the ways that they expected to live on store bought food, buy beer, clothing, and other goods. ..... machine and the U.S. dealer faxed a reply to that address, so all information was available to the mining .... Casino capitalism. Oxford: Blackwell.
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‘‘MY LAND, MY WORK’’: BUSINESS DEVELOPMENT AND LARGESCALE MINING IN PAPUA NEW GUINEA
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Nicholas A. Bainton and Martha Macintyre
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ABSTRACT
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Purpose – This chapter analyzes landowner business development and economic sustainability in the context of large-scale mining in Papua New Guinea with a focus on the Lihir gold mine. It pays particular attention to the social implications of success or failure of business development in mining contexts.
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Methodology/approach – This chapter is based upon ethnographic research and social impact monitoring studies conducted by the authors in Lihir between 1994 and 2012, as consultants and employees of the Lihir mining operation and as independent researchers. This chapter is also based upon broader research and consulting work undertaken by the authors at other mining locations throughout Papua New Guinea. The research is intended to explore the social changes generated by large-scale mining and related forms of business development, and the factors and strategies which constrain or enable landowners to get what they want from capitalism. Engaging with Capitalism: Cases from Oceania Research in Economic Anthropology, Volume 33, 139–165 Copyright r 2013 by Emerald Group Publishing Limited All rights of reproduction in any form reserved ISSN: 0190-1281/doi:10.1108/S0190-1281(2013)0000033008
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Findings – Business development in resource extraction enclaves is structurally different from other nonresource development contexts and produces a more dependent and client-based approach to capitalism. In Lihir, research and ethnographic observations indicate that landowner business development is highly territorialized, which is captured by the landowner catch cry ‘‘My land, my work.’’ Ultimately, mining has provided significant economic opportunities for the local community, but these economic changes, especially through the distribution of minederived benefits and opportunities for business development, have involved processes that have divided people and entrenched inequalities.
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Practical implications – In Papua New Guinea, the close relationship between property ownership, landed interests, and capitalist engagement creates steep challenges for sustainable business development in resource enclaves. This research provides a strong foundation for exploring alternative strategies for economic development.
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Originality/value – Provides detailed insights into the social, economic, and political factors which influence sustainable business development in Papua New Guinean mining enclaves.
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Keywords: Business development; mining; dependency; sustainable development; Papua New Guinea; Lihir
INTRODUCTION
James Ferguson’s study of the Zambian Copperbelt presents a grim view of the lives of miners, when mining – the industry that industrializes, urbanizes, and transforms a subsistence-based economy into a modern capitalist one – declines and ceases (Ferguson, 1999). Historically the situation is very different in Papua New Guinea (PNG), not only because of the ways that the workforce is recruited and organized, but also because of the ways that the constitution preserves customary rights over land. ‘‘Landowners’’ – the customary owners of the land and resources being developed – wield a great deal of influence over the daily operation of mining projects and the distribution of any related economic benefits. Their demands typically include large compensation packages and privileged access to employment, ‘‘spin-off ’’ businesses and contracts with the developer, such as the
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provision of labor and equipment hire, catering, and other mine-related services. Mining companies often represent these businesses as positive contributions to the national economy and as examples of their commitment to economic sustainability. There is no doubt too that many Papua New Guineans who benefit from employment or royalties or various forms of compensation believe that these benefits will contribute to their economic advancement. But many also believe that this might be achieved through the establishment of a business. Much has been written about the ways that Papua New Guineans have embraced the use of cash and capitalist enterprise. Entrepreneurial endeavors and various economic activities that have been introduced since the first colonizers arrived have been scrutinized by anthropologists for decades (Akin & Robbins, 1999; Epstein, 1968; Finney, 1987; Gewertz & Errington, 1999; Gregory, 1982; Salisbury, 1970; Strathern, 1971). In the main, anthropologists – even those such as Finney and Epstein who stressed the ways that Papua New Guineans held views about work, wealth, and entrepreneurship that were consonant with capitalism – have argued that in choosing to embrace capitalism, the social and cultural values attached to wealth accumulation, distribution, and consumption remained steadfastly ‘‘Melanesian.’’ In some ways this chapter will continue that tradition as we discuss the success and failure of local business development around the Lihir gold mine in PNG. But we are especially concerned here with the social implications of success or failure in the context of large-scale mining projects where the transformation of the economy entails dramatic changes in social relations over the life of the mine, which in the PNG context is often the major determinant of significant inequalities. This chapter draws upon a combined engagement with the Lihir gold mine that spans over twenty years through independent research and social impact monitoring studies for the company.1 We reflect on the range of overlapping and sometimes contradictory ways in which Lihirians have approached business development and engagement with capitalism more generally throughout the different stages of the mine, from negotiations, construction and early operations, to the current operational phase. In doing so, we emphasize the sorts of cultural responses to mining which not only shape local economic behavior but are likely to also influence the sustainability of the post-mining economy. In considering the ways that Lihirians engage with the cash economy through business enterprise we emphasize the changing trajectory of people’s relationships to the mining project, to the company, and to the major beneficiaries of royalty and compensation payments over the life of the project – the landowners from the mining lease areas. We are
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especially interested in people’s capacity to get what they want from capitalism in terms of economic development, personal wealth, status and improved living conditions, and the social structural changes that have accompanied various forms of economic engagement through resource extraction. We explore the dialectical relationship between the broader processes of encompassment (LiPuma, 2001), whereby existing forms of sociality and economic practices are reconfigured by global capitalism, and local expressions of agency manifest in a seemingly rapacious desire for change driven by the wealthy elite and ambitious landowners. The articulation between and within these different levels has simultaneously produced deep social ruptures and innovative cultural reflexes. We argue that business development in resource development enclaves is structurally different from other nonresource contexts and produces a more dependent and client-based approach to capitalism, which in some ways is symptomatic of a wider national dependency upon resource extraction. At the national level, the Government has outlined a commitment to business development in their Papua New Guinea Vision 2050 plan which sets goals to increase the number of Papua New Guineans participating in economic activities and the number of medium sized enterprises. To a large extent the Government’s strategy relies upon the resource boom to stimulate new business activities including value-adding, support services and supplies. We have found that there are few resource area landowners who establish businesses in order to merely survive. From this perspective, enterprising landowners are perhaps best described as ‘‘opportunity entrepreneurs’’ rather than ‘‘necessity entrepreneurs.’’ At the heart of this distinction is an expectation for business opportunities – an extension of an existing national ‘‘ideology of landownership’’ which is frequently manifested in rent-seeking behavior (Filer, 1997). The expectation for ‘‘compensation as development’’ still remains, but there is an added sense of entitlement to exclusive business opportunities played out in the struggle over the role of patron and client. Such territorialized development effectively constructs relations of dependency and serves to undermine the goals of sustainability as business development remains financially, politically, and spatially tied to individual resource development projects. But even when companies attempt to develop more sustainable economic models that might benefit greater numbers, those very elements of Melanesian society which tend to ‘‘menace the mining industry’’ (Filer, 1998), including limited scales of social cooperation and a multitude of divergent interests, work against corporate, national, and local interests. Moreover, when the sort of instant lottery riches delivered
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through mining benefits merge with existing notions of prestige and wealth distribution, local engagement with capitalism is often characterized by consumption rather than enterprise and accumulation.
