Bougainville Revolutionary Army fighters look down on the Panguna mine in 1996. Now Rio Tinto hopes to wash away its role in war crimes
Rio Tinto ‘gives up’ Bougainville Copper stake
Daniel Palmer | The Australian | 30 June 2016
Rio Tinto has exited its 53.8 per cent stake in the ASX-listed Bougainville Copper after a near two-year review of its position.
The mining giant will transfer the holding to an independent trustee who will distribute the shares to both the Autonomous Bougainville Government (ABG) and the Papua New Guinea government.
It will receive no compensation in return despite the stake being worth over $40 million as of the close of trade yesterday.
The decision by Rio will see the ABG receive a greater proportion of its stock, although both ABG and the PNG government will hold an equal share of 36.4 per cent once the stake is transferred.
Bougainville Copper’s prospects rest on the future of the controversial Panguna copper/gold mine in Papua New Guinea, which has been out of operation since it was central to the start of a 10-year civil war that broke out in 1989.
The Panguna mine was a major producer in its heyday and is believed to still house a very significant 5.3 million tonnes of copper and 19.3 million ounces of gold. However, it could cost up to $10 billion to restart production, while the hurdle of public support will be a challenge to clear.
Bougainville Copper’s rights to the mine were stripped in 2014, which led to the Rio review and while it still hopes to reclaim the licence to develop the mine, there has been no significant change to the state of play.
It does, however, retain an exploration licence.
Rio’s stake was worth $92.5m when it first hinted at an exit, with market interest steadily fading since.
“Our review looked at a broad range of options and by distributing our shares in this way we aim to provide landowners, those closest to the mine, and all the people of Bougainville a greater say in the future of Panguna,” Rio Tinto Copper & Coal chief executive Chris Salisbury said.
“The ultimate distribution of our shares also provides a platform for the ABG and PNG government to work together on future options for the resource.”
The deal will see Rio give six months’ notice for termination of its management agreement with the ASX-listed group, while Bougainville Copper chairman Peter Taylor will step aside, with immediate effect.
Should either the PNG government or ABG not accept the stake offered by Rio within two months, it will be offered up for the other party to take control.
The departure of Rio from the project echoes a similar decision to walk away from the Northern Dynasty Minerals project in Alaska in April 2014, as it gifted its stake in that controversial project to charitable enterprises.
Papua New Guinea Mine Watch 
Questions for the ABG.
1. What promises did you secure from Rio Tinto to clean up the environmental damage and compensate those who suffered physical or material loss as a direct result of the company’s operations in Panguna?
2. Will PNG and the ABG be using their well known links to the Chinese State, to find a Chinese investor interested in reopening the Panguna mine?
Question for Rio Tinto.
1. Given extremely high levels of corruption inside both the PNG Government and ABG, there is a significant risk any financial asset is vulnerable to misappropriation or will be used to solicit bribes. What safeguards has the company put in place to guard against these abuses?
Media statement from ABG President Momis (30/6/16) states that Rio Tinto will not clean up the environmental damage (see below).
PNG Prime Minister O’Neill is leading a team to China next week to strengthen economic and trading relations. (see http://www.thenational.com.pg/?q=node/110770).
Bougainville News, 30 June 2016
Momis anger at ongoing Rio Tinto injustice
“Rio Tinto has made a unilateral decision. It failed to consult the Bougainville Government about distributing its shares.
At meetings with senior Rio officials, in July 2015 and February 2016, I warned strongly against transfer of Rio’s shares to PNG. It Bougainvilleans cannot accept National Government control over the future of Panguna through either majority or equal shareholding in BCL.
In past meetings, I insisted that Rio accept responsibility for mining legacy issues.
“When I met their officials last night in Port Moresby, they flatly rejected any responsibility for their contribution to the damage done by the Panguna Mine.
“Rio’s officials gave me two reasons for not accepting responsibility for mine impacts.
First, Rio operated under the PNG law of the day. Second, they were forced out of Panguna by the conflict.
It’s now clear the BCA was deeply unjust. It ignored environmental damage and social impacts”
Bougainville President, John Momis, today expressed anger at Rio Tinto’s decision to transfer its 53.8 per cent share in Bougainville Copper Ltd (BCL).
