Many risks to PNG mining boom as landowners fight projects


AUSTRALIAN investment in Papua New Guinea's resurgent resources sector is booming, but the risks have been underlined by dramatic events.

There was a violent raid on a construction camp at Kikori for the $16.5 billion ExxonMobil-Oil Search-Santos liquefied natural gas project.

Kikori is in Gulf province northwest of Port Moresby.

As well, the developers have won the latest round of a colossal court battle over the disposal of tailings from the $1.8bn Ramu Nickel mine, under construction by Chinese state-owned giant Metallurgical Construction Corporation, with Brisbane-based Highlands Gold a minority stakeholder.

The common theme in both cases is the role of frustrated, opportunistic or worried landowners.

The attack at Kikori came at night, when no one was working at the site, so there were no injuries, but a Caterpillar 740 dumptruck -- which routinely costs $250,000 secondhand -- and another truck were destroyed by fire, and other equipment was damaged severely, some of it by gunfire.

The construction site is managed by a joint venture of Perth-based Clough Engineering and Townsville-based Curtain Brothers, the most prominent of the Australian companies contracted to the huge liquefied natural gas project.

Landowners throughout areas affected by the project, which will pipe gas from the Southern Highlands to Port Moresby for liquefaction and export, have expressed concern about their involvement in the sudden rush of economic activity, especially the numbers of local people employed at this most labour-intensive period of the project's lifetime.

Police are investigating the attack at a Kikori quarry.

Planning and Development Minister Paul Tiensten said there was "in-fighting" among landowners, but the LNG project was on course to start exporting in 2014, with costs restricted to original estimates. Construction of the Ramu Nickel project in Madang province was held up for months by injunctions granted by the National Court to coastal landowners, who complained that the plan to dispose of the tailings by a 130km pipeline from the mine into the sea would destroy their culture and lifestyle.

Then, late last month, the three key landowners suddenly and mysteriously asked the court to drop the proceedings they had brought, and sacked their outspoken lawyer, Tiffany Nonggorr, an Australian who married a leading PNG constitutional lawyer and has become the most eloquent opponent of dumping tailings at sea in one of the country's most famous beauty spots.

Ms Nonggorr complained last month of being intimidated by former Madang politician and convicted rapist James Yali, who since his release has been lobbying for the PNG government and MCC to complete the project.

John Gooding, managing director of 8.56 per cent shareholder Highlands Pacific, said: "This is a great outcome for all stakeholders. The project can now get on with the task of completing the remaining construction and commissioning."

Acting Prime Minister Don Polye welcomed the decision of the National Court, commending the judiciary "for being mindful of the national interest when determining the merits of the issues". The mine developers do not appear to have had a fallback position if they were not, finally, allowed to dump the tailings at sea -- just as the mine developed by BHP-Billiton at Ok Tedi lacked an acceptable alternative when the original tailings dam collapsed.

Rowan Callick is the Asia Pacific Editor with the Australian Newspaper


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