EXPECTATIONS OF DEVELOPMENT
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Mining relies upon a finite resource. While individual mine sites have a definite life-span, over the past decade the major global mining companies have worked hard to develop the image of a more sustainable industry (see, e.g., International Council for Mining and Metals (ICMM), 2008; Minerals Council Australia (MCA), 2005; Mining, Minerals, and Sustainable Development (MMSD), 2002). There has been an industry-wide shift toward greater social and environmental accountability and more emphasis upon facilitating social and economic development that will sustain communities, or entire regions, into the post-mining era. Companies now face closer scrutiny against a range of international performance measures, although to a large extent improved practice remains dependent upon selfregulation and voluntary commitment to higher standards, which can reify auditing over actual performance (Kemp, Owen, & van de Graff, 2012; Macintyre et al., 2007).2 If the PNG State has historically lacked sufficient capacity to closely regulate the activities of multinational companies, in some ways this has been balanced out by the ability of project area landowners to exercise their ‘‘rights’’ and to ‘‘regulate’’ or at least influence mining operations to serve a raft of local interests. It is for this reason that commitments to ‘‘best practice’’ are not so much the result of corporate altruism but more a pragmatic reality of doing business. In the PNG operational context, which includes a volatile political landscape comprising empowered and expectant landowners (Allen, 2013), good corporate citizenship, or the development and maintenance of a ‘‘social licence to operate,’’ is inextricably linked to managing social and political risk and maintaining ‘‘business continuity’’ (see Owen & Kemp, 2012). However, when business risk is the primary driver for investing in landowner businesses, this invariably compromises the agenda of sustainability. Mining companies frequently present economic sustainability as an objective (to governments, landowners, shareholders, and society at large), but in practice this goal is rarely realized. This is partly because, historically, in the start-up phase of an operation, many companies have necessarily concentrated on the development of businesses that supply goods and
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services to their enterprise rather than those that might flourish independently of the project and be economically sustainable beyond the life of the mine. It is also due to the ‘‘capital logic’’ of each operation which determines the schedule for the repayment of loans and the attainment of profits and influences the outcomes of the project, even when these appear to have little to do with mining (Gerritsen & Macintyre, 1991, pp. 37–40). However, at different stages in the life of a project companies will shift emphasis, and in some circumstances companies will be better placed to invest in broader forms of economic development. The life-span and size of a project are also important, as smaller and shorter projects allow less time to realize sustainable goals. In all cases, the money from loans, compensation, and wages facilitates new forms of entrepreneurship and generates new patterns of consumption. Compensation payments provide ad hoc injections of cash into the local economy which soften the impacts of business inefficiency. Even those businesses that appear to be independent of the mine, such as livestock projects, commercial food crops for local consumption, transport services, clothing stores, supermarkets as well as small village trade stores, are often profitable only because of wages or the general increase in the circulation of cash throughout the local economy. The experience of people on Misima Island (in Milne Bay Province of PNG), who had a mine that was closed in 2004, indicates that when employment ceases small businesses collapse, as people have little money to spend. The remittances from qualified tradesmen who go to work in other mines cannot substitute for the level of income available during local operations. Those businesses that have been established to support mining activities usually close down. Although the development of such contractor companies is presented as an opportunity to ‘‘go national’’ and so gain contracts on other mining developments, in fact each new project is expected to support its local landowners in such enterprises. The tendency for localisation, which is exacerbated in island locations, militates against commercial viability beyond the life of the mine. Local landowners, in most instances, simply will not allow another company from elsewhere in PNG to come and work at ‘‘their project.’’ The argument often being that these businesses similarly excluded outside involvement in their own locations – so the circle of localized, relatively short term, project dependent business development becomes further entrenched. Cash cropping and other primary industries theoretically provide economic opportunities that will carry on beyond the mining operation. But in reality these activities are rarely as lucrative as contracts with the mine, and farmers are often reliant upon the transport infrastructure maintained by
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the company, even more so in island locations. Nor is this always considered desirable work. As Ferguson (1999) observed of Zambian miners, people do not really want to go ‘‘back to the land’’ when mining stops. In PNG, many people attempt to start businesses with the aim of accumulating wealth and diversifying their income in ways that will ensure that they are not reliant upon subsistence farming or cash cropping. Mining companies, aware of criticisms about enclave development and the problems of sustainability beyond mine closure, invariably establish business development offices that are tasked with promoting tandem projects (such as some form of cash cropping) during the life of the mine. However, working the land (or fishing) is often redolent of the ‘‘hard work’’ of a pre-modern economy, as subsistence farmers or plantation laborers, and lacks the prestige of a business – where one can sit in an office, employ other people, and drive around in a company car, or as one Lihirian man once told Macintyre, ‘‘wear shoes and socks all the time.’’
