Tag Archives: Chinese mining

Australian-based company’s PNG mine could pose big environmental risk

The Sepik river in Papua New Guinea. Serious environmental and social concerns are being raised about a mining project by Australian-based company PanAust. Photograph: Emmanuel Peni

Gold and copper project for Sepik region also has potential to cause social conflict and unrest, report says

Lisa Martin | The Guardian | 15 June 2019 

A gold and copper mine proposed for the Sepik region in Papua New Guinea by an Australian-based company threatens to destroy the health of a major river system, poison fish stocks and cause violent unrest, a report has found.

The Chinese-owned company, PanAust, says the Frieda river project could have a 45-year life span and generate A$12.45bn in tax, royalties and production levies for the PNG government and landholders.

But the report, from research centre Jubilee Australia and Project Sepik, raises serious environmental and social concerns about the mine.

“The lack of information released by the company about its environmental management plans are continuing to cause uncertainty about whether the company’s environmental management plans will be fit for purpose,” it says.

“The potential for this project to lead to damaging social conflict and unrest is real and must be taken seriously.”

Papua New Guinea has a chequered mining history, including an environmental disaster when the BHP Ok Tedi copper mine’s tailings dam failed and the decade-long civil war on Bougainville, which was triggered by the Rio Tinto majority-owned Panguna copper mine and cost an estimated 20,000 lives.

The report notes that one of the PanAust project’s biggest challenges will be building a safe storage facility for the mine’s tailings (waste material left over after separating the valuable mineral from the ore) to prevent acid rock drainage.

That occurs when mine waste is exposed to oxygen and produces sulphuric acid, which dissolves heavy metals such as mercury from nearby rocks, which can then leach into rivers.

The report says the size of the ore body, combined with the relatively low grade of copper in the deposit, means the mine will generate substantial tailings.

Locals protest against the proposed mine project at the Sepik river in Papua New Guinea. Photograph: Project Sepik

“The inaccessibility of the terrain will pose challenges when it comes to finding a large enough site or sites for storage,” it says.

“The extremely high rainfall in the area and the fact that the area is a site of seismic activity add to the risks of a dam collapse. The technical complexity of the feat facing the mining engineers, the extremely large costs involved, and the weather and seismic situation all adds up to a very expensive environmental management problem and one with considerable risks.”

Locals also have concerns about environmental damage from an increase in the number of large vessels operating on the Freida river.

PanAust promised in April it would shortly release an environmental impact statement to nearby villages, but researchers say it has not done so.

In response to to questions from Guardian Australia, the company said PanAust had not received a copy of the Jubilee report and “as such, the company is not in a position to comment on its contents”.

It did however say that PanAust had submitted its plans and an environmental impact statement to PNG regulators and was working with them on its approval.

The report also accused PanAust of a flawed consultation process with indigenous communities downstream from the mine which has created an “atmosphere of animosity and lack of trust” and resulted in acts of sabotage.

“There are reports of official (mainly police) intimidation of anti-mine activists,” the report says.

Map showing the location of the proposed Frieda River mine. Photograph: Jubilee Australia

“In 2017 a youth leader from Oum 2 village led a group of young men to attack a tugboat and pontoon with homemade wire sling shots.”

In October researchers visited 23 nearby villages, where locals repeatedly raised concerns about river and fish health as a result of increased sedimentation from increased tugboat traffic connected with the project.

The Freida river joins the 1,126km Sepik river, which flows across the provinces of West Sepik and East Sepik provinces.

The local economy is built on the sale of sago (starch from a tropical palm stem), fish, freshwater prawn, eels, turtles and crocodile eggs. Crocodiles are also harvested for their skins and teeth. Locals are worried about the mine affecting their food security, the report says.

In a company announcement in December, PanAust characterised the mine project as a “nation building development”.

It has promised 5,000 jobs in construction and 2,100 in mining, and estimates there may be 30,000 more indirect jobs.

“Host communities, especially in rural areas, will benefit from access to improved transport, telecommunications, health, education and government services that will support a higher quality of life and greater social participation,” the company said.

“More broadly, training and employment of Papua New Guineans will provide the skills and capacity to support the nation’s future development and prosperity.”

The company said a final investment decision would be linked to financing and fiscal terms agreed with the PNG government during the approvals phase.

