An International airport and deep-sea port development on Emirau Island will provide a gateway for Papua New Guinea (PNG) to access international markets and export fresh tuna and seafood and establish the largest fresh tuna market in the world. The airport designed for Boeing 747 and the new Airbus 380 will also provide a staging point for control of the vast PNG Designated Fishing Zone (DFZ). Effectively this increases the level of regulation and compliance on visiting international fishing fleets and provides a way of monitoring their impact. Initially the project focus is on developing commercial artisanal fisheries for St Mathias islanders and marketing high quality hand-fished fresh seafoods under a unique brand that promotes the sustainability of the fisheries, the environment and a values- based society. The daily catch, bound for the burgeoning middle classes of Asia, Europe and North America will very quickly increase from 100MT a day to 400MT a day. Effectively one daily freight service raises the contribution fisheries make to PNG‟s GDP from 1% to 6%. The potential to replicate this sustainable artisanal fisheries model to include the New Irelanders, New Britain Islanders and reach all the islands as far as Wewak could be achieved in under three years. The project will also be a social change program of significance. The project will transition island populations from subsistence agricultural and fishing communities to Independent Business Ownership (IBO). The transition will be facilitated by a program that recognises the strength of the values-based culture that underpins the IBO structure. This culture is also a very marketable commodity. As the project progresses through four clearly defined stages of development, eco-tourism will be one of the outcomes. The economic development of Emirau Island and the St Mathias Island group will be based on a philosophy of zero impact development. The development must fit in with the beauty of the place and the beauty of the people. Hence the entire development hinges on a values-based assessment that respects what is there, how it is sustained and how it fits together with the beauty that has survived. There will be no infringement on, or compromising of the beauty in anyway. This development will be a joint venture between the Emirau Trust and Wind Australia. The joint venture will be registered in PNG as Wind Emirau Ltd. The financial surplus generated initially through artisanal fishing will bring the population into line with the western middle class market place, with a Papua New Guinea difference. This is solid sustainable grass roots wealth for PNG.

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Background

Papua New Guinea Papua New Guinea (PNG) enjoys a large marine Exclusive Economic Zone (EEZ) of 200 nautical miles or 5957 million square kilometres, one of the largest marine jurisdictions in the Pacific. It is characterised by the warmest surface waters, averaging 29 degrees Centigrade, and represents the world‟s most abundant, diverse and valuable marine life breeding ground.

The fisheries resources range from estuarine, reef and coastal pelagic to deep water and off shore. They include the following species; inland barramundi, threadfin, mangrove crabs, inland and marine prawns, mullet, trevally, mackerel, catfish, baitfish,

snapper, shark, tuna and billfish.

The fisheries industry can be divided into four general types: coastal subsistence, inland subsistence, small-scale artisanal fisheries and commercial, industrial fisheries. The fisheries resources in the region are largely unexploited with the exception of the highly marketable species of barramundi, beche de mer and local lobster.

PNG has some of the most productive tuna fishing in the world. PNG has tuna stocks all year round Papua New Guinea‟s commercial fisheries are primarily for export to meet the demand of the rapidly expanding market for sashimi-grade tuna and consist of purse seiner and longline fishing. Prime quality „yellow fin‟ and „big eye‟ tuna is exported

in fresh chilled form to Japan by air. The low quality fish is canned and airfreighted to Australia and beyond, or sold on the domestic market.

Most of the recorded annual catch of around 200,000MT (metric tonnes) is taken by fishing nations licensed to operate in PNG 1 waters. Various fleets have historically fished for tuna in the PNG Designated Fishing Zone (DFZ), including domestic and

foreign pole-and-line fleets and foreign longline fleets. Current operations predominantly involve longline and purse seine fleets from Korea, Taiwan, USA and the Philippines. These countries have various bilateral and multilateral fishing agreements (Tuna

Access Agreements) in place and pay access fees to the PNG Government. The number of vessels total 162, operating out of the Western and Central Pacific areas and this includes 20 vessels locally based in PNG.

1 The total foreign vessels catch in 2000 is estimated at 160,000MT worth approximately US$400 million.

4 Commercial in Confidence Wind Emirau Project Proposal Overview - cont Estimates given by the South Pacific Commission puts the tuna harvest between 240,000MT and 350,000MT per year. The total resource yield has the potential to reach a sustainable 800,000MT per annum.

Fisheries sector Papua New Guinea has the sovereign right to explore, exploit, management conserve and manage living natural resources within its 200 nautical mile Exclusive Economic Zone (EEZ). The 2000 2 Fisheries Act accordingly places an obligation on the Government to ensure the conservation and optimum utilisation of these resources.

The Papua New Guinea fisheries sector is experiencing a major restructure and reorganisation in its administration and

management. The Government‟s intention being to increase the

participation of Papua New Guineans in all aspects of the

industry from fishing to marketing.

To establish a domestic longline tuna fish industry, PNG denied overseas-based longliners access to PNG waters, effective from March 1987. This was formalised in August 1995 when the Government issued a Gazettal Notice stipulating that foreign longliners, having holding facilities capable of storing tuna at less than 40 C were disallowed from operating in PNG waters. This effectively reduced the ability of fishing fleets to stay on the fishing grounds for months on end utilising a mothership freezing operation.

Thirteen years after closing PNG waters to foreign longline fishing, progress in establishing shore-based fleets has been slow.

Papua New Guinea currently supports a small, but expanding, fleet of around 20 active longliner vessels producing sashimi- grade tuna destined primarily to markets in Japan. For infrastructure and logistical reasons the majority of these vessels are based in Port Moresby. In 1998, this fleet exported an estimated 1,000MT of fresh product.

The PNG fisheries industries contribute approximately 1% to PNG‟s Gross Domestic Product (GDP) or KI00 million. The industry employs 3,500 individuals in the formal fisheries sector. So although the economic value of fisheries in the GDP is small, the importance of fisheries to the overall population, and in particular to subsistence cultures, is significant.

2 The Fisheries Act 2000 and Fisheries Regulation 2000 lay down the general framework for the terms and conditions for the management, development and regulation of fishing, including fisheries management and development, access agreements, fishing licenses and prohibited fishing related activities.

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Proposal Overview - cont Hence to facilitate the development of the domestic fishing industry the Government has also undertaken a number of major infrastructure developments in the maritime provinces. These developments include the construction of the Kavieng and Manus designated longline wharves and processing plants; including the Wewak tuna loining factory and assistance with incentives for the Lae and Madang mackerel and tuna canneries.

However it is the transport industry that determines the economic viability of most business activity in PNG. The deteriorating state of roads and the high cost of air and sea transport - as a direct result of the devaluation of the Kina - has effectively played a part in hampering the promotion of, and any significant growth in, agriculture, tourism, fisheries and related industries.

In addition the PNG experience with large-scale developments has often resulted in rural PNG communities being negatively impacted. These developments have invariably been socially and environmentally destructive, occurring without any reference to core values and more often than not, unsustainable.

Drivers of change At the present time the country is loosing opportunities to attract foreign capital and failing to secure significant employment and other economic benefits from fisheries.  Large scale industrialised fishing has yet to deliver the promised down stream economic benefit to the host nation. Fisheries resources are therefore expended and exploited largely by foreign fleets that remit relatively small resource rents and fees to the host country. This is true right across the Pacific Nation-States.

 Foreign fishing fleets provide no guarantee of sustainable

fishing while their capital investment philosophy is to remain mobile and obligation free when it comes to creating sustained local infrastructure.  The constraints to coastal fishery development are mainly due to the absence of a fish handling, distribution and marketing infrastructure.

 Existing domestic airfreight services are not capable of guaranteeing shipments of perishable marine produce, particularly if any sizeable volumes are involved, on a regular basis.

 Lack of airfreight out of Hoskins on Air Niugini has affected profitability of the small tuna longline fleet that commenced in West New Britain Province in early 2000.

 There is evidence of over-fishing especially in the local lobster, beche de mer and barramundi fisheries. Penalties to deter the more self-destructive tendencies of the industry have been enshrined in domestic fisheries laws, but despite

this, and rigorous management practices, many fisheries are

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Drivers for change - cont clearly under pressure and seemingly well managed fisheries continue to collapse.  The reported tuna catch is believed to be significantly lower than the actual catch. Poaching and under-reporting is estimated in the vicinity of 500,000MT. Data is not recorded on licensed vessels from Indonesia, Philippines, Japan, Vietnam and catches unloaded in Thailand and Samoa.

 The National Fisheries Authority‟s (NFA) is under-resourced to effectively administer the fisheries affairs of the nation. Fisheries will struggle to realise their potential to make a major contribution to the Nation's economic development unless an efficient professional capacity to initiate and regulate fisheries development is re-established by the national Government.

Within the next decade a gradual contraction in the global supply of tropical fisheries products will result in increased interest in PNG‟s New Ireland Province (NIP) marine resources. While several factors, such as:  The diverse nature of the catch  Traditional claims to ownership of resources and fishing grounds  New Ireland Province (NIP) remoteness from preferred markets constrain development, there remain significant opportunities for commercial fisheries to become established and sustained3 and for PNG‟s subsistence based primary industries to:

 Benefit from the wealth generating potential of their marine resource.

 Take advantage of the world‟s rapidly expanding middle class demand for goods and services.

 Realise the growth opportunities of an e-based economy.

3 Refer Appendix A – ‘Developing Sustainable Commercial Fisheries’.

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Proposal Overview – Wind Emirau Project

Creation of sustainable The Wind Emirau project will develop sustainable integrated grass roots wealth for industries leveraging off the establishment of a commercial Papua new Guinea fishing operation in the St Mathias Islands. The project will ensure ongoing wealth generating opportunities are secured for participating communities and will manage the social and

economic transition by adopting values-based business practices.

Papua New Guinea sits on one of the world‟s largest tuna fish resources in the world. This project focuses on the development of sustainable high quality hand-fished fresh tuna and seafood exported to the burgeoning middle class markets of Asia, Europe and North America.

It hinges on the development of an International airport and sea port on Emirau Island.

Emirau Island is found in the St Mathias Islands. Refer Appendix B – Project Location.

From here the fresh tuna markets in Japan, China, Thailand, Malaysia and Singapore are all 5-flight hours away and Europe and the United States are 15-flight hours away.

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Emirau Island airport Emirau Island has an existing aerodrome covering a three- kilometre area as part of a 30 square kilometre damaged ecosystem. The aerodrome consists of two large all-weather runways exceeding two kilometres in length and six smaller runways or taxiways with 64 adjacent parking bays. The creation of the Emirau International Airport is viewed as the nucleus of a development package that will become the catalyst to generating economic interest and growth in other related industries. It introduces clear claim to the surrounding ocean waters and provides the opportunity for strategic control of the vast PNG Designated Fishing Zone (DFZ). Augmented by the development of a deep sea port, Emirau Island is a strategic „port of first entry‟ This transport hub is fundamental to the development of a commercial artisanal fishing industry for St Mathias islanders and New Ireland Province.

Commercial artisan A commercial artisanal fishing industry will make possible the fishing industry transition of communities from subsistence-based agriculture and fishing to Independent Business Ownership (IBO). Papua New Guinea is a rare and unique country, where some of the oldest customs and traditions coexist with twenty-first century capitalism and technology. It is envisaged that the creation of IBOs will not undermine the ongoing values-based lifestyle of island communities.

Eco-Tourism In fact a values-based fishing and gardening lifestyle has educational value for international visitors. The Wind Emirau Project would invite the world to visit and learn from individuals and families that live in one of the most beautiful places in the world. How these people live and organise themselves would be the very fabric of the tourist experience. Their inherent values-based behaviour is a marketable commodity.

Sharing values-based culture with visitors is the focus of eco- tourism at Emirau and the St Mathias Islands. Hence it is essential to protect the environment, both natural and cultural as it supports lifestyle and behaviours. To do so will require a concerted effort by the project owners and government to draw up policy guidelines that ensure a cohesive, controlled and sensitive development in the St Mathias Islands.4

In this way a working model of sustainable development, where the architecture and infrastructure reflect zero environmental impact can be show-cased to the world as a unique travel and

4 Environmentally sustainable development will be based on „zero impact‟ for undamaged environments, meaning no disturbance. Where vegetation and land has been disturbed, a sensitive, respectful approach to restructure and revegetation that incorporates a systematic community approach will be adopted.

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Proposal Overview - cont education destination.

Partnering based on The people of the Murat LLG (Local Level Government) have a shared values strong and traditionally clear understanding of values-based behaviour, making their island home a very good choice for significant investment through partnership. The Wind Emirau project is primarily a partnership between Edward Car of Wind Australia and Emirau Trust. Wind Emirau Ltd will be registered in PNG.

Wind Australia will be providing the necessary infrastructure development capital. The Emirau island stakeholders, through the Emirau Trust, will be part owners of all the investment developments. This investment could realistically include ownership in other related industries like; fishing vessels, thermolysis plastic waste disposal to diesel manufacture, renewable power generation, satellite communications, undersea cable communications, coast guard surveillance, air services operations, hotel propriety, inter- island public transport, eco and business tourism and financial services. The project respects the need to manage the transition to a modern e-based economy sympathetically and in tune with the values that are fundamental to the way the Emirau islanders and the whole of Murat LLG Province live.

Tackling the project in stages, respecting social and cultural impacts and adopting values-based business management practices will offset any social and cultural shock that may arise from economic and infrastructure growth and development, necessary in the transition to an e-based economy. The social journey will be a model for the rest of PNG.

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Proposal Overview - cont It is a 4-stage development project.

Port of first entry Stage 1 Establish a fresh fish market hub, contingent on establishing an artisanal commercially viable mixed fleet of vessels to hand-fish for sashimi-grade tuna and the development of the Emirau International Airport. The airport will be privately owned by Wind Emirau Ltd and will be built to accommodate Strategic importance the new Airbus 380 due in service in 2006. Emirau International Airport will have a runway length of 5000 meters providing infrastructure of strategic importance. A deep-sea port will also be commissioned for freight and cruise ships and appropriate infrastructure developed to support surveillance aircraft providing ongoing monitoring of PNG‟s Designated Fishing Zone (DFZ).

The development of other related industries including:

 Provision of fish handling facilities and transport support

services, including fish conveyers to take fish from the processing facility at the wharf to cool storage.

 Freight terminal and cool storage

 Investment in a plastic to diesel conversion operation for the export of diesel and storage facilities for plastics and diesel  Housing and office accommodation for construction 5 personnel and government officials  Maintenance and provisioning of fishing vessels 6  Manufacture of ground effect flightships in Hamburg Harbour to take advantage of the disused landing ramps used during World War II

 Pioneering the development of a diesel driven catamaran

Stage 1 development sees Emirau Island strategically placed to be declared a port of first entry for customs and immigration.

At every stage of this project optic fibre backbone cabling, for

data and telephonic communication, security and fire alarm services will be installed underground and in the foundations of all structures being commissioned. And this will include the wiring of the new residential area for island stakeholders.

Urban development Stage 2 Commence construction of the international and domestic terminal building, including the necessary roads and backbone cabling. Ongoing investment in renewable electricity production and the latest sustainable management of water and waste treatment. Further upgrading of the deep-sea port, fishing

boat harbour, cold store and shore based facilities covering provedoring and chandlery workshops, as well as marketing and

5 A port of first entry will require custom clearance, quarantine, immigration and security personnel. 6 Aircraft designed to fly in close proximity to the earth‟s surface, such as the ocean, are called „ground effect‟ craft. At speeds of 50 knots the craft lifts totally clear of the water‟s surface to ride a self-generated airwave known as ground effect.

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Proposal Overview - cont training7. Complete the relocation of the Tavilu village and the other northern and eastern villages to make way for Stage 3 development of hotel and apartment accommodation adjacent to

the Emirau International Airport to cater for eco-tourists. Retaining the villages and incorporating them into bed and breakfast businesses for tourists visiting neighbouring islands and regions of PNG.

This stage includes:

 Survey and construct the new 5000 metre airstrip

 Commencement of the industrial and warehouse precinct  Commencement of airport docking facilities and terminal buildings

 Develop Eulolou Harbour to cater for cruise liners and a

marina for visiting boats and yachts. Floating booms that open and close electronically will enclose the mooring to protect reef, marine and coastal eco-systems from any floating contaminants discharged by visiting vessels.  Complete a 500-bed hotel  Establish the new residential precinct for Emirau islanders, including schools, shops and roads

 Establish a Kavieng-based chandlery operation to service larger fishing vessels and Wind Emirau‟s fleet of longline vessels Stage 2 will see the creation of the new urban development for the Emirau residents, located at the western end of the island and adjacent to Eanusbu Island. It will involve the planning and development of the island‟s accommodation, transport and communications networks to support international and domestic travellers. Stage 3 The expansion of renewable electricity production that Destination place – a can be show-cased to world as the latest sustainable energy biosphere park technology, likewise with water and waste treatment. Development of services infrastructure, including educational institutions and hospitals, where the hospitals would have rooms for world leading medical and cosmetic practitioners and the universities have student accommodation on campus. Creation of multi-storey hotel and apartment accommodation, shopping plazas, banking precinct, board walks, beach spots, private jet Proposal Overview – cont parking and entertainment areas to accommodate international travellers visiting a community and wilderness destination maintained with zero impact to the inhabitants‟ core values and the surrounding biosphere.

7 Training will be arranged through the National Fisheries College in Kavieng to improve the proficiency of artisanal fishermen in fish handling and ensure the operation secures international seafood accreditation from the Marine Stewardship Council.

12 Commercial in Confidence Wind Emirau Project The whole of the Murat could be considered PNG‟s first 8 Sanctuary or Biosphere Park, with potential tourist traffic of 12,000-20,000 people per day, expanding to 50,000 per day.

The map below details the proposed preserved and restored

ecosystem areas. The dappled area on the map represents existing damaged ecosystem.

It would be at this point that Wind Emirau would promote the project through strategically managed launches. The first launch would be the opening of banking services to coincide with laying

the undersea cable linking PNG to Guam and Fiji.

Official opening of the new university, recognised as a centre for oceanic and biosphere studies, values-based business practices and socio-economic learning - using the documented Wind Emirau experience.

Stage 4 Creation of an International Special Economic Zone. A Safest holiday and meeting destination in tax-free zone that will attract businesses to participate in a the world business precinct designed to accommodate 5000 registered business houses. The business precinct would include the creation of business conference venues to attract the world‟s business community and Heads of State to what will be a safe and central meeting destination. PNG hosts global summit This would allow the PNG Government to host global events, like economic summits and global warming conventions.

Visitor safety is a marketable commodity and a priority for both

visitors and inhabitants alike. As a port of first entry, immigration and customs surveillance will be state-of-the-art. There will be a „closed‟ intra-island transport system. It will

8 This requires a comprehensive policy framework that protects undamaged environments from inappropriate infrastructure development and the concerted and well-coordinated efforts of all stakeholders, Independent Business Owners (IBO), Murat Trust and Emirau Trust structures.

13 Commercial in Confidence Wind Emirau Project include a monorail to ferry passengers from the ports and airport to the hotel or business precinct. Freedom to move around the island would be electronically controlled via satellite tracking to limit access to eco-sensitive and embargoed areas. Making the island one of the safest holiday and meeting destinations in the world. The Emirau community naturally becomes a co-owner of the Joint venture partnership infrastructure development from Stage 1 to Stage 4. The financial surplus from the development will bring the island population into line with the western middle class market place – with a PNG difference. It is the intention of the Wind Emirau partnership that further development stages, to include the New Irelanders, New Britain islanders and reaching all the Islands as far as Wewak, will allow island stakeholders to access, and have ownership of other related industries. The Wind Emirau project is therefore an economic opportunity for PNG to make a significant contribution to the world economy and become a sound international partner.

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Objectives  Develop a sustainable privately owned in-shore artisanal hand-line tuna fishery augmented by a longline commercial fishery.

 Develop a „brand‟ to identify product that is harvested from a sustainable, ecologically sound range of fisheries.

 Establish a global market for Wind Emirau tuna, seafood‟s, organic fruit and vegetables - established through an airfreight operation connected to strategic global markets

 Develop fish and fish processing operations fully owned by PNG citizens as Independent Business Owners (IBO), initially managed by private companies.

 Develop an international transport hub including an international airport to ICAO standards, a deep-sea port and communication hub.

