Monthly Archives: January 2020

The Horse Breeder, the Novelist and the $60 Billion Panguna Mine

Panguna. RNZ/Johnny Blades.

Aaron Clark | Bloomberg News | January 27, 2020

John Kuhns has been many things: an investment banker, a silicon smelter operator in China and a novelist. His sights are now set on an abandoned mine with an estimated $60 billion of gold and copper.

Kuhns is among a handful of people exploring for minerals and courting landowners on the Pacific island of Bougainville. His rivals include an Arabian-horse breeder, a hedge fund investment manager who keeps wallabies on his estate and a former Australian defense minister.

The involvement of such an eclectic mix of entrepreneurs is a reflection of the fact that this is no ordinary mineral reserve. Rio Tinto Group operated the Paguna mine for 17 years through subsidiary Bougainville Copper Ltd. The global mining behemoth shut it in 1989 as local protests over mine revenue degenerated into a civil war that killed as many as 20,000 people.

The mine has been in limbo ever since. But that may be about to change as the Autonomous Region of Bougainville moves toward independence from Papua New Guinea after a referendum showed an overwhelming majority of the population on the small group of islands wants to establish a new nation.

While the political uncertainty may deter major mining companies from making an immediate investment, the mine’s riches attract entrepreneurs hoping to develop the asset to a point where they can deliver it to a big operator for a fee, said Peter O’Connor, a Sydney-based analyst at Shaw and Partners Ltd. “They have to create a story with a vision,” he said.

Success will depend on earning the trust of thousands of poor, customary landholders, many of whom remember the civil war that was triggered by communities demanding greater compensation from the mine.

“The landowners want to reopen the mine but they are divided by the interested developers,” said Sam Akoitai, a member of the island’s parliament who represents central Bougainville, an area that includes Panguna. “It’s really up to the landowners to come together to understand that the land belongs to the clan and not to some individuals.”

Bougainville Copper, which is no longer associated with Rio, has estimated it would take seven to eight years and $5 billion to $6 billion to rebuild the mine and resume full operations. The company is blamed by many locals for contamination attributed to the mine.

“We retain strong levels of support among customary landowners within the project area,” Bougainville Copper said in a statement. “We have a trusted local team on the ground that continues to engage with project area communities.”

The Bougainville Mining Act 2015 strengthened landowner control and was designed to increase compensation to local communities and the island’s government from future mining to avoid a repeat of the bloodshed of the 1980s and 1990s. The government also decided not to renew Bougainville Copper’s exploration license, which the company is challenging in court.

In June 2019, Kuhns flew several landowners to the U.S. to meet potential investors, including representatives from Barrick Gold Corp. At the Harvard Club in Midtown Manhattan, where stuffed moose, bison and even an elephant head adorn the rooms, the landowners heard Kuhns deliver a PowerPoint presentation introducing potential investors to Bougainville.

Barrick declined to comment.

“Panguna mine can be rejuvenated and can be resuscitated for a couple of billion dollars,” said Kuhns in a follow up phone interview. “It’s going to take a major to do that.”

Among those also interested in Panguna is Jeff McGlinn, who made his fortune in mining and construction services through Western Australia-based NRW Holdings Ltd., which he co-founded. McGlinn, who resigned from NRW in 2010, is part of the glamorous world of Arabian horse breeding, mixing with models and celebrities at parties on the French Riviera and promoting luxury brands. He once gave an Arabian colt to Italian opera singer Andrea Bocelli.

McGlinn’s roots in mining give him valuable experience for Panguna — one of NRW’s businesses was constructing dams that hold mining waste. He’s also linked to a recent effort by the island’s government to kick start development, when it created Bougainville Advance Mining. The government’s Executive Council proposed last year an amendment to the 2015 mining act that would give all available mining rights to the new company, in which McGlinn’s Caballus Mining would hold a stake.

That amendment drew criticism from landowners, as well as Bougainville Copper, the former mine operator, which says the proposal undermines its rights to mine Panguna. The bill was later shelved. A representative of Caballus said McGlinn was unavailable to comment.

