Thursday, July 30, 2015

Writing was on wall for Ok Tedi mine

Source:The National, Thursday July 30th, 2015

JUST over 18 months after Prime Minister Peter O’Neill announced the 100% takeover and ownership of the giant ok Tedi mine by the PNG Government, OTML announces a temporary shutdown of operations.
One wonders whether the environment and the market conditions really had anything to do with this temporary closure.
We are told that more than 300 national employees will be made redundant. Another 1, 500 will be stood-down and more than 5, 000 contractor employees will either be stood down or also made redundant. This exercise affects more than 6,800 employees involved in the Ok Tedi mine.
Within the corridors of OTML headquarters, in the work places, streets and outskirts of Tabubil, it is too common a story that there are chronic underlying issues then the so called “dry weather” and “low metal prices” window dresser pictures being painted to the rest of the country.
Its roots go back to the Government’s takeover of the mine from. Through poor strategic planning, imprudent and mismanagement of OTML, the once great company was laid bare for the taking.
The signs were already there by early fourth quarter 2014 - Ok Tedi was struggling to keep afloat.
At the changing of the guards in December 2014 the company barely survived. The signs were there again in March 2015.
Through prudent management by a new national executive the reserves obtained were able to get Ok Tedi through to June and July of 2015.
At the questionable changing of the guards again by the government in May 2015, it was only a matter of time before things fell apart-this time for the worst. The dry weather was the perfect excuse. Now the results are evident.
It is quite disturbing recalling the events of the past 24 months, under the previous senior management’s leadership:
How decisions were made and approved to finance so-called Mine Life Extension projects like: the Parker donggas, the Rubber Crumb Plant, the Crusher and Batch Plant, the Motor Rewind Shop, the country club construction, the DIWAI Hospital accommodation and teaching facilities project, the major company redundancy and restructure of 2014, and the ensuing overhaul of work roster change to name a few. I wish I had more space to put the data and figures down to show the startling costs of these projects compared to the actual benefits they have brought in for Ok Tedi while violating its own project management processes which would have prevented such fall outs.
These major spending on so-called Mine Life Extension Projects were not for the Ok Tedi Mill Operations and Mine Production, the business units which make money for Ok Tedi.
These major capital investments had no direct benefits to Ok Tedi at all. Yet they accounted for about 40% of the capital expenditure budget in 2013 and 2014. What a blunder.
These projects never had any known proper formal technical feasibility study done to ascertain their viability and benefits through competent technical and economic evaluations.
If they were done, certainly there was no technical capacity to evaluate them as the Engineering Services Department, the technical brain of this project, was already dissolved by the OTML Management on the eve of these projects.
Looking back, one thinks whether hard earned revenue was strategically squandered on these major projects since they have had no practical benefit to the company.
It is startling to imagine how the OTML board and the PNG Government scrutinised these projects and major company changes.
Was the Government ill advised? Did the government lack the competence to ask the right questions? Did the government consult the technical details of these projects? If so, were these details reliable?
One thing is for sure, there is nothing to show for the benefits of most of these projects just 24 months on.
The then senior executives and cohorts brought in their cronies who restructured the company to lure in more of their kind and siphon out money from OTML and PNG causing many job losses to PNG nationals during the major company redundancy in 2013.
The 2013 workforce strike was to prevent the redundancy exercise and major company changes because this was foreseen. Neither the government nor the land owner leaders were able to see this coming!
Even though the Prime Minister was given ample evidence and plea by OTML employees, on his visit to Tabubil during the 2013 strike, this far cry fell on deaf ears. No job loss was promised. It is sad to say that this never eventuated.
The company was restructured. Many employees lost their jobs. Systemic Failure commenced. Ok Tedi was set up for this fall.
It is frightening to think that this happened right under the nose of the Government and the local land owner leaders - people who were mandated and entrusted with to look after the national interests of simple people.
Now, after 18 months, the results of that day speak for themselves. And not only the remaining employees of that day but the local community, Western province and PNG will now bear the brunt of the lack of leadership.
Whether the Government then was acting on poor advice or decided to ignore caution. The damage is done.
OTML, once immune to external market forces, environmental conditions and political interference, is suddenly susceptible to “dry weather” and “low metal prices” condition, not to mention the lower than normal quality of gold and copper it is now producing.
Only the OTML management and the PNG Government know the primary reasons why the mine is now going into this shutdown mode.

Abib Maan
Tabubil, Western

Related News Link
Polye Upset Over Ok Tedi Mine Closure
Ok Tedi PNG Copper Mine output stalled by low river level
Papua New Guinea's Ok Tedi Mine Suspends Production, Stands down workforce 
Opposition Leader Upset over Ok Tedi's Move

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