“When we don’t have any of these copper and gold mines anymore, where are we headed?”

This quote is by Jerry Garry, managing director of PNG’s Mineral Resources Authority (MRA).

According to Garry, mineral resources from large mines (both current and pipeline) will be exhausted in 40 years. Oil and gas will also eventually run out.

This should be a wake-up call for Papua New Guinea.

First, it is just over a generation away.

Second, PNG is overly and increasingly dependent on the mining industry for exports (80 percent of total export revenue) and economic growth.

The resources sector was only about 10 percent of the economy at independence in 1975, but is about 25 per cent today.

Third, despite a long history of mining in the country, socio-economic development is still lagging, as highlighted by poor performance in health, education, governance, and law and order.

Indicators languishing
The country’s human development indicators are languishing against compararable economies, and we are unlikely to achieve Sustainable Development Goals by 2030, or Vision 2050’s ambitious goals.

Last, the country has made little progress over the years in diversifying and expanding the economic base to enable broad-based, inclusive and sustained economic growth and development.

The government and its policymakers understand that the mining industry is capital-intensive and, given its enclave nature, has few linkages with the rest of the economy besides the jobs it creates and the contracts it provides to local landowners.

The main contribution the industry makes should be the transfer of resource rents to the government through royalties, taxes and profits (where the government has an equity stake).

But this is where the problems start.

First, the contribution of the resource sector to government revenue has been underwhelming — less than 10 percent in recent years.

Second, it is incumbent upon the government to deliberately and sustainably invest the resource rents in the rest of the economy, including through infrastructure development, strengthening of governance and institutions, as well as building human capital by investing in sectors such as health, education, water and sanitation.

Billions lost to corruption
“This has not happened consistently across the country, with billions of kina lost to corruption and mismanagement.

Third, and underlying these two problems, PNG seems to be subject to the “resource curse”, which is when a country is unable to successfully translate proceeds of its abundant natural resources into gainful economic growth and development outcomes for its people.

No one can dispute that PNG’s resource rents have not produced commensurate development outcomes for the country and the people.

There is a large body of literature on PNG which attests to this situation.

Understanding the problems is one thing, but what matters is addressing them. And given the ominous warning by the MRA, actions are needed fast, and now.

Prime Minister James Marape has embarked on a process to increase the proceeds of natural resources to national stakeholders, though how successful he is remains to be seen.

The more fundamental challenge facing the newly elected Marape-Rosso government is to diversify the country’s economic base and to promote the non-mining economy.

Bold step needed
The new government has taken the bold step of allocating new ministerial portfolios to coffee, oil palm and livestock.

However, this is more a symbolic step than anything else.

If we really want to encourage coffee growers, what is needed is better roads and security, neither of which a coffee minister can deliver.

Deliberate and sustained policy interventions are needed to lift the country and the people out of the resource curse, and forge a development pathway that is ultimately driven by sectors such as agriculture, fisheries, forestry, tourism and manufacturing, including downstream processing of the country’s agriculture, fisheries and forestry products.

To boost these sectors, the overvaluation of the exchange rate needs to be corrected.

This will address the problem of forex rationing, which is hurting businesses, and in the long run will improve agricultural exports by fetching higher prices for farmers/exporters.

This is important policy ammunition used to fight the Dutch disease associated with the resource curse.

Diversification options
Diversification would also include tapping into the country’s abundant renewable energy sources, such as hydro, geothermal and solar, to improve the reliability, affordability and coverage of electricity.

Initiatives to build capacity within key government departments and agencies, such as the treasury, central bank, national planning, health, education and the MRA, will be important, as well as investment in research and academia to support public policy.

Also needed are structural reforms to modernise and improve the efficiency of the country’s state-owned enterprises.

This has been on the agenda of successive governments, but it requires commitment and sustained effort to ensure that the policies and reforms are implemented.

There is only a handful of resource-rich countries in the world — including Botswana, Norway and Australia — that have fought off the resource curse and achieved broad-based economic growth.

The citizens of these countries enjoy a higher level of living standards, because their governments made deliberate policy decisions to invest the proceeds of their mineral and oil resources to support other productive sectors such as agriculture and the services sector.

Mid-course correction
They have also strengthened their governance to support growth and development.

