Papua New Guinea is home to some of the most biodiverse habitats in the world and is rich in natural resources. Having the third largest gold reserves in the world, it has attracted large amounts of investments into mining. Among them is the Lihir mining operation which is one of the two biggest mines in the country [1]. The mine has been operated by Lihir Gold Ltd. and is currently owned by Australian miner Newcrest (see project details). The mine is located on Lihir island, New Ireland Province.

Prior to the arrival of the mine, indigenous residents in the area largely depended on subsistence agriculture and fishing. The first mining explorations started in the early 1980s and were followed by several feasibility studies and negotiations between local landowners, the company and the state. Negotiations over the development of the mine, benefits distribution and impact mitigation were finalized in 1995. The agreement was signed on March 17th, 1995 ([2], see also project details). 

During the planning phase, many social problems were anticipated. They included issues such as unequal income distribution, influx of outsiders, tensions between community members, project dependency and the like [2]. While compared to other mining projects in the region, substantial efforts were undertaken to consider these problems, some argued they were largely reduced to issues of compensation. A proper communication processes between the different stakeholders was however missing. Many of the initial concerns and considerations of how to handle them were not adequately taken up into the mining development plan, which some termed a “shotgun marriage” between the company and the community, overseen by the state [2]. 

Large concerns over both social and environmental impacts emerged with the development of the mine. Regarding environmental issues, the mining activities heavily disturbed the terrestrial and aquatic ecosystems of the island, particularly through waste disposal into rivers and the ocean. The Lihir mine manages waste in 3 ways; dumping of waste rocks into the sea, submarine tailings deposition (STD), and stockpiling of low-grade ores for later processing. While STD is very harmful for the ocean, it is cheaper than alternatives. An Environmental Impact Assessment (EIA) conducted in 1992 argued that improved tailing management would be technically possible to reduce environmental impacts, but the company decided to forego these measures for financial reasons and because they were not compulsory in the country. Also, deals with the government were made to exempt the mine if stronger environmental restrictions would be applied in the country [1]. 

Consequently, coral reefs suffered massively under the dumping of million of tons of waste rock into the ocean. The post-processing waste has been directly channelled into the sea through STD techniques. The mine’s environmental management plan admitted that this will raise cyanide and heavy metals concentrations in the sea, which can accumulate through the food chain. (Cyanide is used in the gold extraction process). Smothering of massive areas of sea-floor with toxic tailings is another detrimental impact [1]. A study in Nature assessing the impacts of 15 years of deep-see tailing from the Lihir mine placement found a substantial reduction of in-sediment infauna and changes in higher taxon community structures [3]. Such environmental impacts can also have strong social and economic dimensions, because traditional communities depend on the environment for their livelihoods. Fears of changes in fish populations commonly harvested by local people had been voiced [1]. 

The social impacts have also been far reaching. Residents had to be displaced for the mining development. Migration has become a problematic issue. Many locals have suffered from the enormous influx of people from outside and the changing relations in the community. The broader social impacts from this have included community tensions, violence, alcohol and drug issues [4]. Disputes about compensation and benefits distribution turned into a key cause of conflict between the company and locals [2;5;6;7]. 

Concerns and disputes have been commonly expressed by the community using taboo markers called “gorgors”, placed at the mining site. Gorgos are traditional markers made from ginger plants that represent a customary and non-violent grievance mechanism. In the case of the Lihir mine, both the company and the community accepted the use of the gorgor as grievance mechanism and could avoid more violent confrontations, as seen with other mining projects in the region. While this dispute handling mechanism is commonly used in villages, it is less commonly employed when multinational companies or the state are involved. Over the last ten years, the use of the gorgor has rather escalated, showing the many tensions and frustrations between landowners and the gold mine [6]. In many occasions, it has led to the suspension of the mining activities [5;7]. 

For example, in 2012 disputes emerged over a compensation and benefit packages to be provided by Newcrest mining [c]. Mining was stopped due to protests of the local landowner association LMALA (Lihir Mining Area Landowners’ Association), who placed the traditional taboo markers around the mining site [5]. A similar event occurred in June 2015, when the mine was shut down due to gorgor placements. The local landowners argued that the Integrated benefits package was still pending revision since 2012 and moreover, concerns over environmental issues had emerged in the community. This time, the government responded to these protests by sending a heavily armed police squat to re-open the mine [7]. 

As of late 2017, mining activities continue, as do the tensions surrounding the mine. Recently, new conflicts over royalties emerged between the company, the provincial and the national government [8]. 

HISTORY:

Gold reserves were first discovered in 1982. At that time, explorations were conducted by a joint venture between the Kennecott Explorations Australia and Niugini Mining limited [9]. A first feasibility study was conducted by in 1988 that raised concerns over the economic feasibility of the mine [2]. In 1989, Kennecott was bought by Rio Tinto Zinc corporation (RTZ) [2].

In 1995, negotiations between local landowners, company and state were made, following a series of impact assessments and studies [2]. Negotiations were ongoing for a while and first not accepted by local customary landowners. However, they finally agreed when the government promised them a 15% equity stake in the project and 2% of royalty rate of annual output [2]. The agreement was signed during 1995 and included a benefits package for the community that foresaw the payment of royalties as well as the development of infrastructure and social services [6].

The Lihir Special Mining Lease (SML) was granted in 1995 and the Lihir project was transferred to Lihir Gold Limited (LGL) Company, which was managed and operated by the Lihir Management Company – a subsidiary of Rio Tinto. Production started in 1997 [9].

In 2005, Rio Tinto divested its stakes in Lihir and the operations became owned by LGL. In 2010, LGL was taken over by Australian miner Newcrest [9], in a %9.5 billion deal [5].

The mine is an open pit mine, consisting of overlapping pits [1;9].

FINANCE ISSUES:

In 1995, exploration costs had mounted to ca. 150 million USD [2]. Capital cost of mining operation were, at that time, estimated to amount to 600 to 1000 million USD. [2].

Initially, 450 million USD of shares were floated to finance the mine [1].

A study [1] reported that the Union Bank of Switzerland provided a loan for 300 million dollars. The loan was indemnified against political risks and environmental issues by the World Bank’s Multilateral Investment Guarantee Agency (MIGA) [1].

Another study [10] reports a 46 million USD loan from the European Investment Bank in 1996. The CEE Bankwatch Network, supported by many NGOs, demanded the bank to withdraw the loan due to environmental concerns [10].

PRODUCTION CHARACTERISTICS:

In 1999, the mine’s processing plant and related infrastructure covered a land area of about 7.3km2 [1].

In 2011, the mine produced about 600,000 ounces of gold. Output was expected to rise to between 700,000 and 900,000 for 2012 [5]. For the financial year 2016, Lihir produced about 900,000 ounces of gold. Since operations started in 1997, the mine has produced more than 10 million ounces of gold [9].

An article from 2002 [1] estimated that the processing of 104 million tons of ore reserves will create around 341 million tons of waste rock. Most of the waste rocks were going to be disposed into the ocean.

POPULATION:

In 1995, the community that hosted the mining project had a population of approx. 8,000 people [2]. (Since then, the population has grown rapidly [4]). At that time, about 1,000 people were customary owners of land leased to the company. They formed later the Lihir Mining Landowners Association (LMLA) [2].

In 2016, the company reported that about 4,500 people were employed at Lihir [9].