INTERPRETING PART 17 OF THE BMA 2015
The Bougainville Mining (Amendment) Bill 2019 has been received with resentment and opposition. This is solely because of preconceived misinterpretations, misconceptions, deliberate propaganda and/or pure ignorance.
This paper tries to explain the Bougainville Mining (Amendment) Bill 2019 in laymen’s terms so as to reflect its purposes and intentions.
THE BILL
PART A – SPECIAL BOUGAINVILLE EXPLORATION LICENCE OR MINING LEASE
A. Notwithstanding any other provision in this Act, to the extent that there are any inconsistencies between:
(1) Part 1 to Part 16 of this Act and Schedule 1 to this Act; and
(2) Part 17 of this Act,
then Part 17 of this Act shall prevail.
Interpretation:
Notwithstanding:
Legal definition, notwithstanding means:
· “in spite of,
· even if,
· without regard to or impediment by other things.” Duhaime’s Law Dictionary
Notwithstandingconveys the sense of equality of provisions – it does not necessarily imply that one provision is overlapping or contradictory.
The current BMA 2015 has Part 1 to Part 16. The Bougainville Mining (Amendment) Bill 2019 seeks to insert an additional part to the current BMA 2015.
In contrast, on one hand is the existing Part 1 to Part 16 and on the other hand, Part 17. On enactment of the Bougainville Mining (Amendment) Bill 2019, Part 17 becomes part of the BMA 2015. The BEC seeks to insert Part 17 into the current BMA 2015 through the enactment of the Bougainville Mining (Amendment) Bill 2019. However, it is not the intention of the BEC to supersede (set aside) Part 1 to Part 16. Therefore, introducing Part 17 with the word “NOTWITHSTANDING” protects Part 1 to Part 16 from being set aside.
Given the above definition of notwithstanding, Part 17 does not override Part 1 to Part 16 of the BMA 2015. On the contrary, Part 1 to Part 16 of the BMA 2015 remain intact and even if Part 17 is added to the BMA 2015.
In the event that there are inconsistencies pertaining to the benefits and entitlements accorded to landowners by law, then Part 17 prevails. This simply means that landowners will receive more benefits and entitlements pursuant to Part 17. This will be made clearer as provisions below are expounded on.
PART 17 – SPECIAL BOUGAINVILLE EXPLORATION LICENCE OR MINING LEASE
378 Special Bougainville Exploration Licence or Mining Lease
(1) The Bougainville Executive Council, in conjunction with the Minister for Mineral and Energy Resources, shall have the power to issue a Special Bougainville Exploration Licence or Mining Lease to a Special Bougainville Entity.
Meaning:
Part 1 to Part 16 of the BMA 2015, does not provide for any Special Exploration Licence or Mining Lease in Bougainville. In the absence of such, this provision establishes and empowers the Bougainville Executive Council (BEC) to issue a Special Bougainville
i) Exploration Licence, or
ii) Mining Lease
It further establishes that the Special Bougainville Exploration License or Mining Lease can only be issued to a Special Bougainville Entity.
What is a Special Bougainville Entity?
By definition, pursuant to the proposed Part 17, a Special Bougainville Entity “means a company that the Autonomous Bougainville Government and the resource owners of Bougainville:
(i) Hold no less than 60% of the voting shares of the company; and
(ii) Control the company.
By law, the ABG and resource owners will hold no less than 60% - implying explicitly that the 60% is non-dilutable and cannot be any less than 60% at any time or for any reason. Indirectly, this also implies that the ABG and the resource owners can increase their shareholding beyond 60% and up to 100%.
However, it is important to note that this provision does not exempt the Special Bougainville Entity from adhering to the normal application process. This provision maintains that the Special Bougainville Entity must adhere to the normal application process as outlined in Part 1 to Part 16 to obtain a Special Bougainville Exploration License or Mining Lease.
Consistent with Part 1 to Part 16, on the advice of the Bougainville Mining Advisory Council (BMAC), the BEC is the granting authority of a Special Bougainville Exploration License or Mining Lease.
