MAC: Mines and Communities

A call to suspend mining in Papua New Guinea

Published by MAC on 2012-09-18
Source: Postcourier, Development Policy (2012-09-12)

Why is Papua New Guinea resource rich, yet its citizens poor? Yet another report attempts to tackle this perennial question - this time addressing issues around the huge Porgera mine.

Equally, if not more important, for the country's communities is the reality that habitat destruction, caused by resource extraction, is robbing them and future generations of their very means for survival.

It's an aspect of the current situation about which the World Health Organization has raised grave concers, specifically in relation to polluted water.

Call to suspend mining in PNG

By Grace Tiden

Postcourier

12 September 2012

SOME of the country's natural resources should be left aside for future generations says senior statesman Sir Ronald Tovue.

He said much of Papua New Guinea's financial activities such as mining projects and most recently the LNG and Sea Bed projects were all happening at the same time.

He said the future generation will be left with nothing if PNG exploits its natural resources in only a small space of time.

The former East New Britain premier and current chairman of the East New Britain Autonomy Committee said the committee had raised its objections to sea bed mining.

"It was not a matter of stopping the project but it is too early for another mining project to be developed and especially when it has not been done anywhere else," he added.

He said the project should eventuate much later because there were currently a lot of mines in PNG.

Sir Ronald said the current government should withdraw the license that was issued to Canadian firm Nautilus Minerals.

He further said the company will benefit more from the project in the next 20 years and the people will be left with nothing.

"They will become rich from our resources...our children will be left with nothing," he said.

Sir Ronald said those people from PNG who were assisting the company to mine the sea bed have hidden agendas and should be more careful.

"We have had the experience of Bougainville. That experience should teach us a lesson," he said.

"It is the people who have spoken. The government should withdraw that license," he added.


Contaminated water for PNG

By Nellie Setepano

Postcourier

12 September 2012

THE WORLD Health Organisation has raised grave concerns over the safety and quality of available water supplies in the country.

It has recently called on the PNG government to address the problem by establishing an independent mechanism to monitor the environmental impacts of climate change and extractive industries in regards to water quality.

In a meeting last week, the head of WHO in PNG, Dr William Adu-Krow, reported that available information regarding water quality in the country has raised concerns regarding the safety and quality of available water supplies.

It is obvious, and the WHO agrees that water quality in Papua New Guinea appears to have been affected by numerous factors, including climate change associated factors and extractive industries. Although water scarcity has not been identified as an issue in the country, the following issues have been identified;

Salt water intrusion into island and water estuary areas, microbial contamination of water sources including some municipal water systems, contamination by mining activities and inadequate sanitation coverage.

Dr Adu-Krow said while attempts have been made to harvest heavy rain water, the storage tanks in some areas appear to be poorly maintained resulting in microbial and other contaminations.

Although surface water is abundant in rivers and creeks, some of these sources are polluted due to the direct dumping of solid waste and domestic sewage into these sources. Direct use of surface water without proper treatment has resulted in several water-borne disease outbreaks in the country.

Ground water which is considered a safe water source has been found to contain traces of heavy metals in some areas in proximity to mining sites. Traces of mercury, cyanide and other heavy metals have all been reported to be found in water bodies in relative proximity to mines or mining activity.

The WHO representative said that the need for ensuring that no contamination of water bodies occurs during mining, and establishing stringent quality checks on communal water supplies, is important in ensuring availability and supply of safe water supply to the population.

Meanwhile, Water PNG, the body responsible for quality water through its PNG Quality Control Unit, is tasked with producing safe drinking water to the specifications of the PNG Drinking Water Quality Standards, 2000, which is adopted from (WHO) Drinking Water Quality Guideline.

"We extract raw water from both surface and underground sources, treat and distribute through a network of pipelines to our consumers. We are required to discharge from our Sewage Treatment Plants effluents that comply with water quality standards set by the Department of Environment and Conservation," according to its website information.

The Quality Control Unit was established in 2005, in line with the Organization's Strategic and Medium Term Corporate Plan 2006 - 2015, with a strategic objective to ensure that Water PNG complies with the National Drinking Water Quality Standards and Effluent Standards regarding the discharging of wastewater effluents and also in the quality of supplied drinking water.

That is, it complies with PNG National Health Standards and the Environment Standards set by Department of Environment and Conservation for the protection of aquatic and marine ecology. It is also tasked with setting up its own laboratory for the testing of water and wastewater quality.

