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Saturday, March 3, 2012

Establishing the Papua New Guinea (PNG) Deep Sea Mining (DSM) Citizens’ Advisory Council (CAC)



Media clip: Page 32 Post_Courier, Friday March 2, 2012

By Richard Steiner, Professor
Anchorage, Alaska
December 1, 2011
[richard.g.steiner@gmail.com]

Introduction

The Nautilus Minerals Solwara I project set to commence with the first commercial deep sea mining (DSM) development off New Ireland, PNG represents the first such venture anywhere in the world ocean. Many residents of PNG and others are concerned about the project’s potential impacts, prompting one seabed mining forum along the north PNG coast in 2008 to adopt a resolution opposing the project altogether. Many others in PNG remain very concerned about this new industrial development in their marine environment.

In general, large-scale mining projects receive insufficient governmental and citizen oversight. While mining companies have significant financial, technical, and political resources with which to advance their business interest, many governments and civil society often do not. And in the absence of effective oversight, companies have been known to lower social and environmental standards to reduce costs and maximize short-term financial returns, leaving local people, the environment, and governments unfairly disadvantaged and exploited. This insufficient oversight and low standards can result in acute damage, and long-term, chronic degradation. And a lack of sufficient public engagement often leads to mistrust among the major actors in a project – the mining company, the government, and the public. That deep sea mining is far offshore and in an unfamiliar deep water environment, by its very nature it will generate suspicions and misunderstandings among the public.

To correct this problem, local citizens/stakeholders/the public need to be actively involved in the oversight of industry operations that affect their lives, and to do this they will need an organization with money, staff, authority, broad representation, and independence. Thus, it is proposed that the federal government of PNG require the establishment of the Papua New Guinea Deep Sea Mining Citizen Advisory Council, in order to provide informed public oversight for the offshore mining sector, to be funded either by the mining company directly or the government. It is envisioned that the PNG/DSM/CAC will engender a level of trust and understanding among all parties in the conduct of deepsea mining in PNG. And the group will provide a powerful example to other nations regarding how to effectively engage the public in the deepsea mining industry.

Below, for discussion purposes, is a suggested model for the PNG/DSM/CAC:

Proposed Structure and Function of the PNG/DSM/CAC

The PNG/DSM/CAC should be structured to give local citizens / the public a direct voice in the corporate and governmental decisions that affect them and their communities with regard to deep sea mining off PNG. The group should become the primary conduit through which government and industry communicate to the public on all DSM issues. In a real sense, the DSM/CAC should become "the eyes, ears, and voice" for the local public on all DSM issues.

Board of Directors

The PNG/DSM/CAC should be directed by a Board of Directors (either volunteer or paid), consisting of members representing the communities and major citizen/public constituencies potentially affected by any DSM project – the stakeholders. These board seats might, for instance, represent indigenous people, commercial fishing, conservation groups, women’s organizations, recreation, tourism, tribal entities, and so on. Once the stakeholders groups that are potentially affected by DSM in PNG have been properly identified, then the PNG/DSM/CAC board members should be chosen by, and serve entirely at the pleasure of, their respective constituencies. Representatives should not be chosen by industry or government. The PNG/DSM/CAC may also have several ex-officio, non-voting, board members representing the relevant federal and provincial government agencies. The Council should meet regularly (e.g., quarterly), and at each meeting representatives of industry and government should be asked to report on their operations and listen to citizens concerns. This regular interchange provides a line of communication vital to the interest of each constituency, and results in a constructive climate for problem solving. The board should be responsible for hiring staff, making recommendations on DSM, and allocating the annual budget. For the PNG/DSM/CAC, I would suggest that a Board of approximately 8 or 9 people may be appropriate.

Staff

The day-to-day activity of the PNG/DSM/CAC should be the responsibility of a small paid staff. Depending on the desire of the Board, staffing can include an executive director, deputy directors, public information manager, community liaisons, finance manager, project / committee managers, and administrative assistants. The staff serves at the pleasure of the Council's executive director. For the PNG/DSM/CAC, a modest staff of perhaps 5 full-time employees could be a starting point.

Committees

The PNG/DSM/CAC could establish technical committees, each with a dedicated staff liaison. These committees should be appointed by the Board based on expertise, interest, and willingness to serve. Committees could, for instance, cover public revenue from DSM, offshore environmental monitoring (with trained observers on the mining ship/s), near shore monitoring, exploration, transportation, etc. The committees should meet regularly to discuss any and all issues within their purview, draft and recommend policy actions to the Board, and conduct research approved and financed by the Board.

Responsibilities

The broad mission of the PNG/DSM/CAC should be to engage citizens/the public in ensuring the highest standards of environmental and social responsibility of any and all deep sea mining projects in PNG. The PNG/DSM/CAC should be empowered to provide oversight on all aspects of DSM development in the PNG region—permitting, exploration, production, transportation, refining, public revenue collection, risk management, and environmental compliance.

