2012 ESAP Report - Morobe Mining Joint Venture

HIDDEN VALLEY,
EXTERNAL
STAKEHOLDER
ADVISORY PANEL
(ESAP)
June
2012
ESAP Annual Report on the Hidden Valley Joint Venture, July
2011 – June 2012
Report No. 1

Table of Contents
Executive Summary 3
1. Introduction 4
2. Background 4
3. The HVJV Project 7
3.1 Project Site 7
3.2 Permit to Operate 7
3.3 Positive undertakings 8
4. ESAP and its roles 10
4.1 Objectives and TORS 10
4.2 ESAP Operations 11
4.3 ESAP Formal Meetings 11
4.4 Other engagements 14
4.5 Relationship of ESAP and the HVJV 15
5. Key issues 15
5.1 General 15
5.2 Environmental 16
5.3 Social and community 20
5.4 Mine Closure & implications 24
6. Role of Government 24
6.1 Responsibilities of Government 24
6.2 Ineffective mine monitoring by Government 25
6.3 Slow feedback from Government on Environmental Permit
Compliance queries 25
6.4 Ineffective Government oversight of the utilization of benefit flows
from HVJV 25
6.5 Ineffective Government oversight of the environmental destruction
caused by alluvial gold miners along the Bulolo and Watut Rivers 26
7. ESAP Future Work Program 26
7.1 General Operations 26
7.2 Environment 26
7.3 Social & Community 26
7.4 Communications 26
Appendix 1: ESAP Members 28
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ACRONYMS
ANZECC - Australia and New Zealand Environment and Conservation Council
ARD – Acid Rock Drainage
BSA – Benefit Sharing Agreement
BST – Benefit Share Trust
CRDP – Community Regional Development Program
DEC – Department of Environment and Conservation
EAC – ESAP Environment Advisory Sub - Committee
EMP – Environmental Management Plan
EIS – Environmental Impact Statement
ESAP – External Stakeholder Advisory Panel
FGF – Future Generation Fund
HVJV – Hidden Valley Joint Venture
LLG – Local Level Government
MEJV – Morobe Exploration Joint Venture
MoA – Memorandum of Agreement
MPG – Morobe Provincial Government
MRA – Mineral Resources Authority
NKW – Nauti Kuembu Winima
PNG – Papua New Guinea
SCAC – ESAP Social and Community Advisory Sub-Committee
SMEC – Snowy Mountain Engineering Corporation
TSF – Tailings Storage Facility
WGJV – Wafi Golpu Joint Venture
WRIMP – Watut River Impact Management Project
WRIMP AC – Watut River Impact Management Project Advisory Committee
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Executive Summary
This Report covers the first year (July 2011 to June 2012) of operation of the Hidden Valley gold mine
External Stakeholder Advisory Panel (ESAP). ESAP was established in June 2011 by the Hidden Valley
Joint Venture (HVJV) 1 as an independent advisory body to assist HVJV in addressing the
environmental and related social impacts of its gold and silver mining activities upon the
communities. The establishment of an external expert advisory panel is consistent with world’s best
practice in the mining industry.
The Hidden Valley mine is located in the Upper Watut area of the Wau-Bulolo district of the Morobe
Province. Mining of gold and silver by HVJV commenced in July 2009 and is expected to continue for
a period of 14 years.
Recognising the economic importance of the mine to the community, Morobe Province and Papua
New Guinea, HVJV undertook several initiatives to ensure that key environmental and related social
issues affecting the communities were promptly identified and addressed in a transparent and
responsible manner.
This report contains a summary of the ESAP’s observations, gained from familiarisation visits to the
HVJV mine, review of various documents provided by HVJV, discussions with HVJV staff and
management, from five (5) ESAP meetings held to date, and attending other meetings with key
stakeholders and HVJV partners.
Over the first 12 months of its operation, ESAP provided several reports to HVJV, namely in the form
of recommendations from each meeting, Advisory Note 1 and reports and comments on individual
issues. In the Advisory Note 1, ESAP discussed its key findings and presented advice to HVJV on:
• Two Environmental areas - on-site issues (e.g. minimisation of ARD) and off-site issues (e.g.
overall condition of the Watut River from the impact of about 30 million tonne of sediment
cast into the River);
• Three broad Social and Community areas - empowerment, future generation fund and
landowner relations.
Furthermore, ESAP identified a number of tasks related to Environment, Social and Community
aspects that it will seek to progress over the next twelve months. ESAP commends HVJV for setting
up an independent Advisory Committee (ESAP) to give them advice on Environmental, Social and
Community impact of the mine’s activities.
In this reporting period, ESAP has worked in accordance with its Terms of Reference and, through its
briefs and advise as noted above, put forward for HVJV’s consideration suggestions on the way
forward. However, ESAP believes there is scope for further work to improve the relationship
between HVJV and ESAP, in particular in improving communications between HVJV and ESAP.
1
HVJV is a 50-50 joint venture between Harmony Gold Limited and Newcrest Mining Limited
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1.0 Introduction
The Hidden Valley Mine External Stakeholder Advisory Panel (ESAP) was established by the Hidden
Valley Joint Venture (HVJV) partners in June 2011 as an independent advisory body to assist HVJV
mine address its environmental and related social impacts of its activities on the community. The
establishment of the ESAP by HVJV represents current world best practice for mining ventures in the
areas of environmental and social responsibility.
The ESAP currently consists of six (6) members with expertise in environmental management,
aquatic ecology, water quality, forestry, business management, foreign relations, law and civil
society. The ESAP is chaired by Sir Joseph, J. Tauvasa KBE. Details of the ESAP members are listed in
Appendix 1.
Between July 2011 and June 2012, ESAP held five (5) formal meetings, details of which are provided
in Section 3.2 (ESAP Operations). In March 2012, ESAP provided HVJV with an Advisory Note (#1)
covering recommendations on a number of environmental, social and community issues. ESAP also
undertook an independent assessment of the reported fish deaths in the Watut and Markham rivers
in February 2012 for HVJV.
This report contains a summary of ESAP’s observations and recommendations on environmental,
social and community issues in the first 12 months of its operation, and outlines a work program for
the next 12 months.
2.0 Background
Harmony Gold Mining Company Limited of South Africa and Newcrest Mining Limited of Australia
formed three 50-50 unincorporated joint ventures (Morobe Mining Joint Ventures) in August 2008
for the purpose of developing and operating mines in the Morobe Province of Papua New Guinea
(PNG). Harmony and Newcrest are significant gold producers in the world with impressive reserves
and exploration growth portfolios 2 .
The Hidden Valley Joint Venture (HVJV) is one of the three (3) joint venture entities entered into
between Harmony and Newcrest. The other two entities are Wafi–Golpu Joint Venture (WGJV) and
Morobe Exploration Joint Venture (MEJV).
The Hidden Valley mine is located 15 km southwest of Wau in the Morobe Province, at the top of the
Watut River catchment (Figure 1). The mine site is at an altitude of between 1,800 and 2,500 m with
an annual average rainfall of approximately 3,000 mm.
2
http://www.morobejv.com/about/index.htm
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Figure 1:
Topographical map showing the location of the HVJV mine site identified as ML151 in the south
with respect to its location from Lae.
Source: Morobe Exploration Joint Venture, 2009
Much of the focus on the environmental impacts of the mine has been on the loads of sediment
contributed during both the construction phase (2007-2009) and then during the current operational
phase (2010-present).
ESAP is aware that a significant amount of sediment from the pre-mining construction phase was
released into the Watut River as a result of poorly constructed waste rock dumps at that time. Some
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of this sediment still remains in the river system, most notably in the Upper Watut River upstream of
the Bulolo River junction and in the Lower Watut River.