 Wind Emirau takes responsibility for all the people, guiding them through a values approach,9 to help them make the transition to a modern middle class economy and at the same time preserve their cultural way of life and the environment.

 Develop a special economic zone that includes a tax-free business precinct, multi-storey hotel and duty free shopping complex, diesel production plant and the manufacture of „ground effect‟ flying vessels, known as flightships.10

 Set up ocean surveillance systems with interdiction capability, covering the entire 200 nautical mile Economic Exclusion Zone (EEZ). Flightship surveillance would be launched and centred at Emirau Island.

 Promote eco-tourism based on the establishment of a special conservation and cultural biosphere showcasing the most advanced technology for renewable power generation, water conservation and waste management.

 Develop other ancillary services and related industries to benefit local communities.

9 Values-based behaviour is the core of their traditional society and preservation of these values will protect their culture and the environment. The National Research Institute will be invited to document the process and will be engaged to undertake a study initially to assess the social impact of the project and in time use this as a model for the rest of PNG. 10 Aircraft designed to fly in close proximity to the earth‟s surface, such as the ocean, are called „ground effect‟ craft. At speeds of 50 knots the craft lifts totally clear of the water‟s surface to ride a self-generated airwave known as ground effect.

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Marketing Plan

Sustainable commercial Papua New Guinea will not gain any substantial benefits from fisheries fisheries resources until facilities are built to enable it to take an active role in the processing of product caught and the provedoring and maintenance of ships fishing within its territorial waters. Such heavy capital investment will not be made unless there is a strategic, long term, well-managed sustainable approach to commercial fishing in the region.

Located slightly east of the zoologically diverse Indonesian and Philippine archipelagos, New Ireland supports a naturally rich marine flora and fauna and is centrally located to the highly productive tuna fishing grounds in the western tropical Pacific.

Tuna is considered the resource to offer best prospects locally for large-scale commercial fisheries development.

Commercial artisanal Capitalising on the untapped potential for tuna fishing within 12 fishing kilometres (in-shore) of the islands‟ coastline is central to the success of this marketing plan. Fishing is the basis of life on island communities and in the St Mathias Islands nearly one- quarter of the population are highly skilled, intuitive fishermen,

capable of hand-line fishing for „yellow fin‟ and the highly

prized „big eye‟ tuna.

With a fleet of 120 - 200 privately owned banana boats and 20 PAM boats, these „artisanal‟ fishermen could harvest commercial quantities of tuna, sufficient to justify the introduction of regular airfreighted shipments to the lucrative fresh fish markets in Asia, Europe and US. Within months of the commencement the fleet will be producing 100MT of tuna, justifying the charter of freight aircraft flying under the name Wind Emirau.

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Marketing Plan - cont Many private investors have moved away from small scale fisheries because of the misconception that this form of fishing activity tends to perform a more social rather than economic function and is therefore less efficient than industrial fisheries.

Studies have shown that there are more fishermen engaged in small-scale artisanal fishing than are employed in large-scale fishing companies. The cost of investment in large-scale industries is 100% higher than that of artisanal fishing. Studies have also shown that the volume of catch per ton of fuel is three

times higher with artisanal fishing than that of larger high-tech

fishing operations.

In addition it is relatively easy to replicate this fleet of 23-foot 11 long banana boats in other island settings, as a quarter of all island populations fish for a living.

Establish a commercial To further ensure the success of the venture Wind Emirau will longline tuna fishery also have commercial longline operations.12

Longline catches in potential fishing grounds adjacent to the

New Guinea Islands (NGI) are high. Catch rates have been

achieved during trial fishing of around three times the average longline catch rates for the rest of the Pacific tuna longline fishery. Longlining activities would therefore focus on PNG waters north of New Guinea, in the central and northern Bismarck Sea, east of New Ireland, and east of Milne Bay. . Local baitfish will be To establish an annual fishery for 10,000MT to 20,000MT of essential longline caught tuna will require approximately 20 vessels13 with

11 Banana boats have a 350-500kg capacity and only need a minimum of two crewmembers. 12 A fleet of 20 longliners, with three to four vessels coming to port on a daily rotation, could deliver upwards of 90MT per day and thus contribute to the size of the catch airfreighted to other continents. 13 This assumes 209 fishing days per vessel per annum and a conservative catch rate of 55kg per 100 hooks set. This is based on historical information from Japanese fleets operating in the PNG area.

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Marketing Plan - cont a 30MT capacity, located in the northern islands close to Kavieng. Harvesting of bait locally will be an essential requirement if longline tuna fishing is to be successful on a commercial basis.

The Tigak and Ysabel Passage regions of northern New Ireland

arguably support the most productive baitfish fishing grounds in the western tropical Pacific. The offshore tuna resource of principal interest to a longline fleet, skipjack and juvenile „yellow fin‟ tuna is abundant throughout the year. Tuna scientists from the Secretariat of the Pacific Community are confident that the local baitfish resource is capable of sustaining increased fishing pressure without being detrimental to populations of other reef-associated fishes taken incidentally during bait hauling operations.

Monitoring fisheries Introducing a commercial fishing regime will require the collection of biological and fishery information from artisanal, bait and longline operations, thus reducing reliance on Fish

Refer Appendix C - FAD Aggregate Devices (FADs).

Continuity of Supply Hence the major constraints to further development of the tuna industry in the New Guinea Islands (NGI) relates to difficulties in coordinating sufficient tonnage of fresh, chilled sashimi-grade tuna at anyone time. This is essential for Wind Emirau to:  Build confidence of overseas markets in this operation by guaranteeing continuity of supply  Secure airfreight space direct to Japan on a regular basis.

The fish stocks exist. The total resource yield has the potential to

reach a sustainable 800,000MT per annum. The issue is

harvesting the fisheries stocks and shore-based processing

facilities.

Fishing fleet expansion The Wind Emirau fleet will focus on harvesting tuna stocks needed principally within Papau New Guinea fisheries waters, in-shore, that is within 12 kilometres of the coast line, beyond 12 kilometres and on the adjacent high seas.

In-shore fishing provides the opportunity for much smaller fishing vessels to join the fleet. A smaller vessel could be used to great benefit if PAM or flightships took on a mothership role. Fish quality would be improved and productivity increased, if the majority of the fleet remained on the fishing grounds. A small vessel would be more economical to run in terms of fuel consumption and speed to market.

It is in the interests of the enterprise to gain economies of scale as soon as possible by establishing a fleet of 20 PAM and 20

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14 Marketing Plan - cont longline vessels to augment the fleet of banana boats. This needs to happen in a relatively short time frame.

Shore based support During establishment enterprise profitability is dependent on vessel performance subsidising the costs of supporting shore operations. Income to support shore services will be secured from a management levy charged to each vessel. This reliance is reduced as the fleet size increases.

The banana boats can put to sea 275 days a year to coincide with the open days of global fish markets. They will depend on a flightship15 or mothership to retrieve their catch within hours of

it being caught. To do so will require individual boats to be

fitted with a Global Positioning System (GPS) system that

connects individual boats to the airport, flightships in flight and motherships. This system could also be used as a safety feature if the two-man crew got into difficulty.

The PAM boats, capable of holding 6–10MT of tuna will fulfil multiple roles, fishing, icepacking and mothership until all 20 flightships are operational.

The primary focus for longline vessels will be on the production of fresh sashimi-grade tuna, involving trip cycles per vessel of 14 days. Each vessel will complete 26 such fishing trips in a year. The total fishing time per year is thus expected to be 209 days per vessel, or 209 sets of the longline gear. The fleet would rotate in and out of port with 3-4 longliners coming to port every day.

Bait, food and other consumables will be charged to each vessel. Each vessel will be expected to be a viable economic entity in its own right.

The ultimate success of the entire domestic fisheries will require the development of more capital intensive shore-based facilities such as canneries, fishing base-ports, cool storage and air freight

capability.

At start up, shore support for the Emirau fleet could be based at:

 National Fisheries Container waterfront site

 Provincial Government's Fish Depot

 Government Stores site at Kavieng

 New facilities built at Emirau.

14 Twenty pole and line vessels would provide employment for around 600 New Irelanders, generate significant commerce for linked industries in New Ireland and provide ancillary benefit for coastal communities living adjacent to the bait grounds. These fisheries, hand-lining for tuna, longlining for tuna and baitfishing could exist side by side with other fisheries, such as hand-lining for deepwater snappers, without concerns for competition between the fisheries arising. 15 Flightships are flying boats capable of flying at speeds upwards of 160km/hr with a load of 1000kg of fish.

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Marketing Plan - cont In order to access international markets, international accreditation will need to be achieved and shore-based facilities will have to adopt HACCP – Hazard Analysis and Critical Control Point principles. Hence a documented HACCP program for quality assurance and seafood accreditation from the Marine Stewardship Council will be essential.

Emirau-based facilities Once markets and sustainable export volumes of sashimi-grade tuna have been established Wind Emirau will focus on providing the necessary sea and airfreight infrastructure to improve services in and out of Emirau Island for the export of tuna, deep-water snapper, mud crab and other commercially valuable sea foods.

Boeing 747F aircraft will initially move 100MT of fish product per flight once weekly to Japan. This would be expanded to a daily operation lifting 100MT. Opening up global markets through regular and reliable freight operations provides market access for fresh vegetables, raw fibre materials and hand crafted products. The Chimbu Valley in the PNG mainland highlands could export fruit and vegetables, via Wind Emirau, to rapidly expanding organic niche markets. Consumers in western cultures are paying premiums for organic produce, acknowledging the risks pesticides and herbicides pose to their health and wellbeing. To access premium prices Wind Emirau will, as part of the education program, bring in permaculture skills and learning.

It is anticipated that further development and expansion of the fishing industry will definitely generate the interest of other international fishing fleets. This could take the form of:  Licensed catches being airfreighted to Wind Emirau‟s established markets, lifting tonnage to 400MT a day, requiring 4 daily departures.  The use of facilities to market fresh fish to other countries.  Use of overnight delivery services back to the country of origin.

Industries such as tourism, air transport services, road, rail and ferry transport systems will be developed to facilitate the traffic of transit passengers to and from major ports in the region. This would mean Wind Emirau securing preferred positions in both waterfront and airport terminal space to conduct these operations.

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Marketing objectives  Land sufficient tonnage of chilled sashimi-grade tuna to merit regular airfreight charter flights to Asia, Europe and North America.

 Exporting initially to existing fish markets, particularly Japan, the operation will quickly move to developing unique markets for Wind Emirau products.

 Develop China as Wind Emirau‟s primary market.

 Advocate for regulation and monitoring of tuna stocks and catches so PNG rightfully claims and obtains economic benefit from their fisheries stocks.16 Overseas markets will not have to be created, but PNG sovereignty and market share of fisheries in the DFZ needs to be clawed back into PNG ownership.

 Market the PNG catch as an ecologically sustainable product - securing a premium in the middle class markets of Asia, Europe, USA and Australia, where consumers are becoming increasingly concerned that the environment is under threat from man‟s exploitation.17 Hence tuna from PNG waters will be marketed under a brand name. Fish will wear a visible identification „brand‟ attached to a barbed micro-chip that is place, time and date stamped. Developing the strength of this brand could see foreign fleets channelling their catches through Wind Emirau to take advantage of these marketing and distribution networks.

 Develop Europe as the world‟s boutique market for eco-fish.

 Determine the best specifications and commission the development of in-shore18 fishing vessels to progressively replace the fleet of banana boats.

 Establish local manufacturing of in-shore fishing vessels, flightships and plastic to diesel conversion plant.

 Recruit personnel and organisations to help establish the infrastructure projects. Recruitment and induction processes will be values-based.19

16 The catch from PNG waters accounts for 30 –40% of the global tuna market. Approximately 2 million MT of recorded catch comes out of the Central and Western Pacific Ocean. Over 70% or the worlds‟ tuna comes from the Pacific region. 17 Consumers are already prepared to pay premiums for energy coming from renewable resources. 18 In-shore relates to fishing with 12 kilometres of the coastline. 19 Wind Australia will manage recruitment and induction. Short listed applicants will be required to complete an eligibility audit based on values to secure a job in this project. www.windaustralia.com

21 Commercial in Confidence Wind Emirau Project Products The growth area is in sashimi-grade „fresh chilled tuna‟ airfreighted to fresh seafood markets in Asia, Europe and North America. This fish attracts a premium in these markets. While it is coming off a small base,20 this market has grown in dollar terms by 60% in the past three years.

Sashimi-grade tuna The export of sashimi-grade tuna will consist of 100% of the „big eye‟ tuna catch and 45% of the „yellow fin‟ tuna catch. The remainder of the „yellow fin‟ will be loined, vacuum packed and exported in frozen form by sea to North America or Europe. Some of the by-catch will also be airfreighted to Japanese fresh fish markets while the remainder will either be loined or sold domestically.

There maybe a requirement to can tuna, but as the focus is on fresh fish this would be less than 10% of the catch and it would only occur intermittently. Canning operations may be needed for some of the by-catch, other marketable marine species or organic vegetable, but this would be addressed in subsequent business

plans.

The establishment of a fresh sashimi-grade tuna export operation Diesel fuel at Emirau will be assisted by favourable fuel prices. Diesel fuel can be produced by the conversion of unclean plastic waste.

The aircraft freighting fresh chilled tuna to market will be back- 21 loaded with shredded plastics and polystyrenes for the return journey to Emirau. The plastic will be injected into the freight containers used to transport the „coffins‟ filled with tuna.

Converting plastic to diesel takes about 7 hours. A self-sufficient thermolysis plastic waste to diesel manufacturing plant would be built adjacent to the airfield for the convenience of unloading bulk deliveries of plastic. The end-product would be stored in secure underground bulkheads at the airport and „reticulated‟ access provided to harbour locations for refuelling of PAM, banana and longline vessels. The fleet would normally be paying K0.63t/litre for imported diesel in drums (Calculated accounting for the K0.03t/l duty draw back).22

The price of diesel from the conversion operation will be available at competitive Port Moresby prices. There is further potential for selling reconstituted high-grade diesel for other uses and this could open up export markets.

20 In the largest market, Japan the volume of sashimi grade tuna is currently 70,000MT that represented 20% of the total Japanese market for tuna fish. This volume is continuing to grow. 21 This unclean waste plastic will have the PET plastics removed. PET plastics are predominantly soft drink containers that can be recycled. 22 This is based on 1999 figures but the cost could now be as high as K1/litre.

22 Commercial in Confidence Wind Emirau Project

Market Size The global market for fresh tuna has grown significantly in the past 10 years as globalisation has exposed western cultures to the fish-based diets of Asian countries, in particular Japan‟s sushi and sashimi dishes.

For decades South Pacific longline fleets, predominantly

operating from bases in Asia, have produced frozen and fresh/chilled tuna which is traded principally in Japan on the domestic sashimi market. In the last decade significant supplementary markets have developed in the US, Europe and China.

The US market has grown steadily in recent years with a current

annual demand for 50,000MT of tuna annually, almost a quarter of which passes through Hawaii.

China is now emerging as the biggest fish market in the world. 23

The principal market for fresh and frozen tuna and billfish

continues to be Japan with an annual demand exceeding

400,000MT. Imported tuna accounted for 70 percent of the total Growth market is fresh- market for sashimi-grade tuna in Japan in 1998. chilled tuna Fresh chilled tuna imports to Japan average 70,000MT annually, representing 20 percent of the total tuna market. Fifty percent of the trade is „yellow fin‟ tuna, 35 percent „big eye‟ with billfish accounting for around 8 percent. The balance consists of temperate tunas. Exports from the South Pacific generally consist of 40% „yellow fin‟, 50% „big eye‟ with the balance albacore and

billfish.

Air freighted fresh tuna from the South Pacific in 1998 amounted to 13,000MT, down from a peak in 1994 of 20,000MT. This could be expected following the passing of a domestication policy by the PNG Government in August 1995. Effectively this PNG waters – market policy shifted the emphasis from foreign commercial fishing to share domestic commercial fishing. The gradual growth in domestic boats and the decline in quotas for foreign vessels have seen a decline in the recorded volume of tuna caught in PNG waters.

The total catches by all vessels fishing in PNG waters in the last five years, 1996 - 2000, dropped from 337,022MT in 1996 to 111,837MT in 1999. Refer Appendix D – ‘Tuna Exports’

In 2000 the total catch is estimated to have been 160,000MT.

23 The market in China for fresh tuna has grown 30% in the past year.

23 Commercial in Confidence Wind Emirau Project Catch Projections The data used in this analysis is based on a catch composition of 70% „yellow fin‟, 15% „big eye‟ and 15% other species, and this is consistent with historical Japanese data for the Papua New Guinea area. It is assumed that 100% of the „big eye‟ tuna and 45% of the „yellow fin‟ tuna caught are of sashimi-grade quality. The remainder of the „yellow fin‟ will be loined, vacuum packed and exported in frozen form by sea to North America or Europe. Loining is assumed to achieve 55% recovery. Some of the by- catch will also be airfreighted to Japanese fresh fish markets while the remainder will either be loined or sold domestically.

A fleet of 120 banana boats, remaining active over the day, could catch 1000kg of tuna a day. The projection is roughly two catches per boat per day. This aggregates to 132MT/day and is sufficient to charter a Boeing aircraft24 for a daily flight to export markets. There will of course be additional catch volumes coming in from PAM25 and the longline fleet to augment the artisanal banana boat catch.26 Hence the capacity to fill Boeing aircraft will quickly move from a daily operation to 2-3 times a day. Artisanal fishing will be encouraged through the entire New Ireland Province (NIP) which is the landmass right in the middle of the Morgado Square. It is feasible that the airlift operation could expand rapidly to 10 flights per day. Further expansion of artisanal fishing South to Bougainville and West to Wewak would lift the air freight traffic to 25 flights per day. This means the number of purse seiner fishing vessels can be reduced and their wasteful fishing process, primarily pulling their estimated 350,000MT off FADs, can be rested. Wind Emirau can take over the harvesting and exporting of tuna. The total resource yield has the potential to reach a sustainable 800,000MT per annum. However to guarantee continuity of supply and ensure the fisheries‟ sustainability, efficient regulatory control over all fishing operations throughout the economic zone will be set up by Wind Emirau to manage and monitor catch volumes.

24 Boeing 747F aircraft have a maximum capacity of 100MT per flight. 25 It is anticipated at start up that the 20 PAM boats will be deployed in equal numbers to fish and provide icepack or mothership roles. Ten PAM boats would produce 100MT every 2 days, based on a 6-10MT capacity and the ability to stay at sea for a week. 26 In addition to the banana boat fleet and 20 PAM boats, the 20 longliners – with a 30MT capacity would add another 600MT per week to the catch.

24 Commercial in Confidence Wind Emirau Project Pricing In Japan‟s Tokyo fish market the price for fresh sashimi grade Fish Price Review big eye tuna over 50kg has increased by 60% in three years. 2001 – US$20.00/kg 2002 – US$25.00/kg 2003 – US$32.00/kg

Conversely the price for frozen, usually skipjack tuna, has dropped from US$10.00/kg to US$6.00/kg over the same period.

Yellow fin and small big eye tuna, less than 20kg, attract average prices of between US$15.00 - $17.00/kg and average prices have remained stagnant. Costings Banana boats The fleet of banana and PAM boats coming from the PNG government will be privately owned, making artisanal fishermen Independent Business Owners (IBO). As such the crew, fuel, fishing tackle and maintenance is their responsibility. They then sell their catch to Wind Emirau, at an estimated US$1.00/kg.

Given the subsistence fish-based culture of these islands there are any number of banana or PAM boats that could be utilised for a quick-start of this artisanal fishery.

These boats would remain in private ownership. The boat owner would be required to cover the cost of fuel to power a 40HP Yamaha engine, as well as the cost to install a GPS system. Boat owners would also contribute to the cost of running flightships and the shore-based facilities, including the overhead costs associated with recording and invoicing the payment of the catch.

Flightships Flightships are flying boats capable of flying at speeds upwards of 160km/hr and landing in shallow water. Initially 20 flightships will be required to provide retrieval and surveillance services.

The cost of the flightship is estimated at US$800,000 retail, but Wind Emirau will be manufacturing these flightships. This will effectively reduce the price to US$400,000 for the first

25 Commercial in Confidence Wind Emirau Project

Marketing Plan – costings twenty flightships. The number of flightships will double at each cont stage of the development and will move from a 1,000kg load- capacity to 5000kg.

