Law protects resource companies from legal action

Rowan Callick




The issue that aroused most popular antagonism to Papua New Guinea’s government of Sir Michael Somare—helping push supporters into the opposition—has been its legislation protecting resource companies from legal action.
The scrambled and controversial adjournment of parliament until November may have protected the government from immediate defeat, but the outcry against the legislation is likely to continue, eroding Somare’s support.
The legislation shelters resource projects from all litigation over the destruction of the environment, labour abuse, or landowner exploitation.
This is the controversial effect of the amendments to the Environment Act approved in June by 73 votes to 10 in parliament.
The amendments were driven by China’s Metallurgical Construction Corp (MCC), the developer of the $A 1.5 billion Ramu nickel mine, which is also 8.56 percent owned by Brisbane based Highlands Gold.
Injunctions have been won by Ramu landowners to put on hold the completion of the pipeline intended to slurry waste from the mine, once it is operational, out to sea off Madang.
The corporation had become increasingly upset about delays to the project—over labour conditions, over the displacement of landowners, and over the impact on the environment.
Mount Hagen based lawyer Tiffany Nonggorr, who represented landowners in obtaining an injunction, from Justice David Cannings, said: “There are grave environmental concerns. MCC must find an alternative to dumping the mine waste into the bay. The mine’s proposal is just too risky. This injunction is a massive victory for us, definitely a David-and-Goliath struggle.”
Goliath fought back, with the support of the Somare government.
Nonggorr responded that as a result of the new legislation, if an oil company did off PNG what BP has done off the American coast,  “they would escape all liability for environmental damage.”
George Ireng, who organised a petition opposing the dumping of tailings off the coast, said the legislation was “a direct insult, especially to the concerned people of the Rai Coast.”
The amendments give the director of the government’s environment and conservation office wide-ranging discretion to award certificates granting exemptions to resource developers from state requirements.
Environment and Conservation Minister Benny Allan said “the national interest” is paramount, and that it was thus necessary to remove threats to PNG’s revenue.
The deputy opposition leader Bart Philemon, a former Treasurer, said the new legislation protected the interests of investors at the expense of the resource owners and of the environment.
Challenges
Opponents of the new legislation that will shelter resource projects—including the $A16.5 billion ExxonMobil-led liquefied natural gas project, which has begun to encounter increasing obstacles—have begun to challenge it in the courts.
The wordy and broad-ranging PNG constitution, which stresses the importance of protecting the environment and defending the rights of landowners, provides substantial room for such challenges.
In the meantime, in mid-July, the court kept the injunction in place—thus preventing the construction, which includes blasting of coral reefs off the Basamuk area, and intensifying the frustration of the mine developer.
The injunction was originally taken out by four people living on the Rai Coast. They claim the discharge of tailings into the sea risks causing irrevocable damage to their lifestyle that depends heavily on marine life. They are demanding a further environmental assessment of the potential impact.
The original interim injunction was granted on March 19, and has remained in place despite attempts by the MCC and the government’s Mineral Resources Authority to have it lifted.
Highlands Pacific filed a statement to the Australian Stock Exchange that the claim of those who obtained the injunction “is not supported by the legally recognised landowners at the mine site on the inland and coastal pipeline route or at the process plant site.”
The company said “the injunction only prevents work on the placement of the Deep Sea Tailings Displacement systems in the ocean, whilst other construction and commissioning activities are continuing normally at the project.”
The group who obtained the interim injunction is now seeking to make it permanent.
This would trigger the need for a total reconfiguration of the project, which has always been predicated on dispersing its tailings in the ocean—as happens at Lihir gold mine.
Future investment
Greg Anderson, executive director of the PNG Chamber of Mines and Petroleum, has warned that “the whole mining and petroleum industry is monitoring this case closely,” and that its outcome “is critical to the future investment environment of the country.”
He said the chamber is particularly concerned about the broad security of tenure risk issues that such disruptive actions introduce.
Deputy Opposition Leader Philemon said the new legislation protects the interests of investors at the expense of the resource owners and the environment.
Port Moresby Governor Powes Parkop said it delivers “almost absolute power to the government’” on such matters.
But Somare, defending the legislation, said: “We cannot get mining going while this is in court. The Prime Minister’s Department has been held to ransom by [the judiciary].
“The government will lose a lot [of money]”—although he has granted the Ramu project an unprecedented 10-year holiday from paying taxes.