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Chinese redevelopment of Solomon Islands’ Gold Ridge mine dubbed ‘way over the top’

PHOTO: The Gold Ridge mine has a long and chequered history.

Key points:

  • The deal follows a month after the Solomon Islands switched diplomatic ties from Taiwan to Beijing
  • The Solomon Islands will not own the new infrastructure
  • The former Australian-listed company that owned the mine sold it to local landowners for $100 in 2015

ABC News | 30 October 2019

Chinese companies will build and control power and port facilities, roads, rail and bridges on an island within the Solomon Islands, as part of an $825 million deal to revive an abandoned gold mine, according to new contract details.

The gold project agreement, described by Chinese ambassador Xue Bing as an “early harvest” of the new diplomatic tie-up between Beijing and Honiara, gives Chinese interests an increased foothold in the Pacific, long under the influence of the United States and its allies.

While locals initially expressed fears the Gold Ridge mine deal would saddle the island nation with debt, those attending a weekend ceremony at the mine site were told the Solomons would not pay for the project infrastructure.

Nor will the country own the infrastructure.

A company majority-owned by Hong Kong-listed Wanguo International Mining, which has the project rights, will retain ownership of any project related-infrastructure, according to the project terms presented to attendees.

Wanguo has contracted state-owned China State Railway Group $825 million to complete the works over several phases.

The previous owner, Australian-listed St. Barbara, sold the mine for a nominal $100 to a landowner group in 2015, and that group went on to secure interest from Australian-based Chinese company AXF Resources, and then Wanguo.

Those attending the ceremony at the mine site, located about 30km south of Honiara, were told the large contract would involve a significant infrastructure component beyond the immediate mine site.

“Only China, proceeding from the friendship and wellbeing of the local people, is ready to overcome all obstacles to undertake this project by planning to build roads, bridges mining facilities and a hydropower station,” Mr Xue said, according to the recording.

A separate announcement from China Rail in September also said the contract included port work.

The infrastructure will be built in and around Honiara on the island of Guadalcanal, a strategic Pacific location that saw fierce fighting in World War II.

While the Solomons government, China Rail and the project operators have denied any political involvement in the mining deal, it was presented at the project ceremony as an example of what the new relationship between China and Solomons can deliver.

The agreement was announced in mid-September, coinciding with a decision by the Solomons Government to switch diplomatic ties from Taiwan to Beijing, angering the United States in the process.

“This is not only a new beginning of the Gold Ridge mine, but also a very important early harvest of the friendly cooperation between China and Solomon Islands which established diplomatic relations just 35 days ago,” said Mr Xue, who is the Chinese ambassador to Papua New Guinea.

Solomons landowners and politicians, Chinese officials, and representatives of China Rail and Wanguo were at the ceremony, said a source who attended.

Solomon representatives were repeatedly reassured the Pacific nation would not be subjected to a “debt-trap”, an allegation used against China by the United States.

Wanguo did not immediately respond to questions. The Solomons Government, which did not immediately respond to questions on Wednesday, has previously said it was a private sector deal and was not privy to the commercial arrangements.

Solomons opposition lawmaker Peter Kenilorea said the Gold Ridge agreement was opaque and its terms needed to be better explained.

The size of the contract has perplexed mining analysts, given past private operators have struggled to make the mine profitable.

Independent Australian-based mining analyst Peter Strachan said the agreement was “way over the top” for a relatively low-grade gold project with modest reserves.

“There has to be some back story on this,” said Mr Strachan, who has visited the Guadalcanal mine site.

The troubled Gold Ridge mine last operated in 2014, before severe floods halted production.

At its peak it was the source of 30 per cent of GDP in the Solomons, which is largely reliant on timber exports. Solomons GDP was at $1.4 billion last year, according to World Bank data, making it one of the world’s smallest economies.

The project owners have not released an anticipated date the project will restart.

Walton Naezon, chairman of the Gold Ridge landowner group, said the Gold Ridge deal was a commercial arrangement with no political input.