Flightships cost US$95.00/hour to run and it is anticipated that Computer and they will collect the catch from two to three banana boats before communications having to return to base at Emirau International Airport. It is envisaged 20 flightships will each make 5 trips per day with an average round trip, including loading, unloading and refuelling, expected to take approximately two hours. At start up PAM boats

will play the role of the flightship and perform mothership services as well as being used as icepackers.

Flightships, PAM boats, longline vessels and banana boats will be fitted with global positioning, transponder identification

systems (GPS). Flightships and retrieval vessels will also have an on-board computer to handle the weighing, recording and creation of identification tags for each fish.

The boat owner will have a master code that identifies his boat

and this will be how the catch is consigned in the on-board computer system. The identification tags will register the boat owner, place, time and date. The computer system will automatically print out a record of the catch and download the data to the central computer on Emirau Island.

This identification coding will be the basis on which Wind Emirau pays artisanal fishermen for their catch.

This identification number, tied to the GPS location, will be

another input to fish stock monitoring. It will also provide fishery-to-market tracking of the tuna caught and provide daily, weekly, monthly and yearly catch records.

The initial set up and operation of this system will be charged

26 Commercial in Confidence Wind Emirau Project

Marketing Plan – costings back to the boat owners in the form of an overhead charge. cont

Baitfish for the long-line Initially the cost of baitfish is based on imported container loads. fleet A full container, approximately 16MT, contains 200,000 pieces of baitfish at US$1.80/kg, including freight. The landed cost is expected to be in the region of US$2.00/kg.

The average size of a bait piece is 80 grams, so the per piece cost is US$O.16. Converted to Kina, bait cost would be KO.53 per set hook. With the establishment of a local baitfish industry, the average cost is expected to be US$0.10 per piece. This will assist the longline fleet.

Freight Air Freight A fleet of leased Boeing aircraft will initially fly under the name of Wind Emirau.

Sashimi-grade tuna needs to be packed into re-useable and collapsible coffins that vary in size depending on the size of the fish. These are yet to be sourced and costed for this proposal.

An average load for a Boeing 747F aircraft would be 100MT.

The freight rate is expected to be 5% of the wholesale price to Japan, but this is contingent on the Emirau venture obtaining an Air Operators Certificate. Marketing & Distribution Marketing Costs There will be two components to marketing expenses.

The first component relates to distribution and landed costs. In Japan the cost of marketing sashimi-grade tuna can vary between 15% and 25% of auction value. These charges are affected by the

size of the shipment, the particular agent employed and final market destination for the shipment. The breakdown of these charges includes government import duty (3.5%), customs clearance and transport costs (13% – 17%), market commission (5.5%) and sales tax (5%). Established operators elsewhere in the Pacific have demonstrated that overall rates of around 16 percent are achievable.

The second component is the branding of marine produce harvested from PNG‟s Designated Fishing Zone. There will be

the actual branding of the product and the promotion of the

brand.

In the case of sashimi-grade „fresh-chilled‟ tuna there is a need to have these fish present at market in pristine condition. Hence labels or brands will have to be very judiciously placed to prevent marks and bruises.

27 Commercial in Confidence Wind Emirau Project

Marketing Plan – costings The intention is for each fish to wear a visible identification cont „brand‟ attached to a barbed, hard to remove without disfiguring the fish, microchip that is place, time and date stamped. The coding of this information is based on random number sequences

generated at the originating port, Emirau Island.

There is no advertising as yet but for the purposes of costing, it is assumed that this will represent 20% of the wholesale price. The estimates are based on an average wholesale price of US$10.00/kg.

Marketing costs associated with loins is negligible.

Recruitment costs Recruitment costs are principally associated with the selection of foreigners for outsourced or contracted services and support service personnel, like consultants and industry specialists. The

recruitment process will be managed by Wind Australia on behalf of Wind Emirau.

The standard rate is one-month‟s salary, based on the remuneration for the job being filled. This overhead cost will still be applicable even if the applicant is unsuccessful because he/she fails the values audit.

28 Commercial in Confidence Wind Emirau Project Brand Marketing Research to identify the characteristics, key messages and logo for this eco-catch will need to reflect the unique nature of the St Mathias – New Ireland - PNG islands.

It is envisaged that each sashimi-grade tuna whether „fresh- chilled‟ or frozen will be labelled with the brand.

Yet this branding cannot be established in isolation. Signage for Wind Emirau‟s aircraft, fishing fleets and other developments will need to reinforce the brand or be sympathetic to the brand. A hierarchy of brand names and/or images needs to be developed so that it accounts for all aspects of signage and promotion of each of the business opportunities identified in Stage 1 through to Stage 4.

Any key messages and logos will need to be tested to ensure that the language is a good cultural and ethical fit in target export markets, particular when translated into different languages.

The key messages may need to be tailored to each market and collateral materials developed to promote this product with wholesalers initially. Premium prices for the eco-catch will only be achieved when communities demand it.

Hence more research, a significant marketing expense, would be needed before an awareness campaign was launched in each and every market.

The focus of this campaign would initially be China, Europe and the US. Even though these markets are relatively small compared to established Asian markets, they are growing at a faster rate. Wind Emirau has the opportunity to create new and grow existing fresh fish markets in Europe because reliable deliveries of sashimi-grade tuna, of a consistent high quality, will be accessible.

Developing the strength of this brand could see foreign fleets channelling their catches through Wind Emirau to take advantage of the market/distribution network. When this occurs, marketing costs will be defrayed across a significantly larger volume of fish.

29 Commercial in Confidence Wind Emirau Project

SWOT Strengths  Existing values-based relationship between Edward Car and the Emirau Island communities.  Unique arrangement to consolidate all customary land under the Emirau Trust. To improve investor confidence in the project and guarantee smooth implementation processes, the Emirau people agreed to adopt the land-use system of „lease, lease-back‟. The Emirau Trust has been established to lease the land from each Incorporated Land Group and „lease-back‟ the land to Wind Australia for development. Land

mobilisation is more than 75% complete.  Centralised project management and contract negotiation. The airport land will be transferred from Emirau Trust to Wind Australia. As the primary owner and promoter of the project Wind Australia will handle all project negotiations with government authorities, multilateral agencies and private investors.  Island and geographic isolation assists the management and containment of development.  The immediate use of the existing 2200 metre serviceable runway.  The solid foundation of the existing runways eliminates major digging and compacting costs.  The damaged ecosystem from World War II operations,

making possible further development in these areas.  Available runway space for a 5000 metre or more airstrip spanning the island NW to SE acr0ss the 30 metre contour, parallel to the existing overgrown runway, passing through agriculturally disturbed land and regrowth.  Unanimous local support and agreement for the runway development.  The population is vegetarian, doesn‟t drink, smoke, swear or chew beetlenut. They follow the church of the Seven-Day

Adventist (SDA) religion.  The population is all one united system of marriage- interrelated clans.  A small population gives confidence to effective management of social and law and order issues.  Nearly quarters of coastal populations have local fishing knowledge and skills to fish. As such it will be easy to train and establish fish handling protocols for sashimi markets.

 Banana boats are plentiful in these communities and it is easy

to acquire banana boats or similar vessels to support artisanal fishing.  Flightships are ideal for coastguard surveillance and providing long term control of regional and national artisanal fisheries.  The local baitfish resource is capable of sustaining the demands of a fleet of longline vessels. An ancillary cash benefit would accrue to resource owners of the bait grounds.

30 Commercial in Confidence Wind Emirau Project

SWOT - cont Weaknesses  Time to manufacture 20 flightships. It takes 8 months to build the first flight ship and then one-month thereafter. It will take two years for all 20 flightships to be in service.

 Existing domestic airfreight services are not capable of

guaranteeing shipments of perishable marine produce particularly if any sizeable volumes are involved on a regular basis.  As the island is remote and cut off by the sea there are no economies for cheaper access to government services and support services. Additional costs for support services and industries needs to be factored into the project.

 Banana boat capacity is limited to between 350-500kg of fish. Hauling more fish on board could cause the boat to sink. This limited capacity, when there is plentiful fish to catch, represents a wasted fishing opportunity.

Opportunities

 Raising fisheries contribution to PNG‟s GDP from 1% to 6% with one daily flight of 100MT of tuna to overseas fish

markets. The potential to raise this to 24% of GDP with the introduction of additional daily flights.  Good coordination of production between companies and provinces can lead to joint chartering of aircraft and marked reduction in costs, improvement in quality and hence greater profitability.

 Export of organic vegetables from the cool highland provinces

and establish a national foods export market as part of the Wind Emirau eco-brand.  Manufacture and exporting of large quantities of eco-friendly diesel fuel.  Bringing to PNG and NIP high tech manufacturing industries with export potential. Eg: Ground-effect flightships

 Scales of economy are raised to a point where an undersea

cable can be financed.  Opening a new style of bed and breakfast accommodation throughout NIP based on the program implemented in Mussau, Emirau and Tench.  Inter-island transport system based on flightship economies.

 High cash flow reserves to stop logging as a revenue source.

 Set the trend and management practices for preserving

beautiful locations for contemporary eco-tourism market.  Pioneer the development of a diesel driven „out-rigger‟ style Catamaran that will be very stable in ocean conditions to facilitate the easy transfer of between 350 – 500kg of tuna to flightships.  The successful establishment of a regular airfreight service to market tuna would provide opportunities for air freighting lobster and other marine products, like deepwater snapper and mudcrab. Developing supplementary exports will generate significant financial benefits for local communities. In order

31 Commercial in Confidence Wind Emirau Project

SWOT – Opportunities to sustain these benefits, local communities would need to consider adopting local management arrangements that protect lobster and other marine populations from over exploitation. Such arrangements may include the

establishment of reserves where collection of marine flora and fauna is prohibited entirely.  By-catch could also be effectively marketed to further improve the economic viability of Wind Emirau.  Under the current exchange rate climate, there is significant scope for joining by-catch tuna (>15kg) at Kavieng, freezing and vacuum packing it and exporting it to Europe or the

continental USA for further processing. Revenue from the sales of Kavieng by-catch processed in this way has been conservatively estimated at US$3.50 per kg.  The Port Moresby market for 2nd or 3rd grade tuna is currently limited with demand largely satisfied by Port Moresby based producers.

 Provedore, chandlering and stevedoring service industries 27 based at Kavieng to service the entire Pacific fleet.  Securing distributors rights for ships supplies, such as fishing gear, spare parts and bait, as the Emirau-based fleet expands.  Promotion of recreational fishing – Wind Emirau would provide the marketing and management support. Although many aspects of recreational fishing in New Ireland are yet to be proven, there are extremely good prospects for:

 Light gear estuary fishing  Shallow lagoon and reef fly fishing, including fly fishing for highly prized bonefish  River fishing  Casting and jigging reef drop offs

 Bottom hand-lining

 Near shore trolling for reef-associated pelagic such as

spanish mackerel, job fish, barracuda and giant trevally  Off shore trolling for large game fish such as sailfish, marlin and tunas.

Threats  Ongoing commitment from local artisanal fishermen.

 Lack of political motivation to assist the venture to manage

the bureaucratic and legal obligations.

 Government and/or private investor development of Momote airport in the Manus Province into an international airport to rival Emirau as a port of first entry  Lack of monitoring mechanisms to support the sustainable management of the renewable tuna and baitfish resources in order to sustain the industry.

 Effective regulation and monitoring of tuna stocks and catches

will cause a significant market readjustment. The sunk capital investment costs in foreign fleets, particularly those fleets that are fishing without recording their catches, will place political

27 The nearest base for these services is 1000 nautical miles away in Guam.

32 Commercial in Confidence Wind Emirau Project

SWOT – weaknesses pressure on the government for a longer transition period – delaying this project. Alternatively the pressure will come in some other form, but the outcome will be to limit or compromise the benefit PNG will receive from the revitalisation and restructure of the industry that this proposal offers.

33 Commercial in Confidence Wind Emirau Project

Implementation Requirements – Stage 1

Long term leasing of the Emirau Island is a coral atoll with a land area of 36 square land kilometres. The 30 Incorporated Land Groups (ILG) that make up the land and resource ownership of the island are prepared to lease thirty (30) square kilometres to the Emirau Trust, which in turn will lease this land to Wind Australia for the development of this project. The tenure of the lease agreement is a renewable 99 years lease.

Each family in the clans, comprising the 30 ILGs, have documented their traditional ownership of the land and are having their entitlements legally registered. This process is 75% complete.

Once completed the Memorandum of Understanding (MOU) between Emirau Trust and Wind Australia will be finalised. The MOU and the leasing agreement will be endorsed at a properly constituted meeting of the Emirau Council of Trustees to take place on 9 August 2004.

The leasing agreement will then be security, making it possible for Stage 1 and Stage 2 to commence.

Additional land will be secured in Kavieng for the manufacture of flightships.

Business registration Parallelling the development of the memorandum of understanding will be registering Wind Emirau Ltd as a PNG company. Support from the government is required to expedite and assist in this process.

Wharf, processing and The shore-based operations located at Eulolou harbour, situated storage facilities on the eastern end of Emirau Island, will provide the necessary support for the landing of equipment for the infrastructure

development.

There is an existing jetty facility that caters for general purpose and small scale fishing operations. The jetty will be repaired, upgraded and extended to cater for increased activities of the Wind Emirau fishing fleet.

As part of the infrastructure development, a large, modern processing and storage facility will be constructed to meet

standards for exporting sashimi-grade tuna and other seafood products. Part of this will be on wharfing and along the shore below the designated fish freight terminal found above the shoreline at the 30-metre contour, at the NW end of the runway. A conveyor system will be established to transport packed

34 Commercial in Confidence Wind Emirau Project

Implementation - cont coffins up to the cool storage and aircraft-loading hangers for shipment into waiting B747F aircraft.

The pier is located at the shortest distance directly below the freight terminal on the shoreline out into Hamburg Harbour. The nearby housing and village school need not be disturbed.

The beachfront below the runway threshold will be designated the fish processing and packing precinct. The pier, with 24-hour lighting, will be large enough to accommodate 3-6 returning longliner vessels, 3-6 PAM boats, itinerant transport vessels and coastal traders trans shipping frozen catch. The wharf area will also have low ramps for 20 – 40 banana boats and 6 flightships.

The deep-sea port offers protection from southerly and easterly winds and will be configured to provide a safe water haven for the entire longline fleet and PAM boats for overnight and weekend moorings. Access to the moorings and the wharf to unload fish and refuel will be controlled by the harbour master.

Longline and PAM boats that have to take on stores and provisions will tie up at the moorings, freeing space at the wharf for boats unloading their catch.

This process is critical to protect the reef, marine and coastal eco- systems. Access to the moorings is via electronically operated floating booms designed to contain oil and other floating contaminants. Once secured in this area it will be mandatory for each vessel to connect any discharge portals to the reticulated waste system embedded in the wharves‟ structure. Under water surveillance will monitor vessel compliance and any unauthorised discharges.

Purse seiner vessels will not be permitted to dock at the island. When this fleet elects to use Wind Emirau market and distribution services a floating ice-packing barge will provide at- sea off loading.

Flight manufacture Flightship manufacture is a priority given the lead-time necessary to establish the manufacturing facility and enter the production phase. It needs to be the first infrastructure project to be funded and established on Emirau Island. The manufacturing site will be south of the shoreline fish processing and packing facilities. It will be situated to take advantage of the disused landing ramps in Hamburg Harbour.

Establishing the fishing The St Mathias Islands already have a significant number of operation small privately owned banana boats that would be used to start this venture. It is anticipated that a fleet of 120-200 boats would

35 Commercial in Confidence Wind Emirau Project

Implementation - cont be available to commence commercial in-shore fishing.

The government is to provide 20 PAM boats and will lease Wind Emirau 20 longline vessels by way of backing the start up of this commercial artisanal fishery.

Expanding the fleet Wind Emirau is currently working with designers to produce a „out-rigger‟ catamaran to augment the fleet of basic banana boats. The first 20 outriggers will possess the following general characteristics.

 20 –30 metres in length

 Capacity to secure 6 to 8, 80kg tuna on board

 Tow a banana boat to provide additional fish-holding capacity  Stabilisers to allow transfer of fish to flightships or motherships  GPS transponder identification system

The budgeted cost for an outrigger is expected to be similar to the cost of a banana boat, approximately US$3,000.

As banana boats are progressively replaced with out-riggers, the

banana boat becomes an auxiliary craft, towed by the outrigger to

provide at-sea-holding facilities. This will enable the boat owner to increase his catch size 120% before having to request retrieval services from the flightship or mothership. Further improving economies of scale.

PAM boats PAM boats are a Phillipino concept that is very successful in shallow in-shore fishing operations. They can stay at sea for up to 14 days and carry a catch of 6-10MT.

The Government is also acquiring 20 boats to support the

artisanal fishery as crewed commercial fishing platforms and as a

packer mothership iced up for retrieval. The PAM boats play an important integral role as a mid-sized vessel for quick local retrieval operations as well as sustained fishing, ideally a couple of days before returning to Hamburg Harbour.

The PAM boat fleet could expand to 100‟s of units as the operation moves south and westward through PNG.

Longliner fleet The longliner vessels, to be supplied by the government, if not readily available, will need to have the following characteristics.

 Fuel capacity that would permit extended operations

approaching two to four weeks  Set up for 1,600 hooks using monofilament line systems  Holding capacity for 30MT of chilled tuna  GPS transponder identification system

The budgeted cost for such a vessel is US$420,000. Provision for

36 Commercial in Confidence Wind Emirau Project

Implementation - cont initial operating capital for the vessel, amounting to US$50,000 and delivery costs, including modifications, US$100,000 has been included. Refer – Appendix E – Assumptions - Summary

The vessels will be configured so that they can serve both as a

fishing platform and a mothership. In the belief that for the

majority of the year good longline fishing grounds will be found relatively close to Kavieng.

It is intended that the first 20 vessels in the fleet be acquired to prove they have the capacity to fish as well as serve as a mothership. If this is proven and the vessels can provide a mothership service this will be done on a rotational basis.

This means the acquisition costs will be reduced and future vessels deployed at Kavieng would be in the US$200,000-

300,000 price range.

While productivity will be improved with the successful adoption of a mothership-type operation, this assessment confines itself to a traditional operation comprising one vessel undertaking short retrieval trips that maximise fish quality.

Expertise Wind Australia has established a network of interested experts who will join this project under contract to assist in the planning, development and construction of the shore-based fishing

facilities, airport, renewable power generation, the diesel conversion plant, marketing and flightships.

These contractors will provide their project management and technical services on a non-committal and non-proprietary basis.

The experts selected have strong proven and existing track- records and have established tuna industries for island nations, developed provedoring and chandlery operations and other infrastructure projects necessary to support a transport and

communications hub.

When plant and facilities are constructed, other experts will be brought in to manage these facilities on a limited tenure basis. This will include the management of the airport, meteorologists, flight controllers and information technology experts. Part of

their responsibility will be to set up succession plans to mentor and train PNG inhabitants to take on these responsibilities.

As part of Wind Emirau‟s commitment to attract new industries and investment to the islands other business opportunities, like

flightships manufacture, will be established by Edward Car.

Monitoring Wind Emirau will monitor and study the effects of the infrastructure development on the wildlife and the stakeholders.

37 Commercial in Confidence Wind Emirau Project

Implementation - cont  Wind Emirau will work with the Department of Environment and Conservation and engage experts qualified to undertake the necessary environmental impact research and further ongoing studies.

 In the longer term, Wind Emirau will have as part of it own management structure an Environment Department with staff attached to the technical and further education University - established by Wind Emirau in Stage 3 of the project.

 The National Research Institute will be invited to document the process and engaged to undertake a study initially to assess the social impact of the project. This could be the social model underpinning economic development for the rest of PNG.

 Wind Emirau will enrol the support of the world‟s leaders in environmental and social transformation to study and measure the process of zero impact development.28 The process of human change with a reference anchored to core values-based behaviour, seen as principles, will be documented and published for the benefit and use of other communities.

28 Where the untouched is left untouched and where the rehabilitated land is supported and encouraged to return to its natural original biological expression.