What will we in PNG have to show for when our gold and copper as well as our oil and gas are exhausted?

We need to make a significant mid-course correction to our country’s development pathway now, through deliberate and sustained policy actions.

We must turn the proceeds of our country’s abundant natural resources to building the non-resource economy.

The resulting broad-based economic growth would lift the living standards of the rural majority and the urban poor, and prepare us for when PNG’s minerals and petroleum run out.

Andrew Anton Mako is an associate lecturer and project coordinator for the ANU-UPNG Partnership. He has worked as a research officer at the Development Policy Centre and as a research fellow at the PNG National Research Institute. This research was undertaken with the support of the ANU-UPNG Partnership, an initiative of the PNG-Australia Partnership, funded by the Department of Foreign Affairs and Trade. This article appeared first on Devpolicy Blog, from the Development Policy Centre at The Australian National University.

Article by AsiaPacificReport.nz

Dear Prime Minister Marape

Our government has to admit the fact that there is a glaring imbalance between Papua New Guinean and foreign ownership of businesses. We own very little in our country.

The retail, wholesale and real estate in our towns and cities are controlled by Chinese interests. We own almost nothing in the logging industry. It is, as we all know, controlled by Malaysian interests.

There is an increasing push by (new) Chinese business owners who are buying up National Housing Corporation (NHC) properties and forcing out Papua New Guineans – YOUR people – onto the streets.

There is no strong legislation that prevents 100 percent foreign ownership of property and land. We need those laws in place now. We need the political will to do it. Now.

The justice system can’t protect our people. They don’t have the money to fight long protracted legal battles… …and the syndicate – yes, syndicates – know this and they take advantage of it.

Recently, local people along the North Coast of Madang protested against a sand mining proposal. The people associated with the sand mining company have also evicted families from NHC properties in Madang.

It is no secret. It was reported by the media.

Tack Back PNG more than a slogan
Take Back PNG must not remain a political slogan for elections. The people must live it.

I am calling for legislation that protects the social and economic rights of our people. I want lower taxes (or no taxes at all) for struggling SMEs.

Give them tax holidays like the government did for RD Tuna and the petroleum sector. Give them REAL financing. Not a figure on paper they can’t access.

We want shop spaces in the centre of our towns and cities. Give it to us. This is our country. We want what is ours.

If the laws don’t allow it. Change the laws to suit our people’s needs.

We cannot continue to exist on the fringes of a large Pacific economy that boasts a “healthy” GDP yet cannot show it in the impact on the lives of our people.

Tax the alcohol companies. They contribute to the widespread abuse and the violence associated with it.

Society not mature enough
Our society is not mature enough to allow the widespread consumption of alcohol.

Tax the cigarette companies. Make them all pay for the ill health of our people.

We are not taking back PNG by allowing these cancers to continue untreated. We are in fact, selling off PNG’s future.

Reduce the cost of medical treatment at the private clinics and hospitals. Reduce the cost of dental care. It’s UNAFFORDABLE. How can a papa or mama in the village afford K500 for a tooth extraction.

Give your people the means to look after themselves. Give your people the means to pay for their children’s education so they don’t become enslaved by politicians who peddle election policies that don’t really serve our people.

We don’t want to be dependent on government. We want to make our own money. Wealth in the hand of its people is real wealth.

We demand preferential treatment for US.

Our resources. Our country. We deserve more.

Scott Waide is a leading Papua New Guinean journalist and a senior editor with a national television network. He writes a personal blog, My Land, My Country. Asia Pacific Report republishes his articles with permission.

Article by AsiaPacificReport.nz

COMMENTARY: By Scott Waide in Lae

Just into the fourth month of 2019, and resource projects in Papua New Guinea have come under scrutiny.

Early last month, senior ministers of government, including Petroleum Minister Fabian Pok, traveled to Komo in Hela for meetings with landowners of the gas project.

After 15 years, there is some progress. Or at least that’s the positive spin to it.

READ MORE: O’Neill loses in high stakes battle for control of US$1.4b PNGSDP

There appears to be some indication that royalties locked away due to legal battles and tangled by bureaucratic red tape were going to be paid – but only after landowner identification processes.

Finance Minister James Marape told the media three months ago, that K300 million (NZ$132 million) is parked at the Central Bank ready to be released. But landowners or people claiming to be landowners had to follow a process of “landowner identification” in order to be paid the money.