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PLANNING FOR BUSINESS DEVELOPMENT IN LIHIR
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The Lihir gold mine commenced operations in 1995 when an Integrated Benefits Package (IBP) Agreement was signed by the landowners, the company, and the Government. The agreement specified that the people whose land fell within the Special Mining Lease (SML) area would not only receive royalty and compensation payments and new houses if they were relocated, but that they would have privileged access to ‘‘spin-off ’’ businesses, training, and employment. The Lihir gold mine is located on the main island of the Lihir Group of Islands in New Ireland Province. The mining lease area is relatively small, yet the social and economic footprint of the mine has encompassed the entire group. Lihir is divided into 15 local-level government wards with approximately 40 villages scattered along the coastal fringes. Land rights are primarily vested in matrilineal clan groups that are distributed throughout Lihir. The main ‘‘landowner villages’’ of Putput and Kapit were relocated in 1995 to make way for the SML area where the mine is located and the company townsite, camps, and airport are located near Londolovit and Kunayie villages. These so-called ‘‘affected area’’ villages contain the largest concentration of lease area landowners and have subsequently received the most economic benefits. Over the past twenty years the local population has grown from less than 10,000 Lihirians to approximately 16,000, coupled
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with approximately 7,000 migrants seeking new economic opportunities and access to services (Bainton, 2013). In 1994, Rolf Gerritsen, a development economist, and Martha Macintyre prepared a social risk assessment for the Lihir gold mine, commissioned by the Export, Finance and Investment Corporation, an Australian government institution that was the initial insurer for the project (Gerritsen & Macintyre, 1995; Moody, 2005). Having previously collaborated on the Misima mining project (Gerritsen & Macintyre, 1986), they had by that time become very familiar with the problems surrounding the influx of money into communities in the first phase of a mining project, so they stressed the need for tandem development to reduce dependency on the mine. Gerritsen and Macintyre’s brief involved recommendations concerning the mining company’s support for the establishment of businesses that would serve the needs of the company’s activities – this included recommendations on a locally owned company that had been formed to provide catering, cleaning, and maintenance of the camps where fly-in/fly-out workers were accommodated; earth-moving companies that could quarry and supply coronus, and make and grade roads; and a security and maintenance company for the airport facility. There was also a need for labor hiring services, building contractors, vehicle sales and servicing, a fuel outlet, waste collection and disposal, and a hotel for business visitors. A supermarket, post office, and banking facilities were also planned. In short, from an island that previously relied upon subsistence farming and had only a few trade stores, Lihir suddenly needed numerous businesses to support the mine and to service the needs of the employees who lived there. Many of these services were to be provided through private contracts with the mine, which created opportunities for local business development. The role and presence of the government also expanded as the District Office administration staff increased fivefold and a police station with several stationed officers was required. By 1996 all of these businesses had been established. In this early phase almost every village had at least one building company. The construction of roads and relocation houses alone generated a great deal of business and as there was work for unskilled laborers in such tasks a very large percentage of the male population was able to earn money. Lihirian leaders drove a hard bargain during negotiations, and for some Lihirians these changes signaled the emerging realisation of previous dreams of ‘‘becoming a city’’ – an all-encapsulating vision of the new modern world (Bainton, 2010). Support for local business development was initially provided through interest-free loans and the company’s business development section gave
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advice and training in business planning and management and free bookkeeping and accountancy services. During the construction and early operational phase (and continuing in the current era), company support entailed a hierarchy of interests. Maintaining good relations with landowners meant that these landowners had first claim on business development opportunities (which is a common approach in PNG) – since they had lost land that previously provided their subsistence livelihoods. In the early days people whose land had not been used by the mine generally accepted this arrangement and in a larger sense, this acceptance underpins the institutionalisation of localized business development throughout PNG. Looking back at the prevailing Lihirian ideas about business, employment, and economic development during the construction phase of the mine, much of which centered upon ideas of prestige and modernity, it is easy to see that the majority of people in Lihir had relatively little understanding of the ways that they could initiate economic development in the form of businesses – how they could establish companies and secure business contracts with the mine. There was a core group of men who had formal education, who had worked for government and in private companies, and who were striving to ensure that Lihirians gained control over all major business developments. But in this early period they had to work with older men who had been designated ‘‘clan leaders,’’ or ‘‘landowner representatives,’’ whose major concern was gaining cash from various forms of payment as opposed to running businesses – reflecting the earlier belief held by some landowners that once the mine began nobody would have to work again as they would all receive ‘‘compensation’’ (the term most often used for any financial benefit). In the light of later developments during the renegotiation of the IBP Agreement between 2000 and 2007, when there were many returned Lihirians who were formally educated, experienced in working in towns, and more astute in their assessment of where business opportunities might lie, it is salutary to recall that in the very early days of the mine they were a distinct minority. While the company managers dealt mostly with this educated elite and so considered that they represented Lihirians, they were in fact a minority whose views were unrepresentative. At that time there was community resentment toward them as ‘‘greedy’’ in their demands for business development and their actions jarred with local appeals to ‘‘custom’’ that emphasized unity and egalitarianism. Over time there has been a persistent tension between the ethics of distribution and reciprocity and the accumulative practices of the new elite (whether they have gained wealth through mining benefits or business success), which has dramatically
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restructured clans, dissolved corporate solidarity, and transformed ‘‘everyday’’ and ceremonial exchange practices. But in retrospect these men were the ones who ensured that Lihirians had some influence in policies and commitments by the company that protected local companies, paving the way for later business success. Early plans for businesses had arisen as landowners and the wider Lihirian community, national government politicians and public servants, and the provincial administration officials had bargained with the mining company for the benefits that would flow from gold production. As in previous PNG mining contracts, the mining company had to deal directly with the local landowner organisation (the Lihir Mining Area Landowners Association) and it was this body that argued strongly for control over ‘‘spin-off ’’ businesses. In Gerritsen and Macintyre’s (1995) report and for the purposes of negotiation a proposed umbrella company, provisionally called ‘‘Lihir Holdings,’’ was to be established. At that time the landowner organisation appeared to be strongly arguing for the general benefit, stressing the need for shares, for large enterprises to be divided between different clan groups (so, for instance one clan was to own the company that catered for the camp, another would have the fuel outlet license, another would have an earth-moving company, etc.). The rhetoric of business development appeared to embody ideals of communitas. Yet even before the umbrella company could be registered, three men who had participated in negotiations went to Port Moresby and registered a company as ‘‘Lihir Holdings’’ in their names. They had hoped in doing this to gain control over the management of all companies and to be able to claim contracts from the mine that had been designed with the name ‘‘Lihir Holdings’’ as the contractor. This created some problems that were resolved by adopting a new name for the landowner group’s company – Lakaka. But it is indicative of a pattern that was quickly established, which is by no means unique, whereby individuals would attempt to gain control over business ventures and exclude others who had an interest, by fair means or foul. Often the ways that people went about this were clumsy and easily detected – but some succeeded in excluding family members from ‘‘family businesses’’ and others simply struck out alone in order to gain control over businesses and to become the primary beneficiaries of the profits.3 Despite public appeals to custom and equality, in practice competitive economic behavior has become completely normalized. Leaders are not being disingenuous when they assert the need for ‘‘balanced’’ or ‘‘parallel’’ development. Their statements reflect genuine concern over the socially
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divisive effects of capitalism as it is experienced through large-scale mining and the unequal power relations between Lihirians and the company. But ultimately there is a contradictory process at play: as leaders externally proclaim the importance and unity of the community in moral opposition to corporate profit maximising motives, this masks the internal divisions that are exacerbated through daily actions and the pursuit of new economic opportunities.