38 Commercial in Confidence Wind Emirau Project Operational Issues Fishing regime Artisanal fishing in banana-type boats These fishermen would set out each day and set their moored lines. Monitoring activity on the buoys will indicate if they have caught a tuna.

Tuna will be hauled to the surface and brought onboard. These boats will have capacity for a possible 6-8 large tuna before having to request a retrieval vessel, either a flightship or mothership (PAM).

Given the manufacturing lead-time for the flightships, the catch will be collected by PAM boats acting as motherships and icepackers.

Fishing out of banana boats occurs on the reefs and trolling along in deeper water. Banana boats will often work in groups and this team of fishermen coordinate their catch and help land the larger „big eye‟ into the boat. The banana boat can tow a second banana boat with ice boxes to support and extend their time at sea, fishing favourable opportunities. Clusters of crewed banana boats can work in relative close proximity and can help each other unload the catch to motherships or flightships.

The banana boats can be family operations or run by individuals. Any number of banana boats can be maintained providing sufficient petrol is available and a small boat service is established to do motor repairs and provide spare parts.

Longline vessels The primary focus for longline vessels will be on the production of fresh sashimi-grade tuna, involving trip cycles of up to 14 days. Each vessel can complete 26 such fishing trips in a year, with the balance of time spent slipping, undertaking maintenance and repairs, additional travel time and delays that may be periodically experienced as a result of, for example, bad weather.

The total fishing time per year is thus expected to be 209-275 days per vessel, or 209-275 sets of the long line gear.

These vessels would rotate in and out of the harbour so that at any one time 2 – 3 vessels are docking daily.

39 Commercial in Confidence Wind Emirau Project Air freight regime Over the weekend no heavy jet movements will be permitted29 so that the tranquillity and serenity of one of the most beautiful places in the world can be experienced by visitors to Emirau

Island.

The weekend from Friday 16:00 (4pm) to Monday morning is the time of recreation, reflection and prayer.

 No flights on Saturday and most of Sunday. The airport control zone shuts down to a Mandatory Broadcast Zone (MBZ) and the runway lights stay on all night.

 Light aircraft movements possible again after 15:00 (3.00pm) on Sunday will occur for freight departures to meet Narita airport‟s schedule (in Japan) for Monday‟s fish market auction.

 Fishing operations can continue on Sunday.

 Daily B747F aircraft depart daily from 06:15 to 15:15 destined for Asian markets. Flights bound for Europe or the US depart at 1800 hours for early morning arrival at their destination.

 Flights will quickly increase to four (4) departures every day and ten (10) departures daily within the first year. When PNG has made the transition to a comprehensive national artisanal fishing industry, centred over the Bismark Archepelago, 25 departures a day are likely. Process Fish to market  Artisanal fishermen use banana and PAM boats. Professional fishermen use longliners. It may be possible depending on demand, for foreign fishing boats under license to offload

onto Emirau trans-shipment vessels and thus gain access to fresh fish markets.  Fresh and live fish are picked up by retrieval craft, weighed, coded and assigned to the boat owner via the on-board

29 No flights on Saturday to respect Seventh Day Adventist customs. No flights on Sunday until 3.00pm to preserve the tranquillity for visiting tourists.

40 Commercial in Confidence Wind Emirau Project computer. The catch is trans-shipped to Emirau Island. Operational Issues - cont Various retrieval craft may be used for this purpose and they include PAM boats, ice packers, flightships or Cessna Caravan C208 floatplanes. Aircraft could operate out of Emirau, Tench or Musau Islands. Flightships will make the connection between Kavieng and Emirau over water in one hour. Using flightship technology for retrieval and transhipment brings fresh and living seafood products quicker to market and potentially they will command higher prices. Flightship will bring the New Hanover Island catch into Emirau in less than an hour, with Manus, Namatani on New Ireland and the north coast of New Britain 2 hours away. The Hermit Islands to the west would be some 3 hours from market.

 The fresh and live fish are fed to wharf or apron coolers. (located at the airport)  Quality control inspection and grading takes place. The fish are then stacked into collapsible coffins, packed with flaked ice and shipped to a cool storage hanger by conveyer system.  Coffins destined for foreign fish markets are loaded into Boeing freight containers for the flight to foreign markets. B747F aircraft can handle 100MT per trip. The flight duration is 5 hrs to any Pacific Rim country in Asia, or 15 hrs to Europe and North America.  B747F aircraft takes on a 100MT load of shredded waste plastics poured into the empty freight containers. One freight container will return with collapsed coffins.  B747F aircraft make the return journey to Emirau and the shredded plastic is vacuumed out of the freight containers and conveyed to the recycle plant operating below the apron.  Plastic is converted to diesel within 7 hours.  Diesel is then stored in underground bulkheads until required for export.  Diesel reaches port facilities via reticulated pipes that cater for PAM, longliner and fuel tankers.  Aircraft are made ready for the next load of fresh seafood.

41 Commercial in Confidence Wind Emirau Project Tokyo central wholesale At the Tsukiji Fish Market shipments pour in from 5pm onwards market and continue for the next 12 hours. Hundreds of tonnes of seafood arrive by jet cargo every day. Up to 17,000 vans and

refrigerated trucks come from nearby ports delivering some 2,300MT of seafood and 1500MT of fruit and vegetables. The market trades for 275 days in the year and takes about 2.4

billion-Yen daily. The market is open Monday to Saturday every week and is

closed on alternate Wednesdays and every Sunday. Fresh tuna is auctioned off in the first 10 mins.

Frozen tuna may be purchased in country of origin. Purchase negotiations are done by a sample or by inspectors inspecting at country of origin.

Payment is handled by letter of credit or Telegraphic Transfer (TT) against the original shipping document/invoice/ packing

list/bill of lading/certificate of origin. Daiichi Suisan Co. operates the Tsukiji Fisheries division of the Tokyo Metropolitan Central Market as a fresh fish wholesaler.

In 2002 Daiichi processed 63,792MT. Other auction houses are Osak Uoichba Co. Ltd, Daito Gyorui Co. Ltd.

Importing Sales System Most of the fresh/live seafood are imported through airfreight to Narita International Airport or the new Kansai International Airport under a “Consignment Sales Agreement”. The customs clearance is completed within 2-3hrs at the airport, after which the fish is immediately trucked to the Tsukiji Fish Market ready to sell the following morning. The last freight flight to be accepted needs to arrive at Narita by 20:00pm. The latest Estimated Time of Arrival (ETA) at Kansai is 12:00noon. Fish are sold at auction. This price is called the Net Sales Amount. The following calculation is made and the consignor immediately advised by facsimile. (A) – (B) – (C) – (D) – (E) = Net Sales Proceed. Net proceeds are remitted to the consignor‟s bank account within five (5) days of the auction. (A) Net Sales Amount x 5% (sales tax) = Gross Sales Amount (B) Sales commission = 5.5% (C) Customer clearance fee and transport to market = 13-17% (D) Import Duty = 3.5% (E) Bank Remittance Charge = 1%

42 Commercial in Confidence Wind Emirau Project

Logistics A detailed flight and load time schedule is attached. Refer - Appendix F - Time to Market Scenario Airport Management With Stage 1 a limited runway lighting facility would be adequate, supported by the installation of fixed ground aids such as NDB and VOR with a published GPS non-precision approach

capability. The main runway would have, at the Hamburg Harbour end on

the northern side of the apron, the fish handling and storage buildings, private hanger and buildings. This is the closest point to wharfing, fishing fleets for loading and existing solid road infrastructure.

The Tavilu village need not move at Stage 1 if at all. The apron will at Stage 1 accommodate four B747F aircraft and several regional third level airline aircraft and surveillance aircraft and several small private jets.

FAA estimates that airports with single runways have the capacity to service approximately 200,000 operations per annum

and demand a level typical of 350,000 inhabitants. One runway has the maximum possibility of 60 operations per hour under IFR rules. If it were under VFR rules the maximum is 99 operations per hour.

Maximum design capacity of a single runway, under IFR is 60 operations per hour. This means one aircraft lands every 2 minutes. That is 30 landings per hour and one minute to take-off which is 60 take-offs per hour.

At Emirau for a possible 10,000 inhabitants staying overnight in hotels there would be 6,000 operations per annum or 25/day for a 5 day week, which is 2 operations per hour if there is a curfew at night. This is expected after the completion of Stage 2.

Entering Stage 4 Emirau will become a traffic hub for the Pacific Rim countries to transfer passengers and cargo between flights flying from North America to Asia and Asia to Australia. The Emirau Cargo Fleet will be in the order of 25 Boeing 747F aircraft after 4 years, all visiting Emirau daily, with another 10

Jumbos with 400 passengers landing daily to keep the hotels full. 15 Jumbos would be just passing through picking up connecting passengers and so on.

43 Commercial in Confidence Wind Emirau Project Infrastructure Development Investment schedule The investment in infrastructure projects will require significant funding at each stage of this proposal. The investment estimate for each stage is as follows. Stage 1 will require a loan of US$63 million* Stage 2 US$76 million Stage 3 US$175 million Stage 4 US$490 million * The project will be self-funding after Stage 1.

 Wind Australia will be raising the funding for Stage 1 of the Wind Emirau Project.

 Developing the tenders for the infrastructure development will be outsourced to organisations with experience in the development of large infrastructure project.

 Wind Australia will undertake all tender responses and contract negotiations.

Stage 1- investment Runway development 10 MIL Port development 3 MIL Communications – fibre optics backbone cabling30 3 MIL Fish Handling/Storage/Port transport to Apron 2 MIL Housing redevelopment/new housing/accommodation 5 MIL Utilities Power/waste/water/fuel 5 MIL Diesel production 10 MIL Aircraft PC12 3 MIL Administration/consultants 1 MIL 200 Banana Boats @ US$3,000 plus coolers 0.6MIL Flightship manufacture 20 MIL Total Initial Investment US$63 MIL

Airport Current infrastructure

The current airport system or aerodrome covers an area of six (6) square kilometres. It has two large airstrips at 2200m in length. Adjacent to each side of the two main runways are six (6) smaller runways or taxiways of half the length with numerous (64) parking bays embedded along each side of the small runways,

30 Fibre optics cabling will cater for communications, security and fire and emergency alarm services.

44 Commercial in Confidence Wind Emirau Project

Infrastructure ideal for a corporate application in Stage 4 of the proposal.31 Development - cont

The southern main runway is partially overgrown. The other has remained in constant use to this day with intermittent third level airlines operating on request. The base and foundations of the entire airport systems including the two main runways were compacted using coronas or coral/lime stone. Proper drainage systems were also constructed Although not sealed or concreted, the entire infrastructure has withstood the test of time and remains intact to this day, giving substantial proof of the solid foundation and coral rock quality of engineering work carried out by the allied forces. Tests carried out on the structural formwork of the foundation revealed that the foundation is extremely solid, comfortably meeting the highest construction standards.

31 The existing jungle embedded parking bays make exclusive private jet parking possible close to adjoining housing, making this a unique and sort after development.

45 Commercial in Confidence Wind Emirau Project Airport rehabilitation Both runways are capable of taking wide-bodied jets. So the most important airport infrastructure is already in place to access priority markets. Immediate attention will therefore be given to revitalising the existing airstrips to add any necessary improvements needed to meet ICAO standards and other requirements as directed by PNG‟s Department of Civil Aviation and other relevant authorities. The airport development will also see the construction of fresh fish storage hangers for 100MT of fish, fish handling and packing facilities, basic airport terminal infrastructure and parking facilities.

Support Services Support facilities will also be required as part of the rehabilitation of the airport. These include infrastructure to support oil companies to provide fuel supplies for aircraft and fishing vessels, the construction of a thermolysis plastic to diesel plant32, diesel fuel storage facilities and storage buildings for

100MT of waste plastic flown in from China and Japan.

To make way for the relocation of existing housing into new estates and to develop new housing for construction personal work will be done in parallel to the airport revitalisation to develop a fuel farm, power station, drinking water supply system and water treatment.

A satellite communication system with optic fibre needs to be laid at this stage for an in-house Internet and telephone system that will eventually link all residences on Emirau and Musau.

Port development Stage 1 of the proposal also requires port side development for the fishing fleet and a deep-sea port for frozen fish export at Hamburg Harbour.

The creation of the deep-sea port is being established on a natural drop off allowing the extension of jetties for fish handling to extend into the water with little reef damage. There will be no

cutting of the reef to access the lagoon for harbour development.

The lagoon‟s resident crocodile and habitat will be left intact.

This reflects the values-based business management that Wind Values at work Australia brings to this joint venture.

The values-based assessment for the entire development hinges on having respect for what is there, how it is there – the interdependencies – and how it fits together with the beauty that has survived. The proposal must fit in with the beauty of the place and the beauty of the people. There will be no infringement on, or compromising of the beauty in anyway.

32 The plastic to diesel conversion plant is capable of converting 5 – 400tonnes of plastic will require an investment of US$10 million.

46 Commercial in Confidence Wind Emirau Project Accommodation New accommodation for resident islanders could see the introduction of suspended multi-level housing that is secured to the ground by a pole type construction. This communal-based development leaves a „small footprint‟ and eliminates the need to excavate, minimising displacement of vegetation.

Additional accommodation will be required to cater for the international requirements of immigration, customs clearance and quarantine.

The interior accommodation would take advantage of prevailing breezes and be constructed using materials that will be durable in tropical conditions and compliment the lifestyle.

Government accommodation and office space will also be needed to meet safety and security requirements and support Wind Emirau‟s surveillance of PNG‟s Designated Fishing Zone.

47 Commercial in Confidence Wind Emirau Project New runway A main runway of 5000 meters in length and 60 meters wide with connecting parallel terminal facilities will be installed.

Grading a new runway parallel to existing runways, between the 40 metre contours along the spine of the Island would roughly cover the road between Tavilu and a point north of Tesingina.

It would provide horizontal distances to 5000 meters in length allowing future development of modern terminal facilities to the south above the 40-meter contour, overlooking the stunning lagoon and Nukutesi Island. This would be a world class view one which the Stage 4 multi-storey hotel development and duty- free shopping village would also enjoy.

Terminal Building The terminal building would be built to hug the contour and be designed to capture solar and wind energy to contribute to the island‟s power supply grid. The wind veins, used to capture light winds, would be strategically placed on the facade. Their totem like design would allow them to serve a duel purpose. They

could be colourfully decorated to represent the 30 Incorporated Land Groups and serve as a welcome to visitors.

North of the runway and between the runways on the NW end would be a good site for the water treatment, state-of-the-art

renewable energy power station, waste recycle and conversion to diesel plant for domestic and export use. Constructed as a multi- storey underground complex of warehousing and machinery plants, with the freight terminal on the same level as the runway. The freight terminal has freight lift access to the lower level to move fish from belowground storage for loading and a reticulated vacuum system to remove waste plastic from freight containers to underground storage facilities.

48 Commercial in Confidence Wind Emirau Project

Infrastructure Aircraft designed to fly in close proximity to the earth‟s surface, Development - cont such as the ocean, are called „ground effect‟ craft. At speeds of Flight ships 50 knots the craft lifts totally clear of the water surface to ride a

self-generated airwave known as ground effect.

The United Nations International Maritime Organisation (IMO)

and the United Nations International Civil Aviation Organisation (ICAO) have prepared world standards for the design and operation of commercial ground effect craft, ratified by all 73 IMO member nations in December 2002. Ground effect aircraft are now legally defined worldwide as marine craft.

Known as „flightships‟ they have no sea related motion and operate at speeds far in excess of normal marine transport. They are initially cheaper than comparable conventional transport systems, have no essential infrastructure requirements and are

well suited to low overhead/low cost operations.

Flightships can be configured in a number of ways.

They can be configured as freight or passenger craft capable of:

49 Commercial in Confidence Wind Emirau Project

Infrastructure  Seating 10 passenger in either passenger or coastal patrol Development - cont configuration

 Cargo configuration  Combination of passenger and cargo

Properly configured they are able to efficiently transport in excess of 10kgs of payload per kW of engine power. Operating costs are typically US$95.00/hour, a fraction of the cost when compared to other craft.

Speed versus operating costs

Fast Ferries Hovercraft Aircraft

Ferries Operating Cost Flightships

0 10 15 25 35 45 50 60 70 80 90 95 105 115 Speed (Knots)

Wind Emirau is in a unique position to be the start up venture for the global manufacture of these flightships. The flightship patent owner is prepared to establish this new venture in the investor‟s country of choice.

The market research has been done and there are already 45 customers wanting to purchase this craft for coastal patrol, a further 42 requiring passenger configurations and a number of freight craft applications for live fish transport and pearl farming operations.

To establish a business to manufacture flightships of the design proposed would require working capital of US$7 million over 18 months to establish full design classification, crew training curriculum and serial production of aircraft.

Wind Emirau will set up manufacture on Emirau Island.

The St Mathias Islands are an ideal location for manufacture as they are central to the three main geographic regions, South east Asia, Continental North and South America and the Mediterranean/Gulf region, identified as the major markets for flightships.

50 Commercial in Confidence Wind Emirau Project Diesel Production It is envisaged that multiple processing units will be employed to convert shredded plastic waste into diesel. Handling 5 – 400 tonnes per day, these units are environmentally friendly emitting no smoke, odour, ash or toxins.

The process generates a significant amount of energy. The energy enables the system to be self-sustaining, requiring almost no external electricity supply for full operation. In addition it is possible to attach a power co-generation plant and generate 14 megawatts of power per day which contributes to the microgrid supplying power to the island.

The investment funding for this project is US$10 million, however the ongoing running costs will be low, so the return on the investment high. The raw material to operate the plant is free plastic waste. The cost to airfreight it from foreign ports has already been covered by the fish shipment. Hence handling costs and management of the plant will be the only significant costs, allowing the sale of diesel at competitive Port Moresby prices.

Power House Apart from the standard diesel power supply fuelled by Emirau manufactured diesel, electricity will come from a further six different sources. A microgrid will be used to collect the energy generated by solar troughs, wind power, compost waste systems, biogas/methane, geo-thermal, tidal and diesel thermolysis. The Microgrid, using the latest magnetic super conductors, micro turbines, flywheel energy storage systems, Vanadium Redux batteries, ceramic fuel cells and stirling engines will be developed to provide clean sustainable power for all the residential, business, manufacturing and support industries.

Airport Design Terminal Navigation System Initially a Global Positioning System (GPS) Precision Approach using Kavieng VOR / DME and Momote VOR / DME would be sufficient. However a complete CAT 1 ILS approved runway attracts the world‟s airlines and is necessary to protect the

investment landing at Emirau.

Air Traffic Services Stage 2, towers and other observatory infrastructure will be constructed and equipped to ICAO requirement.

The Road system Existing roads are to be rehabilitated and expanded, primarily from the port to the storage hangers and other infrastructure. Security System Security

Appropriate security systems including necessary government police personnel will be engaged. An ID (identification) system, similar to that of the Australian Government, will control all infrastructure areas. Stage 2 onwards sees people movement on the island control via programmable electric cars, driven only to

51 Commercial in Confidence Wind Emirau Project

Infrastructure programmed destinations. A monorail system can connect Development - cont terminal areas with accommodation and recreational locations. Off shore movement in water taxis will represent employment

and ownership opportunities for islanders, properly on visitor movements.

The Airport Fire and Safety Emergency System In order to ensure the safety of the travelling public, properties and the general community, a comprehensive plan and design for

fire and safety operations. It will include:  Airport Fire Station

 Fire protection equipment and systems  Emergency control organisation

The Fire Protection Equipment and System Fire protection equipment and system would be installed in all buildings including airport terminal, multi-storey hotel, shopping

complex, freight complex, business precinct and residential development. The system will be computer monitored and meet all Building Regulation and Fire Code. The specification of the above will be detailed as soon as the project has commenced, but is likely to include an integrated, networked system of

computerised fire alarms, emergency lighting, backup power, fire indicator panel and intercom system. The Emergency Control Organisation (ECO) A qualified emergency service coordinator will head up the ECO

to oversee airport emergencies and other happenings on the island. It will be manned in accordance with government requirements and will be linked to the surveillance of PNG‟s Designated Fishing Zone.