There is some hope of an end to disputes. However, the final settlement is still a long way off. That’s the reality. Many of the elders died waiting for the royalty payments they were promised.

Since becoming a new province, there is still a lot that needs to be ironed out. The Hela provincial government still has to work its way through layers of bureaucratic processes that continue to favour the Southern Highlands in terms of royalty payments from the gas project.

It’s all that and a lot more.

Background to complexities
Understanding the background to the complexities of the resource project in Hela means going back some 20 years when oil extraction ended and the promise of Papua New Guinea becoming the Saudi Arabia and Dubai of the Pacific faded as the crude oil taps shut off.

It is against that backdrop that the neighbouring Enga province is now looking at the Porgera mine’s renegotiation through a wardens’ hearing. This is a process that is reopened after the end of a mining lease.

Landowners and the Enga provincial government are looking at a bigger slice of revenues and benefits.

What did they get over the last 30 years? That’s a point of contention for pro-mining and anti-mining proponents.

What is visible to the international community is the campaigns against alleged atrocities committed against local people in Porgera and the desperate push by locals to get what little crumbs they can from a mine that has existed for 30 years on their land.

For the first time in more than three decades, it appears the national government is speaking a different language: One that calls for greater benefits into government coffers and landowner pockets.

This rhetoric has come after 30 years of gold extraction, 500 shipments of liquefied natural gas and billions of dollars worth of round log exports.

Production-based tax
In Lae, during the opening of the Central Bank’s Currency Processing Facility, Deputy Prime Minister Charles Abel talked about a production-based tax. Instead of a profit-based tax for resource projects which will be signed from 2019 onwards.

The general thinking from the national government is that a profits based tax can be deceptive leaving the government with very little to collect if a mining company declares losses or breaks even.

While Porgera discusses mine benefits, a similar process is happening in Madang. Triggered by an agreement between the Chinese and the PNG Governments, Ramu Nickel’s expansion is in discussions ongoing between the government and the developer.

The processes are long and drawn out. The risk is that without proper representation, landowners could be left with another raw deal for several more decades before another opportunity for renegotiation presents itself.

Scott Waide’s blog columns are frequently published by Asia Pacific Report with permission. He is also EMTV deputy news editor based in Lae.

Article by AsiaPacificReport.nz

By Albert Agua in Waigani

Indonesia is driving towards the Papua New Guinea border because of a recent discovery of huge mineral deposits in the Star Mountain regency just at the back of Tabubil Ok Tedi mine.

“Reportedly, there is gold, copper, coal, and thorium – a safer radioactive chemical than uranium,” says president-director of PT Antam Tato Miraza, who was then Director of Development, reports Pusaka.

“Geological Survey shows its potential is good and promising.”

READ MORE: West Papua Liberation Army behind deadly Nduga attack

The core of the deposit is, however, found in the disputed area of the border between PNG and Indonesia.

The claimed Papua border “shift” – the red zone near Ok Tedi mine. Source: PNG Blogs

Recently, Indonesian troops patrolled to Korkit and surveyed the land just around 40km from Ok Tedi, less than 10km from the border marker in the Korkit village to build another military base.

-Partners-

The citizens from Korkit village who are PNG citizens are moving into the new Indonesian village.

This is just 20km from the mineral deposit area.

Thorium, a weakly radioactive element that can be used as fuel in a nuclear power reactor, has been discovered in the disputed area and this has been the sole driver for Indonesians to force themselves into the disputed territory.

Also the “explorers” are actually the military carrying out the exploration.

The Indonesians have been transporting mining supplies to the area and the locals are prepared to wage war if the exploration continues under heavy military security.

Wutung border improvements
Meanwhile, major improvements in infrastructure and capacity are planned for the PNG-Papua border at Wutung, reports Loop PNG.

The improvements are planned as part of the PNG government’s West Sepik Special Economic Zone (SEZ).

National Planning Minister Richard Maru and delegates of a fact-finding mission to West Sepik visited the border area last week.

Loop PNG also reports that an international bus service and terminal are planned for the Wutung border post.

Albert Agua is an academic at the University of Papua New Guinea.

