Momis on PNG government takeover of BCL

Aloysius Laukai | New Dawn

ABG President, John Momis says that he is very concerned at the discussions been held between Rio Tinto and the Papua New Guinea Government to purchase RIO’s 53.83 percent shares in BCL for ONE HUNDRED MILLION US DOLLARS.

In his address to the ABG House this week [see below for the full text], President Momis said that he has been approached by several senior National Government officials including the Prime Minister, Peter O’Niel [sic] the last time during the December’s JSB meeting in Kokopo.

President Momis said that the people of Bougainville must be assured that the ABG has made no deal with PNG.

Instead we are putting a very strong Bougainville position to both PNG and RIO that environmental clean-up is now the key issue and that if there is any transfer of RIO’s shares, it must be to Bougainville.

President Momis said that the minerals in Bougainville belong to Bougainvilleans as our blood has been shed over those Panguna Minerals, yet PNG wants to buy RIO’s shares so that it can own Panguna and its minerals.

Related Post:   PNG and Bougainville governments chase mining mirage

ABG POSITION ON PANGUNA MINE FUTURE, AND PNG PROPOSALS TO PURCHASE  RIO TINTO SHARES IN BCL

STATEMENT BY PRESIDENT JOHN. L. MOMIS, TO THE BOUGAINVILLE HOUSE OF REPRESENTATIVES
22 DECEMBER 2015

Mr. Speaker:
Over the past five years, the ABG has worked hard to develop an appropriate mining policy for Bougainville. That work has included:
• examining possible re-opening the Panguna mine, as a realistic way of getting the significant levels of Bougainville derived revenue needed for either real autonomy or independence;
• extensive consultation with landowners and other Bougainvilleans on the issues involved in re-opening Panguna
• developing a Bougainville mining law that gives the highest possible protection to landowners -much higher than anywhere else in the world, and makes sure that any mining happens only under Bougainville law, and with the fairest possible conditions for all Bougainvilleans;
• working to prevent a wide range of outside economic interests from getting control of Bougainville mineral resources through back door deals with small and unrepresentative local groups;
• making sure that small-scale mining in Bougainville is legal if it’s done on the miners own land or with permission of landowners.

In 2014, Bougainville’s Mining (Transitional Arrangements) Act took away all BCL mining tenements under the PNG Mining Act. Soon after, in August 2014, Rio Tinto, the majority shareholder in BCL, announced a review of its investment in BCL. Since then, it has become very likely that Rio Tinto will end its BCL investment.

The issues involved in Rio’s review of its investment in BCL include much more than the loss of its previous tenements. They include:
• major falls in global copper and gold prices since 2012;
• uncertainty about Bougainville’s political future with the approach of the referendum; and
• implications of divisions amongst landowners from the previous BCL leases; and
• interference in Bougainville mining matters by a wide range of outside interests seeking to get access or control for their own benefit.
All these things make the high cost of re-opening Panguna – over US$6 billion – very difficult for Rio Tinto to seriously consider.

It is also clear that those same issues of commodity prices and uncertainty about the political future mean that there’s now doubt whether any other responsible developer can find the money needed to re-open Panguna. As a result, over the past two years, the ABG has increasingly been questioning whether it’s possible that Panguna will re-open in the foreseeable future.

But at the same time, over the past two years, the PNG National Government has made a series of efforts to purchase Rio Tinto’s shares in BCL. As the National Government already holds 19.3 per cent of BCL shares, if it bought Rio Tinto’s 53.83 per cent, it would own over 73 per cent of BCL shares.

Since first hearing about these proposals in2014, the ABG has opposed them. As President, I have written several letters to the Prime Minister expressing my disagreement. I have made public statements. I have spoken direct to the Prime Minister expressing my strong opposition.

I have told him clearly that it is unacceptable to Bougainville for the National Government to be majority shareholder in BCL. Further, the most important issue now is not share ownership, but making sure that a proper clean up occurs and compensation is paid by Rio Tin to before they end investment in BCL.

