Sparks fly in battle over Ok Tedi mine

Rowan Callick | The Australian

THE extraordinary battle for control of the vast copper-gold mine at Ok Tedi and of its revenues, including the $1.4 billion long-term fund reserved for future generations, has heated up in Papua New Guinea.

The conflict emerged in November, when Prime Minister Peter O’Neill told parliament:

“I want to put it on record that (the then chairman of Ok Tedi Mining, Ross Garnaut) will be no longer welcome in this country until BHP surrenders control of PNG Sustainable Development Program to the government and people of PNG.”

The mine — which provides almost 20 per cent of the government’s income, more than $500 million a year — is owned 63.4 per cent by PNGSDP, a trust established by BHP Billiton when it quit the mine a decade ago, 24.4 per cent by the PNG national government, and 12.2 per cent by the government of Western province, where the mine is located.

Mr O’Neill wants BHP to give up any residual say in matters relating to the revenues, via the constitution under which PNGSDP operates.

He and former prime minister Mekere Morauta, who presided over the legislation through which the mine’s new structure was created, and who has now succeeded Professor Garnaut as chairman of OTML and PNGSDP, have been trading arguments through paid advertisements in PNG’s newspapers.

Mr O’Neill — who also attacked The Sydney Morning Herald’s finance columnist Michael Pascoe for what he called “a truly bizarre justification for BHP’s past and current roles” — said “new management at BHP in the period prior to 2002 wanted to close the mine because of its appalling environmental and social damage history, and because that history was attracting the most adverse regional and international media attention”.

He said BHP insisted, and the Morauta government approved, that PNGSDP’s funding be managed via Singapore, “denying PNG significant taxation and other revenue”.

“That was a vote of no confidence in PNG and was a reflection of the colonial-era mentality that existed in BHP then, and clearly exists in BHP Billiton today,” Mr O’Neill said.

The PNG parliament, he says, gave BHP immunity from prosecution that almost certainly spared it and its partners costly legal proceeding and compensatory payouts that may have run into billions of kina.

“The campaign by vested interests and their barrackers to portray the government’s commitments as being dangerous, and worse, will not succeed,” Mr O’Neill said.

He has threatened that unless the ownership terms change, his government will not renew the mine’s leases and will force it to close, with the prospect of a new owner being brought in.

Sir Mekere has responded that when told by BHP in 2001 that it wanted to close the mine, his government carefully balanced “the environmental impact against the economic and social importance of the mine at that time”, when “PNG stood on the brink of financial collapse after several years of gross mismanagement of the nation’s public finances”.

“Closing the mine would have had truly disastrous consequences for the country and the people of Western province,” Sir Mekere said.

The creation of PNGSDP, he said, aimed to ensure that dividends from the mine would “be used wisely, independently, transparently and accountably”, and to provide income for the people of Western province.

This structure “has stood the test of time”, he said, and BHP now “has no involvement whatsoever in PNGSDP” or the mine.


Filed under Environmental impact, Financial returns, Papua New Guinea

5 responses to “Sparks fly in battle over Ok Tedi mine

  1. nationalist

    Talk, talk, no substance as both Morauta and O’Neill like to believe. Both of them and all other so called big names have ruined our people. Full stop. All evidence tells the full story our poor people are the big losers in all this power play.

  2. Wesely

    Where are the common people’s of PNG in all of this?
    Why is there no unified voice, or any voice at all?
    In Australia we have just seen the community om NSW stop shale gas fracking dead in its tracks.
    Why is it in PNG that the community is so lacking in unity, with no single or common voice?
    Why do te citizens of PNG so happily defer to the voice of either O’Neil or Morauta?
    It seems that this is the underlaying problem.
    The nation is still being run but One Toks and Big Men.

    • nationalist

      I think the common people are at a loss, have loss hope, no leader to lead, are busy on survival mode,fear of police brutality under orders from politicians, maybe common people don’t know where to begin without educated facts/truths in mining, Most common people are not educated to a level to think/speak logically to participate with unified voice to cause change..
      Such is the state of the common people that the so called big names, the pretend or money bought leaders take advantage to continue pocket filling ego trips, leaving behind a trial of all that we see and experience everyday.

      • Weseley

        Is it true to say that the people of PNG are slaves to the so called “PNG elite”?
        This would be the classic model for a dictatorship.

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