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Ambunti, Porgera & the need for give & take

Beautiful Ambunti  right on the Sepik River
Beautiful Ambunti right on the Sepik River


KALAMAZOO, USA – Along with my wife Penny, I have served with Pacific Island Ministries in East Sepik Province between 1980 and 1985 and from 2005 until the present.

Pacific Island Ministries was founded in Ambunti, the largest town on the Sepik River, in 1977.

From the get–go a priority was to listen to the locals about what kind of help they wanted.

They expressed a strong interest in education and a prominent landowner donated a tract of land for us to construct classrooms, dormitories and teachers’ houses.

Ambunti Akademi, as it was named, conducted Grade 1-6 education and all went well for 28 years.

Then the landowner died and his two sons took over.

They met with us Pacific Island Ministries leaders in 2005 and stated, “Papa bilong mipela I stupit! We’re taking back the land.”

And take it back they did. Not just the land but all the infrastructure as well….houses, dorms and classrooms valued at about K500,000

Landowner relatives claimed the houses and the school had to be closed.

“Okay, what do we do now?” we asked ourselves.

We decided to turn our focus to work with villages in the Sepik River Valley where there was no educational opportunity.

Over time, we established 30 elementary schools.

The agreement with villagers was that if they wanted a school for their children, they needed to meet some goals.

They had to construct a school building using bush materials. They needed to build a bush materials house for the teacher provided by the ministry. They also had to construct two pit toilets, one for the school, the other for the teacher.

Once this was achieved, the ministry would provide trained teachers and their salaries and equipment - blackboards, books, pencils, paper, tables, benches, all that was required.

This mutual arrangement has worked very well.

But the worrying event remained in our minds - second generation landowners had reclaimed land their papa gave for a school, even though it meant a small NGO in the Sepik got trampled on.

The thought strikes me that is what happened in Ambunti in 2005 a microcosm of what is now happening in Porgera on a major scale?

Is the PNG government effectively saying, “Thank you for constructing the mine for us. You’ve made a handsome profit and are no longer needed.  By the way, we will be taking the infrastructure for which we will pay you a few million kina. But we’re not going to pay fair market value for the mine.  Goodbye.”

Back in 1990, when the Porgera Joint Venture began, the ownership deal was 47.5% for Barrick, 47.5% for Zijin and 5% for landowners and Enga Province. PNG as a whole would benefit from taxation receipts.

Under new arrangements, the PNG government has the option of retaining between 16.6% and 25% ownership in a project, with the understanding it will come up with the funds to pay for its share.

If the project agrees to defer payment while the government obtains a loan, that is also workable.

But, in my book, seizing a mine while paying only 5% of its value is exploitation.

James Marape is a big improvement over the corrupt prime minister who preceded him.

But, as I have argued previously, I disagree with his posture toward the Porgera Joint Venture.

Thankfully there was recourse for an appeal to the national court, which on 1 May instructed the two sides to discuss and resolve their differences and ordered them to report back to the court.

It has been encouraging to see some progress on the impasse.  According to the Post-Courier, Barrick Niugini has presented a proposal on how to resolve the dispute on the lease and the future of the mine. 

The government's response is expected by tomorrow and I’m optimistic the two sides will work this out.

If this doesn't happen, it's likely the national court will appoint a mediator to resolve the matter.  

Let's hope for healthy give and take on both sides.


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Arthur Williams

More doubts in my mind about Pastor Eric Schering behaving as an apparent lobbyist for mining companies after he posted his advice in The National newspaper on Monday for anyone trying to make Twinza share its profits with the cash-short PNG nation.

My follow up post was: "Eric gives a sorry explanation as why PNG should not demand anything for allowing its God given resources to be removed from the land or the sea.
If you want to run a business on my land then you pay me rent.

"My contribution is my land or ocean and the resource underneath that you desire to exploit. I don’t have to pay you anything.

"Why should anyone in this case the State of PNG pay anyone to come and take its resource?

"Tuna companies from America etc pay the South Pacific nations to catch in their economic zones. Those nations do not pay any company to come and fish in their waters. Why should that policy be different for mining companies?"

Philip Fitzpatrick

Makes you wonder who has got shares in Barrick.