The PNG/DSM/CAC should provide oversight, advice on issues such as the following: where to allow development, rates of production, Best Available and Safest Technology (BAST) standards, accident prevention and response preparedness, liability, environmental monitoring, regulatory reform, revenues and taxes, and so on. It should have a voice in the selection of export routes and transportation methodologies. The PNG/DSM/CAC should review and submit written comments on all project operations. This should include government legislation, regulations and permits, and industry policy and procedure, and industry financial matters— revenues, costs, taxes, royalties, etc.

At the request of its Board or committees, the PNG/DSM/CAC should commission independent scientific studies and reports on issues of relevance to the public, the media, government agencies, legislative bodies, and the industry. This research should form the basis of policy recommendations. Conducted jointly with government and industry, this research will foster a more cooperative spirit among these groups, minimizing any potential conflict. And the PNG/DSM/CAC should provide technical observers onboard the mining ships (much as many offshore fisheries across the world). The PNG/DSM/CAC should monitor and play an active role in all industry and government oversight for the project.

The recommendations of the PNG/DSM/CAC should be advisory and non-binding, and while government regulators and industry would not be required to adopt the council's advice, it is hoped that many recommendations will be adopted if they derive from thorough research and vetting by the council's process. All of the PNG/DSM/CAC work should be open to the public on whose behalf it operates, and interested citizens should be allowed to attend and provide public comment as well. A robust public outreach and communications effort should be developed by the PNG/DSM/CAC, with a website and regular newsletters, etc.

Funding

Substantial and stable funding for such a group is critical. The budget should be commensurate with the responsibilities of the PNG/DSM/CAC, and include sufficient funds to commission independent research and technical reports as the Council deems appropriate. One thing that distinguishes this concept from other advisory structures, it is that it has sufficient funding to conduct its work. Typically, about 1/3 of the annual budget is devoted to staff; 1/3 to administration (office rent, supplies, equipment, audits, etc); and 1/3 for research and contracts.

For discussion purposes, it is proposed here that the PNG/DSM/CAC have initial funding of at least 1 million Euros / year as base funding to begin its operation, with the opportunity to adjust this amount in the future as the Council develops its programmes.

There are two proposed mechanisms for financial support of the PNG/DSM/CAC:

• Direct funding by industry: Funding could come directly from the companies conducting DSM in PNG (Nautilus for now). Industry funding would be best in the form of an endowment from which the PNG/DSM/CAC could operate off the investment earnings, but annual funding is also possible. The government can assist in this by allowing a tax credit, by which the company can reduce its tax payments to government in order to support the DSM/CAC.

• Government support: The federal government of PNG can finance the PNG/DSM/CAC from public revenues derived from the DSM projects, and/or provide tax credits to the companies as mentioned above.

Avoiding corruption and co-option

To prevent financial corruption, the DSM/CAC should commission annual financial audits by independent firms, and report results in their publicly available annual reports. As well, clear conflict of interest and disclosure policies for directors and staff should be instituted. To minimize the risk of industry co-option, CAC members should remain accountable to their respective stakeholder groups, and have high standards of transparency and openness. Ultimately, it should be the citizens groups represented in the DSM/CAC that control the process - not government or industry.

Lessons

There have been many important lessons learned from existing CACs that are relevant elsewhere (www.pwsrcac.org), as follow:

• Establishment of the PNG/DSM/CAC should be required by government in order for the project to be in legal compliance.
• The PNG/DSM/CAC should exist for the lifetime of the DSM industry in PNG.
• Sufficient funding is essential.
• The PNG/DSM/CAC can be independent with industry funding, with proper safeguards. Funding should come with no strings attached.
• The PNG/DSM/CAC should represent all stakeholder groups that are potentially affected by any/all DSM operations in PNG.
• Board members should be appointed by, and serve solely at the pleasure of, affected stakeholder groups -- they should not be controlled by industry or government.
• Board members do not have to be experts.
• Cooperation works better than confrontation.
• Conflict is inherent, but common ground is possible.
• Agreeing on how to disagree reduces conflict
• Logic makes passion persuasive, using science, etc.
• A clear mission and identity should be established early on

Conclusion

Given the obvious benefits to democratic governance and sustainable development, it is strongly recommended that the federal government of PNG require the establishment of a Papua New Guinea Deepsea Mining Citizens Advisory Council (PNG/DSM/CAC). The importance of this Council is paramount— it is not government, it is not industry, but it is to be established and operated solely by and for the citizens of the region. This council will provide an unprecedented level of transparency and informed public participation with regard to mining activities - an important prerequisite to achieving a prosperous, equitable, just, and sustainable society.

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