The ABG’s critics accuse us of doing special deals with BCL. They say that the aim of the Bougainville Mining Act is to look after the interests of BCL and Rio Tinto. They say that the ABG is controlled by Australian advisers acting in the interests of Rio. Some pamphlets even say the ABG is assisting the forces of Satan!!

There are constant allegations, mainly by outsiders, that the ABG is forcing re-opening of Panguna against the wishes of landowners. They say that Bel Kol is a perversion of Kastom, forced on landowners by BCL and the ABG.

Mr. Speaker:
Most of the attacks on the ABG about Panguna and the mining law are made by people with their own agendas. Those agendas include:
• economic self-interest, of many outsiders, as well as a few Bougainvilleans;
• Very narrow and often twisted religious beliefs, for example about the gold of Bougainville going to God through Jerusalem;
• Very narrow and twisted political views, including some strange Marxist views that have no relevance to the context of Bougainville.
Bougainvilleans need to be very careful of the falsehoods being pursued by narrow interests, or by those with their own selfish agendas

The fact is that the ABG is just trying hard to work with all Bougainvilleans of good will, to protect the interests of Bougainville landowners, and of Bougainville more generally. We have no deals with BCL, Rio, Australia or Satan. We have never tried to force Panguna re-opening on landowners.

Instead, we are working hard to find ways to ensure that the Peace Agreement is given full effect.

So, Mr. Speaker, I am making this statement to give a clear picture to members of this House of the realities of the situation we face in making decisions about Panguna.

Mr. Speaker, first I must outline:

ABG Policy on the future of the Panguna Mine
All ABG presidents (Kabui, Tanis and Momis) have recognised that both real autonomy and independence will not occur without major new revenue sources derived from Bougainville, and under Bougainville control. All three Presidents have explored possibilities of allowing large scale mining. Although different options have been considered, all three Presidents have considered re-opening Panguna. All three have also always emphasised that Panguna would only re-open if Panguna landowners agree.

In March 2011, I convened a major 3 day workshop to consider major options for Bougainville mining policy. The workshop involved about 75 people, including ABG members, officers, advisers, and Bougainville experts on mining. The workshop agreed that the ABG should consider four main options:
• First option: Negotiate reopening Panguna with BCL as developer, mainly because landowners express preference for ‘the devil they know’, on the basis that BCL already accepted responsibility for mining legacy issues;
• Second option: If BCL proves unwilling to return or to meet ABG and landowner conditions, negotiate re-opening Panguna with alternative developers (still with a focus on dealing with Panguna legacy issues);
• Third option: Allowing exploration for commercially exploitable minerals in parts of Bougainville other than Panguna;
• Fourth option: Focus on small-scale mining.
The main options could gradually be explored at the same time. In relation to Panguna the need to take full account of landowner views was fully acknowledged.

We had two main reasons for giving priority to Panguna.

The first reason is Bougainville’s need for revenue to achieve either real autonomy or independence. The reality facing the ABG is that options for obtaining significant revenue are limited.

Agriculture is undoubtedly important. But with limited land and growing land pressures in many areas, agriculture on its own will clearly never be enough to sustain the revenue Bougainville will need for autonomy or independence.

A related issue here concerns the timetable for the referendum, which results in special and urgent time pressures in relation to achieving sustainable levels of necessary revenue.

Panguna could re-open within 5 to 6 years of completing negotiations. Even during mine reconstruction, the ABG would get significant tax revenue. By contrast, a new mine would probably take 15 to 30 or more years from beginning of exploration to opening. That is a long time for the ABG to wait for the necessary revenue.

The ABG feels particular pressure for early revenue because:
• the National Government is not fully honouring the financial provisions of the Peace Agreement; and
• the referendum timetable means that most Bougainvilleans have high . expectations that independence can be achieved soon after 2020.