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THE FIRST RUSH OF MONEY
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The early phases of negotiation and construction of mining in PNG are typically marked by spectacular changes in consumption as cash flows in. In Lihir, throughout the early to mid-1990s, this was a heady period of optimism, excitement, and social upheaval. As compensation payments first poured in and as business enterprises were established, coupled with the sudden availability of paid employment for people who had none previously – and the promise of royalties over the following decades – this all contributed to the general feeling that this small island community had hit the jackpot. Although the influence of earlier socio-political movements that promised a new world order cannot be discounted as an influence in the unrealistic expectations of Lihirians during the initial stages of mining (Bainton, 2010; Patterson & Macintyre, 2011), we want to stress the range and variations in notions of wealth acquisition and people’s engagement with business opportunities. Some held to the fantasy that they would no longer have to work and would enjoy the wealth from mining in the form of a perpetual income stream. Others had no experience of running a business but were eager to do so. A few had experience and understanding of business enterprises and were able to immediately take advantage of the company’s offer of interest-free loans to assist in the process. Some were relatively unconcerned about opportunities in small businesses and wanted to ensure agreements that would place them in managerial positions within the mining company and assist in setting up large companies that could be contracted to take on all aspects of construction and mining. The mining operation’s need for reliable service provision meant that there was also a more certain way of gaining an income – becoming a ‘‘silent partner’’ with an established national company, such as Ela Motors or Avis Car rental – and as discussed further, this kind of arrangement has come to typify an ideal of landowner status.
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The major beneficiaries of compensation payments initially conceptualized their engagement with capitalism mainly in terms of consumption rather than productive business enterprise. In interviews they mentioned what they would buy – at that stage invariably a truck – and then discussed the ways that they expected to live on store bought food, buy beer, clothing, and other goods. They expected royalties to provide them with a regular income that would sustain their lives of newfound luxury forever.4 When no royalty payments were forthcoming (and after considerable work by the company’s community relations team explaining how royalties related to production and the price of gold, which at that stage was significantly lower than today’s price) there was a spate of compensation claims – especially from those who had been relocated and had little gardening land. The resettlement allowances given for the first six months were finished and few had even planted new gardens, believing that they would not have to ‘‘work for food’’ again. In the first two years of the project much of the money, whether acquired as compensation, wages, or loans, was spent quickly on consumables and many of the newly acquired vehicles had been written off. The payments for compensation (for loss of land, crops, water, etc.) were often substantial – in the thousands of kina5 – and these payments were initially accepted as payment for loss of land. As the effects on people’s lives became apparent, further claims for compensation were made – for dust pollution as the roads were built, light pollution from the plantsite, for the noise and disruption caused by explosions, and for the deaths of pigs and dogs that wandered onto the newly made roads (Kirsch, 2004). In most instances these were paid. One effect was the expectation that there would be a continuous flow of money in the form of compensation. At the other extreme were people who saw the advent of construction and the influx of money as an opportunity to engage in village-based commerce. They did not borrow money but set up roadside stalls selling betel nut and surplus produce from their gardens and small ‘‘canteens’’ or trade stores. There was also a flourishing black market in beer. In many ways these experiments with petty capitalism, while dependent upon the circulation of cash from the mine, were approached in a more independent manner compared to landowners’ businesses. There were also numerous instances during those early years where company advisors exposed frauds that outsiders attempted to perpetrate, but in several respects this only increased suspicion among Lihirians that the mining company was determined to deny them real access to the capitalist system – that they were withholding the secrets that would ‘‘unlock’’ a constant stream of benefits and greater control over mine operations.
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Throughout this time, it became apparent that many people (especially those who encountered the confidence tricksters who convinced them of high percentage profits and the millions of dollars that was simply waiting for them if they invested their money) had limited knowledge of how investment worked. This lack of knowledge is not restricted to PNG, many people around the world have similarly limited understandings of money markets, including in countries where capitalism has been the dominant economic system for centuries (Strange, 1986). Some Lihirians at this time, however, had a great deal of disposable income, with more to come, and they were easy targets. This was also the heyday of money scams such as ‘‘Mani Rain’’ and ‘‘U-Vistract,’’ the home-grown Ponzi schemes that promised returns on investment as high as 100% per month (Cox, 2011). Its coincidence with the first large payouts for compensation from the mine saw many Lihirians lose thousands of kina. The appeal of these schemes tapped into local desires for immediate riches and ideas about capitalism based upon the instantaneous arrival of mine-derived wealth.
