Mining in Ok Tedi will end around 2027: Exec

Peter Esila | The National aka The Loggers Times | March 2, 2020

OK Tedi Mining Ltd in Western invests about US$20 million (K66.46 million) annually in drilling for reserves, chief executive and managing director Peter Graham says.

Graham said current exploration was focused near the Mt Fubilan mine and within existing special mining lease (SML).

“The most prospective targets indicate underground rather than open pit mining,” he said.

Graham said the life of the mine, based on current reserves and mining rate, would end around 2027.

“The mine is limited by an agreement with communities on the amount of waste material mined and placed in waste dumps,” he said.

“Without this limitation, mine life would be longer.

“Efforts are therefore being focused on potential stable waste dumps, in-pit waste disposal and a potential tailings storage facility.”

Meanwhile, OTML is a major producer of copper concentrate for the world smelting and refinery market in Germany, India, Japan, South Korea and the Philippines.

The mine exports copper as a concentrate which contains gold and silver.

From start of operations in 1984 to end of 2018, Ok Tedi has produced 4.83 million metric tonnes of copper, 14.8 million ounces of gold and 32.7 million ounces of silver.

In addition to the SML, OTML holds a portfolio of several exploration leases (ELs), other leases for mining purposes (LMPs) under the PNG Land Act.

Apart from its direct monetary contribution, OTML is also involved in Western’s development through tax credit scheme and other infrastructure projects such as health centres, school classrooms, houses, roads, airstrips, jetties, water supply and communication systems for the villages.

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PNG Petroleum Minister Kua brushes aside claims of Threats on Gas Project

NBC News | 23 January 2020

Papua New Guinea Petroleum Minister Kerenga Kua has brushed aside claims of threats to close gas projects in Western Province.

This follows, Governor, Taboi Awi Yoto and North Fly MP, James Donald claims, the State Negotiating Team has poorly negotiated for the province and the landowners over the P’nyang Gas Project’ with the developer in Singapore last week.

The leaders have threatened the government to close P’nyang and Stanley LNG Projects before the close of business this Friday until the Oil and Gas Act is amended.

In his response, Minister Kua says constitutional law allows all minerals and petroleum is owned by the State and not by provinces and landowners.

He said only the State is empowered to commercialise these resources, and no other entity is by law empowered to do this.

Mr. Kua said leaders at all levels are entitled to express their views on issues related to resource project negotiations but State will make the final decision.

The Petroleum Minister urges leaders to remain calm as P’nyang Ministerial Committee is always on hand to discuss any discontentment.

AG Tasked To Look Into Use Of Ok Tedi Funds

A mother and her malnourished child, Bimadbn Village, Morehead, Western Province, Papua New Guinea. Photo: Penny Johnson

Gorethy Kenneth | Post Courier |  August 30, 2019

Prime Minister James Marape has instructed the deputy Prime Minister and Attorney General Davies Steven to seek a restraining order to protect more than K500 million of OK Tedi CMCA and non CMCA funds from being abused.

North Fly MP James Donald took the PM to task to explain why there were a certain group of people now drawing down K58 million from the CMCA funds parked at a commercial bank in Port Moresby.

An irate PM Marape demanded the inquiry report done by former prime minister Peter O’Neill to be released.

“It saddens me that we continue to have people with interest outside of the main stream, outside of everyone, to use institutions of our democracy to access funds run-ning in and out of Vulupindi Haus, running in and out of Court Houses and access funds under the auspices or pretext of being better for our people.

Western Province like many other provinces with entitlements from resources continues to remain backward in so far as development indexes and indicators are concerned,” Mr Marape said.

“Let me call on the Attorney General and our Deputy Prime Minister to firstly furnish to us the enquiry that was made on the use of CMCA and non CMCA earlier, this Parliament deserves to have the benefit of that report.

“Let me advise the leaders of Western Province, that I also ask the State Solicitor to intervene and that this matter is put on hold until we ascertain exactly what is being pursued or what is being accessed and whether they are in compliance with the Trust Instruments we have and whether they have legal entitlements to those funds,” he said.