He said the project’s two other equity owners, Wanguo and AXF Resources, were raising $275 million to pay China Rail to bring the mine back into production.

“The balance is the second phase to be approved, which includes things like underground work,” Mr Naezon said, referring to the remainder of the $825 million contract.

“China Rail will bring their own machines. They will employ 70 per cent local labour and the rest will be their own staff.”

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Troubled Gold Mine Sold to Local Landowner Company for A$100 Relaunched in Solomon Islands

Photo: Flickr/Jenny Scott

Sputnik News | 27 October 2019

The troubled Gold Ridge mine in the Solomon Islands changed ownership multiple times over the years and was shut down by its last owner in 2015 after severe flash flooding.

The Gold Ridge goldmine in the Solomon Islands was officially relaunched Sunday in Central Guadalcanal, reports Radio New Zealand.

The mine which is currently the property of a local landowning company, Gold Ridge Community Investment Limited, is less than an hour’s drive from Honiara across the Guadalcanal Plains and has stood dormant for the past three years.

It is now being redeveloped by the Chinese miner Wanguo International working in partnership with Chinese owned Australian developer AXF Group and local landowners in Central Guadalcanal.

Speaking to RNZ Pacific earlier in the week, a spokesperson for Gold Ridge, Allen Wang, applauded the new contract for the reconstruction of the mine by the China Railway International Group, emphasizing he believed China Railway “had the mining experience, construction expertise and Pacific experience to make a great contribution to the development of a world class mine in Solomon Islands”.

The contract signed by Honiara and China Railways involves two major phases.

The first phase includes an exterior mountain-stripping project followed by the installation of interior mining equipment and facilities.
The second phase includes the construction of roads, bridges, and a nearby reservoir along with dock facilities and a hydropower station.

The mine on central Guadalcanal, south-east of the capital Honiara, began operation in 1998, and at the height of its production in 2012 accounted for 20 percent of the country’s entire gross domestic product.

However, a succession of foreign owners and intermittent periods of closure due to civil unrest and environmental problems left a troubled legacy.

After Cyclone Ita and torrential rain damaged infrastructure and forced the mine to shut down in 2014, its Australian owner, Santa Barbara, sold the venture and its legal liability a year later to Gold Ridge Community Investment Ltd, a local landowner company for AU$100.

Shortly after St Barbara sold the mine, the Solomon Islands Government declared it a disaster area when a tropical cyclone filled the dam to capacity.

On 12 September 2019, the mine signed a deal with China Railway Group Limited of China worth US$825 million to build and lease a railway system and mining service station.

China Railway International announced the deal on its website’s notice board on the date it was signed, with parent company China Railway Group announcing it on 16 September, the day the Solomon Islands and Taiwan officially broke ties.

The contract is to last until March 2034.

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Solomons’ gold mine to launch ‘world class’ redevelopment

Empty trucks at the Gold Ridge mine

Radio New Zealand | 23 October 2019 

A closed Solomon Islands’ gold mine is set to be officially relaunched this weekend.

The troubled Gold Ridge Mine, which has changed ownership multiple times over the years, has been closed since 2015.

It is now being redeveloped by the Chinese-owned Australian developer AXF Group in partnership with local landowners in Central Guadalcanal.

The full details of the reconstruction by the China Railway International Group is expected to be announced during a ground-breaking ceremony on Saturday, the Solomon Star reports.

Gold Ridge senior official, Allen Wang, said he believed China Railway had the mining experience, construction expertise and Pacific experience to make a great contribution to the development of a world class mine in Solomon Islands.

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Can the Solomon Islands’ Gold Ridge Mine serve as a new model for resource extraction in the South Pacific?

The coastline view near the capital, Honiara. Photo by Paul Hilton/Greenpeace.

Catherine Wilson | Mongabay | 15 November 2017

  • After 17 years of foreign ownership and a checkered environmental history, the Solomon Islands’ Gold Ridge mine is now being led by a local landowner-driven joint venture.
  • The company saw its first major test in April 2016, when rainfall triggered a spillover from the mine’s tailing dam. However, independent tests found the water quality downstream remained safe.
  • Though concerns still remain, the new ownership structure could be a model for mining operations elsewhere in the region.