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This initial embrace of resourced-based capitalism was largely manifest in changes in consumption and ostentatious displays of wealth. Beer, cars, trucks, boats, clothing, electrical goods, supermarket foods, and cooked food were the goods most desired. This was what getting money meant – spending it and showing people that you had it. This emphasis certainly fits with ideas about Melanesian competition being expressed in conspicuous consumption or what the surrealist essayist Georges Bataille termed ‘‘economies of excess’’ (Bataille, 1994). But there is a marked difference between these goods and those that were formerly considered ‘‘wealth.’’ While beer and supermarket foods can be incorporated into feasts, the most expensive items (such as trucks) cannot – and these are the things most desired. And whereas pigs and yams were things that everybody could grow and raise, goods bought with money differentiate those who have money from those who do not. As a result, the ebb and flow of ceremonial exchange has been eclipsed by the arbitrary access to mining benefits played out in an ever-expanding and quickening competition as different clan groups channel more wealth into customary activities. Although competition to obtain business opportunities has deeply divided people, customary feasting has become a means (perhaps now the only one) of expressing clan solidarity, even if at the same time these events also
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expose the differences between ‘‘landowner’’ and ‘‘non-landowner’’ groups. These occasions provide opportunities to reassert ideologies about the importance of the clan, but they are simply moments – performative events that punctuate the daily rhythms of social change and dramatically proclaim cultural distinctiveness (to mine management and the migrant population as well as to themselves). The feasts occur much more frequently now, perhaps in part because buying pigs and yams has become easy for some. They also fulfil a need to assert leadership and claim prestige, and constitute a way of enacting and reinforcing a belief in the importance of the clan and group sociality. As such, the contemporary feasting complex might be regarded as a kind of ‘‘custom cult’’ – a desperate response to the divisive modernity generated by resource development as it has occurred in this location. The new prestige economy exemplifies ‘‘encompassment’’ – the process whereby pre-capitalist forms of wealth, value, and social status are subsumed and reconfigured by the engagement with the global capitalist system (LiPuma, 2001, pp. 19–21). Increasingly, money and the status associated with being successful ‘‘businessmen’’ determine roles in intercommunity feasting. The new displays of asymmetry and inequality that are manifest in competitive feasting retain forms and meanings that have a long cultural history, but they are encompassed by those that have come with changed relations to land (as landowners in the lease areas benefit far more than those outside it), changed relations of production, and the shift to a cash economy. As Lihirians assert their status as patrons through their attempts to ‘‘manage’’ processes of economic transformation, they are simultaneously engulfed by the forces of capitalism. On the one hand there is an active or maximising agency, on the other their lives are over-determined as the price of gold and the success of the mine set the range of possibilities for Lihirian landowners and reinforce relations of dependency. During the early years of the mine, saving, investing, or devising means of accumulating more capital were issues on the minds of few Lihirians. For most people the project of wealth-making was viewed primarily as finding ways to extract more concessions from the company. There were constant struggles over compensation, shares, jobs for Lihirians, and resentment at the lack of management positions for local people. The assertion of ownership of the gold resource was a constant issue as few Lihirians really accept the notion that the mineral resource is owned by the State. Lihirian exceptionalism and secessionist tendencies fueled vehement opposition to the company when contracts went to people from other areas of PNG and hostility toward migrant workers increased, underscoring localized forms of project dependent business development.
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The desire to make money is certainly a factor behind landowner interest in owning or running a business. But there are other social motivations that are derived from Lihirian ideas about prestige or gaining status (Banks, 2007). Having a business was seen by many as a way of displaying one’s position as a landowner. Mainly, those who applied to the company for a business development loan appeared to be intensely interested in acquiring a motor vehicle or boat and only secondarily concerned with the type of business they wanted. Many took their cue from already established businesses, such as building companies, which meant that there was a proliferation of such businesses for a short period. This ‘‘copycat’’ approach to business invariably ensured that many were not viable as there were simply not enough contracts available. Few Lihirians were prepared to introduce competition in the form of bidding lower than the amount that they had heard was paid previously to a successful company. In a discussion in the late 1990s with three disgruntled men who had not gained building contracts (each had tendered a slightly higher price than a recently awarded contract), they explained to Macintyre that to bid lower would have implied that they were ananit (Tok Pisin – ‘‘underneath,’’ of lower status) the clan group who had gained the earlier contract and that they bid higher in order to show that they were antap (Tok Pisin – ‘‘on top,’’ superior) of their rivals. In this way, inter-clan rivalries are transferred to the realm of business; the allocation of contracts antagonises and exacerbates existing differences, prompting some to sabotage or block business development activities. Although many Lihirians demonstrated a rather surprising disregard for ‘‘rational,’’ competitive business strategies, a few who were able to capitalize on the situation expanded their business activities rapidly during this period. There were two very successful businesses that had preceded the mine – a liquor outlet and a large tradestore in the affected area villages. With the establishment of the mine, these businesses expanded and thrived. Both were owned and operated by Lihirians who had returned to the island after working away from the island for several years. These men were shrewd, careful in maintaining control over their day-to-day operations and kept aloof from others in their villages. They were in many ways ‘‘loners.’’ The liquor storeowner employed only his own sons and a few men who were paid extremely low wages. The trade store keeper explained that he would not employ anyone who was related to him and for several years employed only young people from East New Britain, whom he also housed. Similar to many other business owners, both of these men insisted that the main problem for retail businesses in PNG are the demands of families and
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wantoks (relatives) to extend credit on goods. They also thought that family members were also far more likely to steal – knowing that a relative would probably not prosecute them. Their success highlights the problems that many Papua New Guineans face in building up their businesses or maintaining their affluence, as the demands of kin present a distinct threat to their position or the viability of their enterprise (Gewertz & Errington, 1999; Martin, 2007). Unlike traditional items of wealth, such as shell money, it is far more difficult to hide cash or trade store goods to avoid demand sharing.
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Small business failure in the context of mining development is intriguing, mainly because several of the economic circumstances that frequently cause insolvency elsewhere in PNG (such as low and intermittent cash incomes; problems with supply because of transport delays and inefficiencies; poor accounting skills; and theft and embezzlement) should not obtain, or at least not to the same extent. Theoretically, support from business development officers and closer contract management should help to mitigate these factors. Yet the vast majority of Lihirian small businesses begun in the first years of the mining project failed because of insolvency. So did some of the larger businesses. But we have also found that business failure is often a result of deliberate sabotage, which is again closely connected to the so-called ‘‘resource dependency syndrome’’ (Filer, 1998). Discussion of business failure in PNG is in some quarters a sensitive issue, often provoking a defensive tu quoque response that ‘‘small businesses fail at spectacularly high rates in developed countries too.’’6 The perception of high failure rate of small businesses in Australia, however, and possibly elsewhere, appears to be one of those ‘‘zombie myths.’’ Rates as high as 80% are sometimes claimed for small business failure in the first year of operation. The actual rates of failure, according to several studies, range between 9% and 35%, depending on how ‘‘failure’’ is counted. ‘‘Exit’’ from business operations accounts for the higher estimate, including cessation of businesses because of death of the owner, sale, or merger with another business enterprise and other reasons that are not economic. Failure due to insolvency is rarer.7 In PNG, and particularly in Lihir, we have found that insolvency is the most common reason for failure of businesses, especially small retail businesses such as village trade stores (see also Kuehling, 2005, Chapter 6).
