KEITH SUGGESTED I give an account of my own interest in the Ramu nickel case as I seem to be taking a quite different line to most people here.
I responded that I'm not a particularly interesting person as an individual but as my background is quite different it may be interesting to some to get a different perspective.
I am a self-directed investor, not a wealthy or institutional one. Just a working stiff who likes to do my own research in what I invest.
I am originally from PNG and maintain an interest in the country. I believe the increased interest in resources presents a great opportunity for PNG. But I also consider myself an ethical investor and have no interest in plunder and pillage.
At one point I held shares in Highland Pacific (HPL), which discovered Ramu and maintains a small interest. When I first heard the complaints about deep sea tailings placement (DSTP), I was initially concerned. It did sound like a dodgy practice.
But I asked for the company’s side of the argument and was somewhat reassured by information I received. I also read the Lutheran-sponsored report and tried to understand the discrepancies between the two versions.
To me, the SAMS (Scottish Association of Marine Science) report answers a lot of these questions positively, especially around the likelihood of upwelling, and the possibility of bio-accumulation of toxins.
The report does point out some research gaps in understanding the oceanological system, and the deep-sea ecosystem, but my reading is that this is, at most, a case for delay while more information is gathered, rather than a case for halting the development.
I no longer hold shares in HPL, so my interest isn't direct, but I do hold shares in other PNG companies, which tend to be exploration companies, so no environmental issues - yet.
The issue for investors generally is sovereign risk, which is a bit of a catch-all for country-specific issues that pose an investment risk. Resource projects can be blocked or delayed due to environmental issues or indigenous landowner objections anywhere in the world (including Australia).
This is reality in the modern day, and miners and investors accept this and "price it in" while the project is in its early exploration and resource definition stages.
For various reasons, PNG has always been considered a high risk destination, but what stands out about this particular case is that the injunction was made after approvals and permits had been granted and the construction was nearly complete.
That's almost unheard of. It calls into question the government's sovereignty. Are they empowered to grant a permit for a development, or can this be nullified at any point by a third party complaint?
Almost immediately we heard of copycat lawsuits being brought against the LNG project, which had only just been given the go-ahead by its financiers.
The government responded with the Environment Act amendments, which seemed draconian but were trying to reassure investors that the government did have the power to grant approvals and would take responsibility for decisions.
I don't believe that passing laws and winning court battles will reduce investment risk in PNG over the long term, and large scale mines are long life assets.
Governments can change, laws can be challenged in court. In extreme cases (e.g., Bougainville) there is the possibility of violent revolt.
The only way for resource companies to feel secure for the longer term is to win hearts and minds by demonstrating that they can provide a lasting benefit to local communities, as well as the broader population, with minimal cost to the environment.
People like Ross Garnaut, and the new management at Ok Tedi Mining, have been leading the way in these areas and I was baffled by the recent attacks on Garnaut.
As for Ramu, I think its importance is symbolic. Others here have described it as a defining moment - I hope it can be.
I hope the result is a clearer understanding by all sides of the others' point of view, and a rewritten "pact" between all parties, government, miners and landowners.
There is certainly room for miners to lift their game, to contribute more, and to reduce their environmental impact.
And there is room for the government to monitor, tax and police miners more effectively on behalf of their citizens.
In exchange the miners want more security for their investments.
These goals aren't incompatible.