PNG transfers remaining BCL shares

Carmella Gware | Loop PNG | March 13, 2020

The PNG Government has fully transferred its entire 36.4 percent share in the Bougainville Copper Ltd to the Autonomous Bougainville Government.

This was one of the resolutions reached during the first, and possibly the final, post-referendum Joint Supervisory Body meeting held on Thursday, the 12th of March, at Port Moresby’s APEC Haus.

It was the first Joint Supervisory Body, or JSB, meeting to be held since the referendum last year. It is also the last JSB as its name has been changed to Joint Consultative Body, and this body will continue to provide oversight to the post referendum consultation processes.

During the JSB, teams from the PNG and Autonomous Bougainville governments, including President John Momis and Prime Minister James Marape, sat together to decide a future for Bougainville.

The sixth out of the 13 agendas discussed and passed included the transfer of Bougainville Copper Ltd shares.

The JSB noted that in 2017, the National Executive Council made a decision for the National Government to transfer 17.4 percent from its 36.4 percent shares to the landowners of Panguna. Following that, on the 13th of December, 2019, at the joint announcement of the Bougainville Referendum results, Prime Minister Marape further announced that the National Government will transfer to ABG its remaining 19 percent of the BCL shares.

“This JSB affirmed that the entire shares of Bougainville Copper be passed to Bougainville Mining Ltd – the Bougainville Government and Bougainville people’s subsidiary company,” the PM, flanked by the ABG President and members of their technical teams, told media after a full day of meeting.

Rio Tinto and the ABG both own 36.4 percent each while public shareholders hold the remaining portion of the share capital.

Apart from BCL shares, the PNG Government has made it clear that the constitutional Restoration and Development Grant (RDG) will be given to support the budget on Bougainville while the National Planning Ministry has been directed to clearly define the K100 million commitment and report back in the next Joint Consultative Body meeting this year.

The JSB has also acknowledged and accepted the democratic choice of the Bougainville people for Independence.

Advertisement

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.”

Bougainville voted yes to becoming the world’s newest nation. Now begins the gold rush

PHOTO: The people of Bougainville voted overwhelmingly in favour of independence. (ABC)

Natalie Whiting | ABC News | December 14 2019

A ceremony to announce the results of Bougainville’s historic referendum opened with a chorus of the Bougainville anthem. When the overwhelming result for independence was handed down, people spontaneously started singing it again.

It was a clear sign of the separate identity that Bougainvilleans have long maintained. The thumping result for splitting from PNG was an even clearer sign.

But the path to potential nationhood remains complex and far from guaranteed, despite the mandate from an almost 98 per cent vote of support offers.

The end of the referendum not only starts another political process, but it will also turn eyes back to a massive open-cut mine that has been sitting, waiting in the mountains since the 1980s.

PHOTO: The Panguna mine hasn’t produced a pound of metal in 30 years.

As Bougainville looks for a way forward politically, it also needs to look at economic options.

That’s something Papua New Guinea is keen for it to focus on as it grapples with how to respond to the vote.

PNG is known as the land of a thousand tribes and many in the Government are worried about keeping the rest of the country united if Bougainville leaves.

PNG Prime Minister James Marape has offered economic control but stopped well short of committing to independence for Bougainville.

Economically, the most obvious income stream for the resource-rich area is mining, but that would involve revisiting the issues that started the bloody conflict in the region.

Landowners at the site of the Panguna gold and copper mine, where the violence first broke out, say they are ready to see it reopen in the wake of the referendum.

Up to 20,000 people died in the secessionist conflict that followed, before the peace agreement which guaranteed the vote brought it to an end.

PHOTO: A small settlement has been built at the bottom of the Panguna mine. (ABC News: Natalie Whiting)

Several companies are already circling, keen to make a move now that the vote is over.

Whether they have the capital and the ability to reopen it peacefully remains to be seen.

PNG Prime Minister offers Bougainville economic control

PHOTO: PNG’s Prime Minister James Marape was welcomed at the airport with a guard of honour from police and a traditional sing sing group. (ABC News: Natalie Whiting)

As the referendum ballots were being counted in Bougainville’s capital Buka, speculation about the movements of Mr Marape were swirling.

Initial indications that Mr Marape would be coming to Buka for the announcement were replaced by rumours of him instead going to Panguna in the days after the result.

In the end his visit was moved to the town of Arawa, near the mine. But Panguna and building Bougainville’s economy featured throughout his speech.

Thousands of people gathered in the middle of town to hear him speak. The people even wanted to carry him to the stage on a specially built chair, an offer he graciously refused.

