Porgera Transition Uncertain
The transition of ownership for Porgera from Barrick to a new operator won’t be swift as that of Ok Tedi.
Institute of National Affairs executive director Paul Barker said that the landowner issues surrounding Ok Tedi were much clearer than those of Porgera which will be disruptive especially when landowners are kept in the dark.
Mr Barker said this is because with the operator like a relatively impartial hand in the face of local factions, losing its authority in a valley, where for the past 30 years managed both mining operations but effectively also provided all government services and functions.
“With Ok Tedi, but landowner issues are much clearer. The Ok Tedi mine was transferred to national ownership almost 20 years ago, with a smooth management transition,” he said.
“The subsequent nationalisation of the mine, from its existing PNG institutional owners (people of Western Province), while disruptive, was not the same as a relative surprise revocation or discontinuation of the lease for two major overseas investors, which had envisaged a further 20 years of operations.”
He said this move does potentially elevate opportunities for different claims and disputes to come to the fore, and creates a vacuum. “The company owns all the plant and equipment and facilities, and employs the workforce, but it ceased to have a mandate to mine and make an income to employ staff anymore.
“By entering a dispute mode with the government, it’s clearly indicated an un-readiness to comply with the State’s proposal to continue as interim operator, in the absence of the legitimacy of a lease,” Barker said.
For the state to assume the lease and become the operator or to award the resource to another operator, Barker said requires capital or a reallocation process which will take time and leave the mine inoperative, and open to illegal mining, increasing the costs and task of recommencing subsequently.
“Capital, to acquire assets, and operating capacity and to hire a workforce, can’t be achieved overnight, so it wouldn’t be like the relatively smoother transition at Ok Tedi. “Any disputes at the community level or unwelcome move to control the mine by some group or power broker at the expense of others, would invariably be disruptive, without ongoing claims with the current operator and joint-leaseholders,” he said.
Mr Barker said at this stage a well planned and cautionary approach is advisable. “The State is under no legal obligation to extend a lease, notably if there’s evidence of deficiency by the existing operator,” he said.
However, particularly in the current conditions, when economic, social and revenue stability are needed across PNG and the valley, and when a strong and positive message about investor stability is also needed, at a time when globally capital is fleeing all emerging and developing economies, it could be argued strongly that now is not the time for further risky disruption,” he said.
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