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Local agricultural projects that supply produce to the mining camp mess are an obvious choice for local business development. Early attempts by the mine camp to purchase local produce (such as eggs, poultry, fish and vegetables) struggled with securing a regular supply and these projects ended up more like elementary community relations exercises than business development. A returnee from Lae initially embraced a poultry project with enthusiasm. The company’s agricultural staff provided assistance with the project and imported feed from Lae as part of the establishment process. When the food ran out the owner was incensed to discover that he was expected to purchase feed regularly with the profits from his egg sales. He stormed out of the company office, spent a great deal of money on beer, and abandoned his birds to death from dehydration and starvation. A piggery was proposed, funded, and supported by the company as another ideal business project that could be sustainable beyond the life of the mine. Pigs were imported from East New Britain that were larger than local pigs and it was envisioned that the pigs would be sold to village owners who could in turn breed from them and sell pigs to the local community. A slaughtering facility was planned so that meat could be produced and sold to local consumers and the catering company. The large pigs were much admired and within weeks most had been given away at feasts or killed for consumption by the businessman involved. The cultural prestige factor was irresistible and giving away huge pigs was a guaranteed strategy for displaying wealth. The demise of this business caused considerable ill will. He was, like the chicken farmer, furious when he discovered that a new supply of breeding stock would not come courtesy of the company and killed off the last pig – a pregnant sow – to the horror of many Lihirians. A vanilla plantation project failed when all the beans were stolen just as they were ripe. A large-scale vegetable project failed when conflict broke out between villagers claiming ownership of the land (which had been acquired by the Catholic Church a century previously and leased by the mining company) and stopped all people from entering the area. A mariculture project to produce crayfish for sale was sabotaged by men who were angry because they had not been given a comparable business venture. The cancrushing machine donated to the women’s association (as a way of raising funds and dealing with the thousands of aluminium cans littering the island) was very successful in generating income. Some men resented the venture’s success and claimed that it should be given to them as a business. When they were thwarted they smashed the machine. These cases illustrate the ways that some Lihirian people constructed the mining company as a source of constant funding and regarded such things
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as ‘‘interest-free loans’’ as gifts to which they were entitled rather than seed funding from which they were expected to grow an ongoing business. In effect, various forms of financial and advisory support were construed in terms of reciprocity – the land and resources being used by the mine had initiated indebtedness that was continuous. All benefits, including business support, were thus a form of due rent (Ballard, 1997). While many no doubt hoped that they would make money from their businesses, they were not unduly concerned about failure as they believed that the mining company would refinance them, or pay off their debts, or give them a lucrative contract that would enable them to do so. While this view of reciprocity and indebtedness might be characterized as ‘‘Melanesian’’ it also reveals a lack of awareness about the ways that loans work and of business acumen more generally. Interviews with recipients of loans at the time suggested that many were not being disingenuous when they asserted that the loans were ‘‘free money.’’ Moreover, the response of ‘‘cutting off the nose to spite the face’’ when their hopes for a business or perpetual financing were foiled occurred so regularly as to be a Lihirian, if not a ‘‘Melanesian’’ or ‘‘cultural’’ trait. Allowing all the chickens to die, smashing the can crusher and letting several hectares of vegetables rot in the ground were typical of the reactions when people were angry or resentful. In all, during the years 1996–2001 no fewer than 16 such incidents were recorded that effectively ensured that a business failed. Such acts might be construed as evincing the ‘‘ferocious egalitarianism’’ that is sometimes claimed to be a Melanesian cultural trait, but most Lihirian people attributed them to a more ferocious competitiveness, anger, and envy (Tok Pisin bel hat; jelas). These are perhaps manifestations of the same egalitarian proclivity, but they are a far cry from the dispersal and redistribution of wealth that is assumed when people speak of Melanesians investing in the social realm and so expanding their prestige. Unlike other documented cases of sabotage (Scott, 1985), these ‘‘levelling’’ acts are directed both vertically toward dominant forces and horizontally towards ‘‘peers’’ – other landowners. In several respects these acts have less to do with the morality of distribution or social equality, and are more related to the feeling among certain individuals or groups that they have been slighted or have missed out on their just entitlement. Dashed expectations and sheer resentment manifest in forms of ‘‘negative’’ or ‘‘outraged’’ agency (Wardlow, 2006) – material moments of disruption and destruction that signal the perceived failure of others (in this case the company) to act in expected ways.
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In the past five years the Lihirian economic and social terrain has significantly changed, dramatically exacerbating the early patterns we have described. The number of companies operating in Lihir has exploded as a greater number of Lihirians actively seek (sometimes demand) contracts with the mine. By 2011 there were approximately 650 Lihirian-based companies registered with the PNG Investment Promotion Authority. The largest are grouped under the Anitua Group of Companies (formally Lakaka).8 Although the ‘‘six major clans’’ in Lihir maintain the majority of shares in Anitua, the distribution of profits within this large umbrella structure is a challenge. The Group currently employs in excess of 2,000 workers, which is comparable with employment figures for the mining company, and approximately 45% of the workforce is Lihirian. The most successful branch is the NCS Catering Company, which has gained contracts with new projects in other parts of the country, but the majority are dependent on the presence of the mine in Lihir for their income.9 The Anitua Group has a board of directors largely comprised of Lihirian landowners. Many of these board members have become extremely rich. These few ‘‘boardroom capitalists’’ constitute the new wealthy elite and many have integrated their wealth into the global economy through investments. In many ways they exemplify Lihirian ideas about commercial engagement and embody the ideal of landowner status, whereby income is drawn from board positions that are awarded according to landownership, while expatriates or other Papua New Guineans manage and work for these companies. This model has now been widely replicated through the range of joint venture or ‘‘silent’’ partnerships and the range of small-to-medium enterprises, many of which supply labor. Much of this has been driven by the opportunities created by expansion of the mine processing facilities in order to produce an annual output of one million ounces of gold. This project, which was approved in 2008, has required approximately 500 additional laborers and provided millions of kina in contracts and grants that have directly benefited local companies (Newcrest Mining Limited, 2012, p. 59). In order to maximize commercial opportunities lease area landowners have grouped themselves under six larger ‘‘specific issues companies’’ that reflect geographical areas within the mining lease, such as the plant site, the mining pit, the stockpile area (where Kapit village was once located), the Londolovit weir, and Kunayie airport. Many of the smaller companies employ fewer than 50 staff and provide ‘‘labor hire’’ services, drawing upon the large pool of migrant labor in Lihir.