PHOTO: Thousands turned out to hear Mr Marape speak in Arawa during his first visit after the referendum. (ABC News: Natalie Whiting)

Mr Marape has been seen as being more supportive of the referendum than previous leaders, but PNG has nevertheless made no secret of the fact it wants Bougainville to remain a part of the country.

The independence vote is non-binding, and amid the celebrations of the result, PNG has been quick to remind people that years of discussions between the two parties will follow and a negotiated outcome will then be presented to PNG’s parliament.

In the lead-up to the referendum, Mr Marape had been discussing a “third option” beyond independence and greater autonomy which the people were asked to choose between — what he called “economic independence”.

His speech was in a similar vein, focussing on economic development and self-determination, but avoiding mention of independence.

He presented a cheque worth 50 million kina ($21 million), promised another 100 million kina ($42 million) next year and control over income generated in Bougainville, including tax powers.

“The only thing I will ask you, is that I will look after the border and both of our flags must fly until we reach the conclusion of this process,” he told the crowd.

Certainly, Bougainville is currently in no position to support itself and the call to focus on building the economy is warranted. But Mr Marape wouldn’t be drawn on whether he could envisage independence for Bougainville.

“That’s something for the future. I can’t pre-empt the outcome of the consultations that will take place,” he told the ABC.

PHOTO: Bougainville President John Momis heads to the polls on referendum day. (ABC News: Natalie Whiting)

After such a comprehensive vote, there may be little appetite in Bougainville to accept something less than full independence.

But for the moment his speech was well received by the crowd, and Bougainville’s President is confident of productive discussions going forward.

The greatest expectation from Bougainvilleans after the referendum is for change — people want improved services and infrastructure. Both governments will need to make that a priority and it will require funding.

Landowners split over who should reopen mine

PHOTO: The disused mine has divided locals, some of whom have blocked access to the site over the years. (ABC News: Eric Tlozek)

In the base of the massive open pit of the Panguna gold and copper mine, a small settlement has been built and people work digging up gold that remains buried there.

It’s thought there is still $84 billion worth of copper and gold in the site, but re-establishing operations would likely take a decade and billions of dollars.

Keeping the mine closed has been seen as part of maintaining peace ahead of the referendum.

PHOTO: People dig for gold at the base of the Panguna gold and copper mine. (ABC News: Natalie Whiting)

The local landowners now largely want to see it open, however, a split is already forming over which company should be brought in.

The most prominent landowner group is backing Australian company RTG, but there is another group of landowners who want to see the original company, Bougainville Copper Limited, brought back. The Bougainville Government has supported a third company, Caballus, which is also Australian.

That, combined with the ongoing political discussions, could create an uncertain investment landscape.

Mr Marape has said the PNG Government’s 39 per cent stake in Bougainville Copper Limited will be given to Bougainville, but he urged people to look at other industries as well, like agriculture.

It’s not just Panguna that has been attracting attention — landowners say they’ve received visits from other companies, some from Australia and some from China, interested in looking at other greenfield sites in the region.

Australia could face difficult diplomatic waters

The current geopolitical climate in the pacific — where China and the west are seen to be in a battle for influence — has thrown another filter on the vote.

Much has been made of possible offers from China to help Bougainville develop if it is a fledgling country.

However, Bougainville President John Momis has said there have been no offers from the Chinese Government and it was unclear if money being offered by companies, including some said to be interested in Panguna, would actually materialise.

PHOTO: The Panguna gold and copper mine sparked a war that killed 20,000 people. (Reuters: Trevor Hammond)

He said: “These are complex issues, which we’re not going to deal with right away.”

The geopolitical and diplomatic complexities of either a new nation in the region, or of a disagreement between PNG and Bougainville during the upcoming negotiations, is undeniable.

Nowhere will that be felt more keenly than in Australia, which is a key financial and development supporter of both.

Already a key former combatant from the crisis is calling for the international community to “ask PNG to accept the reality and let Bougainville go”.

PNG’s Bougainville Affairs Minister Sir Puka Temu has urged the international community “not to interfere in the consultation phase”.

“What we want is to achieve an outcome like what we did 18 years ago, that is a joint creation — the Bougainville Peace Agreement was a joint creation,” he said.

In a statement, Australia’s Foreign Minister has passed on congratulations for the vote and says Australia “looks forward to continued productive engagement” between the two governments.

PHOTO: Flags were proudly flown around the region when the people of Bougainville overwhelmingly voted yes to independence. (Reuters: Melvin Levongo)

But as the cobalt blue of Bougainville’s flags flickers from buildings and cars across the region in the wake of the vote, credit must be given to both it and PNG for almost 20 years of peace and an incredibly well-run referendum.