“As we speak, it is immoral to have Western Province still backward over K500million in funds that are entitled for development sitting in banks and government institutions, legal firms, many of the so called educated people, we are fighting over money that is meant to fix Western Province.

“They have their own funds sitting there, yet educated Western Provinces with a combination of other Papua New Guineans over time have been feasting on this funds outside of what these funds are meant for.

“It is about time we put to shame people who continue to access these funds and I propose AG to establish a pathway, with legitimate bodies on the ground like government, districts and CMCA agencies on the ground so that Daru town does not have black buckets anymore.

“The National Government will add in their ex-gratia component and their own funds and we will work in partnership to ensure that this province is moving on the right spot.

“Let’s find a way to help the Western Province leaders and the people,” he said.

Tuke yet to receive mining audit report

The National aka The Loggers Times | July 4, 2019

MINING Minister Johnson Tuke says a report on an internal audit into one of the trust accounts that keeps the funds from the proceeds of the Ok Tedi mine for the people of Western is yet to be furnished to his office.

Tuke said these in response to questions from Western Governor Taboi Awi Yoto in Parliament yesterday.

Tuke said the previous government under the leadership of Peter O’Neill had put a moratorium on one of the trust accounts to undertake an audit after allegations of corruption and misuse of funds.

“There are two trust accounts – the Community Mine Continuation Agreement (CMCA) Trust Account and non-CMCA,” he said.

“Under CMCA 12 projects have been identified and they were being done. It comes under Ok Tedi Development Foundation (OTDF).

“The other one is non-CMCA and projects were endorsed before I became the minister.”

Tuke said there were 148 projects endorsed and funded under non-CMCA Trust.

“These projects were done already but we don’t know, whether these projects were actually delivered on the ground or not.

“For this reason, the previous government authorised a project audit to be done so that the people would know whether these funds were actually used to deliver projects and programmes to benefit the people of Western or not,” he said.

“The audit report was done already but I have yet to receive it.”

Tuke said once he received the report he would act on its recommendations with the relevant authorities.

He also clarified that the balance of that funds under the non-CMCA Trust would be given to the Mineral Resource Development Company (MRDC) as per a Cabinet decision.

No tangible development in Western despite decades of mining

A father holds his malnourished son in Western Province, Papua New Guinea. Photo: Sally Lloyd

Marape Tells Awi Yoto To Improve Western

Leiao Gerega  | Post Courier | June 24, 2019

For almost 38 years Western province has seen no tangible development taking place despite helping the country generate millions in kina from the Tabubil mine.

The province remains one of the least developed in the country with low health status and lack of basic delivery of service to its people.

Prime Minister James Marape who visited the province on Friday to launch both the provincial and district five year development plans was implored by Governor Taboi Awi Yoto to look at the provinces needs which include;

• Creation of one or two electorate added to the province’s current three electorates;
• Uplift moratorium on the Province’s need to recruit new public servants;
• Fix issues with the province’s dividend trust account through former operations with Ok-Tedi;
• Find common ground on issues regarding WP’s major development program called the PNG sustainable development program;
• Building of a major port to export its resources;
• Request Ok-Tedi and Porgera to compensate middle and south Fly over mining waste pollution;
• Current 33 percent shares in Ok-Tedi be lifted to previous 64 percent and
• Stop fly-in and fly out of Ok Tedi workers to ensure money goes back to the people

Mr AwiYoto admits that the slow progress of development of the province was due to disunity amongst the leaders.

He assured Mr Marape that they are now ready to work together to ensure their people benefit from the money owed to them.

The 2018-2022 development plan under the theme “a new way forward” focuses on three key areas which are health, education agriculture and covers the province and its three districts in the Middle, South and North y.

“This is no easy task….everyone in this country have their own issues,” Mr Marape said while giving examples to how Buka and Lihir have fared poorly over the years despite the huge mining activities.

“Our agriculture and mining resources have been lost over the years while the people are suffering. Waigani is stealing from them and we are here now to turn things around,” Mr Marape said.

“These new work will take years but we want to direct and steer the country in the right path,” he said.