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Ramu NiCo rethinking expansion

The National aka The Loggers Times | March 26, 2019

RAMU NicO Nico Management (MCC) in Madang will reconsider its decision on the planned K5 billion expansion programme, vice-president Wang Baowen announced last Thursday.
He said the company was reconsidering its earlier announcement to expand the mine because of the costs involved.
Baowen said the company was yet to finish some of its obligations in its memorandum of agreement which expired last year.
He said the agreement must look after expectations and benefits of landowners, including stakeholders like the national government, provincial government, local level government and landowners.
Ramu NiCo Management, which runs the Ramu nickel and cobalt mine, announced a planned K5 billion expansion of the mine during Apec last year.
The announcement has created controversy among the landowners and other stakeholders.
Prime Minister Peter O’Neill and Madang Governor Peter Yama both said mine expansion would be guaranteed only after the current agreement was reviewed.
Yama said the agreement review would ensure more benefits go to the landowners and stakeholders.
“The Ramu nickel mine expansion will wait till we conduct the review,” O’Neill said when he visited Usino-Bundi district last month.
Landowners of the Kurumbukari mining area at Enekwai threatened to shut the mine’s water supply in December when they heard about the expansion.

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Tuke, Yama Want Fresh Deal For Ramu Mine

Politician’s love to make fancy promises – but do they ever actually deliver?

Post Courier | March 19, 2019

MINING Minister Johnson Tuke has said, before he signs any documents regarding the Ramu NiCo project, he needs to understand what is there for the landowners.

“When I understand and am really convinced then I will sign the agreement for the expansion, otherwise that will not happen,” Mr Tuke said.

He said he had discussed with Prime Minister Peter O’Neill the licence that government will issue for the expansion must be under a new agreement.

Mr Tuke said many mining companies usually say they will only give according to the MoA, however, there must be some form of kindness and humility when dealing with the local landowners whose land and water were given away for the project.

Madang Governor Peter Yama said the new expansion plan for the Ramu project will be properly discussed and he, as the head of the province, must be convinced that the people of Madang receive more benefits.

He said the old agreement that was signed before the construction and the operation of the Ramu Nickel Project must be done away with.

“The new agreement will be renegotiated, and the old agreement will be no more,”

He said that the Prime Minister Peter O’Neill during his visit to Usino had publicly announced that the new agreement will be a fresh start. Mr Yama said he is in full support of a new agreement for the Ramu NiCo Project, and stressed that all the parties that will be signing the agreement including the National Government, the provincial government, and the developer Ramu NiCo (MCC) must make sure the agreement provides better benefits to the people of Madang.

This is particularly for those from the impacted communities, the developer Ramu NiCo, Madang province, and the country.

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No Ramu extension until benefits are guaranteed: Govt

‘Ramu nickel mine is the worst ever State negotiated mine with no benefits to the locals’ – Yama

Loop PNG | February 12, 2019

Prime Minister Peter O’Neill has announced there will be no extension of the Memorandum of Agreement (MoA) for the Ramu NiCo mine in Madang Province.

The initial MoA was signed in 2000 and expired in March 2018. It is now due for a review, however the Prime Minister announced last Friday that there will be no agreement until government is sure there is fair benefit for the people and the State.

“The mine agreement has expired and we will renegotiate so that our people benefit most. Bai yumi stap na lukluk tasol ah? Nogat! Nogat! Em blong yumi. Yumi mas gat sampla sher stap insait. Bai yumi stretim, Gavana bai yumi stretim, mark my words. Yumi mas lukautim ol pipol blong yumi pastaim,” O’Neill said. (Will we just stand and watch? No! No! This is for us. We must have some share in this. We will fix this, Governor we will fix this, mark my words. We must first take care of our people.)

He told Governor Peter Yama that they had a big task ahead to negotiate the new terms and conditions of the new agreement.

Yama expressed passionately that the Ramu NiCo mine was the worst ever State negotiated mine with no benefits to the locals in Kurumbukari and Basamuk. Concerns have also been raised that other minerals apart from nickel and cobalt have been extracted and exported.

“The people of Basamuk must have spin off businesses. They must have good roads, good housing, health centres, schools, water supply and electricity. Right now Rai Coast and Usino-Bundi are the least developed districts in the country despite being hosts of the Ramu NiCo mine and also the Ramu Agro Industry for Usino Bundi,” Governor Yama said.

Minister for National Planning, Richard Maru, visited Basamuk last Thursday and met with the mine operator, MCC, and encouraged all stakeholders to now focus on a way forward that will benefit the company, province, landowners and the State.

At the moment, the State is not an equity partner in the mine project. There has not been any corporate tax and no Goods & Services Tax paid by the company since production began in 2012.

