Papua New Guinea: Mining giants react as new gov't promises reform

August 27, 2011

The new government of Papua New Guinea, led by prime minister Peter O'Neill, has announced plans to revert ownership of minerals and resources to traditional landowners.

Mining minister Byron Chan said in a speech on August 11 the government would seek to give traditional owners legal ownership of resources under the land and sea.

Currently, the PNG government owns anything more than six feet under the surface.

Chan also promised an urgent review of mining and environmental laws, especially those involving deep sea mining.

Chan told Radio Australia on August 17 the change would not affect existing mining projects.

PNG's mineral wealth has long been plundered by foreign mining companies who, in league with the government, made huge profits while exploiting and threatening locals and trashing the environment.

If the changes go ahead, mining companies will have to deal directly with landowners, who would have the power to “make or break the mineral projects”, Chan said.

The mining industry reacted with hostility to the prospect of having to deal with the people whose lives they often destroy.

Greg Anderson, executive director of the PNG Chamber of Mines and Petroleum, told The Australian on August 19: “This is playing with fire.”

An unnamed resources executive in PNG told The Australian the move would "increase sovereign risk and damage investor confidence".

However, Professor Spike Boydell from University of Technology Sydney told ABC Radio Australia on August 24: “I don't think investors will go away for a long time, because they know they're dealing with significant mineral wealth.”

He said landowners would need proper legal representation to avoid being swindled under the system.

Other proposed changes promised by the new government include a crackdown on corruption, free school education to year 10, the scrapping of an unpopular “super hospital” project in Port Moresby and the sale of the government's $51 million private jet.

The government also sacked New York-based carbon trader Kevin Conrad from his position as PNG's Ambassador for Climate Change, the Post Courier said on August 18. 

Deputy Prime Minister Belden Namah  said it was not appropriate for someone has little or no knowledge about life in PNG to be its representative.

Namah “thanked [former PM] Sir Michael Somare for getting political independence but his government will get economic independence”, the Post said.

O'Neill was installed by a parliamentary vote on August 2 after months of political limbo. Somare had been seriously ill in a Singapore hospital since April, with his deputy Sam Abal taking his place.

Many members of the opposition and ruling coalition ― including members of Somare's National Alliance ― voted to remove Somare and his clique from power.

PNG has a long history of similar leadership coups, with fractious alliances forming and dissolving regularly.

Abal launched a legal challenge in the national court, claiming the position of prime minister was not declared vacant before the vote, Australia Network News said on August 25.

Australian National University  academic Bill Standish  said at on August 11 that the change of leadership stemmed from the increasing unpopularity of the Somare regime.

Standish said this was due to corruption and lack of democracy, as well as personal rivalries in the ruling coalition and resentment from opposition MPs over unfair administration of the parliament.

Somare had been a dominant figure in PNG politics for more than 40 years. Nicknamed the “Grand Chief”, he was the country's first prime minister after it won independence from Australia in 1975 ― one of three stints he had in the job.

Somare was also famed for his ability to hold together alliances in PNG's notoriously chaotic parliamentary scene.

Somare's long absence and questions over whether he would return contributed to the breakdown of his regime.

Somare's government was marked by its obedience to corporate interests, especially in the mining and logging sectors.

The government allowed corporations free reign to exploit PNG's natural wealth, while destroying the environment and damaging communities.

Many of the reforms proposed by the new government would mark a step toward social justice, but the changes do not necessarily represent a break with the past.

Many of the individuals in the new government are very much part of the PNG establishment, including some who were ministers in Somare's government.

O'Neill also has a shady history. He faces allegations that he was the beneficiary of fraud involving a real estate deal in 1999, PNG Exposed said on July 27, 2010.

A commission of inquiry into the case in 2002 found “O’Neill had definitely benefitted from the proceeds of the NPF Tower fraud”, and recommended charges be laid against him and his accomplices. O'Neill was never charged.

Ilya Gridneff said at New Matilda on August 3: “The Somare-led National Alliance (NA) party is now split with members on both sides of parliament.

“NA is the strongest political party in the country, a machine that has enough financial and political capital to mean something.

“The other smaller parties really don’t differ much on policy, indeed they work more as clubs with various personalities attached to them.

“It’s a scramble to form government. The opposition is simply made up of those MPs who missed the bus.”

Despite the moves toward economic nationalism, O'Neill said the new government would look to strengthen ties with former colonial ruler Australia, the Sydney Morning Herald said on August 9.

His government has already agreed to reopen a detention camp on Manus Island to hold refugees cruelly expelled from Australia.


Its about time changes are made. Resource owners are loosers in the current mining arrangements. The mineral wealth the country has to offer is enough to deter whinging investors wishing to leave our shores. They should look at new mining laws in Venezuela and see if nationalisation is the worst culprit. Landowners deserve better deals.

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