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Mining, Corporate Social Responsibility and Pluralism in Papua New Guinea

Outline. The PNG Mining Context.Main themes

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Mining, Corporate Social Responsibility and Pluralism in Papua New Guinea

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    1. Mining, Corporate Social Responsibility and Pluralism in Papua New Guinea Ben Y. Imbun School of Management University of Western Sydney 10th Annual Global Development Conference, Kuwait, February 2-5 2009.

    2. Outline The PNG Mining Context. Main themes – the PNG literature. Emergence of pluralistic practice of CSR. Testimonies of expatriate mine managers. Emergence of pluralism in PNG mining. Evidence from three mines. Down side of pluralistic activity. Summary.

    3. The PNG Mining Context Few medium to large world standard mines. Handful of projects under construction. Robust exploration activity. PNG World’s 11 largest gold producer (2007). 50 % of income and 25 % of GDP (2006). Enclave projects and mining policy viewed same (except environment). 9000 mine workforce, (6% of formal workforce).

    4. The Mining Map

    5. Main Themes -The PNG Literature Mining policy of maximizing government revenue and utilizing them for national development. Disgruntled and disenchanted rural communities of mining areas emerging and forming formidable political power base. ‘Love-hate’ relationship between government, local communities, and mining companies.

    6. Main Themes Civil, political and environmental crisis of mines have promoted the emergence of landowners as the ‘other’ stakeholder. Mining companies role in employment and skill formation activities. Idiosyncrasies of individual mines on varying topics. Mining and CSR led development in rural PNG

    7. Emergence of Pluralistic Practice of CRS in PNG Unique character of PNG’s mining aided development system is not explained in general CSR theories. Conflict is a product of diverse groups and sources of loyalty. International research seldom acknowledge idiosyncratic aspects as varyingly influence CSR of (mining) companies. PNG government and society embody strong signs of pluralism. Pluralistic participation has become norm for large scale mineral exploitation in PNG.

    8. Negotiation Savvy Communities? “ I went to the best schools, taught by the best professors, but no body told me there was a Porgera in PNG” ( V. Botts, Porgera mine manager, 1992). “I often say that having spent 10 years in Africa and another 10 in the Middle-East, I thought I was an expert in dealing with under-developed communities. But I threw the book away soon after I arrived here” (G. Laudon, Lihir mine manager, 1998).

    9. Emergence of Pluralism in PNG Mining Causal factors. Underdevelopment of rural areas. The Bougainville mine crisis. Progressively aggressive and proactive local communities. Weak governments. Relevant institutional policy framework. Proactive and (sometimes reluctantly) willing mining companies. 1990’s Industry Initiatives towards Best Practice

    10. Fig1. The CSR Role of Mining Companies in PNG

    11. Pluralism in Action: Evidence From Three PNG Mines Common characteristics: i) Located in rural and isolated areas. ii) Communities’ obsession with cargo cult and prophetic legend of benevolent figure. iii) Common feelings of neglect by their governments, and people. iv) Determined and strong community leadership. v) . Only facilitating role for governments.

    12. Porgera Mine 1989 Porgera became first mine to go through pluralistic style mine development negotiation process. Resulted “Porgera Forum”, principle to be applicable to other existing mines and potential mines. Also resulted in altering the ‘Fiscal Regime for Mining’.

    13. Benefits to Governments and Communities in Rural Areas Royalties. Special support grant. Compensation and relocation payments. Infrastructure Tax Credit Scheme. Equity participation. Prescribed infrastructure. Prepared Area Status, education, employment and business development assistance. Miscellaneous grants and support

    14. Ok Tedi Mine Environmentally disastrous mine since its establishment in 1984. Prompted restless and vigilant local communities. Porgera ‘undertaking’ only legitimised Ok Tedi’s tacit policies. 1990 OK Tedi established Lower Tedi/Fly River Development Trust.

    15. Legal Debacle and Sustainability Development Endeavour In 1994 BHP is sued in Australian High Court for environmental damage. Prohibition of Foreign Legal Proceedings Act, 1995. 1996 BHP agreed to settlement. 2001 Ok Tedi Mine Continuation Act allowed provision for BHP to gift its equity to PNG Sustainable Development Program Company.

    16. Lihir Mine Lihir gold mine commenced in 1997. Prophetic to a cargo cult obsessed island. In 1995 Integrated Benefits Package (IBP) signed by National Government, Nimamar Development Authority and Lihir Gold. 6.76% equity in mine held by local community. IBP reviewed and renamed Lihir Sustainable Development Plan in 2005 with a long term focus.

    17. Down Side of Pluralist Activity Fragmentation of community power base and emergence of few ‘super’ big men. Unequal distribution of resources and development and emergence of stratified communities and regions. Departure of ‘CSR friendly’ and reputable companies (i.e. Rio Tinto, BHP, Chevron) Hot spots for development conflict, HIV/AIDs, etc.

    18. Summary Mining and CSR regime have developed embryonic pluralistic independent local community groups. Emergence of local communities as the ‘other’ stakeholder in the trinity of mining development. Large scale mining developments can not operate on a daily basis without contributing tangibly to development pursuits.

    19. Summary The right to negotiate by local communities is not seen as a barrier to FDI. Integration of ‘development’ role into the mainstream of mining operations. Thus mine operators are seen as their ‘government’ in rural communities. Role of PNG state has become that of a ‘mediator’ for competing interests.

    20. Porgera Mine Showing Outflow of Tailings

    21. Illegal Miners, Porgera

    22. Development Conflicts, Porgera

    23. Graves, Results of Conflict Over Compensation Payouts, Porgera

    24. Porgera Mine Operator Challenged In It’s Own Turf

    25. Ok Tedi Copper Mine

    26. CSR Project Areas of Ok Tedi Mine

    27. Environmental Degradation Along Fly River System

    28. Ok Mine Tailings and Sediment

    29. Ok Tedi Mine/Community Development Meeting, South Fly

    30. Lihir Gold Mine

    31. Lihir Landowner Demonstration

    32. Community Road Upgrading Project, Lihir Island

    33. Acknowledgements GDN and ODN for facilitating the presentation of this paper at this conference. Photos, courtesy of Jerry K. Jacka, Porgera mine, Ok Tedi mine, and Lihir mine. Thank you all !

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