Letter to the Environment Minister Hon. Benny Allen

Copy of
Letter to Minister for Environment and Conservation 20th January 2011.


I wish to brief you on the Watut River Damage Claim and I request that your Department take urgent and appropriate action.

In October 2010, groups of customary Landowners along the Watut River complained to me that the Hidden Valley Joint Venture (HVJV) had caused massive damage to the Watut and were however trying to get Landowners to sign statutory declarations to submit to an 'Improvement Compensation procedure" and accept a small amount of compensation of up to K1200 per Landowner for the massive damage to the River and the surrounding land. Of further concern, the Landowners were also complaining of skin rashes and stomach complaints due to contamination of the water by HHJV, as well as all fish life in the river being dead.

The mine owners, Australian Newcrest and South African Harmony Gold which are the companies that own 50% each in the HHJV, have admitted on Harmony's website the existence of higher levels of sedimentation in the river that had been caused by mine operations. They did not however explain why the fish in the river had died, why the landowners were experiencing medical problems and why vegetation along the river was dying back.

It was then exposed that HVJV had underestimated the amount of overburden that had needed to be removed in the construction of the mine, but without any structural alteration had stored the excessive amounts in the planned interim waste dumps. Further, HVJV did not even construct competent waste dumps as there were insufficient competent fresh hard rock - but went ahead with the construction of the mine. These dumps failed with the first big rains sending millions of tonnes of metaliferous overburden (containing iron pyrites and other metals) into the Watut River. As there was meant to be no discharge of waste into the Watut, none of the landowners down the river were part of any pre-existing compensation agreement as would have been required under the Mining Act if any damage was a predicted consequence.

Additionally HVJV failed to construct retaining dams at the Kaveroi and Watut catchments and 18 months after construction began, none of the retaining constructions were even commenced and all side casting by HVJV was going straight into the Watut and Kaveroi catchment creeks.

Both ore and waste at the Hidden Valley Mine were predicted to be and are susceptible to acid generation, so should have been and should be handled with great care, which clearly has not been the case.

I announced by way of press release on 27 October 2010, that was reported in the PNG national newspapers, that I was very concerned that HVJV was approaching Landowners to accept minimal compensation, without any independent verification of the nature and extent of the damage to the Watut and surrounding land and that I was going to investigate into both the scientific facts and the legality of the situation and that if the signing of the statutory declarations was inappropriate for the landowners and also if it affected their rights to compensation in any way, legal proceedings would be commenced. I publically requested HVJV to cease the statutory declaration compensation procedure.

A letter was sent from the lawyers for HVJV Blake Dawson (a large Australian Law Firm) to the lawyers for the landowners on 3 November stating that should any legal proceedings be commenced to stop the payments (the statutory declaration signings), then they should be given reasonable notice so HVJV may be represented in the proceedings.

Discussions then took place between the myself and members of the HVJV, and HVJV requested that a meeting take place between the myself and my advisors and HVJV to try and resolve the issue through negotiation.

The meeting took place on 26 November 2010. At the meeting, I agreed that I would not immediately commence legal proceedings on behalf of the Landowners, on the basis that the issue of the pollution of the Watut would initially be resolved by a process, particularly:-

• That MMJV would provide all relevant documents and reports
• That the Landowner advisory team would visit the site
• That both sides would draft terms of reference and suggest members of an independent review team
• That the parties would meet in late January 2011 and should the respective teams differ in their scientific evaluation of the problems with the Watut – an independent scientific team would be put in place to assess the situation
• That the amounts of compensation and rehabilitation would be determined after the scientific assessments were completed.


On 13 December, it was reported to me that over the weekend of 11-12 December HVJV teams were still approaching Landowners on the Watut River asking them to sign the statutory declarations which confirmed their submission to the compensation process as outlined in the MOA – which they are not even party to- and accept an arbitrary amount of compensation. This conduct by HVJV was contrary to the spirit and express agreement by the parties on 26 November 2010.

As HVJV had continued with the process, I, as representative of 110 named customary landowners on the Watut River had lawyers file a Writ of Summons in the National Court in Lae, Morobe Province, on 14 December 2010 claiming against the corporate entities that make up HVJV, damages and other relief on the basis of Nuisance and Negligence, which was the dumping of the waste into the Watut River.

