Chan reassures Chamber of Mines and Petroleum boss

MINING minister Byron Chan has reassured PNG Chamber of Mines and Petroleum executive director Greg Anderson that the proposed amendment to the Mining Act 1992 will not deter investors.

In a brief meeting with Mr Anderson on Friday the minister said he was looking forward to working with the Chamber to see how best they can fine tune the policy to accommodate all stakeholders in the mining sector.

The minister however said as it is now the current call for the Act to change is a political one and there is a great need for consultation by all stakeholders before it is made a policy.

Minister Chan early last month upon taking office as the new mining minister made a bold policy statement that resource ownership rights must go back to the people.

He outlined that the O’Neill /Namah Government will focus on four key policy Issues that include:

• 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.  

 

The ramifications has somewhat made instant ripples on the international scene and what has been described by Mr Anderson as “extremely naive”.

However, minister Chan explained that his statement is principally the same through with greater landowner rights, though the policy would take at least six months before the “policy changes” be brought to Parliament for debate.

Minister Chan said this would take time to properly assess with other existing policies and an appropriate case study to be done by his department, MRA and all industry stakeholders to properly substantiate the proposed changes, though until then the “Status quo remains” business as usual.

Chan cautions opposition over Sir Michael’s health

MINING minister Byron Chan has cautioned the opposition and individuals not to compromise the grand chief Sir Michael Somare’s health with politics.  

He urged those responsible that what they have done is not right and had put the grand chief’s life at risk.

“I’m deeply concern about Sir Michael’s health and wellbeing and that this action alone by those with vested interest or for political gain has already put the life of the nation’s founding father at risk,” minister Chan said.

He made the statement after learning that several individuals decided to bring back Sir Michael from his sick bed in Singapore just to attend parliament this week.

Speaking as a close son and with family ties going back decades minister Chan said, “We don’t have proper medical facilities in the country to sustain Sir Michael’s life especially when he has gone through three surgeries. He is better off in Singapore then being forced out to take a long journey to PNG”.

He noted that the courtroom experience Sir Michael had previously before being flown to Singapore is a different case scenario then if he is to be forced to sit in parliament on Tuesday after undergoing three critical surgeries and with all the pressures from MPs.

“I’m very mindful of this and who knows we might lose the father of this nation in the process. I need to see those responsible to think more mature and not play politics at the outset. Life of Sir Michael is important than playing petty politics,” the minister reiterated.   

Minister Chan who is also the Member for Namatanai said those minorities that try to use the grand chief in attempt to regain parliament and power will have a detrimental effect on Sir Michael’s life and the family as well.

“The government has always maintained that we will not put stress and duress on the chief’s life but to see him enjoy life after politics with his family. However, we should not be seen responsible for the acts by handful of politicians in the opposition.

“If you force grand chief to come in and try to correct what seems to be wrong is totally irresponsible for leaders in the opposition,” he said.   

Chan clears air on proposed mining policy review

MINING Minister Byron Chan says he stands by his policy statement that resource ownership rights must go back to the people provided there is wide consultation between the state, landowners and industry partners.

Speaking during a mine tour to Simberi Island on Thursday he assured the business community and particularly industry participants in the mining sector that the proposed changes to the Mining Act 1992 which has now become a heated debate in the media will not affect their operations.

“Let me assure the business community and especially the mining industry in the country that there will be no immediate policy changes to the existing laws until proper case study and wide consultation with the industry and relevant stakeholders is carried out.

“As government we will try as much as possible to polish up the policy that I believe will be suitable for all Papua New Guineans. If it means for us to go out and study other countries whose mining activities and laws are similar to what we are proposing then let it be.

“I believe this will enlighten us to see for ourselves how best we can fine tune the policy that we will be implementing in the O’Neill/Namah Government to benefit our resource owners, non-resource owners and industry partners in the country.

“I must stress also that this is not a deliberate attempt to discredit any mining firm or developer in the country. In fact there’s nothing new. All I’m saying is for developers to recognise resource owners as custodians of their own land in the proposed policy,” the mining minister said.

He said if the developers cannot live up to the policy, they should not waste their time in the country but to pack and move to allow for other investors who are keen and can respect resource owner rights and work closely with them to bring about meaningful development. 