International mining giant, Rio earlier announced transfer if its BCL shares to an independent trustee, for distribution to the ABG (36.4 per cent), and the PNG Government (17.4 per cent). PNG is already 2nd largest BCL shareholder. So the share distribution would see the governments equal BCL shareholders – 36.4 per cent each.
The remaining 27 per cent of shares are held by small shareholders.
Rio Tinto has been reviewing its BCL shareholding for almost two years. The review resulted in Rio deciding to end its investment in BCL, which ran the giant copper and gold mine at Panguna from 1972 to 1989, under the 1967 Bougainville Copper Agreement (BCA).
“We are open to PNG remaining a BCL shareholder. That may assist us find responsible partners and financiers for possible future operations at Panguna. But we cannot accept Rio Tinto’s interference in seeking to give PNG equal control over Panguna. There is no possibility of progress on resolving the future of Panguna on that basis.
“Rio Tinto has shown arrogance and ignorance in ignoring my warning. Sitting in their comfortable London offices, they have interfered in Bougainville’s affairs by deciding PNG should have equal control of BCL.
“Bougainvilleans are united in rejecting what Rio Tinto seeks to thrust upon us.”
The President also expressed deep anger at Rio Tinto’s refusal to accept responsibility for the environmental and other damage done by the Panguna mine. He said ”In past meetings, I insisted that Rio accept responsibility for mining legacy issues.
“When I met their officials last night in Port Moresby, they flatly rejected any responsibility for their contribution to the damage done by the Panguna Mine.
“Rio’s officials gave me two reasons for not accepting responsibility for mine impacts.
First, Rio operated under the PNG law of the day. Second, they were forced out of Panguna by the conflict.
But the truth is Rio Tinto generated huge revenues from what we all now know was the terrible injustice of its Bougainville mining operations.
The mine shut down in 1989 only because anger over that injustice generated demands for a renegotiated agreement.
“It’s now clear the BCA was deeply unjust. It ignored environmental damage and social impacts. Only a tiny share of mine revenue was distributed to landowners and to the North Solomons Provincial Government.
“The gross injustice of the BCA has since been recognised by Rio. As a result it made major changes to its own policies, especially in relation to landowners. It accepted new standards of sustainable development as a founder of the International Council on Mining and Metals (ICMM).
“Rio is now deeply hypocritical in its blatant disregard of the higher corporate responsibility standards it says it has adopted.
“It now seems Rio has no commitment to social responsibility or sustainable development principles. It talks those principles only when that helps its profits. But it throws them out when costs to its bottom line could be involved.
“Now Rio Tinto proposes to walk away from responsibility for the effects of the injustice of its highly profitable operations.
“Rio cannot rely on grossly unjust past laws to escape its contemporary responsibilities for what we now know was wrong. Corporate social responsibility means responsible companies accept that their responsibilities go beyond the legal requirements of the day.
“I am writing to the Managing Director of Rio Tinto asking him to reconsider not only the Rio decision about its shares, but also its refusal to deal with its Panguna legacy responsibilities.
“I am also writing to the International Council of Metals and Mining asking them to end Rio Tinto’s membership because of its failure to honour the ICMM’s 10 Principles for Sustainable Development Performance.
“Finally, I am seeking the earliest possible meeting with Prime Minister O’Neill to discuss how best to defuse the dangerous situation created by Rio’s decision on its shares in BCL.”
Chief John L. Momis
President, ARoB
https://bougainvillenews.com/
And what is President Momis’ legal adviser from the ANU saying or doing to help???
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Assuming that BCL and Rio Tinto are in compliance with their financial reporting requirements and that their respective auditors have conducted their audits in accordance with international standards, there can be little doubt that the actual cash due the landowners has been invested in treasury management strategies consistent with the respective companies and is not held in Treasuries issued by the Bank of Papua New Guinea. In the event that BCL / Rio Tinto pay the landowners an amount less than the minimum of K131,534,107.48 (or US$47,030,030.92) representing the model of audited investment returns by Rio Tinto compounded for the period, the difference may be taxable income and could trigger liabilities of compounding tax penalties assessed across the past 23 years. These possible taxes and penalties could be assessed both in Papua New Guinea and in Australia.