In April 2016, thousands of villagers living in the vicinity of the Gold Ridge Mine in the southwest Pacific nation of the Solomon Islands braced themselves for a major disaster as torrential rainfall triggered a spillover of thousands of cubic meters of untreated water from the mine’s tailings dam.

The Ministry of Health issued instructions to people to cease using water from the nearby Kwara, Tinahula and Matepono rivers for drinking, washing or fishing, due to possible risk of chemical contamination.

The gold mine is situated on the country’s main island of Guadalcanal, 40 kilometers (25 miles) from the capital, Honiara.

Stanley Holmes Vutiande, who lives in Navola village, located along the Gold Ridge Road leading to the mine and 2 kilometers (1.2 miles) from the dam, remembered when it happened.

“We fled because there was water overflowing from the dam and we thought it might burst, so people just panicked and took off,” he recounted. “There was general information to look for safety, for higher ground, but no specific instructions as to what to do.”

Joe Horokou, the environment and conservation director at the Ministry of Environment, said the incident “was bad because it took us by surprise,” even though the company had been given approval to discharge tailings from the dam. “The approval was given with conditions like before it is discharged the water has to be treated to acceptable standards.”

Despite the dire warning, the expected disaster didn’t materialize. The dam held, and stakeholders, including Gold Ridge Mining and the ministries of environment and health, commissioned numerous independent tests of nearby rivers and streams.

“Based on the findings of those analyses we were able to determine that, even if the water was discharged untreated at the time, it caused no immediate harm to the downstream communities … the water quality was safe within the dam,” Horokou said.

Vutiande also said that, at the time, he noticed nothing of concern in the water quality of the Tinahula River near Navola.

A palm oil plantation in the Solomon Islands. The land used to be grassland and bush. Photo by Lorette Dorreboom/Greenpeace.

The incident was the first major test for the new landowner-led company, Gold Ridge Community Investment, which had taken ownership of the mine only the year before. After 17 years of foreign ownership and a checkered environmental history, the Gold Ridge mine is now being led by a local landowner-driven joint venture that is emerging as a potential new mine management model in the Pacific Islands region.

In 2015, Gold Ridge was sold for 100 million Australian dollars ($73.8 million at the time) to Gold Ridge Community Investment (now Gold Ridge Mining), by its Australian owner, St. Barbara. The company decided to abandon the mine, which contains an estimated 3.18 million ounces of gold, in the wake of extensive damage caused by Cyclone Ita and flooding the previous year.

The mine hasn’t been operational since, but following the signing of an agreement with Australia-based AXF Resources, which will provide the majority of investment, plans are now in place to resume extraction by the end of next year.

Walton Naezon, chairman of the landowner-led Gold Ridge Mining, said he is now keen to both reduce any risk the tailings facility poses to the surrounding environment and communities, and to increase public transparency of the company’s environmental processes. The top priority, he said, is dewatering, or emptying out the dam to ease pressure on its wall and decrease the chance of any further overflows.

Naezon spoke to Mongabay about implementing his vision of an extractive project where local communities are part of the corporate structure. About 3,000 to 5,000 people live in villages surrounding the mine, and traditional landowners own 30 percent of the company. They have already participated in making key decisions, such as the selection of an independent environmental consultant. They also observe operations at the tailings dam and take part in the company’s environmental testing and monitoring of nearby rivers and streams.

Larger than life in a blue Pacific print shirt, Naezon is bullish in his drive and optimism about the enterprise when we meet in a Honiara hotel. But he also comes across as astute, widely informed about the industry and its issues, and attuned to the sensibility and needs of his own people. No doubt this is a product of his previous career in politics, as well as skills and grasp of the cultural context as a traditional leader. He was minister of mining and energy from 1997 to 2001, minister for state government until 2003, and minister for commerce for another two years.

Naezon is visibly relaxed about the attention given the mining industry worldwide by what he refers to as the “greens” movement, commenting that it “makes the developer and company stronger.”

