MMJV Response to 2012 ESAP Report - Morobe Mining Joint Venture

28 May 2013
Sir Joe Tauvasa
Chairman
Hidden Valley External Stakeholder Advisory Panel
c/- Teisaki Limited
PO Box 725
Port Moresby 121
National Capital District
Dear Sir Joe,
Subject: Comments in Relation to Hidden Valley ESAP Annual Report #1
1. Introduction
The Hidden Valley Joint Venture (HVJV) welcomes the publication of the first External
Stakeholder Advisory Panel (ESAP) report and thanks both you as Chair and the individual
members of ESAP for your considered thought and recommendations.
As you note ESAP was set up as an independent advisory body to the HVJV to provide
independent advice in relation to the environmental and related social impact of its activities
on its host communities.
I think that both the HVJV and ESAP recognise that they are on a journey in first taking the
bold step to establish such an advisory body and secondly to publish its advice and
recommendations.
You have set out in your report the things you believe we are doing well (especially in terms
of the community benefits and development opportunities that the HVJV is providing). You
have also set out your constructive criticisms and advice on areas for improvement.
We have taken your advice on board.
Since the report was written there have been developments that we should note and there
are some things where we take a different view and need to put this on the record in a spirit
of good faith and constructive engagement. We touch on the most significant of these
below.
Before doing that I should say that on the community front we’ve increased our outreach
activities with respect to water supply projects, community infrastructure, community health,
and agriculture programs. These programs have assisted greatly in building bridges with
local communities. With the water supply projects we have empowered and contracted
community groups, including the Union of Watut River Communities, to construct these
projects in their own communities on our behalf.
In addition to the wide-ranging project delivery highlighted above, improved community
consultation is also a key feature of our broader outreach activities. In the most recent
HIDDEN VALLEY SERVICES LIMITED
All correspondence to: PO Box 4015, Lae, Morobe Province, Papua New Guinea
T: +675 472 1703 F: +675 472 1705 W: www.morobejv.com

28 May 2013
HVJV-Government Watut River Patrol (October 2012), the teams provided extensive
information during the community consultations and it was very evident the communities
appreciated the information.
The program of mine visits by community leaders prior to the patrol greatly aided the
understanding and posters and other informational material used by the patrol teams are
updated annually as new data becomes available.
2. Managing sediment and its impacts
(a)
Sediment generally
HVJV has acknowledged the increased sediment load in the Upper Watut River
during the period of construction activities of the mine in 2007- 2009. Some
estimates put the total sediment load during this period at around 30Mt. Importantly
however, there has been substantial and measured improvement in the sediment
concentrations in the river, such that it is now approaching 2006 levels (preconstruction).
Furthermore, as recognised in the ESAP report there is a significant contribution of
sediment in the Watut River by various sources over time (in addition to any minederived
sediments) – being, the Bulolo River, Kumalu/Snake Rivers and others.
While it will always be difficult to precisely estimate relative contributions, this does
provide a picture for the whole of the river system and its multiple sources of high
sediment load inputs to the broader Watut River system. A thorough understanding
of the fate of mine-derived sediment has been a key focus. However, it is important
to note that the monitoring of metals concentrations in the river system, a significant
element of our continuous monitoring program, continue to indicate that metal levels
do not appear to have increased when compared to pre-mining baseline studies.
On the subject of the restoration of the entire river system this too is something the
HVJV would like to work with others on but does not believe that it alone should
shoulder the burden of “restoring the river system”. The mine will continue to
address the management of potential mine-derived sedimentation in the upper Watut
but all stakeholders need to acknowledge that below the Bulolo River junction there
are other significant sources of sediment which are beyond our control. ESAP and
others recognize that there are many sources of the sediment in the Watut River
system and HVJV looks forward to working with other stakeholders to address issues
associated with the river.
We also appreciate the effort that ESAP is putting into the process of the
development a river health scorecard to assist with stakeholder communications.
