Port Moresby, 7 February 1966
Confidential
The meeting opened at 2.00 p.m.
His Honour the Administrator stated that the meeting had been called to consider mining policy and legislation in the Territory and the special requirements of large scale operators in the mining field. His Honour commented on the comprehensiveness of the working papers prepared2 and invited the A/Assistant Administrator (Economic Affairs)3 to open the discussion.
The A/Assistant Administrator (Economic Affairs) pointed out that the mining industry in the Territory is entering a completely new phase which must inevitably have a considerable impact on a wide range of Administration activities and policies not previously bound up with mining operations. The entry of large scale operators into the exploratory field and the possibility of the rapid development of large scale mining operations have highlighted the inadequacy of existing mining legislation and emphasised the need for immediate amendment of the existing legislation (pending the introduction of consolidated legislation to suit present day conditions) to provide greater flexibility to meet the needs of types of mining operation new to this Territory.
The A/Assistant Administrator (Economic Affairs) stated that amendment of the legislation will require a restatement of some accepted policies and acceptance of some new principles fundamental to the new legislation to be drafted. The main points of policy bearing on the proposed amendments were seen to be:
1. Recognition of Crown ownership of all minerals.
2. Recognition of the right of the Territory’s elected political leaders to control the granting of long-term mineral leases.
3. Recognition of all landholders’ rights to:—
(a) compensation of all assets on the surface in all stages of mining operations;
(b) compensation for loss of access to land;
(c) rent for land used for mining purposes;
(d) permission to enter at all stages of mining operations;
(e) lodge objections to the granting of prospecting permits before a Mining Warden Court.
4. That the public should be kept informed of the granting of all types of mining concessions.
The A/Assistant Administrator (Economic Affairs) conceded that amendment of the legislation along the lines he proposed introduced the risk of retrospective claims but expressed the view that any such claims could be handled satisfactorily and their numbers contained. In any event, said the A/Assistant Administrator (Economic Affairs), it is essential that the more blatantly undesirable features of the mining situation should be eliminated by amendment or repeal of existing legislation, where necessary, or the introduction of new legislation; and the longer the delay in rectifying the position, the greater the risk of seriously adverse public reaction.
The A/Assistant Administrator (Economic Affairs) concluded his opening remarks with specific reference to C.R.A.—the force and nature of the impact of its operations on the Territory, the scope of its exploratory activity, the extent of its financial commitment to date, the importance of its potential ultimate investment in the Territory, and its recognised need for some measure of security of investment before it becomes further committed. The A/Assistant Administrator stated that he was seeking approval in principle to discuss with C.R.A. principals and without prejudice the type of negotiated special agreement which, in cases where the Administration is satisfied that heavy capital expenditure is required to exploit a mineral field, would meet the needs of both the Administration and the operating company.
The Economic Adviser4 and the A/Treasurer5 stated that they supported the need for amendment of current legislation and did not question the desirability of retaining C.R.A. interest and attracting substantial capital investment; at the same time, it was suggested, ability to handle retrospective claims should be further examined. The A/Treasurer suggested also that the effect (by way of financial return and creation of employment opportunities) on the Territory’s economy might warrant consideration.
Mr. Aitchison6 (vice Mr. McCarthy) supported certain of the A/Assistant Administrator (Economic Affairs)’s proposals but predicted that native landowners affected will argue that they have a right to profits (as distinct from mere compensation for loss of use of land) in minerals mined. Mr. Aitchison raised also the question of the level at which ownership rights would be determined: whether at the level of individual ownership of the land actually affected by mining operations or at the much wider level of community ownership. The one approach would effect a concentration of significant rewards in the hands of relatively few, and the other a spread of less significant rewards among many.
The complexities of the situation were acknowledged: the need for decisions on the basis for sharing profits and fixing compensation, the effect on the company’s operations of anticipated or actual local opposition or resentment, etc.
His Honour suggested that, to facilitate comprehensive and orderly consideration of the factors involved, the Committee should debate the points of policy dealt with in the A/Assistant Administrator’s summary:—
Point 1: recognition of Crown ownership of all minerals:
– It was agreed that this precept, already embodied in the statutes, could not be argued. Certain difficulties associated with the principle could be foreseen but its acceptance could, it was felt, be assured with the development of a satisfactory approach to its statement.