The revived Gold Ridge venture, at this stage, comes across as more than ticking the right boxes in order to be assessed a responsible corporate citizen. There is evidence of an attitudinal shift, a genuine motivation to alter the structure of power, participation and accountability.

The Gold Ridge Mine tailings dam in Guadalcanal Province, Solomon Islands. Photo by Catherine Wilson for Mongabay.

Community Involvement

As I stood in the water treatment plant at the edge of the vast blue expanse of the dam, reflecting the brilliant tropical sun, Gaheris Porowai, the supervisor, readily answered questions. He said that we were looking at 1 million to 2 million cubic meters (264 million to 528 million gallons) of water, with the water level currently 1.5 meters (5 feet) below the spillway. Treated water was being discharged, as permitted, at 500 cubic meters (132,086 gallons) per hour or 12,000 cubic meters (3.17 million gallons) per day, with water testing conducted twice weekly.

This will be done persistently, Naezon said, until the dam is empty.

“There should be no water there. In the next two years, no water, we don’t want to see water there,” Naezon said emphatically, adding that Golder Associates, the company responsible for the dam’s construction has also been reengaged to review its current state and potential future.

Phil Fairweather, Gold Ridge’s general manager, said that he and many other people had been attracted to the venture by the vision of building an enterprise on greater transparency, community inclusion and social and environmental sustainability.

“Any dewatering that is happening at the moment, for example, involves the communities,” Fairweather said. “It actually involves unqualified community people coming and observing the testing, coming and being involved in community awareness prior to any discharge and during.”

Local village chiefs, landowners and students are all invited to visit the tailings dam to learn about the water treatment process and witness its discharge.

“We want to see the mine open, but the health and safety and environmental responsibility is an utmost priority to us,” said Robert Rafaniello, the company’s deputy CEO. “And that is why as we lower the water, we will do more investigations into the stability of the dam, assess it. Does it need any strengthening to future-proof it for any other unknown event? Do we use the tailings dam in its current form, do we look at alternatives?”

Tropical forest, Vella Lavella, Solomon Islands. Forests cover more than three quarters of the country’s land area, but illegal logging remains a serious problem. Photo by Lorette Dorreboom/Greenpeace.

In hindsight, the lack of continuity in the mine’s foreign corporate ownership since the late 1990s — and intermittent periods of closure resulting in inconsistent environmental practices — can be seen as factors in the problems being experienced today.

The start of mining in 1998, by the Australian company Ross Mining, coincided with the stirrings of civil unrest. The mine was forced to close a mere two years later when the violence escalated. While a peace agreement was achieved in 2003, Gold Ridge didn’t reopen until 2010 after acquisition by Allied Gold. The venture changed hands again in 2012, this time to St. Barbara. Then, in April 2014, calamity struck when a cyclone and torrential rain caused massive flooding that damaged mine infrastructure, raising concerns about the stability of the tailings dam and forcing a second shutdown. Losses and damages at the mine amounted to $27.7 million, 26 percent of the total economic impact of the disaster on the country.

Soon after, St. Barbara decided to exit the country, selling the mine and its legal liability to Gold Ridge Community Investment the following year, while the Solomon Islands government declared the site a disaster zone.

A model for the region?

The Solomon Islands is not the only Pacific Island state to experience environmental problems in the mining industry.

Natural and mineral resource extraction has, over decades, generated major revenues in a number of other countries in the region, such as Papua New Guinea and Nauru, while many more are now considering the lucrative potential of deep-sea mineral extraction. But in both island states the extractive industries have been plagued by environmental disasters. Both have failed to achieve environmental sustainability, and the economic windfalls have not led to substantial improvements in human development.

Glaring examples include the Panguna copper mine in Bougainville, Papua New Guinea, where the fallout from the destruction of land and waterways nearly 30 years ago remains unaddressed; as well as the OK Tedi copper and gold mine in the country’s Western Province, where massive discharge of mine waste into local river systems since the mid-1980s decimated fish and animal species and contaminated water sources and farmland. In the tiny state of Nauru, aggressive phosphate extraction has ravaged 80 percent of the country’s landscape.