Hopefully, the next phase will be as successful.

An independent Bougainville could mean Panguna’s rebirth, a mine with a Grasberg scale potential

BCL via International Mining | 11 December 2019

Talk to any Australasian mining manager “over a certain age” and it is likely they or one of their compatriots from mining school spent some halcyon days working at the Panguna copper-gold mine in Bougainville, which in its heyday was one of the largest mines in the world, and on paper still is in terms of potential. Tales of high salaries, escapades during time off in Rabaul…you get the picture. After the deposit was discovered in the 1960s, the open pit mine in Panguna was opened by in 1972 by Bougainville Copper Ltd, a subsidiary of Rio Tinto, through its Melbourne arm Conzinc Rio Tinto, opened in 1972, with Rio only selling its BCL stake in 2016.

Back to the 1970s and Panguna soon provided 44% of Papua New Guinea’s export income and in the 17 years prior to 1989, the mine produced concentrate containing 3 Mt of copper, 306 t of gold and 784 t of silver. But it all came to an end in 1989 when production abruptly halted following separatist militant activity by the Bougainville Revolutionary Army fighting against the PNG army, mainly over issues caused by a large influx of PNG migrants that did not sit well with Bougainvillians.

And much of the equipment is still there, overgrown by tropical jungle and unused. Bougainville Copper also trained some 12,000 employees, including approximately 1,000 completing full trade apprenticeships and some 400 completing graduate and post-graduate studies that resulted in considerable progress in the localisation of the company’s employees and significantly added to the number of skilled workers elsewhere in the country’s workforce.  

On 1 July 2016, BCL’s major shareholder, Rio Tinto, transferred its 53.8% shareholding for distribution to the Autonomous Bougainville Government, for the benefit of Panguna landowners and the people of Bougainville, and to the Independent State of Papua New Guinea. 

Fast forward to December 2019 and an independence vote by the people of Bougainville (98% in favour) means the likelihood of Panguna mine returning to production, and joining the likes of Grasberg, Lihir, Porgera and OK Tedi in the region’s hugely important mining industry, have just got much higher. The referendum was approved by the Papua New Guinea government, but the result is non-binding. That said, it puts a lot of international pressure on PNG to grant Bougainville independence. The islands have a population of around 300,000, and 206,731 people enrolled to vote in the referendum.

Panguna is the single obvious route to a vast and relatively quick revenue source for any new sovereign nation of Bougainville. BCL is already majority owned by the people of PNG and Bougainville. And it would come at a good time mining wise, as it would be in a position to use the latest technologies available to maximise productivity and efficiency from automation to digitalisation, though this would have to be balanced with supplying large numbers of badly needed skilled jobs in the country. And of course the mine could support a vast industry of other businesses that come with mining from catering to cleaning to logistics to accommodation, which all where possible should be locally owned.

BCL’s task has been made more challenging with a decision in January 2018 by the Autonomous Bougainville Government not to grant an extension of the company’s exploration licence (EL1) – which Bougainville Copper believes was legally and procedurally flawed. This decision is subject to an ongoing Judicial Review in the PNG National Court.

Regardless, the company believes BCL presents the best value proposition to redevelop Panguna – particularly given the strong majority ownership stake that the people of PNG and Bougainville have in the company – and continues to work towards this eventuality.

‘The revolution is ongoing’: Bougainville to revive radical mining proposal

Heavy trucks sit rusting on the edges of Panguna copper mine, closed in 1989 as a result of sabotage. CREDIT: FRIEDRICH STARK / ALAMY STOCK PHOTO

* Bougainville mining proposal to go before parliament in December

* Plan gives a 60% share of mines to Bougainville

* Bougainville is currently voting on independence from PNG

* Proposal was shelved ahead of independence referendum (Adds BCL share price, quotes, context)

Jonathan Barrett | Reuters | 28 November 2019

Bougainville Vice President Raymond Masono said he will revive a plan to overhaul the region’s mining laws after its ongoing independence referendum, which could strip the former operator of the Panguna gold and copper project of its interests.

The proposed changes, which have been criticised by Panguna landowners, would also erase an interest in the project held by the Papua New Guinea government, potentially complicating negotiations between the two governments after the referendum.

Under the proposed mining law amendments, Bougainville would take a 60% share in all projects and retain all mining licences, leaving a 40% share that investors can bid for.

“Panguna is the most likely project that can bankroll Bougainville’s independence from Papua New Guinea,” Masono, who is also Bougainville’s mining minister, told Reuters by telephone from the town of Buka.