Furthermore, there is no benefit sharing agreement for the landowners in the project. Minister Maru said in the future, MoA’s must have benefit sharing agreements where landowners, the host province and the State must have shares in the project. This will be the case for Wafi-Golpu Mine, the Frieda Copper Mine and any other upcoming mines in the country.

“MCC is not the enemy, we are partners in development and so in the negotiations for the new MoA, we must ensure win-win situation for all parties involved,” Minister Maru said.

He said Madang had the economic potential and opportunity to double and triple its internal revenue and become a major economic hub in the Momase region. Minister Maru challenged Governor Yama and all the other MPs from Madang to focus, cooperate, communicate more for the greater good of the province.

Minister Maru is certain MCC has by now recovered its initial investments in the mine. This also explains why the Ramu mine is looking to invest a further US$2 billion to double production. The State, provincial government and landowners must now take up equity in this lucrative mine under the new agreement that the Government will take on together with MCC. The challenge now is to properly identify the landowners and Mineral Resources Authority (MRA) must ensure this exercise immediately by MCC.

In saying that the company must not feel that it has to solve all the problems in the area, Minister Maru encouraged MCC management to participate in the new-look Infrastructure Tax Credit Scheme which will be launched in March. He also urged the company to work with the PNG Government to seek grant funding from the Chinese government to build most needed infrastructure in the Usino-Bundi and Rai Coast districts.

The particular focus would be to build a highway between Erima to Saido and other roads, health and education facilities within these two districts.

The Ramu NiCo mine has a 135km slurry pipeline that runs through Usino-Bundi and Rai Coast districts.

Minister Maru also maintained that mines should do away with the fly-in fly-out arrangement and return to the model of the Bougainville Copper Limited where mining townships must be built at the mine sites.

Governor Yama also supported the position of the Government of Morobe and the Tutumang Government that there shall be no “Fly in Fly Out”, for the Wafi -Golpu Mine Project and other Mines and Resource Projects into the future.

“We will maximize revenue flows from all these projects to go to the local people, landowners and to our Government and to remain in the country. Hospitals, schools, a township and other utility services are built there. There’s no reason why we shouldn’t use this model,” Maru said.

“If we want to allow the revenue from these mines to rotate within PNG and help build our country, in the form of taxes, employment and so on, we must walk away from the fly-in fly-out arrangement.”

Maru said the Government is committed to build a highway from Erima to Saidor in Rai Coast District to assist the people living along these areas access markets and services and is seeking the support of the Chinese government to focus their development grants away from Port Moresby to two the remote districts of Usino- Bundi and Rai Coast, which hosts the only Chinese owned mine in Papua New Guinea, the Ramu NiCo Mine.

A State Negotiation Team will be put together as soon as possible to commence discussion of the future of the mine and its stakeholders, including the State and the landowners.

The Prime Minister himself announced that he will chair the State negotiating team with the Madang Governor as key members of the State Negotiating Team.

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No tax paid by Ramu nickel mine

Terms Of Mine Extension To Be Renegotiated

Post Courier | February 11, 2019

Prime Minister Peter O’Neill, has announced there will be no extension of the Memorandum of Agreement (MoA) for the Ramu Nico in Madang province.

The initial MoA was signed in 2000 and expired in March 2018. It is now due for a review, however the Prime Minister announced last Friday that there will be no agreement until government is sure there is a fair benefit for the people and the State.

“The mine agreement has expired and we will renegotiate so that our people benefit most. Bai yumi stap na lukluk tasol ah? Nogat! Nogat! Em blong yumi. Yumi mas gat sampla share stap insait. Bai yumi stretim, Governor bai yumi stretim, mark my words. Yumi mas lukautim ol pipol blong yumi pastaim,” Mr O’Neill said.

He told Mr Yama they had a big task ahead to negotiate the terms and conditions of the new agreement.

Mr Yama said the Ramu Nico mine was the worst state-negotiated mine, with no benefits to the locals in Kurumbukari and Basamuk. Concerns have also been raised that minerals, apart from nickel and cobalt, have been extracted and exported.

“The people of Basamuk must have spin-off businesses. They must have good roads, good housing, health centers, schools, water supply and electricity. Right now, Rai Coast and Usino-Bundi are the least developed districts in the country despite being hosts of the Ramu Nico mine and the Ramu Agro Industry,” he said.

National planning minister Richard Maru visited Basamuk on Thursday last week and met with the mine operator, MCC, and encouraged all stakeholders to now focus on a way forward that will benefit the firm, province, landowners and the state.

