about utilities — things like power companies, for instance. And then there is gas.

For years, electricity and gas operated independently. But the two have become intertwined as the shift towards a cleaner environment and lower emissions has thrust gas firmly into the box seat as the transition fuel to generate electricity.

We’ve suddenly discovered, however, we don’t have enough. It’s no exaggeration to describe the power situation now facing eastern Australia on both fronts as a catastrophe. And here’s why.

Within the next four years, Australia will overtake Qatar as the world’s biggest supplier of gas. We are sitting on vast gas reserves. In fact, we’re swimming in the stuff.

And yet, we face critical shortages at home which could starve manufacturers of fuel, see power outages across the eastern states and force energy prices through the roof while any profits that are made will be shipped offshore.

This is a public policy fail of epic proportions.

And it’s worth getting a handle on how it all came about and the shenanigans employed by the gas majors that have deliberately created this crisis and the supposed shortage which is a total con.

How could this happen?

First, however, consider this: the gas we are exporting does not belong to the energy giants. It belongs to us.

Companies like Woodside, Origin and Santos and their foreign partners merely have bought the right to exploit those gas reserves, which was supposed to lead to massive benefits for ordinary Australians.

Here’s the scorecard so far. Having spent close to $250 billion building new export facilities, no-one seemed to think that flooding the globe with extra energy would see global prices drop.

They have. Gas prices into Asia, where we export, have now dropped below what it costs to extract, process and ship the stuff. In fact, the east coast suppliers so far have written off around $6 billion on their new plants.

It gets worse. Extracting the gas from coal seams in Queensland was a little more problematic than originally thought. Then farmers, incensed at the activity taking place on rich agricultural land, began shutting the gates.

That meant the companies couldn’t get enough to satisfy the huge supply contracts they’d written in Japan, South Korea and China. So they plundered the supplies, much of it from Bass Strait, that once powered the domestic market. That’s why we have an artificial shortage.

But wait, there’s more. No-one ever considered that once we were plugged into the global market, we’d be paying global prices. Around the time all these new gas plants were developed, prices in Asia were up to $25 a gigajoule. Back then, we were paying between $2 and $4.

Prepare now to be outraged. Global prices have more than halved to $10 and under. Domestic prices, meanwhile, have soared, to well above $10 because of the domestic shortage.

By putting the domestic market under pressure, they deliberately pushed local prices higher.

The upshot is that we now are paying more than Japanese manufacturers for our own gas. In fact, power company AGL is actively considering buying Australian gas in Japan and shipping it back home. And why not? It’s cheaper there.

That means energy-rich Australia is subsidising Asian manufacturers while penalising our own, a situation likely to force many to the wall.

Just to rub salt into the wound, the ramp-up in exports has not delivered the resources rent tax bonanza once promised by US giant Chevron. In fact, thanks to a shifty cash shuffle, ExxonMobil, Chevron and Shell until two years ago were booking around $3 billion a year in profit, tax free.

That’s seen our Petroleum Resources Rent Tax proceeds, which in the past delivered around $2 billion a year, plummet. In fact, by the time we overtake Qatar for global gas domination, it’s anticipated our resources tax will collect just $800 million.

Qatar, on the other hand, is expected to receive $26.6 billion in royalties that same year for roughly the same volume of exports.

So what’s being done about it?

Treasurer Scott Morrison last year declared he would urgently look into the matter. He’s called a review to get to the bottom of why soaring exports have coincided with a halving in the resources rent tax collections.

The review panel could do worse than read a report sent out last week by global investment bank Credit Suisse.

Hardly a bastion of left-wing ideologues, the report — entitled The Wolf Who Cried Boy — raises the prospect of Australia establishing a national oil company as one possible solution to the concocted crisis. And it goes straight for the jugular.

“If the gas producers and sellers are the wolves, they themselves are seemingly calling foul just as the danger is truly upon us,” it begins.

“We wonder whether a national oil company, a la Kumul Petroleum in PNG, could work? Instead of the petroleum resources rent tax on future projects, could we see state participation instead?”

Could we indeed? There undoubtedly will be howls of protest from the business lobby and their associated hangers-on. But consider this. Is this not the ultimate form of capitalism?

We are the landlords. The energy companies are tenants. If we had a controlling stake in the business, it would be much easier to ensure the kind of chicanery that has taken place in the past few years was never repeated. There would never be shortages.