Another interested party is Richard Hains, son of the Australian billionaire David Hains. Richard, famous for keeping wallabies on his Gloucestershire estate, has helped develop mines in some of the world’s most difficult places. He’s the largest shareholder of RTG Mining Inc., whose management team has financed, built and operated mines across Africa and Asia, including the Boroo gold mine in Mongolia.

“Some of the best opportunities in the mining business in the 21st century are now in the more difficult commercial environments,” Hains said in a phone interview.

RTG believes it can restart production at Panguna through a staged process in as little as 18 months for about $800 million.

“It’s far smarter to start with a smaller footprint,” said RTG Chairman Michael Carrick. “Then in consultation with the community, we can turn up the mine’s operation.”

RTG operates a joint venture with the Special Mining Lease Osikaiyang Landowners Association, a Panguna landowners group. The JV employs 15 people, including Philip Miriori, the chairman of the landowners group.

There are bigger fish too. Fortescue Metals Group Ltd. said in an emailed statement it has sent representatives to Bougainville to learn about the region and potential opportunities, confirming earlier reports. Founder Andrew Forrest is Australia’s second-richest person with a $10.2 billion fortune, according to the Bloomberg Billionaires Index.

Shaw and Partners’ O’Connor said Chinese miners may also have a chance of redeveloping Panguna because they have a greater risk appetite and access to cheap financing.

But the Panguna landowners group Chairman Miriori said the people he represents aren’t interested in working with Chinese developers because of their poor environmental track record.

If anyone wins the right to develop Panguna or other parts of the autonomous region they will need to do so cautiously. Violence remains a constant threat in a community that is still fiercely divided.

A geologist working for Perth-based Kalia Ltd. was killed and seven others were injured in an attack in northern Bougainville in December, according to the local government and the company, whose chairman is former Australia Minister for Defence David Johnston. Authorities subsequently suspended Kalia’s exploration expeditions and geological field work.

There’s also a moratorium on work at Panguna because of sensitivity to restarting the mine, said Raymond Masono, Bougainville’s vice president and minister for mineral and energy resources.

“We are no longer talking with any investors about Panguna until the moratorium is lifted, and we don’t know when” that will be, he said by phone. “The government is treading very carefully on this particular mine.”

But prospects for restarting Panguna and allowing for the development of new mines are bolstered by the idea that Bougainville would need revenue to have any chance of financing an independent state. Many hope the mineral wealth could ultimately help reduce poverty for the region’s 300,000 people where estimated per capita GDP is only about $1,100.

That would depend not only on clearing the way to restart production, but a government able to make sure that enough of the proceeds are used to fund development. “Given the failure of mining in PNG to deliver really anything like sustainable development, those hopes may end up being disappointed,” said Luke Fletcher, executive director of Jubilee Australia, a group that has tracked the effect of resource extraction.

But the lure of riches mean miners aren’t likely to give up.

“Bougainville had almost no exploration for nearly 40 years,” said Mike Johnston, executive director of Kalia. “There’s no other place like it on the planet.”

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Woodlark MP Lashes Out At MRA

Construction work has already started for the Woodlark gold mine. Image: Geopacific Resources.

‘We do not want to repeat the same mistake we did for Misima mine which is just a few kilometers away….’

Post Courier | January 27, 2020

Samarai Murua MP Isi Henry Leonard has hit out at the Mineral Resources Authority (MRA) for acting independently on matters relating to an upcoming mine on Woodlark Island in Milne Bay Province.

Mr Leonard told a media conference last week that MRA had failed to consult provincial and district authorities, LLG and landowners in its dealing with this mining prospect.

Queries raised by the Post-Courier with the MRA were not answered but the MP was reportedly told through his office that mining activities would start following a mining lease awarded six years ago.

The MP’s office also understood that MRA officers flew to Alotau last Thursday to have a meeting with provincial and district authorities.
However, this did not go down well with Mr Leonard who reminded MRA that he represented the people of Woodlark Island and his office should be consulted.