The second reason for giving priority to Panguna is the need for large amounts of funding to deal with mine legacy issues, such as environmental clean-up (chemicals, tailings areas etc.), reconstruction and maintenance of Jaba River levy banks, improving the situation of re-located villages, and compensation. The most likely.way of getting the significant funding needed for legacy issues would be from the funds generated by renewed mining at Panguna. Without significant mining revenues it was expected that getting the funds needed to deal with mine legacy issues would be very difficult.

At all stages the ABG has made it clear: Panguna will not reopen unless impacted landowners agree. Further, reopening must be under a completely new and fair mining agreement. Let me repeat: There will be no re-opening of Panguna without landowners’ agreement.

So since 2011 the ABG has worked with Panguna-affected landowner communities and the wider Bougainville community to explore the possibilities of re-opening the mine.

But the ABG takes the question of landowner agreement very seriously. As a result, we have not applied any pressure to landowners to give agreement. That is why, more than four years on, in late 2015, no negotiations have begun.

There is no deal or agreement between the ABG and Rio or BCL. The ABG will never force Panguna – or any other mine – on the landowners who own the minerals.

However, the Panguna landowners have also made it clear that they want BCL to clean up, to fix the problems of the relocated villages, and to pay compensation for damage. To do that, BCL will need to send in employees and contractors.

At a meeting in Buka in July 2012, over 50 senior landowner leaders told a BCL representative that they wanted BCL to come back for clean-up and related work. But the landowner leaders also said that before coming, BCL had to go through a domingmita ceremony – Bel Kol.

So I must emphasise here that Bel Kol is being arranged only at the request of the landowners. As a result of that request, the ABG has worked with them to try to arrange for Bel Kol. Neither BCL nor the ABG has requested Bel Kol, nor are we forcing it on anyone.

From 2011 the ABG organised extensive consultations about possible reopening of Panguna with landowners, former combatants, and the wider Bougainville community. Through this consultation it became clear that most Bougainvilleans would not consider any kind of future mining in Bougainville unless it was done as follows:
• Under a Bougainville mining law, replacing the PNG Mining Law that Bougainvilleans saw as unjust;
• The Bougainvillean mining law would need to recognise customary ownership of minerals;
• The law would have to make sure that any new mining occurs only under entirely new and fair conditions, both for mine lease landowners, and for Bougainville more generally.
Most people also insisted that ownership of minerals should give them a veto over the grant of any lease needed for the re-opening of Panguna.

Mr. Speaker, next I must discuss some of the reasons for:

The Bougainville Mining Act
All of the matters just outlined were dealt with in the Bougainville Mining Act passed in March 2015. Critics of the ABG claim that the law was developed mainly to open the way for BCL to return to Panguna

Mr. Speaker:
That is a complete lie. There has never been any deal with BCL. The ABG is not forcing Panguna to open under the Mining Law. In fact, we had completely different reasons for developing the law. They included:
• Completing the drawdown of mining powers from the National Government, so that every aspect of decisions on mining in Bougainville will now be controlled by Bougainville’s mining law- and not by PNG law;
• To make sure that any mining project occurs only under conditions that are fair and just for both landowners and for all Bougainvilleans;
• To provide strong protection for mine-impacted landowners in particular;
• To stop back door deals over mining that outside groups have been trying to set up with various small and unrepresentative groups in Bougainville;
• To provide a workable legal basis for managing small-scale mining in a way that encourages it while minimising its sometimes dangerous health and environmental impacts.

The law was not made to give BCL special help. But the law did recognise ABG policy of exploring the possibility of re-opening Panguna as a way for Bougainville to get the revenue needed for autonomy or independence. It also recognised that most landowners, and other Bougainvilleans have expressed a clear preference for the ‘devil they know’, rather than a new devil.

