“ Prime Minister, the reasons for your decision on the equity suggest that you believe that you know better than the ABG about Bougainville’s mining policy needs. You substitute your views for ours. Yet under the Bougainville Peace Agreement, responsibility for Bougainville mining policy has been transferred, so that these are now matters solely for the ABG.”
Bougainville News | 24 August 2016
Letter from Bougainville President to PM of PNG
Dear Prime Minister,
I refer to your Government’s decision to allocate the 17.4 per cent equity in BCL (recently received from Rio Tinto) to ‘Panguna landowners and the people of Bougainville’. The decision must be rejected by the Autonomous Bougainville Government (the ABG).
You are reported as telling the Parliament on Thursday 18 August 2016 that you:
- ‘deliberately’ decided that the ABG should not be majority shareholder in BCL,
- ‘wanted a separate vehicle that the landowners can meaningfully and directly participate in BCL’, and
- do ‘not believe’ that the 5 per cent interest for landowners in mining operating companies provided under the Bougainville Mining is ‘sufficient enough to compensate some of the suffering the people of Bougainville had’.
Prime Minister, the reasons for your decision on the equity suggest that you believe that you know better than the ABG about Bougainville’s mining policy needs. You substitute your views for ours. Yet under the Bougainville Peace Agreement, responsibility for Bougainville mining policy has been transferred, so that these are now matters solely for the ABG.
We have given careful attention to mining policy. We give landowners veto power over ABG grant of mining licences, giving them real and direct involvement in decision-making. They must be satisfied with conditions and benefits before a project proceeds. A minority 17.4 per cent BCL equity that you propose will not give them any control over decision-making.
ABG policy also guarantees landowners 5% free equity in any mining operating company. If Panguna does re-open, that will be worth much more than 17.4% in the current BCL. Because re-opening will cost about K20 billion, a new developer will definitely be needed. The new capital requirements would then dilute all present BCL equity shares to tiny percentages. So 17.4 per cent in the existing BCL will only make landowners etc. minority shareholders in a company now worth very little.
By comparison, our Act guarantees they will have valuable equity in the fully funded project, if it re-opens. Our act also guarantees separate 1.25 per cent royalty shares each for: 1) mine lease landowners; 2) projects for those landowners; 3) adjacent landowners; and 4) infrastructure development for Bougainville generally.
It also guarantees landowner preference in mine employment and business opportunities. So our law offers very real financial benefits especially to landowners, but also to all Bougainvilleans.
The ABG believes that you are making ill-informed decisions about a complex situation that you clearly do not understand, and which do not bring real benefits to landowners. The decisions undermine autonomy, and are bad for Bougainville.
As the government of all Bougainvilleans, the ABG needs majority BCL shareholding to give it clear decision-making authority about Panguna in the interests of all Bougainvilleans, both landowners and others.
Bougainvilleans ask why you interfere in our mining policy. Do you fear that ABG control of Panguna could provide the revenue needed for Bougainville independence? In fact, no one knows if the agreed process under the Peace Agreement will lead to independence. More important, interfering in mining issues only causes deep anger in Bougainville. That is likely to cause increased support for independence. The only way you can now reduce support for independence is to work in cooperation with the ABG to make people see that autonomy really meets the needs of Bougainville. Supporting our mining policy is an essential start.
The ABG cannot allow your bad decisions to stand. I now offer you a final opportunity to resolve this issue. I request you to direct transfer of the 17.4 per cent to the ABG.
If you refuse to do so, the ABG must use other means to keep clear control of decisions on Panguna. In particular, we will cancel BCL’s exploration licence under the Bougainville Mining Act (notice to show cause why it should not be cancelled has already been given to BCL). We will then seek a new developer by inviting tenders using powers under our Mining Act.
That licence is BCL’s major asset. So cancellation would probably make all BCL shares almost worthless, including the 19.2% BCL equity PNG has held since 1972. Until now the ABG has been open to PNG retaining that equity. If Panguna re-opens, the National Government could then keep equity involvement. But if interference in ABG control of mining continues, we have no choice but to cancel the licence and completely end PNG involvement in Panguna.
That will not reduce landowner involvement in decisions about Panguna, or their sharing fairly in revenue, for the Bougainville Mining Act ensures their full involvement in both.
I await your response.
John L. Momis