Since completion of the construction phase the sediment load from the mine site has been reduced
significantly as a result of the construction of well-designed waste rock dumps.
However, the Hidden Valley mine is not the only source of sediment to the Watut River. There are
three other well-identified sources, these being (Figure 2):
(a) The Bulolo River - alluvial mining has occurred in the Bulolo River catchment since the 1930’s,
and is still occurring. These current mining operations are considerably more sophisticated than
in the past with high pressure sluicing now used to process the sediments and permit the gold to
be extracted. Over the years these operations have contributed a considerable load of
sediments downstream, and this is still occurring.
(b) The Kumalu landslide – a major landslide occurred in the Kumalu River catchment (a tributary of
the Snake River) around the year 2000. This landslip contributed an unknown, but probably
significant, load of sediment to the Watut River via the Snake River. Based on monitoring data
over the past two years, the Snake River is contributing 4-5 times the annual sediment loads
from each of the Upper Watut River and the Bulolo River.
(c) Landslips – the upper parts of the Watut River catchment are steep and prone to regular
landslips. These landslips, such as those evidenced in the Banir, Isuro and Langimar catchments
(which are part of the Watut catchment), can contribute large quantities of sediment to the river
system, although the amount has not been quantified.
ESAP estimate that the three main sources – the HV mine, Bulolo River and the Kumalu landslide -
have contributed approximately the same amount of sediment to the Watut River, although over
different time periods (HV mine – 5 years; Bulolo River – ca. 50 years; Kumalu landslide – 12 years).
These sediment loads have contributed to a number of changes particularly in the Lower Watut
River, including:
• River straightening,
• Increased bank erosion and landslips,
• Overbank flooding and deposition,
• Ecosystem loss,
• Forest dieback.
ESAP believes that the Upper, Middle and Lower Watut River communities have a lack of
appreciation of the above sources of sediment to the river, and tend to blame all the observed
sediment-induced changes on the HV mine.
Further, ESAP believes it to be in HVJV’s best interests to continue working vigorously to address the
issue of sedimentation in the Watut River system and to identify possible measures to restore the
river system. It also needs to work harder to get this information out to the communities in a simple
and understandable form in English and Tok Pisin.
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Figure 2:
Map of the Watut River catchment showing photos of the three main sources of sediment to this
system: the Hidden Valley mine, artesian mining in the Bulolo River and the landslide in the Kumalu
River catchment.
Landslide in Kumalu River
Engineered Waste Rock Dumps at
Hidden Valley Mine
Results of artesian mining in Bulolo
River
3.0 The Hidden Valley Joint Venture (HVJV) Project
3.1 Project Site
Historically the Hidden Valley area has been the focus of various exploration companies spanning
over two decades. CRA Exploration discovered the Hidden Valley prospect in 1984 and the adjacent
Kaveroi prospect in 1992. The Hamata prospect was discovered in 2002 in 1987 by Renison
Goldfields Consolidated (RGC). As a result of various ownership changes Harmony eventually
acquired a 100% interest in all of these prospects in 2003 3 .
Hidden Valley is a greenfields gold mining operation although there has been artisanal mining of
alluvial gold in this area and following further exploration established the viability of a large scale
gold mining processing operation based on these deposits. The strategic joint venture agreement
with Newcrest in 2008 resulted in the creation of the Morobe Mining Joint Ventures (MMJV).
In terms of the joint venture agreement, Newcrest bought an initial 30% stake in Harmony’s PNG
assets in July 2008 for US$229 million and sole funded exploration, development and construction
costs in the joint venture area for approximately US$300 million in FY09 to earn-in an additional
20%. Newcrest formally reached a 50% stake in the joint venture on 30 th June 2009.
The Hidden Valley mine is operated by Hidden Valley Services Ltd via Morobe Consolidated
Goldfields Ltd for Harmony and Newcrest PNG 1 Limited representing Newcrest.
3.2 Permit to Operate
The Hidden Valley mine was commissioned in 2009 to commence mining of its Mining Lease (ML)
151. Construction of the mine started in 2007 with the bulk of the work completed towards mid-
3 MRA OHS REPORT, Hidden Valley Operations, 2010
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2009. The first gold pour occurred in 2009 with the mine achieving full commercial production in
September 2010 4 .
Prior to construction work on the mine and establishment of HVJV, Morobe Consolidated Goldfields
(a Harmony subsidiary) entered into a Memorandum of Agreement (MoA) in 2005 with the
Government and the local landowners. The signatories to the MoA were the Minister for Treasury
representing the State at the National level, the Morobe Provincial Government (MPG) representing
the province, the three LLGs of Bulolo District representing the District and Nakuwi Landowners
Association Incorporated, representing the three landowner clans of Nauti, Kuembu and Winima
villages. The MoA provided the formula for the distribution of royalties and/or compensation from
the mine operations to all the signatories as well as specify the guidelines for the recruitment of the
general labour force for the mine.
The Environmental permit to operate the Hidden Valley mine was received in March 2005 following
the submission of a comprehensive Environmental Impact Statement (EIS) along with a detailed
Environmental Management Plan (EMP). The approval process involved extensive stakeholder
consultation that included local landowners, the provincial government, the district administration
and the local level government officers5.
3.3 Positive Undertakings
Over the past 12 months, ESAP observed that HVJV has progressed well in delivering on its
commitments and obligations as spelt out under the HVJV MoA. Amongst other things, ESAP
observed progress and improvements in the following areas;
• Mine operation and disposal of tailings and waste;
• A series of scientific and technical projects aimed at better understanding high priority
environmental issues both on-site and off-site (Watut River Integrated Management
Program - WRIMP);
• Employment opportunities for local communities;
• Focus on gender equality in employment opportunities;
• School fee assistance to affected communities and community projects such as water
supplies;
• Health and education infrastructure support;
• Construction of fishponds (aquaculture);
• Extension support for cocoa farming in the lower Watut villages and coffee planting in the
Upper Watut villages; and
• Positive partnerships with the Provincial and District Administrations and various service
providers and civil society organisations in the Province.
For a relatively medium sized mine that has been in operation for less than five (5) years, these
achievements are highly noteworthy. HVJV is establishing itself as a leader, in terms of maintaining
an environmentally sustainable and a socially responsible mine. This trend points to a positive
outcome in the future that will be long remembered after the mine closure. It is a trend that is
consistent with the world’s best practices. Also consistent with world’s best practice in the mining
industry is the initiative taken by HVJV to create independent advisory bodies like ESAP and the
WRIMP Advisory Committee.
4 http://www.morobejv.com/about/history.htm
5 Hidden Valley – Factsheet, September 2011
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HVJV’s proactive response to the needs of the communities beyond the immediate mining villages is
also a positive reflection of HVJV as a responsible corporate citizen. HVJV’s commitment was visible
in the communities ESAP visited and these interventions were appreciated and acknowledged by the
communities. ESAP commends HVJV for establishing the Community Regional Development Program
(CRDP) that has been the primary vehicle used by HVJV to deliver on its commitments to the
landowners and the affected communities beyond the mine site.
ESAP also acknowledges the enormous investment made by HVJV towards the construction of the
Tailings Storage Facility (TSF), the first of its kind in PNG.
A further positive for HVJV has been the mine visitation program where it encourages visits to the
mine site by interested parties, both government and affected landowner communities to see
firsthand the on-site containment strategies and actions.
Figure 3:
Tailings Storage Facility (TSF) at Hamata.
