Is the resources boom good for Melanesia? (report)

A report and commentary by Dr Tess Newton Cain* on a panel discussion convened on 4 February 2013 by the State, Society and Governance in Melanesia Program. [See an account of the presentation by panelist Dr Matthew Allen on the CAP website.]

The members of the panel** represented a number of disciplinary approaches including economics, anthropology and law. With the focus on mining much attention was paid to PNG and, more particularly, Bougainville although other countries (Solomon Islands, Fiji and New Caledonia) were also discussed. Although this event was billed as a debate, the format was that of a series of presentations and it was a little disappointing that there was no real interaction between the speakers.

A number of key messages came through in this panel discussion, but there were also some relevant issues that did not receive any attention, possibly due to time constraints.

There is no denying that extractive projects are and/or have the potential to be ‘big ticket’ items in PNG and elsewhere the Pacific and this was reiterated by many of the panellists: they are high investment, they can generate huge profits, they become significant (often the most significant) contributors to government revenue, they have huge environmental and social impacts and they also have marked effects in the political space of the countries where they operate. It may be a vexed question as to whether having resources that the rest of the world wants is a blessing or a curse but the reality is that several of the countries of Melanesia do indeed have them and need to identify and address the challenges that this brings.

The potential for conflict arising in relation to mining and other resource extraction projects was explored. Conflict is possible in a number of areas: between national and local governments, between landowners and mining companies, between different groups of landowners, between corporations and workers. One area of contestation that was not explored in any detail during this discussion was between mining companies and regulatory bodies, which most likely reflects a lack ‘assertive’ governance in this context. This in turn may indicate a lack of capacity within the regulatory environment in a given country.

The issue of capacity is significant. Whilst it was noted that the Mines Department in PNG had 20 members of staff all of whom were doing a good job there was a general consensus that it was a huge challenge for Pacific island countries, especially the smaller ones, to have the capacity to act assertively in a highly technical context and when dealing with entities whose financial resources (giving them access to countless other resources) can appear to be endless.

A number of spin-off aspects of the capacity issue can be identified. First, it was generally agreed that because of the high economic stakes involved, there were quite obviously incentives for various parties to seek to maintain an environment of weak or patchy capacity with the opacity and opportunities for rent seeking that this provides. A further issue relating to capacity is one that has been noted elsewhere in relation to public finance management. In countries with small populations it may not be possible to have sufficient specialists with the requisite degree of technical expertise to be able to equip agencies to deliver the regulation and other management required to ensure that risks associated with mining are mitigated and the transformative opportunities for development are maximised.

One issue of capacity that was not discussed was whether the mining companies and their representatives have sufficient capacity to engage in the cultural environment in which they (seek) to work. There was reference to the apparent acceptance (under the guise of corporate social responsibility) that mining companies would contribute to the communities they join whether through improvements to infrastructure or supplementary delivery of essential services such as health and education. However, there are other areas where these entities may be hampered by their own lack of capacity. One such area is negotiation with landowners, especially where land is subject to a dispute. Another aspect is the negotiation of the cultural space and practices of communities – to ensure that negotiations are culturally appropriate and contribute to meaningful and beneficial relationships between stakeholders. Reference was made to the past disappointment of community groupings on Bougainville who had tried to meet with Bougainville Copper Ltd but the executives had not shown up. Examples may also include  a lack of recognition of the importance of talking face to face (and sometimes doing so numerous times) in Melanesian societies. Similarly, we were told that the people of Bougainville had expressed a wish that mining should resume there and that it should be done by BCL (very much along the lines of ‘better the devil we know’) but in order for that to happen it was hoped that a customary ‘sorry’ would be conducted so that the company could acknowledge the mistakes it had made in the past. There is scope here for the ‘cultural capacity’ of mining companies to be developed to mitigate the risk of conflict arising.

A couple of other issues were notably absent from this discussion.

One was the lessons that might be learned from the Timor Leste experience. Particularly noteworthy is the recent work that has been done (in challenging circumstances) to ensure that mining companies are paying appropriate taxation in the country to whom resources belong. This is particularly important in light of what we know about the potential for tax revenues to far exceed the dollar value of aid – some of these challenges are discussed here.

The other issue that was not discussed was the significance or otherwise of the Extractive Industries Transparency Initiative (EITI). Timor-Leste is listed as EITI compliant but none of the Melanesian countries are yet signatories to the initiative. Oxfam has recently highlighted this as a means of ensuring that revenue flows from mining and other resource extraction projects contribute to equitable development rather than being diverted by rent seeking behaviours. It is unlikely that the IETI is any sort of silver bullet in this regard, but it will be interesting to see if it becomes a key piece in this puzzle.

* Principal at Devpacific and a Research Associate at ANU’s Development Policy Centre.
** The participants in this panel were: Prof. Brij Lal (Chair), Director of the School of Culture, History & Language, ANU; Dr Matthew Allen of SSGM, ANU; Prof. Satish Chand, School of Business, UNSW; Associate Professor Colin Filer, convenor of the Resource Management in the Asia-Pacific Program, ANU; Dr Chris Gregory, Reader in Anthropology, ANU; Dr Kylie McKenna, ANU; Anthony Regan, Fellow of SSGM, ANU.

This entry was posted in ANU PI, Events, Reports and tagged , , , . Bookmark the permalink.