So the Mining Act does provide tough conditions applying to the possibility of re-opening Panguna. But that possibility is subject to very big protections for landowners, and for Bougainville more generally. Those protections include the following:
• BCL lost all of the mining tenements that it previously held under the PNG Mining Act (including Exploration Licences for Paru Paru and Eivo);
• Instead BCL just has an Exploration Licence over the old SML, which gives it only a right to negotiate on the future of Panguna;
• Its Exploration Licence is just for two years, from August 2014, and so will expire in August 2016 unless the ABG agrees to renew it;
• The law makes landowners the owners the minerals in all customary land;
• As a result, Panguna landowners can veto both exploration of their land, and any mining licence, including for re-opening Panguna. As a result, there will be no re-opening of Panguna unless landowners of the area agree. Obviously landowners will agree only if they are satisfied with the proposals that BCL makes;
• If BCL does not satisfy the concerns of the landowners and the ABG, it will lose its Exploration Licence. It would then be possible for another developer to be considered. But once again, no exploration or development will be possible at any place in the Panguna area unless landowners agree.

The misinformation and lies being spread about the Bougainville Mining Act are hiding an amazing truth. That truth is:

The Bougainville Mining Act provides much greater protection to landowners than any other mining law anywhere in the world.

The ABG worked hard over several years to develop the best possible set of protections for Bougainville in the Mining Act. I ask the critics of the Act to read it carefully, and to point to any other mining law anywhere in the world that provides more protection than our law. I am confident that they will find no better law than ours.

Mr. Speaker:

All Bougainvilleans should be proud of our new Mining Law. We should all be proud of the ABG for making a unique mining law that gives such strong protection to all Bougainvilleans.

Mr. Speaker I must mention one other aspect of the Mining Act:

The 1971 Moratorium on Mining Exploration
The Act continues the existing moratorium on exploration or mining in all other parts of Bougainville. That moratorium has been in place since 1971. Until March 2016, a Gazetted notice under the ABG Mining Act means no exploration licences can be issued for Bougainville. But even when that Gazetted period expires, no mining exploration licence will be possible unless the 1971 Moratorium is lifted.

Under the ABG Mining Act, the BEC first decides on lifting the Moratorium. It can be lifted either for just part of Bougainville, or for the whole of Bougainville. Before a decision of BEC can be put into operation, the whole House of Representatives has to have the opportunity to debate the proposal.

There could be a range of advantages in lifting the moratorium for just 2 or 3 prospective areas of Bougainville where there is already evidence that landowners would welcome exploration. This would reduce the possibilities of opposition and conflict. It would also allow the opportunity for us to see how well the administration of the new tenements system we have established under our law works for us.

Mr. Speaker, I now turn to:

The BCL share structure, and BCL’s Rights in Bougainville
BCL operated the Panguna mine from 1972 to 1989. BCL is a company owned by shareholders. Although the mine is not operating, BCL still exists. It has an office in Port Moresby, and has employees there. The company still owns all the data on drilling and exploration at Panguna – important information that would be needed by any developer interested in re-opening Panguna..

BCL is 53.83 per cent owned by Rio Tinto, and 19.3 per cent owned by the PNG Government. Just under 27 per cent of BCL shares are owned by many small shareholders.

The August 2014 Rio Tinto announcement of a review of its investment in BCL was a clear signal that Rio was considering ceasing its involvement in BCL and in Bougainville.

If Rio does decide to sell its shares in BCL, that would have major implications for the four options on ABG mining policy developed in February 2011. We would no longer be looking at re-opening Panguna with the ‘devil we know’.

A major reason why the landowners prefer the devil that they know is that a majority Rio Tinto owned BCL accepted some responsibility for the damage done by the Panguna mine. If Rio sells its BCL shares, Bougainville would be dealing with a BCL with new owners. We have no idea what responsibility that a BCL with new owners would take for past damage.

Mr. Speaker, the next issue is:

What Happens if Rio Tinto Sells its Shares in BCL
There would be a wide range of issues involved. Rio Tinto is a large company with access to financial resources and the technical skills needed to re-open and operate Panguna. Without Rio involved, Panguna will only re-open if an appropriately qualified and experience new developer is willing to be involved.