And just perhaps, we’d end up with a dividend cheque, maybe even along the same lines as Qatar’s.

Just a thought.

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ExxonMobil’s natural gas project foments unrest in Papua New Guinea

Armed clansmen in the town of Komo in Papua New Guinea’s Hela Province. Photo courtesy of Michael Main

Michael Main | UPI  |  March 9, 2017

The Papua New Guinea liquefied natural gas project is the largest resource extraction project in the Asia-Pacific region. Constructed at a stated cost of $19 billion, it’s operated by ExxonMobil in joint venture with Oil Search and four other partners.

The project extracts natural gas from the Papua New Guinea highlands where it is processed before being sent via some 435 miles of pipeline to a plant near the nation’s capital, Port Moresby. The gas is then liquefied and transferred into ships for sale offshore.

Construction for the project began in 2010, and the first gas shipment was made in May 2014.

In February 2009, the economic consulting firm Acil Tasman (now Acil Allen) produced a report for ExxonMobil about the project’s impact. The purpose of the study, which was posted on ExxonMobil’s website but has now been removed, was to provide an analysis of the likely impacts of the project on Papua New Guinea’s economy.

ExxonMobil did not respond to questions about the removal of the report or the impact of the project on local communities.

The report said the project has the potential to transform the country’s economy by boosting GDP and money from exports. These would increase government revenue and provide royalty payments to landowners. It claims the project could potentially improve the quality of life of locals by providing services and enhancing productivity. Workers and suppliers would reap rewards, as would landowners who would also benefit from social and economic infrastructure.

But six years on, none of this has come to pass.

A shaky agreement

In the years since construction began, Papua New Guinea’s ranking on the United Nations Development Program’s Human Development Index has fallen by two places to 158, having been overtaken by Zimbabwe and Cameroon. Far from enhancing development indicators, the largest development project in PNG’s history has coincided with an unprecedented downgrade in the country’s development status.

In this period, there has been a stream of articles published that highlight the alarming state of Papua New Guinea’s economy and criticize the lack of positive economic and development impacts from the LNG project.

But very little is known about the actual impact of the project on local landowners. This is largely due to the remote location of the gas field in the mountainous Hela Province. The dire security situation in that part of Papua New Guinea also makes any investigation a highly dangerous undertaking.

I first visited Hela Province in 2009 shortly before the project was to begin construction. I encountered a population that was bristling with anticipation and enthusiasm for a development that promised to transform their lives.

In 2016, I returned and spent seven months with the landowners of the LNG project as part of my doctoral research. What I encountered was abject poverty situated alongside one of the largest natural gas extraction operations in the world. Combined with this was immense frustration, anger, corruption, mounting violence and widespread proliferation of weapons.

Like other such projects in Papua New Guinea, the LNG project was able to begin operations after agreement was reached with landowners on the benefits that were to be delivered via the extraction and sale of the resource that exists beneath their land. After much negotiation, the PNG LNG Project Umbrella Benefits Sharing Agreement was signed in May 2009.

On its website, ExxonMobil describes the agreement as ensuring a “fair distribution of the benefits,” but neither ExxonMobil, Oil Search nor any of the other joint venture partners are signatories to the UBSA. Rather, the agreement is between the Papua New Guinea state, various levels of government and the landowners themselves.

The agreement outlines a variety of income streams to be generated by the project, as well as specific development promises, such as road sealing and township development. Its upshot is that landowners can expect the LNG project to deliver tangible improvements to their lives and to the lives of their children.

But the reality – after four years of operation and windfall profits for the project’s joint venture partners – is that the project has delivered almost nothing of benefit to landowners. In fact, it has, in important ways, made life worse for the majority of people living in the project area.

Downward spiral

During my fieldwork with project area landowners, I saw a life of immense frustration, disappointment and palpable anger at the absence of benefits. The township of Komo, which is at the center of operations, contained a newly built hospital that stood empty with no beds, no staff and no fuel for its generator.

It, and its newly constructed staff houses for nonexistent staff, are just two of several white elephants built at inflated prices by companies owned by Papua New Guinea’s politicians. Promised road sealing and township development, including power supply and schools, have all failed to materialize.

The most terrifying aspect of life in Hela province has been the proliferation of weapons. The Huli-speaking population comprises a complex society of hundreds of individual clans with a history of disputes over land and possessions that can be traced back over many generations. This pre-existing context of intense inter-clan rivalry has been made worse by the frustrations of a population hammered by the broken promises of the nation’s largest resource development project.