Terminal The freight terminal will need to be capable of expanding from four B747F aircraft parking in the first year to 13 x B747F aircraft parked and loading fish while another 12 return to unload plastic. The storage hangers would need to cope with 200MT of chilled fish, to act as a buffer plus additional space to hold a possible 1000MT of plastic waiting for conversion to diesel in underground warehousing. Tourism and the attraction of Emirau as a tax-free business destination will result in significant hubbing by all the airlines operating the Pacific. In the next five years the Passenger Terminal area needs to cater for 25 large jets and 25 regional jets connecting travellers internationally and regionally. The proposal also anticipates long-term investment to consolidate the aerodrome to meet domestic flights connecting all ports in PNG and international requirement. This is essential in order for passengers to effect connections and access direct international flights to and from Hongkong, Shanghai, Bangkok, Kaula Lumpa, Singapore, Guam, Tokyo, Europe and North America.

52 Commercial in Confidence Wind Emirau Project

Benefits

Wind Emirau services to  Establishing a commercial artisanal fishery in the St Mathias government Islands will increase PNG‟s GDP from 1% to 6% with only one daily flight to overseas fish markets. The potential for this project to expand rapidly could see fisheries‟ contribution to GDP increase to 24%.

 Surveillance and monitoring of PNG‟s DFZ. Identification of unauthorised fishing activities in PNG waters. Strengthening PNG‟s ability to prosecute and control the destiny of economic development.

 Market development for fisheries and tourism that will benefit other PNG communities and „refresh‟ PNG‟s current image, making it attractive to foreign investors.

 PNG takes on a strategic global partnership role.

 Making Kavieng the centre for international fishing fleets, increases foreign currency through fish chandler and provedoring,33 improves PNG‟s economy and increases employment opportunities.

Business ownership and Island populations have fishing skills. On average a quarter of social change the population has these skills. Once the infrastructure is created to permit artisanal fishermen to engage in commercial fishing operations the Emirau model is relatively easy to replicate in other island settings.

IBO The development of commercial fishing opportunities will shift island communities from subsistence agriculture and fishing activities to Independent Business Owners (IBO). This economic shift will bring about social change and see island communities enjoy the affluence of middle class western society, from a business ownership perspective.

Environment protection In locations that offer processing facilities to foreign fleets there has been a lack of respect for the environment. Pollution of lagoons and reefs is having a devastating effect on local fishing activity. Wind Emirau is committed to environmentally sustainable development. The creation of the deep-sea port is

being established on a natural drop allowing the extension of

jetties for fish handling to extend into the water with little reef

33 Based on 162 foreign vessels making five trips a year, costing $500,000 to outfit for the trip, represents a market potential of US$405 million per year. If these vessels do not have to travel to remote ports because their fish can be processed close to the fishing grounds, this will add an extra trip per year, equating to a further US$81 million. This is an attractive scenario for foreign vessels because without the lengthy return trip their profit margins automatically increase and if the cost of processing is more competitive because of cheaper labour costs there is a further incentive to use PNG ports and services. Extracted from a report prepared by Global Ocean Consultants

53 Commercial in Confidence Wind Emirau Project

Benefits - cont damage.

Economic development Wind Emirau has created a unique land mobilisation model model for PNG enabling land ownership to be legally documented. The creation of Incorporated Land Groups (ILG) permits the traditional owners of the land to participate in economic development and receive appropriate remuneration for the use of their natural resources.

Employment Employment opportunities come in many forms.  Artisanal fishermen can own and operate a commercial fishing vessel and employ others to fish with them.  Expert technical support and management skills will be transferred to the local population as they assume control and management of new infrastructure development.  Tourism will create employment. Growth in the number of visitors will create the critical mass needed to develop service industries like schools, banks and hospitals, providing other employment opportunities.  New manufacturing plants requiring trade skills – diesel conversion plant and flightship manufacture.  Training by master fisherman in longline fishing and how best to utilise existing vessel types.  Flightship crew. Flightships require two people. Stage 1 – 20 flightships = 40 crew Stage 2 –100 flightships = 200 crew Expatriate captains will, over time be replaced by nationals.  Fish processing and handling.  Administration and government services.  Bed and breakfast accommodation.

54 Commercial in Confidence Wind Emirau Project

Ownership

Project Owners The people of Emirau recognise and wholeheartedly support the export driven policy of the Somare/ Murat Government, which aims to broaden the economic base of the country through the development of appropriate infrastructure and management of PNG‟s natural resources. In realising the strategic location of the St Mathias Islands and their close proximity to Japan and the West coast of USA, the people have agreed to invite private investor Edward Car to partner with them in developing the island as a major transport and communication hub. They have resolved to surrender whatever land is required, under a „lease, lease-back‟ arrangement, to develop a sizeable airport facility. The airport would cater for medium to heavy aircraft and provide air transport services domestically and internationally.

Project Promoters The Emirau islanders are now in the process of finalising, with Edward Car a private investor and owner of Wind Australia, a joint venture arrangement. The joint venture between Wind Australia and the Emirau Trust will operate under the name of Wind Emirau Ltd. As part of this agreement Edward Car has made firm commitments to monitor and facilitate the social and economic transition of the people. Wind Australia, through Edward Car will be providing the necessary infrastructure development capital. All revenue raising business opportunities will be in partnership with Emirau Trust on the basis of 20% Emirau Trust, 80% Wind Australia. This includes the revenue raised by the marketing of seafood, aviation transport, diesel fuel and flightship manufacture, fishing vessels and sales in all businesses established on Murat land and elsewhere.34 It is envisaged that the surplus/profits from the early stages of development will be invested to build Stages 2- 4, develop other regions of PNG and duplicate this investment and success internationally. Edward Car maintains the right and sovereignty to decide how the 80% is spent. Emirau Trust A systematic structure has now been instituted to coordinate and manage landowner‟s affairs. The Emirau Trust is the regulatory authority with special powers, one of which is the responsibility over all land matters.

Land required for the development of the project has been transferred to the trust. It will then leased out to Edward Car

34 This would include the duplication of this venture in other countries, helping other south sea island people as well as helping other regions throughout PNG.

55 Commercial in Confidence Wind Emirau Project

Ownership - cont who will represent the traditional land owners interests in the development of the required infrastructure by Wind Australia. This will invariably formalise any dealings on the land with regards to transfer of titles and ownership issues. It was unanimously agreed in various meetings held in all the six villages on the island from the 6th to the 24th of February 2003 to establish the Emirau Trust and transfer all customary land on the island to the trust. All land needed for the project will be surveyed, registered and titled under Incorporated Land Groups (ILG‟s) representing clans, sub-clans and families having customary rights to the land. Each ILG has an elected representative that will hold the portion/s of land under the ILG‟s registered name and title as a trustee in Emirau Trust. Incorporated Land More than 30 ILGs have been confirmed and are in the process Groups of incorporation.35 This will allow meaningful participation of landowners in the project. The entire residential population has shown overwhelming support for the concept. Formal and legal registration of their landownership will help them eliminate the never-ending problems of land disputes. This has not happened overnight. Preparation and mobilisation workshops began with islanders in late 2002. This was followed by a comprehensive awareness and training program conducted to properly educate the people about the important aspects, procedures and requirements for incorporation of ILGs. Village Council of During the initial and transitional stages each village will have a Trustees council of trustee with its members comprising of trustees of various ILG‟s of each village. The Village Council of Trustees will be responsible for all land matters of their respective villages. The Village Council of Trustees is responsible to the Emirau Board of Trustees. Emirau Board of The Emirau Board of Trustees will be the managing body for the Trustees Emirau Council of Trustees. It will manage the proceeds and earnings of the Emirau Trust from leases and profits from investments. It will coordinate the distribution of dividends to the ILG‟s. The board is comprised of six trustees each representing the six villages of Leoa, Tasingina, Lounusa, Tavilu, Pakena, and Buliale an independent elected chairman and two appointees. Emirau Council of The Emirau Council of Trustees will be the overall body Trustees governing all issues regarding land and other matters affecting the interest of the ILG‟s, landowners, IBOs, companies and other related matters.

Members of the Councils of Trustees are comprised of all trustees representing each ILG. The Emirau Council of Trustees will appoint the Emirau Board of Directors for Emirau Holdings

35 Ownership is being signed off by a magistrate.

56 Commercial in Confidence Wind Emirau Project

Ownership - cont Ltd from capable Emirau Islanders living on the Island or elsewhere. Structure

Wind Emirau Ltd $

Emirau Holdings Wind Land Emirau Trust Limited Australia Lease-back Board of Directors Emirau Emirau Reserve Fund $ Board of Trustees $

Emirau Council of Trustees

Village Council of Trustees Village Council of Trustees Village Council of Trustees

ILG ILG ILG ILG ILG ILG ILG ILG ILG $

Emirau Holdings Ltd The islanders have recently organised and incorporated a (EHL) landowners company, the Emirau Holdings Ltd (EHL) that will act as the investment arm of the Emirau Trust. All investment matters and commercial activities of the trust will be solely conducted by EHL. All profits earned from investments will be strictly transferred to the Emirau Trust for administration as per the constitution of EHL and the Trust. All major business of the island will be conducted as joint venture projects with Emirau Holdings Ltd. It is proposed however that the airport project will be a joint venture between EHL and Wind Australia. Emirau Reserve Fund The Emirau Reserve Fund will be established as a financial security for future generations. Ninety percent (90%) of the net earnings of EHL will be paid to the Emirau Reserve Fund. The board for the Emirau Reserve Fund will be compromised of the chairman of Emirau Trust, Chairman of EHL, a representative of the central bank, an independent trustee and three (3) others nominated by the Emirau Council of Trustees.

57 Commercial in Confidence Wind Emirau Project

Government Assistance

Wind Emirau requires the advice and support of the PNG government to establish Wind Emirau Ltd as a PNG registered business. Specific to this requirement is the need for guidance and resources to assist with bureaucratic and legal processes and some seed funding.

Priority Project  Include the Emirau International Airport development as a priority infrastructure project under the Public Investment Program (PIP) of the Transport Department and Civil

Aviation Authority.  PNG Government to guarantee the proposal to assist the venture to take advantage of assistance offered by the World

Bank.

 Financially support the establishment of flightship

manufacture at Emirau until funding arrives. This will require in both the immediate and short-term a monthly retainer of US$10,000 plus expenses for the patent owner to set up this operation.

 Invests in the up-front market research and market development for the artisanal fisheries industry by providing a retainer plus expenses to Wind Emirau Ltd. The US$25,000 monthly retainer is to be used to develop the marketing of

Wind Emirau fisheries, visit state-of-the-art sustainable residential and business development, research and visit successful fisheries-related infrastructure developments and head hunt the skills and expertise necessary to develop Emirau

Island.

Wind Emirau would furnish the government with a program of scheduled activities and trip reports to secure this funding.

 Gazette the Murat LLG as a Special Economic Zone providing Emirau as a unique tax-free business precinct and Gazettal Notices banking centre for PNG and the Central Western Pacific. Special Economic Zone Initially a tax free zone will assist Wind Emirau to attract investors to manufacturing infrastructure projects like plastic to diesel conversion, flightships and outrigger craft. In the longer term this will help promote the establishment of the 5000 business houses.

Legal assistance  Legal and accounting assistance and advice to register Wind Emirau Ltd as a PNG company.  The PNG Parliament grant the Murat LLG legal autonomy rights and law making capability. This will require special

58 Commercial in Confidence Wind Emirau Project

Government assistance - autonomy legislation to provide the Murat with unique law cont making capability that will protect the sovereignty of the peoples‟ identity and ensure the integrity of the communities‟ core values and environmental values are maintained.

Port of First Entry  Certification will be sought from the National Government for the airport and deep-sea port to be declared a port of first entry with customs and immigration capability.

Air Operators Certificate  An Air Operators Certificate is required. Assistance from PNG‟s Civil Aviation Authority in meeting the standards for construction, support services and ongoing development of the International Airport is essential. Initially direct the Civil Aviation Authority (CAA) to carry out an inspection of Emirau airport with the purpose of granting conditional approval for ICAO status.  To operate without an Air Operators Certificate the Emirau venture would need to charter aircraft at higher cost rather than directly lease the Boeing aircraft needed.

Hazardous materials  Relevant agencies such as the Civil Aviation Authority, the Department of Environment and Conservation and other relevant agencies will jointly coordinate operations relating to hazardous matters. The PNG Defence forces will be engaged to dispose off any undischarged WW2 materials such as bombs, mines and ammunition.

Community support  Provides 20 PAM boats, making good a suggestion by Kavieng open member, Ben Micah.  Leases Wind Emirau 20 longline vessels to back the start up of this commercial artisanal fishery.  A school upgrade to provide education to level 12.  Basic hospital.

Support Services  Meteorology observation facilities and manpower.  Customs, immigration and quarantine services and manpower.

Gazetted special  The St Mathias Island group is designated as a special conservation and cultural conservation and cultural biosphere to preserve the natural biosphere beauty of the islands and the special cultural value based behaviour of the inhabitants. It could be considered PNG‟s first Sanctuary or Biosphere Park.

59 Commercial in Confidence Wind Emirau Project

Risks Sustainable yield While there is a National Tuna Fishery Management Plan (NTMP)36 which provides some sustainable yield figures, there is evidence of unrecorded catches and these could be significantly undermining sustainable stocks of tuna. In addition, the most recent study to promote optimal sustainable utilisation of tuna was undertaken by the South Pacific Community (SPC) Scientists back in 1999. With the onset of global warming and the unclear implications for marine life as water temperatures rise, there is a clear need to increase the regulation of the industry and undertake the collection of biological and fishery data.

36 The NFA gazetted a National Tuna Fishery Management Plan (NTMP) which provides guidelines for participation in domestic tuna fisheries. The plan established licences for 100 longline vessels and put the total annual catch of those vessels at 10,000 MT to achieve long-term sustainability of the resource.

60 Commercial in Confidence Wind Emirau Project

Financials

Projections The proposed St Mathias Fleet is 200 banana boats, 20 PAM boats and 20 longliners. The estimated catch per day is 200MT from the banana boat fleet, a weekly catch of 200MT from the PAM boats and 450 - 600MT from longliners. The total possible landed catch per day is 360MT.

A B747F freighter could fly 100MT per day from Emirau to

Tokyo/Shanghai/Hongkong/ Madrid/LosAngeles. The wholesale price for tuna, based on a conservative price somewhere between the low and average quality tuna would be US$10.00/kg.

The daily Net Sales Amount = US$1,000,000 Given the formula on Page 41 for the Tsukiji Fish market in Japan

A = US$1,055,000

B = US$57,750 C = US$178,500

D = US$36,750

E = US$10,000 Net Sales Proceed = US$767,000

Subtracted from the daily Net Sales Proceed are following as a percentage of the Net Sales Amount (wholesale price). Airfreight 5%

37 Operational costs 25% Payment to artisanal fishermen 10% Based on US$1.00/kg

Daily income for Wind Emirau is US$600,000 split between the Emirau Trust (20%) and Wind Australia (80%).

Wind Australia uses this surplus to pay off the investment loan and re-invest in the project. Emirau Trust‟s Board of Trustees contributes ninety percent (90%) Emirau Reserve Fund and distributes the remaining surplus between the 30 Incorporated Land Groups that have

37 Operational costs include the use of a private jet to maintain contact with island communities, continue to develop artisanal fishing sources and market the venture internationally, marketing costs associated with brand development and awareness and salary and wages of Wind Emirau staff.

61 Commercial in Confidence Wind Emirau Project

leased their land to Wind Emirau. (US$400/day)

Qantas quotes US$300,000/ freight run return, with cash up front Freight cost calculations at booking 3 months in advance of departure. Leasing B747F aircraft costs USS$400,000/month excluding running costs such as fuel, insurance, pilots, and maintenance, landing and flight charges. The total monthly cost is therefore approximately US$1 million. Working 100MT/day for five days of the week is 20 flights per month the cost is US$50,000/flight when flying empty return.

The back loading of the return flight to Emirau with plastics will

be absorbed into the cost of flying the fish to market but will be

recouped with the sale of diesel.

If the plastic waste was being flown in from Europe, Wind Emirau would be paid for this waste disposal service. The payment to remove plastic is 250EURO/MT minus costs 150EURO = 100EURO/MT 100MT of plastic by 100EURO = 10,000EURO (US$12,000)

Expected Annual Fish Based on one jet carrying 100MT of tuna, once a day, flying five Income days a week or the 275 days a year that the Tokyo fish market is open, would deliver 27,500MT or 27,500,000kg/pa. Artisanal fishermen, paid US$1.00kg, will collectively earn US$27,500,000. Based on 200 banana boats with two fishermen, there are 400 fishermen with net earnings of US$68,750 per annum. Deducted from this amount would be the costs of fuel, bait, maintenance and their contribution to the running of the flightships and shore- based fish handling and processing.

62 Commercial in Confidence Wind Emirau Project

Glossary of Terms

Artisanal A skilled worker – especially manual work

Chandlery Goods sold by a chandler. A ships chandler deals in cordage, nets, buoys, canvas and general ship fit-out.

Ground effect Flying close to the earth‟s surface, over water, at speeds of 50 knots will lift the craft totally clear of the water surface to ride a self-generated air-wave known as ground effect.

Longline A vessel with booms radiating from either side with multiple lines trawling behind with 1600 or more hooks.

Pelagic Performed on the open sea eg: Pelagic whaling Marine life belonging to the upper layers of the open sea.

Provedoring The supplier of provisions to a ship, petrol, diesel, ice, food and bait.

Purse Seine A fishing net for encircling fish with floats at the top and weights at the bottom edge, where the bottom edge can be closed.

Seine A fishing net for encircling fish with floats at the top and weights at the bottom edge

Stevedore A person employed in the loading and unloading of ships

63 Commercial in Confidence Wind Emirau Project Developing Sustainable Commercial Fisheries Appendix A

The diverse nature of the fish resource of New Ireland Province (NIP), PNG, and its potential to support commercial fisheries, has been widely acknowledged for many years.

While several factors, such as the diverse nature of the catch, traditional claims to ownership of resources and fishing grounds, and NIP remoteness from preferred markets, constrain development, there remain significant opportunities for commercial fisheries to become established and sustained.

Within the next decade a gradual contraction in the global supply of tropical fisheries products will result in increased interest in PNG‟s NIP marine resources.

Located slightly east of the zoologically diverse Indonesian and Philippine archipelagos, New Ireland supports a naturally rich marine flora and fauna. Due to the central location of New Ireland in respect to the highly productive tuna fishing grounds in the western tropical Pacific, tuna is considered the resource to offer best prospects locally for large-scale commercial fisheries development.

While industrial-scale fisheries for tuna will offer significant linked benefits for the local economy (through employment and in relation to opportunities for associated industries), it is the near shore resources that offer best prospects for direct involvement by local communities in commercial fishing enterprises.

Some resources, for example beche-de-mer, are already the target of commercial-scale fisheries. In such instances, suggestions are presented for promoting the sustainable management of the resource and improving prospects for the long-term economic viability of the fishery.

Beche-de-Mer Beche-de-mer is the name given to the product processed from sea cucumber. It has been exported from New Ireland in relatively small quantities for many decades.

During the 1990' s the harvest of sea cucumber from New Ireland increased significantly with production from the province believed to have ranged between 80 and 140MT annually in the period 1995-1998. During this period, beche-de-mer became one of PNG's major fisheries commodities, a significant earner of foreign exchange and an important source of income for coastal communities.

However, reports from many maritime areas in PNG suggest most local stocks of beche-de- mer are under increasing pressure as a result of consistently high levels of fishing. According to NF A biologists, New Ireland stocks in many coastal areas throughout the Province are already severely depleted. This has resulted in a temporary closure of the fishery to al1ow stocks to re-build throughout 1999.

Consistent with trends in beche-de-mer fisheries throughout the tropical Pacific, as the New Ireland fishery has expanded there has been a gradual substitution of high value species in exports with larger quantities of low value species. This is a function of fishermen targeting high value species when they are abundant during the early stages of development of a

64 Commercial in Confidence Wind Emirau Project fishery. Species of less commercial value are general1y only harvested once population levels of the commercially valuable species are reduced to levels such that commercial harvesting is difficult.

The current arrangements for management of the fishery centre around a total annual allowable catch (TAC) for exports and limiting the number of exporters permitted to operate in the fishery. In theory, limiting the number of exporters should improve the capacity of the fisheries regulatory body to accurately monitor harvests. As a result, harvests should be maintained within the TAC.