Major issues to be considered here include:
• On the basis of a 2012 BCL “Order of Magnitude Study” on re-opening the mine, at least US$6 billion (K20 million) will be needed;
• Only 6 or 8 companies in the world have the technical and management skills and the access to financial resources needed to operate a large, low grade porphyry copper and gold project, which is what the Panguna mine is;
• Significant falls in copper and gold prices since BCL did their 2012 study mean that re-opening the mine is now much less economically viable than it was in 2012.
• Any company considering a huge mining project must raise much of the costs through bank loans. Before lending large sums for a mining project, any bank considers carefully the risks involved in any particular country. This is usually called sovereign risk. In addition to the history of the closure of the Panguna mine by a violent conflict, there are now new factors impacting on sovereign risk assessment, which will make it hard for any responsible and technically qualified potential developer to raise the huge funding needed for Panguna. Factors here include:
o the political uncertainty arising from the approach of the referendum;
o increasing difficulties between the ABG and the National Government;
o the inability of the Panguna-mine affected landowner associations over the past 4 years to agree amongst themselves on significant issues; and
o increasing interference by various outside economic interests in efforts to make decisions on Panguna’s future.

Such factors are likely to influence Rio Tinto in making its decisions about the future of its investment in BCL. If Rio does decide to withdraw from BCL, we can expect that other responsible investors will have to take a similar approach.

So the possibility of re-opening Panguna is now much less certain than it was in 2011. In fact the ABG’s assessment now is that it’s quite likely that the Panguna mine will not re-open in the foreseeable future.

It is therefore vital that the ABG is ready for what happens if Rio Tinto does decide to end its investment in BCL. The most important priority then will be to make sure that Rio Tinto takes responsibility for the damage done by the Panguna mine.
While Rio and BCL operated under the law that applied in the 1960s, 1970s and 1980s, looking back now, we can see clearly that in their ignorance, the Governments of those periods, together with Rio and BCL, allowed terrible injustices to occur in Bougainville. In addition, there was never any mine closure done when BCL hurriedly exited in 1989-90.

Rio also made very significant profits through BCL. Indeed. BCL used to be described as the jewel in Rio’s crown.

In all these circumstances, if Rio decides to withdraw from BCL, they must take steps to do a proper mine closure. They must remedy the injustices done.

Mr. Speaker:
Rio Tinto must be held accountable. It cannot be allowed to walk away with a payment for its shares, while refusing to take responsibility for the damage it caused in Bougainville.

Mr. Speaker the next issue is:

PNG Interest in buying Rio Tinto’s Shares in BCL
From January 2014, when Prime Minister O’Neill unexpectedly visited Bougainville, he has talked about the National Government buying Rio’s shares in BCL. He has discussed the proposal with many different people. Last year, he pushed the idea strongly to the Me’ekamui Government of Unity leaders. He even took them to Moresby to discuss the possibility.

This year, the Prime Minister has several times discussed the proposal with me. He proposes that if the ABG and landowners agree, a PNG-owned BCL would re-open Panguna. It would be owned by the PNG government in the same way it owns and runs Ok Tedi. The Government would allocate 30 per cent of the shares to landowners and the ABG. The Prime Minister has not advised who he thinks a new developer might be.

If PNG does purchase Rio’s 53.83 per cent shares, there would be several consequences, including:
• together with the 19.3 per cent BLC shares it already owns, PNG would own over 73 per cent of BCL;
• transfer of 30 per cent of the BCL shares to Bougainville would still leave PNG the largest shareholder in BCL, and effectively controlling Panguna;
• it would also be open to PNG to buy out all the small shareholders – the other 26 per cent – so that PNG would then own 70 per cent;
• if Rio does not first make payment for a clean up, then the PNG owned BCL would inherit the previously Rio Tinto owned BCL’s liabilities for clean up. Landowners and the ABG would then be trying to pressure PNG on mine legacy issues. That would be a recipe for conflict between Bougainville and the National Government.

