On 9 December 2021, Project Sepik Inc and Jubilee Australia Research Centre (‘the Complainants’), on behalf of 2,638 people living along the Sepik River in Papua New Guinea, filed a specific instance against PanAust Limited at the Australian NCP. The complaint concerns activities of PanAust and its subsidiary, Frieda River Limited, regarding their plans to build the Frieda River Mine in the headwaters of the Sepik River. If built, the mine will be the largest in PNG’s history and includes a proposal for a vast tailings dam that, if breached, would lead to significant environmental destruction for communities downriver.
The Complainants allege that PanAust has failed to uphold their rights as affected Indigenous communities to give Free, Prior and Informed Consent to the project. The Complainants also allege that PanAust has failed to adequately address the environmental risks and likely impacts of the Project on the Sepik River and its environment; and have not adequately disclosed project information to stakeholders.
The Complainants are seeking support from the NCP to facilitate discussions with PanAust, and are asking the company to pause all further project development, and engage in good faith consultations at an international standard with all potentially affected communities, including the Complainants, with participation of an independent third party. Should these consultations not result in the Complainants providing their Free, Prior and Informed Consent to the project, the Complainants ask that the company commit to discontinuing its plans for the mine.
Relevant OECD Guidelines
- Chapter II
- Chapter II Paragraph A14
- Chapter III
- Chapter III Paragraph 2
- Chapter III Paragraph 2 f
- Chapter III Paragraph 2 g
- Chapter III Paragraph 4
- Chapter IV
- Chapter IV Paragraph 1
- Chapter IV Paragraph 2
- Chapter VI
- Chapter VI Chapeau
- Chapter VI Paragraph 2
- Chapter VI Paragraph 3
- Chapter VI Paragraph 4
- Chapter VI Paragraph 5
On 25 July 2022, the Australian NCP published its initial assessment accepting the complaint for further consideration and offering its good offices. According to the NCP, “[t]he objective of good offices would be to help the parties resolve their differences regarding PanAust’s due diligence on the proposal and planning for a mine in the Frieda River Project.”
The NCP noted two aspects that required attention to inform the potential and scope of any good offices: the Complainants’ position and proposals within and outside the NCP process, and the environmental impact assessment (EIA) process underway in PNG. The NCP invited both parties to provide further detail on these two aspects, as well as the company to address whether and how the Complainants’ concerns are being addressed consistently with the Guidelines, and for the Complainants to confirm their wish to genuinely engage in the NCP process with a view to finding a solution to the issues raised.
On 3 October 2023, the NCP published its final statement. As PanAust had refused to engage in the NCP’s good offices, the NCP conducted its own examination of the issues. The NCP determined that most of PanAust’s actions identified in the complaint were consistent with the OECD Guidelines. The NCP referred to extensive consultation and engagement conducted by PanAust and the PNG government in relation to the Sepik Development Project being underway with PNG communities. Many factual matters raised in the NCP complaint will be determined by PNG legal processes and the NCP stated that it would be inappropriate for those to be subject to determinations in its statement.
The NCP recognised, however, that the proposed project entails significant impacts on indigenous groups, and that those groups’ free, prior and informed consent (FPIC) will be necessary for the project to proceed. The NCP noted that PanAust has acknowledged that it will need to obtain FPIC from some communities for the project to proceed. The NCP stated that the expectations regarding FPIC only apply to Indigenous groups which will be significantly impacted by a project, not to every stakeholder. According to the NCP, FPIC depends on: “(a) an objective understanding of the physical impacts; (b) a subjective understanding of the cultural impacts referenced to the relevant Indigenous culture and credibly substantiated within that; (c) consideration of whether either of those types of impacts are of such significance that FPIC would be required; and (d) the relevant group’s views after appropriate engagement”. The NCP stated:
“It has not been possible through this examination to determine the extent of impact on the parties involved in this complaint, and whether their FPIC is required… Equally, the fact of an enterprise’s inconsistencies with some expectations of the OECD Guidelines about stakeholder engagement does not preclude FPIC from ever being achieved… The enterprise’s Stakeholder Engagement Plan addressed where FPIC is not able to be obtained, and a role for compensation. Offering compensation as an alternative to obtaining FPIC would be inconsistent with the OECD Guidelines…”
The NCP also made several recommendations, including for PanAust to review the totality of community engagement in relation to the project (by itself and the PNG government) and to ensure that for any Indigenous groups from which FPIC is required, that engagement occurs in a language easily understood by that group. PanAust was also recommended to review its internal FPIC procedures to ensure consistency with international standards, particularly that compensation is not understood as an alternative to FPIC. The NCP also recommended for PanAust to include the Complainants in future stakeholder engagement and consider the views of the communities they represent, as well as to disseminate the dam break analysis.
The Complainants welcomed the NCP’s final statement: “Although the AusNCP did not find the company in breach of the OECD Guidelines in relation to environmental assessment, it recommended that PanAust disclose the dam break analysis to relevant communities, which was one of the main requests made by the complainants in this process – something the Sepik communities have been calling for for years. The NGOs have long maintained that not enough information has been released about the proposed tailings dam, which several experts have argued is potentially unsound. ”
Luke Fletcher, Executive Director of the Jubilee Australia Research Centre, said: “PanAust should release the dam break analysis at once, as recommended by the AusNCP. The Sepik people deserve to be able to know what will happen to their river and their way of life in the event that this risky tailings dam fails one day.”