From HVJV quarterly reports, ESAP noted considerable progress made in the area of employment
under the HVJV MoA, where up to 55% of employees overall are from Morobe Province, with 45%
recruited locally from the Bulolo District. Additionally, females make up 15% of the workforce. This is
a remarkable effort on HVJV’s part to mainstream gender into its operations. ESAP however is aware
that HVJV is faced with staff retention issues that need to be addressed.
Furthermore, royalties have been paid out to the stakeholders in line with the MoA. A total of K37.6
million has been paid at the end of June 2012, of which K750,000 has been set aside for future
generations through a Trust Fund. Notable also is the execution of the Benefit Sharing Agreement
(BSA) Trust Deed and the establishment of the Board of Governors to oversee the operations of the
BSA Trust.
ESAP also notes the increasing inputs provided by HVJV in supporting the establishment and
profitable operations of local landowner companies. ESAP is aware of a number of joint venture
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initiatives involving local landowner companies and external service providers to support HVJV mine
operations in the areas of trucking, security and catering. A more recent example is the plant nursery
contract with a Nauti village company to supply indigenous plant seedlings to be used in the slope
stabilisation work at the mine site.
Despite the positive initiatives, interventions and activities undertaken by HVJV and summarised
above, activities of the pre-mining phase have dented the company’s image and this will take time to
heal. ESAP is aware that a significant amount of sediment from the pre-mining construction phase
(from mid-2007 to mid-2009) was released into the Watut River and has contributed to the
environmental and social impacts of the river and the river communities respectively (See also
Section 2). This issue remains an ongoing concern.
Consequently, ESAP believes that in spite of the good intentions by HVJV in its social and community
initiatives and activities, suspicion will continue to prevail in the Upper, Middle, and Lower Watut
River communities. It will be in HVJV’s interests to continue working vigorously to address the issue
of sedimentation in the Watut River system and to identify possible measures to restore the river
system. It also needs to work harder to get this information out to the communities in a simple and
understandable form in English and Tok Pisin.
Given the lessons from the post mining experience of HVJV, ESAP believes that there is scope for
HVJV to consider underground mining for the emerging WGJV mine as opposed to open cut mining.
4.0 ESAP and its role
Over the first twelve months, ESAP focussed on familiarising itself with the Hidden Valley operations,
while HVJV undertook its own assessment on how best to fully utilise or draw on ESAP’s expertise
and experience to provide advice in the environment, social and community areas.
This section covers; ESAP’s Terms of Reference and presents briefly the actions taken in fulfilling
each requirement of the TOR.
4.1 Objectives and ToR’s
4.1.1 At the request of HVJV, to periodically review HVJV's environmental standards, policies, data
and procedures and to give advice and make recommendations thereon, having regard to
local, national and international norms and standards:-
The opportunity to address this ToR has not been provided, however, ESAP expects to
address this in the second year of operation.
4.1.2 To identify actual or potential environmental and related social impacts of HVJV's activities,
having regard to topical stakeholder concerns and inputs:-
ESAP has commenced addressing this ToR with details provided in Section 4.2.
4.1.3 To recommend to HVJV the commissioning of relevant, specific technical studies and
investigations, for HVJV approval. Studies and investigations approved by HVJV will be
conducted by HVJV or by external experts or institutions on HVJV's behalf at HVJV's cost and
expense:-
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ESAP has had limited opportunities to recommend the commissioning of technical studies
during this initial 12 months. However, ESAP is now in a position to work with HVJV to
recommend a number of studies during the next 12 months (see Section 7).
4.1.4 To review the results and findings of approved studies and investigations and to give advice
and make recommendations to HVJV thereon:-
This particular activity links to activity 4.1.3 above. As noted above, ESAP has had limited
opportunities to act on this ToR. However, at the specific request of HVJV, ESAP undertook
an independent review and investigation into the alleged cyanide poisoning of fish in the
Markham River and submitted its report to HVJV. ESAP expects to undertake further reviews
for HVJV over the next 12 months.
4.1.5 To be a credible additional source of information relevant to the environmental and related
social impacts of HVJV's activities; and
ESAP has provided advice to HVJV through the recommendations contained in the minutes
of its five meetings held to date.
4.1.6 To assist HVJV communicate relevant information to stakeholders by means of joint
announcements and joint attendance with HVJV representatives at community or
stakeholder forums.
ESAP has fulfilled this action through reports it has provided to HVJV as well as consultations
it has held with the concerned communities. As for reports; ESAP has written two reports
namely, the Advisory Note 1 and Fish Mortality Report. With respect to public consultations,
ESAP had its first face to face public meeting with the people of the Lower Watut River at
Madzim in its first visit and again with the Sambio villagers in its recent visit of May 2012. In
addition to these consultations, ESAP members have also participated in the presentation of
the report of the joint State and HVJV patrol of the Watut River at the PNG University of
Technology in Lae. Through these avenues, ESAP has had the opportunity to interact as well
as communicate key messages to the communities concerned.
4.2 ESAP Operations
The ESAP members are fully committed to performing their roles as members of the panel. ESAP has
established two sub-committees to effectively utilise the expertise and experiences of the full panel
in providing analysis and advisory services in response to the tasks outlined in its ToR. The subcommittees
are: (a) the Environment Assessment Committee headed by Professor Barry Hart, with
Professor Simon Saulei and Professor Misty Baloiloi (on leave of absence) as members, and (b) the
Social and Community Assessment Committee headed by Ms Jean Kekedo with Sir Joe Tauvasa and
Ms Freda Talao as members.
In this first 12 months of operation, ESAP quickly realised that the lack of adequate baseline
information on the conditions of the environment, social and community structures before HVJV
commenced mining, poses a significant challenge to ESAP in the analysis and assessments it seeks to
make. Such historical data is a vital benchmark from which to assess the current activities of the
mine, especially in relation to changes in the Watut River system and the impact on the communities
over time.
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ESAP is committed to ensuring that HVJV maintains its focus on the current and future generations
of the people in the Watut River Valley. To this end, ESAP provided advice on Future Generation
Fund (FGF) and has also been asking for the Conceptual Mine Closure Plan as discussed in Section 4.4
ESAP met five (5) times in the past 12 months and presented a total of 25 action points to HVJV for
consideration. In the same period, one issues report (Advisory Note 1) and one technical report 6
were presented to the company.
4.3 Formal ESAP meetings
The inaugural meeting of the ESAP was held at the Hidden Valley mine campsite in July 2011. This
meeting included a site tour of the Hamata pit, the processing plant and the TSF. This was followed
later with a visit to the Watut River from the headwaters at the mine on a helicopter as well as, an
aerial visit of the developing Wafi-Golpu Joint Venture advanced exploration site. The purpose of
this visit was to enable the ESAP members to get an insight into the operations of the company and
familiarise the members with the mines operational context. ESAP members also stopped at Madzim
village in the Lower Watut to consult with the community and to see first-hand the impact of the
mine in the lower stretches of the Watut River system. At this village, the ESAP members also
observed a water supply project constructed by HVJV.
Figure 4:
ESAP members briefing at the T.S.F. site.
The second meeting was held at the Melanesian Hotel, Lae, in September 2011.
Following the Lae meeting, ESAP was invited by HVJV to meet the WRIMP (Watut River Impact
Management Project) Advisory Committee in Brisbane and also meet the HVJV Executive Team.
ESAP also utilised this opportunity to convene an extraordinary meeting in Brisbane, addressing
urgent matters arising from its Lae meeting, and also used this meeting to prepare for its meeting
with the WRIMP AC and HVJV Executive Team.