Article by AsiaPacificReport.nz

By Kevin McQuillan of Business Advantage PNG

Two court hearings next week – one in Port Moresby and the other in Melbourne – will help determine the future of the exploration licence for the Panguna copper mine in Bougainville.

The decision to refuse an extension of Bougainville Copper Limited’s exploration licence and to impose an indefinite moratorium over the Panguna resource, followed a statutory Warden’s meeting in December 2017.

There was “a narrow divide between those supporting the mine to be opened by Bougainville Copper Ltd (BCL) and those that oppose it”, according to Bougainville President John Momis.

BCL has successfully sought leave to apply for a judicial review of the decision to refuse its licence extension, citing legal and procedural concerns.

“While the moratorium has been gazetted, it has no impact on existing exploration licences or applications for extension, lodged prior to the moratorium,” said BCL Company Secretary, Mark Hitchcock.

“BCL remains the holder of the exploration licence (EL1) until the matter is ultimately determined,” he said.

-Partners-

BCL has held the licence since the mine closed in 1989. The company is now owned by the PNG national government (36.4 percent), the Autonomous Bougainville Government (36.4 percent), European shareholders (four percent) and 23.2 percent through the Australian Securities Exchange (ASX).

Rio Tinto gave away its stake in 2016.

Opposing BCL
Those opposing BCL’s involvement are led by Philip Miriori, who claims chairmanship of the Special Mining Lease Osikaiyang Landowners’ Association (SMLOLA).

He has thrown his support behind a bid by Perth-based junior miner, RTG Mining, to gain the exploration licence, setting up a joint venture company, Central Exploration, of which RTG owns 24 percent.

One of RTG’s major shareholders holds another 32 percent, and the SMLOLA retains 44 percent.

Miriori’s chairmanship of the SMLOLA remains in dispute. The 367 authorised customary heads of the 510 blocks of land within the special mining lease area of Panguna say they do not recognise Miriori as the Chairman of the SMLOLA and support the extension of BCL’s exploration licence.

On the same day as the Port Moresby hearing, on May 17, BCL will be in court in Melbourne, seeking disclosure about the relationship between RTG Mining and the SMLOLA.

Miriori and other supporters admit they are being paid by RTG, but Miriori has told the ABC that the payments are legitimate salaries, not inducements.

“That is always a normal part of anything, nothing is free,” he said.

Seeking disclosure
The action seeks disclosure from RTG Mining and Central Exploration about any compensation or benefits paid to the SMLOLA.

One analyst close to the proceedings says any disclosure could determine the possibility of “unlawful interference” with BCL’s exploration licence.

For his part, Momis says his government believes it would be “untenable under current circumstances” for any developer to develop the mine.

“BCL has an extensive database of historical data and project information from the mine operations prior to closure.”

“We have some problems with RTG right now,” Momis told RNZI.

“In fact, they are causing a lot of confusion and division in the community and we are not prepared to go ahead while this situation prevails.”

Exploration data
Should RTG Mining or any other company win the exploration licence, the next battle will be over the data about the location and extent of resources.

“BCL has an extensive database of historical data and project information from the mine operations prior to closure in 1990,” said Hitchcock. “This data remains the intellectual property of the company.”

Even if that data is not protected by intellectual property law but is only considered confidential information, it will still require cooperation from BCL to access, according to Alexandra George, senior lecturer at the University of New South Wales, who specialises in international intellectual property law.

She said it might be expensive and time-consuming to obtain.

She said that under Australian copyright law, ownership of a database is not straightforward. Whether or not RTG Mining could access the data may depend on the terms of the exploration licence, any special legislation, and on the terms of any contracts or licence agreements that have been entered into.

“If [the data] was not available, having to reinvent the wheel would add significant costs,” said George.

“Perhaps the safest way of assessing value is what the market is prepared to pay.”

Hitchcock said: “We estimate it would take any other company or entity at least two-to-three years to replicate the BCL database through exploration activities and would cost in excess of A$200 million (K400 million).”

Kevin McQuillan writes for Business Advantage PNG.

Article by AsiaPacificReport.nz

By Jeremaiah M. Opiniano in Manila

The Philippines is among the world’s top sources of metallic deposits like nickel. But in this Southeast Asian mining haven, love may have been lost between the Philippine government and the mining industry.

