Common use of Regional Clause in Contracts

Regional. An advantage of a regional approach is that it helps to ensure that the benefits of the project are more widely distributed, rather than being restricted to landowners and/or those who are most directly impacted. This can reduce community tensions over the distribution of benefits and provides more leveraging opportunities for social development, especially if government can be brought into the picture. However, for regional level CDAs to work, there also need to be provisions that address the particular interests and rights of landowners and directly impacted communities; otherwise these groups are unlikely to agree to be a party to the agreement. Two examples of regional approaches are provided below: The community development agreement for the Lihir Gold project had its genesis in a nationally mandated Development Forum process, devised by the PNG government to ensure greater local participation and planning, and distribution of benefits. In early 1995 the Development Forum agreed on royalties and special grants that were to be used on community projects throughout Lihir. The government of PNG was authorised to execute the Forum’s agreements with the provincial government and local community leaders. After intensive negotiations the Lihir Mining Area Landowners Association (LAMALA) signed an Integrated benefits Package (IBP) agreement at a ceremony on Lihir on 26 April 1995. The principles of the IBP in the compensation agreement clearly specified that payments be made directly to the immediate landowners but overall development is for the benefit of Lihirians. The IBP outlined a range of agreements and memoranda that covered direct aspect of mine-related developments, including compensation, housing relocation, infrastructure commitments by the local and national governments and the mining company, and commitments relating to environmental monitoring. The IBP also contained provisions for a Village Development Scheme (VDS). Funding through this scheme was principally for housing improvements, water, sanitation, and electricity provision. There was also a provision in the agreement that the IBP be reviewed every 5 years. Starting in 2000, the review of the IBP eventually led to a revised agreement that was re-named the Lihir Sustainable Development Plan (LSDP). The LSDP is a larger and more detailed compensation package, considering in more detail the distribution of royalties, equity, special support grant expenditure, and a range of other benefits. The LSDP is not just about money or company-sponsored development but more of a road-map for Lihir to aim toward a self- sustaining future enabled by the mine but not dependent on it. It includes agreements around capacity building, infrastructure and utility development, town and village planning and other broader benefits. (Source: The Lihir Destiny: Cultural Responses to Mining in Melanesia, 2010)