Nigel Parker, Managing Director & CEO, Ok Tedi Mining, on the roles of townships and fly-in-fly-out employees in Papua New Guinea

The debate over the benefits or disadvantages of the fly-in-fly-out employment model in the PNG resource industry is, in my view, often misguided, as it tends to target foreign employees, when in reality it is more applicable to the national workforce. Most resource extractive operations are located in very remote areas of PNG, so there is a need to recruit skilled workers from outside the local area. As the proportion of foreign employees in most extractive operations is less than 10% of the total workforce, the majority of employees are in fact nationals from other parts of the country. At Ok Tedi, for example, the workforce is composed of 6% foreign employees (in a mix of residential and flyin-fly-out), 22% local area nationals and 45% national employees on the fly-in-fly-out roster, with the balance of the workforce living on-site, but drawn from other areas of PNG. This composition exists despite the fact that Ok Tedi has, over the last 35 years, established a modern township in Tabubil with over 1000 houses for residential employees.

The fly-in-fly-out model has its benefits, especially for non-local employees, and in particular nationals, who can regularly travel back to see their families, keep their cultural ties intact and also contribute to the social and economic development of their village, district and province. Not having this flexibility would have a significant social impact on employees and their families in a culturally diverse country like PNG.

The debate within the resources industry also extends to the value of townships and their future use once resources are depleted and the extractive operations are closed. The significant investments in public infrastructure – such as hospitals, power stations, roads, airports and utilities – as well as the social fabric that is built around an extractive resource township, pose a major challenge for resource companies that want to avoid leaving behind a negative legacy and potential future liabilities. If authorities are going to insist on resource companies establishing townships in PNG, there has to be a long-term plan that meets the needs of all stakeholders in order to justify the massive investments required to build infrastructure in remote areas.

One of the models proposed so far involves resource companies allocating sufficient revenues to meet the costs of providing utilities and services, such as roads, electricity generation and distribution, water, and garbage collection – effectively a full-service township. What hasn’t been addressed is the establishment of governance structures for townships created in this way. This has many socio-political implications and will inevitably require a broader discussion at a national level. The Australian municipal model, which was inherited from the colonial period, has essentially failed in the delivery of essential services to the people.

With regard to the Ok Tedi experience, the fact that the Tabubil township is built on a special purposes lease, which will expire when the mine closes, means that third parties cannot obtain long-term land tenure in Tabubil for potential commercial activities. This represents one of the major constraints to attracting investment and assuring long-term social and economic development. After a mine closure, the land reverts to the original landowners, therefore investors are reluctant to invest significant amounts of capital in infrastructure. This issue could be addressed by the government taking the necessary steps to convert special purpose mining leases into urban development leases, so that individuals or organisations can be granted subdivision land titles under the PNG Land Act.

The future of Tabubil is a complex issue, and the same is true for other resource supportive townships in PNG, as land is considered a part of the soul in this country. I believe that there has to be a concerted effort by the government, landowners and mining companies to consider the advantages and disadvantages before deciding whether a resource company should be required to develop a supportive township. How to develop Ok Tedi’s Tabubil hospital in a way that will be sustainable post-mine closure will require cultural sensitivity and coordination between all the stakeholders.