Sharon Masige | Australian Mining | August 17, 2016
The apparent postcard perfect paradise of Bougainville and its history is wrought with conflict, bloodshed, and constant appeals for autonomy, with the Panguna mine linked inextricably within it.
Under Germany’s rule in the 1880s, Bougainville was annexed from the Solomon Islands with whom they shared strong cultural, historical, and geographical ties. After being embroiled in both WW1 and WW2, it was placed under Australian authority and later relinquished to administration by Papua New Guinea (PNG).
Bougainville repeatedly attempted secession from PNG – such as a failed independence attempt in 1975 – before PNG agreed to offer it limited autonomy; the island becoming one of its provinces and adopting the title Autonomous Bougainville Government (ABG).
Copper was discovered on the island by Australian geologists in the 1960s, with prospecting undertaken by Bougainville Copper Limited (BCL) – a joint venture between Conzinc Rio Tinto and Broken Hill Corporation – in 1963. This led to the eventual development of the Panguna mine which began production in 1972, and soon became one of the world’s largest open cut mines.
During its 17 year life, the mine produced three million tonnes of copper, 784 tonnes of silver, and 306 tonnes of gold. During 1980 it had approximately 4000 employees, a third of them native Bougainvilleans, while around 200 local businesses also relied on BCL, with nearly half of their employees from Bougainville.
In regards to the operation itself, nearly 54 per cent of the BCL joint venture was owned by Rio Tinto, 27 per cent by the Bougainvilleans, and 19 per cent by the PNG Government; the mine also accounted for close to half of PNG’s exports.
However, despite nearly a third of mine’s ownership held locally it exacerbated the underlying tensions relating to autonomy and failed secession attempts to breaking point.
The native Bougainvilleans felt disempowered in decisions relating to their environment and resources, claimed insufficient payment of royalties to traditional landowners, as well as wages, rent, and compensation disparities.
These issues intensified resentment towards both PNG and BCL.
In a recent address to the ABG’s House of Representatives, Bougainville president John Momis – quoting figures from former BCL managing director Paul Quodling – said during the mine’s operations, PNG received 61.46 per cent of the total revenue, compared to the North Solomon Islands on behalf of the Bougainvillians, who received 4.28 per cent and mine lease owners just 1.37 per cent.
The uneven financial distribution from the mine sparked a violent backlash by the Bougainville Revolutionary Army (BRA) militant group that led to the mine’s closure and nearly a decade of civil war between PNG and ABG, during which some reports claim more than 20,000 lives were lost.
“The mine was closed as a result of action by landowners, mine workers, and people from adjacent areas,” Momis said.
Arson, sabotage, property and equipment damage, as well as attacks on individuals ensued, forced the mine to shut down in 1989.
“They wanted BCL and the National Government [PNG] to negotiate a new basis for mining – one that would be much fairer for both landowners and the rest of Bougainville. They had no intention to close the mine permanently.”
However, it has remained closed ever since.
Momis added that now, landowners of the mine’s lease areas are left with issues which were caused by the tailings, deterioration of chemical storage areas, as well as associated environmental issues from the mine’s operation.
The future direction
Now an already in doubt mine’s future is even set to become even more clouded.
Earlier this year Rio Tinto decided to divest its 53.8 per cent share in BCL to its joint venture partners, saying it would allow Bougainville residents to have more input into decisions regarding Panguna.
The shares will be given to Equity Trustees to manage its distribution between ABG and PNG.
If the transfer is complete, both ABG and PNG will have an equal share of 36.4 per cent in BCL, which the company says “ensures both parties are equally involved in any consideration and decision-making around the future of the Panguna mine”.
Chris Salisbury, Rio Tinto Copper & Coal chief executive, said,
“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.”
Luke Fletcher, director of Jubilee Australia Research Centre, an organisation that promotes the human rights of groups affected by the actions of Australian companies or governments, told Australian Mining Rio’s exit has created instability on the island.
“The fact that some Rio shares have been handed over to the PNG Government has also added a destabilising factor to the whole situation because now PNG potentially has an influential role in Bougainville’s future, if the decision is taken to reopen the mine.”
He added that Rio should not have sold its shares without addressing the environmental obligations in conjunction with BCL.
“We also believe that Rio has washed their hands of the role in the conflict; as the controlling interest in BCL, they bear responsibility for BCL’s actions in helping bring the country into a civil war. They have never acknowledged this, and now that they have sold their shares, there is even less chance than before that they ever will,” Fletcher said.
President Momis called for all the shares to be given to ABG and for Rio to address its environmental obligations.
“First, we must unite in demanding that the whole of the Rio 53.8 per cent shareholding in BCL be transferred to the ABG,” he said.
“Second, we must unite in developing the strongest possible international campaign to apply all necessary pressure on Rio Tinto to accept its mine legacy issues such as the needs of relocated villages.”
He said it was “grossly unjust” and “completely unacceptable” for Rio to negate responsibility and added that PNG should also contribute to remediating environmental issues caused by mining.
When asked whether the ‘obligations’ Rio had to complete following their exit included environmental costs, a Rio Tinto spokesperson told Australian Mining, “ABG and PNG are keen on recommencing the operations. It will depend on what they decide.”
“In accordance with our existing management agreement with BCL, we have given the required six months’ notice to the BCL board. We will continue to meet our obligations during that period to ensure an orderly handover of the management of the company,” he added.
One lingering possibility is to reopen the Panguna mine, which Momis says could aid with the clean up efforts.
“Re-opening Panguna is generally recognised as the best way to achieve not only a clean-up of Panguna and the tailings, but also to fund economic development for the Panguna and tailings areas, and to provide the funding needed for Bougainville to have either real autonomy or independence,” he said.
Fletcher supported the notion of Bougainvilleans should make their own decisions over the future of the mine.
“It has always been our position that the people of Bougainville must decide what sort of development path they want: one based on exploiting its mineral resources, including the Panguna mine, or one based on developing other industries like agriculture and fisheries,” he said.
“However, to make that choice, it is important that the people of Bougainville be fully informed about the implications of choosing one path or the other–clearly that has not happened yet. All the talk is that Bougainville needs Panguna to be financially solvent, although this is not self-evident.”
With the mine’s future still in limbo, and the island expected to hold another referendum on secession from PNG by 2019, it seems Bougainville’s battles will continue for a few years yet.