8. ANÁLISIS DE MERCADO
8.1 TENDENCIA DE MERCADO
Principle:
State involvement in negotiations with potential investors for access to the country’s resource wealth needs to be based on strong technical expertise, adequate levels of information and with a clear sense of what the state wants from the resource development – how it fits into the broad development vision for the country.Policy Options:
1. For any future negotiations (or renegotiations) regarding extractive sector developments, look to draw on regional and international expertise (such as ISLP) to strengthen the State’s information and expertise base, as much for transparency of process as for any potential improvements in agreement terms.2. As part of the review of Mineral Policy, ensure there is a wide-ranging and informed debate regarding the costs and benefits of State Equity in major resource developments. This can then be used as a guide in future negotiations to reduce the scope for ad hoc political decision making regarding each successive development.
33 Although in the Porgera negotiations the developer (Placer Pacific) was not a signatory to the agreements that resulted from the Development Forum, in each subsequent set of negotiations the developer, the state and lease landowners have all been signatories, West 1992, and Filer 2012..
Principle:
Inclusive forms of growth require that all community members – including marginalized and vul- nerable groups – have a say in the process of negotiating both policy and new extractive develop- ments.Policy Options:
1. Following on from the 2013-2014 review of Mineral Policy and the Mining Act, and in the context of the current formulation of the Sea-bed Mining Policy, ensure that women and other vulnerable and marginal social groups are empowered to participate in, and help shape, discussions of mineral policy and its implementation.2. Legislate or embed in regulation, a role for women in negotiations for new extractive resource operations. Adequate and appropriate representation in Development Forum and negotiations of BSA would be a minimum for this.
3. Ensure quality SIA and social mapping to identify other vulnerable and marginal groups and ensure they also have a voice over the development of new extractive operations. Such participation can be very helpful in assisting leaders to develop clear, more inclusive plans for their areas. Having these processes open to the public can assist in terms of transparency. Clear public communications from these processes can also build awareness among affected groups regarding what their leaders are seeking to achieve.
MECHANISMS AND CAPACITY FOR INVOLVEMENT OF COMMUNITIES IN NEGOTIATIONS
The original Porgera Development Forum, a tripartite set of negotiations between lease landowners, provincial and national
government, and the mine developer33, represented a major step –
advanced by global, not just developing world standards – in having local landowners play a major role in the negotiations around the development of a large-scale gold mine. This became a precedent for all subsequent resource developments in the country. In a broader sense, the 2013-2014 process of reviewing the existing Mineral Policy and Mining Act has also sought to involve (through public fora) a broader range of inputs into the policy process than the sector had previously enjoyed.
However there is still a need to improve and broaden the mechanisms by which a wide range of voices can be brought into the negotiations and discussions around policy, as well as be involved in negotiations for individual resource developments. This involves examining the mechanisms by which marginal and vulnerable groups (including women, youth, the poor, and disabled) are given voice (or a seat at the negotiating table) and providing them with the capacity (through technical assistance) and confidence to effectively evaluate policy proposals, business propositions, and impact assessments.
One way to facilitate engagement of a broader range of beneficiaries or landowners in the early negotiations for new developments is to strengthen the capacity of government and/or civil society to work with and support these groups. This might include working with the groups to research and prepare submissions, assess
proposals from the state or the developer, and if necessary access additional expertise.
Additional mechanisms that can fall into this policy arena include examining the mechanisms by which different groups are compensated, and to push for greater emphasis on non-cash forms of ‘compensation’ that can better spread the distribution of benefits to support more sustainable aspects of human development (such as improvements in health and education facilities). Following from this, there is also a need for greater levels of accountability of all parties to the social contracts that these agreements contain with communities affected by resource developments. This accountability in turn requires much more institutionalized forms of monitoring and evaluation, tied to local- level planning processes.
These more inclusive forms of development require all to have a voice – and especially women and children, given the analysis in previous chapters. These innovations could be mandated in legislation or regulation, or simply be policy with regard to Development Forums and BSA negotiations. This is the direction mineral resource governance needs to go to protect and enhance rights says Macdonald (2014:39) in a report for UNICEF. While such a high and broad level of community participation in policy and site-level negotiations is relatively rare in the developing world (and indeed in many parts of the so-called developed world), the experience in Papua New Guinea is that corporations would welcome this, particularly if it was clearly associated with reducing the exposure of their operations to protest and violence from communities.
MINERAL RIGHTS AND OWNERSHIP
There needs to be clear and appropriate understandings, and community acceptance, of the rules around mineral ownership. State ownership of minerals, as noted in Chapters 3 and 5, has been a source of contention since Independence (and unsuccessful legal challenges in the past) and is now being increasingly questioned in the Papua New Guinea context. The major issue is that Melanesian conceptions of ‘ownership’ integrate above ground and sub-soil resources.
The Transitional Mining Bill currently under consideration in Bougainville is attempting a new path by proposing that ‘All minerals existing on, in or below the surface of any customary land in the Autonomous Region of Bougainville are the property of the owners of the customary land’ (Section 13). There have also been moves since 2008 to introduce similar changes in Papua New Guinean Mineral Policy and incorporate these as amendments to the Mining Act (first introduced by Boka Kondra, MP in 2008). There is a range of potential advantages and disadvantages to this proposal, although there is little evidence to support either side. Proponents argue that such an approach could increase returns to landowners from the resource, provide them with a veto over mineral
development, and reduce frustration (and conflict) at perceived inadequate returns. Critics (from industry in particular) debate whether such a proposal could actually provide enhanced returns to landowners, and the uncertainty created would stop investment in the sector. There is little relevant international experience with such a proposal, and a lack of rigorous assessment of the options and their costs and benefits.