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Labor hire companies offer services not just to the mining company but also to other Lihirian contractors. The abundance of such ventures is in part a continuation of the ‘‘copycat’’ phenomenon observed above. Once people observe that a labor hire company is successful, they emulate it in the hope of similar success. While this promotes competition initially, there are diminishing returns once almost every lineage or sub-clan group sets up a labor hire business. Just as in the first construction phase there were simply too many building companies to be viable, now there is a super-abundance of labor hire businesses. While they might begin by buying a vehicle and having a logo painted on the side and having a list of staff or an ‘‘operations manager,’’ many do not have sufficient contracts to remain viable and certainly few will be able to fulfil their aspirations of expanding into equipment hire and becoming national companies. The prestige of having a vehicle with a logo and being able to call oneself a company director are undoubtedly also factors in this trend, but they also indicate the ways that competition over businesses is now a site of social fission and conflict. As has happened elsewhere in PNG, the mining project in Lihir has attracted large numbers of domestic migrants (Bainton, n.d.). There is a symbiotic relationship between increased in-migration and the growth in landowner businesses. While migrants constitute a large proportion of people employed by Lihirians and have fueled the expansion of labor hire companies, their presence continues to be a source of resentment and tension. The outsider status of migrants reinforces Lihirian ideas about their status as landowners who should be the primary beneficiaries of economic development, and they also desire to profit from the migrants’ presence – as employers and by renting houses and land to them. From the earliest phase of the project Lihirians have regularly called for migrants to be evicted and ‘‘sent home’’ (Bainton, 2009), all of which have foundered because Lihirians are their landlords and bosses, and so are dependent upon them. The labor hire company glut has also created challenges for the equitable distribution of contracts and the development of long-term commercially sustainable businesses. The proliferation of small enterprises offering similar services makes it difficult to establish economies of scale. The contracting environment on Lihir has assumed a kind of Byzantine complexity with companies operating under joint venture, independent, family, clan, or subclan ownership. Other companies operate according to land areas that cut across individual clan land boundaries such as the specific issues companies. Commercial affiliations are duplicated across these entities. This means that in many instances the same people are competing for contracts but through different companies and in some instances in collaboration with different
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sets of individuals or groups (as a way of maximising opportunities). There has been an attempt to address the oversupply of labor hire companies by grouping smaller companies under the specific interest company structure. However, many landowners remain committed to the notion of individually owned and operated companies, which likely reflects their concerns over large distribution models, the fear of losing any prestige associated with owning a company, as well as more general patterns of social and political division that preclude some groups and individuals from working under a single entity. There are other factors which must be considered to understand the labor hire phenomenon. The shift from a focus on royalties and compensation money as the main form of economic benefits to ‘‘commercial participation’’ is premised upon enduring ties to land whereby landowners expect to participate in any work that occurs on their land in order that their land might still be regarded as ‘‘productive’’ (which is most often expressed through the local idiomatic turn of phrase, kisim kaikai bilong graon bilong mi yet – to get food from my ground). This exacerbates the politics of resource development as labour hire companies typically operate within their own territory (their clan land identified within the lease area) and generally have little competition from other companies (except in cases where members of the same clan, or rival clans with competing land claims, establish a company in the same line of business). The landed interests which underpin the allocation or awarding of business opportunities ensure that business development remains synonymous with compensation. The distribution of economic benefits within clan, sub-clan, and even lineage groups is rarely to the satisfaction of all members. This has hastened the splitting of landowner groups and the subsequent ‘‘sub-division’’ of lease area blocks – as these groups compete for economic opportunities from the same source this produces an economically and socially diluting effect. The owners of these companies are able to leverage their negotiating position in relation to the mining company by threatening to disturb to operations, which is signaled through the placing of a symbolic taboo marker made of a ginger root plant (Bainton, 2012). Such tactics of disturbance are directed toward both the company and fellow Lihirians. Quick responses by the company to these threats in order to maintain good relations and avoid work stoppages ultimately furnish landowners with an unusual amount of negotiating power that is perhaps more commonly associated with business owners operating in the underground economy. Consequently, the broader mining lease area now resembles a patchwork quilt of imperfect economic competition. The ability of certain landowners to extort business
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opportunities from the mining company through chicanery or force configures landowner–company relations around forms of negative reciprocity (Sahlins, 1974) and reinforces a competitive system of block holder monopolies that further deteriorates intercommunity solidarity.