“I’d like to clear the air on landownership rights, which is the bigger issue raised here and abroad by respective mining commentators and relative industries. For example, I appreciate what Australian Minister Neil Swan said recently – “that Australia and Australians must benefit from the existing mining boom and enhance the country’s economic position through policy changes”.

Minister Swan also goes on to elaborate how Australian businesses were “missing out on the supplies procurement of machinery, goods and services which Australian companies and Australians can provide”.

“Likewise, my statement is principally the same through with greater landowner rights, though this policy would take at least six months before the “policy changes” be brought to Parliament for debate,” Chan said.

Minister Chan said this would take time to properly assess with other existing policies and an appropriate case study to be done by his department, MRA and all industry stakeholders to properly substantiate the proposed changes, though until then the “Status quo remains” business as usual.

Resource owners still in the dark: Chan

MOST resource owners in the country must be made aware that for so long considerable wealth has been siphoned through public equities and not from the actual sale of minerals.

They are misled to believe that resource developers make millions of kina through the sale of commodities such as gold, copper, silver and nickel.

Mining Minister Byron Chan highlighted this today during his first ministerial visit to the landowners and company executives of multi-million kina Lihir and Simberi mines respectively.

“Most of us have little knowledge about the way resource developers actually make money. We’ve been led to believe that their benefit comes from the sale of gold, copper, silver, nickel and carbon energy.

“But since taking office I have come to learn that significant wealth is accumulated in the public equities that are bought, sold, and traded on international stock exchanges using our resources. Company stocks soar on news of the granting of exploration and mining licenses and, to date, no party in Papua New Guinea has seen any tangible benefit,” Minister Chan said.

Chan who is also the Member for Namatanai, the richest electorate in Papua New Guinea that houses world class mines in its backyard such as Lihir, Simberi and Nautilus wants to see new changes for resource owners and the nation at large.

“So today, in the dawning of the new paradigm for mining in Papua New Guinea, my office is exploring ways to insure that the expansion of shareholder value in the global equity markets for announcements made, and rights granted by my office include benefit that flows to landowners and the nation.

“Using state-of-the art quantitative market tools, we have begun a process of learning the value of our intangible asset announcements – our granting of licenses – and we will develop world-class methods to insure that when our resource developers win, our people win alongside them,” Chan said.

He also would like to see more dialogue between mining companies and industry partners to fully understand clearly the motive behind his proposed amendments to the Mining Act 1992. 

The minister raised this concern after learning that both foreign and local commentators in the media misunderstood the nature of his move and what it meant for resource owners in Papua New Guinea.

“In my capacity as the Minister for Mining, it is well known that I have long stood with citizens of Papua New Guinea in calling for a more equitable participation in the benefit extracted from the land and sea of this country.

“For many years, ministers before me have been advised to favour mining operators under the veiled threat that, standing up for our rights and interests would intimidate investment in development of our country’s resources. This advice has placed our interests secondary to those of the international markets.

“However, as we see the global markets transform, with economies from the U.S to Europe to Asia undergoing considerable stress, the assets of this country are highly desired and, in this time, the maturing Papua New Guinea must now stand side by side with nations of the world, expecting and receive mutual respect, dignity for our people, and appropriate sharing in the abundance of our resource wealth.

“My office is undertaking a comprehensive review of a number of initiatives that you will hear about in the coming weeks and months. Abuse of our land, sea and people will be addressed. But even more than that, abuse of our government’s actions will be addressed,” Minister Chan said.

He reiterated that the O’Neill /Namah Government will focus on four key policy Issues that include:

·        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.  

 

The minister noted the four policy directions would take time to be properly assessed with other existing policies and an appropriate case study will be done by the mining department and MRA and local and international advisors and consultations with all industry stakeholders to properly substantiate the proposed changes.

The policy would take at least six (6) months before the “policy changes” be brought to Parliament for debate.

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

OFFICE OF THE MINISTER F OR MINING

BREAKFAST ADDRESS TO DIVISIONAL HEADS OF MINING DEPT & MRA BY HON. BYRON CHAN, MP

AT YACHT CLUB

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’ CLAIM TO MINERAL OWNERSHIP

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.

URGENT REVIEW OF HE MINING LEGAL REGIME

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.

LEGISLATION FOR OFFSHORE OR DEEP-SEA MINING

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.

ENVIRONMENTAL DISASTER MANAGEMENT FUND

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.

CONCLUSION

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.