As consistently noted in this letter and in the ESAP report, the Hidden Valley mine is
not the only contributor of sediment to the Watut River system and the combined or
total sediment load to the system varies spatially (from the various sources and
tributaries) and over time between these different sources. Estimating when the
upper Watut (the only area over which we have some control) will recover can only
be assessed on the basis of the complex interrelationships between the key drivers
(sediment load and sediment transport, hydrology, and metals loads) with the key
response components (river morphology and biologic responses) over time. We will
continue to assess what changes occur in flora/fauna abundance and species
diversity over time. To predict when the river will recover is a very difficult thing to
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28 May 2013
determine at this early-stage and we are seeking collaborative partners to assist with
this work.
(b)
Waste rock dumps
We recognise that there were challenges during the mine construction period with
construction of waste rock dumps. Since this time the mine has continued to build
and seek best available materials for waste dumps. The mine has also progressively
rehabilitated cleared areas and established sediment traps in the mine which have all
contributed to significant improvement in the management of mine-derived sediment
risks. We continue to explore ways to further improve the construction of waste
dumps and dams.
(c)
Dieback
With respect to impacts on the flood plain and dieback, it is not clear whether or not
the dieback can be fully attributed to the mine. The majority of the acute dieback,
which contributed to 80% of the total area of dieback (just over 400 ha) has
recovered. The dieback process was explained to the communities during community
consultations and, in recognition that mine-derived sediment may have contributed to
increased sediment load in the river in response to the cumulative amounts of natural
and mine-derived sediments. In 2010 - 2012 HVJV voluntarily paid compensation to
landowners along the Watut River whose crops and gardens were effected by
dieback. As highlighted in the report, it is difficult to attribute "blame" with respect to
dieback and that there is no "easy" way to tell the story given that the sediment
contributing to the dieback has come from many sources. The environmental
scorecard which ESAP is producing should be helpful in communicating this concept.
(d)
Fish and aquatic ecology
While the report suggests that that sediment from the mine has contributed to a
major decline in fish populations, we firmly believe this statement only to be true for
the upper reaches of the Watut River. Other areas of the river system are impacted
by other major contributors to the sediment load as discussed throughout your report.
With respect to aquatic ecology, we have continuous monitoring of the macro benthic
invertebrate studies (plus the diatoms). Currently sample numbers are too low to
draw valid statistical comparisons with respect to bioaccumulation in fish and prawn
tissues. HVJV is continuing work to improve our fish and prawn sampling program.
3. Managing ARD and water quality
We acknowledge that the management of potential Acid Rock Drainage (ARD) from the
waste rock dumps both during mine life and beyond is an important area of continuing focus
at the site. An ARD mitigation strategy has been developed in the past and is currently
being reviewed in an effort to ensure appropriate management based on current available
knowledge.
Based on monitoring programs to-date, there is no evidence suggesting that ARD may be
occurring within the river system. This is consistent with the low level of Potentially Acid
Forming material identified in deposited sediment throughout the river system to-date.
Nevertheless, ARD management will remain a focus.
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28 May 2013
Compliance levels – we do acknowledge there are some differences and we take on board
ESAPs comments. It is important to note that HVJV strives to comply with its internal criteria
which are actually more stringent than is currently required by the mine’s discharge permit.
For example DEC’s revised limit for Cu is 100ppb while HVJV has an internal limit of 6.5ppb.
4. Baseline information
We recognise, with the benefit of hindsight, there are ways in which the scope of baseline
assessments undertaken prior to construction of the mine could have been improved. This
should not take away from the fact that detailed baseline studies covering environmental,
cultural heritage, social and health issues were undertaken as part of a formal EIS in
accordance with PNG legal requirements.
To improve our understanding of conditions, assist with our continuing management of the
potential impact of the mine and to inform ongoing programs to support the community, in
October/November 2012 we undertook follow up health and biomedical study work covering
communities along the entire length of the Watut River system. This report will be made
available to government, communities and ESAP once completed and will be used as the
basis to support community health programs going forward.
5. Community engagement and contributions
(a)
(b)
Our wider community development programme
With respect to comment on the broad social and community areas of empowerment,
future generation funds and landowner relations, ESAP may not have been aware of
all of the work being done in this area as much of it sits outside ESAP’s overall
mandate. Programs including: business development, capacity building, small scale
miner training, agriculture and aquaculture, health, education and community
infrastructure, descriptions of which can be found on the MMJV website. Many of
these programs we have run in partnership with others and those where we’ve not
had partners we are actively seeking them.