During the project’s construction phase, Komo was a hive of activity. It was home to thousands of international workers as well as PNG nationals attracted to high-paying jobs and the promise of an LNG-driven future.

Large amounts of cash were paid to people who had no prior experience of money, and the lack of infrastructure development meant there was little to spend it on other than consumable goods and guns.

A black market arms trade has existed between the PNG highlands and the Indonesian military across the border in West Papua for many years. During the course of my fieldwork, I witnessed constant outbreaks of fighting by heavily armed clans, young men gunned down by military assault rifles, and many dozens of houses shot through with holes and razed to the ground.

Much of this fighting is a direct result of payments made to landowners displaced by the project. Compensation money paid to affected clans invariably ends up in the hands of individuals who fail to distribute the funds properly or support their own families, and the money is always paid to men.

In 2009, ExxonMobil agreed to pay 700 PNG Kina (approximately U.S. $216) per hectare per year for land occupied by the LNG project, indexed to inflation. The giant Komo airfield that was built to fly in materials for the project’s construction occupies an area of approximately 1,500 hectares. Disputes over ownership of that land have resulted in sporadic warfare over the past several years and dozens of deaths.

Military intervention

In August 2016, several leaders of landowning clans at ExxonMobil’s gas conditioning plant at the village of Hides, which is located on a ridge in a remote part of Hela Province, organized to blockade the facility and shut off the gas taps at several wells. Although security guards initially opposed the blockade, the landowners came armed. They forced their way into the plant site before locking its gates and demanding that the government meet their ultimatum to honor the UBSA agreement.

Members of Papua New Guinea’s mobile police squad told me they had no intention of acting against the local population, who vastly outnumber and outgun any police and military presence the government is capable of providing.

When I interviewed the landowner leaders during the blockade, it became clear that what they were demanding amounted to a better future for their families.

In November 2016, a convoy carrying the Hela Provincial governor, deputy governor and some local level government councilors was blocked on the road by an armed clan. Although the dispute was clan-related, I was informed that the convoy was targeted as a result of frustration over the lack of LNG project benefits and perceived corruption.

The resulting shootout left two people dead and one policeman wounded. A few weeks later, the PNG government announced that it would be sending troops with “logistical support” from ExxonMobil and Oil Search into Hela province, to flush out illegal arms and restore peace to that volatile part of the country.

The military intervention in Hela province has thus far been unsuccessful. James Komengi, a Huli who runs a peace NGO based in Hela province, told me that a gun amnesty that’s been in place for the past two months has failed to recover anything other than a few homemade shotguns and some non-serviceable factory-made rifles.

Residents of Komo village are reporting that ExxonMobil staff are being transported under heavily armed guard from their arrival at the Komo airfield to the gas conditioning facility at Hides. Recently, a man was gunned down at the Komo market in full view of the police and military contingent that is tasked with ridding the local population of its weapons.

According to the blog Papua New Guinea Mine Watch, these forces stood by and watched the killers as they calmly left the scene. They said that they were human beings who are fearful of losing their lives in the face of the enormous task ahead of them.

The governor of Hela Province has now declared the gun amnesty to be unsuccessful, with few weapons being surrendered.

The next stage is for the police and army to attempt to forcibly remove thousands of military weapons from hundreds of clans throughout the province. All this is a far cry from the excitement and optimism that characterized the mood of the landowners when the LNG project began construction in 2010.

Papua New Guinea now faces a situation where it’s compelled to send its army to an area where a major resource extraction project has failed to deliver on its promises to landowners. It may be time for all parties involved – both state and corporate – to consider development as a more effective path to peace.

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Greedy foreigners continue to fight over who profits from the destruction of the Sepik

The Chinese and Australians are fighting over who will control the destruction of the Frieda river and the region’s rainforests, swamps and staple sago trees

PanAust speaks out on HPL

Post Courier | March 08, 2017

MINER PanAust Limited has broken its silence on the rift that has developed with its joint venture partner-Highlands Pacific Limited (HPL).

Responding in a market report managing director Dr Fred Hess clarified the proposal was to reinvigorate its (HPL) board and that it had omitted material information to the proposal.

“PanAust also wishes to note that in its view each nominee would meet the test of independence as set out in the Australian Stock Exchange (ASX) Corporate Governance Principles and Recommendations.” he said.