In practice, due to the inability of the regulatory body to effectively monitor harvests, this has not occurred. In some years this has resulted in the TAC being exceeded by significant quantities with devastating consequences for the local sea cucumber resource.

In respect to limiting the number of exporters to five, as the exporters are the major financial beneficiaries from the fishery (particularly during the period the PNG Kina devalued), the major portion of benefits from the fishery accrue to a relatively small proportion of the New Ireland population (basically the exporters or the people they represent). This is of concern as, in several demonstrated instances; the exporters are in effect only serving as front men for overseas buyers who finance the purchasing activities of local exporters.

The closure of the fishery has had major consequences for local communities that benefited from the sale of beche-de-mer. In the first instance, as stocks are reduced, local communities found it increasingly difficult to collect commercial1y viable quantities of beche-de-mer from their traditional harvesting areas.

More importantly, when resource managers eventually acted to prohibit harvests in areas where sea cucumber population numbers had been significantly depleted, local communities suffered as a result of no longer having access to a resource that previously provided them with an important supplementary cash flow, Resource depletion on the scale that has occurred in many areas in New Ireland means that, in the majority of cases, it will require the fishery to be closed for at least 12 months before local sea cucumber populations recover to a point that re-opening the fishery on a limited basis could be considered.

If managed effectively, sea cucumber can make a valuable sustainable contribution to the New Ireland economy. 'While this may result in the total annual income for some coastal communities previously involved in sea cucumber fisheries declining, and the turnover of the exporters decreasing, the actual long term benefit will be significantly improved. To maximise benefits from the New Ireland sea cucumber resource, the following management arrangements are recommended:  The fishery be permitted to operate for a single four week period in February each year (the main reproductive period for New Ireland sea cucumber stocks is reported to be October to December). A fishery in February should not affect spawning stocks as dramatically as if the fishery operated in the 3rd or 41h quarter of the year).  That no exports from the Province be approved between the 1st June one year and the 1st March in the following year (this will provide sufficient time for harvests from remote locations to be dried, processed and packed for export. The first harvests in February could be exported in March. In other cases, where "approval" may be granted in April, for example, the actual export will be dependent on shipping schedules and may not occur until May). Both these suggestions should be within the capacity of NFA and the Province to manage and

65 Commercial in Confidence Wind Emirau Project administer.  That it be compulsory for all exporters to be registered with NFA.  That the registration process for exporters be used to -ensure major benefits from the fishery accrue locally.  There be no limits on the number of exporters involved in the fishery.  All exporters be obligated to comply with strict licensing guidelines aimed at minimising the opportunity for the T AC to be exceeded. This would include the provision of progressive detailed reports during the buying season. At the completion of each harvest, the performance of exporters should be appraised. License renewal should be dependent on conformation with all licensing guidelines for the most recent harvest.  That it be compulsory for all exports from the Province (whether domestic or international) to be approved by NFA or the Provincial fisheries authority.  That local communities be encouraged to reserve a portion of their reef flat as a sanctuary for; sea cucumber.

Corals Although some fishery potential may exist for precious corals (pink and black), and some massive corals used in medical applications (eg. some species of Porites), coral fisheries are difficult to manage on a sustainable basis. Coral harvesting is generally habitat destructive and, as the target corals are slow growing, harvested areas take considerable time to re- establish. This has adverse repercussions for the ecology of the entire reef.

It is recommended that commercial development of fisheries targeting corals not be encouraged in New Ireland.

Crustacea Mudcrab, lobster, and coconut crab are all reasonably common throughout the Province. However, only mudcrab and, to a lesser extent lobster, demonstrate some potential for the development of sustainable commercial fisheries in New Ireland. Lobster in the St Mathias Islands is still plentiful.

Coconut Crabs Coconut crabs are slow growing, are slow to mature (reaching reproductive age at approximately 5 years of age) and exhibit very low levels of recruitment. These characteristics make the species very susceptible to over-exploitation, a fact borne out in areas throughout the range of the coconut crab where heavy exploitation has reduced populations to levels verging on extinction. If a means is found to transport coconut crab to lucrative overseas markets efficiently, pressure on New Ireland's coconut crab resources will increase.

If the exploitation of coconut crab does increase in New Ireland, the Provincial Government and the National Fisheries Authority NFA, will be required to introduce regulations that ensure local populations of coconut crab do not become threatened. The elements of such a management arrangement could include:  Protected areas that could be developed in association with local communities. A mechanism to license/people collecting and exporting crab.  A prohibition on the taking of berried females, and  A means to limit harvests to a total allowable catch for specific locations.

Lobster Three species of tropical lobster are reasonably common on New Ireland reefs, the double spined lobster (Pamtlirus penicillatus), the painted coral lobster (P. versicolor) and the long -

66 Commercial in Confidence Wind Emirau Project legged spiny lobster (P. longipes). All are harvested for local village consumption, except on the St Mathias Islands, they are sold to restaurants, hotels or small-scale exporters in Kavieng or they are sent to friends and relatives elsewhere in Papua New Guinea. There is no accurate assessment of the present annual harvest of New Ireland lobster but it is unlikely any local population is currently under threat of over exploitation.

Like mud crab, New Ireland's lobsters lend. themselves well to the development of a commercial fishery targeting export markets. Lobster can survive for relatively long periods alive after capture and, whether frozen or fresh, they attract high prices on international markets. The main constraints to the development of a, New Ireland lobster fishery at present is i) the difficulties associated with efficiently delivering the catch to overseas markets in fresh condition, and ii) the period of time associated with consolidating volumes sufficient for containerised export overseas. . In relation to the second point in the preceding paragraph, there are considerable difficulties associated with developing a market when it is difficult to guarantee consistent supply. In New Ireland, consistent supply of lobster will be dependent on establishing a relatively large collection area covering the entire northern region of the Province. While this adds costs to any enterprise operating in this fishery, no particular area in New Ireland can guarantee volumes of lobster that would support a commercial operation on a long-term basis. This is partly a function of the distribution and abundance of the resource itself and a function of the intermittent involvement of fishermen in the fishery. This is because local fishermen are committed to a broad range of community obligations that compete with the time available for fishing.

The key to developing a commercial lobster fishery in New Ireland is the development of a cost efficient mechanism to transport reasonable volumes of perishable marine produce to overseas markets. Sea transport for such commodities will usually involve large volumes that are shipped in FCL's. A considerable period of time would be required to consolidate sufficient volumes for such exports.

Existing domestic airfreight services are not capable of guaranteeing shipments of perishable marine produce particularly if any sizeable volumes are involved on a regular basis. The only apparent solution to this conundrum is the establishment of an efficient air freight service as planned at Emirau.

While trade in crab and lobster is not sufficient to justify such a service, the potential for the airfreight of sashimi-grade tuna is high. Critical to the success of a sashimi tuna export venture would be the implementation of an efficient air cargo service between Emirau and international ports such as Tokyo or Hongkong. The successful establishment of such a service would then provide opportunities for air freighting lobster or other marine produce as a minor component of exports, principally comprising tuna, from Emirau.

A lobster fishery that could develop as a consequence of the tuna export operation will generate significant financial benefits for local communities. In order to sustain these benefits, local communities will need to consider adopting local management arrangements that protect lobster populations from over exploitation.

The biology of lobster, particularly in respect of the biology of lobster larvae and their

67 Commercial in Confidence Wind Emirau Project extended planktonic life, means traditional fishery management practices, such as closed seasons and size restrictions, appear to be of minimal conservation 'value.

Nevertheless, it wi1l be in the interests of local communities to establish preconditions for participating in the fishery that promotes sustainable exploitation. Such arrangements may include the establishment of reserves where collection of lobster is prohibited entirely and a prohibition on the removal of berried females.

Mudcrab Mangrove crabs already form the basis of an important smal1-scale artisanal fishery in New Ireland with annual total harvests estimated by NFA biologists to be close to 10MT. Most are sold to local restaurants and hotels, through the local market or packed for shipping to friends and relatives elsewhere in Papua New Guinea.

Having the ability to survive untended for relatively long periods (up to six days), mud crabs lend themselves well to the development of a fishery in a relatively remote location such as New Ireland. Mud crab is in demand on international markets where the relatively high prices that it attracts provided the best prospects for maximising the kina value of a commercial fishery in New Ireland. However, the development of a commercial fishery aspiring to market mud crab internationally wi11 be dependent on the establishment of an efficient means to deliver live crab to international markets in prime condition.

The best prospects for this occurring rest with the establishment of improved airfreight connections from Emirau. As with deepwater snapper and lobster, mudcrab could form a supplementary component of shipments of tuna by air from Emirau. If this did develop, mud crab could form the basis of a very valuable sma11-scale fishery for New Ireland communities with access to sizeable resources of mud crab.

If exploitation of local mud crab populations does increase, the New Ireland Provincial Government and the National Fisheries Authority will need to introduce regulations that seek to ensure that mud crab resources are only exploited within sustainable limits. Such regulations may include:  A prohibition on the harvest of a11 females.  A prohibition on the harvest of a11 males less than l50cm carapace width.  The possibility of introducing a closed season, governed by the reproductive period for local populations. Protecting mangrove habitat, and  Working with local communities to establish reserves in mangrove habitat, within which harvesting is totally prohibited.

Deepwater Demersal Fish Probably the near shore resource offering the best commercial fisheries development potential in New Ireland is deepwater demersal finfish. These fish, principally snappers, emperors, cods and groupers are taken by traps set at depths between 100 ms and 500 m.

The most widely accepted element of a management regime for these resources is to limit production on the basis of the 200 m isobath. The expected yield would be 50MT/annum. This fishery attracts high prices of USD$20/kg. Such a fishery could sustain at least 4 commercial vessels operating full time.

Providing accurate monitoring of changes in species composition and catch rates are

68 Commercial in Confidence Wind Emirau Project incorporated in catch reporting procedures comprising the terms and conditions for the granting of a license to operate in this fishery, data should gradually become available to make informed decisions on the optimal level of fishing effort that the local resource can sustain in the long term.

Deepwater Shrimp Experimental trap fishing NFA biologists in the early 1980' s demonstrated that deepwater caridean shrimp are present in New Ireland waters. While the actual local abundance was not determined by the NFA surveys these shrimps are widespread throughout tropical oceans between depths of 200m and 800m.

A combination of factors has contributed to the lack of commercial fisheries for deepwater shrimp in the South Pacific. Relatively high setup costs to become established in the fishery, difficulties in sustaining viable catch rates and the fact that prawns need special care to prevent deterioration through enzyme-induced melanosis (black spot) following capture, has meant that commercial fisheries for deepwater shrimp have been confined to Hawaii.

It is recommended that any consideration of commercial development of a fishery for deepwater shrimp in the Kavieng area be left to the private sector to pursue. There are considerable costs associated with preparing a vessel to fish the deepwater habitats of these shrimp and on-board processing requirements to ensure the preparation of premium grade product means that development of the fishery will require considerable investment and expertise.

If there is ever an expression of interest from the private sector to explore the fishery potential of the resource, the New Ireland Provincial Government should be supportive. If a commercial venture did, materialise as a result of the initial surveys, it is recommended management guidelines be implemented for the fishery. Such guidelines may include any one, or combination of, the following:  The setting of a total allowable catch.TAC  A restriction on the number of vessels licensed to operate in the fishery, and  Consideration of gear types approved for the fishery.

Giant Clam The export of wild-caught giant clam product is prohibited by international treaty, the Convention for International Trade in Endangered Species (CITES). Although some remote areas of New Ireland (for example Lyra Reef), may have occasionally been targeted by poachers, it is likely that local stocks of giant clam are currently only exploited for subsistence purposes or for occasional sale at the Kavieng market.

In the last decade, significant progress has been made perfecting the culture of giant clam in dedicated hatcheries. All species of clam can now be routinely spawned and the larvae reared in hatcheries with the later stages of grow out taking place on reefs adjacent to the hatchery facility.

Although the sale of hatchery-produced clam is permitted, at present most hatchery-reared clam are distributed to repopulate reefs that have previously experienced heavy fishing for adult clam. This focus on re-populating reefs is partly because most of the research associated with perfecting the hatchery production of clam has been undertaken by organisations concerned with conservation and re-establishing depleted natural.

69 Commercial in Confidence Wind Emirau Project

It is not likely that there will be a proliferation of new facilities for hatchery rearing of giant clam in the near future - mainly because existing facilities elsewhere in the region appear to satisfy current requirements and commercial production remains to be proven. Nevertheless, given the ideal habitat that the Tigak Islands has to offer for such a facility, it is possible New Ireland will attract the interest of giant clam culturists in the future.

It is recommended that should the New Ireland Provincial Government receive a proposal to establish a giant clam mariculture facility in the Province, the proposal receive its strong support.

Mariculture In addition to the culture of pearls, seaweed or clam, there are various coastal habitats in New Ireland that could be utilised for the culture of a several types of marine and estuarine species.

Although there is limited habitat for the culture of prawns, because of the porous nature of the largely coronas terrestrial base, some suitable estuarine habitat for the culture of prawns may exist in Bagail Bay or elsewhere in the Tigak Islands. However, it would require a detailed assessment of the environment and habitat types before an accurate appraisal of the culture potential for prawns in any particular area could be assessed.

One species of fish that occurs naturally in New Ireland and which may attract the interest of culturists is the milkfish, Chanos chanos. Over the last four years this species has attracted substantial interest in Indonesia, the Phi1lipines and Guam where it has been cultured in large quantities to supply the bait requirements of Taiwanese longline tuna fishermen. . There is little doubt milkfish can be cultured in New Ireland. Any milkfish produced in New Ireland could be either sold to local tuna longline operators (that either may be based at Kavieng or elsewhere in PNG) or exported to longline operators overseas. As local tuna fishermen pay USD 1,100 (K3,500) per MT for bait from overseas suppliers, and the PNG domestic tuna longline industry is widely forecast to be entering a strong period of sustained growth, there would appear to be considerable potential for producing milkfish for bait locally.

In addition, the suitability of the New Ireland marine environment may attract interest from mariculturists that are currently experimenting with the hatchery rearing of more exotic species. Options for the Province to be able to accommodate ventures, such as the commercial hatchery production of sea horses, which is currently being investigated in several locations around the world, should be actively promoted as the opportunity arises.

The co-operation and support of local landowners will be critical to the success of any mariculture venture in the Province. In addition, while there are no actual proposals before the New Ireland Provincial Government for a mariculture venture at present, it is not too early for the Provincial Government to develop a policy on mariculture. The Policy should clearly state that strategies for minimising habitat destruction and environmental degradation need to be clearly elaborated by the proponents of any venture before a specific mariculture development initiative could receive the endorsement of the Provincial Government.

Marine Aquarium Fish The potential, and constraints, for developing a live fish export industry at Emirau targeting the tropical aquarium trade are similar to those applying to the development of any export

70 Commercial in Confidence Wind Emirau Project fishery dealing with perishable product from New Ireland. As species diverse as the local finfish fauna is, particularly in relation to species of interest to tropical aquarium dealers, due to logistical and infrastructure constraints associated with shipment, there is considerable difficulty associated with guaranteeing markets a reliable supply of aquarium fish in prime condition from New Ireland.

As is the case with other resources described herein, prospects for the development of the aquarium fish collection industry improve significantly if an effective air freight service is established. If an air cargo service that is principally reliant on sashimi tuna exports, the prospects for live aquarium fish to form part of airfreight consignments from Emirau becomes a real possibility. Only then will the potential of the northern New Ireland live aquarium fish resource begin to be realised.

If an aquarium fish collection industry is established and sustainably managed, the New Ireland Provincial Government and the NFA will be required to draft regulations for governing participation in the fishery.

The elements of management arrangements promoting sustainable utilisation of the aquarium resource in New Ireland would include:  A management regime, developed in consultation with all interest groups.  The regime must provide a mechanism for compensating local reef owners for collecting activities on their reefs.  The regime must also accommodate the interests of aquarium fish collectors and the recreational dive industry (by, in consultation with local reef owners, separating tourist dive and collecting locations).  Registration of all aquarium fish exporters.  A monitoring regime for the collection of catch information from the fishery.  Following baseline surveys and the implementation of a monitoring program, establishing a list of species prohibited for export.  A mechanism to ensure those that use SCUBA in the fishery (including those maintaining dive equipment) are appropriately qualified.  A prohibition on the use of specific gear including dangerous chemicals and/or explosives, for the collection of fish (with severe penalties for infringements).  Mechanisms for local communities to establish reserves on their reefs where all forms of fishing are prohibited.

Marine Turtles There is no commercial potential for a fishery for marine turtle in New Ireland. However, a turtle research or conservation foundation may be interested in establishing a turtle hatchery and nursery in New Ireland (particularly in respect of the leatherback). If such an expression of interest is forthcoming, it should receive strong Provincial Government support. Such a proposal would also obviously require strong support from local landowners.

Pearl Oysters Two species of oyster, the black lip (Pinctada margaritifera), and gold lip (P. maxima), form the basis of cultured pearl industries in Japan, Palau, Indonesia, Philippines and Australia (for gold lip) and Cook Islands, Fiji, French Polynesia, Solomon Islands, and Marshall Islands (black lip). Both species are present in New Ireland, particularly in the area of the Tigak Islands and areas around New Hanover.

Two gold lip farms were operational in PNG in the 1970s - one at Fairfax Harbour and one at

71 Commercial in Confidence Wind Emirau Project Samarai. The Fairfax Harbour operation was moved by its Japanese parent company to Torres Strait when it was determined that water quality at Fairfax Harbour was not conducive to the culture of pearl. The operation at Samarai was a private operation that failed as a result of a partnership breakup. ' Although both species of oyster occur locally, there is currently nothing documented in relation to their distribution and abundance throughout the Province. If either shell is present in reasonable numbers, significant potential exists for the establishment of a pearl culture industry based on wild stocks or imported spat (although imported stock or spat raises concerns in relation to the mixing of gene pools).

While outside expertise and capital would be required to commence pearl culture in New Ireland, there are significant benefits that would be generated as a result of its successful establishment. These include:  The prospect for local communities to directly participate in the industry (shareholding, employment and income possibilities - this would alleviate any problems that may arise in relation to tenure to the area to be used to culture pearl).  Pearl culture farms, if correctly managed, have low environmental impact, and  Given New Ireland's relative isolation, the production of a non-perishable commodity that attracts relatively high prices on international markets is an attractive point in favour pearl culture in New Ireland.

It is recommended that in order to further assess the potential for establishing a pearl culture operation in New Ireland that:  The NFA be approached to commission a survey of pearl oyster stocks in the Tigak and New Hanover regions (the ideal institution to undertake such a survey would be the International Centre for Living Aquatic Resources Management's (ICLARM's), Coastal Aquaculture Centre, in Solomon Islands), and  That, if local stocks of pearl oyster prove abundant, an existing reputable operator in the pearl culture industry be approached to assess commercial prospects for establishing a pilot operation in New Ireland.

Should a pearl culture industry develop in northern New Ireland, the following management measures will need to be considered:  The collection of wild stock regulated (through the introduction of closed seasons and quotas, etc) so as to maintain natural populations of shell.  Any imported spat be quarantined and sterilised to minimise the risk associated with the introduction of symbiotic organisms prior to release  The stocking density for shell on individual farms regulated to reduce the potential for disease  The establishment of reserves where shell collection is prohibited at all times.

Pole-and-Line Tuna Fishing A regionally significant pole and line tuna fishery operated from northern New Ireland in the 1970's and early 1980's. It provided employment for a relatively large number of New Irelanders and generated a significant amount of commerce for businesses in the Kavieng town (estimated at K3 million kina annually). In addition, as a result of its exports, it contributed to the country's foreign exchange earnings. It also provided ancillary cash benefits to resource owners on the bait grounds who received a levy for the harvesting of bait that is essential to the success of pole and line tuna fishing (see discussion below in relation to Small Pelagics).

72 Commercial in Confidence Wind Emirau Project

Resource considerations centre on the capacity of the regional tuna resource to support increased fishing pressure and the capacity of the bait resource to sustained harvests required to service the annual demands of a fleet of pole and line vessels.

The Tigak and Ysabel Passage regions of northern New Ireland arguably support the most productive tuna baitfish fishing grounds in the western tropical Pacific. The offshore tuna resource of principal interest to a pole and line fleet, skipjack and juvenile yellow fin tuna, is abundant throughout the year. Tuna scientists from the Secretariat of the Pacific Community are confident that the local resource is capable of sustaining increased fishing pressure.