At the moment, the state is not an equity partner in the mine project.

There has not been any corporate tax and no goods and services tax paid by the firm since production started in 2012.

Furthermore, there is no benefit sharing agreement for the landowners in the project.

Mr Maru said in the future, MoAs must have benefit-sharing agreements where landowners, the host province and the state must have shares in the project.

This will be the case for Wafi-Golpu mine, the Frieda Copper mine and any other new mines.

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Mayur Resources brings in the Chinese

Mayur gets Chinese funding for development of Orokolo iron and zircon sand project in PNG

Paul Moore | International Mining | 7 January 2019

Mayur Resources Ltd announces that its 100% owned subsidiary MR Iron PNG Pte Ltd (MIPP) has signed a legally binding term sheet with China Titanium Resources Holdings Ltd (CTRH) relating to the development of Mayur’s Orokolo Bay Industrial Mineral Sands project in PNG’s Gulf Province with pilot scale bulk sampling planned to commence in Q3 of the 2019 calendar year.

The Orokolo Bay Project is proposed to be developed in two stages. Stage 1 is the Pilot Plant comprising the construction, commissioning and operation of a pilot scale bulk sample that is already environmentally permitted to produce up to 100,000 t of iron ore sands per annum (over a 2‐year period) principally for the purpose of providing test scale shipments of product to potential off takers, with the endeavour they will then sign legally binding long‐term offtake agreements for the Full‐Scale Plant.

Stage 2 is the Full Scale Plant. Subject to the outcomes of the Pilot Plant Bulk Samples including customer acceptance of product, obtaining the required permits and landowner consents for the Full‐Scale Operations, as well as the Definitive Feasibility Study, it is proposed to expand the capacity of the Pilot Plant to achieve total production capacity of 800 t/h run of mine (ROM) feed rate. In addition, a processing circuit is to be installed to separately produce construction sands and crude zircon concentrates (in separated form).

Pursuant to the Legally Binding Term Sheet, CTRH has agreed to provide up to $25 million in funding for the construction of the Pilot Plant and Full‐Scale Plant on the following terms:

a) CTRH to fund 50% of the Maximum Budget for the Stage 1 Pilot Plant that is to be agreed between the parties. MRL will provide the remaining 50% of the Maximum Budget for the Stage 1 Pilot Plant but may at its sole option defer payment of half (50%) of its funding obligation for the Stage 1 Pilot Plant, in which case CTRH will fund 75% of the Maximum Budget for the Stage 1 Pilot Plant. CTRH will be solely responsible for funding any expenditure in excess of the Maximum Budget that is required to construct the Stage 1 Pilot Plant.

b) Should the conditions precedent for proceeding to the Stage 2 Full Scale Plant be met CTRH will fund the capital expenditure for the Stage 2 Full Scale Operation subject to the total funding provided by CTRH for both the Stage 1 Pilot Plant and the Stage 2 Full Scale Operation not exceeding $25 million.

c) CTRH will receive a 2% equity interest in MIPP for each $1 million in funding contributed by CTRH, provided that CTRH’s total equity interest in MIPP is capped at 49%.

d) CTRH will be solely responsible for funding the operating costs of the Stage 1 Pilot Plant and the related bulk sampling program during the operation of the Stage 1 Pilot Plant.

e) Although it is considered extremely unlikely, to the extent that additional funding above $25 million is required for the construction of the Stage 2 Full Scale Project, MRL shall provide loans to

MIPP with those loans being repaid, on a priority basis, from the cash flows generated by MIPP from the operation of the Stage 2 Full Scale Plant.

This agreement has been successfully concluded following a number of years of discussions, site visits (PNG and China) and detailed due diligence by both parties. Paul Mulder Managing Director of Mayur Resources said “CTRH bring core operational capability in mining these types of projects, and in addition to providing development capital funding CTRH will also take on working capital and operational risk through the Orokolo Bay pilot plant phase while agreeing to take on funding responsibility up to $25 million and build the Stage 2 Full Scale Plant. This is a positive outcome for Mayur Shareholders where an external funding pathway has been secured whilst Mayur retains a 51% stake in the potential future economics of the $106 million NPV of the Orokolo Bay project as documented in the Pre‐Feasibility Study that was included in the Mayur Prospectus. MRL still also retains a 51% interest in the mineral sands exploration license portfolio that MIPP holds across the Gulf of Papua that offers the potential for further expansion projects. Having the operational expertise of CTRH, with their proven capability in low cost mining and quarrying, will assist Mayur in putting PNG on a fast track process to becoming a mineral sands exporter.”