From the Brisbane meeting, the following issues were identified for ESAP’s further consideration:
6 Fish Kill Incidents in the Watut and Markham Rivers, February 2012
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• ESAP recognized, from the reports provided, the difficulty in attributing how much of the
dieback is directly related to HVJV mining activity compared with other sediment sources.
However, there is an urgent need to get the story related to die-back produced in a simple
and understandable way.
• There are significant differences between the DEC and international compliance levels that
need to be addressed. ESAP understands that HVJV have made representation to DEC to
have these compliance levels reviewed, and seeks to be kept informed on the outcome of
these discussions.
• In view of the potential damage introduced fish species can cause to natural river systems,
ESAP encourages HVJV to consider stocking aquaculture fish ponds with native fish species.
• The need for HVJV to develop strategies on its social and community programs with a clear
focus on outcomes.
• The need to align various infrastructure programs to local and provincial government plans.
• The need to assess Government budgets with a view to establishing a future generation
fund.
The fourth (4 th ) ESAP meeting was held in Port Moresby in February 2012. The meeting was to
finalise its first Issues Report (Advisory Note 1 7 ). ESAP’s two sub-committees, the Environmental
Assessment Committee (EAC) and the Social and Community Assessment Committee (SCAC),
presented discussion papers that were compiled into the final report for presentation to HVJV.
The fifth (5 th ) ESAP meeting was held at the Bulolo Technical School in May 2012. At this meeting,
ESAP discussed feedback from HVJV on its Advisory Note 1 and incorporated relevant amendments
for final submission to HVJV. ESAP also discussed its first Annual Report and resolved to further
refine this report at a meeting in mid-June. Other key considerations at this meeting included;
• Involvement, if any, with the upcoming HVJV MoA negotiations between, landowners, State
and HVJV as observer and not as active participant;
• The need for targeted empowerment programs in the communities;
• Discussions on managing waste discharge issues by HVJV with a visit to the discharge point
at the mine site to ascertain how discharge was being handled by the HVJV. This assisted
ESAP members to better understand water conditions at the monitoring stations;
• Revisiting previous agreement to prepare Report Cards on: (a) the environment and (b) the
social and community development activities by the end of 2012. ESAP resolved to obtain
information for the preparation of these two report cards for the next meeting.
Following the 5 th meeting, ESAP members visited the villages of Nauti in the Upper Watut and
Sambio in the Middle Watut area. At Nauti Village, a direct beneficiary of the mine through
landownership, ESAP inspected the Environment Monitoring Station and had informal discussions
with villagers present.
ESAP also witnessed road maintenance, new double elementary classrooms, aid post, community
hall, footbridge and water supply to the village by HVJV. ESAP members were surprised to hear of
how little the villagers knew about the mine and its operations.
At Nauti, ESAP inspected two staff houses built by HVJV, and held informal discussions with the
community. The panel visited the site of river crossing where a proposed foot bridge is being
planned for construction. The women and youth representatives expressed disappointment in what
they perceived to be unfair distribution of royalties to them by their village leaders, asserting that
7 ESAP Advisory Note 1, July – Dec 2011
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the men were getting the bulk of these royalties. They also expressed their desire to participate in
tours of the mine and for inclusion in the discussions for royalties. In light of the grievances raised,
ESAP suggested that the Community Affairs team continue dialogue with the communities about
mine visits as well as on how the communities can use their benefits more meaningfully, in
particular, whether or not the community could build cheap homes from the royalties they receive.
ESAP noted further concerns raised by the Sambio community around their fear of eating the fish,
eels and prawns found in the river.
4.4 Other Engagements
In addition to the formal meetings, ESAP has also undertaken other engagements, including:
• ESAP Chairman Sir Joe Tauvasa met with Executives of both JV partners.
• Ms Jean Kekedo and Mr Romias Waki undertook a helicopter trip up the Watut River to Hidden
Valley in September 2011.
• Ms Freda Talao, Professor Misty Baloiloi and Mr Romias Waki attended the HVJV Stakeholders
Forum held at the PNG University of Technology in November 2011.
• Professor Simon Saulei and Ms Talao visited Hidden Valley and did an aerial survey of the Watut
and Markham River Catchment in February 2012. This followed a period of extraordinary heavy
rainfall in the Morobe Province that contributed to reported land-slips in the tributaries of the
Watut River. This trip allowed the ESAP members to make an independent assessment of the
impact of the heavy rainfall and land slips. From the observations, the impact of the rainfall on
the Snake River resulted in the clogging of debris at Bangalum and old Sambio villages in the
Mumeng LLG. ESAP understands that the PNG Defence Force were called on to come in and
blast the debris to clear up the passage for trapped water to flow out as well as to enable the
debris to move further downstream and ease impact of flooding on the villages in the vicinity of
the river.
Figure 5:
Showing Debris build up at Bangalum and old Sambio Villages following heavy rainfalls in February
2012 but not related to HVJV mining operations.
•
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• Access to the mine from Lae was also affected by the poor conditions of the Bulolo Highway.
Reports of a supply truck overturning at Wampit and dying fish on both the Watut and Markham
Rivers prompted HVJV to request ESAP to independently assess allegations and concerns raised
by the local communities that the dead aquatic food source were caused by the mine. Following
its own independent analysis, ESAP provided its scientific opinion to HVJV in April 2012.
• During this period, Professor Simon Saulei also had discussions with HVJV on issues relating to
fish deaths in the Markham River, issue of credibility of cyanide tests and samplings, silt clogging
of fish gills from River sediments and the de-oxidation of water due to high loads of sediments.
4.5 Relationships of ESAP and HVJV
ESAP is broadly happy with the current working relationship with the HVJV partners. The JV partners,
Harmony Gold and Newcrest Mining Limited, are very professional in their approach and are
committed to their organisations and to their Joint Venture arrangements under the Morobe Mining
Joint Ventures (MMJV), covering HVJV, Wafi-Golpu Joint Venture (WGJV) and Morobe Exploration
Joint Venture (MEJV).
At the Bulolo meeting, ESAP discussed how communications with HVJV could be improved,
especially in relation to obtaining information and reports necessary for ESAP to make its
assessments, as well as providing advice on outstanding environmental matters raised on a number
of occasions over the past 12 months. As a way forward on this issue, ESAP and HVJV will conduct a
workshop in July 2012 to go over documentation held by the company with respect to
environmental issues for consideration by ESAP.
5.0 Key Issues
5.1 General
Of the two established sub-committees, the primary role of the EAC is to assess all environmental
issues impacting the community from the mine’s operations and contribute its analysis and advice to
the ESAP. The role of the second sub-committee is to assess and advise ESAP on the social and
related community issues arising from HVJV operations, including the impact of HVJV benefits and
contribution to the communities.
The establishment of the two sub-committees is designed to ensure that the impact of the mine
operations on the environment and the community are adequately addressed and assessed using
the relevant expertise and knowledge of the panel members.
Comments in this section of the report are from observations ESAP made from its two site visits to
the HVJV mine, as well as visit to the Watut River village communities where the members had the
opportunity to meet and consult with the community members. The review of key reports and
documents provided by HVJV also provided further guidance in ESAP’s advice to HVJV. Current best
practice is that such documents should be in the public domain or on the internet. This is not yet the
case for HVJV reports and documents.
The work undertaken by WRIMP on the environment, and the social mapping studies carried out by
Tanorama 8 have been useful to ESAP. Data and assessment done by the consultants, especially from
the on-going work by WRIMP, have provided useful description on the status of the environment
along the Watut River. The pre-mine development phase and the current mine operations on the
8 Report on Watut River Impacts Consultations, Tanorama, 2009
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environment outside of the immediate mining lease have had a consequential impact on the
communities’ livelihood and welfare, particularly in the Upper Watut.