“Even the current company wants to start to with the construction phase prior to a mining lease awarded six years ago, relevant government authorities on the ground should be aware of such intentions and plans,” the MP said.

He said that the mining lease as described by MRA should provide mining development plans, a memorandum of agreement (MOA) between all stakeholders, environmental plan, waste disposal plan, relocation plan for locals living around the vicinity and mining closer plan amongst others.

Mr Leonard said considerable efforts should be undertaken by the MRA for the good of the national, provincial and local level governments and its people.

“We (Samarai Murua) do not want to repeat the same mistake we did for Misima mine which is in the same electorate and just a few kilometers away. We want a MOA and this MOA should be reviewed every four or five years to ensure compliancy and also a mine closure plan should be in place,” the MP said.

He said those were some of the fundamental aspects that Misima Mine failed to capture and the legacy is inflicted on the lives of the people, adding that this was a ‘reminder’ not to be repeated.

Mr Leonard said MRA should communicate with relevant government authorities on the ground and should refrain from directing decisions from Konedabu in Port Moresby.

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Communities & Civil Society Call for Action to Prevent More Mine Waste Disasters on First Anniversary of Deadly Brazilian Spill

A member of a rescue team walks next to a collapsed tailings dam owned by Brazilian mining company Vale SA, in Brumadinho, Brazil February 13, 2019. REUTERS/Washington Alves

January 23 2020

Communities and civil society groups are marking the first anniversary of one of the world’s deadliest mine waste disasters by highlighting the dangerous practices of the mining industry, and calling for stricter oversight.

On January 25th, 2019, the Córrego do Feijão iron mine tailings dam in Brazil collapsed, killing 270 people, obliterating the community of Brumadinho, and inundating the Paraopeba River watershed with 12 million cubic meters of mining waste.  The mine is owned by Vale, the third largest mining company in the world, and a member of the mining industry trade association, the International Council on Mining and Metals (ICMM). 

Sadly, this was not an isolated event. The World Mine Tailings Failures Database documents the increasing number and severity of tailings dam disasters since 1915. Brumadinho was the third major collapse since 2014, including the catastrophic Samarco failure in Brazil, also owned by Vale.   

Maria Teresa Corujo, an activist from the mineral rich Minas Gerais region of Brazil and member of the #JaneiroMarrom (#BrownJanuary) campaign said,

“We in Minas Gerais are facing hundreds of ticking ‘time bombs,’ the tailings dams that are not being properly dealt with by those who have the power and responsibility to do so. The ‘solutions’ we’ve been given are unacceptable, such as training thousands of people to ‘self-rescue’ while mining companies continue to operate unsafe waste dams and expand their operations.”

Seven Vale executives and six safety auditors have been charged with covering up reports the Brumadinho structure was unsafe. This week, Brazilian prosecutors filed homicide charges against the former CEO of Vale and 15 other employees and auditors. 

“In Brazil, society is still waiting for a proper response from regulatory agencies and Congress to increase accountability for mining companies. Social movements demand that the government fix legal loopholes, such as the lack of financial assurance for compensation and reclamation, and allowing mining companies to choose their own auditing firms”, said Bruno Milanez, Associate Professor at Juiz de Fora Federal University (Minas Gerais), and member of the National Committee in Defense of Territories Against Mining in Brazil.

Industry and government have failed to take meaningful steps to prevent tailings disasters. In April 2019, investors controlling $10 trillion demanded that global mining companies disclose their tailings dam failure risks – the first time investors have demanded accountability of the mining industry on this scale. Investor intervention led to the creation of the Global Tailings Review, co-convened by the United Nations Environment Programme (UNEP), the Principles for Responsible Investment (PRI) and ICMM. Several civil society organizations have been critical of its limited scope and the recommendations presented in the draft standard.

“We’ve learned from Mount Polley, Brumadinho, and the many tailings disasters before them to know that tinkering on the margins isn’t going to prevent future catastrophes,” said Payal Sampat, Earthworks’ Mining Program Director.

“Safety must be the primary priority for mining operations around the world, and the rules for safer mining cannot be written or self-policed by mining companies.”

