COMPENSATION FOR USE OF LAND FOR EXTRACTION OF MINERALS IN PNG.
LANDHOLDERS COMPENSATION UNDER THE MINING ACT 1992

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Background:
 

In Papua New Guinea, the land is divided between that which is owned by the State, those parcels held as freehold titles and traditional customary owned land.

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The following are some Questions that were frequently being asked by Landholders during a Compensation Agreements Review of a Mine Project in the Papua New Guinea which the Author was involved and the Answers provided.
 

COMPENSATION TO THE LANDHOLDERS.

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A landholder is paid compensation for the following;

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1. being deprived of the possession or use of the natural surface of the land;

2. damage to the natural surface of the land; (s. 154(2)(b))

3. severance of land or any part thereof from other land held by the relevant landholder; 154(2)(c)

4. loss or restriction of a right of way, easement or other right; s. 154(2)(d)

5. loss of, or damage to, improvements; s. 154(2)(e

6. in the case of land under cultivation, loss of earnings s. 154(2)(f);

7. disruption of agricultural activities on the land s. 154(2)(g);

8. social disruption s. 154(2)(h);

9. economic trees; s. 154(3) and

10. injury to or depreciation to the value of adjoining land or improvements s. 154(6)

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Why doesn’t the Act authorize a Landholder/Landowner/LO to be paid some money for the extraction of minerals from their land?

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The Constitution of Papua New Guinea, authorizes section 212B of the Constitution of the Independent State of Papua New Guinea (‘the Constitution”) provides for the notion that hydrocarbons and minerals in their natural state are, and always have been, the property of the Independent State of Papua New Guinea.

This provision was a recent amendment to the Constitution.

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Does the State or the Developer have any right to come onto my Land and start extracting minerals?

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The simple answer is No, they cannot just enter onto your land and start extracting minerals.

You have to allow that they enter your land, but ultimately because it is a State Project, the area is compulsorily acquired, a Lease in the form of a Tenement is issued to the Developer and the Landowners are paid compensation for the whole of the term of the Tenement.

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Circumstances where deprivation of Property (Land) maybe exempt.

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Section 53 of the Constitution affirms the Basic right to protection of property and that no property may be compulsorily acquired, except in the following;

(a)   if the property;

–  is required for a public purposes; or,

–  is required for a reason that is reasonably justified in a democratic society that has a proper regard for the rights and dignity of mankind. This must be outlined under and Organic Law or an Act of Parliament.

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(b)   That it is really necessary, that such act of deprivation is necessary, that it can afford reasonable justification for the causing of any resultant hardship to the affected person.

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The exploration and mining activities are declared as activities conducted for public purposes, and national interests, hence this allows possession to be compulsorily acquired of any property, and permits any interest in or right over property to be compulsorily acquired by the State for the number of years that the extraction of minerals will take place and the Developer is allowed on the Land.

However, as stated under the Constitution a person/customary land owner cannot be deprived of their use of their land without being given just compensation on just terms.

The Mining Act also provides that compensation must be paid to the landholders of the land onto which either exploration or mining activities are to be conducted.

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WHAT IS A COMPENSATION AGREEMENT?

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Once both the Developer and the Landholders agree to the amount of Compensation and the method of payment of compensation, then that is reduced into writing as an Agreement for the

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WHAT FORMS OF COMPENSATION PAYMENTS HAVE BEEN MADE IN OTHER MINES

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Compensation has in the past been paid in the form of Cash, paid to each landholders, development projects for the whole community that are affected and cash in the form of investment for the descendants of the landholders

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IS COMPENSATION PART OF ROYALTY?

No compensation is for deprivation of the use and enjoyment of the land, royalty is different.

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IS THERE A LIMIT TO AMOUNT OF COMPENSATION PAYMENT?

The legislation does not provide for set amounts for compensation. The amounts are negotiated between the Landholders and the Developer, guided by the State and taking into consideration factors like, inflation, CPI, amounts set in other mines in PNG, 

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