Papua New Guinea is highly dependent on the extractive sector. The country relies heavily on the revenues from its resources for economic growth and government revenue. More broadly, the mining sector in PNG plays a significant role in the country’s overall development. The mining companies operating in different communities across the country bring enormous change to these locations that are established in some of the world’s most isolated areas. Some people would associate the high revenue generated from mineral resource with positive growth for PNG, but many are pessimistic about the ‘boom-bust’ nature of mining operations. The impact that mineral wealth distribution and overall development has on the impacted communities and the country as a whole is contested by many. This chapter introduces the context of mining in PNG to provide background to the ways in which the industry at the local-level contributes (or otherwise) to community resilience among communities impacted by the large-scale mines.
The focus of this chapter shifts from the broad (national-level) down to the specifics of health and impacts on local-level communities. This chapter firstly explores the significance of mining in PNG’s economy, then covers policy and governance issues surrounding the mining industry and the impact of mineral wealth on the host communities. The various stakeholders involved in the sector are then introduced,
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with a focus on the role they play, and the responsibilities they have in maintaining and building resilience within the communities. This chapter further investigates how mineral wealth trickles down to the adjoining communities, and how these benefit streams contribute (or not) to the building of resilience to help achieve sustainable communities. While this is not a thesis focussed on economic aspects of the mining industry, the revenue streams are critical to understanding community change and the prospects for strengthening resilience. The chapter then reviews two particularly relevant impacts of mining at the local level (land and effects on women), and then concludes with a discussion of the links between these large-scale mines and health in the affected communities.
3.1.1 Papua New Guinea and the economic importance of
mining
Mining began in PNG in 1888 when a significant amount of gold was discovered at Sudest Island, in Milne Bay, bringing miners north from the goldfields of Queensland. This discovery led the way for further exploration across the islands and eventually developed into hard rock and large-scale dredging operations at Wau and Bulolo on mainland Papua New Guinea (Nelson, 1976).The modern era for mining started in the 1970s when the Bougainville Copper Mine (BCL) was established. BCL had a successful operation from 1972 to 1988 and contributed about 17 per cent of the country’s revenue (Banks, et al., 2014), but was forcefully closed down in 1989 due to landowner grievances and environmental impacts (Filer, 1990). From the 1980s several other mines have been established around the country. Currently the country hosts eight operational mines: Lihir, Hidden Valley, Ok Tedi, Porgera, Ramu Nickel, Simberi, Sinivit
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and Tolukuma. Solwara 1, the world’s first deep-sea mining operation, is now under construction. Most of these mines produce gold, while Ok Tedi is also a copper producer and Ramu Nickel produces Nickel and Cobalt (Banks, et al., 2014). Figure 3.1 shows the location of the current and potential future mines in the country.
Figure 3.1: Current mines and future prospects for mining in PNG. Source: PNG Chamber of Mining and Petroleum.
These mines contribute significantly to the country’s economy by generating revenue from taxes, from dividends from equity shareholding in the operations, and through a 2 per cent royalty to the GoPNG. Recent figures on mining revenue to PNG confirm that over 50 per cent of the foreign income is from mineral exports (BPNG, 2011, 2012, 2013). These figures illustrate a typical ‘extractive resource dependent’ economy and
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are predicted to continue for some decades or so. Table 3.1 highlight the production and mine life estimates of the five major current mines in the country.
Table 3.3: Mining operations and resource production.
Mine Resource
extracted
Production Approx. value
of production
(2013 values)
(USD)
Mine life (actual
and anticipated)
Ok Tedi Gold and
Copper
125,000t Cu 405,000oz Au (2012)
$1,504 million 1984-2023
Porgera Gold 507, 000oz Au
(2013)
$700 million 1992-2023
Lihir Gold 650,000oz
(2013)
$900 million 1997-2035
Hidden Valley Gold 200,000oz
(2011)
$280 million 2009-2023
Ramu Nickel & Cobalt 15,000t Nickel 1,400 Cobalt (2013)
$225 million 2013-
Source: Adapted from Banks, et al., (2014, p.15.).
In addition, about 0.4 per cent of the population (between 30-50,000 people) are engaged in small scale or Artisanal and Small-scale Mining (ASM) mainly in the Morobe-Madang-Sepik (MOMASE) and the Island regions of the country. Mineral Resource Authority (MRA) records show that this sector produced about 95, 000 ounces of gold in 2012 (Banks, et al., 2014). However, ASM is not the focus of this study as the emphasis here is on the large-scale mines operated by multinational companies.
Despite the high value of production and significant revenues derived from the mining industry, critiques reveal that there is little evidence of this industry’s contribution to development at both national and local levels. The argument is that mineral wealth
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has not trickled down or been translated into better services to improve the living standards of people in the communities most affected by the operations (Banks, 2003; Filer & Macintyre, 2006; Kepore & Imbun, 2011). More recent literature on corporate social responsibility (CSR) internationally (Hilson, 2012; Luning, 2012; Slack, 2012), and nationally (Gilberthorpe & Banks, 2012; Kepore, Higgins & Goddard, 2013), also largely point to a lack of tangible results to show in terms of the benefits of mining. This was also evident in terms of the country’s poor health indicators (see Chapter 2) and other social indicators in PNG. The policy framework surrounding the governance of mining benefits is central to the links (or otherwise) that prevent mineral wealth being transformed into tangible results.
3.2 Governing the mining industry
At the broadest level, the direction of mineral policy set in 1977 that the mining sector is to be the ‘driver’ of economic growth - has essentially continued. The current principal law that regulates the mining industry is the Mining Act (1992)8. The Mining Act (1992) is the overarching document that is used to guide the development of the legal documents around mining operations such as the Mine Development Contract (MDC), Compensation Agreements and Memorandums of Agreement (MoA). Other Acts that impinge on the operation of the sector, as James (1997) outlines, include the Environment Act (2000), Companies Act (1997),the Mining Safety Act, Sections B and C of the Income Tax Act, Foreign Exchange Regulations, Mineral Resources Stabilization
8
This Act was being reviewed in 2014 and some revised policy documents are out for discussion, but to date no new legislation has been put in place.
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Act, Environmental Planning Act, Water Resources Act, Land Act and the Customs Act. These Acts are applied concurrently in mining projects theoretically to deliver best possible results for all parties, but have little relevance to the current study.
3.2.1 Governance framework for mining
Governance in this context concerns the manner in which mining benefits such as taxes and royalties are collected, managed and channeled to different institutions including the district and LLG administration to deliver services such as health and, through this, contribute to the building of community resilience. This subsection reviews literature on the policy framework surrounding the governance of benefit sharing, with a particular focus on the Development Forum, and the MoAs, as these are central to the delivery of health services to the mine affected communities.