Govt risk to PNG players

PAPUA New Guinea’s mining industry is once again under threat of government reforms to give community landowner groups a 49% stake of mines and projects in PNG. Reforms to oil and gas legislation are expected to follow.
Govt risk to PNG players Govt risk to PNG players Govt risk to PNG players Govt risk to PNG players Govt risk to PNG players

Mining Minister Byron Chan first created controversy back in August by discussing plans to hand over national government control of PNG's mining, hydrocarbon and forestry resources to customary landowners.

The industry outcry which followed seemed to have made the O'Neill-Namah coalition government back away from the issue.

But the government was also occupied with many other matters, such as the legal challenges against its formation last year while Sir Michael Somare was on medical leave. The unresolved constitutional crisis is still before the Supreme Court.

Chan's announcements on resource ownership changes can be traced back to Boka Kondra, who has the giant Ok Tedi copper-gold mine in his electorate.

Back in 2010 he was championing his Natural Resources Ownership Bill from opposition, and with the change in government in August he became a vice minister for mining.

Kondra's bill has a simplistic approach to amend existing mining and petroleum legislation by substituting the word "state" with either "customary landowners" or "landlords".

Such a shift in policy could open the floodgates to people who wish to claim landownership, and extensive social mapping is already required under the existing regime.

There could be further implementation issues, as the existing legislation was designed for government ownership of resources.

There are also many unknowns in terms of how sufficient project financing can be obtained under these changes, and customary landowners in greenfield sites are typically impoverished.

According to The National, Deputy Prime Minister Belden Namah has backed Kondra's bill, which is a new focus of parliament this week.

Namah reportedly met with mining department officials on Wednesday who warned him of the risks the industry would face under the reforms, but Namah called on critics and supporters to work together so the final law was acceptable to all.

"A review of the Mining Act is long overdue," he reportedly said.

"Landowners should not be mere rent and royalty takers. They should be a major partner in the extraction of resources from their land."

Namah reportedly proposed that Kondra should look at landowners taking 49% stakes in "production sharing agreements" over the country's mines, with "support of the government".

PNG Chamber of Mines and Petroleum executive director Greg Anderson has previously called the Kondra-inspired reforms "extremely naive" and unworkable.

"If we tried to deal with landowners on exploration titles, I think it's just going to be a nightmare," he told the ABC's Radio Australia program last year.

Anderson was not available to comment this morning. The National separately reported that parliament discussion is expected for Kondra's bill to amend PNG's Oil and Gas Act.

The O'Neill-Namah coalition has overwhelming numbers in parliament and could push through Kondra's bill before the election due in mid-year.

The Somare camp is not attending parliament on the basis that it deems the O'Neill-Namah government to be illegitimate.

On December 12 the Supreme Court ruled that Somare was the rightful PM and he should be restored to this office "forthwith". But Peter O'Neill remains the effective PM and his coalition has used its numbers in parliament to pass laws, some being retroactive, to guarantee him the top job.

These are some of the matters which remain before the Supreme Court.

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