CONCLUSION: FISSION AND FRICTION
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The patterns we have described help to explain why landowner businesses in PNG often fail to expand beyond immediate regions and why capital then appears to ‘‘jump’’ between mineral enclaves and bypass or skip over most of what lies in between (Ferguson, 2005, p. 39). Even if mining companies fulfil their immediate responsibilities to project area landowners, especially in terms of assisting them to develop viable businesses to capitalize on projects, at the same time, capital cannot easily flow between different mining locations or throughout nearby areas because it tends to get ‘‘stuck’’ in local political eddies. These localized interactions between landowners and companies are framed by a global context where much larger sums of wealth move at a higher and restricted level across transnational grids through reinvestment, mergers, and capital movement between and within corporations, which eventually leaves most landowners and hopeful entrepreneurs with the feeling that the real development lies elsewhere. Over the last decade, when the Lihir mine has been in production and expanding, Lihirians have become more concerned with obtaining business contracts than with claiming conventional forms of compensation. The demands for compensation have certainly not decreased rather compensation has assumed the form of business development and vice versa. The categorical merging of business development and compensation frustrates the larger goals of sustainable development and reinforces dependence upon the company. The anomalies in the Lihirian economic system, many of which are replicated in comparable mining enclaves, skew the economy away from structures capable of supporting continuous wealth generation and service delivery in the post mining era. In this context the roles of different actors are continually confused. Landowners present themselves as both households and companies. And while the mining company strives to engage local companies on ‘‘commercial terms,’’ landowner companies demand exception and present themselves as displaced households entitled to compensation and regularly resort to subterfuge to leverage business opportunities. Landowners treat the mining company simultaneously as a firm, as a source
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of income, as a pseudo government that provides infrastructure and regulation, and as a financial institution that provides seed finance and business support. The additional roles and responsibilities assumed by the company in this environment provide landowners with commercial opportunities, but because the company sometimes treats these contracts more like insurance policies to ensure unfettered land access, business development is continuously conflated with compensation. Every time short-term operational needs are privileged over long-term goals of economic stability and sustainability, landowners become further dependent upon the company. This reliance is further evidenced as local ‘‘spin-off ’’ businesses are compelled to ‘‘spin’’ back toward the mine: the various factors which hamper broader economic engagement in nonmine sectors force local companies to invest their resources (including labor power) back toward the mine. In many respects migrants have become the scapegoats for tensions that have developed within the Lihirian population. For while antagonism toward them has been consistent, relations within clans and between different groups of Lihirians have become more fragmented. The initial ‘‘parcelling’’ of land within the pit, which meant specific owners received benefits and exclusive contracts, has extended to different portions of land as the mine has expanded, generating antagonistic interests between people who were formerly united as clan members. Moreover, as people became increasingly aware of the need to ‘‘make money’’ from the presence of the mine, so the competition for businesses has escalated. As different people vie for business support, so the emphasis on clan economic solidarity has diminished. The catch-cry at the early stages was ‘‘Lihirians first’’ – and aimed at ensuring that Lihirians were given preference in employment and promotion. It is now ‘‘My land, my business.’’ The larger clan groups have split into smaller lineage, family, and even individual business entrepreneurs. The fissures have in some cases set brother against brother. Competition is fierce and often acrimonious. As only some people are able to set up businesses and only some businesses succeed, the social and economic gaps between people widen. In short, ‘‘business development’’ has involved processes that have divided people and entrenched inequalities. In Lihir now there are still some people who have never enjoyed any substantial direct improvement in household living standards or income from the mining project – they remain subsistence gardeners. There are others who are wage earners and so have the benefit of a steady (and by PNG standards high) income while the mine exists. Those who, by chance or design, have managed to gain profitable
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businesses and contracts are well off – and a few of them have amassed fortunes that have enabled them to invest in national enterprises and real estate (some of it in Australia). But there are many whose businesses have struggled and failed. There are tensions between ‘‘haves’’ and ‘‘have-nots’’ that even now appear to be irresolvable. Corporate groups, specifically the ‘‘six clans’’ of Lihir, initially provided the ideological foundation and organisational structure for commercial engagement and notions of fair distribution of all benefits. The clan model determined the original agreements with landowners within the SML area and so retains its significance for both Lihirians and the mining company. But the imperatives of profitable business development cut through those imagined unities that were formerly the basis of Lihirian sociality. In this chapter we have concentrated on the early period of engagement with industrial capitalism while drawing attention to the change over time and enduring patterns. As we have shown, the refusal of some Lihirians to be encompassed by local structures and the morality of exchange and distribution, or ‘‘custom’’ – the conscious attempt to manage modernity – stems from the fact that Lihir society as a whole is being encompassed by the global resource economy. At present almost every business is dependent on the mining project in some respect, and so too is the expanding ceremonial economy. When the mine closes, there are very few that will be ‘‘sustainable’’ in their current form. The inequalities that mining has introduced might be tempered by the inevitable collapse or decline that will accompany mine closure, but by then, the social changes probably will have transformed Lihirian social formations and forms of sociality beyond current recognition.
ACKNOWLEDGMENTS
Thanks to Veronica Bainton, John Owen, Deanna Kemp, Mark Mitchell, Tim Grice, and Michelle Fulcher for their comments on an earlier draft which has helped to bring greater clarity to the final version.
NOTES 1. Macintyre was contracted by the mining company to undertake social impact monitoring studies from 1994 to 2005. She also conducted independent research into social change funded by the Australian Research Council. Bainton undertook 18 months of Ph.D. research in Lihir from 2003 to 2004, followed by continuing
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research in Lihir from 2007 to 2010 through a research fellowship funded by a research services agreement between Lihir Gold Limited and The University of Queensland. Since 2010 Bainton has been employed by Newcrest Mining Limited to manage the social impact monitoring program for the Lihir operation. 2. These include the International Finance Corporation Performance Standards (2012), the International Council of Mining and Metals Sustainable Development Principles, the Global Reporting Initiative, and the Global Compact. 3. One man tried to sell one tonne of gold to a U.S. bullion company. He mocked up a logo and letterhead and the American company took the deal seriously. Unfortunately the only fax machine to which he had access was in the company’s community affairs department. He inadvertently left his own letter on the fax machine and the U.S. dealer faxed a reply to that address, so all information was available to the mining company and he was thwarted. 4. This is best captured in the naming of the local supermarket Ataniom, the Lihirian word for garden, which reflects the idea that as modern landowners people would ‘‘harvest’’ their needs from the store with money derived from the use of their ground. 5. Conversion rates for 1 USD/1 PGK: 1995 – .8; 2000 – 2.4; 2007 – 2.9. 6. We confess to taking this stance ourselves on occasion. 7. According to a study conducted by the NSW Department of State and Regional Development in 2001: ‘Despite what is commonly thought, relatively few small businesses fail. Over the 2 year period 1994–95 and 1995–96, an average of 23 200 small businesses or 6.1% ceased operating in Australia. Less than 10% of these closures were due to bankruptcy proceedings (in the case of unincorporated businesses) or companies being liquidated. The other businesses closed down for reasons such as the owner retiring, seeking a different lifestyle or dying. The failure of Australian businesses fell significantly during the 1990s. It is estimated in 1999–2000, there were 3.6 failures per 1000 enterprises.’ (See also Bickerdyke Lattimore, & Madge, 2000). 8. These include Anitua Mining Services, NCS Catering, NCS Properties, Anitua Security, Lihir Tyre Centre, Anitua Radial Drilling (see http://www.anitua.com.pg/). 9. It is important to note that while major landowner companies in PNG like Anitua are hailed as models of success by institutions like the World Bank, their success is highly contingent upon the support base provided by the mining company in their formative years. This support includes preferences for local contracts, and in the case of the Lakaka company (the earlier formation of Anitua), financial assistance to avoid bankruptcy. Where other companies have proven commercially unviable, the long term success (and ‘sustainability’) of primary landowner companies is frequently underpinned by the vested interests of mining companies.
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