The Quality Control Unit plays an important role in Water PNG's operations. Some key functions of the Unit are to undertake:
- constant audit on water and wastewater treatment procedures employed by branches;
- water and wastewater testing for physical, microbiological and chemical contamination; and
- checks and verifications on treatment chemicals and their applications to water supply and waste water treatment.


Benefits from mining in Papua New Guinea - where do they go?

Margaret Callan

Development Policy Blog

10 September 2012

Download article as PDF

The National Research Institute (NRI) has published an interesting study of the economic benefits from the Porgera Gold Mine over its lifetime, see: NRI Discussion Paper No 124, Peter Johnson, Lode Shedding: A Case Study of the Economic Benefits to the Landowners, The Provincial Government, and the State from the Porgera Gold Mine/, /Background and financial flows from the mine.

Benefit flows

The Porgera gold mine in Enga Province has been producing gold for over 20 years. This research identifies the benefits distributed from Porgera's operations from 1990 to 2009 at Kina 6.4 bn (at 2009 exchange rates, USD2.3 bn). Of this total, Kina 4.8bn was distributed to groups and institutions in PNG in line with the mine's Memorandum of Agreement and Kina 1.6 bn was distributed to international stakeholders.

According to calculations in Table 1 of this report, the share of total PNG benefits accruing to various parties amount to: national government Kina 1.7bn; landowners Kina 1.2bn; ‘PNG nationals' Kina 1.1bn (mainly wages and contracts); Enga Province Kina 424m; Enga Provincial Government Kina 279m and; Porgera Development Authority Kina 130m. In 2009 alone, K56 million in royalties, compensation and dividends was injected into the Porgeran economy, equivalent to approximately Kina 3935 per person, a contribution substantially higher than PNG's 2009 per capita income of Kina 2337 (US$850).

Johnson analyses Porgera's benefit flows by type of benefit as well as beneficiary. Wages and taxes have each accounted for 31 per cent of financial benefits from the mine, with business contracts close behind at 29 per cent. By contrast, royalty and compensation payments, while large kina payments, accounted for only 4 per cent and 3 per cent respectively of total benefits paid.

However you cut it, it is clear that the Porgera mine has delivered massive resources to the national government, provincial authorities, development authorities and the people of Enga province. With what results?

Impact and accountability

Section 6 of the report titled, Expenditure of Financial Benefits By Sector, is sobering reading. It concludes that the mine has put a lot of financial resources into the hands of landowners and in this respect their expectations of the mine are likely to have been achieved.

However, Johnson's examination of expenditure by the services arms of government (Porgera Development Authority, Porgera District Authority and local level government) concludes that it is not possible to determine how financial flows have been turned into infrastructure or health and education services.

Johnson finds a "complete lack of transparency and accountability in many of the institutions associated with the Porgera mine" (p88). Over a billion kina in cash and benefits have been spread through the Porgera region but it is almost impossible to know where the money has gone.

This finding was highlighted by Thomas Webster, Director of the National Research Institute of PNG, in an interview with Stephen Howes reported in this Devpolicy post on 31 May. Webster noted that the operator of the mine paid different government institutions and landowner groups as they were required to do, but "... it's clearly government institutions which are not doing what they were expected to do on the ground ..." and "... the mine pays particular individual or landowner groups, but these accounts are managed by - I don't know how they do it, but it's said one or two principal landowners, and then from quiet conversations, they said that these individuals are living in Port Moresby or in Australia."

The report sets out to shed light on the perennial question of why Papua New Guinea is resource rich yet its citizens are poor.

It concludes that for the communities who are supposed to be the beneficiaries of the mining wealth, the legal and payments system is complex, opaque and one-sided, and there remains a lack of transparency at both national and sub-national levels of government.

The report also notes weaknesses in the national government: a failure to report the details of payments from and to mining project stakeholders, and the lack of a system that tracks how stakeholders under its control operate.

Recommendations

The report includes a number of recommendations to improve the transparency and accountability of responsible institutions. It identifies the implementation of the Extractive Industries Transparency Initiative (EITI) as the first step.

But it argues that a more important step would be to increase transparency by creating an audit trail of payments from national and provincial governments to other institutions such as the Porgera Development Authority, the Porgera Landowners Association and local-level governments. Such a second-tier transparency initiative would increase the accountability of these institutions.

The report argues that current mining policy debates in PNG are being conducted in an information vacuum and risk missing the larger issue of whether monies meant to improve development outcomes in Porgera have been spent appropriately.