The country’s Department of Environment and Natural Resources (DENR) has ordered the closure of 23 mines and the companies operating them, plus suspending five others. The firms’ closures and suspensions were recommended by experts who conducted mining audits for the DENR between July and August 2016.

The audits were done in response to reports of these mining firms’ compliance or non-compliance with prevailing regulations on responsible mining and maintaining of environmental standards.

Philippines’ Environment Secretary Regina Lopez is in hot water from the mining industry given her closure and suspension orders, all announced in early February.

Policy and legal battles related to the months-old government of President Rodrigo Duterte have triggered a closer watch on the mining issue.

Mining sector protests
The controversy erupted after February 2 with the announcement of the cancellation and suspension orders by Lopez. Six days later, Lopez had signed the cancellation and suspension orders of the 28 affected companies.

The DENR also released results of the mining audit online explaining why the firms’ mining operations were ordered cancelled or suspended.

Protests followed from the mining sector, especially the industry association Chamber of Mines of the Philippines (COMP). The group said an estimated PhP70 billion (NZ$1.9 billion) in gross production value and some P20 billion (NZ$556 million) in taxes would be lost because of these closure orders, and some 67,000 workers may be displaced.

The COMP said the orders were released “without due process,” but Lopez said  on February 10 that DENR “meticulously observed due process.”

Lopez was referring to the work of the multi-sectoral audit teams that looked at the mining projects in the identified areas. Experts from the central and regional offices of the DENR; from the DENR attached agencies like the Mines and Geosciences Bureau (MGB), Environmental Management Bureau (EMB), the Biodiversity Management Bureau (BMB and the Ecosystems Research and Development Bureau (ERDB); experts from the Departments of Health and Agriculture; and representatives from various civil society organisations conducted the audits.

The multi-sectoral audit teams, Lopez explained, used criteria on the requirements of the different mining and environmental laws of the country. The teams also did cross-auditing, with auditors who reviewed the projects come from another Philippine geographical region. Lopez added the teams also staged entry and exit conferences with stakeholders, including the mining companies.

Seven days were given to the companies to respond to the technical results of the audits and the “show cause” orders. Afterwards, and spanning five months, a technical review committee conducted further review on the companies’ replies to the audit teams’ reviews

Bombardment
After the February 2 announcement from Secretary Lopez, COMP sought the help of the economic managers of Duterte’s cabinet, including Finance Secretary Carlos Dominguez who co-chairs with Lopez an inter-agency Mining Industry Coordinating Council (MICC).

On February 9, Secretaries Lopez and Dominguez — as MICC co-chairs— decided to form a multi-stakeholder committee that will review and advise DENR on Philippine mining operations, to include the recent decisions handed out to the 23 closed and five suspended mining firms.

The mining companies had operations in identified mining hotspots of the country, such as Benguet province (north of Manila, in Luzon island), Zambales province (in the western part of Luzon island), Surigao del Sur (in eastern Mindanao island), Dinagat Island (also in eastern Mindanao), and Eastern Samar (in eastern Visayas region).

Zambales province saw four mining companies —BenguetCorp Nickel Mines, Inc., Eramen Minerals, Inc., LNL Archipelago Minerals, and Zambales Diversified Metals Corp — ordered closed due to alleged illegal logging activities, and for conducting mining operation near a river that had led to siltation in the municipality of Sta. Cruz. Nickel is said to be being extracted there close to a watershed.

Seven mining firms operating in Dinagat Islands were also ordered closed for a build-up of silt on coastal waters: AAM Philippines Natural Resources Exploration, Krominco, Inc., SinoStell Philippines H.Y. Mining Corp., Wellex Mining Corp., Libjo Mining Corp., and Oriental Vision Mining Corp.

In Surigao del Sur province, a further seven mining firms were ordered closed, also for silt in coastal waters and for mining in watersheds: ADNAMA Mining Resources Corp., Claver Mineral Development Corp., Platinum Development Corp., CTP Construction and Mining Corp., Carrascal Nickel Corp., Marcventures Mining and Development Corp. and Hinatuan Mining Corp.

Companies Mt. Sinai Exploration Mining and Development, EMIR Mineral Resources and Techlron Mineral Resources, with operations located in Eastern Samar, were also ordered closed not only because of the siltation of coastal waters, but because of the destruction of a functional watershed.

