Secretary discusses mining

The National Business
The Department of Mineral Policy and Geohazards Management is the policy arm of the mining industry. Secretary Harry Kore spoke to Business Editor Shirley Mauludu about the department’s view of the industry and other issues facing the mining sector.

Q: What is the department’s general view of the mining sector?
KORE: Papua New Guinea is host to large scale and world class mines. They include the Lihir and Porgera gold mines, the Ok Tedi copper mine, the kina Ramu Nickel/cobalt mine, Hidden Valley gold mine, Simberi gold mine and the Kainantu gold mine. Information provided by PNG Chamber of Mines and Petroleum states that the value of exports in 2017 based on the Bank of PNG data is K31.4 billion. Mining contributed 37 per cent and petroleum contributed 47 per cent which totals to 84 per cent of the total exports for 2017. The rest of the sectors contributed the balance of 16 per cent of the exports. But it does not tell us how much was derived as benefits to the people of Papua New Guinea.
Similar information provided by the Chamber for the same year in the PNG Extractive Industry Transparency Initiative (EITI) 2017 Report stated that extractive sector (mining, oil and gas) contributed 86 per cent to the export volume out of PNG. The rest of the other sectors only contributed 14 per cent of the total PNG exports. However, interestingly, from that 86 per cent, the extractive sector’s contribution to government revenue is a mere 7 per cent.
This raises a very important question: Is PNG getting its fair share of the mineral resource revenue? My department is working in collaboration with other relevant State departments and entities to ensure we address this question to ensure our people get a fair share of the revenue derived from the exploitation of our mineral resources. This is done through the revised Mining Bill yet to be tabled in Parliament, and the six new policies that we have developed and others that are currently being developed to address the predominant issues in the PNG mining sector. In order for PNG to become “the richest black Christian nation leaving no-one behind”, it is imperative that we change the way we’ve been doing business in mining in this country. Change is inevitable after 44 years of independence. We cannot keep doing the same thing over and over and expect a different outcome. All we want is a fair share of the resource revenue, nothing more, nothing less. And we expect our investors to work with us to correct this glaring anomaly amplified in the EITI Report.

Q: What were some of the major challenges for the sector in 2019 from the department’s perspective?
There are predominant issues in the mining sector in PNG that require urgent policy and legislative interventions to be address. Some of these major issues are as spelt out below. Landownership is a core principle issue. Landowner identification and social mapping are critical to any project development in PNG. Identifying the correct landowners is the first step towards acquiring the social licence that guarantees the security of the project. Mineral ownership is a major issue. There is overwhelming call by our people and our leaders for the State to exercise its sovereignty and Constitutional right to retain the ownership of our mineral resources to enable the State to negotiate better deals for the exploitation of our mineral resources at minimal or no cost to the State.
The resettlement or relocation of affected landowners from the project area is a significant challenge for both the developer and the State. The wellbeing and livelihood of our people must be improved and sustained into the future through proper planning with adequate compensation. We expect our investors to be serious about addressing this core issue in their planning. It will be a major consideration as a precondition to the granting of a development licence. The health and safety of the mine workers and the environment they conduct their business is of paramount importance in the sector. Our laws are being revised to be comparative with global industry practices and applicable standards to ensure all our mine workers return home safely to their families and loved ones at the end of the day.
The fair distribution of mine derived benefit and adequate compensation are genuine concerns that the State is addressing through the revised laws and policy developments. There must be fairness in receipts of the benefits derived from the exploitation of the mineral resources between the various stakeholders inclusive of the investor. The landowners, the provincial governments, the districts and the National Government must be entitled to a fair share of the proceeds from the sale of the mineral products. The EITI is a step in the right direction in ensuring accountability by stakeholders. However, the challenge is the correctness of the information being produced by the developer and its authenticity. There should not be any discrepancies between the data produced by the developer and data produced by the responsible State agencies.
The national content aspiration of the Government is a key consideration that should be utilised to add value to the communities surrounding the mine project as well as other citizens intending to undertake service contracts in a mining development. It gives rise to greater participation in resource development by our people and provides project security to the developer. Papua New Guineans are capable and qualified to undertake major service contracts in the resource sector. And the State will ensure its people are given preference when such opportunities are available. Environmental concern is a serious matter for consideration for any investor intending to conduct business in PNG. The State is putting in place systems to protect and mitigate, minimise or prevent any damages to the environment. The revised Mining Act will not allow riverine discharge into the pristine river system in our country. Any allowable discharge particularly for deep sea tailings disposal in accordance with international best practice standards will be at cost to the responsible party as compensation for the impact to the marine environment. Currently there are no policies or specific legislative provisions that address many of these issues.
Most of the practices are adopted from international best practices and standards in similar jurisdictions in other parts of the world or are industry standards that our developers apply on a day to day basis. Nevertheless my department is addressing these policy gaps in the development of the revised laws and the new policy developments.