Based on information generated during the operation of the New Ireland pole and line fishery in the 1970's and early 1980's, the annual harvest of bait required to support the pole and line operations of a fleet of 20-30 vessels at northern New Ireland was around 1,200MT. It has been shown that, not only is the local baitfish resource capable of sustaining such an annual yield, but that the removal of that volume of baitfish does not appear to be detrimental to populations of other reef-associated fishes taken incidentally during bait hauling operations.

As a result, there are good prospects for the re-establishment of an annual fishery for 10,000MT to 20,000MT of pole and line caught tuna, requiring approximately 20 vessels, in the northern islands close to Kavieng.

Twenty pole and line vessels would provide employment for around 600 New Irelanders, generate significant commerce for linked industries in New Ireland and provide ancillary benefit for coastal communities living adjacent to the bait grounds. It is also a fishery that could generally exist side by side' with other fisheries, such as longlining for tuna or handlining for deepwater snappers, without concerns for competition between the fisheries arising.

If the pole and line industry were to re-establish, management arrangements that applied during the previous operation of the fishery in the 1970's and 1980's would need to be re-- introduced. Such arrangements relate principally to:  The collection of biological and fishery information from both the i) bait fishing, and ii) tuna poling operations of the fleet.  In addition, if Fish Aggregation Devices (FAD's) are deployed in the vicinity of the bait founds (pole and line vessels generally operate up to 150kms from their bait grounds), regulations relating to the deployment and use of FADs will require drafting and implementation.

On the basis that in the medium to long term there are good prospects for the re-establishment of the live-bait pole and line fishery at northern New Ireland, it is further recommended that access to the area previously known as the Mogardo Square be re-established as an area in which tuna purse seining is prohibited.

Recreational Fishing Kavieng offers a near-perfect environment for the tourist and recreational fisherman. It is clean, there are other recreational activities that visitors can experience, local diving is among the best in the western Pacific, there is currently ample accommodation available (including guest house type accommodation in local communities), and existing operators in the tourist industry are aggressively promoting the virtues of the Province. While tourism development in New Ireland to date has largely been focused on diving, recreational fishing arguably offers

73 Commercial in Confidence Wind Emirau Project equal potential for growth.

Although many aspects of recreational fishing in New Ireland are yet to be proven, there are extremely good prospects for:  Light gear estuary fishing,  Shallow lagoon and reef fly fishing, including fly fishing for highly prized bonefish,  River fishing,  Casting and jigging reef drop offs,  Bottom handlining, ,  Nearshore trolling for reef-associated pelagics such as Spanish mackerel, job fish, barracuda and giant trevally, and  Offshore troIling for large gamefish such as sailfish, marlin and tunas.

Recreational fishing generally does not remove large volumes of fish and, as such, does not require dedicated management characteristic of a fishery in which commercial quantities of fish are harvested. In fact, in many instances, recreational fishermen practice what is known as "tag and recovery" fishing where fishermen insert a plastic tag in captured fish prior to its release alive back to the water. The information collected is then forwarded to resource managers.

While recreational fishing can generate many local benefits, experience elsewhere has demonstrated that the interests of the recreational fishing industry and others with an interest in fishing, for example the commercial fishing industry or subsistence fishermen, need to be carefully managed. In respect of New Ireland, the areas that conflict could develop include:  Recreational fishing in near shore areas where consultation with local resource owners has not been satisfactorily concluded.  Recreational fishing in areas frequented by dive operators, and  Offshore commercial fishing competing with offshore trolling by recreational fishing operations.

It is recommended that the New Ireland Provincial Government promote the significant potential for recreational fishing in the Province and be prepared to develop processes to promote consultation between various interest groups early in the development of the industry. This will ensure that, should conflict arise, prospects for the amicable resolution of disputes will be improved. .

Seaweeds Although large-scale commercial production of seaweed has not yet become successfully established elsewhere in the South Pacific, promising trials have been undertaken in Kiribati, Fiji, Tonga and Solomon Islands. The world's largest producers of seaweed continue to be the Philippines and Indonesia which account for more than 80 percent of global supply of carrageenan, the principal extract of farmed seaweeds such as Euclzeuma.

New Ireland's nearshore habitat offers good potential for the commercial production of seaweed. The New Ireland environment is similar to that utilised in the Philippines and Indonesia with extensive areas of shallow sandy lagoons flushed by clear oceanic water with a temperature of approximately 29°C year round.

Seaweed cultivation is not technologically demanding, it does not require a significant initial investment and the product, although requiring some care in terms of storage, is relatively sturdy. Cultivation has little environmental impact and is generally compatible with

74 Commercial in Confidence Wind Emirau Project traditional fishing and other subsistence uses of the near shore environment.

However, there are reasons that widespread commercial production of seaweed has not occurred to date in the South Pacific. These include difficulties in securing seed stock, fluctuations in prices received by farmers from the principal buyers (global seaweed processing is dominated by three or four major companies), devastation of farms by storms or unfavourable winds, grazing by rabbitfish, or disease.

It is apparent that the commercial production of seaweed in New Ireland will require considerable research and appraisal. If a company or private investor were to express interest in undertaking an assessment of the potential for seaweed production in the Province, it should receive the support and encouragement of the Provincial Government. It should be clear to the proponents of such a venture that the approval and participation of local resource owners will be critical to the success of any such enterprise.

Shallow Water Reef associated Fish Shallow water reef fisheries adjacent to Kavieng were intensively studied in the 1980's by NFA biologists. The study monitored the catches and fishing methods of small-scale artisanal fishermen who sold the majority of their catch and consumed the remainder.

As a result of New Ireland's proximity to the zoologically diverse Indonesian/Philippine archipelagos, the catch of local fishermen is extremely diverse with more than 250 species of fish recorded. The principal fishing methods were hand-lining, trolling, spearfishing and netting.

While there have been several attempts to establish commercial operations targeting shallow water reef-associated fish, only small-scale operations with relatively low overheads have, been able to survive for any extended periods of time. All the product of these operations is sold frozen or chilled on local markets.

In the last few years, fishing for live reef fish (principally wrasses and groupers) has become reasonably widespread throughout Papua New Guinea. One such operation has been based at Kavieng for the last two years. The catch from these fisheries is destined for the restaurant trade in Asia where the catch attracts premium prices. While this type of fishing can add significant value to normal reef fish operations, experience with operators in this fishery Pacific-wide has demonstrated that the fishery requires, a committed approach to its management.

It is recommended that if fisheries for live fish for the restaurant trade are to be supported in New Ireland, they be subject to strict management control. Such controls may include:  A prohibition on the use of poisons, stunning agents or anesthetics to collect fish.  A prohibition on fishing methods that are destructive to the habitat.  The institution of a comprehensive data collection system, compliance with which be made a condition of license issue and renewal.  Strict guidelines relating to who can fish, or otherwise operate, in the fishery.  The development of a mechanism to confirm market value of exports.  Mechanisms for local resource owners to be fully consulted prior to the allocation of a license to fish within their traditionally-claimed areas, and  Mechanisms whereby local resource owners can be encouraged to declare selected areas of reefs, or entire reefs, as reserves where all commercial-scale fishing is prohibited.

75 Commercial in Confidence Wind Emirau Project The development of commercial fisheries for fresh chilled or frozen shallow water finfish resources in New Ireland is constrained by several factors:

While there is a relatively small local market for fresh fish, New Ireland is remote from prime markets which makes it difficult to generate premium prices for local product. Except in respect of live fish export operations, the diverse composition of the catch makes marketing difficult. Probably as a result of the low prices on offer, local communities dedicate relatively little effort to fishing - their productive work effort is spread between community commitments and income earning opportunities elsewhere, particularly in the production of copra or cocoa during periods of good prices. As a result, and in order to be assured of a consistent supply of fresh chilled or frozen product, a relatively large collection area is required. The costs associated with establishing this are considerable. Perhaps as a consequence of the above points, infrastructure for the support of small scale commercial fisheries in New Ireland is largely absent. Commercial exploitation of shallow reef fish may conflict with local subsistence demands for the same resource, and, in any case, Commercial exploitation of local shallow water finfish resources is subject to traditional claims to tenure of fishing areas.

The fact that there are few, if any, successful commercial ventures principally targeting shallow water reef fish anywhere in the South Pacific, tends to support the assertion that investment in commercial near shore reef fish operations in locations remote from markets, such as Kavieng, should currently be considered high risk without an international airport at Emirau.

Sharks Shark fishing in PNG is confined to tuna longliners which harvest pelagic sharks incidentally to the target tuna catch, a small demersal fishery for squalene shark off Wewak and one licensed long line operator targeting pelagic shark. The eight vessels operated by the pelagic shark fishing operation do not frequent New Ireland ports (although they may occasional fish "New Ireland waters"). The fishery is principally for shark fin and trunks produced from oceanic pelagic sharks.

Except for the northwestern part of New Ireland, where there is a reasonably extensive offshore shelf, the steeply sloping topography of the seabed. close to the New Ireland landmass means that local populations of squalene shark are not likely to be sufficient to support a large commercial fishery. These shark are fished for the production of squalene oil.

If the opportunity presents itself, the New Ireland Provincial Government may elect to support an experimental fishing operation that seeks to define local resources of demersal shark and determine the viability of a potential fishery. However, it is essential that the Provincial Government be prepared for the fact that, if a local demersal shark resource is to be managed on a sustainable basis, it will require an applied approach to its management

Sharks possess particular biological characteristics that render them extremely susceptible to high fishing pressure, and as such, qualify them as a special case for management. While they may have few natural enemies, they are long-lived, relatively slow growing, have low reproductive rates, a long gestation period, are relatively large before attaining sexual maturity and recruitment is dependent on the density of adult populations. These

76 Commercial in Confidence Wind Emirau Project characteristics result in shark fisheries being particularly sensitive to over fishing.

Shell Trochus and green snail form the basis of the oldest commercial-scale fishery in New Ireland with collections from the Province possibly occurring as early as the first decade of this century.

The fishery now is probably largely opportunistic in that shell is gathered as it is encountered during fishing expeditions for a variety of marine organisms, such as beche-de-mer or fish, along the reef edge. Collected shell is stockpiled in the village until such time as there is sufficient quantity to warrant sale to an exporter.

A recent easing in the global demand for green snail has resulted in a drop in price for that commodity. This will probably have only limited impact in terms of reducing fishing pressure on local stocks. As shell quality will be maintained for many years following harvest in a protected situation in the village, shell are likely to be collected and stockpiled in anticipation of a resurgence in prices - with little real concern for how long that resurgence may take. .

There have been several politically-motivated attempts to prevent the export of un-processed trochus and green snail shell from PNG (by imposing export taxes, for example). This has been done in an attempt to stimulate the processing of shell locally into button blanks to add value to exports. These efforts have not been successful and exports of raw material are still permitted. Although one button-producing factory at Rabaul appears to have been economically viable for some period of time now, it reports periodic shortages of raw material.

The vulnerability to overfishing of these two shell resources is a product of a combination of factors. Trochus inhabit a clearly defined and easily accessible zone on coral reefs and, with minimal practice, the shell is easily located. In addition, larval dispersal is probably limited and as a result recruitment is dependent on local populations; distant reefs probably contribute little to recruitment to local reefs which means depleted populations take considerable time to re-generate.

As the sale of shell is a valued supplement to other artisanal fishing activities of coastal villagers, the New Ireland Provincial Government should do all possible to ensure that exploitation is controlled within sustainable bounds. For this to be assured, management of the fishery requires more than just the simple monitoring of exports for undersize shell.

Small Pelagic Fishes There are substantial resources of small pelagic fishes in New Ireland waters that can be targeted for commercial production. Some of them, the anchovies and sprats of the Tigak Islands, Three Islands Harbour and Ysabel Pass, have formed the basis of a sizeable fishery in the past. During the 1970s and early 1980's up to 1,200MT of these small fishes (together with incidental catches of other small pelagic species), provided the basis for the tuna pole and line industry that operated' in New Ireland. There is no reason why a similar fishery could not be re-established and sustained.

Even if these resources are not to be targeted by a live-bait tuna fishery, they can be harvested for other purposes. These same species form the basis of a sizeable industry throughout Asia where the fish are sun dried and packaged for human consumption.

77 Commercial in Confidence Wind Emirau Project There are also slightly larger pelagic species present in New Ireland that form the basis of commercial fisheries elsewhere. While they are occasional1y taken in quite large quantities by subsistence and artisanal fishermen, they were only taken incidentally in the baiting operations of the pole and line tuna vessels. Little is known about the size of local resources of species such as gold spot herring (Herklotsichthys qlladrilllaculatus), sardines (Sardinella spp., Dussumieria spp. and Amblygaster spp.), the scads (Selar spp.and Decapterus spp.), and the small coastal pelagics such as Rastrelliger kanagurta, Auxis thazard and Euthyunnus afjinis. However, they do offer some commercial development potential. Tuna

Apart from commercial-scale pole and line fishing and sashimi, longlining tuna also offers significant development opportunity for local fishermen operating small vessels, such as the open fibreglass dinghies, common at Kavieng.

If a fresh sashimi-grade tuna export operation is established at Emirau, small scale fishermen will be provided with an opportunity to undertake short fishing expeditions offshore from Kavieng and elsewhere, to handline for sashimi-quality tuna.

Assuming that they carry adequate ice (which should be available from the sashimi operations shore base on the waterfront), it will be possible for small boat operators to venture offshore and handline for sashimi-quahty tuna. Provided the fish are handled appropriately (a skill that can be acquired in a relatively short period of time), local fishermen should be able to generate significant income from the fishery. One quality 40kg bigeye tuna, for example, could realistically expect to attract a local price in the vicinity of K6-8/kg or K320 for the fish, retail. The most common component of the handline catch will be yellowfin. This species should attract a local price of at least K4.50/kg.

Trolling for the small coastal tunas, frigate mackerel (Euthyunnus affinis) and mackerel tuna (Auxis thazard), for bait also has some limited development potential at Kavieng. However, the recent increase in petrol prices will serve as a major impediment to the development of this fishery because, as a fishing method, trolling is now a relatively expensive exercise. However with the manufacture of local Diesel from plastic the local artisanal fisherman can effectively control fuel costs. At present, domestic shark longline fleets rely on imported bait at a cost of approximately, USD600 (KI875) per MT. If a fleet of dinghies was able to regularly land small quantities of coastal trolled tunas for consolidation, a small industry servicing at least some of the bait requirements of domestic shark fishermen could develop.

In addition, during the late 1970's a tuna cooking and smoking facility operated at Nago Island to produce katsuobushi. Recently, a company with Taiwanese interests was granted approval to establish a similar facility at Madang.

Given the local abundance of skipjack tuna, it is possible that an enterprise, probably with predominantly foreign interests, could propose the re-establishment of a small katsuobushi plant in New Ireland at some time in the future. Such a facility could rely on its own fleet of small vessels and local artisanal fishermen to supply its raw material requirements or it may link with any efforts to re-establishment of a pole and line industry in northern New Ireland.

Such an enterprise would stimulate significant local benefit and there would be few concerns relating to the capacity of the local tuna resource to sustain the harvest required by such a facility. The main issue that would require monitoring and regulation in respect of a katsllobushi facility would be the harvesting of mangrove timber, the preferred fuel for the

78 Commercial in Confidence Wind Emirau Project smoking process.

In most other respects, small-scale tuna fisheries such as those suggested above require minimal management by Government regulatory bodies.

79 Commercial in Confidence Wind Emirau Project Project Location Appendix B

Emirau Island

Emirau Island is located approximately 02 degrees south of the equator, (Lat 01” 41‟/ Long 150” 41‟) and about 77 Nautical Miles north- west from Kavieng, the administrative capital of New Ireland Province. It is part of the St Mathias groups of Islands, which comprise largely of Musau, Emirau and Tench. This group of Islands is Papua New Guinea‟s last land frontier to the north east along the vast stretch of ocean that forms the country‟s sea boundary with the federated state of Micronesia. It is also the turning point for world shipping, routing from Australia to the north and west. The Recent History

In 1908 the Seventh Day Adventist Church first came to PNG at Port Moresby, gained no footing went to Fiji, Vanuatu, the Solomons through Bogainville to the Islands of Emirau and Musau arriving in 1931. Here at the edge of the world grew strong. Education was a high priority and major contribution. From Manus alone, the educated moved into Parliament and gave significant contribution to Independence in 1975. Today the earlier SDA missionaries are retiring to their home after serving 35 years within the church service. Changing world markets brought poverty to the St Mathias Islands and children eager to pursue higher education are financially blocked. Today in 2004, there is very little they can sell with any useable return, while markets are too far away and to expensive to reach. These intelligent successful people have become victims of omission as they watch the world make its transition to middle class development fully aware of their losses. In 1942 the Americans arrived and in 6 weeks built a fully operational Bomber Aerodrome they denuded the entire Island built a tent city and fought the Japanese for 18 months bombing Rabaul and troops on the Kokoda Trail and then left within 6 weeks of the Hiroshima Bomb. They left behind trucks, jeeps, machine guns, pistols, bullets and a magazine of bombs. Something was buried somewhere and no-one knows any more. Live Ammunition pilled high make reefs off shore, still there today and is still maiming and killing village people. The American forces arrived one morning, war ships covered the horizon on all sides of the Island. The People were rounded up. They had no choice. Machine guns were placed every 50 yards along the beaches, later every second position was removed as the submarine net and minefield was in place. The aircraft were transferred in a day and a half, the ships then left. All the people were repatriated to Musau Island for the duration of the wartime operation of the aerodrome infrastructure. Six weeks after ceasefire the Americans pulled out overnight. After some time some Islanders would paddle back over 18 nautical miles (approx 35 km) of water from Musau to see why it had gone silent. They took the news back and the Chief had 2 large canoes made to transport 100 people They came back to a totally obliterated and empty Island 6 months later, in 1946. The people returned to their original village locations and made use of whatever was there. Some built their dwelling on bunker concrete foundations. Everyone had two or three 303 rifles, machineguns were used as ornaments, some had pistols. Everyone played with bullets and only recently in 2003 people stopped using explosives from the discarded casings to fish with. In the 1980s the people had the where with all to stop indiscriminant Malaysian logging contract because of a breech in the terms of the contract. Working on Saturdays began, enforced by the logging company ended their right to log on Musau Island. The Malaysians

80 Commercial in Confidence Wind Emirau Project used the east-side Islanders to do the cutting on the west side, effectively gaining control of the wood. The cutters received the name East Malaysians clearly describing the betrayal felt. By the end of the eighties, logs were left stacked on the beach and the Malaysian Logging Company was gone. A commercial fisheries development initiated by the Emirau Development Corporation in 1992 resulted in the establishment of a fish processing facility which has since supported a fishing industry that has enable the islanders to acquire modern fishing techniques and skills in handling, processing and packing of sea products. The facility was operated by Emirau Marines Products Ltd, who bought sea products from Emirau, the surrounding Islands of the St Mathias and New Ireland as well as trading with and servicing Islands as far off as North Solomon‟s, Manus and Sepik Provincial Islands in the Vuvulu and Niniku groups. Most products were processed and exported to markets in Australia, Europe and else where.

The Geography

Emirau Island is a coral atoll whose highest point rises to a height of 55 meters above sea level and has a land area of approximately 36 square kilometers .The topography of Emirau is typically of re-growth tropical scrub with idyllic white sandy beaches and blue lagoons. The beach and reef ecology with lagoons is the home of countless turtles, marine life and an ancient estuarine crocodile. The St Mathias people being vegetarian do not eat Turtles, lobster, inner reef fish or any scavenger species leaving a pristine aquaculture along the shoreline. There are two natural harbours at Eulolo in the east and Pakena to the west of the Island. The climate is tropical with temperature constant at 31.5 Degrees. The water temperature is typically 29.5 Degrees. The Island was totally flattened and devastated in 1942 by the American Forces. During WW2 Emirau was prepared as a Bomber airfield. Today, covered in re-growth around the remaining matrix of significant taxiways and runways, disused and abandoned munitions still remain live buried. 500lb Bombs dumped onto the reef are still within reach. Very little top soil remaining proves to be difficult and a challenge, giving poor yield to subsistent crops with only limited selection of species responding. Current practices can only nourish a maximum of 500 people.

