Why does mining always end up like this?

PHIL FITZPATRICK

THE RELATIONSHIP BETWEEN traditional landowners and mining and petroleum companies in Papua New Guinea, whether Australian, American or Asian, usually starts out well but inevitably and inexplicably deteriorates as time goes by.

Here are two interesting scenarios.

In the first a very large multinational mining company develops and begins to operate a large copper and gold mine on an outer island of Papua New Guinea.  Everything appears to be going well until the local people start fighting over the distribution of benefits.

The dispute escalates and the focus turns towards the mine.  Sabotage ensues, the situation escalates out of control and the mine closes down.  The island descends into anarchy and civil war.

In the second scenario a small mining company secures an exploration licence in the foothills of a province on mainland Papua New Guinea.  They approach the local landowners and explain what they plan to do. 

The area has been neglected by the government for untold years and social and economic infrastructures are almost non-existent.  The local people see a chance to improve their lives.

All goes well for a while and then opportunists from outside the area show up.  They convince the landowners to make escalating demands on the company.  The company tries to be accommodating but the more they do the more that is demanded from them.

Eventually the landowners start fighting among themselves over the perceived spoils.  The company decides it has all become too hard and packs up and leaves.  The landowners are left with nothing.

If you take into account the different scales of magnitude in these two scenarios there are interesting similarities.  There is also much to be learned by both miners and landholders.  Whether either group is prepared to take on board these lessons is a moot point.

The first similarity relates to the landowner’s attitude to their land and the minerals underneath.  In both cases there is a belief that is considered incontrovertible; this is that the minerals belong to the community and are a shared resource. 

No amount of explanation of a nation state’s legal ownership of mineral resources washes with traditional landowners.  If such wealth is to be exploited they believe that the benefits must flow to the community and that everyone is entitled to their fair share.

The second similarity is that the slightest scent of mineral wealth and profit will bring out the carpetbaggers and conmen.  Conversely, it also attracts entrepreneurs who see opportunities to do business with the mining company. 

The company, in its capitalist frame of mind, tends to encourage the latter because it sees it as a benefit to the community, not realising that the local businesses have no intention of sharing their spoils.

At the same time spokespeople for the community arise and gain traction with the company.  These people tend to be the better educated and literate and they monopolise the benefits from the company.

Many of them go on to form landowner companies which deal with the mining company.  The mining company is happy because it thinks it is dealing equitably with the community and its largesse is creating community benefits.

If you put these similarities together you have a group of naïve landowners expecting direct benefits from the exploitation of “their resources” when in reality the benefits are only going to a select few. 

The company naively thinks it is doing the right thing and is caught by surprise when dissension occurs.  With little understanding of the situation it has caused it begins to take a hard line against the perceived unreasonableness of the disenfranchised landowners. 

Soon it is erecting barriers, both political and physical.  When the razor wire goes up and the riot squad arrives the situation is generally beyond salvage.

The sort of scenario which develops where a select few monopolise the benefits from resource development is exactly what happened on Bougainville and it has continued to happen to varying degrees to every other mining and petroleum project since. 

You would think that by now everyone would have worked out what goes wrong and taken steps to fix it.

The fact is that there are too many vested interests sitting around the honey pot. 

These range from the shonky landowner companies operating out of Port Moresby which purloin royalty and other payments before they can reach the true landowners in the provinces to the corrupt public servants and politicians taking kickbacks and bribes.

Also at fault are the mining and petroleum companies that blithely hand over vast amounts of money knowing full well where it is going to end up.

For them whacking up razor wire fences and paying the riot squads under the table is cheaper and considerably less stressful that opening up the can of worms that passes for government in many parts of Papua New Guinea.

So what is the solution?  I’m not really sure.  Maybe with the amendments to the Land Group Incorporation Act it might be possible to make direct payments to individual landowners. 

The national and provincial governments could possibly take its share as individual personal tax payments from the landowners. 

Could the national and provincial government administer such a scheme?  I doubt it.  Would the mining and petroleum companies be prepared to do it?  No way!

Another option would be to pay absolutely nothing to the landowners and the landowner companies. 

That would cut off the tap to all the carpetbaggers and spivs.  Unfortunately there is no guarantee that the governments, either national or provincial, would spend the money fairly or equitably.  It would be a very brave government, given the current state of Papua New Guinea services and infrastructure that would take such a step.

And on that note it is time to forget the whole thing.  Like all problems in Papua New Guinea it’s just too hard to think about and it makes your head hurt.

Comments

[Paul Oates]

For thousands of years, other nations have struggled to deal with exactly the same problem. It's called human nature. I currently reside in a farming region that has untapped coal reserves under it and that mining companies want to mine.

Given our legal land ownership arrangements that no one except the government (in theory held in trust for the people as a whole), owns the resources under the ground, there has been a political battle to see whether the miners or the farmers will have use of the land.

Currently, the politicians know their chances of re election in this area are nil if they allow mining has provided a temporary solution: No mining of coal and gas.

Whether that solution lasts however is anyone's guess given the state of world hunger for scarce resources.

When someone comes up with an answer to human greed and opportunism, it will probably be patented so at the very least, someone gains a profit from someone else.

Maybe Phil is right. Maybe there is no equitable answer but only the reality of 'might is right'? That certainly seems to be the experience of history.

That is unless someone can design a society that maintains the rule of law in a seemingly impartial manner and without prejudice. Now where has that occurred recently? Sounds vaguely familiar.