CONCERNS ABOUT THE NEW MINING AMENDMENT ACT

by
ROBERT ALEMBO
 
While we recognise that the State is trying to secure its rights to the Porgera mine by way of this amended legislation, we must make sure that we do not undermine the whole basis of our mining legislation by making quick amendments which are not fully understood.
 
The amendment to Section 7 of the Mining Act 1992 breaks down the whole basis of the Mining Act which is based on the principle of First Come First Served which is a clear principle in the legislation.  This new provision relates to all reservations in the future and not just Porgera.  This gives the State-owned company a priority over any other Investor in the country, even one which may have applied for a license months or even years before the State Applicant puts in its own application, giving an advantage to the State which other Investors will consider to be unfair and anti-competitive.  We doubt provision this is consistent with the ICCC which guarantees a level playing field for all investors in PNG.
 
The newly proposed Part VA of the Bill makes little sense other than to continue to erode the rights of existing Investors in the sector.  Section 95A is probably unconstitutional in that it says this new Part VA of the Mining law takes precedence over any other provisions of the Mining Act 1992 and “any other Laws” in PNG.  That statement itself is so broad that it challenges and abrogates any organic law and our very constitution.
 
Section 95B states that any expired or surrendered license becomes “Reserved Land” over which only The State Applicant can apply for a license and will have priority.  What the section does not say is how long this reservation will remain in place. Forever??  This effectively rules out any new investment or competition for exploration or mining in PNG in future.  This provision applies to all types of tenements including exploration licenses which are all over PNG and are required to downsize by 50% every 2 years.  Every time this happens this relinquished land becomes “reserved” under this provision with no end.  At the very least this will require the Minister to issue a gazettal every time it wants to un-reserve land.  This will need to be occurring every week and likely to be tens to hundreds of times a year during busy times.  More likely this will just lead to confusion over what is land is reserved and what land is not and to investors turning away from PNG due to the uncertainty created.
 
Section 95 D goes on to say that the application by the State Applicant will be in the same form as other mining company applications and 95 E says that the State Applicant will provide a Proposal for Development – that is a Bankable Feasibility Study, just as we require from any private sector investor.
 
Section 95 F is also in contradiction to our other laws and will make PNG an embarrassment in the international and global community.  In complete contradiction to the Environment Act 2000, this provision states that the State will first grant the Mining Lease to the State Applicant and then ask the State Applicant to apply for an Environment Permit after the lease is granted.  This is the opposite of what is required under the Environment Act and what we require from private mining companies which must get an Environment Permit First before the grant of a Mining Lease.  So which law do we follow?? The Mining Act, or the Environment Act?? It cannot be both because they contradict each other.
 
The same thing goes for all other permits and compensation agreements.  This Bill also removes the legal requirement for the Minister to hold a Development Forum and prepare an MoA before the license is granted.  It makes this requirement an option by saying that the Minister may (if he feels like it) convene a development forum.  How is this possible to apply one set of investment rules to the State and another set to the Private Sector?
 
Section 95 I also removes the ability for a foreign investor to seek to have a dispute settled in an offshore court.  We must be certain that this does not contravene existing Mining Development Contracts or our bi-lateral investment treaties. This clause is definitely a joke too as we know the country’s justice system is broken and the PNG arbitration Act is quite outdated. This does not give us too the landowners our legal rights, freedom & choice to check further justice aboard.  
 
Section 95 H furthermore automatically removes the States responsibility towards landowner’s outstanding MOA commitments and legacies of unsettled issues like Resettlement, MOA review etc leaving the Provincial Government and the Investor to settle it or work it out.  
 
It is pretty clear that these provisions are being introduced by the State to try to recover from the tragic mistake the Government has made in cancelling the Porgera SML. 
 
If the Government thinks that this Bill will fast track a return to mining under a new State-owned mining company -  then they are wrong!!. This Bill is completely flawed and silly.
 
Let me outline why.
1) Do you know how long it takes for a mining company to prepare a full Bankable Feasibility Study suitable for acceptance by the Minister as a Proposal for Development?  It takes several years.

2) Do you know how long it takes a mining company to collect baseline data and prepare an Environmental Impact Statement necessary to be granted an Environment Permit under the Environment Act?  It takes many years.

3) Do you know how difficult it is, and how long it will take, to negotiate compensation agreements with all of the affected landowners and downstream affected communities?  The Mining Act says no work can be done in a Mining Lease until compensation agreements are signed and registered by the Registrar.  Are they proposing to bypass that requirement of the existing Act?? This process is extremely challenging, and in a case like Porgera which now has many legacy issues, it could take many years.  It may even be impossible to reach an agreement with everyone at this late stage. 

4) Do you know how long and lengthy it has been to achieve the outcome of our existing MOA agreement with the State, Provincial Government and the Investor??? It takes years and now you want to permanently throw all our outstanding benefits out of the window

If this Amended Bill is supposed to bring Porgera back to life, it is doomed to failure.  Not only will it fail to bring back Porgera, but it will also scare off other mining investment because it is so poorly drafted in a hurry that it does not recognise how it rides rough over other laws and it fails to address the negative and unintended consequences it creates for all other investors.

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