An investigation of the impacts of mining projects in Papua New Guinea on livelihoods and poverty in indigenous communities

This thesis investigates the impacts of mining projects in Papua New Guinea (PNG) on livelihoods and poverty in the indigenous mining communities. The impact of mining on poverty of PNG’s indigenous people has been an issue of concern for several decades. In fact, mining has been a controversial industry in PNG. Its newsworthiness has stemmed from the dramatic environmental and social consequences that have dogged mining development there (Chapter 3). Without downplaying the importance of these issues in any way, the focus of this thesis is on the relationship between mining and poverty in two of the country’s largest mining regions – Ok Tedi and Porgera. The relationship between mining and poverty is a complex phenomenon. The conventional wisdom is that mineral resources can add value to the economy of a mineral-rich country because mineral resources are considered an asset which can be used to enhance economic growth (Chapter 2). However, there is recent evidence to the contrary in many developing countries. The intention of this thesis is to review four questions: (1) What is the link between the mine, the communities and the economic opportunities that mining has created through participation in people’s livelihood? (2) To what extent have the mines contributed to reducing poverty levels through empowerment, enhanced capabilities, and security and provided opportunities for indigenous people to pursue their livelihoods? (3) How has the contribution of mining reduced the vulnerability and insecurity of livelihoods of the mining communities? (4) Has opening of the mining operations into the local community and in PNG provided the locals with greater opportunity or has it negatively impacted on the people?
This thesis, using a quantitative methodology, focuses on livelihood measures. It begins with data collection on the livelihood resources and welfare status of mining households and non-mining households. Two mining projects were selected, each representing different companies, different locations and different mining approaches. The household survey interviewed 609 participants in both mining and non-mining communities of Ok Tedi and Porgera mining (Chapter 5). A logistic regression model was used to determine the main factors like human capital, rich-poor ladder, food eaten in the last 30 days, income satisfaction and other variables affecting being a mining household. With these determinants, a Propensity Score Matching model was used to quantitatively evaluate the impacts of mining on welfare, life satisfaction and poverty of the indigenous people.
The research results indicate that the introduction of mining projects has improved the livelihoods of the indigenous people and has reduced poverty. The relationship between the Sustainable Livelihood Framework and Mining Poverty Reduction Linkages was established (Chapter 4). Mining agreements that improve and allow indigenous people’s participation in having access to livelihood resources do improve their welfare and life satisfaction and reduce poverty. The analysis focused on four important metrics: the rich-poor ladder to assess the communities’ views of their own affluence, level of education, food eaten in the last 30 days, and income satisfaction (or satisfaction deprived from a given level of income) (Chapter 6). The results overall suggest that mining does reduce poverty and improve welfare, but some of the differences between mining and non-mining villages, such as average level of education, are small (Chapter 6).
These results have implications for governmental policy on mining projects regarding livelihood resources, livelihood diversification and poverty alleviation. An understanding of these concepts in mining agreements may play a role in assisting indigenous mining communities to be resilient at a local level and better equipped to withstand exogenous shocks that the introduction of mining projects may have on their livelihoods and poverty (Chapter 7).
Keywords: mining, poverty, livelihoods, Propensity Score Matching, Papua New Guinea