Mr. Speaker, now I turn to the next question:

What is the ABG’s Position on the PNG Proposals?
At all times I made it clear to the Prime Minister that our position is this:
• All decisions on the future of Panguna must be made by the ABG, on behalf of all Bougainvilleans, and not by the National Government;
• Any re-opening of Panguna can only happen under ABG law – that must be the situation no matter who owns the majority shares in BCL;
• It is not acceptable to Bougainville that the National Government becomes the main BCL shareholder and tries to run Panguna;
• The ABG wants to avoid a situation where it is potentially in conflict with a PNG owned-BCL on environmental and other legacy issues;
• If Rio Tinto decides to end its investment in BCL then:
o its shares should be transferred to ABG and landowners, free of charge – in doing that, Rio would make up for some injustice and damage caused by its Panguna operations;
o it must also make full provision for legacy issues (environmental clean-up etc.).

I had hoped that the Prime Minister was listening, and taking the ABG’s concerns seriously.

But in June 2015 year, I received reliable information that the National Government was trying to rush through purchase of Rio’s shares in BCL. I then approached Rio Tinto direct to find what their position was. I met with their senior officials in Singapore, in July 2015. They said that:
• Rio Tinto had not yet completed its review of its investment in BCL;
• As a result Rio had made no decision to sell its shares in BCL;
• Rio had been approached by PNG, which Rio saw as understandable, because PNG is the second largest shareholder;
• No agreement had been reached to sell Rio’s BCL shares to PNG.

I put it to Rio officials that if they do decide to divest their shares in BCL, then:
• They should first talk to the ABG, as the place where the mine is situated, and as the Government whose laws cover mining in Bougainville;
• The shares should be transferred only to Bougainville;
• BCL must establish a large trust fund to pay for clean up of environmental and other damage.

The Rio officials agreed that if Rio decides to dispose of its shares in BCL, they would negotiate such matters with the ABG. On my return to Bougainville, I wrote to Rio confirming these points.

Mr. Speaker:
I have not previously made any public statement about these talks with Rio Tinto, because of the sensitivity of the issues involved. I am doing so now because some aspects of the National Government’s attempts to buy Rio’s shares have become public. As usual accusations are being made. Some Bougainvilleans are already saying that the ABG and the National Government are entering into a joint agreement to allow National Government control of Panguna.

Mr. Speaker:
The people of Bougainville must now be assured: The ABG has made no deal with PNG. We have made no deal with Rio, and no deal with BCL. Instead, we are putting a strong Bougainville position to both PNG and Rio that environmental clean up is now the key issue, and that if there is any transfer of Rio’s shares, it must be to Bougainville.

Mr. Speaker, the minerals in Bougainville belong to Bougainvilleans. Our blood has been shed over those Panguna minerals. Yet PNG wants to buy Rio shares so that it can own Panguna and its minerals. Then it says it will give us back just 30 per cent of what we own. How can they possibly think that they are being generous by giving us a minority percentage in what we all know already belongs to us?

In October 2015, I met the Prime Minister. I made the same points about Rio’s BCL shares coming to Bougainville, and the need for a trust fund (for clean-up) to be set up by Rio. I said PNG should only talk to Rio about these matters jointly with the ABG. I believed that the Prime Minister agreed with what I proposed.

Mr. Speaker, unfortunately there have been major new developments since then. So I now explain:

The National Government Proposals Made in Early December 2015
I was very surprised in the first week of December 2015 when I received messages through the Bougainville Chief Secretary’s office that Mr. Micah, PNG Minister for Public Enterprise, wanted to see me urgently, to discuss National Government purchase of Rio’s shares in BCL. He would be accompanied by MP for Central Bougainville, and PNG Minister for Communications, Mr. Jimmy Miringtoro. I was advised that a decision from the ABG and landowner leaders was needed very urgently by Monday 7 December. If not, then Rio might sell its shares to someone else! I was told Mr. Micah wanted to discuss the issues with me, and that Mr. Miringtoro would discuss the issues with landowner leaders.