Again, consistent with Part 1 to Part 16, in the renewal of a Special Bougainville Exploration License or Mining Lease, yet again on the advice of the BMAC, the Minister for Minerals and Energy Resources is the granting authority.
This will be made clearer in Section 378(3)(c) below.
The advice of the BMAC, in accordance with Part 1 to Part 16, cannot be amended by the BEC or the Minister. It can only be accepted or rejected.
(2) A Special Bougainville Exploration License or Mining Lease may be granted over all land in Bougainville available for reconnaissance, exploration and mining, that is not subject to an existing exploration licence or mining lease.
Meaning:
The granting of a Special Bougainville Exploration License or Mining Lease, subject to compliance requirements as stipulated in Part 1 to Part 16 of the BMA 2015, only applies to all land that is available. By available, all land available are those that are NOT covered by existing exploration licenses or mining leases and those that are NOT covered by any existing Moratoriumput in place.
In practice now, there is NO land available for reconnaissance, exploration or mining in Bougainville as those lands that are not covered by existing exploration licenses (or mining leases) are currently under the existing Moratorium.
The process of lifting or placing a Moratorium is outlined in Part 1 to Part 16 of the BMA 2015.
(3) For avoidance of doubt:
(a) In circumstances where an existing exploration licence expires and is not renewed, then that area of Bougainville shall be available for reconnaissance, exploration and mining under the Special Bougainville Exploration License or Mining Lease.
Meaning:
In order for an existing Exploration License to expire, it will have been granted pursuant to Part 1 to Part 16 of the BMA 2015. This provision takes into account the fact that an existing Exploration Licenses was already granted pursuant to Part 1 to Part 16 of the BMA 2015 in order for it to be expired.
Accordingly, only when the expiredExploration License is not renewed pursuant to Part 1 to Part 16 of the BMA 2015, then that area (land) is deemed available.
Based on this aspect of availability, then the area (land) is available for reconnaissance, exploration and mining pursuant to Section 378 subsection (1) and subsection (2) of Part 17 – meaning that area (land) now becomes available only as a Special Bougainville Exploration Area or Mining Area.
This provision does not apply to an existing Exploration License that is renewed through the normal application process in Part 1 to Part 16.
Being a Special Bougainville Exploration area (land) or Mining area (land), “The Bougainville Executive Council shall have the power to issue a Special Bougainville Exploration License or Mining Lease to a Special Bougainville Entity”. This, in essence, means that when an area (land) is made available as a Special Bougainville Exploration area or Mining area, then that is available only to the Special Bougainville Entity to apply for a Special Bougainville Exploration License or Mining Lease.
The application process for a Special Bougainville Exploration License or Mining Lease by the Special Bougainville Entity is subject to Part 1 to Part 16 of the BMA 2015. This means that the process of seeking landowner consent for Exploration or Mining through the Warden’s Hearing remains intact.
(b) All fees, annual rent, royalties, levies and other rights and interests granted to landowners under Part 1 to 16 of the Act shall not apply to a Special Bougainville Exploration License or Mining Lease or a Special Bougainville Entity, however, such landowners affected by a Special Bougainville Exploration License or Mining Lease, as determined by the Bougainville Executive Council, shall be entitled to and shall be granted the following:
Meaning:
Under this provision, it may be deemed alarming that the landowners will not benefit from all fees, annual rent, royalties, levies and other rights and interests granted under Part 1 to Part 16.
However, the landowners will benefit better in two major categories: One being Preferential Benefits and the other being Enhanced Entitlements.
On Preferential Benefits:
(i) the landowners shall receive preferential benefits pursuant to the terms of negotiated agreements that are required to be entered into on a mandatory basis between the Autonomous Bougainville Government (or a subsidiary of the Autonomous Bougainville Government) and the said landowners prior to any mining activities occurring on the landowners respective lands; and
Meaning:
Given that the landowners will not benefits from all fees, annual rent, royalties, levies and other rights and interest granted under Part 1 to Part 16, the landowners shall receive instead preferential benefits based on negotiated agreements between the ABG and the landowners prior to mining activities. This negotiated agreements are mandatory and contractually binding.
So, what constitutes “preferential benefits”?