He adds: “Bilateral ties will increase with Australia, Japan and China with multiple products coming from the mineral sands operation. Our focus is to bring employment, spin off business opportunities for the people of Orokolo Bay and work with the people to ensure there will be clarity in detail around what such an operation will mean. Now having secured an operating and funding partner we will progress the project alongside CTRH whilst progressing our National Building and Import displacement strategy for PNG.”

The legally binding term sheet is expected to be converted into definitive transaction documents before the end of January 2019. The Orokolo Bay project is extremely simple with no requirement

for chemical processing, grinding or tailings dams. The process involves simple near surface ripping and then sand extraction that is separated by gravity spirals and low intensity magnets (LIMS), with the vast majority of the sand being placed back from where it was taken, enabling rehabilitation to occur almost immediately after mining, leaving a minimal foot print.

CTRH ‘s Director Mr Chen Hui said: “As a strategic partner we are excited to develop the Papua New Guinea Industrial Mineral Sands operation together with Mayur, a team with great entrepreneurship and professionalism. We are confident that we will deliver Vanadium Titano Magnetite (VTM) and Construction Sands fit for the market demand at a low cost. We are also visioning for future downstream integrated steel production and expecting to bring long term value for our shareholders and the people of PNG. Having been to the site numerous times and having spent time in PNG to understand its provisions we are confident in the Provincial and State governments commitment to encouraging investment and diversifying the PNG economy. Very importantly we must see benefit go to the communities that we work in and as such will adopt a very inclusive management style. The intention of the Stage 1 pilot plant operations is to demonstrate to the international community that PNG can be taken seriously as a reliable, quality supplier of minerals that range from products for steelmaking, tiles, ceramics, concrete/cement, golf clubs, medical prothesis and smart phone screens.”

He adds: “Upon Stage 1 testing successfully gaining customer acceptance and Stage 2 Permits and Landowner consents being received, we have already committed to fund the development of Stage 2 full scale operation. The Governor of Gulf Province has been very supportive to provide new employment and job opportunities for the people of Orokolo Bay, and we are committed to localisation of human resources and will bring and transfer expertise and skills together with Mayur. CTRH and Mayur have already started ordering equipment for the Stage 1 trial plant and will further refine the definitive feasibility study (DFS) from the pilot plant findings that will inform the final Stage 2 Full Scale Plant. We will also second resources into MIPP to finalise the DFS while executing the Stage 1 pilot plant.”

Mulder concluded “We hope this success is just the first in a pipeline of other similar type mineral sands projects slated for the Gulf of Papua region, and moreover the replication time should be drastically reduced once this plant is up and running at Orokolo Bay.”

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Bougainville gets caught in China’s Pacific power game with West

Bougainville’s huge copper reserves and independence vote draw global interest

Fumi Matsumoto, Nikkei Asian Review | December 11, 2018

A small island has found itself caught in the escalating battle for influence in the South Pacific.

On both economic and diplomatic fronts, Papua New Guinea’s autonomous region of Bougainville has become a key piece in the game between Beijing, on one side, and the U.S. and its allies on the other.

With Bougainville holding one of the world’s largest untapped deposits of copper, Chinese and Western companies are weighing the prospects for reopening its Panguna copper mine — closed since a vicious civil war broke out in 1989. The island is also set to hold an independence referendum on June 15, potentially creating a new country that could vote in international forums such as the United Nations.

John Momis, president of the Autonomous Bougainville Government, told the Nikkei Asian Review that Chinese businesspeople raised the matter of investing in the mine on a visit to PNG ahead of last month’s Asia-Pacific Economic Cooperation summit in the capital, Port Moresby.

Momis said he told them that, “Panguna is not an easy issue, and as far as ABG’s concerned we have decided to put it on the back burner until the referendum.”

The peace agreement signed by the PNG government and island leaders in 2001 created the ABG and set the stage for the referendum. Chinese involvement with the mine would give Beijing a direct role in the economic future of a newly independent nation as it seeks to secure resources and expand its strategic network. It would also boost China’s sway in its power game against the U.S. and regional rivals such as Australia.

But given its potential resources, the government in Port Moresby would be loath to lose the island, especially the Panguna mine. And while the referendum is not binding, blocking a secession backed by most of the local population might be a recipe for renewed unrest in the volatile country.