“They don’t own the licence and the mine, we own it – they come on our terms. The revolution is ongoing.”

He said companies like former Panguna operator Bougainville Copper Ltd (BCL), which counts the PNG government as a major shareholder and claims exploration rights at Panguna, would not get “special treatment”.

“They can only come in through the new framework. If they have money they can invest as will other investors.”

BCL declined to comment. The PNG government did not immediately respond to a request for comment.

Masono said he would push for the plan to go through Bougainville’s parliament in December, after it was shelved in the lead-up to the referendum amid a backlash from some landowners and government members.

Once the economic engine room of PNG, Bougainville has fallen to the bottom of almost every financial indicator, despite boasting mineral riches, fertile volcanic soil and stunning geography.

The autonomous region is now grappling over how best to re-establish a mining industry while maintaining peace, 20 years after the last shots were fired in a bloody conflict between Bougainville rebel fighters and PNG forces, killing 20,000 people.

As part of the peace agreement, Bougainville is holding a non-binding vote on independence that ends on Dec. 7, with the results to go before the PNG parliament and be subject to negotiation.

BCL is one of at least two companies, alongside a group including explorer RTG Mining Inc , that claims the rights to develop Panguna, with the dispute currently being tested in the PNG courts.

BCL shares had been on a bull run since the start of last week, rising almost five-fold to hit A$0.49 on Nov. 26, underpinned by positive sentiment flowing out of the independence vote.

BCL shares have since retreated to trade just under A$0.30 on Thursday.

Another Australian company, Kalia Ltd, is exploring for gold and copper on land located northwest of Panguna.

The mining law amendments, which have previously been backed by Bougainville President John Momis, were put on hold before the referendum amid concerns that landowner rights would be eroded, with control over assets being handed to the Bougainville government.

“It is totally unacceptable to be trying to steal Panguna from the customary owners,” Panguna landowner, Lawrence Daveona, said in a statement in June.

A Bougainville parliamentary committee was also heavily critical of the proposed changes, and noted that there had been a lack of consultation.

The High-Stakes Race For Bougainville’s Copper And Gold

Satellite imagery of the Panguna Mine located in the autonomous region of Bougainville in Papua New Gunea. GETTY IMAGES

Tim Treadgold | Forbes | November 27 2019

Fat profits are being made by speculators confident they can beat a Chinese takeover of one of the world’s great copper and gold deposits on the Pacific island of Bougainville even though it hasn’t produced a pound of metal in 30 years.

The once fabulous Panguna mine was closed in 1989 during a civil war which pitted locals, fighting as the Bougainville Revolutionary Army, against troops of the government of Papua New Guinea which claimed control of the island.

An estimated 20,000 people died from the fighting and disease in what ranks as the worst conflict in the South Pacific since World War Two.

An uneasy truce in 2001 formally ended the conflict but Bougainvilleans have continued to push for independence which is being tested in a two-question referendum which started this week and will end on December 7 with voters being asked whether they want complete independence or just greater autonomy from Papua New Guinea.

Strategic Location In The Pacific

Strategically placed to the north-east of Australia, Bougainville commands a large area of the South Pacific Ocean and is seen as a perfect location for China to extend its influence in the region.

The island’s population has closer demographic connections with the Solomon Islands than Papua New Guinea with a culture clash one of the civil war causes.

Another contentious point which help trigger the war was the Panguna mine operated by a subsidiary company of the Anglo-Australian mining giant, Rio Tinto.

In its peak years between 1972 and 1989, Panguna was producing an average of 175,000 tons of copper a year and 18 tons of gold, but the mining and ore-processing methods at the time where not environmentally friendly with heavily-polluted water running off the mine site.

Unfortunately for local residents Panguna was a critically important asset for the Papua New Guinea government accounting for an estimated 44% of national income, which is one reason why the government fought hard to keep the mine operating, a task which proved to be impossible in a war zone.

The promise of independence has sparked interest in the abandoned mine which is estimated to still contain one billion tonnes of ore, an attractive target but one which will be hard to mine, and even harder to process.

High Cost Of Restarting

The first challenge will be the need to mine a large amount of ore annually to compensate for the low grade of the raw material. A second challenge will be spending an estimated $5 billion on a new processing plant because the original has rusted away in Bougainville’s tropical weather.

But the cost of restarting Panguna might be worth it because a “gold equivalent” calculation, which is the combination of the value of copper and gold in the ore, produces a world-class estimate of 45.3 million ounces of gold equivalent (a mix of copper and gold).

