Part IIIA of the Mining Act 1992 consists of a single section, and it overrides almost everything else in the Act.
Section 16A(1) — the participation right
Notwithstanding any provision of any other Part or the terms of any agreement made by the State:
(a) the State, MRDC and the Company shall each have the right to acquire and, as appropriate, transfer a Participating Interest in a Mining Project in accordance with the Option Agreement; and
(b) without limitation, the conditions of any exploration licence, the conditions of any special mining lease, mining lease, lease for mining purposes or mining easement granted in relation to a Mining Project, and the terms of any mining development contract or section 17 agreement made in relation to a Mining Project — granted or made after the coming into operation of Parts II and III of the Mineral Resources Development Company Pty Limited (Privatisation) Act 1996 — shall recognise and provide for the exercise of those rights.
The opening words displace any provision of any other Part of the Mining Act and the terms of any agreement made by the State. So the participation right cannot be contracted away, even in a project agreement the State itself has signed.
And paragraph (b) is mandatory: the conditions of the tenements and the terms of the contract shall recognise and provide for the exercise of the right. It is not enough for the right to exist in the background — it must be written into the instruments.
Section 16A(2) — who actually acquires it
The State shall, subject to and in accordance with the Option Agreement, nominate MRDC or the Company to acquire its Participating Interest.
So the State holds the right but does not necessarily hold the interest. It nominates either MRDC — the Mineral Resources Development Company — or the Company, as defined for the purposes of the Act, to take it up.
The Mineral Resources Development Company Pty Limited (Privatisation) Act 1996, and the Option Agreement to which section 16A refers, are not carried in the PacLII Papua New Guinea legislation databases. They are named here rather than linked, so that no unverified link is given.
The notice requirements before grant
Section 33(3) — the Head of State, acting on advice, shall not grant a special mining lease in relation to a Mining Project unless the Minister has first given to the Company written notice.
Section 38(4) — the Minister shall not grant a mining lease in relation to a Mining Project unless he has first given to the Company written notice.
These are procedural gateways. Before the two production tenements are granted for a Mining Project, the Company must be put on notice — so that the participation right can be considered before the project is locked in.
Section 17 — State participation by agreement
An agreement between the State and a developer, not inconsistent with this Act, may contain provisions relating to the acquisition by the State either directly or indirectly of a participating interest in a mining development.
Section 17 is the general power; section 16A is the mandatory overlay. Two limits on section 17 are worth repeating:
- Section 17(2) — the State may not enter a special agreement about the payment of any tax, duty, fee or other fiscal impost, or grant any exemption, moratorium, tax holiday or other indulgence howsoever described.
- Section 19 — a mining development contract governs the development, except that, to the extent of any conflict with this Act, the Act prevails.
Compared with a State Applicant tenement
| Part IIIA — State interests | Part VA — State Applicant | |
|---|---|---|
| What it is | A right to acquire a participating interest in someone else’s project | A right for the State to hold a tenement itself |
| Over what ground | A Mining Project | Reserved land — ground from an expired, cancelled, surrendered or relinquished tenement |
| Who takes it | MRDC or the Company, as the State nominates | A State Applicant, through a State nominee or subsidiary |
| Override | Notwithstanding any other Part or any State agreement | Notwithstanding any other provision in this Act, or any other laws |
| Consultation | Through the ordinary process and the development forum | Section 95G duty to take active steps to consult; the forum may come after the grant |
What it means for landowners
Section 16A concerns the State’s interest, taken up by MRDC or the Company. It is not a landowner equity provision, and it does not change what a landholder is entitled to under the Act.
Landowner entitlements come from three places:
- Compensation under Part VII, built from the section 154 heads — and with no entry until it is settled.
- Royalty under the Mining (Royalties) Act 1992, which section 154(4) preserves as the only lawful production-linked payment.
- The arrangements negotiated around the development forum, at which landholders of the lease land and of other tenements to which the proposals relate must be represented.
- Has the section 33(3) or 38(4) notice been given to the Company?
- Is a participating interest to be taken up, by whom, and on what terms?
- How is the royalty to be distributed, and to whom?
- What does the mining development contract say about the matters in section 17(1) — how discretions will be exercised, and how disputes will be settled?
- Who represents the landholders, and on what authority? Settle that before the forum.
Get independent advice for the group — the Public Solicitor, or a firm from the law firms directory.
Sources
- Mining Act 1992 — ss 3, 16A, 17–19, 33, 38, 95A–95I, 148, 154; Parts IIIA, IV and VA
- Mineral Resources Authority (Amendment) Act 2018
- Land Groups Incorporation Act — PacLII 1986 Revised Edition
Before relying on anything here, read the current text of the Mining Act 1992 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.