However, given the lack of baseline environmental data that can be used to provide a benchmark,
ESAP’s assessment of the ecological condition of the Watut River (aquatic life and turbidity) has been
qualitative rather than quantitative.
Additionally, there is also a lack of socio-economic baseline information on the Watut River
communities that has made it difficult for ESAP to assess changes in the socio-economic conditions
of the communities due to the mine’s existence. There appears to be little knowledge of previous
official records of clans, demography, population shifts and tribal groups in the Upper, Middle and
Lower Watut areas affected by the mine.
The Tanorama Report highlighted population surveys of the Watut River communities, but given the
lack of official records and written population history and genealogy, ownership of land may prove
difficult to manage in terms of derived benefits. Compensation may become contentious especially
in the more heavily populated areas such as Nauti. From ESAP’s discussions with the silent majority
of women and youth, these groups were concerned with the selection process used in appointing
women and youth representatives to important decision-making committees of the villages. The
women and youth consulted asserted that village committee members appointed were not
nominated by the majority of the villagers, but were chosen by leaders as their proxies.
They raised further complaints on the unfair distribution of royalties in the community where they
were receiving far less than the men.
The two complainant groups viewed the current village selection process as unfair and not in the
best interest of the communities. There is a need for a transparent process to be installed that will
allow the women and youths to freely select their own representatives to the village committees
without fear or intimidation. From this consultation, ESAP observed the strong need for targeted
awareness of people’s rights through the use of Radio Morobe on community issues such as health,
education, women’s advancement and conflict management and resolution to help the people in the
mine area understand their rights and resolve their internal tensions.
5.2 Environmental
5.2.1 General
HVJV currently operates under the PNG Department of Environment and Conservation’s (DEC)
approved Water Extraction and Waste Discharge permits and Environmental Management Plan
(EMP). Additionally, as a result of an environmental audit conducted by Snowy Mountain
Engineering Company (SMEC) during 2010, the company is also implementing an Environmental
Improvement Plan (EIP) that was approved by DEC in April 2011. This latter plan is focused largely
on on-site environmental issues (e.g. erosion, rehabilitation, operation of the tailings dam, operation
of the cyanide destruction facility).
HVJV has also developed and is implementing the Watut River Impacts Management Project
(WRIMP), which is focused more on potential social and environmental impacts downstream of the
mine. The objectives of WRIMP are: (a) to identify all environmental and social effects related to
mine-induced impacts on the Watut River, (b) to manage and coordinate all relevant technical and
social studies, (c) to identify and implement measures to reduce adverse impacts, and (d) to
regularly inform all stakeholders of progress.
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Resulting from two ESAP site visits (23-24 July 2011; 21-22 May 2012), good briefings from mine staff
(23 July and 22 September 2011) and the WRIMP Advisory Committee (20 October 2011) and review
of key documents and reports provided by HVJV, ESAP had a good overview (if not all the details) of
the environmental issues facing HVJV and what HVJV is doing about them.
In this section ESAP comments on four key areas: (a) baseline information, (b) on-site environmental
issues, (c) off-site environmental issues, and (d) report on fish kill incident.
5.2.2 Baseline condition
A detailed assessment of the condition of the Watut River system, both environmentally and socioeconomically,
before the Hidden valley mining operations commenced is essential background
information for assessing the impacts of the operation on the downstream environment.
Unfortunately, even though an Environmental Impact Assessment (EIA) was prepared prior to
government approval of the project, there is a significant lack of detailed baseline information
outside of the immediate mining lease area.
ESAP has requested that HVJV prepare a single document that summarises the available information
on the baseline condition of the Watut River system before the Hidden valley mining operation
commenced. This information is needed to serve as a benchmark to assess:
• Short-term changes due to pre-mine impacts (mid-2007 to mid-2009);
• Current (2010-12) environmental condition; and
• Expected environmental conditions of the Watut River system in the future (e.g. 2015, 2020
and 2030).
ESAP requested information on the following baseline environmental indicators: general water
quality (conductivity, pH, DO, including BOD), contaminants (heavy metals, cyanide, acid rock
drainage (ARD), suspended sediment loads, geomorphology of the river channel, and condition of
the aquatic ecology (fish, prawns, macro invertebrates). ESAP further asked that this information be
reported spatially for the following regions: Upper Watut River, Bulolo River, Middle Watut River,
and Lower Watut River, since the changes in these different sections of the river are expected to
vary significantly.
An initial summary report on baseline condition was prepared by HVJV in May 2012, and ESAP is
working with HVJV to improve this report. ESAP intends to use this baseline information in the
preparation of a simple Environmental Report Card, the first to be completed in early 2013.
5.2.3 On-site environmental issues
HVJV has a detailed environmental management plan and an environmental improvement plan,
both approved by DEC. Although ESAP still has to assess in detail HVJV’s performance against these
plans, all that ESAP has viewed so far suggests that this plan is adequate and is being implemented in
a professional manner.
ESAP intends to undertake a more detailed assessment of the adequacy of the environmental
management plan and of the HVJV’s performance against these plans as part of the preparation of
the Environmental Report Card to be undertaken during the second year of ESAP’s operations (see
Section 7).
The following on-site environmental issues are of concern:
• On-site ARD mitigation strategy – ARD is already occurring in the waste rock dumps, with the
acidic seepage occurring. This is currently being treated with lime. Further engineering
investigations are occurring to develop a long term solution.
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• Reducing riverine turbidity at Nauti – a major issue with all mine sites is the management of
erosion and transport of sediment downstream. ESAP will further investigate (a) claims that the
DEC criteria for turbidity at Nauti are unrealistically stringent, and (b) potential for improving
management of sediment in the Watut River.
• Mine as a source of pathogens and sewage pollution – ESAP will investigate the adequacy of
current discharges of treated domestic waste water into the Watut River.
• Ensuring data quality – ESAP will investigate the adequacy of the quality control protocols
for the in-situ water quality monitoring and will also review the environmental monitoring
program as part of the preparation of the Environmental Report Card.
• Transforming data into information – ESAP will work with HVJV to better analyse the very
large amount of water quality data being collected; this will be done as part of the preparation
of the Environmental Report Card. Additionally, ESAP sees a need to better consolidate into
single focused reports the very large number of relevant company and consultant reports.
At this stage, ESAP believes that the major on-site environmental management issue that requires
continuing attention is the assessment and management of potential acid rock drainage (ARD) from
the waste rock dumps both during mine life and beyond.
ESAP has requested that HVJV prepare a document that addresses: the ARD issue, possible
mitigation strategies, and an initial assessment of the likely success of these strategies in reducing
ARD release during mining and beyond.
Figure 6:
Mixing zone for waste water from processing plant with lime.
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5.2.4 Off-site Environmental issues
The off-site environmental (and social) issues related to the HVJV mining operations are a concern
for the people living in the Watut River valley.
HVJV has identified a range of off-site environmental issues, contributed by an increased sediment
load in the Watut River catchment from the mine site during pre-construction phase. It appears that
material is still in the river and is slowly making its way to the Markham River and the Huon Gulf. The
sediment has contributed to a major decline in fish populations, adverse impacts on floodplain
vegetable gardens and forest die-back.
HVJV established a specific program of work - the Watut River Impact Management Program
(WRIMP), with extensive series of technical and social projects to mitigate the impact of the above
issue.
As the external and independent ‘watchdog’, ESAP believes it is vitally important that it works closely
with the WRIMP Advisory Committee to closely monitor the progress of this work and assesses its
adequacy, and reports its finding to both HVJV and all stakeholders.
