PNG RECOVERS ‘PATHETIC’ PROFIT FROM GOLD MINES

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PNG RECOVERS ‘PATHETIC’ PROFIT FROM GOLD MINES New Ireland given 2 percent of annual sales

PORT MORESBY, Papua New Guinea (The National, March 16, 2009) – It is shameful how the State and mining giants are making "obscene amounts of money" while little of the benefits is going to the provinces and local areas in which the mining occurs, New Ireland Governor Sir Julius Chan has said.

"In New Ireland, we receive pathetically little of the revenues and profits that flow from the Lihir gold mine," Sir Julius told the Bank of Papua New Guinea (BPNG) board meeting in Kavieng, New Ireland province, last Wednesday.

He said New Ireland received 2 percent of freight on board (fob) annual sales in royalties and 1 percent fob annual sales in special support grant (SSG) funds.

Sir Julius said in recent years, the State had, unilaterally and without consultation with other parties to the Lihir memorandum of understanding, tried to reduce SSG from 1 percent to only 0.25 percent.

"So, in total, the people whose land is being ripped apart, who are going to be left with a devastated island and very little income in 20 or 30 years when the mine closes, who suffer all the negative social consequences of what the State calls ‘development’, are receiving a total of less than 3 percent of annual sales.

"At the same time, the State and the company make almost obscene amounts of money from the destruction of the land of those they pay only a pittance to," Sir Julius said.

"This is the agreement reached by the State on ‘behalf’ of the landowners and the province. And we do not even get this pittance on a regular basis," Sir Julius said.

He said that for nearly 15 years, the State had simply ignored its legal obligations to provide these payments to the provinces and landowners.

He said that at present, the National Government owed New Ireland more than K350 million in back payments for SSG, major infrastructure and

Infrastructure Development Grants.

"This is the price we pay for having the State claim ownership of all minerals on, or under, the land and sea of the country. This is the playing field the State insists we play the game on," he said.

Sir Julius said New Ireland’s budget for this year, which included K45 million [US$16.4 million] to rehabilitate infrastructure like roads, was written on the assumption that the province would finally get some of these arrears paid this year.

He said the provincial government had been in intense negotiations with the National Government to come to an agreement on the exact amount of these arrears.

Sir Julius said the National Government had promised to meet some of these arrears this year and the rest over the next several years.

"With these funds we will be able to finally begin to meet the legitimate expectations of our people for decent infrastructure, decent health care and a decent education system," he said.

The National: www.thenational.com.pg/

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