Mr Marape who travelled later to Tabubil to hear presentations from Ok-Tedi mining limited says everything will be discussed in Waigani after which they would strictly ensure monies owed to the people under various areas will be “unlocked.”

Mr AwiYoto says despite giving so much to the country the province has been failed by so many governments over the past years and is confident there is certainly a positive journey ahead.

Around 17,000 people gathered to welcome the prime minister at the Kiunga Township on Friday.

Mr Marape grew up as a child in Western province where his father was a Seventh Day Adventist pastor.

Marape holds Singapore talks over PNG trust fund

Radio New Zealand | 19 June 2019 

Papua New Guinea’s prime minister has led a delegation to Singapore to find a way in to a trust fund the government has been locked out of.

In his first overseas trip since taking office last month, James Marape met with officials from the PNG Sustainable Development Program on Sunday.

The company manages about $US1.4 billion of assets through a long term fund which was set up to hold profits from the Ok Tedi copper mine in Western Province.

Since the government of Peter O’Neill expropriated the mine from the SDP in 2013, it had been in a protracted court fight to gain control of the long-term fund parked in Singapore.

Singapore’s High Court ruled against the government’s claim in April. Following this, and a change in government leadership, PNG’s new prime minister Mr Marape is seeking a different approach.

He said on Facebook the aim of his trip was to find common ground with the company managing the fund.

The prime minister was accompanied by MPs from Western Province whose constituents are intended to be direct beneficiaries of the SDP’s projects and long-term fund.

Mr O’Neill, who indicated that the government would appeal the Singapore court ruling, portrayed the government’s aim in the case as being to ensure the company’s funds were given to the people of Western Province.

It remains to be seen whether that appeal will proceed, with Mr Marape advocating a discourse-based approach to dealing with Sustainable Development Program.

The SDP was established in 2001 when BHP Billiton divested its majority share in the lucrative Ok Tedi copper mine in Western Province to SDP.

The divestment followed legal action by Western Province landowners over extensive and long lasting environmental damage caused by the mine operations, particularly its riverine tailings disposal system.

April’s court decision was welcomed by the four Western MPs, who said it would ensure SDP was protected from political interference and that its assets went to the people.

However, the money in the fund is intended to be disbursed by SDP within Western Province when the Ok Tedi mine closes. The mine is still operational.

O’Neill’s lies show he still wants to get his tentacles on $1.4 billion

War of Words Over PNG SDP Gets Even Hotter

Mekere Morauta | April 25, 2019

The Member for Moresby North-West, Sir Mekere Morauta, said today that Peter O’Neill’s statement that BHP Billiton and I created PNGSDP as a private company with four shareholders, one of whom is me, is a deliberate lie manufactured by a man desperately trying to repair his public face following the comprehensive win by PNGSDP in the Singapore Supreme Court.

“Peter O’Neill also lied to the Singapore Court, through the State’s affidavit, saying he had a document giving the State the power to control PNGSDP,” Sir Mekere said. “He failed to produce the document as evidence to the Court, and the court decision exposed him as the liar he is 

“Why did he not produce such a document? Because no such document exists. He made it up, hoping this would convince the Singapore Court.”

“Why is he still lying? Because he wants to get his tentacles on the $1.4 billion in PNGSDP’s Long Term Fund.”

PNGSDP was established by the State of Papua New Guinea, BHP Billiton and Inmet, the shareholders of Ok Tedi Mining Ltd in 2000, to hold the BHP shareholding (then 52%) gifted by BHP.

The object of PNGSDP was to invest two-thirds of the future dividend flows from the shares into a Long Term Fund to be used after mine closure for sustainable development in Western Province. One-third of the dividend income was spent on development projects throughout the country, including Western Province.

PNGSDP was established as a not-for-profit company, limited by guarantee. It has no shareholders. In such company structures, used by charities, NGOs, sporting groups and other similar organisations, shareholders are replaced by members. I am a member of PNGSDP, not a shareholder.