The Demography

The inhabitants of Emirau are basically Melanesian and speak predominantly Emirau dialect and Neo Melanesian pidgin and English. There are about 400 people living on the island and about another 600 living outside of the island. The islanders are generally industrious and hard working and relatively skillful in such trades as Carpentry, Boat building, Seamanship, Mechanical engineering degrees, Economic degrees, Plumbing and other trades. Highly intelligent, they have historically been soundly educated and have had a significant influence in the decision making of PNG. Emirau people are part of a greater population of some 3,000 relatives living through the St Mathias Island group with 2,500 on Musau, 400 on Emirau and 50 on Tench. 1,000 live away off the Islands at Keivang to earn some income. Related by way of tradition, their Value Based behavior is the current currency underpinning trade and relations between a total of 20 clans with 3 major clans on Tench, between the people and their Island Forests, Beaches, Turtles and Fish. This group of people, culturally and verbally emphasise their core values in their daily activities and language, they ensure every member is naturally, consciously aware of how important and necessary their operating cultural

81 Commercial in Confidence Wind Emirau Project language is for their success and survival. This group is represented politically by the Murat Local Level Government(LLG). They are Christians, and predominantly members of the Seventh Day Adventist church. They observe strict principles of Health, the Vegetarian Diet, temperance and abstain from drinking alcohol, smoking and chewing Beetle Nut. Their behaviour is naturally value-based, strong and practiced in the identified core values of Faith, Trust, Honesty, Compassion, Loyalty and Love, a strong traditional foundation making the socio-economic cultural transfer from basic subsistence practices to modern leading edge high tech e-commerce business management leadership straight forward. Where the Western Business community struggles with the implementation of value based business practice, with the St Mathias people this is a great strength. Value Based Behavior is a very expensive commodity to establish and implement in modern western business and is more acknowledged in these times as the vital factor for success outcomes. The project at Emirau involves the entire St Mathias population of some 4,000 people and is seen as one complete socio-economic unit making the transition into the modern business market, and bridging into middle class society. The historical importance of moving into a modern middle class society, while maintaining the original identity and value base of traditional Island life, shows the rest of PNG and the world how having surplus money in a new economy can exist with the old way of life and respecting the natural environment heritage. Conscious Value Based behaviour is the glue that holds every success together.

82 Commercial in Confidence Wind Emirau Project Fish Aggregating Devices (FAD) Appendix C

Whilst Papua New Guinea boasts huge unexploited stock of marine resource, a change away from Fish Aggregating Devices (FADs) implementation, is as yet to see a comprehensive approached to sustainable fishing being seriously pursued by both the Government and the private sector. There are currently 828 FADs in use, but there could be twice that figure. The total number of FADs set in the last five years, including those lost is approximately 4000. This has been reduced to only 1000 in the current FAD Management Policy. Of the 141 Purse Seiners with access to the PNG Fishery, 26 fish mainly on anchored FADs. This effectively allows exploitation of the resource. Anchored fishing on FADs is killed off young fish stocks unnecessarily and is very wasteful. The FAD Management Policy does not grant FADs deployment in the Morgador Square.

83 Commercial in Confidence Wind Emirau Project Tuna Exports Appendix D

Tuna Exports:1996-06/2001 Note: Figures are incomplete YEAR Product Quantity (kg) Value (US$'OOO) Value (K'OOO) 1996 Canned - Meal Fresh Chilled 235,886.83 829,164.55 1,091,119.72 Frozen 2.030.600.00 1,763.265.82 2.352.734.74 Total 2266486.83 2592430.368 3443854.466 1997 Canned 1,176,717.50 3,235,347.00 5,151,998.74 Meal 302,245.00 103,839.55 167,330.83 Fresh Chilled 452,373.67 1,551,214.48 2,326,613.60 Frozen 4,285.805.00 3,966.159.35 6.239.559.62 Total 6217141.17 8856560.382 13885502.8 1998 Canned 4,822,268.59 10,840,107.95 22,339,744.70 Meal 1,010,500.00 235,812.45 507,114.13 Fresh Chilled 589,995.25 1,687,890.91 3,480,093.90 Frozen 29.558.806.00 26.715,791.65 57.769.814.15 Total 35981569.84 39479602.96 84096766.88 1999 Canned 6,710,863.92 12,341,460.31 32,182,010.38 Meal 260,000.00 78,584.08 207,365.59 fresh Chilled 673,447.00 2,684,667.4 7,084,373.60 Frozen I 29.122.263.50 14.535.974.28 38.424.934.93 Total i 36766574.42 29640686. ; 71698684.5 2000 Canned 8,618,605.90 15,340,568.60 41,595,874.59 Meal 1,542,000.00 399,250.13 1,100,152.79. Fresh Chilled 1,188,529.60 5,137,409.04 14,130,596.59 Frozen 26.986.134.73 13.618.888.12 37.337.245.89 Total 38333270.23 34496115.8894163869.85 . 2001 Canned 3,479,668.38 5,909,041.13 18,998,193.45 (Jan-Jun) Meal 460,000.00 239,394.64 772,738.93 Fresh Chilled 655,4 73.60 2,700,694.21 8,616,985.23 Frozen 12,016.010.20 7,048,190.53 22.513.247.06 Total 16611152.18 15897320.51 50901164.67

84 Commercial in Confidence Wind Emirau Project

Exports of Marine Products from PNG - 1996 - Updated 3/9/01 Note: Figures are Incomplete

Year Product Quantity (kg) Value (USD) Value (Kina) 1996 Beche-de-mer (dried) 595,278.00 5,942,016.92 7,848,948.92 1996 Crab (frozen) 200.00 3,080.00 4,013.46 1996 Crab (live) 4,327.00 30,948.50 40,622.14 1996 Fish (canned) 51,075.00 104,301.07 136,532.21 1996 Fish (meal) 340,200.00 153,090.00 203,145.20 1996 Fish (fresh chilled) 3,020.05 7,762.13 10,410.83 1996 Fish (frozen) 15,391.00 59,484.09 77,810.17 1996 Fish (live) 8,369.00 45,713.00 60,625.38 1996 Lobster (frozen) 72,834.60 1,564,362.31 2,058,930.06 1996 Lobster (live) 8,960.50 194,921.00 254,231.02 1996 Shark (frozen) 150,627.00 105,631.24 139,461.45 1996 Sharkfin (dried) 2,508.10 124,386.94 164,238.05 1996 SharkfiQ (frozen) ! 8,483.00 94,237.65 127,245.00 1996 Shell (button) 39,501.00 1,338,065.96 1,763,359.49 1996 Shell (meat frozen) 14,005.00 189,067.50 251,642.82 1996 Shell (unprocessed) 170,850.00 978,193.00 1,284,960.38 1996 Shrimp (frozen) 724,873.50 5,829,924.08 7,612,019.47 1996 Tuna (fresh chilled) 235,886.83 829,164.55 1,091,119.72 1996 Tuna (frozen) 2,030,600.00 1,763,265.82 2,352,734.74 Total 4,476,989.58 19,357,615.76 25,482,050.51 ! I Exports of Marine Products from PNG -1997 I " Updated 3/9/01 ' Note: Figures are Incomplete

Year Product Quantity (kg) Value (USD) Value (Kina) . 1997 Beche-de-mer (dried) 505,402.40 5,185,736.52 7,683,43:7.15 1997 Crab (frozen) 805.60 6,483.89 9,883.62 1997 Crab (live) 2,821.00 16,907.03 24,164.16 1997 Fish (fresh chilled) 1,524.21 ' 3,517.56 5,363.50 1997 Fish (frozen) 2,565.00 9,700.73 14,895.51 1997 Fish (live) 33,819.00 344,419.53 513,713.78 1997 Lobster (frozen) 96,615.74 2,230,191.24 3,259,783.22 1997 Lobster (live) 5,580.00 131,812.00 203,692.55 1997 Shark (frozen) 87,150.00 63,150.00 107,562.59 1997 Sharkfin (dried) 3,118.90 170,569.85 244,028.48 1997 Sharkfin (frozen) 4,994.00 74,910.00 127,593.25 1997 Shell (button) 56,871.00 1,364,308.15 1,950,396.98 1997 Shell (meat frozen) 11,003.00 164,356.31 233,680.13 1997 Shell (unprocessed) 160,234.50 853,572.94 1,226,754.04 1997 Shrimp (frozen) 567,146.00 5,019,847.98 7,189,566.4 7 1997 Tuna (canned) 1,176,717.50 3,235,347.00 5,151,998.74 1997 Tuna (meal) 302,245.00 103,839.55 167,330.83 1997 Tuna (fresh chilled) 452,373.67 1,551,214.48 2,326,613.60 1997 Tuna (frozen) 4,285,805.00 3,966,159.35 6,239,559.62 Total 7,756,791.52 24,496,044.12 36,680,018.23

85 Commercial in Confidence Wind Emirau Project

Exports of Marine Products from PNG - 1998 Updated 3/9/01 Note: Figures are Incomplete

Year Product Quantity (kg) Value (USD) Value (Kina) 1998 Beche-de-mer (dried) 674,548.85 8,014,896.91 .:16,623,273.25 1998 Crab (live) 3,131.00 13,695.00 29,690.78 1998 Fish (canned) 34,732.00 64,748.12 139,774.00 1998 Fish (fresh chilled) 3,909.15 8,356.60 16,144.43 1998 Fish (frozen) 7,654.00 21,610.90 45,087.28 1998 Fish (live) 12,851.25 243,327.00 497,755.85 1998 Fish (oil) 38,200.00 19,172.22 42,211.13 1998 Lobster (frozen) 110,031.20 2,694,096.46 5,749,460.30 1998 Lobster (live) 4,825.00 115,800.00 221,431.58 1998 Shark (frozen) 792,955.00 643,154.00 1,357,056.91 1998 Sharkfin (dried) - -, 4,241.60 222,685.26 456,492.99 1998 Sharkfin (frozen) 69,609.00 1,201,407.20 2,557,336.79 1998' Shell (button) 25,140.00 850,709.68 1,757,498.08 1998 Shell (meat frozen) 14,379.50 181,527.21 370,570.66 1998 Shell (unprocessed) 293,529.50 1,570,346.04 3,184,227.33 1998 Shrimp (frozen) 942,452.60 9,021,593.96 19,106,295.91 1998 Tuna (canned) 4,822,268.59 10,840,107.95 22,339,744.70 1998 Tuna (meal) 1,010,500.00 235,812.45 507,114.13 1998 Tuna (fresh chilled) 589,995.25 1,687,890.91 3,480,093.90 1998 Tuna (frozen) 29,558,806.00 26,715,791.65 57,769,814.15 Total 39,013,759.49 64,366,729.54 136,251,074.17 . I Exports of Marine Products from PNG - 1999 Updated 3/9/01 Note: Figures are Incomplete : Year Product Quantity (kg). Value (USD) Value (Kina) 1999 Beche-de-mer (dried) 393,976.75 4,156,048.45 11,004,412.97 1999 Crab 1,456.00 6,556.34 15,907.77 1999 Crab 58.50 '234.00 592.56 1999 Fish 54,307.00 89,898.29 216,433.15 1999 Fish 3,862.40 7,923.32 20,298.41 1999 Fish (frozen) 39,005.00 219,834.50 608,226.01 1999 Fish (live) 6,214.41 31,003.78 86,894.00 1999 Fish (oil) 18,620.00 25,137.00 69,439.23 1999 Lobster (frozen) 105,229.10 2,376,559.08 6,227,369.23 1999 Shark (fresh chilled) 72.50 65.81 176.90 1999 Shark (frozen) 1,320,926.00 920,373.42 2,382,351.54 1999 Sharkfin (dried) 9,637.11 461,916.90 1,261,282.78 1999 Sharkfin (frozen) 79,745.00 974,320.91 2,494,469.89 1999 Shell (button) 24,094.00 837,447.00 2,144,559.31 1999 Shell (meat frozen) 9,746.00 146,790.80 377,662.10 1999 Shell (unprocessed) 229,766.00 1,009,252.39 2,560,288.99 1999 Shrimp (frozen) 833,342.30 7,202,197.15 18,537,452.40 1999 Tuna (canned) 6,710,863.92 12,341",460.31 32,182,010.38 1999 Tuna (meal) 260,000.00 78,584.08 207,365.59 1999 Tuna (fresh chilled) 673,447.00 2,684,667.43 7,084,373.60 1999 Tuna (frozen) 29,122,263.50 14,535,974.28 38,424,934.93

86 Commercial in Confidence Wind Emirau Project

Total 39,896,632.49 48,106,245.24 125,906,501.74

Exports of Marine Products from PNG - 2000 Updated 3/9/01 " Note: Figures are Incomplete tn1 w:$ fNG 1< 2000 Beche-de-mer (dried) 568,928.72 5,737,683.00 15,458,118.96 2000 Crab (frozen) 1,830.00 9,668.66 27,598.83 2000 Crab (live) 560.17 2,425.68 6,315.34 2000 Fish (canned) 53,875.20 101,762.61 293,777.29 2000 Fish (frozen) 68,825.00 184,502.88 506,846.07 2000 Fish (oil) 37,620.00 18,654.58 49,828.54 2000 Lobster (frozen) 81,340.99 1,863,721.27 5,197,865.89 2000 Shark (frozen) 1,392,636.50 702,570.33 . 1,994,213.25 2000 Sharkfin (dried) 8,972.58 519,798.60 1,464,415.07 2000 Sharkfin (frozen) 88,604.15 794,875.06 2,226,192.92 2000 Shell (button) 56,795.00 1 ,153,482.56 3,029,371.23 2000 Shell (meat frozen) 455.00 21,580.51 60,624.28 2000 Shell (unprocessed) 188,353.00 658,708.04 1,834,975.29 2000 Shrimp (frozen) 794,227.20 7,057,999.14 19,168,139.90 2000 Tuna (canned) 8,616,605.90 15,340,568.60 41,595,874.59 2000 Tuna (meal) 1,542,000.00 399,250.13 1,100,152.79 2000 Tuna (fresh chilled) 1,188,529.60 5,137,409.04 14,130,596.59 2000 Tuna (frozen) 26,986,134.73 13,618,888.12 37,337,245.89 Total 41,676,293.74 53,323,548.80 145,482,152.72

Exports of Marine Products from PNG for January to June 2001 . Updated 3/9/01 . ; . Note: Figures are Incomplete

. ---,--1- 2001 Beche-de-mer (dried) 297,99.60' 3,218,293.28 10,249,962.80 -. 2001 Crab (frozen) 760.00 3,806.93 12,165.71 2001 Fish (canned) : 89,712.20 152,620.44 488,264.06' 2001 Fish (maw dried) . 8.00 64.00 207,.66 2001 Fish (fresh chilled) 63.50 192.25 634.89 2001 Fish (frozen) 67,285.00 60,341.81 195,024.92 2001 Lobster (frozen) 32,451.14 792,504.43 2,531,385.45 2001 Shark (frozen) 377,309.00 163,575.22 535,628.47 2001 Sharkfin (dried) 3,247.30 199,758.35 643,384.33 2001 Sharkfin (frozen) 28,440.00 217,427.95 707,148.10 2001 Shell (button) 100.00 1,000.00 3,137.75 2001 Shell (meat frozen) 50.00 10.00 31.38 2001 Shell (pearls) 3.50 28,696.96 94,772.00 2001 Shell (unprocessed) 193,200.00 554,825.00 1,779,294.78 2001 Shrimp (frozen) 295,326.00 2,448,190.07 7,731,797.51 2001 Tuna (canned) 3,479,668.38 5,909,041.13 18,998,193.45 2001 Tuna (meal) 460,000.00 239,394.64 772,738.93 2001 Tuna (fresh chilled) 655,473.60 2,700,694.21 8,616,985.23 2001 Tuna (frozen) 12,016,010.20 7,048,190.53 22,513,247.06 Total 17,997,057.42 23,738,627.20 75,874,004.47

87 Commercial in Confidence Wind Emirau Project

88 Commercial in Confidence Wind Emirau Project Assumptions - Summary Appendix E

Unit of Item measure

Vessel value (ready to fish Kavieng) US$ - 420,000 Fishing days per year Days 209 No. hooks per day Hooks/day 1,600 No. hooks per year Hooks/yr '. 333,714 Catch rate Kg/100 hooks 55 Catch composition - YFT % 75 Catch composition - BET % 15 Other species % 15 Proportion exported whole - YFT % 45 Proportion exported whole - BET % 100 Proportion exported loins - YFT % 50 Proportion sold locally - YFT % 5 Proportion exported loins - by catch % 50 Proportion sold locally whole - by catch % 30 Proportion exported whole - by catch % 20 Market price – YFT ¥/kg 900 Market price - BET ¥/kg 1300 Market price - Other ¥/kg 200 Recovery for loins % 55 'Loins I USD/kg 3.50 Crew ration (365 days) K/day 12 Insurance - vessel and gear % 3.75 Crew insurance % :3 ait cost K/pc .46 Shore Management (returns to boat) % 10 Port charges (berthage, etc per trip) K 250 Ice cost per tonne K 100 Ice requirement at 2: 1 ration to fish K/trip 500 Depreciation - vessel % 10 Owner's equity % 100 Loan finance % 0 Interest rate % 6 Loan period Years 7 Packaging/carton K 45.00 Handling costs I K/kg .33 Freight - air I USD/kg 2.50 Freight - sea USD/kg .30 Japanese market costs I % 16 Vessel- annual maintenance K 120,000 Fishing - annual gear replacement K 60,000 Two yearly slipping maintenance I K 50,000

89 Commercial in Confidence Wind Emirau Project

Daily fuel consumption I L 800 Operating capital I K 150,000 Fuel cost K/I .66

Staffing requirement

# vessels Staff 4 6-8 >8 Manager*6 1 1 1 Office Supervisor 1 1 Admin. Assistant . 1 Accountants 1 1 2 Procurement 1 Fleet Manager* 1 1 Packing and shipping foreman 1 Fish grader* 1 1 2 Marine mechanic* 1 1 Marine electrician 1 1 Mechanics 2 Refrigeration engineer I 1 2 Driver 1 1 2 Cool room and freighting staff 5 8 12 Security 2 3 4 TOTAL -11 19 34

90 Commercial in Confidence Wind Emirau Project Time to Market Scenario Appendix F

06:00 am Artisanal fishermen on location prepared to fish. Fish rate will average 150kg/hr. They fish for 6 hrs and change crews allowing the new crew to fish for a further six hours.

9.00 am As catches climb to 500kg, the banana boat catch is fed back to port by the retrieval craft. The retrieval craft, flightship/C208 trans-ship fish and exchange banana boat crews. This happens through the morning from 9:00 am onwards.

12:00 noon One MT of fish transferred to ice packer.

13:00 100MT is gathering at Port Emirau at the fish handling quality control checking and coffin packing facility. Once packed it is sent to the airfield apron for loading.

15:00 The tuna coffins, ready for export are loaded into the freight containers and loaded into B747F aircraft. This operation is now completed.

15:05 B747F aircraft are ready, fully loaded are cleared for Push Back.

15:15 The aircraft departs for Tokyo to the Tsukiji Fish Market in Japan. The fish may have already been sold on consignment and are simply being delivered, or they are going onto the auction process. Alternatively if two B747F freighters are running daily, the second aircraft operates on a 06:15 departure, making a 10:45 arrival at Kansai with 2 hrs to unload and a further 2 hrs to load the plastic. This flight returns to Emirau at 19:15. It can now be loaded with the afternoon catch ready for a 06:15 departure the next morning.

19:45 The aircraft is on the ground taxing into the Freight Terminal at Narita off peak when sufficient slots are available for arrival. Possibly the International Express Co. Ltd, a customs-house broker in Japan, is used to takes care of the fish cargo. The latest ETA Kansai for Tsukiji is 12:00 and Narita for Tsukiji is 20:00. Tsukiji auction begins at 05:30. The same aircraft loads on the plastic, turnaround is four hours - 2 hours to unload the fish and 2 hours to load the plastic.

23:45 Aircraft departs Narita for Emirau with a fresh crew.

04:15 Arrives back at Emirau with a full load of plastic. The freight containers are removed and the plastic vacuumed out by 08:00. The plane is ready for reloading the new morning catch by 6.15.

91 Commercial in Confidence Wind Emirau Project

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