Revisit 33 per cent equity distribution for landowner groups

THE Government’s recent decision to distribute the 33 per cent equity in Ok Tedi Mine Ltd (OTML) to the various landowner groups in Western makes them the first indigenous people in the country to hold a one-third direct equity participation in a mine.
Under the share distribution, the Community Mine Continuation Agreement villages will own 12 per cent (previously 12.2 per cent), the Mine Lease Area landowners will own 9 per cent (previously 3.05 per cent) and Fly River Provincial Government will own 12 percent (previously 3.05 per cent).
The remaining 67 per cent equity in OTML is owned by the state (previously the state owned 18.3 per cent).
The biggest winners in this new arrangement are the Mine Lease Area landowners who were given an increase from 3.05 per cent to 9 per cent or an increase of 5.95 per cent while the Fly River Provincial Government got an increase from 3.05 per cent to 12 per cent or an additional 8.95 per cent.
These increment in equities were given as free equity without the stakeholders shedding a dime to acquire on commercial value.
Nevertheless, the people of Western were previously better off with a collective equity of 81.7 per cent shareholding in OTML under these arrangements: CMCA group owned 12.2 per cent, Mine Lease Area Landowners owned 3.05 per cent, Fly River Provincial Government owned 3.05 per cent and the people collectively owned 63.4 per cent which was managed by Papua New Guinea Sustainable Development Program Ltd.
If the State was serious in assisting the people of Western, it would have acquired OTML and transferred the 81.7 per cent in its entirety to the communities in Western so that this would not only herald a record in the country but in the world for being the first indigenous community to directly own a world class mine.
Within this arrangement, the Mine Lease Area landowners can be given 12 per cent equity, Community Mine Continuation Agreement villages can be given 15 per cent equity, Fly River Provincial Government can be given 15 per cent and the remaining 39.7 per cent equity in OTML can be used to fund development projects in Western.
These stakeholders will appoint their representatives on the board of OMTL together with the state who will continue to own 18.3 per cent equity in OTML.
The board will then appoint a world class mine operator to manage OTML on their behalf and pay it a management fee based on a transparent contractual terms.
A trust account will be created for all dividend proceeds from the 39.7 per cent to be held and used to fund development projects that are in line with the provincial and district plans.
For a start, key development projects that are deemed to elevate the social and economic status of the province will be funded.

Eugene Kambut
Port Moresby