Papua New Guinea soldiers guard the Panguna mine. January 26, 1990. (Photo by Miller/Fairfax Media)

It’s the large amount of unmined copper and gold which explains the race which has developed among rival companies seeking permission to redevelop Panguna with companies from Australia and China leading the way.

Interest in the mothballed mine reached a high point yesterday when two were asked by regulators from the Australian Stock Exchange why their share prices had risen rapidly over the past two weeks.

Shares On Fire

Bougainville Copper, a company in which the local government (known as the Autonomous Bougainville Government) has a 36.4% stake is up 200% over the past three weeks with a rise from 6.5 cents to 20c — though at one stage on Tuesday the stock hit a 10-year high of 33c, triggering an exchange “speeding” inquiry.

RTG Mining, another Australian-listed hopeful in the race for Panguna, also received a speeding inquiry when its shares rose by 37.5% to 7.5c. RTG has secured a development agreement over the mine with a local land owners association.

There is a long way to go before Panguna can be redeveloped, if at all, given the history of conflict and fractious nature of the local politics.

The result of the referendum will be a first step in the mine re-start process. Choosing a company acceptable to all Bougainvilleans to do the job will be next, followed by funding and then proving that the mine can operate profitably and in an environmentally acceptable way.

Landowners ‘Ready To Reopen Panguna Mine’

Panguna landowners showing clearly which option they will vote for at the mine site up in Panguna.

Post Courier | November 25, 2019

Landowners of the decommissioned Panguna copper mine are now prepared to reopen the mine as soon as the next Bougainville House of Representative is installed.

Seeing that as the only means of generating income for Bougainville as soon as it gains independence status, the landowners have agreed that Panguna will finance Bougainville like it financed Papua New Guinea back in the 1970s and 80s.

Special Mining Lease Osikayang Landowners Association (SML-OLA) mobilised all landowners from different parts of Panguna to gather at the edge of the mine pit to show that they were now one and ready to re-open the mine when Bougainville gained its independence.

SMLOLA chairman Philip Miriori and chief consultant adviser to the association Lawrence Daveona told the Post-Courier in Arawa that the landowners were now one and that there was no differences among them anymore.

“We are now united as one and we, re ready to re open this mine to finance the Independence of Bougainville, culturally and symbolically over to the government the new government that will be in place next year,” Mr Miriori said.

“This will be proof to the PNG government and also the international community that we can also be economically independent now, and right now Panguna mine is the only answer because it will not need exploration.

“We are now very positive that this mine will be reopened soon, we are working together with our developer RTG to reopen the mine and we have made a very strong commitment and stance that we do not want BCL back ever again into Panguna or on this island.”

He said the landowners were the people to have and to make the final say on the mines re-opening and now they had made a final say, to reopen the mine, to cater and finance the Bougainville independence.

Will Bougainville Reopen the Panguna Mine?

Rebel guerillas above the Panguna copper and gold mine in Bougainville in 1994. CREDIT: BEN BOHANE

With an independence referendum on the horizon, reopening the Panguna mine offers both attractive opportunities and terrible consequences.

Joshua Mcdonald | The Diplomat | November 22, 2019

The Panguna mine on the Pacific island of Bougainville is one of the largest copper and gold deposits in the world. 

The mine was also at the center of a decade-long civil war fought between the Bougainville Revolutionary Army and the Papua New Guinea Defense Force in the 1990s. The conflict cost as many as 15,000 lives and displaced 40,000 of the island’s 200,000 inhabitants.

Before the war, the Panguna mine generated more than $1 billion in national tax revenue and accounted for about 45 percent of Papua New Guinea’s total exports, 17 percent of its internal revenue, and 12 percent of its gross domestic product. It essentially paved the way for the nation’s transition to independence from Australia. But Panguna landowners and local employees — angered by the environmental destruction from the operation, poor wages, and unfair distribution of revenue (less than 1 percent of profits were reinvested in Bougainville) — eventually took up arms. 

In 1988, landowners led by Francis Ona broke into storerooms at the mine, stole explosives, and blew up Panguna’s power lines. In response, Papua New Guinea (PNG) sent in the military. Soldiers burned down villages, executed collaborators, and raped with impunity. When that failed to crush the resistance, PNG, with the support of Australia, enforced a naval blockade cutting the island off from the rest of the world. 

When that, too, failed the government hired a U.K.-based private military company to carry out its operations in Bougainville. The Sandline affair, as it came to be known, was eventually leaked in the Australian media – first there was a public outrage, and then came the resignation of then-PNG Prime Minister Julius Chan.

