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Monday, August 15, 2011

Give resource ownership back to the people: Chan (Speech)


Thursday, 11th August, 2011

Good morning ladies and gentlemen,

I would like to acknowledge the presence of Prime Minister Hon. PETER O’NEILL, Minister for Finance & Treasury Hon. DON POLYE, Minister for Education, Hon. THEO ZURENOUCH, Works and Transport Minister Hon. FRANCIS AWESA, New Ireland Governor Sir JULIUS CHAN, Mining Secretary Ms NELLI JAMES, MRA Man­aging Director KEPAS WALI, representatives from the PNG Chamber of Mines & Petroleum and other distinguished guests and Media representatives.

Thank you everyone for coming.

As your new Minister for Mining, I would like to brief you on your key policy issues that the O’Neill-Namah Government will focus on in the mining industry during our term of office. The four key policy issues are:
·        Recognition and protection of traditional landowner’s right to mineral ownership on or under their traditional land and seabed;
·        Urgent review of the mining legal regime;
·        Deep-sea mining; and
·        Environmental Protection.

Let me take you through the briefly how each of these issues will be addressed by the O’Neill-Namah Government.


Traditional landowners’ ownership claim to all hard-rock minerals and petroleum (oil and gas) has never been debated since Independence to the present. The only time issue was debated was in the colonial House of Assembly. At that time, when Bougainville Copper was being developed, the Bougainville landowners claimed that by virtue of their ownership of the land under which the minerals were found, they were owners of the minerals. Land and minerals are part of the same thing; they cannot be separated. Their argument was rejected in the House and the Aus­tralian precedent was followed. Since then we have adopted a legislation based on Australian experience that vests mineral ownership in the State and not the landowners.

I would like to make two points about this historical record.

First, Australia has always been treated as a land mass owned by no one – the technical term is terra nullius. Based on the legal fiction, the Australian Abo­riginals were not recognized as citizens capable of owning land until as recently as 1971 when they were given citizenship. But the terra nullius doctrine remained until it was thrown out by the Mabo Case in 1992.

The legal consequence of the terra nullius doctrine is this: since no one owned the Australian land mass, the Crown was the absolute owner. Upon attaining inde­pendence from Great Britain, the Australian States became owners of the mass and minerals.

That cannot be said in the case of Papua New Guineans have always owned the land handed down from one generation to the next since time immemorial. Com­modore Erskine’s Proclamation of part of our country as a British Protectorate from Hanuabada, next to where we are, recognized and protected customary rights to the land. Customary land ownership was protected; not taken away unlike in Aus­tralia. From then on to the present, customary land ownership has been recognized and protected. Consequently, we are told that 97% of the land in PNG is owned by customary landowners.

Therefore, there was no reason – like the Australian reason – existed in Papua New Guinea for the colonial House of Assembly to divest the customary landown­ers’ of their property rights in minerals and petroleum and vest them in the State. Without debating and carefully considering the unique historical circumstances of Australia with that of Papua New Guinea, successive governments since In­dependence have allowed the law taking away mineral rights of the traditional landowners to remain.

The O’Neill-Namah Government will change that. This Government sees that Papua New Guinea was not a land mass belonging to no one. On the contrary, it was, it is, and it will always be a land that belongs to thousands of tribes who have lived here for thousands of years. Therefore, it is proper that the mining and petroleum legislations recognize and protect what has always belonged to the people in the first place.

To do so will amount to correct a moral wrong – the wrong that what belonged to the landowner was taken away without their consent, taken freely by the force of law. Just as the Mabo Case in Australia corrected the historical error of the terra nullius doctrine, this Government too intends to correct the wrong we have done to our people by taking away their mineral rights by the force of law.

Second, I understand the historical justifications for vesting ownership of minerals in the State during the debate in the Colonial House of Assembly to be based on three key justifications:
• Revenue generation for the young nation;
• Equitable distribution of briefs; and
• Uniform development

I do not see how the revenue generated from mining projects will not benefit the State if and when the minerals are owned by the traditional landowners. On the contrary, the more money Papua New Guineans earn from the sale of their miner­als, the more the State will benefit. The State can still generate revenue through the taxation regime as well, just like it does today. Therefore, this argument can no longer hold.

In relation to equitable distribution, I think the current regime under State owner­ship is concentrating wealth in a few landowners who, according to the current law we have, are not owners of the minerals. So, effectively, State ownership has enriched a few landowners at the expense of the vast majority. Accordingly, this justification too must go.

While uniform development is ideal, at least State ownership of minerals and petroleum have not caused development to be promoted on a comparatively equal basis throughout the country. In fact, even the mining and petroleum areas like Kutubu oil and Lihir gold. So, this justification too must be out.

From one standpoint, Papua New Guineans wonder why the law allows mineral royalty benefits to be given to the landowners in the project areas if they are not owners of the minerals. I know the Government transfers its royalty entitlements to the landowners, but the perception is that because the State’s royalty entitle­ments to the landowners, but the perception is that because the State’s royalty is not shared with all the rest of Papua New Guinea apart from the landowners, it is seen as if the landowners are receiving these benefits because they are owners of the minerals; when they are not, in fact they are. So, the O’Neill-Namah Government re-vesting or restoring traditional landowners’ mineral ownership will not disturb the status quo as some might think. Instead, the law will be revised merely to recognize and legitimize the current practice.