Amongst many concerns I had about this news was that it suggested that Rio Tinto had ignored what they agreed with me in July. They had agreed with me then that if they decide to dispose of Rio shares in BCL, they would discuss the consequential issues with the ABG. So on 4th December 2015 I wrote to Rio asking whether they had completed their review of their investment in BCL. I did not receive a reply until 12 December.

In the meantime, on Sunday 6 December 2015, Mr. Micah and Mr. Miringtoro met me and other ABG ministers in Kokopo, East New Britain. They put to me their proposals that PNG purchase the Rio Shares in BCL. Then on Monday 7 December, Prime Minister O’Neill put much the same proposals to me.

In summary, they stated that:
• The National Government had recently held several meetings with Rio Tinto, and reached agreement to purchase Rio’s 53.83 per cent shares in BCL for US$100 million;
• The National Government was taking this initiative as second largest BCL shareholder, exercising its first right of refusal to purchase the shares;
• The National Government regarded this as a very good commercial deal, beneficial to both PNG and Bougainville
• An urgent decision was needed, as Rio might otherwise sell the shares at a higher price, and perhaps to a company unsympathetic to PNG or the ABG;
• The shares would be purchased through a PNG-owned company, Kumul Minerals Holdings Pty Ltd;
• On 6 December, Mr. Micah said environmental cleanup issues were too sensitive to discuss, and could damage the chance of making a favourable commercial deal, but on 7 December the Prime Minister indicated it might be possible to ask Rio to put some money aside for cleanup purposes;
• The National Government would transfer from 30 to 33 per cent shares in BCL to the ABG and landowners;
• The Panguna mine will re-open only with ABG and landowners agreement;
• If the mine does re-open, then it would be about one third owned each by PNG, Bougainville interests and the developer, and the Bougainville shares would be transferred on a ‘free carry’ basis;
• The Prime Minister proposed that the ABG and landowners jointly reach agreement with the National Government on the issues involved, and then hold joint talks with Rio Tinto in Singapore before Christmas 2015.

It seemed very strange that PNG would pay US$100 million at a time when the National Budget is in deep trouble, and then leave it to Bougainville to decide if the mine could re-open. I also wondered if PNG might be thinking that Panguna is the most likely source of revenue for Bougainville’s independence, and so might want to keep as much control of Panguna as possible.

On 9 December 2015 the Prime Minister’s Chief of Staff contacted me to advise that the Prime Minister wanted me to join him in leading a joint PNG/ABG team to travel to Singapore on 17 December to meet Rio Tinto officials to discuss PNG purchasing the Rio shares in BCL.

Mr. Speaker, as President of the Autonomous Region, it is my duty to protect Bougainville’s interests. So I now outline:

The ABG’s Response to the Prime Minister’s Proposal
In addition to other concerns already mentioned, I was concerned that:
• PNG was again talking to Rio about purchase of the shares, without full involvement of the ABG, contrary to the understanding I had made with the Prime Minister in October 2015;
• There would be serious dangers of conflict between PNG and Bougainville if PNG becomes the main BCL shareholder without environmental and other legacy issues being dealt with – the ABG and landowners would then need to press PNG for action on legacy issues.

On 12 December, I received a letter from Rio Tinto (answering my letter to them of 4 December). It advised that Rio had not completed its review of its investment in BCL. As a result, it seems clear to me that it is most unlikely that there is any urgency in relation to PNG purchase of Rio’s shares in BCL. The obvious question that then arises is why Mr. Micah and the Prime Minister were stressing how urgent this proposed transaction was.

