Threat to Shut Kainantu Gold Mine

Threat to Shut Kainantu Gold Mine

November 24th, 2004

By Jaive Smare, PNG Post-Courier

A landowner group of the Kainantu gold mine has threatened to stop the mine unless the operator honours its commitments in an agreement with them.

The Bilimoia Landowner Association said the mine's operator, Highlands Pacific Limited, has "failed to meet many of its obligations to the landowner group" contained in an agreement signed between the two parties last year.

The association's executive director Bernard Kelonti said unless the company honour these obligations, they would shut down the mine.

These obligations included the awarding of contracts to the association as either stand-alone contracts (such as for catering and security) or joint venture contracts, the employment and training of landowners on all sectors and stages of the project development.

Mr. Kelonti said prior to the signing of the agreement, Highlands Pacific and the landowners were at loggerheads over the issue of the 45 per cent equity the landowners wanted in the project.

Eventually, with the intervention of Mining Minister Sam Akoitai, who appointed former governor of Southern Highlands Anderson Agiru, to arbitrate the discussions, a settlement was reached on the equity issue.

The landowners decided to reduce their demands to 5 per cent equity in the mine project.

In return the company would ensure that the landowner association, through its business arm, be accorded stand-alone or joint venture contracts.

Mr. Kelonti said so far the company had not honoured the spirit of the agreement.

He said the landowners also wanted to see the company meet "verbal" commitments that its representatives made during discussions about the agreement.

These included the provision of K10,000 seed capital for 10 clans to register business operations, two Landcruisers as gifts to the landowners for signing the agreement, and the operator's reimbursement of K35,000 the association has spent in 2002 to draft the agreement containing the commitments in dispute and a separate compensation agreement.

Mr. Kelonti said the association had delivered a petition of 13 demands to the management of Highlands Pacific last Thursday, which it wants met in seven days.

In the petition, the association warned that if the demands were not addressed satisfactorily, the mine would be forced to halt all activities and the National Government would be petitioned to forfeit several licenses to the Kainantu Gold Project held by HPL to the Bilimoia Landowner Trust Company.

A spokesman for Highlands Pacific said the company had met all its obligations under the agreement to all the stakeholders in the project.