Bougainville Copper Limited, (BCL) a subsidiary of the British-Australian resources giant Rio Tinto, owned the mine at the time of the conflict and despite extracting around 550,000 tonnes of copper concentrate and 450,000 ounces of gold in its final year of production was forced to close as it appeared the separatists were not going to back down. The conflict officially ended nine years later, but Rio Tinto never returned.

In 2001, after a peace agreement was reached that gave Bougainville autonomy within PNG and ensured that an independence referendum would be held by 2020, some of the islanders launched a class action lawsuit in the United States against Rio Tinto. 

Panguna landowners accused the company of genocide, citing the company’s support for the blockade of the island by PNG forces. The plaintiff’s lawyers claimed the mine’s manager in Bougainville at the time “encouraged the continuation of the blockade for the purposes of starving the bastards out.”

Former PNG Prime Minister Sir Michael Somare provided the court with a sworn affidavit stating that it was Rio Tinto calling the shots during the war.

“Because of Rio Tinto’s financial influence in PNG, the company controlled the Government. The Government of PNG followed Rio Tinto’s instructions and carried out its’ requests,” he wrote.

“BCL was also directly involved in the military operations on Bougainville, and it played an active role. BCL supplied helicopters, which were used as gunships, the pilots, troop transportation, fuel and troop barracks.”

Due to the unrest in the area in the years that followed Rio Tinto’s withdrawal, no official investigation has been conducted on the impact the mining operation has had on the surrounding environment. It is known, however, that around 300,000 tonnes of ore and water were excavated every day in Panguna and that the mine tailings were discharged down the principal river system, the Kawerong-Jaba, which now flows blue because of toxic mixtures of heavy metals and other chemicals. The Sydney Morning Herald reported in 2002 that the mine was pumping 110 million cubic meters of waste, contaminated with cyanide and other chemicals, into the sea each year. 

For years, the Bougainville government has asked the company to make contributions to help with the clean up. It has also asked Australia, as the former colonial power responsible for authorizing the mine. Rio Tinto has refused. So, too, has the Australian government. 

Now, Australian Iron ore magnate Andrew “Twiggy” Forrest as well as several other smaller mining companies have shown interest in resuming operations at the mine. 

Forrest has friends in high places. In September, along with several other high-profile Australian business chiefs, Forrest was invited to U.S. President Donald Trump’s state dinner hosting Australian Prime Minister Scott Morrison. 

Forrest’s company, Fortescue Metals Group Ltd, is the fourth largest iron ore producer in the world. Its main areas of operation are in Western Australia, but in recent years the company has increased its efforts abroad, especially in South America, where it was granted 32 exploration licenses in Ecuador alone. Last week, it was confirmed that representatives from Forrest’s company had traveled to Bougainville in recent months to explore “potential opportunities.”

Also interested in Panguna is the Australia-based RTG Mining Group, which has the support of Philip Miriori, the chairman of the Panguna landowner association. Bougainville President Dr. John Momis, however, has accused RTG of attempting to bribe his government and of waging a subversive propaganda campaign. 

Another landowner group, the Panguna Development Company, supports the mine’s former operator, BCL, in its bid to return to Panguna — pitting the two groups against one another. 

They are, however, united in their opposition to Momis’ plan for Panguna, which would see the government and Australian mining company, Callabus, set up a new joint company that would be given a monopoly over the island’s mineral wealth. It is not clear how the government intends to proceed with this scheme since the legislation to enable it was blocked by the Bougainville legislature several months ago. 

Recently, the battle for Panguna entered new territory when rumors emerged of a Chinese delegation having offered $1 billion to fund the transition to Bougainville independence along with offers to invest in mining, tourism, and agriculture. An independent, resource-rich Bougainville would be a valuable ally to China as it seeks to have more influence in the South Pacific.

In a public presentation to ward councillors and MPs, filmed by a crew from 60 Minutes, Sam Kauona, a former Bougainville Revolutionary Army general, unfurled a large map of Bougainville with Chinese script highlighting proposed bridges, highways, ports, airports, and luxury hotels. 

“This is the first holistic offer, which has come from China,” he said. “Where is Australia and the U.S. and Japan? Earlier this year I met representatives from Fortescue mining, but I have been waiting 10 months for them to make a commitment.”

It’s estimated that Panguna mine still holds around $60 billion worth of copper, gold, and silver.

With the independence referendum beginning on Saturday, many local leaders admit that they would like to see the mine reopen as a way to boost revenue, yet distrust of giving a foreign mining company access again still looms large. No matter the results of the referendum, any company looking to make a buck is sure to find opposition in Panguna. This is, as long as past mistakes are not forgotten.