“If we’ve learned anything from this tragedy, it’s that there must be rigorous technical standards, enforced by an independent global body. The Global Tailings Review must lead to the establishment of such a body, and it must require top-level corporate accountability for disasters, whistleblower protections, independent oversight and safer practices such as dry storage of mine waste and a ban on upstream dams,” said Jamie Kneen of MiningWatch Canada.

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Bougainville president accuses mining company of lying to Australian stock exchange

Bougainville’s Panguna mine, for which RTG Mining is seeking an exploration licence.

John Momis says his government ‘will not rest’ until Australian-linked miner seeking licence for Panguna mine is banned for life from Bougainville and PNG

Kate Lyons | The Guardian | 24 January 2020

The president of the autonomous Bougainville government has accused an Australian-linked mining company of lying to the Australian Securities Exchange over its plans to reopen one of the world’s largest copper mines.

In a scathing statement, John Momis, the president of the autonomous Bougainville region, accused the Australian-linked RTG Mining of “lies and deceptions” and said his government “will not rest until all RTG and their executives are banned for life from Bougainville and Papua New Guinea”.

Momis was referring to a statement issued by RTG Mining to the ASX on Tuesday in which the company sought to clarify recent press reports, which have alleged that RTG staff are banned from entering Papua New Guinea.

In December, after the results of a referendum that saw almost 98% of Bougainvilleans vote in favour of independence from PNG, Momis issued a warning banning people affiliated with certain foreign mining companies, including six from RTG and one from Kalia Group, from entering Bougainville. Momis said they were creating “disharmony” in the region and that he had sought the assistance of the PNG prime minister and office of immigration and border security to assist with keeping them out of Bougainville.

However, RTG clarified in its statement to the ASX that its executives were “not banned from travel to Papua New Guinea” and emphasised that “the national government currently [have] constitutional authority over border control for the country”.

RTG is seeking to secure an exploration licence at the Panguna mine in Bougainville. The Panguna mine was at the heart of the brutal civil war in the region that saw an estimated 20,000 people killed between 1988 and 1997. The mine, which once provided 45% of Papua New Guinea’s export income, has been mothballed since the conflict began, but there has been talk about reopening it.

Among the companies in talks about resuming mining in Bougainville are RTG, which is listed on the Canadian and Australian stock exchanges, ASX-listed Kalia, Bougainville Copper Limited, a former subsidiary of Rio Tinto that ran the Panguna mine in the 1970s and 1980s, and Caballus Mining.

Andrew “Twiggy” Forrest has also expressed interest in mining in Bougainville, with the Sydney Morning Herald reporting that representatives of his mining company, Fortescue, travelled there in 2019 to explore “potential opportunities”.

There are disputes over land rights at the Panguna mine site, but RTG is the joint venture partner of the Special Mining Lease Osikaiyang Landowners Association (SMLOLA). RTG wrote in their statement to the ASX that the members of the SMLOLA “are the customary landowners who own the minerals at the Panguna Mine under the Bougainville Mining Act”.

However, Momis said the SMLOLA was established under an old system and that the autonomous Bougainville government considered its claims over the mine “illegal, null and void”.

There are concerns that disputes over land rights at the mine site might reignite tensions in the region. The Bougainville government enacted an indefinite moratorium on renewing the licence of BCL, a controversial mining company, in January 2018 over fears it could reignite violent civil conflict. However, since then, the government has shown signs that it was in favour of restarting mining in the region.

Despite voting for independence from PNG, the question of how an independent Bougainville would support itself hangs over the vote, with some experts saying it is impossible for Bougainville to become financially independent without a strong mining industry and that it would take much longer for other mining projects to be established and become profitable than it would take to reopen Panguna.

The autonomous Bougainville government and RTG Mining were contacted for comment.

