Harmony unable to stop legal action at mine

Member of Papua New Guinea parliament seeks damages over mine sediment runoff

 

ALLAN SECCOMBE of Business Day South Africa

 

Published: 2011/01/07 07:44:05 AM 

 

 

EFFORTS by Harmony Gold and its Australian joint-venture partner, Newcrest Mining, to halt legal action at its Hidden Valley mine in Papua New Guinea relating to damage caused by sediment appear to have failed.

The equally held joint venture called Morobe Mining yesterday denied allegations contained in a writ "purportedly" served on it by legal advisers acting for Sam Basil, the member of parliament for the Bulolo area, and villagers living along the Watut River.

"The writ alleges nuisance relating to mine-related sediment and seeks damages and injunctive relief in relation to the Hidden Valley mine operations," Morobe said. "The joint venturers will vigorously defend the litigation should it proceed."

The writ was issued despite an apparent deal reached between the parties last month when it was agreed there would be a "constructive dialogue process" and the setting up of an independent panel of international experts to assess the sediment and pollution issues affecting the Watut River.

"The pending legal action now prejudices the ability of the member (MP) and his legal adviser to participate in this process," Morobe said yesterday.

Morobe said on December 16 that Mr Basil had withdrawn a writ lodged with the National Court of Papua New Guinea over the alleged nuisance related to sediment from the Hidden Valley mine, which produces gold and silver and is Harmony’s only operating asset outside SA.

Mr Basil said at the time: "I have not withdrawn the legal proceedings on behalf of 110 landowners who have been seriously impacted by the pollution of the Watut River by sediment and heavy metals from the Hidden Valley mine."

The mining partners have been paying compensation since November to people living along the river for damage caused to their crops and gardens by floods that carried sediment that may have come from the mine as well as natural events like landslides.

Harmony CEO Graham Briggs told stakeholders at the end of 2009 that the higher than expected sediment runoff from the mine had given rise to "serious concern within and outside the company". This was a result of it taking longer than expected to reach hard rock at the mine.

According to an Australian Broadcasting Commission (ABC) report in November, sediment had destroyed crops, reduced fish stocks, polluted drinking water and affected revenue-generating small-scale alluvial gold mining.

"Although these changes in the river course occur naturally over time, the mine’s contribution to the sediment load in the lower Watut River has speeded up this process," Mr Briggs said.

About $1m was set aside to compensate people in 30 affected villages, the report said.

Morobe Mining Joint Ventures community affairs manager Stanley Komunt told ABC the runoff had been stopped and 2200 individual damages claims were being assessed.