As Bougainville Revolutionary Army leader Francis Ona once said, “Land to us is our lifeline, and we cannot be separated from it.”

Derelict mine caused a bloody war. Now Aussie companies are fighting over it again

Heavy trucks sit rusting on the edges of Panguna copper mine, closed in 1989 as a result of sabotage.

Sarah Danckert and Ben Bohane | Sydney Morning Herald | November 15, 2019

Iron ore magnate Andrew “Twiggy” Forrest has joined the race with an unruly bunch of small, struggling mining companies, all with links to Australia and share prices of 10c or less, for access to some of the world’s biggest copper and gold deposits on the Pacific island of Bougainville.

The manoeuvring over the gigantic, mothballed Panguna mine comes ahead of an independence referendum later this month that could turn Bougainville into the world’s newest nation after disputes over foreign mining prompted a bloody, 10-year war that killed perhaps 15,000 people.

However, China is also sniffing around opportunities in Bougainville, although not necessarily the Panguna mine itself, which was valued recently at a staggering $US58 billion ($84 billion).

Previously run by Rio Tinto, the mine was at the centre of a decade-long conflict over allegations that locals were being ripped off and the environment damaged by foreign mining companies. The war continued well after the mine closed as a battle of control for the country raged between the Bougainville Revolutionary Army and the Papua New Guinea Defence Force. It was the most serious conflict in the south Pacific since World War II.

The Age and The Sydney Morning Herald have confirmed that representatives of Mr Forrest’s mining company, Fortescue, travelled in recent months to the island and were exploring growth opportunities there.

“As a leading mining company with world-class expertise, we constantly assess opportunities to build on our operational reputation to drive future growth through product diversification and asset development,” chief executive Elizabeth Gaines said. “Consistent with business development activities, representatives from Fortescue have visited Bougainville Island to learn about the region and potential opportunities.”

Other companies – including one chaired by a former Liberal defence minister David Johnston and another by Arabian horse breeder and luxury goods dealer Jeff McGlinn – have also been striving to gain local support on the island to reopen the mine, which was shuttered in 1989.

Meanwhile, a Chinese delegation is rumoured to have offered substantial funds in late 2018 to help finance a transition to Bougainville independence, along with offers to invest in mining, tourism and agriculture, with a figure of $US1 billion cited. A new port was also reportedly proposed.

A new nation to our north?

On November 23, Bougainvilleans will go to the polls and are expected to vote overwhelmingly for independence from Papua New Guinea. But in the wake of that expected vote, there is a real risk of new disputes between landowner groups as miners, many with links to Australia, could reignite the crisis that engulfed the island 30 years ago.

“Are they f—king mad?” asks one former Rio Tinto executive who worked at the company when it was the majority owner of Bougainville. “Re-opening Panguna would be a disaster.”

In its heyday, the mine, which would take an estimated $US5 billion in infrastructure spending to restart, was a productive asset for Rio Tinto, then known as Conzinc Rio Tinto. During the final year of production in 1988 and 1989, Rio’s subsidiary Bougainville Copper (BCL) extracted 550,000 tonnes of copper concentrate and a whopping 450,000 ounces of gold.

Already the tussle for Panguna has sparked a race to promise the best deal and the highest royalties to landowners while stemming the environmental degradation that has ravaged Bougainville. But that race has also already sparked intense political disagreement between rival groups on the island.

Rio’s former subsidiary BCL is still in the race for a mining licence, though Rio divested its shares and walked away in 2016. But a number of new entrants are also in the game.

Among them is Toronto and ASX-listed RTG Mining Inc – which has links to the Philippines and counts the son of billionaire Australian stock picker David Hains, Richard, as the largest shareholder of its Toronto-issued shares.

Another ASX-listed company, Kalia Limited, has been given two permits to explore in the northern tip of Bougainville. Kalia counts former Defence Minister David Johnston as its chairman and Perth-based mining entrepreneur Nick Zuks as its top shareholder. Johnston’s biggest claims to fame at home are a controversy over his lavish spending on entertainment as minister and comments that South Australians couldn’t build a canoe, much less a submarine.

Kalia’s bid is financially supported by a company run by Australian polo patriarch Peter Yunghanns. Another significant shareholder, Graeme Kirke, is the founder of Kirke Securities where Mr Forrest previously worked.

More recently a new player, Caballus Mining, has arrived in Bougainville. It sparked fears, rumours and intrigue when it emerged the Autonomous Government of Bougainville had drafted new laws that would assign the responsibility for issuing mining licences to a new entity – Bougainville Advance Mining and a foreign partner. Many believed that partner would be Caballus.