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Brazil files homicide charges against Vale ex-CEO, 15 others in deadly 2019 dam collapse

Rescue operations underway in the wake of Vale’s Brumadinho dam collapse

Brazil prosecutions a stark contrast to the lack of corporate culpability in Papua New Guinea for a series of ‘world class’ environmental disasters and thousands of preventable deaths from river pollution…

Ana Paula Blower and Siobhán O’Grady | Washington Post | January 21, 2020

Prosecutors on Tuesday filed homicide charges against Fabio Schvartsman, the former CEO of the Brazilian mining conglomerate Vale, and 15 other people in the deadly dam collapse last year that killed at least 249 people.

The Minas Gerais state prosecutor’s office said it was bringing homicide and environmental charges against 11 people who worked for Vale and five who worked for the German safety-certification company TUV SUD. The companies will also face environmental charges.

The prosecutor’s office said the charges followed a nearly year-long investigation that concluded the dam posed a critical safety risk since at least 2017, and the situation worsened in 2018. In a statement, prosecutors accused Vale of hiding information related to the safety of the dams “from the government and society, including investors and shareholders of the company.”

They said investigators determined the alleged crimes were carried out in a way “that made it impossible or difficult for the victims to defend themselves — since the dam burst occurred abruptly and violently.”

In a statement, Vale said Tuesday that it would cooperate fully with authorities but “believes the accusations of fraud are perplexing.”

“It is important to note that other authorities are investigating the case and, at this point, it is premature to claim there was conscious assumption of risk to cause a deliberate breach of the dam,” the statement said.

Schvartsman’s lawyers said the charges against him were “hasty and unfair,” and should not have been determined before federal police finish their investigation.

Attorneys Pierpaolo Cruz Bottini, Mauricio Campos and Paulo Freitas said in a statement that Schvartsman took repeated measures to ensure dam safety at Vale, and opened an immediate investigation when the dam burst last year. They said authorities ignored documents submitted for the investigation that show the problems at the dam were not relayed to Schvartsman’s office.

“Those responsible must be held responsible for their actions,” the lawyers said. “But the attempt to punish those who, since the first hour, fulfilled their duty and stood by the authorities to investigate what happened and repair the damage, is unjust and regrettable.”

Vale and TUV SUD have faced scrutiny since the 280-foot tailings dam in the Minas Gerais municipality of Brumadinho collapsed last January, unleashing nearly 2 million cubic meters of toxic waste onto the mine’s offices and a nearby community. Torrents of mud swept away hundreds of people; some are still missing.

Schvartsman has been on leave since March. “Even totally assured of my righteous ways and having fulfilled my duty,” he wrote to company directors at the time, “I request the board to accept my temporary leave in the benefit of the company’s continued operations.”

TUV SUD said Tuesday it is “deeply affected” by the disaster, and “is still very much interested in clarifying the facts of the dam breach and therefore continues to offer its cooperation to the responsible authorities and institutions in Brazil and Germany in the context of the ongoing investigations.”

The company declined to offer further details Tuesday, citing “ongoing legal and official proceedings.”

Waste from the collapse on Jan. 25, 2019, blanketed miles of vegetation. Firefighters uncovered a bus carrying employees in the wreckage. All on board were dead.

Iara Murta, 58, fled her home with her two sisters. Speaking to The Washington Post in the aftermath, she said saw bodies and livestock stuck in the river of mud and mining runoff.

“It’s like watching the worst horror film,” she said.

In July, a Brazilian judge ordered Vale to cover all costs related to the dam’s collapse. Vale, based in Rio de Janeiro, said it would pay families more than $100 million.

Last year’s dam collapse shed light on the dangers of tailings dams, prompting reviews of other locations in Brazil where dams could be at risk for similar types of collapse.

A different Vale-operated dam burst in Minas Gerais in 2015, killing 19 people and displacing hundreds. After last year’s collapse, former environmental minister Marina Silva tweeted that “History is repeating itself,” and that “the government and the mining companies have learned nothing.”

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PNG New Ireland Deputy Governor Tells Social Media Mining Critics : Get Smart or Get Screwed

Pacific Mining Watch

 Papua New Guinea’s Deputy Governor of New Ireland, Sammy Missen, said today that it is actually amusing to see all the talk on social media about the failure of politicians to take action to make the mining sector work better, to the benefit of the people of the country.

