The lure of mining money in PNG

12 Mar 2012

Papua New Guinea has a new leader but the country's relationship to mining remains complex. Locals who aren't happy about the growth of the industry are left with few options, reports Antony Loewenstein from Port Moresby for New Matilda.

http://newmatilda.com/2012/03/12/lure-mining-money

At Port Moresby international airport in Papua New Guinea sits piles of free brochures labelled, "Map and Handy Mining/Petroleum Guide." Inside are emergency phone numbers alongside a foldout map that lists countless projects in more than a dozen places across the impoverished nation. The $15 billion, Exxon-Mobil LNG project dominates the page, with a red line representing proposed pipelines from the Southern Highlands straight to the capital.

The glossy pamphlet is one of the first thing visitors see as they arrive in the resource-rich state and it speaks volumes about how Prime Minister Peter O’Neill and his government view the future prospects of the country.

Minister for Petroleum and Energy William Duma, in comments given at the February opening of Shell offices in Port Moresby, proudly told the assembled crowd that, "in a small way and through consistent political leadership at the national level, PNG has been able to attract international interest for the exploration and development of our under-developed hydrocarbon resources."

It’s early days in the O’Neill era but there are few tangible differences between the previous Michael Somare regime and the new leaders in relation to welcoming multinationals to develop and exploit PNG’s resources.

James Arvanitakis, cultural researcher at the University of Western Sydney who has spent time working in PNG and the Pacific, tells the New Matilda that, "PNG has a long history of relying on extractive industries and a change of government won’t alter that. Unless there’s a shift in development philosophy, power relationships with these industries will continue to fund political campaigns."

There’s no doubt, however, recently travelling across various provinces, that Somare is widely viewed with suspicion for failing to wisely invest the billions received from foreign companies. Somare’s legacy is disastrous, with his years in power contributing to a deeply corrupt state and under-resourced services. Nobody interviewed by New Matilda wanted the "father of the nation" to return.

The main advocates for Somare over the last years have been Australia and China, two nations competing for PNG’s affections. AusAid recently announced the slashing of more than $90 million by cutting the numbers of advisers it employs for PNG programs but it remains arguably Port Moresby’s financial saviour.

Australia’s High Commissioner to Port Moresby, Ian Kemish, recently told the National Times that Canberra fully backed exploitation of natural gas, arguing that it would assist the people themselves. The evidence for this is virtually non-existent.

Washington is watching. US Secretary of State Hillary Clinton admonished both Beijing and Somare during a visit to Port Moresby in November 2010, warning of a "resource curse".

In later statements to the US congressional foreign relations committee, Clinton was more direct. "Let’s put aside the moral, humanitarian, do-good side of what we believe in and let’s just talk straight, real politics," she said. "We are in a competition with China. Take Papua New Guinea — huge energy find."

Clinton accused Beijing of attempting to "come in under us" and stated that it would be a "mistaken notion" to think that America would retreat from "the maintenance of our leadership in a world where we are competing with China."

The human face of modern PNG can be found on the tranquil province of Madang. The site of the Chinese-run Ramu Nickel Mine, the $1.5 billion investment was challenged in the Supreme Court to stop the deep sea dumping of millions of tonnes of waste that contain traces of metallic elements and solvents used to extract them. Monash University’s mine tailings expert Gavin Mudd argued that there were far safer ways to dispose of waste on land as opposed to contaminating the seafloor.

The land-owners lost in a decision late last year and one of them, Terry, wearing a floppy white hat and dark blue polo shirt, tells New Matilda that, "this is how our country works. Corrupt government, courts and media."

He already sees discoloured water and other pollutants in the water next to his village near the mine and knows the problems will only get worse.

Terry’s village, with around 500 people, doesn’t have an electricity supply, relying on battery-powered lights. When the memorandum of understanding between Chinese company MCC and the landowners was signed in 2006, one of the conditions was that the company would connect them to the power grid. Six years later, this is yet to happen despite the firm using its own power supply.

A few months ago the company dumped one solitary solar cell and it now lies on the ground in the village. "The frogs sit in it at the end of the day", Terry says. Although he loathes what he sees as an "arrogant" Chinese corporation destroying his country, Terry says his daughter is applying for a scholarship through Beijing’s embassy in Port Moresby and his son is already studying in China.

They are poor people with few financial options. For the sake of education, it would be pig-headed, he implies, to not take some Chinese money for "good" instead of seeing it merely used for exploitation of resources.

Like many New Matilda met in PNG, Terry opposes Chinese investment — "At least with Australians we can talk with them about things, even if we disagree. The Chinese aren’t like us, they speak a different language" — but has no other places to find even the possibility of higher education funding for his children.

This is Chinese-style soft-power, a trend repeated across the Pacific.

On the ground, however, more mundane problems exist. The over-stretched police force in Madang is forced by direction from Port Moresby to protect foreign resource projects at the expense of local concerns. A representative of Madang-based NGO, Bismarck Ramu Group (BRG), says officers are often living in squalor while the national government demands they prioritise mining and forestry interests.

For the Exxon LNG project, this staff shortage has been fixed by the hiring of multinational firm G4S. The largest foreign and private company in the country, with close to 5000 staff, New Matilda heard in Bougainville, Madang and Port Moresby, though was not furnished with hard evidence, that the corporation with a troubling human rights record across the world has essentially taken over PNG’s military.

A leading NGO with close ties to the central PNG government, who requested anonymity, tells New Matilda that after years of depleting the military’s strength, Exxon Mobil and other Western multinationals have invested heavily in private security. The source argues that these forces are now loyal more to a company than a state and wonders if the plant will even open with sabotage of pipes a serious concern.

Stanley Mamu of the LNG Watch blog, a man close to the landowners in the Southern Highlands, confirms this view, arguing that anger towards Exxon and G4S is only growing due to its failure to consult with local communities and lack of cultural sensitivity. Violence is a real possibility.

New Matilda asked G4S to comment on its PNG operations. A spokesman in the country said: "G4S has no role in managing the LNG project. The PNG government do not employ G4S to manage security in the country."

These problems go far deeper than just the LNG project. Barely a week goes by when a report from a PNG blogger or tweeter doesn’t highlight a village somewhere in the country disrupting a mining or forestry project because they feel ignored by the companies running them and angry at the pollution. Stable governance is impossible in such circumstances.

Leading local blogger Martyn Namorong more blunt, telling New Matilda: "The Government and Exxon Mobil will do whatever is necessary to ensure that the project is not derailed. But as history on Bougainville has shown us, people can still have the upper hand. This is our land, not Exxon Mobil or the state."