Background to Mining and Development

The establishment of large-scale mining has historically been defended on the basis that mining provides a source of national wealth, and on the premise that metals are necessary for society’s use and consumption (International Council on Mining and Metals (ICMM), 2012). Increasingly, as signalled in Chapter 1, mining is also rationalised as providing an opportunity for the promotion of sustainable development and local level development (ibid.). Large-scale mining operations have the ability to financially benefit local communities through the provision of royalties paid on the mineral resource, compensation paid for land occupied and damaged as a result of mining, and equity participation and joint venture benefits (O'Faircheallaigh, 2002). Yet while some believe that mining can be positive for poverty reduction (International Council on Mining and Metals (ICMM), 2012; Labonne, 2002) and others believe the idea that mining can support poverty reduction to intuitively make sense (Pegg, 2006, p. 376), more neutral and pessimistic opinions about the potential for large-scale mining to support human development are also well established (Bebbington, Hinojosa, Humphreys Bebbington, Burneo, & Warnaars, 2008; Gamu, Le Billon, & Spiegel, 2015; S. Kirsch, 2014). For example, as argued by Bebbington et al., the relationship between large-scale mining and development

can be described as being ‘contentious and ambiguous’: “‘Contentious’ because mining has

so often delivered adverse social, environmental and economic effects for the many, but

significant gains only for the few; ‘ambiguous’ because of the abiding sense, among local

populations as much as development professionals, that just maybe mining could contribute

much more” (2008, p. 965, italics in original). Accordingly, scepticism, alongside abiding hope, exists with respect to the potential of mining to support development (Wise & Shtylla, 2007).

The potential for large-scale mining activities to generate extensive adverse social and environmental impacts is now well documented (Earthworks & Oxfam America, 2004; World Bank, 2003 ) and often resides at the core of development concerns. According to Jenkins and Yakovleva, mineral exploration, extraction and related forms of mineral processing, can be considered “…one of the most environmentally and socially disruptive activities undertaken

impacts are typically caused by pit construction and waste rock removal and disposal, and can be further associated with issues of waste rock leaching; ecosystem and habitat destruction; air pollution; water contamination; and soil contamination (Earthworks & Oxfam America, 2004; Gamu et al., 2015; Slack, 2012).

In addition to environmental impacts, large-scale mining often generates a suite of broader social impacts. Such adverse effects include the disproportionate and adverse impact of mining on women within mining communities (Ballard & Banks, 2003; Macdonald & Rowland, 2002; Macintyre, 2002). As recognised by Macdonald & Rowland (2002), although women may be theoretically included within the reach of mining-related development benefits and compensation entitlements, in reality their access to such benefits can be limited as a result of their marginalisation during the process of benefit distribution. Mining has also been connected to human rights violations (Kennedy & Abrash, 2002), with communities being particular vulnerable to violations when mining companies operate in countries with a weak rule of law and governance, and/or where mining companies are prepared to work with repressive regimes (IIED & WBCSD, 2002). Potentially connected to human rights breaches, mining-derived land alienation and human displacement can increase the vulnerability of communities, impoverishing those displaced by limiting their subsistence viability (Downing, 2002; Pegg, 2006). In terms of cultural impacts, large-scale mining is often located in remote areas in developing countries and can be extremely disruptive to traditional cultures (Rumsey & Weiner, 2004). By generating rapid social change within traditional cultures, mining can dramatically alter the social fabric of these societies and, in turn, cause or increase societal ills such as alcoholism, gambling, abuse, violence, and prostitution (Pegg, 2006; Weber-Fahr, Strongman, Kunanayagam, McMahon, & Sheldon, 2001).

In the case of PNG, researchers have observed dramatic forms of socio-cultural, political and economic change within mining communities, alongside issues of land alienation and livelihood viability (Bainton, 2010; Filer, 1990). Inward migration has also been found to be particularly destructive for mining communities (Banks, Kuir-Ayius, Kombako, & Sagir, 2013). When conceptualising the significance of these socio-economic impacts in PNG, Banks and Ballard (2003) suggest that for many Papua New Guineans, social and economic impacts (positive and negative) are equal to, if not of more of a concern than, physical environmental impacts for affected communities, and that they cannot be divorced from them (see also Banks, 2002). As further discussed, this point becomes important to understanding the relationship between mining-derived development in PNG, as for many Papua New Guineans mining is considered “…the way to gain wealth rapidly and to ensure that dreams of ‘development’ and ‘modernity’ come true” (Filer & Macintyre, 2006, p. 216). This signals the

starting point for this research, as the Papua New Guinean optimism for mining-derived development endures (Connell, 1997; Filer, 1997b; Jacka, 2015, Jackson, 1993; Kepore & Imbun, 2010) even though Papua New Guinean development aspirations have not generally been realised in practice (Dinnen, 2001; UNDP, 2014).

Notwithstanding the Papua New Guinean optimism for mining-derived development, theories of the resource curse, and mining-derived social disintegration, challenge the notion that mining has the potential to promote development. These theories are discussed in turn below.

Resource Curse Theory

In the early 1990s, Auty challenged the claim that extractive sector activities can be good for development. Instead, he theorised that an abundance of natural resources actually creates economic distortions that undermine a country’s ability to contribute to development (Auty, 1993; Sachs & Warner, 1995) . On this basis, Auty argues that resource abundant economies actually end up worse off than economies without an endowment of natural resources. The

related concept of ‘Dutch disease’ further suggests that poor economic growth in resource-rich economies is due to unsustainable consumption and investment patterns, and boom-type economic growth (Mikesell, 1997). In turn, it is argued that this increases a country’s exposure to economic shocks and distortions, and stifles the economic success of other sectors (Auty, 1993; Ross, 1999). The potential for short-term profit seeking objectives brought about by a nation’s dependence on natural resources has further been heralded as limiting the potential for development by increasing the likelihood of poor governance and weak institutional quality, fuelling corruption and financial mismanagement, and increasing the chance of violent conflict (Auty, 1993; Ross, 1999).