I remember that character who was writing articles on PNG Attitude urging the re-opening of the Panguna mine.

At least he wasn't coy about his real interest, even though he played up the benefits to Bougainville.

Arthur Williams

An unfortunate title, Eric, for your latest lobbying for the Barrick Zijin joint venture.

At Ambunti you gave but eventually the landowners took. At Porgera it is landowners and the nation ‘giving’ and the JV does the ‘taking’.

There are a few corrections to you latest post. Placer Dome began the Porgera mine and its subsequent environmentally riverine detritus disposal disaster.

Barrick commenced a US$10 billion takeover in 2005 which it completed in 2007.

The nation is not seizing or nationalising the mine. The agreement to mine is not open ended. It has a contractual life that has already ceased.

It was only in May 2015 that Zijin announced it would pay US$298 million for its stake in the mine after a year of failed negotiation with Newmont.

A day after the story in the media, Engan Governor Ipatas expressed concern about the Chinese miner and its poor environmental record.

A few days later the local aomen’s group also raised concerns that the MoA review must solve alleged outstanding issues with Barrick first. A few here:

1 That Barrick had never paid the correct amount for water used at the facility. As of 2016 they still had not done so.

2 Compensation for (a) land used free for over 30 years and (b) landowners homes and gardens.

3 Violence including arson and rape in several incidents.

On 15 July 2007 Zijin’s boss told the Porgera people that there would be no more environmental problems as well as recording the strength of his company which had generated K26 billion from its worldwide mines the past year.

Later in that first JV year we saw typical murky mining accounting shenanigans when in October 2015 Barrick Gold reported a 3Q net loss of $US264 million (K750.2m) but an adjusted net earnings of $US131m (K372.3m).

Yet it also said it had produced 1.66 million ozs gold towards what would be a total 6.1 million for year at an all in cost of US$870 cost.

‘Ol man sori tru long Barrick!’ Hang on how did a well-managed top class mining company lose while the world price was US$1140 (that's US$ 270 per ounce gross profit)? Bean counters wet dreams are often not the genuine statistics.

Fast forward through the next somewhat unhappy three years. Despite the mine reaching its 20 millionth ounce of gold since production began at the mine in 1990.

In 2018 Porgera MP Tom Tapili asked environment minister Pundari about the ‘secret’ mining agreement with a 50 year lease. Turns out he was partially right in that there was a 50 year Environmental Permit expiring in 2038. (“Didn’t every know that?” Barrick must have wanted to say.)

Also in 2018 The National on 1 October reported a claim by the chairman of Tuanda ILG Sole Taro that his clan had received nothing for their 600 hectares of land in the Special Mining Lease area.

Further: “They used my land to dump waste from the mine. They haven’t built schools, churches or aid posts to compensate for the ones that are now covered in waste. There is no council ward, my people are scattered all over. Our village is destroyed by the company and now we have no place to call home.”

More worrying for all PNG citizens in any resource impact areas was revealed in PNG Attitude that: "November 2018- Lawyers on behalf of the Justice Foundation for Porgera (landowners of the Special Mining Lease Area) filed a suit worth $13 billion against the PNG government.

"The contracts signed between Barrick and the government prevent any third party from suing the company for anything (this is called a “privity of contract” in legal terms).

"So the Justice Foundation for Porgera could not directly sue the company. This is why the lawyers – based in Australia – have filed their claim in accord with the rules of the United Nations Commission on International Trade Law.

"It has taken the lawyers and the plaintiffs seven years to prepare this important suit. It has brought some attention to the situation in Papua New Guinea."

Only last week another aspect of the dispute arose when the PNG tax man wanted US$191 million of back taxes. This prompted one analyst Kerry Smith at Haywood Securities Inc to tell his clients: "This feels a bit like Tanzania 2.0."

That was when Tanzania banned a subsidiary of Barrick from exporting gold concentrate and later demanded US$200-billion in back taxes it says the state was owed.

The quarrel dragged on for more than two and a half years, with Barrick eventually agreeing to handover a 16 per cent stake to each of its three gold mines in Tanzania to the government and the people."

And "at the framework stage, the deal also includes awarding of a 50 percent of consolidated mining revenue from its mining unit in the country to the host government going forward and a $US300 million one-off payment to be made by Acacia as a show of good faith."