ESAP considers that the following off-site environmental management issues warrant continuing
attention:
• Understanding the geomorphological responses to increased riverine sediment loads – the
significant sediment load added during pre-construction phase has resulted in major changes to
the channel form, resulting in loss of land and forest die-back, and additional over-bank
deposition. The changes due to this added sediment need to be better understood and some
assessment made of how long this will last.
• Understanding the fate of mine-derived sediments – the mine is still contributing a similar
amount of sediment as the Bulolo annually into the Watut River system. The fate of this material
and its associated heavy metals is poorly known, as is the time it will take for this material to be
transported through the system.
• The ARD-risk within the Watut River – there is emerging evidence that ARD may be occurring in
some locations in the Watut River. The sources of which need to be better understood and
mitigation methods identified and implemented as appropriate.
• Assessing recovery of the aquatic ecology – studies have shown that aquatic biota (particularly
fish and prawns) in the Upper Watut River have been significantly impacted by high sediment
load in the River, and possibly also increased metal concentrations. Studies are needed to
predict what recovery is possible and when. The continuous monitoring of heavy metal
concentrations in aquatic faunal tissues need to be implemented and results provided to
stakeholders.
ESAP believes that the major off-site environmental issue is the lack of knowledge related to the
ecological (and socio-economic) impacts of increased sediment load in the Watut River System, and
the difficulty for assessing how long it will take for the aquatic biota to return to a reasonably
healthy condition.
ESAP has requested that HVJV prepare an overview report focused on (a) quantifying the impacts on
the aquatic biota due to mine-derived sediment, and (b) prediction of the time it will take (if at all)
for the aquatic biota to return to a reasonably healthy condition.
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5.2.5 Fish kill incident
In February 2012 there were community concerns over fish dying in the lower Watut River at Chiatz
Village and in the Markham River at the Markham Bridge. There were claims that an accident
involving a truck transporting cyanide from Lae to the HVJV mine was responsible for these fish
deaths.
Upon request from the HVJV, ESAP undertook an independent assessment of the claims arising from
the truck incident and concluded that there was no evidence of cyanide spillage into the Watut
River. There is no question that large numbers of fish, prawns and eels were killed in the lower
Watut River at Chiatz Village on 15 February 2012 and in the Markham River at the Markham Bridge
on 16 February 2012.
However, ESAP could find no evidence to support the claim that an accident involving a truck
transporting cyanide from Lae to the HVJV mine site was responsible for these fish kills. In fact, all
evidence surrounding the truck accident suggested that no cyanide was released into the
environment. This is despite that fact that another assessment provided to the villagers and the
media reported high concentrations of cyanide in surface water and fish tissue allegedly taken at the
accident site and in the Markham River. ESAP was not able to obtain a report on this work and
because of this could not validate the claims.
There was however, evidence to suggest that the fish kills reported at Chiatz village were the result
of a very large increase in the suspended sediment (turbidity) concentration that was transported
through the lower Watut River over a 9-hour period on 15 February 2012. This slug of very turbid
water was probably caused by a landslip in either the Banir or Langimir River catchments a few days
earlier.
Because of the paucity of data, ESAP was not able to provide any assessment of the reason for the
fish kills that reportedly occurred in the Markham on 16 February 2012.
5.3 Social and Community
ESAP observed improvements in education and health of the communities as a result of the mine
operations and acknowledges HVJV’s positive and proactive approach in the provision of health,
education, water supply, farming including aquaculture and infrastructure services to the
communities that otherwise would have not been provided without the mine.
Figure 7:
A Water supply project provided to the communities by HVJV, Photo courtesy of HVJV.
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ESAP furthermore notes the business development opportunities provided by HVJV in awarding
contracts to landowner companies, the support provided to ensure success in L/O business
operations, infrastructure and other benefits provided outside the scope of HVJV mandate as a
measure of goodwill and social corporate responsibility.
The social and community issues identified by ESAP that need addressing collectively by HVJV and
other stakeholders are in the main:
• Empowerment of the Community and people;
• Future Generation Welfare; and
• Ongoing Landowner issues Management.
5.3.1 Empowerment of the people
Since the commencement of the Hidden Valley mine, the villagers living along the Watut River have
seen significant changes to the river and the environment. From two site visits conducted to date,
ESAP has observed both positive and negative impacts of current HVJV operations on the
communities.
HVJV sought to mitigate the environmental impact by paying compensation for food and cash crop
damages. The communities were also consulted to identify and put forward their concerns and work
with the company to address the development needs of the villagers and people.
The total number of landowners recorded for the Hidden Valley mining lease is 3,500 whilst other
communities along Watut River, the Bulolo Highway and the number of Settlers totalled 15,200.
As at 31 June 2012, a total of K 37.6 million royalties have been paid out by the HV Mine. From this
figure the Landowners received K16.54 million, while the 6 Bulolo District LLG’s received
K7.52million and the Morobe Provincial GovernmentK13.54 million. In addition to the royalties, a
further 4.1 million kina was also paid as compensation for garden damages claims raised by some
3,900 villagers.
With the influx of cash into the community, ESAP observed that the communities lacked the capacity
to deal with the modern cash economy. Many landowners are illiterate and even amongst the
literate; they lacked the capacity to make informed decisions on how to wisely use the large revenue
inflows.
Empowerment Issues
ESAP acknowledged HVJV’s and the government initiative in undertaking social mapping and
proactively addressing the concerns of the communities. The company continues to progressively
monitor achievements of the key indicators of community services in; compensation, community
projects, employment, engagement, business development, and benefit streams.
It is a common belief in rural PNG that one aspect of the mining industry desired by landowners is to
own and operate business spin off activities from mining operation. This notion comes with the
expectation that financial assistance should be provided by the company to set up the businesses for
the landowners.
Over time, any measurement of the achievements of the above initiatives will raise questions such
as; Will the people be better off after a period of time?; what is required now to enable the
communities to be satisfied with the benefit sharing outcomes provided by the company?
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To answer these questions, ESAP feels that people will generally be satisfied if they are provided
with the opportunity to manage their affairs including management of projects, future maintenance
and sustainability of assets provided by the company. The notion of empowerment of the Watut
River communities should increase the capacity of individuals and/or the communities to make their
choices and to deal with these choices. It should also allow them to gain the required knowledge and
skills and create an attitude that will be in tune with the changing lifestyle as a result of the mine.
ESAP however, cautions that given the overall low level of educations in the area, too much giving
could lead to creating the mindset of the community to become passive recipients of benefits rather
than being actively engaged in managing their affairs. ESAP considers that deliberate empowerment
strategies will need to be developed and implemented by HVJV. This should involve changing the
mindset of the people from one focused on consumption to one focused on savings.
ESAP notes the benefits generated from the mine, especially the increased cash inflow into the
communities has caused the communities and individuals to spend money quickly without due
regard for their future generations and personal welfare.
HVJV currently implements some aspects of empowerment. Examples can be observed in the
existing Landowner Business Associations that are managed and operated by the community.
Similarly the building of community infrastructure projects in agriculture, transport, fish farming,
health and education and their eventual transfer to communities. For the future, ESAP suggests that
assistance given after the transfer of assets should be subject to negotiation and agreement
between the company and the community.
Some communities visited from the Upper Watut, Middle Watut and Lower Watut areas have
expressed concerns about the company perhaps because they:
• Have been left out or overlooked in the compensation process;
• Have different expectations from the benefit scheme provided by HVJV;
• Want to see greater tangible infrastructure services such as feeder roads, health posts and
classrooms in disadvantaged communities;
• Lack the capability and capacity to organise communities to actively participate in spin off
benefits from the mine;
• Have made comparison of community benefits given to the communities along Watut River
corridor to other mining operations in the country;
• Experience unequal distribution of royalties between the male and female members of
communities.
