Introduction
The case study on Ok Tedi Mining Limited (OTML) in Papua New Guinea (PNG) presents an investment that has caused both positive and negative impacts on the society in which it operates. When such industries set up in a place, there are always obvious effects that occur to the natural environment, the local members of the society, the government and the sponsors.
For example, members of the surrounding community will be displaced to create room for the construction of the plant. On the other hand, the same plant can offer jobs to the locals thus acting as a source of income.
Evidently, any establishment that has benefits to a given group of people must also experience some shortcomings from other sectors. In PNG, OTML has directly employed over 1500 citizens of PNG and remains the only cost competitive producer of copper in PNG (Perspective and Links: Ok Tedi Mining Limited 2008).
However, the plant has caused adverse effects on the environment such that there have been proposals to close the plant by mid-2013. This idea has elicited debates between two groups of people – the proponents and opponents.
Others believe that the plant has caused major positive changes on the lives of PNG citizens and the PNG government in general. Different organizations have come up with different effects that the company has caused on the local village, the natural environment, and the entire management of OTML.
This essay analyzes the responses that the government of PNG, OTML, and other interested bodies has taken towards the on going debate of whether to close the plant or not. In connection to the responses, the essay will vividly discuss the effects of the plant on the environment, indigenous people of the village, the government, and many others.
PNG Government Action
OTML believes that the construction and operations of the firm has affected close to 155 communities in the western province of PNG. Therefore, it has rolled out a compensation and development package plan for the affected communities.
The company has been striving to balance between continuous operation to offer broad economic and social benefits to all stakeholders, and the continuous impact of the mine’s on the system of Fly River. These benefits have put many organizations and the OTML management at crossroads on the effect of closure to the local communities who were employed in the company.
The government of PNG, for instance, had to submit a World Bank Report on the effects of OTML on the environment, local communities, and the economy in a broad-spectrum (Perspective and Links: Ok Tedi Mining Limited 2008). In the meantime, the government vowed to take charge of the firm to terminate the idea of managing OTML funds in Singapore.
The fund management in Singapore occurred since the company has its legal registration in Singapore. The government has taken numerous steps towards protecting the environment of the western part of the country.
For example, in 2002, the government and BHP facilitated the formation of the PNG Sustainable Development Project (PNGSDP) to control the future destructions to the environment in order to make the environment sustainable to the present and future generations.
On the other aspect, OTML has been earning the country a significant amount of revenue as it represents 32% of the total exports. The company has also been using over 50% of its profits to invest on the people of Ok Tedi, PNG and western province in particular.
The closure of this company will directly affect the country’s returns. PNG will have to look for alternative means of recovering the funds from the mining industry and even finding the alternative means of absorbing the 2000 people who the firm directly employed (Perspective and Links: Ok Tedi Mining Limited 2008).
The government of PNG should take drastic steps to restore the state of Ok Tedi River and the Birim River that have been affected heavily by the effluents from the industry. The wastes from the mines have formed thick grey sludge on the Fly River System.
Water contaminations have seen a massive decrease in the number of fish in the area. The navigation systems of the rivers have also been compromised; the mines that found their way into the river have raised the riverbed. Of major concern is the massive flooding that has washed away the forest covers, bananas, and taro plantations in the area.
The food crops are the main diet for the locals. It is on record that the government had earlier rejected the idea to complete building the dam that was to act as a reservoir for settling heavy metals. This negligence saw the rise in copper concentration in water above the World Health Organization (WHO) standards. The government has to launch an initiative that will involve the locals in planting trees in their residential places (Burton 2011).
This rehabilitation program should commence after the closure of the mining company. Even though it will take several years to clean the toxics in the environment, the government must ensure that the sustainability program continues under a stringent policy.
The case of OTML represents an example of environmental injustice on the locals. When the company was being built, the locals had to give up their lands to pave the way for the investment. This move led to the displacement of the local communities.
Notably, in PNG, all lands remain under the control of the central government; therefore, the ruling elites can displace the occupants at will. Later, the negative effects of the OTML had a direct impact on the same locals who had been displaced to other unproductive lands, yet the ruling elites became the major beneficiaries of the project (Burton 2011).
The government of PNG should also address the situation of inequality in sharing of resources. In this program, the local community should be given preference over other stakeholders. In addition, the government should devise an effective resettlement program; for instance, buying lands to resettle the displaced persons and even taking care of the changing market and replacement value.
Compensations should not be in terms of cash since low-income earners are unaccustomed to large influxes of cash. The government should also note that compensation only cannot re-establish the livelihoods of displaces as this have been witnessed in other resettlement programs like in Kiambere in Kenya, the Sardar Sarovar dam in India and Akosombo dam in Ghana (Wilmsen, Webber & Yuefang 2011).
Since the life cycle of mines involves exploration, development, production, and closure, it is obvious that OTML will close its operations in the western province of PNG. Consequently, the PNG government should educate the locals on sustainability of resource development.
This communal engagement will empower them to understand the essence of mines closure in order to plan for their future livelihood. The community will also support the closure to support economic sustainability for the present and future generations. Notably, the closure of OTML does not imply closure of the surrounding community.
The government should devise an inclusive economy that will accommodate the locals who had jobs at the mine. Apart from the local community, the government should re-engineer its plans on how to maintain the economy during post-closure of the mine since most of PNG’s foreign exchange come from this sector.
Therefore, the plan on OTML implies transformation of the entire economy of the Republic of Papua New Guinea and shift of focus to other industries.
The World Bank’s Intervention
The World Bank has been a key financier of the OTML in PNG. In early 2000, the international institution called for the closure of OTML following the Baia Mare Gold Mine Cyanide Spill in Romania that contaminated water and even caused devastation in three European countries (World Bank Calls for Ok Tedi Mine Closure Following Romanian Cyanide Spill 2000).
At the time, BHP was intentionally dumping the mineral wastes in Fly and Ok Tedi rivers. The World Bank must instill the sustainability policy in order to protect the people of PNG and the natural creatures living in the environment. This approach is in line with its leading role on social and environmental sustainability.
Water being a precious product for creating and sustaining life, must receive unchallenged protection from the entire world. The World Bank should overhaul its policies on OTML project as it causes harm on local community and the natural environment (Herbertson 2010).
For instance, the institution should implement the policy that touches on the local community; the policy takes into concern the rights of a society with respect to the initiation of the new project in the area. This development plan will assist the indigenous people to foresee the future development line of their community.
In addition to withdrawing its financial support, the World Bank should use the Environmental Impact Assessment (EIA) to convince the OTML and the people of PNG on the benefits of the closure of the industry.
On the other front, the international institution can divert the financial support towards empowering the indigenous people during the post-OTML era. This funding should take the form of the involuntary resettlement plan that the PNG government should monitor closely to ensure it meets the intended objective (Perspective and Links: Ok Tedi Mining Limited 2008).
Further, the World Bank should convince the Broken Hill Proprietary (BHP) mining company to focus on the human and environmental effect of the plant, as opposed to financial consequences. Clearly, the negative effects that arise due to the operation of the plant are long-term in nature and require more financial support than the financial benefits that society and other stakeholders obtain from the plant.
Some of the global crises that result from such projects include financial instability, climate change and food insecurity (Herbertson 2010). Therefore, the World Bank should strive to align the environmental and human rights norms of PNG to the international standards.
Sustainable economic development remains a significant issue that all OTML stakeholders should focus on; therefore, the World Bank should be responsible for the concerns of the indigenous people that the project has directly affected. The institution should not facilitate the closure of the OTML in a manner that seems to be about overcoming hurdles and minimizing expenses.
The process should be about managing risks and minimizing harm to the indigenous people and the natural environment by creating opportunities that the locals can depend on after the closure of the mine. Based on the Independent Evaluation Group (IEG) report, the World Bank should ensure that the safeguard strategies assist the other stakeholders in preserving the environment for sustainable economic development (Jorgensen 2006).
Markedly, the development of the OTML in the remote area of Northern Fly District has made the community depend on the mine for everything. The social and economic benefits that the closure of OTML will bring to the locals are essential due to the crucial role that OTML has held in the regional economy and creation of opportunities.
Therefore, the World Bank should use a universal sustainability program that will encompass the future livelihoods of the indigenous people (Carr & Filer 2010). In essence, the World Bank should incorporate the people of PNG in the closure plans of OTML so that the locals remain economically stable.
OTML’s Role
The Ok Tedi Mining Limited (OTML) is the major shareholder in the mine. They responded negatively to the closure of the project citing the benefits that the mine has brought to the stakeholders. The response will continue to harm the environment and the locals; for example, the gradual but steady change in climate of the western province could become more eminent than before. Climate change causes drought and famine.
The locals who earlier depended on farming for their livelihood will not be able to obtain crops to support their needs. The emissions from the company and chemical leakages into the environment reduce the fertility of soil thus becoming bare.
The chemicals also leaks into rivers hence killing the living organisms and creatures like fish. Contaminated water is also dangerous for human consumption as it can cause diseases like cholera, typhoid, and bilharzia. If such water gets into contact with objects, corrosion occurs. Clearly, OTML’s reaction on the closure of the mine will have devastating effects on all the stakeholders.
Even though the plant is a key pillar in the PNG’s economy, this support is not a long-term strategy in comparison to the short-term and long-term negative effects of the operations of the company on western province in general (Jorgensen 2006).
Instead, this company should engage in environmental-friendly practices that foster sustainable economic development for all. For instance, the company can respond to this closure by investing on the local community through environmental conservation programs.
Intervention from Local Organizations
The effects of climate change will directly overburden the government of PNG and even the entire OTML since resources will be expensive to acquire. When resources become expensive, there must be an increase in income levels to cater for the change. Evidently, the company will have to raise the wages and salaries of the employees in order to retain them in the industry.
From this perspective, the profits and other benefits that the company realizes will be used in supporting the ‘expensive’ staff. The staff will be ‘expensive’ due to the effects of climate change that has reduced food production making such products costly. The growing population of PNG requires adequate food production that should be produced through sustainable means.
According to Robert Malthus, population growth in developing nations is the cause for food scarcity. When food becomes a scarce resource, conflicts result thereby leading to war (Verhoeven 2011). The scarcity results when population outpaces output. Therefore, OTML has to consider the above consequences when engaging the local community in the project.
The numerous environmental effects demonstrate the reason for the closure of the mine. Other grassroots organizations like Papua New Guinea’s Non-governmental Environmental Watchdog Group must also understand that destruction of riverbanks and loss of biodiversity is due to the operations of OTML. As a result, the closure will help in creating a sustainable economy.
These organizations should put BHP to task on rehabilitating the environment like in other developed countries. PNG is a developing country; therefore, BHP may be reluctant at compensating the damaged communities.
The surrounding ecosystem requires a full-scale clean up given that BHP was openly pumping contaminated water into the river. The stakeholders in the mining project in PNG ought to understand the cost-benefit analysis of continued operation of OTML versus the closure.
Conclusion
From this essay, the environmental concerns and the effects on the local community makes it necessary to close the company. Evidently, BHP had been careless with waste management in this developing country thereby putting the life of the community at high risk.
This practice does not minimize risks on all shareholders and should not be tolerated in the future projects in PNG. The mining industry should apply safe environmental practices in their operations in order to ensure sustainable economic development.
References
Burton, J. 2011, Reporting and sustainability at Ok Tedi, Development Policy Blog. Web.
Carr, P. & Filer, C. 2010, Plans to Close the Ok Tedi Mine in Papua New Guinea. Web.
Herbertson, K. 2010, Can the World Bank Regain its Lead on Sustainable Development?, World Resources Institute | Global Warming, Climate Change, Ecosystems, Sustainable Markets, Good Governance & the Environment. Web.
Jorgensen, D. 2006, Hinterland history: the Ok Tedi mine and its cultural consequences in Telefolmin. Web.
Perspective and Links: Ok Tedi Mining Limited 2008, Ok Tedi Mining Limited. Web.
Verhoeven, H. 2011, Climate Change, Conflict, and Development in Sudan: Global Neo-Malthusian Narratives and Local Power Struggles, Development and Change, vol 42. no, 3, pp. 679-707.
Wilmsen, B., Webber, M., & Yuefang, D. 2011, Development for Whom? Rural to Urban Resettlement at the Three Gorges Dam, China, Asian Studies Review, vol 35, pp 21-42.
World Bank Calls for Ok Tedi Mine Closure Following Romanian Cyanide Spill 2000, MiningWatch | Changing public policy and mining practices to ensure the health of individuals, communities and ecosystems. Web.