Barrick’s Glaciers must be one of the most unique mining events since Freemont destroyed its own glacier in West Papua’s Grasberg mine.

In 2000 Barrick wanted a mine high up in the Andes along its Argentina border at a place called Pascua-Alama. Part of its initial environmental plan proposed the physical removal of about 300000 -800000 cubic metres of ice to be carted and dumped onto another glacial site.

During its development work inspectors forced temporary closure due to water quality concern. Then with continued disregard of environmental safeguards came a $16 million penalty payment and eventual total closure of project in 2013.

The last I know is that the company still considers plans for mining with the possible more costly underground mine method first refused years ago to solve the environment degradation problems.

As well as being a kiap, albeit two years only, I was also a lay-missionary and so well aware of how they can be suspected of being culturally insensitive to the cultural mores of tribes.

I will not forget the expulsion of New Tribes Mission in South America; worse because I had hero worshipped some of their early martyrs in the Amazon. They were being accused of possibly being spies for the US government.

Of course later I think they changed their name to Ethnos360 to shrug off their sexual abuse problems. As a Baptist I was annoyed to the possible disrepute brought to my denomination in the Southern Highlands by an independent Baptist pastor running an unaffiliated church who ran away accused of abuse of young females there.

Of course Tony Crawford of Gogodala fame and other anthropologists over the years have often travelled on diverse paths to missionaries and have their own reason for criticising what some of their ilk called ‘God Botherers.’

So I hope and yes pray that Pastor Eric, who has oversight of 30 primary schools more than a thousand pupils and their teachers to mentor, is not a lobbyist for Barrick.

Perhaps to show his neutrality he could be less concerned for Enga’s Porgera mine when he has a long standing but more pressing mining problem just 160km away with the proposed Frieda Mine in his Sepik ‘parish’.

That could be one of the largest open-pit greenfield copper projects in the world. A company spokesman said "it has the district (?) and depth potential for many decades of production."

The time is now for proper environmental plans particularly tailings waste disposal, ore washing near the river, barges to the coast and/or pipelines, resettlement plans, infrastructure necessary to the project, landowner identification, benefit agreements for local, provincial and national participants.

All these need prior completion before the project is allowed. I believe even before front engineering.

Finally there must be a registered agreed Frieda Mine Closure Plan even if it seems 3 or 4 decades hence. Did Porgera have one? It is now mandatory but who knows as the initial agreement in the Enga was last century.

If anyone thinks Ok Tedi with 20 million tonnes of ore crushed annually was an environmental disaster putative Frieda crushing 40 million tonnes a year has the potential to be far worse.

The challenges for it to ever reach production have grown since the fifty four years elapse since discovery.

More especially since protection of the environment should now be a major concern for any resource being exploited anywhere on planet; none more so in the huge watery Sepik basin that includes its links with the Ramu River.

Finally in their 2019 Annual Report Barrick gave the PNG PM and his team some interesting points in their discussion with the miner.

1 At a time when the global gold industry is at or near peak production, it is worth noting that in 2019 Barrick succeeded in replacing all of our gold reserves depleted by mining and at a higher grade.

2 Worldwide we manged to produce 5½ million ounces of gold with 429 million pounds of copper. Earnings per share increased by 46% year-on-year while dividends for Q4 were 75% up on Q1

3 Net earnings were $4.0 billion in 2019 and net cash provided by operating activities increased by 61% to $2.8 billion from the previous year. The significant improvement in our free cash flow to $1.1 billion represents an increase of 210% year on year

4 This strong cash flow outcome allowed us to almost halve our net debt to $2.2 billion in the space of 12 months and to increase our Q4 dividend to 7 cents per share, an increase of 75% relative to the Q1

5 With a cash balance of $3.3 billion at year end and another $3.0 billion accessible from our undrawn credit facility, our Total Liquidity at year end was $6.3 billion. Along with forecast free cash flow generation in 2020, this will allow Barrick to fund our immediate growth plans unencumbered by the vagaries of the capital markets.

6 We started the year with five Tier One* gold mines and ended it with six, thanks to the Nevada deal.

Over to you PM Marape and your team.

* A real Tier-1 mine need to be low cost, large and long life.

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