Tuesday, April 02, 2013

PNG government to take charge of OK Tedi funds


AAP PNG Correspondent

THE government of Papua New Guinea will restructure the management of the Ok Tedi copper mine to ensure its funds are managed in PNG and not in Singapore, Prime Minister Peter O'Neill says.
In a two-page article written by the PM in Port Moresby's daily newspapers on Tuesday, Mr O'Neill vowed to end what he termed "secret arrangements" between the mine's former owner, BHP Billiton, and the PNG Sustainable Development Project.

The Ok Tedi copper mine.
The government of Papua New Guinea will restructure the management of the Ok Tedi copper mine.
The PNGSDP was created by BHP in 2002 to manage OK Tedi's profits on behalf of the people of Western Province, following massive environmental damage caused by the mine.
OK Tedi's mining lease expires at the end of 2013.
"When the lease expires, the national government will put in place management arrangements that end any secret arrangements, and ensure that the people of Papua New Guinea, including the local landowners, have a say in the mine's future and its management," Mr O'Neill said.
"We will ensure the PNGSDP is managed in Papua New Guinea, and its funds are held in Papua New Guinea, and used transparently for the good of the people of the Fly River Province, and the nation generally."
The $US1.4 billion ($A1.35 billion) PNGSDP fund is currently held in Singapore, where the company is registered.
Mr O'Neill wrote the article in response to a Fairfax newspaper column last week which described the PNGSDP as "by far the biggest act of corporate philanthropy in Australian history".
BHP had nothing to be proud of, Mr O'Neill said.
"Nor can BHP be proud of its majority ownership and managerial control prior to 2002 when it divested itself of its majority shareholding, and pretended - and I use the word advisedly - to end its control over the mine," he said.
"The establishment of the PNGSDP was designed by BHP to keep control of the mine, and the direction of its profits, principally through the PNGSDP, over which it clearly exercised effective control."
Mr O'Neill said past claims by BHP that it had no say in running OK Tedi and the PNGSDP were untrue and that the company held effective control over the mine "through a myriad structures".
In 2010 the OK Tedi mine was the largest single contributor to PNG's tax revenues, to the tune of $US543 million.
In November, former chairman and noted economist Ross Garnaut resigned from the PNGSDP and was replaced by former prime minister Mekere Morauta.
Professor Garnaut was also banned from PNG by Mr O'Neill after he implied publicly that the government would not use the fund's money wisely.
BHP announced in September last year it planned to no longer appoint board members to the PNGSDP.
Future directors would be chosen by the board, which also includes PNG government nominees.
However, it is understood BHP must agree to any changes in the core terms of reference under which the trust operates.
PNG's national government and the provincial government of Western Province jointly own a 36.6 per cent share of OK Tedi, while the PNGSDP currently holds a 63.4 per cent stake.
Both the PNGSDP and BHP have declined to comment.

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