The MOA review
The HV MOA review which commenced in June 2012 is an inclusive process and
has as its core goals:
the establishment of a framework within which Hidden Valley Joint Venture,
the landowning communities and other stakeholders can successfully discuss
issues of mutual interest relating to the MOA, and
to effectively agree on an appropriate balance between the mine’s social and
economic benefits, and the environmental impacts.
While the scope of the review is largely established through the existing MOA and its
component parts, it is HVJV’s view that the scope should not be limited to what is
within the current MOA, providing it falls within the concept of achieving an
“appropriate balance between the mine’s social and economic benefits, and the
environmental impacts”.
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28 May 2013
With respect to the comments regarding distribution of royalties raised by women and
youth at Nauti Village (downstream of the mine), representations have been raised
by them through the Nauti position paper which was tabled at the Hidden Valley MOA
review meeting. These issues will be addressed by that forum.
(c)
Social and Community generally
Our main point here is that the primary responsibility for social issues including:
• Empowerment of the community and people;
• Welfare for future generations; and
• Ongoing landowner issues management
must rest with communities themselves and with the Government. HVJV can
incorporate these into core elements of our Social Responsibility Policy and in each
and every program and project that we undertake but we cannot and should not
assume this accountability.
More work does need to be done in this area however and we’ve made a start with
the formation of the Village Planning Committees in the mine communities for the
Benefit Sharing Trust (BST). This is the first time that the mine communities have
been directly involved in the decision making process with respect to benefits as
previously everything has gone through the Nakuwi Association – the mining area
landowner association.
In addition to the mine villages, we are reaching out to widen our engagement with
the Union of Watut River Communities, a group that has been very antagonistic to
the Hidden Valley operations and its real/perceived impact on the Watut River, to
take a leading role in the identification and implementation of an initial set of
community development projects in middle Watut communities. If we can establish
this process with the Union then there’s no reason we can’t look at engaging other
community groups.
Financial literacy and Personal Viability training have been flagged in the Benefit
Streams Analysis report that was undertaken Mike Finlayson, a consultant
specializing in socioeconomic impact analyses, on our behalf and are being
developed for roll out into mine area communities.
The issue of empowerment is being addressed in the development of the new MMJV
sustainability framework, the HV MOA review and the draft mine closure plan
currently under review.
With respect to the ESAP comments on community and LLG infrastructure, all
infrastructure projects built to date have been in agreement with communities and
LLGs. Water supply projects and community halls have been signed over to
communities and aid posts and classrooms to the government bodies responsible for
these services.
In recognition of the issues faced by LLGs and communities in the maintenance of
community infrastructure projects (in particular funding, skills, organisational
capacity) consideration should also be given to targeted overall capacity building in
this important area by way of maintenance training and establishing an infrastructure
maintenance trust fund from a portion of royalties.
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28 May 2013
Consultation with respect to the prioritization of infrastructure projects is an ongoing
process with communities, LLGs, Districts and the provincial government through the
Morobe Projects Management Unit (MPMU). This process, as well as our planned
support for the development of 5 year development plans for Wards, LLGs and
Districts will be a topic discussed in depth as part of the MOA review throughout
2013.
We do not think we can do anything other than direct infrastructure work through LLG
or other government agencies such as the MPMU as they will need to own and
provision funding to maintain what are public facilities.
(d)
Future funds
Your considered comments with respect to Future Generation Funds are well made.
As per the Benefit Stream Analysis report done for HVJV circulated to ESAP
members, there is a case to be made for strong well-managed funds put in place to
cater for the needs of future generations.
There are currently two Future Generation Funds (FGF) for the mine landowner
communities in place:
The first of these is the FGF from royalties which has a current estimated
balance of K650,000 and is expected to accumulate an additional estimated
K2.5 million over the next 5 years. The rules of this fund have yet to be
established by the National Government and will be discussed at the HV
MOA review.