HVJV again when learning of the filing of the Court proceedings, requested that they be withdrawn so that negotiations could continue. I agreed to continue to negotiate on the basis that:-
• We, being the landowners and myself would continue to attempt to co-operatively resolve the Watut pollution issues – in the manner as outlined in the 26 November 2010 meeting, and
• The proceedings would not be withdrawn but that the proceedings would not be served and that the proceedings would only be served in February 2011 in the event that the negotiations in late January2011 failed, and
• We would however serve the proceedings earlier should HVJV continue to attempt to influence any Watut landowners to sign the statutory declarations OR should MMJV conduct awareness on these issues to the affected landowners.
• HVJV should issue a joint press release setting out the situation

This was communicated to the lawyers of HVJV on Thursday 16 and Friday 17 December 2010.

HHJV, through its lawyers responded on 20 December 2010 that they would continue with the process of the statutory declaration signing and we should still withdraw the proceedings.

We informed HHJV through our lawyers on 20 December 2010 that I had issued a press release to inform the landowners and the community of the situation, that I still demanded that the statutory declaration and compensation procedure cease - so that the independent scientific verification could be made.

On 20 December we were informed through the lawyers for HVJV that unless the Writ was withdrawn there would be no negotiations.

On 28 December I was again informed by Landowners that HVJV had continued visiting villages along the Watut to request villagers sign the statutory declarations and for payments of minimal compensation to be made. I advised HVJV through lawyers that

• HHJV immediately cease this behaviour; particularly that they desist from inducing further signatures and cease payments.
• Should HHJV cease this behaviour, then the landowners would be prepared to proceed with their scientific team visiting the site on 24 January 2011 and following that, agree to a meeting with the scientists, the lawyers and the parties to take place in Port Moresby on 31 January 2011
• Should HHJV continue inducing landowners to sign these statutory declarations and continue to make these payments, the Writ would be served
HHJV responded on 30 December 2010 stating that they refused to stop inducing Landowners to sign statutory declarations submitting to the HHJV compensation procedure nor making payments.
Landowner groups then complained to me that HVJV was using bullying tactics and cheating their communities. I was told that HVJV spent the last week of December delivering cheques to communities to allegedly compensate for the damage caused by toxic pollution from the mine to garden trees and crops. The money ranges from K20 to K4000 (AU$8 – $1600).
At the same time as receiving the payments, the communities, who were earlier forced to sign a Statutory Declaration without any explanation and blank ‘Valuation Sheets’, were now made to sign what are called ‘Damage Assessment Payment Receipt Forms’. These forms, written by HVJV, state:
I (claimant name), herby state that this claim represents a true and correct assessment of damage and that I accept the assessment carried out by MMJV officers as being adequate. I agree that I will make no further claim for economic improvements damages will be made in respect of the garden area and improvements described above, and that this damages assessment payment for economic trees and plants is payment in full and final satisfaction of my claim
Unfortunately given HVJV’s attitude,we had no option but to serve the legal proceedings which we did on 5 and 6 January 2010.
The claim by the landowners is for damages to be paid for the massive damage to the Watut, for the river to be rehabilitated and for the mine to cease operations until the nuisance ceases and proper waste dumps are constructed, erosion controls are properly implemented and the river rehabilitated. They are also seeking punitive damages.
We deny that the commencing and service of these legal proceedings prevent any further negotiations in this matter nor does it affect the establishment of an expert technical advisory panel as a vehicle to resolve the “sedimentation” and pollution issues. An issue that must be determined by the parties or by the court will be the nature and extent of the damage to the Watut and its peoples. This can only be completed by scientific evaluation. The next issue to be determined by the parties or the Court would be the amount of damages and what can be done to rehabilitate the river and also to prevent this type of disaster from occurring again into the future.
HHJV has on one hand pretended to be willing to negotiate with the landowners and their representative on the issues of “sedimentation” and pollution of the river, after concerns were raised me as to the statutory declaration compensation process, but have in complete bad faith, whilst the Landowners agreed to not file proceedings , continued to induce customary landowners to sign the statutory declarations and accept negligible amounts of compensation.
HHJV claim in their press release that the negotiations had nothing to do with the statutory declaration process, when in fact, it was that process that raised the threat of legal proceedings by the landowners in the first place, as can be seen from the initial correspondence from Blake Dawson.
A specialist scientific team will be visiting the site on behalf of the Landowners in late January 2011 to undertake their assessment of the nature and extent of the damage to the land and riverine rights of the Landowners, and should HVJV not participate in negotiations, the Landowners will pursue their commenced litigation vigorously.
The issue of the miner and the destruction they have caused should not be left for the landowners to resolve on their own and your department should take the lead in holding the ,miner to account and to force them to not only properly compensate the landowners but also to rehabilitate the river and your department must take steps to ensure that this sort of behaviour – from destroying the river to conning the landowners into signing documents and accepting negligible compensation NEVER happens again.

Yours faithfully

Honourable Sam Basil MP
Member for Bulolo Open Electorate