In the Solomon Islands, the government is looking to mining as the next big revenue earner as it faces the challenges of post-conflict economic recovery and the exhaustion of commercial forestry after decades of unsustainable logging. The country is known to have significant mineral resources, including gold, silver, nickel and lead.

“The Gold Ridge mine reopening is very important for the government and Solomon Islands as it contributes significantly to the economy,” a spokesperson for the Ministry of Mines, Energy and Rural Electrification told Mongabay.

Nevertheless, the economic, social and environmental success of mining ventures over the next generation depends on not repeating the problems of the past.

A 2013 UNDP symposium on managing extractive industries in Pacific Island states highlighted some of the steps needed to overcome the hurdles. These include conducting better consultations with stakeholders and communities, developing a more complex understanding of customary land tenure, improving the transparency of political processes and revenue management, and achieving greater commitment to environmental protection, over and above the basic requirement of developers producing environmental impact assessments.

Expert observers have also expressed concerns about the influence of corruption and limited capacity of the government to manage the demands of regulating and overseeing mining activities.

Logging road in a deforested area in Vangunu Island. Photo by Paul Hilton/Greenpeace.

“Too close an identification of political leaders with resource extraction companies has not served Solomon Islands well,” Graham Baines of the Bergen Pacific Studies Research Group has written (pdf). “The chance to build an economy based on sustainable timber production has been lost. And just as government institutions have been shown to be ineffective in controlling logging abuses, so, too, their role in guiding and controlling mining is weak and compromised.”

Recently the government has tried to address some of these issues with the launch of a new National Minerals Policy (2017-2021). It aims to guide reformed financial practices, industry oversight, and procedures for tailings management, corporate environmental audits, biodiversity management and the mitigation of deforestation and soil erosion.

“With the policy now launched, the ministry is working closely with the World Bank to begin implementing the policy, and this process is already under way, focusing mainly on the regulatory framework,” the Ministry of Mines spokesperson confirmed. This includes reviewing resource and manpower capacity and rolling out public outreach and awareness of the new policy.

Progress in these areas is vital to turning around the suspension of the Solomon Islands by the Extractive Industries Transparency Initiative (EITI), which in March of this year sanctioned the country due to assessed deficiencies in areas including licensing procedures, monitoring and control of production, and revenue distribution.

The revival of the Gold Ridge mine will bear witness to how much progress the government has been able to make in the short term.

In May, the government and company began consultations with landowners about the mine’s proposed reopening next year, seeking to address issues such as royalties and environmental impact.

There is evidence, though, that not everyone is satisfied and local environmental concerns persist.

Vutiande said that in Navola, “the water system was always a long-term concern since the opening [of the mine] by the previous companies. The water issue is an ongoing issue. There were a few times when there were people who found things that have died in the river, such as fish and frogs.”

Despite the company’s stated commitment to transparency, Gold Ridge Mining remains tight-lipped while it considers the range of options for dealing with mine waste. The decision as to whether the dam will continue to be used is still to be made, and the government is still awaiting the environmental management plan.

The contents of these will be the first step in translating the new Gold Ridge vision into reality and establishing, or debunking, its standing as a model for the rest of the region.

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Gold Ridge to restart within 18 months

Solomon Star | 11 August 2017

AXF Gold Ridge Pty Ltd of Australia says it has secured additional investor funding to start the immediate recommissioning of the Gold Ridge Mine Project.

“This investment will see mine production on track to start within 18 months,” a statement issued by the company on Wednesday stated.

“In an unprecedented partnership arrangement, Gold Ridge Community Investment Ltd (GCIL), which comprised the local land owners, owns 10% of Gold Ridge Mining Limited,” the statement added.

AXF Gold Ridge holds the balance of 90%.

The statement said additional capital and technical expertise from the Hong Kong publicly listed new shareholder Wanguo International Mining Group strengthens AXF Gold Ridge.