It is ESAP’s view that such concerns have been raised and may continue to be raised because some
sections of communities lack information and knowledge on future savings and want to remain
passive recipients of benefits.
5.3.2 Future Generation Fund
To ensure future generation are considered beneficiaries of the mine, a fund has been established
for the future generation of the landowners of the mine villages namely Nauti, Kuembu and Winima.
This will help improve their livelihood, provide better health and education to the people and assist
in alleviating poverty through economic development and business opportunities.
ESAP acknowledges HVJV’s initiative in setting up the Benefit Share Agreement Trust launched
recently to cater for the development needs of current landowners with an initial company
contribution of K3 million and subsequent annual funding of K1.5 million thereafter. ESAP hopes that
BSAT will continue to exist during the life of the mine.
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The Hidden Valley Mine has, to date, provided over K37 million revenues in royalty and
compensation. Furthermore, the company has provided assistance in health, education, water
supply, aquaculture and agriculture to the affected communities. The company has also voluntarily
provided infrastructure support in road construction and maintenance, bridge repairs, river training
and foot bridges.
Future Generation Fund (FGF)
The intent of the FGF is to benefit the future generation of the Watut River communities. The FGF
can be used as a source of funding, to fund requests from communities solely for the purposes for
which the fund is designed for i.e. contributing to infrastructure, health and education needs of the
beneficiaries.
Depending on the level of funds and its sources of revenue, the objective of the FGF can include an
investment portfolio where excess funds can be invested in businesses or commercial properties
within PNG and internationally.
This would depend entirely on the nature and structure of the revenue stream paid into the Fund.
Clearly the contribution by HVJV cannot continue after the mine closure. Another source of revenue
into FGF need to be identified and explored in order to ensure that the future generation of the
Watut River Communities are taken care of by the mine.
FGF Governance
Like the BSAT, the FGF should be governed by a Board of Trustees that will need to achieve:
• Governance and transparency in the administration of the Fund;
• Accountability and reporting of the Fund’s activities;
• Develop a system of equitable distribution of the funding.
The FGF on the other hand would provide direct benefit to future Watut River generation by:
• Improving the perception of HVJV as a caring miner;
• Bonding the resource development link between HVJV and the people of Watut and Wafi
resources area and Morobe Province;
• Offering investor awareness of HVJV ‘s approach to its Corporate Social Responsibilities; and
• Lessen concerns continually raised by Nakuwi and the Middle to Lower Watut River
Communities.
The FGF should not become a slush fund for future leaders. Any legislation drawn up to administer
the future generations’ fund must be a constitutional law and not an Act of Parliament that could be
changed overnight.
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Figure 8:
A Future Generation Fund will benefit children.
5.3.3 Landowner Issues Management
Like all resource development projects in PNG, there are a number of landowner issues associated
with Hidden Valley. ESAP acknowledges that systems related to addressing landowner concerns have
been established and are ongoing by HVJV. ESAP is satisfied with the progress to date but
encourages continuous improvements.
5.4 Mine closure and implications
ESAP has noted indications by HVJV to prepare a Mine Closure Plan and views this particular piece of
work as a critical undertaking.
ESAP notes that Mine Closure Plans are generally left to the last minute. This was the case at Misima
which was a huge concern for the community. ESAP has raised the need for a draft Mine Closure
Plan over the past 12 months, and has been disappointed with the lack of traction by HVJV on this
issue.
6.0 Role of Government
6.1. Responsibilities of Government
The degree to which the country is able to optimize it’s socio-economic gains from mining is in large
measure dependent on the quality of the national regulatory regime and on the ability of
Government to effectively enforce the regime in the management of issues such as: environmental
impact assessments, monitoring associated with waste management, impacts to biodiversity and
habitat, social and community development, poverty alleviation, and benefit sharing/distribution
associated with communities immediately impacted by the mine.
ESAP has observed that a number of these Government responsibilities are being poorly carried out
is the case of the Hidden Valley gold mine. Our key concerns are discussed below.
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6.2 Ineffective mine monitoring by Government
ESAP observed from the reports provided by HVJV so far, as well as ESAP’s own observations on-site,
that the company is, in the main, complying with its permit conditions for the mine operations.
ESAP has also observed with concern that, despite an adequate regulatory framework, there is
clearly a lack of capacity on the part of Government to undertake effective monitoring to ensure the
operation of the mine is within compliance of the standards prescribed in the agreement.
ESAP observed that due to the lack of available resources for monitoring, the Government has
tended to rely entirely on HVJV’s monitoring data, rather than conducting its own periodic site visits
to determine compliance with standards set in the mine agreement.
ESAP considers this situation to be unsatisfactory since there is potential that the independence of
the Government scrutiny will be questioned.
6.3 Slow feedback from Government on Environmental Permit Compliance queries
ESAP noted that HVJV is complying with compliance requirements set by DEC under its permit.
However, ESAP has also observed that there are noticeable variations between DEC and ANZECC or
international water quality guidelines for the limits of various substances (particularly heavy metals)
to ensure adequate environmental protection of rivers. For example, the allowable concentrations
of copper and zinc under DEC permits are considerably higher than the accepted international
concentrations. Additionally, in the case of cobalt the DEC permit concentrations are set lower than
relevant international guidelines.
ESAP understands that HVJV have made representation to DEC to have the compliance levels for
cobalt reviewed, however feedback is still pending.
ESAP also noted that the Sediment and Erosion Control Management Plan has been under review by
the Department of Environment and Conservation since November 2012.
6.4 Ineffective Government oversight of the utilization of benefit flows from HVJV to impacted
communities
The activities undertaken by the company to date regarding compensation, infrastructure support
for community development, and voluntary benefit schemes directed at affected landowners are all
aimed at building a win/win relationship between the company, communities and Government.
According to HVJV reports, as at June 2012 K37.6 million in royalties has been paid out. Of this
figure, Landowners received K16.54 million, 6 Bulolo district LLG’s received K7.52 million and the
Morobe Provincial Government received K13.54 million. In addition to the royalties, a further K4.1
million was paid as compensation to 3,900 villagers for damages to gardens potentially caused by
the mine operations.
ESAP considers that Government assistance to landowner communities in the management of these
benefits has not been effective. Of particular concern is the use of the Royalty payments by
landowner groups for consumer items (e.g. alcohol), rather than investment in more productive
activities (e.g. proper housing to raise living standards).
ESAP recommends strongly that the Government immediately implements more effective
mechanisms to assist landowner groups to manage funds more productively than is the case to date.
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6.5 Ineffective Government oversight of the environmental destruction caused by alluvial gold
miners along the Bulolo and Watut Rivers
Additionally, ESAP has observed the environmental destruction that continues to take place through
alluvial gold mining activities starting from Mt Kaindi in Wau and continuing down both the Bulolo
and the Watut Rivers with what appears to be no Government mechanisms to monitor, control and
regulate these activities which in some cases may be illegal. The Government is mandated under the
Constitution to protect and ensure wise use of the natural resources and the environment in the
interest of development and in trust for future generations.
ESAP strongly recommends that, as much as, the government regulates and monitors the
performance of HVJV, it should also play a more dominant role in, not only regulating and
monitoring the environmental damage that is now occurring from alluvial mining, but also,
educating the public in the importance of protecting the environment.