Mr. Missen said “I find it amusing, because all these people are just missing the point. If they are so concerned about making changes in the Mining Act, then they should start supporting those who really want to make changes rather than just complaining all the time.”

The Deputy Governor said that there is one politician in the country who is serious about making the Mining Sector work to the advantage of the people. “That person is Sir Julius Chan. Sir Julius has been saying for more than ten years that the Mining Act should be changed. He has been saying that the current Mining Act takes huge wealth from the landowners and only gives them a few toea in return. Sir J says that the landowners should get automatic ownership in any mine. Landowners should never have to buy shares in a mine – they should get shares free, automatically. The gold and the copper and the nickel is in OUR ground.”

And, Mr. Missen said, “Sir J says that any company that wants to come in an operate a mine should be able to do so, but they will just be contractors. The owners of the mine will be the owners of the land – the State, the Province or the landowners, whoever owns the land where the mine is operating. And the benefits to the landowners will go up by five times from what they are now. Em tasol.”

Mr. Missen said that Sir Julius has been trying to make these changes in the Mining Act for years. “Almost three years ago Sir J introduced a Private Member’s Bill to Parliament to Revise the Mining Act. But the O’Neill Government did not act. And when the Marape Government came to power one of the first things it did was to invite a New Ireland Team to sit down with him and explain how the Mining Act should be revised. The Prime Minister said he would support those changes, but so far nothing has been done.”

Mr. Missen said criticism of the Mining Minister, the Hon. Johnson Tuke, is misplaced. “Minister Tuke fully supports the changes Sir Julius has proposed,” he said. “He supports giving ownership of the mines to the people who own the land, increasing royalties for the people and increasing all benefits coming from mining. But he can do nothing without the support of the Prime Minister.”

“And that is what people should understand,” said the Deputy Governor. “They should stop criticising everyone, and realise who their friends are. They should realise that they have an ally in Sir Julius. They have an ally in Minister Tuke. What the people need to do is to Get Smart. The need to telephone their MPs email their MPs, go on social media and tell their MPs they demand that they support the changes Sir Julius wants to make. The people need to make some NOISE! They need to demand a Revised Mining Act that will make the people rich from the wealth that is coming from THEIR ground.”

“And if their MPs do not listen to them,” Mr. Missen said, “if their MPs do not support giving the people a much larger share of the benefits, then the people need to make it very clear that those MPs will not get their votes in the next election. That is the only thing politicians understand. The People must tell their MPs one thing – if you refuse to support changes to the Mining Law that will benefit us, then you will no longer represent us. Em tasol!”

“And that,” Mr. Missen concluded, “is what people should be doing. They need to Get Smart. They need to realise who their friends are, and support them. If people just continue to moan and groan and refuse to work together, all our mines will end up just big holes in the ground, and all the wealth from them will be sitting in foreign bank accounts!”

In closing, the Deputy Governor said, “I can tell you one thing for sure. If we don’t Get Smart, we will surely Get Screwed!”

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PNG Petroleum Minister Kua brushes aside claims of Threats on Gas Project

NBC News | 23 January 2020

Papua New Guinea Petroleum Minister Kerenga Kua has brushed aside claims of threats to close gas projects in Western Province.

This follows, Governor, Taboi Awi Yoto and North Fly MP, James Donald claims, the State Negotiating Team has poorly negotiated for the province and the landowners over the P’nyang Gas Project’ with the developer in Singapore last week.

The leaders have threatened the government to close P’nyang and Stanley LNG Projects before the close of business this Friday until the Oil and Gas Act is amended.

In his response, Minister Kua says constitutional law allows all minerals and petroleum is owned by the State and not by provinces and landowners.

He said only the State is empowered to commercialise these resources, and no other entity is by law empowered to do this.

Mr. Kua said leaders at all levels are entitled to express their views on issues related to resource project negotiations but State will make the final decision.

The Petroleum Minister urges leaders to remain calm as P’nyang Ministerial Committee is always on hand to discuss any discontentment.

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