Caballus Mining was set up only in August 2018. Its sole director is Arabian horse breeder and luxury goods dealer Jeff McGlinn – a man who posted a flashy social media video of Saudi royalty at a luxury event, and another of him giving one of his fine equines to classical crossover singer Andrea Bocelli.

The entry of Caballus sparked fears among Bougainville locals – specifically those linked to rival miners – that a three-way fight for Panguna would erupt.

Slugging it out

Already, former Rio subsidiary BCL and Australian-Toronto based RTG Mining have been slugging it out via statements on their websites or on the Australian Securities Exchange. RTG claims BCL has lost its local goodwill and cannot operate in Bougainville, and that RTG has the support of a landowner group the Special Mining Lease Osikaiyang Landowners Association – one of the groups who say they represent landowners in the Panguna area.

BCL hit back saying the landowners’ association (known as SMLOLA) is a new invention and points to recent statements disputing its provenance. In turn, the landowner groups supporting BCL’s plans to reopen Panguna have also come under fire.

The one thing both have in common is their respective share prices are in the gutter, with BCL trading at 10 cents a share and RTG trading at 6.5 Canadian cents (7.4 cents). Kalia’s share price is just one-tenth of a cent.

The disputes between miners have been reflected in intense politicking among local landowner groups and political players on Bougainville. Bougainville’s president John Momis has copped much criticism for entertaining the Caballus deal, and the Autonomous Bougainville Government has given mixed signals on its position on mining.

Momis initially supported a moratorium on mining at Panguna to avoid reigniting old conflicts between landowner groups. The moratorium was put in place in early 2018, but the government now appears to favour mining across the island as a means to generate income and underwrite independence.

Autonomous Bougainville Government President John Momis.

Landowners are guaranteed rights under the 2015 Mining Act, but in an urgent bid in January 2019 to raise funds for the referendum, the government proposed to abolish those rights, at the same time allocating “near monopoly” rights to Caballus’s Bougainville Advance Mining. That legislation was later rejected by the government’s legislative committee, illustrating how politically contentious this issue will be in an independent Bougainville.

Fiscal self-reliance

In recent months, the mudslinging by supporters of both groups has died down. Several sources linked to the company and NGOs operating on the island said this was due to the request by the government that the miners are not seen to be influencing the independence vote.

There was no answer from Caballus in response to a series of questions, including regarding its links to Bougainville Advance Mining and how it achieved such a prime position. McGlinn was last week travelling in Europe.

Calls to the Perth offices of another suitor, Kalia Limited, which is now led by Michael Johnston, the former boss of failed PNG miner Nautilus Mining, went unreturned. David Johnston (no relation to Michael) and Kalia shareholder Nick Zuks also did not return calls.

RTG chairman Michael Carrick was also loath to talk about the issue.

“Politics is played extremely robustly in PNG and the facts/truth are often amongst the first casualties,” Carrick said via email from his Perth office. However, he added that mining would be part of Bougainville’s future.

“There can be no independence without first setting the country on a pathway to fiscal self-reliance and Panguna is the only asset which can assist this fundamental objective.”

BCL company secretary Mark Hitchcock said from his office in Port Moresby that the company retained strong support among landowners and rejected suggestions the company had lost its social licence to operate.

“There is at times frustration when some purporting to speak on behalf of all landowners are in fact representing a narrower interest. Regardless, all views are to be respected.”

Luke Fletcher, a long-time Bougainville watcher and executive director of think tank Jubilee Australia warns of the “resources curse” that has plagued PNG.

“This is one of the problems of the resource curse, you have these big revenues sitting in bank accounts that can be misappropriated quite easily,” he said.

It’s a curse that many think is worth risking.

Bougainville landowners group claims rival a BCL surrogate

Radio New Zealand | 17 July 2019

The Bougainville landowner group, Special Mining Lease Osikaiyang Landowners’ Association or SMLOL, has rejected claims by another group claiming rights around the Panguna mine.

There have been plans to re-start mining as Bougainvilleans contemplate life after the referendum on independence from Papua New Guinea.

A company called the Panguna Development Company has questioned the bona fides of SMLOL to say they represent the landowners at the site of the mine.

But SMLOL said it has the backing of the vast majority of blockholders, that its authority is recognised by the National Court and that its registered office is at the building housing the Bougainville Department of Mining.

SMLOL also said the Panguna Development Company was established just a few months ago by a rival for the re-opening of the Panguna mine, Bougainville Copper Ltd.

A SMLOL spokesman Philip Miriori said Panguna Development Company has just one listed shareholder, Eric Takapau, who he said had since passed away.