So, a company destroys a pristine ecosystem, helps to trigger a war, aids troops murdering civilians, and then abandons their investment without admitting liability or offering remedy – how would you describe this?
The Evening Standard went with the following headline ‘Rio Tinto gives golden gift of rights to Papua New Guinea mine worth $51bn’.
Their strong journalistic grasp of the issues, is demonstrated in the article’s opening line: ‘the Bougainville mine is in Pangua, Papua New Guinea’ – you read that right, Pangua!
Less acceptable was Bougainville News who went with a similar headline: ‘Rio Tinto gives up Bougainville Copper stake worth $51 billion’.
Evidently this is the value of the remaining deposit in the Panguna region.
Of course no Auditors worth their salt would say Rio Tinto has given away $51 billion. Why? Because Rio Tinto does not have any legal right to extract the ore body, thats the first reason. Second, there is little chance any investor could reopen the mine, given strong local opposition, sovereign risk and other commercial challenges.
Third, and perhaps most significantly, no one is able to coherently measure BCL’s liabilities. Were landowners and victims able to organise a successful legal action, damages would be approx $4bn, at a modest guess. This is far in excess of the actual value of Rio Tinto’s ‘golden’ gift, which is valued at $92.5m.
Rio Tinto may have just handed the PNG and Bougainville governments a grenade with the pin out. Not so golden after all.