“New capital will help the Gold Ridge Mine Project reach its full potential.

“Wanguo International Mining Group led by Mingqing Gao has provided technical expertise to the Gold Ridge Mine Project for the past year.

“The strength of the partnership between landowners and AXF Resources, combined with the support from the government, has given Wanguo the confidence to commit as an investor to this project.”

Gold Ridge Mine’s principal landowners and community leaders confirmed their continued full support and commitment to the project during consultation.

Landowners agreed that by working together, the recommissioned Gold Ridge Mine would achieve new heights (Yu mi tugeda bae mekem Gold Ridge mine waka gud).

Richard Gu, Managing Director of the AXF Group and Director of AXF Gold Ridge Pty Limited, said:

“I feel humbled and proud that the project has reached this stage.

“I look forward to a long and fruitful development partnership with Gold Ridge Mine landowners, our investor, and the people and government of the Solomon Islands”.

Senior executives from AXF Gold Ridge including Chairman-elect Mingqing Gao, Richard Gu, and Dr Shaun Ren visited the Solomon Islands this week to celebrate the milestone with landowners and government officials.

At a meeting with Prime Minister Manasseh Sogavare, chairman-elect Mr Gao reinforced:

“The reopening of the Gold Ridge Mine will send a strong message to the investment community that the Solomon Islands is open for responsible and transparent mining business”.

Over the next 18 months, the come said the Gold Ridge mine site will undergo a complete refurbishment with infrastructure upgrades to improve site access and the construction of a new power station.

“An independent review of the tailings storage facility will be commissioned to minimise risk to local communities.

“Community relations activities will ramp up with one of the priorities the establishment of socially inclusive engagement mechanisms with landowners and local communities.”

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Solomons landowners discuss concerns on reopening gold mine

The over-full tailings dam facility at the Gold Ridge Gold Mine on Guadalcanal in Solomon Islands in January 2015. Photo: copyright Dr Matthew Allen – ANU

Landowners on Guadalcanal in Solomon Islands have been consulted about the proposed reopening of the Gold Ridge gold mine.

The mine was closed in 2014 after massive floods and its ownership was then transferred from the Australian owner St Barbara to a local land-owning company Guadalcanal Community Investments Ltd.

Guadalcanal Community Investments Ltd is now working with Chinese-owned Australian property developer AXF Group which plans to have the mine operational by the end of 2018.

Bringing the gold mine back to life is also a major policy objective of the government which says it wants to do it right.

Members of landowning communities discussed a range of issues with government officials and company representatives relating to royalties, security, environmental impact, revenue sharing and the relocation of people.

They were assured by both the government and the company that their concerns would be taken onboard and addressed to ensure a smooth reopening.

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Solomon Islands govt signs agreement to restore mining lease

The over-full tailings dam facility at the Gold Ridge Gold Mine on Guadalcanal in Solomon Islands in January 2015. Photo:  Dr Matthew Allen – ANU

Radio NZ | 9 March 2017

The Solomon Islands government has withdrawn last year’s cancellation of the mining licence for Gold Ridge Mining Ltd.

This effectively restarts efforts by landowners and the new majority shareholder, Chinese-owned Australian property developer AXF Group, to re-open the Guadalcanal mine.

In a statement the chairman of the cabinet sub-committee on Gold Ridge said the minister cancelled the mining lease because he felt the previous owner St Barbara’s sudden departure breach of the Mines and Minerals Act, and the Mining Agreement.

The miner’s departure from Gold Ridge followed complications around flash floods in April 2014, which compromised the mine’s tailings dam and impeded access to the mine.

St Barbara however, has repeatedly denied abandoning the mine.

It stands by its transfer of ownership, via the sale at a nominal amount, to local landowning company Gold Ridge Community Investments Ltd.

The Australian miner also denied claims by GCIL following the sale that it had saddled the local landowner company with all the environmental liability of the closed mine.

Following the signing of the agreement with government to restore the mining licence, GCIL’s chairperson, Walton Naezon, said landowners would be working closely with their chosen investor and the government to restore the mine to profitability.

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