Mining audits
Apart from the 23 firms whose operations were ordered cancelled and closed by DENR, five other firms were given suspension orders. These are Berong Nickel Corp., OceanaGold Phils., Lepanto Consolidated Mining Corp., Citinickel Mines and Development Corp. and Strong Built Mining Development Corp.

DENR conducts mining audits on a regular basis. Some of the firms whose licences were cancelled by Lopez were suspended in previous years and were asked to respond to findings of mining audits.

Some of the firms were also listed in the Philippine stock market, as a few others are joint ventures by a Philippine and a foreign company. For example, Zambales Diversified Metals Corp. is a joint venture between Filipino-run D.M. Consunji Inc. (DMCI) Mining Corp. and the Australia-headquartered Rusina Mining Corp.

Another closed firm, Oriental Synergy Mining Corp., was established by Qishu Mining Corp., a subsidiary of Qishu Enterprises with headquarters in Fujian, China.

Suspended company OceanaGold Philippines, for its part, is a subsidiary of OceanGold Corp., a mid-tier multinational gold producer with assets found in the Philippines, United States and New Zealand.

Other mining companies were also sued by local residents through the writ of kalikasan (nature), a legal remedy provided by the country’s constitution for anybody to sue those who allegedly violate environmental laws and cause environmental havoc.

Lopez alleged last Thursday that some mining firms had links to local politicians, allowing the industry to flourish.

High stakes
The Philippines houses the world’s leading supply of nickel, as it was estimated by the MGB that some PhP54.9 billion (NZ$1.53 billion) of nickel products were produced in 2015.

Nickel prices at the London Metal Exchange’s LMEX Index actually rose to a 16-month high last November 2016. But the stainless steel alloy’s performance at the LMEX dropped again since January, and the price of nickel rose to over-US$10,400 per tonne last Feb. 3 given Lopez’s closure order.

There are 40 metallic mines (including 27 nickel mines) and 62 non-metallic mines in the Philippines, not to mention five processing plants, 16 cement plants, and 2397 small quarries and sand and gravel operations. The Philippines’ mining operations are governed by the 1995 Philippine Mining Act, with some 9 million ha. of land identified to have “high mineral potential” says the MGB.

MGB data shows that the Philippines earned some US$2.8 billion (NZ$3.9 billion) in exports of minerals to Japan, Australia, Canada and China. The Philippines’ minerals industry is currently employing an estimated 236,000 workers, with a job in the mining sector said to be providing four indirect jobs. Mining companies had also paid some PhP25.78 million (NZ$717.2 million) in taxes in 2015.

But a report by the country’s National Economic and Development Authority (NEDA) showed that the mining and quarrying industry contributed only less than a percent — 0.7 percent— of the country’s gross domestic product during the period 2000 to 2015. The sector also contributed 5.6 percent of total exports in the same 15-year period, as the mining sector also generated an average of 236,400 jobs from 2011 to 2015.

The Philippines is said to have as many untapped mineral deposits, according to industry experts.

COMP said in a strongly-worded February 7 statement that Lopez “has trained her guns on the legitimate (mining) operations, while turning a blind eye to un-permitted, undocumented, non-tax paying and non-compliant mining operations who are the real violators of the environment.”

‘Pose a danger’
Lopez’s closure and suspension orders, COMP said, “pose a danger to other industries” like logistics, processing companies, manpower and transportation service providers and even the education and health sectors.

“The country needs minerals and environmental policies to be handled with technical competence and sensitivity to the complexities of the issues,” COMP wrote. “We respectfully appeal to… President Duterte to thoroughly review the actions of (Lopez)… and their serious repercussions as a whole as they are without basis and legality.”

The environment secretary, a member of the Lopez family that runs a gamut of Philippine companies found in the media, power generation and distribution and energy sectors, however claimed to have the support of President Duterte.

She also wanted to prove a “green economy” model that, Lopez claims, “can provide more jobs than destructive mining.”

“My issue is not about mining,” Lopez said February 5. “My issue is about social justice.”

The closed and suspended firms have 15 days, possibly before February ends, to respond to the DENR’s cancellation and suspension orders.

Assistant Professor Jeremaiah Opiniano is coordinator of the undergraduate and graduate journalism degree programmes of the University of Santo Tomas (UST) in Manila, Philippines.