Q: What is the status of the country’s revised Mining Act?
The revised Mining Bill is going through the government due process. It is currently pending its presentation before the National Executive Council for its formal endorsement and ultimately its enactment in Parliament. The review of the Mining Act 1992 and the Mineral Policy started way back in 2009 when the department was first established following the split between the department and the Mineral Resources Authority. We conducted public consultations through the print media, letters inviting comments and on radio talkback. We did the initial regional consultation in 2011 to identify the predominant issues. Then in 2013, we had another regional consultation to present the draft work we have developed for public scrutiny. In 2014, the Mining Bill was to go before Cabinet but the PNGCMP intervened and requested the minister for specific consultations with the industry which ended in June 2016. The Bill was deferred from being introduced in 2017 and again in 2018 due to the PNGCMP claiming it had not being consulted on the amendments.
As the department responsible for the review of the mining laws of our country, we have on record the persons consulted, the outcomes of those various consultations and a commentary matrix as evidence that we widely consulted the stakeholders. In comparison to many other laws that have been enacted with little or no consultations, the Mining Bill is probably the most overly consulted piece of legislation spanning over a decade since 2009.

Q: I understand the department is also putting together six other mining policies. What are they?
The six mining sector policies are:

  • Mining Policy – a realignment of the existing mineral policy to reflect the policy changes in the PNG mining sector;
  • Offshore Mining Policy – addressing deep sea mining in Papua New Guinea;
  • Mining Involuntary Resettlement Policy – addresses the resettlement or relocation of affected communities from the mining project areas;
  • Sustainable Mining Development Policy – an international best practice requirement that focuses on improving and sustaining the livelihood of our people beyond mine close;
  • Geothermal Resources Policy – seeks to harness the opportunity for our people to venture into this sector in a sustainable manner; and,
  • Mining Project Rehabilitation and Closure Policy – an international best practice that requires investors to start planning for rehabilitation and closure right from the start of operation so that the impact on the livelihood of our people is mitigated and addressed up-front to avoid any impromptu planning that could be unfavourable for our community and our people.

In addition, the Downstream Mineral Processing Policy, the Mine Waste Management Policy, the Small Scale Alluvial Mining Policy and the Geohazards Management Policy are important policy developments that need to be further improved from the draft policy framework developed by the department. Funding is an issue that is causing a set back to the development of these additional new policies.

Q: What is the status of those six mining policies?
The six mining sector policies were initially endorsed in principle by the NEC in 2016 but were contingent upon the enactment of the Mining Bill. These policies are pending an approval by NEC and to be introduced along with the enactment of the Mining Bill.

Q: From the department’s perspective, are there any specific issues that are hindering progress of important policies that are vital to the country’s mining sector?
The PNG Chamber of Mines and Petroleum’s continuous interventions through politics to delay and derail a due government process is a major hindrance to the development of important government policies and laws. The continuous interference in the development and the enactment of the Revised Mining Act demonstrates disrespect and disregard towards the government system and processes. This seriously undermines PNG’s sovereignty as an Independent State and the Government’s sovereign authority to make laws and policies for the interest of its people without fear or favour. The respective mining policies and the revised Mining Act are positive changes for the country that will benefit the State and its people. The Chamber as the regulated entity should refrain from continuously interfering with a due government process. That is unethical conduct. The Chamber was represented in the consultations by two expert consultants/ negotiators and thirteen senior industry representatives that raised a total of 614 different issues for discussion. However, after seven separate consultations spanning over a period of two years of rigorous and intense scrutiny involving public servants, the chief secretary, the mining minister and the prime minister, the Chamber still claims that it has not been consulted. Any genuine investor would allow the due process to take its course and would willingly comply with the decision taken by the government of the day instead of speaking rhetoric and distorting the truth to serve its own agenda.

Q: What is the department’s outlook for the country’s mineral sector in 2020 going forward?
It is in the best interest of the State for the government of the day to pass the Mining Bill and endorse the six new mining policies. This will promote sustainable development in the mining sector and in the long term, achieve PNG’s targets in the Medium Term Development Strategy III and the international conventions, treaties and agreements to which it has ratified domestically.
In addition, the revised Mining Act and mining policies will help PNG maximise the benefits derived from its mineral resources. The department envisages that by 2022 and beyond, Papua New Guinea will have a robust regulatory framework for the mining sector that will improve the quality of life of our people though effective mineral policies and legislations. We have developed a mining blueprint geared towards achieving this vision.