Islands Business - Business: DEVELOPER SCRAMBLES TO IMPROVE CONDITIONS

Govt threatens to close down project

Patrick Matbob
China’s US$800 million Ramu Nickel project in PNG, described as the biggest in PNG and the Pacific, has got off to an embarrassing start.

The developers of the project, Ramu Nico Management Limited (MCC) and construction company ENFI PNG Ltd, have been found to breach PNG’s labour and industrial laws and authorities have threatened to close down the project.

Since last month, the Chinese developers have been scrambling to improve working and living conditions of workers at the project site at Basamuk Bay in Madang to comply with the labour and industrial laws of the country.

Inspection tour... PNG Labour Department officers being shown around the Basamuk site.

Secretary for Labour and Industrial Relations, David Tibu on a visit to the project in January found the workers’ living and working conditions not up to standards. He directed the company to immediately address the issues or else, he would close down the project.

The visit followed reports to the department by Madang parliamentarians, Sir Peter Barter and John Hickey, who raised the complaints from workers and landowners about the employment conditions at the site.

After a second visit to the site last month (February 20), Tibu was satisfied that ENFI was doing its best to comply with his recommendations.

The company executives have pleaded for more time to conform to PNG’s labour and industrial standards.
ENFI is the major contractor responsible for the construction of the wharf, refinery, accommodation, office facilities, sheds, warehouse and other infrastructure at Basamuk Bay.

Tibu and his officers found the company was breaking the law by having no proper wage structure for national workers, issuing rations of tin fish and rice in lieu of overtime pay, accommodating national workers in makeshift tents, not providing ablution facilities and medical services on site for workers, and workers were not appropriately attired.

In a list of recommendations, Secretary Tibu directed ENFI to comply with relevant labour laws and pay workers according to their qualifications, ensure that all personnel are issued and attired with correct industrial gear, develop a health safety and working environment policy, appoint a permanent health, safety and environment officer and build ablution facilities in staff quarters.

Tibu has also recommended a physical head count of all non-citizen employees of ENFI (PNG) and Ramu NICO Management after complaints there were more than 200 Chinese workers being employed at Basamuk.

According to the Labour Department records, only 123 work permits had been issued for the foreign workforce. Of the total, 69 work permits were issued in May 2006 to Ramu NICO Management which will expire in 2009; 27 short-term work permits were also issued in 2006 at the company head office in Madang; and ENFI had 17 work permits issued in November, 2006 for non citizens at Basamuk Refinery Site.

Tibu and his team of officers were not able to carry out a head count of the Chinese workers on site because it was reported that most have left for the Chinese New Year break in China.

Heavy rain had also made it impossible for a physical inspection of the campsite.

The breaching of PNG laws comes as no surprise to authorities and locals in Madang who have witnessed a different approach being used by MCC to develop the project.

Unlike other resource project developers in PNG who utilise local labour and expertise and contract spin-off businesses to local companies, the Chinese developers have largely imported their own equipment, expertise and manpower from China.

The Madang Provincial Government has raised concerns that local landowner business companies were missing out on employment opportunities with the amount of machinery and large number of Chinese nationals brought in to work on the project.

The provincial government has claimed that with the current existing mines in PNG, recruitment centres were established during construction and operation stages where prospective workers were screened, recruited and trained, if required. This has not happened with this project.

However, Madang Regional Member Barter said in defense of MCC that the project was a low cost ore mine and not as lucrative as gold, copper, oil or gas.

“It is an inexpensive ore and the spin offs are limited by the value of the production. I believe the people have great expectations (that) they will become rich overnight. Regretfully this will not happen and I feel a great deal more needs to be done to communicate this to the people.

A major issue that remains controversial is the deep sea tailings disposal plan of the mine.

Barter said there are strong arguments about environmental damage if tailings are discharged into Astrolabe Bay.

PNG’s major tuna fisheries and canning company, RD Tuna, which is based in Madang, has also expressed serious concerns about the future of their tuna operations.

“It is essential the environmental plan be investigated and if necessary changes made to prevent discharge of tailings” Barter said. An environment report sponsored by the Lutheran Church in PNG and carried out by the Mineral Policy Institute in Australia has condemned the deep sea waste disposal plans.

There are also outstanding land ownership issues amongst the traditional landowners at the Kumbrukari mine site where the ore is to be mined and the government is yet to sort out the problems there.

Barter has also reported that attempts by MCC to build a road linking the mine site to Basamuk Bay would face serious problems if it is not properly constructed. He said at the moment the road is just ‘pure mud’ and unless the surface is raised, it will continue to face problems.

He said it is important for the Chinese company and government to get together to build a proper all-weather road to the mine site and nearby areas.

With the national election scheduled to begin in June this year, the government had hoped to fulfill an election promise and see the Ramu project get off the ground quickly.

However, the breaching of the country’s laws and threats to close down the project as well as the unresolved issues, has foreshadowed further problems for the project.