“PanAust also wishes to clarify that the proposal to reinvigorate the Highlands board is unrelated to the ongoing dispute in relation to the Frieda River project and the proposed independent directors have no involvement in the Frieda River joint venture.

“In particular, the announcement failed to disclose that PanAust views each nominee as independent from PanAust, and that there is no arrangement or understanding that the proposed independent directors will act at the direction of, or report to PanAust.”

Dr Hess said the reasons for PanAust seeking to change the composition of the Highlands board include to implement a new strategy and direction for Highlands.

Dr Hess said this is with a view to increasing shareholder value in circumstances where the HPL share price has decreased significantly over the last five years.

“PanAust notes that voting patterns at the last annual general meeting reflect substantial shareholder discontent with the current board following the US$68 million loss in 2015 which included the payment of short term incentives to senior management.

“Sentiment is unlikely to have improved following the 2016 half year loss of US$23.5 million which has been exacerbated by the board’s delayed and ineffective response to implement austerity measures and also in the absence of any disclosure in respect of strategy to create shareholder value.

“Clearly, change is overdue with barely US$10.5 million cash left in the bank at year end after spending US$3 million on staff costs for the year,” Dr Hess said.

He said PanAust disagreed with the comments that had been made by Highlands that, should the proposal be implemented, it would result in a “PanAust-dominated board” which “would be at risk of operating in the interests of GRAM, rather than in the interests of all its collective shareholders.”

“PanAust considers that the appointment of a new, independent board is an important step towards a strategic reinvigoration of Highlands with a view to stemming ongoing value destruction.

“PanAust notes that it is still waiting on a response from Highlands on the date of the shareholders meeting to consider Highlands board composition,” he said.

He urged investors to consider the resolutions being proposed by PanAust carefully, together with the information and reasons put forward by PanAust.

Further, that they vote in favour of the resolutions at the special meeting, which will be held in May, 2017.

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20 million oz of gold – but where is the development?

Porgera mine workers celebrate 20 million oz of gold

20 million ounces of gold is worth US$ 24,000,000,000 at today’s market price

Twenty four billion dollars / Seventy two billion kina from just one mine – but where is the development we were promised from this ‘world class mine’?

Polluted rivers, poverty, rape, violence is the price we pay for paving the streets of Sydney, Vancouver, London and New York with our gold

Large-scale mining is the wrong model of development, it is neo-colonialism, and we need leaders who will stand up for PNG and say no more!

PJV reaches milestone production since 1990

Post Courier | March 08, 2017

THE Porgera gold mine in Enga Province reached a milestone this month achieving 20 million ounces (oz.) in gold production since the start of operations in 1990.

The mine is a joint venture operation between Barrick Gold Corporation, Zijin Mining Group and Mineral Resources Enga (MRE) Limited.

In a statement the firm released yesterday it announced that the PJV processing department had attained the +20 million oz on March 6, 2017 after 7044 ounces were produced that day.

Marking its significance for the 26 year mine operation, six of PJVs longest serving employees and some production and processing staff were invited by the PJV management to witness the historic gold pour event.

PJV general manager operations, Damian Shaw on behalf of the management, commended the efforts of those who had been involved with the operation since the first pour in 1990 and those who were still with the operation working safely, 20 million ounces later.

“This has been a great effort by everyone, the employees, the community, the government and all other stakeholders. To those who work behind the scene to make it possible to achieve this result, congratulations.

“Not many mines meet 20 million ounces, it is a rare achievement. Porgera still has a long life so let’s get another 20 million,” MrShaw said.

The +20 million oz. is derived from more than 143 million tonnes of ore that have been mined in both the Open Pit and Underground since start of production.

Production superintendent (Anawe) Anthon Pakyo, acknowledged the contributions from all of the PJV site departments, adding that there have been challenges along the way but as a team, the site has achieved this.

“For the processing team, this is a real milestone achievement as we all know it has been challenging to get this far. We can hope for some more million ounces in the future through our continued team efforts,” Mr Pakyo said.

Porgera accounts for, on average 11 per cent of Papua New Guinea’s total exports and is a major contributor to the PNG economy in taxes, duties, royalties and infrastructure development.

PJV has also managed over 570 tax credit scheme (TCS) and infrastructure development program (IDP) funded projects valued at over US$74million since the start of TCS in 1992.

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