After considering all the issues, I wrote to the Prime Minister on 10 December setting out the ABG position, making the following main points:
• For Bougainville, the main issue is not purchase of Rio’s shares, particularly because low commodity prices and growing sovereign risk issues make it unlikely that Panguna will re-open in the foreseeable future;
• Instead Bougainville’s main concern is that if Rio Tinto ends its investment in BCL, it must be held accountable for the damage it has done in Bougainville and so should set up a large trust fund to pay for clean up etc;
• It is not acceptable for Bougainvilleans or the ABG that the National Government become the major shareholder in BCL;
• If the Rio shares are to be transferred, it should be to the ABG, on behalf of Bougainville interests;
• There is no need for urgency in dealing with the issues involved;
• Before there is any engagement with Rio, the ABG and the National Government need to discuss and reach agreement on the ABG’s proposals.

I have as yet received no reply from the Prime Minister to my letter.

Mr. Speaker it is very important that this House understands that:

Bougainville’s Position is Protected
In my letter to the PM, I emphasised the strong protection of the ABG’s position. That protection comes from special provisions included in the Bougainville Mining Act. This is just one of the many unusual protections for Bougainville interests that we carefully built into that Law.

The special provisions means that the ABG can prevent a PNG owned BCL from taking control of BCL’s current Exploration Licence over the former SML.

I made the following two main points on this issue in my letter to the Prime Minister, and I quote from that letter, as follows:

“I must also emphasise two points concerning the effect of the Bougainville Mining Act 2015. The first is that under section 367 of the Act, BCL now holds nothing other than an Exploration Licence over the area of its former Special Mining Licence at Panguna. That Licence is taken to have been granted on 8 September 2014, and has a term of 2 years. The second point is that section 112 provides that where 25 per cent or more of the shares of a company holding an Exploration Licence are transferred or otherwise dealt with within 24 months of the licence being granted, the Secretary to the ABG Mining Department must initiate action for cancellation of the licence.

“These provisions are intended to provide protection for the ABG and for Bougainville more generally in such situations. The ABG policy position has not changed. So if the shares were to be transferred to the National Government, or to any other entity that you fear might purchase the shares, then the ABG would move to cancel BCL’s Exploration Licence.”

Mr. Speaker:
I am determined to protect the interests of Bougainville in relation to Panguna, which involve such deep concerns for Bougainville. The war in Bougainville started with mining. We must avoid new conflict over mining.

I ask all Bougainvilleans to support the ABG. I ask the ABG’s critics to examine the ABG Mining Law, and to consider carefully the ABG’ actions and policies.

I cannot claim that the ABG policy on mining is perfect. But in developing and implementing that law, the ABG is not working to help BCL, or Rio Tinto, or Australia, or Satan.

Mr. Speaker:
There are grave dangers here. There are people deliberately seeking to cause divisions in Bougainville over mining. I have mentioned outsiders with their own economic interests. I have mentioned people with twisted and unrealistic religious and political views. Some of these are Bougainvilleans, and some are also outsiders.

We must be very careful in evaluating the many claims that are being made. We must not allow outsiders, or people with narrow and unrealistic philosophies, to cause divisions amongst us.

Mr Speaker:
Back in the 1960s I stood with the people and opposed Rio Tinto, and opposed the colonial government in the way it dealt with mining. The ABG under my leadership will never sell out Bougainville. There will be no special deals with RIO, BCL, or any other mining company.

No – the ABG will continue to work to guard the interests of all Bougainvilleans. I ask all of our people to support our efforts.

Thank you Mr. Speaker.

Hon. Chief Dr John L. Momis, GCL, MHR
President
Autonomous Region of Bougainville

2 Comments

Filed under Financial returns, Papua New Guinea

2 responses to “Momis on PNG government takeover of BCL

  1. Pingback: Petromin unaware of PNG Government’s talks with Rio Tinto over Bougainville Copper Ltd | Papua New Guinea Mine Watch

  2. Pingback: Bougainville’s President Momis caught lying to parliament about mining | Papua New Guinea Mine Watch

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