Before I close on this point and move to the second, let me point out to one more reason why mineral ownership must be restored in the traditional landowners. Some development researchers found, from a comparative study, that developing countries that are mineral-resource-rich like Papua New Guinea are cursed when traditional ownership rights is taken away by the State and the transferred to others, especially external investors to own, mine and control is extraction. How­ever, developing countries who allow their domestic companies and citizens to own and control majority of the interest s in mineral projects avoid going through the resource curse. Therefore, the O’Neill-Namah Government believes that recognizing and protecting landowners’ rights to their minerals and ensuring that they stake a large share of what they own will beat the resource curse and place this country on an accelerated pace of development.

We must note three important facts;
·        The Governor of the New Ireland Provincial Government, who has been voted vocal on this point in the recent past, has put a Motion in Parliament in 2009, which the Permanent Parliamentary Committee on Mining and Petroleum has taken up, to review the mining laws to transfer ownership to the landowners. The Committee, I believe, is touring the country to gauge views of the people on this issue. I would be surprised if the Committee does not receive 100% in favour of allowing traditional landowners to won the minerals beneath their land.
·        The National Goals and Directive Principles of the PNG Constitution, and the last Government’s Vision 2050 call for empowerment of Papua New Gui­neans to own and control bulk of the economic activities in this country. Hardly Papua New Guineans are involved in the mineral industry although we have been independent for 35 years. Restoring ownership to traditional landowners, we believe, will allow Papua New Guineans to move towards the achievement of their Constitutional goals.
·        Protecting and recognizing traditional landowners’ rights to mineral owner­ship will not affect current mining projects. It will apply to future mineral projects only, after reviewing and revising the mining legislation to amend the provision that vests property in all minerals in PNG in the State, and divest them to the customary landowners.

Now let me move on to my second point.


The second agenda I will deal with during my term as Minister this year is to review all the laws on or relating to mining. From my personal experience, the following are some of the problems presented by the set of current mining legislations:
·        Consultation with the Provincial and Local-Level Governments. There must be a provision for meaningful and substantive consultation process at every step of the mining process between the Provincial and Local-Level Governments in whose province an exploration or development licence is granted. The Open Member of Parliament in whose electorate the mining activity is taking place must also be included.
·        Provisions requiring financial capacity and technical capability must be re­considered to determine how it will discourage junior Papua New Guinean mining companies from entering the industry. If it is prohibitive, then it would amount to failing to give effect to the National Goals and Directive Principles of the PNG Constitution which calls for bulk of the economic enterprises to be controlled by Papua New Guineans: if opportunities are denied to build the necessary experience and build up technical capacity from trial and error by entering the industry, then when will they get the experience, and how will they build up the technical expertise?
·        Enforcement of the mining laws will be reviewed in order to provide clarity as to who has authority to do it, and how it must be enforced. This will have to include raising of the penalty fines which, at present I believe, is only up to a maximum of K1,000.00.
·        Critical review of the MRA Act o overhauls the MRA Board so that the conflict of interest inherent in the provision for the Regulated to be present with the Regulated to be present with the Regulators is dealt with and ironed out.

I am aware of policy reforms and law s being drafted by my Department on these and other issues. I will support these reforms and look forward to work closely with the staff and management of MRA and the Department of Mineral Policy and Geohazard Management to ensure that the views of the people of this country, the true owners of the rich mineral resources, are recognized and protected. The O’Neill-Namah Government is a government by the people of the people and for the people. And we will ensure that their interest becomes our utmost interest.


Just as we have proceeded into developing our natural gas resources without a spe­cific legislation governing the development and export of our natural gas resources, we have also allowed deep-sea mining to take place without a specific legislation governing and regulating deep-sea mining.

This government will ensure that during the mining legal regime review process, a deep-sea mining policy and legislation is adopted and passed. We must protect and properly regulate deep-sea mining. The current Mining Act 1992 is insufficient to regulate this sector of the industry. I will expect MRA and my department to work on this legislation as soon as possible. My Department, I’m advised, has drafted a deep-sea mining policy by now. We will move fast on that.


The fourth and final point before I sit down is that I would like an Environmental Disaster Management Fund to be set up as soon as possible. All mining companies will be required to contribute to this Fund annually, will be sustainable managed, so that in the event of an environment disaster like in Ok Tedi or elsewhere, monies from this Fund will be used to clean up, restore and rehabilitate the environment.

I would like the support of the Department and MRA to look into the setting of this Fund immediately.


Papua New Guinea is an island of gold floating on a sea of oil powered by gas, as they say, and this is true, compared to the small population and the large world-class mining projects we have and the oil projects. Yet, the living condi­tions of our people tell a different tale.

The O’Neil-Namah Government, by restoring mineral ownership back to the landowners, wants to improve the lives of the people and allow them to own their mineral wealth. Papua New Guineans, as landowners, can become important and equal partners with international investors with the skills, tools, capital and equipment to mine and develop mineral ore deposits for their mutual enrichment.

The State then becomes the regulator; not owner and regulator at the same time. As owners, the landowners will make or break the mineral projects. The endless and bag-load of claims against the State by landowners will become something of the past. The O’Neill-Namah Government recognizes that these policy changes are good for all stakeholders.

Thank you.

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