Diplomatic sources said 99% of residents will support independence; Ted Wolfers, a professor at Australia’s University of Wollongong, said the consensus is an “overwhelming majority” will vote that way. But he also suggested PNG would not let the island go easily.

“PNG’s government might talk the autonomous government into settling for greater autonomy that falls short of independence,” Takehiro Kurosaki, a junior associate professor at Japan’s Tokai University said.

The island, and particularly the mine, have a tangled present shadowed by a brutal past. The decade-long civil war that killed more than 20,000 people — about 10% of Bougainville’s population — was triggered by resentment over pollution and revenue distribution from mining. Bougainville was also a battlefield when Japan invaded the island during World War II in an attempt to cut off a sea-lane between the U.S. and Australia.

PNG desperately needs foreign currency. In September, the government issued its first dollar bonds and managed to raise $500 million — crucial funds as the country attempts to manage $2.5 billion in foreign debt, almost $590 million of which is owed to China, according to Reuters.

“Beijing’s trade and investment in the region is focused mostly on Papua New Guinea, the region’s largest economy and home to rich gold and nickel mines, liquefied natural gas, and timber forests,” the U.S.-China Economic and Security Review Commission said in a report in June.

The report notes that state-owned China Metallurgical Group manages development of a $1.4 billion nickel and cobalt mine in PNG, with funding from the Export-Import Bank of China. This, the report says, is “China’s largest single investment in the region and its biggest foreign greenfield mining project.” About 40 Chinese companies operate in PNG, according to China’s state-run Xinhua News Agency.

Indeed, Beijing offered PNG about $60 million worth of aid to host the recent APEC forum, according to a diplomatic source. This included road repairs and a supply of bulletproof vehicles.

China currently has eight South Pacific countries in its corner, including PNG, while Taiwan has the recognition of six, such as the Solomon Islands. Chinese President Xi Jinping has made little secret of his desire to deepen Taiwan’s isolation; there is talk of the Solomons, where China has also opened up its checkbook, switching allegiances.

China’s outreach to the South Pacific has spurred Western allies to, belatedly, push back.

In the run-up to the APEC meeting, Australia and New Zealand — long the main benefactors for South Pacific nations — joined the U.S. and Japan in announcing a plan to build up PNG’s electricity infrastructure.

U.S. Vice President Mike Pence, in his speech at the APEC summit, announced a plan for U.S. cooperation in bolstering a naval base on Papua New Guinea’s Manus Island. In remarks clearly directed at China, Pence referred to recent naval exercises with India and Japan, and said: “We will work with these nations to protect sovereignty and maritime rights of the Pacific islands as well.”

For now, the island states find themselves in the enviable position of being courted by China, the U.S. and its allies all at once.

PNG has accepted a Chinese proposal to build an internet network using loans from the Chinese Ex-Im Bank and technological support from Huawei Technologies. PNG picked the Chinese proposal over one from the U.S. and Australia.

A similar story is being told across the South Pacific.

Vanuatu signed an agreement with China to take part in Beijing’s Belt and Road infrastructure initiative. In return, China agreed to a moratorium on nearly $3 million worth of debt, according to a local newspaper. In April, reports surfaced that China was planning to build a military base in Vanuatu. Alarmed by this, the U.S. and Australia swiftly moved to start talks with the island state on a bilateral security treaty.

The increased attention from partners, both old and new, means that Pacific nations “now have more leverage,” said Jonathan Pryke from the Lowy Institute, an Australian think tank.

The issues of the mine and referendum puts Bougainville firmly in the spotlight. While the situation on the island is replete with risks, Panguna’s reserves are very attractive to China, the world’s largest copper consumer.

The deserted mine contains more than 1 billion tons of ore, according to a study from 2009 — more than the 675 million tons extracted over the 18 years it was open. These deposits look even more valuable given global concerns over copper supplies, due to emerging market demand, depletion of known resources, rising mining costs and limited new discoveries.

A number of companies are circling. A Lowy report said there has also been corporate interest in the mine from Australia, the U.S., Canada and Brazil.

Whoever wins out will be able to cement a foothold in the region, but it will come at a financial cost.

Professor Wolfers said interested parties would have to consider the startup costs of reopening the mine, which he sees reaching as much as $8 billion.

Bougainville’s President Momis said the island’s government was taking a cautious stance on the investment interest.

“We don’t believe anybody who comes and talks about these issues until we see things in concrete and on paper,” he said.

Nikkei staff writer Sarah Hilton in Tokyo and researcher Jennifer Walpole in Sydney contributed to this report.

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