Between 2001 and 2013, PNGSDP played arguably the major role in...

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The State of Papua New Guinea has been unsuccessful in its attempt in the Singapore High Court to wrest control of the remaining assets of PNG Sustainable Development Program Ltd (PNGSDP), worth US$1.4 billion (K4.72 billion).

The Ok Tedi mine pit. Credit: OTML

The PNG State has been pursuing the cash assets of PNGSDP since the controversial effective nationalisation of PNGSDP's major asset, the Ok Tedi copper mine (PNG's largest operational mine) in 2013.

PNGSDP, a not-for-profit limited liability company registered in Singapore, was established in 2001 as part of the deal to allow Australian mining giant BHP to exit the Ok Tedi mine following a major environmental disaster at the mine in 1999. PNGSDP's purpose was to manage the proceeds of the mine for the development of the people of Western Province, with two-thirds of its funds to be set aside for developing the province once the Ok Tedi mine closes.

'I acknowledge I found the state's narrative compelling and its logic attractive. But the essential problem ... is that this narrative stands alone and is unsupported by the evidence.'

Between 2001 and 2013, PNGSDP played arguably the major role in the economic development of Western Province, one of PNG's most remote and undeveloped provinces.

Following its 2013 nationalisation, Ok Tedi Mining Ltd is now owned by state-owned Kumul Mineral Holdings and its revenues flow to national coffers.

However, PNGSDP's long-term fund of US$1.4 billion still resides in Singapore where the company is registered, hence the hearing before Singapore's High Court.

Detailed judgement

In a detailed 149-page judgment, Justice Vinodh addressed each of the arguments made as he explained why the state had failed in its bid to wrest control of PNGSDP from its independent board.

'I acknowledge I found the state's narrative compelling and its logic attractive. But the essential problem ... is that this narrative stands alone and is unsupported by the evidence,' he said.

'For all the reasons set out, I hold the state fails entirely in its claim against PNGSDP. It is not entitled to the relief sought.'

Implications

The full implications of the legal decision are not entirely clear at the time of writing but it appears on the surface that PNGSDP is now legally free to control the long-term fund, and disburse the moneys in it within Western Province.