Australian real estate investor circles Solomons ‘disaster’ gold mine

Children play in the Tinahulu River downstream from the Gold Ridge mine. (Stefan Armbruster SBS)

Children play in the Tinahulu River downstream from the Gold Ridge mine. (Stefan Armbruster SBS)

The Solomon Islands environment ministry has condemned the ‘immoral’ behaviour of an Australian miner for selling an abandoned gold mine to traditional landowners for A$100.

Stefan Armbruster | SBS World News| 3 September 2016

In the latest twist of the saga involving the troubled, 20-year-old operation, Chinese-Australian property developer AXF is now preparing to buy the mine. Sixteen months after the sale of Gold Ridge, the country is struggling to deal with its toxic tailings dam and is considering legal action.

St Barbara last year sold the site, with all legal liability, to a local traditional landowner company, Gold Ridge Community Investment Limited (GCIL).

The government declared the tailings dam a ‘disaster’ zone shortly afterwards over fears it would overflow, possibly undermining the dam wall, and cause a collapse releasing millions of tonnes of toxic sludge.

Earlier this year after heavy weather, the tailings dam full of sediments containing high levels of arsenic and cyanide, overflowed for the first time, sending millions of litres of untreated water into the local river systems.

Thousands of subsistence farming villagers live along the Tinahulu river and use it to wash, fish, cook, drink and swim.

“We are so worried because if the mining operations come again, we don’t know what is going to happen,” said John Kera, chief of New Rere village downstream from the dam.

However, the river diluted the tailings water and tests showed contamination was below World Health Organisation thresholds.

“Our immediate focus is on securing the tailings storage facility, knowing full well what the impacts would be on the downstream people,” said Dr Melchior Metaki, permanent secretary of the Department of Environment.

“The major pollutants (in the dam), arsenic and cyanide, are really high.”

The Solomons government is now relying on help from the UNDP, funded by the Australian government, to assess what the landowners have bought from St Barbara.

“Knowing full well the recipient (GCIL) doesn’t have requisite capacity and resources to adequately manage the tailings storage facility, in my view it’s not morally correct to do. It’s not morally right to do that,” said Dr Metaki.

“Common sense tells me it would not be accepted in Australia.

“Of course, legal recourse is something we’d need to be advised on how to properly take that forward.”

He added the landowners also bear some blame as: “it takes two people to put it down on paper”.

St Barbara in a statement said it: “does not comment on baseless speculation”, adding the “Solomon Islands Government was aware of the sale process and the sale outcome”.

“Many of the shareholders and directors of GCIL had personal associations with and concerns for the success of the Gold Ridge Project since it was first established in the mid-1990’s, with the GCIL chairman (Walton Naezon) being a former Minister of Mines and Energy.

Gold Ridge tailings dam spills untreated water in April 2016. (Stefan Armbruster SBS)

Gold Ridge tailings dam spills untreated water in April 2016. (Stefan Armbruster SBS)

“St Barbara has no liabilities or commitments in relation to Gold Ridge.”

St Barbara sold up after a year-long dispute with the Solomon Islands government that prevented dewatering of the full tailings dam.

Heavy flash flooding in 2014 shut the site down and it was looted until Australian Federal Police were flown in to protect the mine.

St Barbara lost about $300m while operating the mine and its share price jumped on news of the sale.

The Gold Ridge landowners say they have no regrets buying the mine.

“It’s time that my people had some ownership over the project,” said Walton Neazon.

“We took the liability on from St Barbara with the confidence we can handle this liability.”

“We have dewatered untreated water during height of bad weather at the beginning of this year (but) we have dewatered 1.3 million cubic meters of treated water,” Mr Neazon said describing it as being like “mineral water”.

The water level in the dam is now about two meters below the spillway.

At the height of the tailings spill, the health department issued a press release warning people not to use the river water and added, “finally if the dam wall breaks, there may be a risk of drowning or injury due to the increase water flow”.

The Australian-funded UNDP study will test the dam wall and “look at contingency planning should there be an extreme case,” said Mr Mataki.

“We cannot say it is safe because there hasn’t really been any structural integrity assessment done on the dam wall itself.”

Abandoned Gold Ridge mine processing plant. (Stefan Armbruster SBS)

Abandoned Gold Ridge mine processing plant. (Stefan Armbruster SBS)

As the Solomon Islands grapples with this man-made ‘disaster’, Gold Ridge landowners have been negotiating to sell the mine to a subsidiary of major Chinese-Australian property developer AFX, headed by Richard Gu.

“We had people in Australia check AFX, and we checked ourselves. Yes, we know it’s a property developer,” said Walton Naezon.

“AXF, regardless of their lack of knowledge of the mining industry, we want to partner with them because they’ve got the money to redevelop the mine.”

Landowners hope to sell a 90 per cent stake for an undisclosed amount.

The three-year-old AXF Resources has limited investments in gold and oil shale projects in Western Australia, New South Wales and Queensland.

Managing director Dr Shaung Ren has decades of experience in the mining industry and heads up a small team.

“We are working with consultants and other industry experts, some who have previous experience at Gold Ridge, to complete due diligence work with a view to repair, refurbish and upgrade the Gold Ridge plant to bring it back in to operation,” he said in a statement.

The sale has not been completed and conditions include “that the historic legal liability is either fixed or stays with the original owner”.

“Although this is the responsibility of the original owner, AXF has extended a credit facility to fund the management and operation of the water treatment plant to reduce water levels in the tailings storage facility.”

The department of environment’s ‘disaster’ declaration still stands and no mining can commence until it is lifted.

“This is a man-made, potential disaster, a new type of risk for us,” said Dr Metaki.

“The order made by the minister has not been lifted yet. Until we are satisfied that the measures that are in place can really reduce the risks associate with tailings storage facility, the minister will not be able to lift that state of disaster.”

There is no official estimate for the clean-up cost or remediation of the site.

“We will have to look at people who caused it in the first place,” Dr Metaki said.

“It is something the government cannot do because of the resource implications it has and because there has been negligence along the way.”


Filed under Environmental impact, Solomon Islands

3 responses to “Australian real estate investor circles Solomons ‘disaster’ gold mine

  1. Pingback: Australian real estate investor circles Solomons ‘disaster’ gold mine — Papua New Guinea Mine Watch – Jakeman's 10-20

  2. Pingback: St Barbara considers dividend payment | Papua New Guinea Mine Watch

  3. Pingback: St Barbara and PNG Industry News airbrush history | Papua New Guinea Mine Watch

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