Preferential benefits entail mostly employment opportunities with preference given to landowners. As employees, landowners will be entitled to but not limited to the following:
ü Service-related benefits (commitment & loyalty)
ü Enhanced redundancy pay (enhanced payment to old/women)
ü Enhanced Maternity/Paternity pay
ü Health benefits, etc
Preferential benefits also extend to preferential awarding of general contracts based on capability and expertise of local landowner companies.
Preferential benefits to landowners aspire to engage landowners actively so as to avoid making landowners mere spectators and/or passive recipients of just monetary benefits.
On Enhanced Entitlements:
(ii) pursuant to the terms of the negotiated agreements, the Autonomous Bougainville Government (or a subsidiary of the Autonomous Bougainville Government) are required to provide benefits to the landowners that exceed the entitlements that such landowners were granted under Parts 1 to 16 of the Act (prior to the enactment of the Bougainville Mining (Amendment) Act 2019), be it in one form or another as agreed upon by the landowners and the Autonomous Bougainville Government (or a subsidiary of the Autonomous Bougainville Government).
Meaning:
Again, and as above, given that the landowners will not benefit from all fees, annual rent, royalties, levies and other rights and interests granted under Part 1 to Part 16, the ABG is required to provide instead landowners benefits that “exceed the entitlements”stipulated in Part 1 to Part 16.
As above, this will be based on negotiated agreements (development agreements) between the ABG and the landowners. As above, the negotiated agreements are mandatory and contractually binding.
So, what constitutes “entitlements”?
Part 1 to Part 16 gives landowners entitlements in free equity and in royalties. These entitlements are locked in law through the BMA 215.
In terms of landowners’ entitlements pertaining to free equity, the BMA 2015 stipulates that landowners receive only 5%. If they choose to increase their equity, then they are required to purchase an additional 5%.
In terms of royalties under the existing provisions of the BMA 2015, the landowners and the ABG are entitled to a maximum of 3.75%. In particular, the landowners are entitled to 1.75% out of the 3.75%.
Under a Special Bougainville Entity, in which the ABG and the resource hold 60% in the company, the ABG and the landowners will negotiate entitlements that exceed the 5% in free equity and exceed the 3.75% in royalties. The ABG and resource owners hold controlling interests in the Special Bougainville Entity and as such, are at liberty to negotiate entitlements over and above the current entitlements as stipulated in Part 1 to Part 16 of the BMA 2015.
(c) The Special Bougainville Entity shall be required to comply with the ordinary application processes in relation to the grant of the Special Bougainville Exploration License or Mining Lease, s those processes set out in Parts 1 to 16 of the Act, in relation to:
(i) The application of an exploration licence (if applicable); and or
(ii) The application of a mining lease (if applicable).
Meaning:
This provision seeks to dispel any concerns or fears that the Special Bougainville Entity will bypass any compliance requirements in the application process relating to a Special Bougainville Exploration License or a Mining Lease.
By following the ordinary processes pursuant to Part 1 to Part 16 in applying for an Exploration License or a Mining Lease, the landowners’veto powers are NOT removed. Warden’s hearings will ensure that the landowners’ consent to allow exploration or Mining in their land is not undermined or removed by the Special Bougainville Entity.
(d) In circumstances, where the Bougainville Executive Council, in conjunction with the Minister for Mineral and Energy Resources, deems it necessary, the Bougainville Executive Council may exercise its discretion to vary the specified time-frame(s) either orally or in writing in relation to the application processes referred to in subsection (c) above.”
Meaning:
All respective processes in the application for Exploration Licenses or Mining Leases have time frames. This provision simply empowers the BEC to vary the time frames as it deems necessary.
For example, in the application of an Exploration License, the usual time is a minimum of three months. The BEC may, when it deems necessary, vary the time frame to no more than three months.
In conclusion, the intention and purpose of the Bougainville Mining (Amendment) Bill 2019 is to give preferential benefits and enhance entitlements to the resource owners and the ABG. It does not in any way undermine Part 1 to Part 16 of the BMA 2015 which protects the resource owners’ rights and outlines the normal processes pertaining applications for Exploration Licenses or Mining Leases.
Thank you.
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