7.4 POLICY ARENA 2: PEOPLE-CENTRED
EXPLORATION AND EXTRACTION
LOCAL PARTICIPATION, CONTROL AND DISTRIBUTION
As the discussion of conflict in Chapter 5 indicates, participation of communities from the start can provide them with a greater sense of control and ownership of the project, although experience has shown that the expectations generated need to be carefully managed, as do the internal conflicts that this participation can generate. The fundamental mismatch between local expectations and what an extractive operation can actually deliver in terms of benefits is a driver of much of the social tensions witnessed around resource projects. As the case of Bougainville illustrates, local conflicts can easily escalate to national-level political battles and civil conflict, and this can threaten the continued commitment from investors. Companies have an interest in managing such expectations by establishing and sustaining dialogue with
communities as do local and central government.
Principles such as Free Prior Informed Consent (FPIC) are important in protecting the rights of individuals and communities. This also needs, though, to acknowledge the different ways in which decisions are made within Melanesian societies – Macintyre (2007)
has suggested that in Melanesia, FPIC needs to be approached in a more process-oriented and relational way than usually adopted elsewhere.
Ensuring a greater spread of access to benefits is important. As noted in Chapter 5, existing processes tend to create or dramatically enhance inequalities and produce a wealthy, often increasingly unrepresentative elite. The application of funding to support improved local services and infrastructure is critical to spreading developmental benefits more widely. A lack of access to social services, and locally perceived inequalities and poverty are drivers of conflict, and hence ensuring the effective delivery of services (locally, in addition to the national level) is an effective way to avoid conflict. In this sense the form that the distribution of benefits takes is important to building inclusive human development. Health and education services in particular (along with basic infrastructure – roads, water supply, sanitation etc.) are central elements in terms of broadening the human development effects and outcomes.
In terms of local benefit stream distribution, a move away from the typical model of royalty and compensation payments being made to male leaders is critical (and the Ok Tedi CMCAs offer a model), despite claims to its customary basis. An important element of this is involvement of marginalized and disadvantaged groups in revenue distribution.
Principle:
For the extractives sector to be sustainable in the long-term, there is a need for a mineral rights ownership regime that balances Melanesian understandings and forms of ownership with global sector imperatives for access, certainty and security of tenure.Policy Options:
1. Initiate a formal, wide-ranging, rigorous and consultative review process of the costs and benefits of shifting from State ownership of minerals to either a shared model, or one in which ownership is vested in customary landowners.A form of localized universal or conditional cash transfers would be more participatory and certainly help with the equity element of benefit distribution. It would also ensure a greater spread of local benefits beyond local power-brokers and ‘Big Men’. Conditional
cash transfers derived from mining revenues are already being made in parts of New Ireland Province. While such transfers may be logistically difficult in Papua New Guinea at present, as the coverage of mobile banking is extended, it is certainly worth examining further.
GRIEVANCE MECHANISMS
Currently the State (MRA) manages initial grievance mechanisms (as forms of mediation), so disputes can then enter the formal court systems. The role of the State as mediator is conflicted at times, and affected communities often feel compelled to adopt other approaches to make claims (such as violence, protests, legal action or working with international NGOs) when they feel
their rights have been infringed or agreements not adhered to. Well-designed and supported grievance mechanisms have been shown to be effective elsewhere in terms of preventing or helping to resolve conflict.
Typically such mechanisms need to be independent, and empowered to be able to make binding decisions (that is, ensuring compliance from all parties with decisions), neither of which the current processes are effective at doing.
Such mechanisms (and more than one may well be required) also need processes for resolving and/or managing internal community conflicts around these extractive sites. Current disputes related to land are handled under the Land Disputes Settlement Act, which can be a cumbersome process. Other internal community conflicts around sites of extractive operations are dealt with under customary law or the quasi-formal Village Court system, beyond which recourse is again to the formal justice system.
Principle:
There is a need to ensure high levels of local participation in all stages of resource exploration and extraction. This will maximise the potential for improvements in human development and also mi- nimise business risk. The goal of such participation should be to ensure that affected communities retain a high degree of control over the direction of their lives, and receive an equitable share of the distribution of benefits from the sector.Policy Options:
1. Examine locally appropriate ways of enhancing channels for local consultation and involvement at all stages of extractive industry development. The use of a locally-appropriate form of FPIC as a pre-condition for mining, and then on-going regular communication channels between state, landowners and companies could help raise awareness, moderate expectations and reduce the potential for conflict.2. Examine mechanisms to ensure benefit distribution processes are made more equitable, transparent and inclusive of marginal groups. Building on the Porgera royalty regime (with a component reserved for youth) and recent CMCA initiatives (with a reserved share for women may be useful. This could involve regulating for specific forms of distribution, or setting guidelines for such processes that are included in Development Forum negotiations.
3. Examine the potential mechanisms by which universal or conditional cash transfers of a portion of extractive industry revenue can be used to spread benefits in a more equitable way at national, provincial or local levels.