Tag Archives: Peter O’Neill

Independence ‘challenges’ could derail any return to mining on Bougainville

Image: Department of Defence.

While RTG Mining and BCL squabble over exploration rights, far more serious problems are brewing on Bougainville…

Back to Bougainville

Declan Sullivan* | ASPI | 11 Dec 2017

Trouble is returning to the island of Bougainville and Australia must be prepared. With the 2019 independence referendum looming, Australia will be called on to help support the peace process, whatever the referendum’s outcome. