The Lihir mine in the New Ireland Province began production in 1997. In this case the current operator, Rio Tinto, adopted the objectively ‘worst practice’ of buying the prospect from another company, Kennecott, complete with a time-expired social impact study—and did not update it or attend to the limitations pointed out at the time.
[Our report is limited by] the absence of any substantial documentation of Lihir society by anthropologists or other writers who have spent long periods of time there…research conducted on a ‘fly-in-fly-out’ basis can only produce particular kinds of information, and cannot do more than scratch the surface of village society (Filer and Jackson 1989:2).
A social impact review was finally ordered by the Australian government’s Export Finance Insurance Corporation (EFIC) as a condition of loan guarantees—but the review was confidential to EFIC, an unacceptable practice in our field. In the 50 page summary ‘Environmental Plan’(EP), the social environment is dealt with in just three paragraphs.
Lihir landowners bettered their Porgeran brethren with still more generous compensation and royalty provisions, 12.35 per cent equity in Lihir Gold which may eventually be worth a couple of hundred million dollars, and a seat on the board.
In Australia, political conservatives claim uncertainty over native title poses a threat to the development of resources. At Lihir a preliminary understanding to proceed with mining was signed in 1984. It established the ownership of different clans of the approximately 600 hectares between the two principal creeks of the Luise Caldera. By 1995 when final approvals were granted, a little over half of the area changed hands following rulings in the Provincial Lands Court or was subject to ongoing litigation between customary owners. This is a clear example of ‘uncertainty over native title’. When Lihir Gold was floated on the Sydney Stock Exchange in mid-year, it was not thought significant to mention this in the share prospectus, a serious non-disclosure.
The compensation and royalty provisions are generous, but insufficient measures have been taken to give a correspondingly greater level of accountability to their distribution. I have no doubt at all that complaints based on this will emerge in Lihir in years to come.