7.0 ESAP Future Work plan
7.1 General operations
ESAP plans to meet four (4) times during the next 12 months.
7.2 Environment
Over the next 12 months, ESAP will:
- Continue to work closely with HVJV technical staff in its role to provide expert advice to
HVJV on priority environmental issues;
- Seek to establish an initial technical workshop between ESAP and HVJV technical staff in
Brisbane to resolve some of the outstanding issues with regard to environmental
information and data sought by ESAP;
- Seek to recommend commissioning of independent targeted reviews resulting from the
above workshop outcomes; and
- Seek to recommend commissioning of the development of an Environmental Report Card for
the Watut River system.
7.3 Social and Community
Over the next 12 months, ESAP will:
- Seek to recommend commissioning an independent review of existing baseline documents
relating to social and community aspects (e.g. Tanorama and Findlayson reports);
- Seek to recommend commissioning an independent review of infrastructure assistance
provided by HVJV, including linkages into Government policy and partnerships;
- Seek to recommend commissioning an independent review of the distribution of benefits
resulting from the Hidden Valley mining operation;
- Seek to further develop a Social and Community Report Card for the Watut River system.
7.4 Communications
Over the next 12 months, ESAP will seek to assist HVJV to develop a simple process on how best to
communicate the impact of the mine on the communities of the Watut river Catchment area.
There is an expectation for ESAP to be able to present the results of its analysis and assessment to
HVJV and mine landowners and the Watut communities.
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ESAP has undertaken to work towards developing an Environmental Report Card reporting on the
condition of the Watut River System and the impacts of the HVJV mine on this environment; This
Report Card is expected to be completed by the end of 2013.
To ensure information sharing is improved between HVJV and ESAP to foster better understanding
and appreciation of ESAP’s role in providing independent and impartial advice to HVJV, ESAP will
seek to meet with HVJV annually. This forum will ensure outstanding queries or concerns raised by
ESAP or HVJV over the course of the year can be discussed face to face and resolved.
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APPENDIX 1 - ESAP BIO DATA
Panel Members
Chairman
Sir Joseph J Tauvasa, KBE, MBA, MASc, BA (Econ & Policy) Dip. Public Admin
Chairman, South Pacific Brewery Limited. Director New Britain Palm Oil Ltd. PNG’s Councillor ABAC
(APEC Business Advisory Council). Former Roles included; Chairman - Air Niugini, Director Lihir Gold
Limited, Director Westpac (PNG) Ltd and Member of the CRA Advisory Board in PNG. He also served
as President of the Institute of National Affairs, President of the PNG Australia Business Council.
Previous work experience included; General Manager Shell PNG Ltd, General Manager Air Niugini,
Secretary, Department of Transport and Director, Civil Aviation.
Professor Barry T Hart, AM, Dip App Chem, Dip Chem Eng, BSc(Hon), PhD, FRACI
Panel Member with expertise in water quality management, aquatic ecology, environmental
chemistry and ecological risk assessment. Prof Hart is currently a member of the Murray-Darling
Basin Authority Board, and Chairs many scientific advisory committees in Australia [for further
details see www.waterscience.com.au]
Professor Simon Saulei, BSc (Hons. UPNG), MSc (Waterloo), PhD (Aberdeen)
Panel Member who is the founding and current Director of PNG Forest Research Institute, Formerly
the Dean, Centre for Research & Postgraduate Studies and Head of Biology Department at UPNG,
Technical Advisor to the Government of PNG, Member of editorial committee to scientific journals
and a member of various national, regional (Asia-Pacific) and international Scientific societies and
committees.
Professor Misty Baloiloi, CMG, BArch (UNITECH), MSc (UNSW), PhD (Monash), PNGIA
Panel Member who was recently the Vice Chancellor of the PNG University of Technology in Lae,
Papua New Guinea. Following a short stint in the industry as an architect and construction manager,
he joined academia and spent 28 years at the University, 17 years as Chief Executive Officer.
International engagements; National Point of Contact for UNESCO’s Regional Low Cost Housing
Network, Member of the Board of Trustees of Plant Resources of South East Asia, and participant at
the regional consultation on European Union Green paper on aid to the Pacific.
Contributions to public policy making and governance: Member of UPNG, Vudal, Lae Technical
College and UNITECH Councils, Member of Lae City Authority, Chairman of the Committee
responsible for framing the national vision Kumul 2020, Member of the Transitional Committee for
the newly elected Parliament,1997, Member of the PNG Vice Chancellors Committee, Member of
the Public Sector Reform Advisory Group, Member of the Commission for Higher Education, Director
of Cocoa and Coconut Extension Agency, Director of the National Analysis Testing Services, Director
of University Development Company, Chairman of the Organizing Committee for National Leaders
Summit in Lae, Independent Observer at the LNG Benefit Sharing Agreement Negotiations, and
Strategic Technical Advisor to the Vision 2050 Committee. Awarded the Companion of the Order of
St Michael & St George (CMG) in 1996 for services to higher education and state and an
Independence Medal in 2002. He currently serves as a Director of the Cocoa Coconut Institute Board
and is the Executive Director of Evilo Limited, a consultancy providing services in executive
leadership training and coaching.
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Ms Jean Kekedo, CSM, OBE, BA, Dip Public Admin, PPL, Certificate Community Development
Panel Member who is consultant to the Chief Secretary to the PNG Government on the Royal Visit to
PNG and as well as the Visit by the ARCHBISHOP OF CANTERBURY; and is Consultant to Hakau
Investments Limited. She is Chairperson of 3J&R Limited and Member Women in Diplomatic Service.
Ms Kekedo was formerly High Commissioner to the United Kingdom & Northern Ireland and
Accredited Ambassador to Egypt, Israel and Zimbabwe, Chairperson of the Commonwealth Executive
Committee Board of Governors, Chairperson of World Bank Funded `Targeted Community
Development Programme’, Chairperson OK TEDI External Advisory Panel, Advisor on Community
Awareness – BECIP(AusAID Funded), Managing Director PNG Forest Authority, Secretary Department
of Civil Aviation, Ombudsman Commissioner, Deputy Secretary Department of Prime Minister &
NEC, Director Office of Village Development, Provincial Community Development Officer. Jean is also
a member of a number of charity, community and educational organisations in the country.
Ms Freda Talao, LLB (UPNG), LLM (Bond) (PhD Scholar - UQ)
Panel Member who serves as a Director - Bank of South Pacific Limited, Director - National Airports
Corporation, Director and Chairperson - Airports City Development Limited: Previous Directorships:
Director and Chair - Individual and Community Rights Advocacy Forum (ICRAF), Director - Mama
Graun PNG Conservation Trust Fund, Director – Liklik Dinau Micro – Credit Trust Fund, Director - Civil
Aviation Authority (CAA).
Previous roles include Senior Legal Officer, Dept of Justice and Attorney General, Deputy Registrar
National Court of PNG, Executive Director, PEACE Foundation Melanesia, Executive Officer Family
and Sexual Violence Action Committee and Senior Development Practitioner, AusAID
Secretary
Mr Romias Waki, BSc (ECU); Dip - Econ Policy Analysis (NRI)
Mr. Waki has a Bachelor of Science in Environmental Management from Edith Cowan University in
Perth, Western Australia, and a Diploma in Economic Policy Analysis from the National Research
Institute, Port Moresby. He worked for eight years with the Australian Agency for International
Development from 2002 to 2010 reaching the position of Deputy Program Director before joining
Morobe Mining Joint Venture’s Community and Regional Development Program as Manager from
January to August 2011. He was appointed as the Secretary to the newly established External
Stakeholder Advisory Panel in July 2011.
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