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Dancing Around The Issue

ABOLISHING fly-in, fly-out employment would have detrimental effects for Papua New Guinea’s mining industry, an Australian junior has warned.

While applauding the PNG government’s determination to consult industry ahead of changes to the constitution regarding resources ownership, Highlands Pacific CEO John Gooding warned of potential ramifications of changing fly-in, fly-out rules.

As PNG mining minister Byron Chan had vowed to halt FIFO operations – mostly from Cairns but also from other Australian destinations – for mines in PNG, the PNG Resource Owners Federation said in February that the FIFO scheme had been draining PNG of its economic, social and infrastructure benefits.

“There’s a bit of a push for less FIFO and many thought that refers to ex-pats, but if you look at PNG, a lot of people fly into the project then fly back to their provinces when they’re not working. So the FIFO concept is something that, if it didn’t happen in PNG anymore, would completely change the whole complexion of the place,” Gooding said.

Highlands Pacific is involved with the Frieda Copper, Ramu Nickel and Star Mountain operations in PNG, with additional exploration.

However, PNG’s parliament approved dual citizenship in February, which will enable those born in Australia living in PNG, or vice versa, to travel and do business far more easily between the two countries.

The PNG government earlier this year published in the National Gazette the constitutional amendments related to the ownership and exploitation of PNG’s hydrocarbons and minerals.

These changes are part of the O’Neill government’s Kumul consolidation agenda, which it announced last year. In relation to resource ownership, the government will elevate to constitutional status the state’s ownership claims.

Two sections (212B and 212C) will be added to the constitution. The first of the new sections states that: “All hydrocarbons and minerals in their natural state are and always have been the property of Papua New Guinea.”

The second section referred to as “the consolidation and commercialisation of PNG’s business” sets the constitutional basis for the organic law creating the Kumul Holdings structure.

The state’s ownership says that by elevating to constitutional status, it is hoped claims of resource ownership by local landowners will be put to rest.

While Gooding welcomed the consultation process for the Mining Act changes, he warned of potential difficulties implementing it due to the diversity of languages and remoteness of many communities.

He said mining companies, already active in consulting with communities from the start, even before they even start an operation, had been helpful in gaining locals’ trust to alleviate some of these issues.

“There are some parties that are saying that if this is their land, they own everything to the centre of the earth, including the mineral wealth, and the government is saying – and rightly so – that natural mineral wealth is there for the whole of PNG, not just the people that camp on top of it,” Gooding said.

“You need to understand, PNG has 800 different language groups, and as many different tribes or communities that are very isolated, so it’s all about land ownership. So some people have trouble with that concept that the resources are there for the national good.

“Where we are operating is a pretty isolated area, so we’ve provided water reticulation for the village and built a new health centre and provided education for the kids.

“There’s even a local Brisbane school where kids send up all their used coloured pencils to those in PNG who have nothing.

“We provide medical services and emergency evacuation services when required.

“It really is about being a good neighbour. You need to do it from when you first get there, or even before you even get there until the last day that you’re there, it’s a responsibility we have to help these people as much as we can – and they help us too.

“You try to provide training, education and skills that people can take into the future, which is really important.”

Frontier Resources managing director Peter McNeil also sees a potential issue if any changes are made to equity arrangements.

“I’ve had a lot of time in-country, it’s a good destination – so long as the PNG government doesn’t try to change the amount of equity they can gain for sunk costs in the end, which is 30%,” McNeil, who has been working in PNG since 1985, said.

“If they try to change, that equity level will kill juniors, because the 20% level that’s the difference between the 30% and the 50% – that’s the bit that I work for. Any big company is going to want to at least be on equal terms with the government in a major project.”

McNeil also supports the government’s efforts to sort out land ownership issues.

“If this change assists in dealings with landowners, which it must, then it’s enshrined in the constitution. I imagine they’ll still allow the alluvial resources (non-mechanised) to be owned by landowners, because they’re panning on their own properties,” McNeil added.

McNeil first went to PNG as a student in 1981 when his father, an exploration geologist, was general manager PNG for Esso Minerals, establishing the Misima gold project.

“They spent tens of millions in five years doing a lot of grassroots exploration,” McNeil said. “The next challenge there will be when you start chasing the second-order anomalies in the exploration space in PNG.”