The Sustainability of Local Business Development Around the Ok Tedi Mine, Papua New Guinea

Abstract

This thesis is about the local business development program associated with Ok Tedi Mining Limited (OTML) in Papua New Guinea (PNG). Resource companies in PNG support and establish local landowner companies through their local business development programs with three broad goals: to fulfil their mining agreement terms, to maintain their social licence to operate in the community and to contribute to sustainable mine closure planning. Resource companies aim to develop landowner companies capable of meeting governance and compliance requirements, being commercially viable and generating benefits beyond mine closure. Whilst all resource companies in PNG invest in local business development programs, scholars and extractive resource industry experts agree that resource companies are not producing landowner companies that are both commercially self-sufficient and sustainable. The few in-depth studies of local landowner companies in PNG do not consider the relationships between local landowners and the resource company departments that manage the local business development program. This thesis investigates all actors and contributing elements in OTML's local business development program in order to discover the factors behind local landowner company underperformance.

This thesis uses a qualitative organisational ethnographic approach and draws on interviews with participants from four key stakeholder groups - OTML personnel, local landowner companies, mine area local landowners and government officials - to explain the factors these stakeholders believed contribute to the success and sustainability of local landowner companies. Detailed observations of the interactions between local landowner company representatives and OTML's Economic Programs Department also provide insight into the nature of the relationship between the two groups.

This thesis explores Australian and Canadian Indigenous entrepreneurship associated with large-scale mining in order to provide the basis for a discussion of landowner companies in PNG's extractive resource industry. This thesis argues that the framing of the corporation as multiple, dynamic and permeable is the most useful way to understand the relationships between OTML and its local landowner companies. It also discusses resource project local content policies and outlines the local business development programs of other major resource projects in PNG. After providing a historical overview of OTML's local business development program, this thesis outlines how OTML manages its local landowner companies and examines the various ways local landowner companies access OTML departments.

This thesis demonstrates that, over the last four decades, OTML has made consistent efforts in managing its local business development program through its Economic Programs Department. Whilst the relationship between OTML and its local contractors has largely been positive and robust, this thesis found that OTML's local business development program has produced few landowner companies that could be considered successful and sustainable.

This thesis makes an original contribution to research on Indigenous entrepreneurship in PNG's resource sector in four ways. Firstly, it provides insight into Papua New Guinean landowner company business practices. Secondly, it examines the central role OTML departments play in supporting local business development. Thirdly, it identifies the current weaknesses in OTML's local business development program. And finally, it considers ways in which project-affected local landowners might generate benefits for their communities beyond mine closure.