Although resource curse literature has traditionally assumed an economic focus, more localised environmental, political and cultural manifestations of the resource curse have also been theorised (Filer & Macintyre, 2006; Kirsch, 2014). According to Filer and Macintyre, “[i]n

environmental terms, the curse involves a degree of long-term damage done to the natural environment, which outweighs the short-term economic benefits obtained by a minority of the

affected population” (2006, pp. 217-218). They also suggest that, in cultural terms, the curse manifests itself in the creation of unrealistic expectations for development connected to extractive sector activity, and that, in political terms, the curse becomes visible in the form of conflict, which occurs as people compete to gain access to the financial benefits flowing from the extractive sector (ibid.). Due to the evolving and open interpretation of the resource curse, whether or not it holds true in particular contexts therefore logically depends on how the

concept of the curse is theorised, on how the concept of ‘development’ is understood, and on how the symptoms of the resource curse are perceived. It is also noted that in economic terms the resource curse theory is contested (Davis, 1995; Eggert, 2000). As a consequence of evidence of sustained resource-based economic growth emanating from resource- dependent economies such as Botswana and Chile, within mainstream literature it is therefore widely held that the symptoms of the resource curse are not inevitable (UNDP, 2012; 2014).

Social Disintegration Theory

Within the PNG context, Filer’s (1990) social disintegration theory additionally challenges the assumption that mining can promote human development. Using the Bougainville rebellion as a case in point, Filer (1990) contends that there is a tendency for mining to generate explosive adverse social impacts within mining communities. Filer (1990) argues that, in contrast to promoting human development, large-scale mining leads to a process of social disintegration, which manifests in the form of: local disputes over land boundary delineation and mine benefit distribution; concerns about social stratification and the inheritance of resource wealth; and social disputes over the succession to leadership. In the case of Bougainville, landowner concerns over the environmental and social impacts from the Panguna copper mine, and disputes about the distribution and adequacy of mining benefits, combined with secessionist sentiments, contributing to the onset of a 10-year civil war (Filer, 1990; Spriggs & May, 1990). Related landowner concerns over mine operations also led to militant attacks on the mine, and its abandonment in 1989 (Connell, 1992; Spriggs & May, 1990). Based on this scenario, Filer has likened large-scale mining in PNG to being a social time bomb, arguing that:

“[M]ines in almost any part of Papua New Guinea will generate the same volatile mixture of grievances and frustrations within the landowning community, and, all other things being equal, blow-outs will occur with steadily increasing frequency and intensity until there is a major detonation of the time bomb after mining

operations have continued for approximately fifteen years” (1990, p. 3).

Although large-scale mining operations have generated dramatic forms of social change within PNG, and incidences of violent protest have erupted in other mining communities in PNG (e.g. Porgera, Mount Kare, and Hidden Valley), Filer’s theory remains subject to challenge by other commentators on the Bougainville rebellion. For instance, Larmour (1992) has argued that the Bougainville rebellion was exceptional, being fuelled, in part, by a unique Bougainvillean sense of ethno-national identity and class-consciousness. Denoon (2000) and Connell (1997) further suggest that the unique geographically isolated island context was a key factor in

influencing the Bougainville conflict. O’Faircheallaigh also makes the point that environmental

damage can have ‘profound political consequences’, and argues that it was a major factor in the Bougainville rebellion (1992, p. 262). Recognising the potential for variances of this theory, Filer himself also acknowledges that a range of political, economic, historical and geographic factors have the ability to impact the application of his social disintegration theory in practice (1990; 1997). He also accepts that at some PNG mine sites, such as at the Ok Tedi mine, environmental damage may better explain the social tensions present in communities (1997). In the Ok Tedi case, the discharge of over one billion tonnes of mine tailings and waste rock into the Ok Tedi and Fly rivers led to extensive environmental damage (Kirsch, 2004, 2006). This consequently had a significant adverse impact on the subsistence viability of those people living downstream of the mine (ibid.). In response, a lawsuit was brought against the mine operators, Broken Hill Proprietary (BHP) Ltd., which was eventually settled out of court in the form of an extensive compensation and development package for those communities located downstream of the mine (Kirsch, 2006).

By connecting the literature discussed above, three key mining development insights emerge. Firstly, it becomes clear that many Papua New Guineans value large-scale mining as a path to development (Connell, 1997; Filer, 1997b; Jacka, 2015, Jackson, 1993, Kepore & Imbun, 2010). Secondly, notwithstanding the fact that mining can generate significant adverse environmental damage, and even though the potential for mining-derived development remains subject to challenge, there is a strong case to reject theories that dismiss outright the potential of mining to promote development. This is because mine operations will vary depending on context and case, and because a variety of local contingencies have the ability to shape and influence mine operations and associated development outcomes in PNG communities (as recognised by Filer, 1997). Thirdly, literature also suggests that for many Papua New Guineans, the potential importance of socio-economic development impacts may, initially at least, be equal to, if not of more of a concern than, environmental impacts for affected communities (Banks and Ballard, 2003). Therefore the potential for and existence of adverse socio-environmental mining impacts will not necessarily preclude mining’s ability to

contribute to local level development.