Members do not derive any benefit from a limited guarantee company, as shareholders would from a limited liability company. The Program Rules, set jointly by the Government of PNG and BHP, prescribe that the benefits from PNGSDP flow only to PNG and Western Province.

Singapore documents purportedly showing I am a shareholder are pro-forma documents that do not provide for companies limited by guarantee. They do not provide for members instead of shareholders, as happens in many jurisdictions.

“The statement that I am a shareholder of PNGSDP is a naked, diabolical lie,” Sir Mekere said.

“Increasingly, it seems that the Prime Minister is fabricating stories to cover his own misdeeds. If he actually believes his own lies, we should all be worrying about not only his level of intelligence, but also his sanity.

“The man is not fit to be Papua New Guinea’s Prime Minister.

 “Peter O’Neill’s ceaseless attacks on PNGSDP and on me are due to his failure to gain access to the Long Term Fund – which is what he wants, desperately.

 “He was not satisfied with the extremely valuable shareholding PNGSDP had in Ok Tedi, which he expropriated in 2013. He also wants the Long Term Fund, which now stands at over $1.4 billion. He wants the lot.

 “I want to assure the people of Western Province that their money in the Long Term Fund is safe, and will continue to be safe, whilst it is managed by an independent PNGSDP. 

“It was my instruction to the advisory team when PNGSDP was established that the company was to be protected from political influence – from the tentacles of octopuses.

“The Singapore Court decision proved the independence of PNGSDP. I am proud that I led the fight and won it for the people of Western Province.”

Donald calls on govt to review oil, gas act

The National aka The Loggers Times | April 11, 2019

NORTH Fly MP James Donald, pictured, has called on the Government to review the Oil and Gas Act before it signs agreements on petroleum resource development.

Donald said certain provisions of the Oil and Gas Act 1998 did not serve or protect the interests of Papua New Guineans, especially the project area landowners, and should be amended.

For example, he said the legislation failed to provide for the landowners, provincial governments and local level governments to be involved in the consultations and negotiations right up to the finalisation of the agreement.

Donald said they were key stakeholders even though they only owned a 2 per cent stake in equity when it came to benefits distribution.

“The landowners are given 2 per cent under the current act, which is less when what they should be rightfully getting – 10 to 12 per cent equity or more,” Donald said.

“So really when you look at it closely, it (the current Act) is of no real benefit to Papua New Guinea landowners, the host provincial governments and local level governments.”

He said the 2 per cent equity for landowners should be increased.

“Why continue to keep a law that does not serve our people’s interest?” Donald said.

He called on the ministers for petroleum and energy to work on amending certain sections of the legislation before going ahead with agreements on gas development. He said if not amended, the current legislation would only cause problems for future projects.

“In my view, our government should review and amend the law to give better deal for our people in terms of resource ownership by law because they deserve better from their government,” he said.

Meanwhile, Donald has written to the Constitutional and Law Reform Commission to support him in sponsoring a Private Member’s bill to review and amend certain provisions of the Oil and Gas Act.

O’Neill Loses in High Stakes Battle for Control of US$1.4b PNGSDP

Papua New Guinea state fails to wrest control of US$1.4b stake in PNGSDP

K.C. Vijayan | The Straits Times | 5 April, 2019

The government of Papua New Guinea (PNG) has lost its protracted battle in the Singapore High Court to wrest control of an entity with assets worth about US$1.4 billion (S$1.8 billion) that were spawned from a deal inked with the “largest mining company in the world”.

Justice Vinodh Coomaraswamy has ruled in favour of PNG Sustainable Development Program (PNGSDP) company, saying the state of PNG had failed to prove it had a deal with PNGSDP’s co-founder BHP Minerals Holdings, for joint control to develop PNGSDP assets.

It also failed to prove that there was a charitable trust that allowed the state to intervene.

“I have found that neither the agreement nor the trust exists. The pleaded breaches of the agreement and the trust must correspondingly fail,” Justice Vinodh said in decision grounds on Tuesday.

The outcome means PNGSDP is free to carry out its objectives under the control of its independent board according to the 2001 contractual framework, without interference from the state.