Comment

There are a few other perspectives I would add to Johnson's.. The first is that while accurate, clear and timely information is a critical first step in improving the accountability of all institutions receiving mining benefits, it is equally important to strengthen community-based engagement in planning and monitoring agreements associated with mining projects so that local citizens are better able to demand accountability from those in positions of responsibility.

Community engagement must pay particular attention to the interests of women. A recent study by the Porgera Environmental Advisory Komiti on the social impact of the mine on women found that while the mine has provided some facilities previously lacking such as roads, hospitals and schools, many women had been impoverished and disempowered by losing access to land and livelihoods.

In Porgera's predominantly patriarchal society, the benefits from the mine overwhelmingly favour men as employees or landowners. The report of this study is available here [pdf].

Another issue highlighted by this report is the relatively small shares of royalty and compensation payments in total benefits to landowning communities. So it is perplexing that during community consultations on new mining projects, these shares tend to be given a great deal of attention and the potential benefits from employment and contracting opportunities relatively less.

Finally, I note that AusAID hosted a Consultative Forum with Business (21 August) at which the government's /Sustainable economic development strategy/ was launched. That strategy includes the Mining for Development Initiative which itself includes support for EITI. It will be interesting to see how the Mining for Development initiative plays out in PNG and whether it extends beyond EITI to working with mining companies, communities and governments to help improve the development results from mining projects such as Porgera.

While this is an important report it isn't easy reading. That is due partly to the complexity of the subject matter: nothing about the regime of benefit-sharing for mining projects in PNG is straightforward. So it is very difficult for new researchers to be confident in understanding this complexity and equally challenging to write about it in an accessible way. I recommend readers with limited time tap into the Executive Summary and Overview, read Section 2 on Negotiated Responsibilities, then skip to Section 8 General Observations and Section 9 Conclusions.

Margaret Callan is a Visiting Fellow with the Development Policy Centre at the Crawford School, ANU, researching the contribution of the private sector to development in Papua New Guinea.


Stop destructive projects

Letter to the Editor

Postcourier

4 September 2012

IT is undeniable that PNG has major environmental concerns facing the country but our government is deliberately turning a blind eye to it. You dont have to go far to see firsthand the extent of environmental destruction that is affecting our rural populace. Unsustainable logging operations from the West to East Sepik and the New Guinea Islands has destroyed rich biological habitats and bio-diveristy and ecosystems and affecting our cultural way of life.

The once rich pristine rainforests are now replaced with barren waste land. Our fresh water sources are all murky and stink of waste logs, and fresh water food have all died out. Landslides and floods have become common in the recent past because all the big trees to hold the soil are gone.

You hardly hear the bird of paradise sing anymore because all the birds and animals have vanished. Our people are not able to sufficiently sustain themselves because their food source has become scarce, again adding to the already bigger concern of food security faced by our people nationwide.

The environmental pollution caused by the mining industry is overwhelming but when our people want to make noise, it quickly gets ignored and brushed aside.

The government has yet to address the pollution concerns raised by the local communities living within the Porgera, OK Tedi, Lihir, Watut, and Simberi mines. These are not mere accusations, these are real concerns. The government cannot even begin to independently verify the claims because its agencies such as the DEC,Forestry, and Health lack the capacity to even consider addressing these problems.

Our people are dying from eating polluted fish and other food items, and just because we cannot prove that medically or scientifically, does not mean pollution is not happening. The government is too quick to brush aside their concerns, as flimsy and unsubstantiated claims.

However, from our local knowledge and connection to our environment, our people are in a better position to feel, sense and see changes to their lifestyle and health. This is common sense. We don't need foreign knowledge to tell us our environment is changing; our local knowledge has existed time immemorial.

As if destroying of our forests and freshwater and land is not enough already, now the government wants to destroy our oceans, reefs and underwater world with the introduction of the sea bed mining.

So that our oceans will lose its colour from the clear green and blue to murky black and dirty. Imagine the untouched white sand beaches will be filled with mud from the sea bed mining. Not to mention total destruction to our oceans bio-diveristy and food source for future generations to come.

I mean we are only borrowing our land and sea from our future generations, but instead of being good custodians on their behalf we are destroying it. What sort of PNG do we expect our children to live in.

PNG is a beautiful country, but not for long people. If we don't stand up to our government, who else will, obviously not our future generations. If you have children, you owe to not only to them but to their children and their children and so forth, because the legacy you leave today will affect the type of world that you want your blood to live on with. People let us all rise up and put a stop to this sea bed mining and all forms of destructive development before its too late.

Tommy Rime

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