Australia: Extension on Pre-Bilateral Case Study

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Oct 26, 2017 by Claire Curtis

Lihir Mine, positioned on Aniolam Island in the New Ireland Province within Papua New Guinea is the fifth largest gold mine annually producing approximately 1.2 to 1.3 million ounces of gold. Although the mine is foreign to our nation, Newcrest Mining Limited, an Australian-based corporation owns 100% of the site as of 2010. Since the takeover of the mine, the local PNG community, the environment and the economy have experienced both benefits and disadvantages. The landowners and communities’ benefits are governed by three key agreements including the Mining Development Contract, the Memorandum of Understanding (between government, landowners and community) and most importantly the Integrated Benefits Package (IBP). The Integrated Benefits Package is an arrangement between the Lihir Gold Limited, the landowners and the community that gives compensation and relocation, community development, infrastructure and is most importantly to be reviewed every five years. In addition to this, around 60% (US$565 million) of Lihir Operations total revenue in the 2014 financial year was spent in PNG.

Although these additions have been beneficial towards the locals, there have been disadvantages that have resulted in opposing groups within the community.

The Integrated Benefit Package has, however, sparked major conflict on more than one occasion as it has not been reviewed as per agreed by the Australian owned mining company. The local landowners said their Integrated Benefits Package (IBP), which was due to be reviewed in 2012, was now three years behind schedule. The Lihir community have repeatedly expressed their opinions towards the Australian owned mine by placing “taboo” local ginger plants, otherwise known as gorgors, throughout the work site, indicating to the company that there were discussions they wanted to have. They also cited breaches of mine development activities, tendering of Lihirian business to "outside interests" and environmental damage as reasons for their discontent. "We are not asking for something new, our revised agreements are not new, these are agreements Newcrest has not honoured," Nimamar Local Level Government president Ambrose Silul said. To aid in the reduction of CO2 emissions produced by the mine, Lihir introduced a geothermal power plant that was to be the first project in PNG to be registered for carbon credit trading under the Kyoto Protocol. The plant reduces the Lihir mine’s greenhouse gas emissions by approximately 250,000 tonnes per annum, which equates to approximately four per cent of PNG’s total CO2 emissions. Even though the numbers are low, it is still harming the environment.

Although the extraction of gold from within PNG by an Australian owned company has its benefits for both the Papua New Guinea community and the Australian nation, there seems to be many more disadvantages and opposing groups towards the mine. In addition to the discontent of the Lihirian community, there is the undeniable release of harmful CO2 emissions which is not aiding in decarbonising the environment but is however decolonising Papua New Guinea as a sizable foreign business is exploiting a poorer nation.

Lihir Operations

http://www.newcrest.com.au/media/presentations/2016/PNG_Mining_Conference_2016_Presentation.pdf

Environmental and Economic Information

http://www.newcrest.com.au/media/our_business/2375_Newcrest_FS_Lihir_LR.pdf

Stocks

https://finance.yahoo.com/news/gain-exposure-gold-newcrest-mining-194016439.html

Newcrest turns gold into cash with return to profit

http://www.abc.net.au/news/2015-08-17/newcrest-turns-gold-into-cash-with-return-to-profit/6702750

Lihir Profits

http://www.newcrest.com.au/media/market_releases/2016/FY16_Results_Release_Final.pdf

Lihir Protests

http://www.abc.net.au/news/2015-06-08/police-sent-to-png-gold-mine-after-two-day-shutdown/6530424