The second investment fund is part of the BSA which specifies that 30% of
fund is to be invested for future generations. This is estimated at K3.7 million
over the next 5 years.
The additional element of the ESAP recommendation with respect to FGFs – a fund
to also extend to cover the rest of the upper, middle and lower Watut River
communities – is one that needs to be discussed and debated at length but in a
different forum. What for, with whom, how much and for how long would be the key
considerations in discussing this topic. Again, the Hidden Valley Mine cannot be the
sole source of funding. This requires a whole of Government, communities and
stakeholder approach.
That said, the upper Watut communities to the confluence with the Bulolo River do
get a portion of royalties directly and through the Watut LLG. Middle Watut
communities receive indirect royalty benefits through the Mumeng LLG, however the
expenditure of these royalties is not tied to specific spending in the community. This
will need to be discussed at the time of the Hidden Valley MOA review. The other set
of impacted river communities are in the lower Watut covered by the Wampar LLG in
Huon Gulf District.
Several HV MOA stakeholders share the view that the expenditure of HV royalties in
the impacted Mumeng LLG communities needs to be targeted and a mechanism
developed to ensure the Wampar LLG receive a portion of royalties through redistribution
of existing funds as opposed to making available new funds. Perhaps part
of these funds could be held in a long-term trust arrangement.
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28 May 2013
These funds might come from the Morobe Provincial Government’s share of royalties
and be diverted to impacted Wards of Watut, Mumeng and Wampar LLGs as
agreements with individual communities in these areas are difficult given that that
they are not traditional landowners (transitory).
On the topic of equity we need to note that the Benefit Sharing Agreement was
established in lieu of landowner equity in the Hidden Valley mine. Payments from
this agreement are essentially an additional royalty paid to the landowners in terms of
community development projects and investments that are chosen through their
Village Planning Committees and Board of Governors.
6. Mine closure planning
Mine closure is an evolutionary process and community issues are an integral part of this
process. It is governed under PNG regulation and is updated on regular intervals throughout
a project’s history. The current draft mine closure plan for the Hidden Valley mine, entitled
“Roadmap to Sustainable Mine Closure”, was produced in March 2012 and not available
during the period covered by the ESAP report. The draft mine closure plan is currently being
socialized with Government and Landowner stakeholders. It is a very high-level document in
early stages of development which will evolve over time. The draft mine closure plan will be
published on the website following the current review and consultation process.
7. The role of the Government
We have noted the necessary role of Government at various sections of this letter. HVJV is
working closely with all levels of Government in a number of areas including:
Environmental awareness programs
Training of small scale miners in safer and less destructive methods of mining
Community development – especially gender development
Community health and education programs
The view of ESAP, like that of many NGOs, is that environmental standards applied in
developing nations differ from those in the developed world. HVJV’s view is that the
legislative framework covered by the PNG Environment Act (2000) is appropriate and a very
robust system for environmental regulation. The Act gives the Environmental Council (an
established council under the Act) wide ranging and enforceable powers to set and enforce
whatever appropriate conditions it sees fit for a particular operation.
We acknowledge concerns around monitoring and enforcement of environmental
compliance and fully support the PNG Government’s plans to establish a Conservation &
Environment Protection Authority (CEPA) to address these issues and provide improved
regulatory and enforcement support to the Act.
8. How we might better work with ESAP
HVJV does take your point on board with respect to building the relationship between ESAP
and ourselves and, we trust that you share our view that this relationship has become
stronger as it has developed. There may have been instances HVJV may have been unsure
about what was requested and that ESAP may have been unsure as to its mandate as these
things do happen in the early days of a relationship.
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28 May 2013
ESAP is something newly created by HVJV and it takes time to build the correct
communication. Ownership of ESAP now firmly rests with Chief Executive Officer of Morobe
Mining Joint Ventures with support provided by the GM Hidden Valley Operations and GM
Sustainability & External Relations.
9. Conclusion
We appreciate the considered comment and recommendations by ESAP. We look forward to
the advice and contribution that ESAP provides and to publication of your next Annual
Report.
Sincerely,
Greg Jackson
a/Chief Executive Officer
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