Justice Vinodh, in his 149-page judgment, addressed each of the arguments made as he explained why the state had failed in its bid to wrest control of PNGSDP from its independent board.

“I acknowledge I found the state’s narrative compelling and its logic attractive. But the essential problem… is that this narrative stands alone and is unsupported by the evidence,” he said.

The court examined each key plank of the state’s case and found in addition that none of the state’s witnesses pointed to the existence of a partly oral agreement, much less to the terms of that agreement.

The court found that in the context of a “sovereign nation” and “the largest mining company in the world”, it was likely that the parties would have entered into written contracts “definitively and exhaustively setting out the precise terms actually agreed, instead of exposing their minds to the vagaries of memory and ambiguity inherent in a partly oral agreement”.

The high-stakes court battle involved law heavyweights on both sides. Defending PNGSDP was a team led by Senior Counsel Philip Jeyaretnam from Dentons Rodyk & Davidson while WongPartnership’s Senior Counsel Alvin Yeo led the team representing the PNG government.

PNGSDP was incorporated in Singapore in 2001 with two shareholders: the state of PNG and BHP Minerals Holdings and was meant to enable BHP to divest its shares in mining company Ok Tedi Mining to PNGSDP.

Both parties intended PNGSDP to hold BHP’s shares in Ok Tedi Mining and apply the derived income to promote sustainable development in PNG.

BHP owned 52 per cent and the state 20 per cent of the mine, which was rich in gold and copper and highly profitable.

The judge noted there were several reasons PNGSDP was incorporated in Singapore and these include its robust corporate governance regime.

In 2012 and 2013, PNGSDP made material changes to its corporate governance framework which diluted the state’s powers of control and oversight over the company.

The PNG government sued to reverse the changes.

It argued, among other things, that it would not have agreed to form PNGSDP if the company was free to cast off the state’s rights of control and oversight.

PNGSDP countered that the structure of the parties’ written agreement left no scope for such a critical aspect of PNGSDP’s corporate governance framework to be left “entirely undocumented in that suite of contracts and to be the subject of an oral agreement”.

It added that the common intention in PNGSDP’s formation was to eventually make it a self-run and self-perpetuating organisation and the changes made in 2012 and 2013 were the next step in effecting the common intention.

Justice Vinodh said the dispute is “about corporate governance of PNGSDP”.

He added: “For all the reasons set out, I hold the state fails entirely in its claim against PNGSDP. It is not entitled to the relief sought.”

Govt, BHP blamed for damage to Fly River

The Fly River is a “dead river” according to the World Bank

The National aka The Loggers Times | January 31, 2019

THE Government and BHP should be equally responsible for the damage to the Fly River as the result of the Ok Tedi mine, a former mining minister says.

Former mining minister and South Bougainville MP Sam Akotai thanked Minister for Environment and Conservation John Pundari for tabling a bill in respect to environment population.

He said the Act would put Ok Tedi on par with all the environment protection laws and practices with other mines operating in the country.

Akotai said the Act would also give confidence to other mines that the Government was not biased with its operations and conducts in respect to the environmental issues in Ok Tedi.

Akotai said he had experience in the industry for well over 18 years and was qualified to make such statements while Ok Tedi mine brought a lot of revenue for the country.

He said the developer, BHP Ltd, owned the mine but it was in partnership with the government and while there was a lot of talks on the damage in Western, both BHP and the national government needed to be squarely responsible for the damage.

He said damage done to the Fly River and its inhabitants was irreplaceable, with the river being described as a “dead river”.

“It is one of the biggest damages ever, and many times we are happy to receive revenues but we have a population who are faced with the situation where the river is already dead,” he said.

“A World Bank report says Fly River is a dead river. After the mine closes, the people of Western living along the Fly River will face the problem for more than 200 years.

“However, the good news was that the new Act would at least control the operation of the mine and the deposit of the waste of the mine.”

Akotai said waste from the Porgera gold mine in Enga was also washed down to the Strickland River which eventually connects the Fly River that added more to the level of damage.

“That is why I’m sorry for our citizens living along the Fly River in Western,” he said.