Point 2: recognition of the rights of the Territory’s elected political leaders to control the granting of long-term mineral leases:
– The proposal of the A/Assistant Administrator (Economic Affairs) was that Special Mining Leases (to cover comparatively large areas over long terms and under flexible conditions—i.e. leases of particular significance as distinct from the normal type lease) should be granted by the Administrator in Council following recommendations from the Mining Advisory Board. An alternative approach, not favoured by the A/Assistant Administrator (Economic Affairs), would be [a] grant by the Administrator with the approval of the Minister. This latter approach, stated the A/Assistant Administrator (Economic Affairs), would invite charges that the Government was excluding the people’s elected leaders from deliberation on plans for exploitation of a national (T.P. & N.G.) asset; whereas involvement of the Administrator’s Council would, it was felt, remove some of the political sting from possible opposition to Crown rights to minerals.
The A/Treasurer, in supporting the A/Assistant Administrator (Economic Affairs), expressed the view that the immediate disadvantages that would accompany involvement of the Administrator’s Council in the grant process would be preferable to the long-term problems that would develop from exclusion of the Council, even though the Council’s exclusion would make for easier and safer administration at the outset.
In opposition to the A/Assistant Administrator (Economic Affairs)’s proposal it was stated by the Economic Adviser that, as exploitation of mineral resources on a significant scale would have international, not merely national, implications, the involvement of the Commonwealth seemed inescapable at this stage. He therefore thought that the Minister’s approval should be obtained.
His Honour, summing up, stated that, although he could see merit in the A/Assistant Administrator (Economic Affairs)’s approach, he felt that the limitations and disadvantages introduced in its adoption would be undesirable; His Honour felt that the likely international implications of large scale mining operations could not be overlooked. It should, he said, be borne in mind that, irrespective of the method of grant of the lease under the Mining Ordinance, the specific agreement with each company with regard to its rights would be placed before the House of Assembly for ratification.
On conclusion of discussion in the matter it was agreed that Special Mining Leases should be granted by the Administrator with the approval of the Minister.
Point 3: recognition of the landholders’ rights as listed in the A/Assistant Administrator (Economic Affairs)’s summary:
– The Committee agreed that non-recognition of these rights would be indefensible.
The extent of the retrospective effect of such recognition was difficult to estimate at this stage.
It was agreed that the landholders’ rights enumerated in the A/Assistant Administrator (Economic Affairs)’s summary should be recognised.
Point 4: that the public should be kept informed of the granting of all types of mining concessions:
–The A/Assistant Administrator (Economic Affairs) stated that this could be assured by arranging Warden’s Sittings in the Districts affected by applications, in addition to customary gazettal notice of granting of concessions. (The proposal was seen to be somewhat inconsistent with the intention of excluding the Administrator’s Council from involvement in deliberations on the grant of leases.)
It was agreed that the A/Assistant Administrator (Economic Affair)’s proposal at Point 4 be adopted.
The points of policy having been cleared in Committee, it was agreed that approval in principle should be given for:
1. the immediate introduction of amendments to the two Mining Ordinances as set out in the A/Assistant Administrator (Economic Affairs)’s summary, including appropriate provision for the grant of Special Mining Leases by the Administrator with the approval of the Minister.
2. the commencement of work on consolidation of all Territory mining legislation.
His Honour directed that appropriate advice should be forwarded promptly to the Department of Territories in the terms of the approvals given and decisions reached at this meeting of C.P.P.C. with a view to introduction of amending legislation at the June 1966 sitting of the House of Assembly.
In conclusion, the A/Assistant Administrator (Economic Affairs) advised that discussions with C.R.A. had reached a point beyond which little could be achieved without more specific information from the company on its plans and requirements.
His Honour approved further discussion with C.R.A. principals without prejudice and without commitment at this stage.
The meeting closed at 3.05 p.m.
[NAA: A452, 1966/1445]
1 Consisting of senior Administration officials, the Central Policy and Planning Committee (CPPC) was the Administration’s most important policy forum.
2 Not printed.
3 F.C. Henderson.
4 A.W. McCasker.
5 J.E. Ritchie.
6 First Assistant Director, Department of District Administration.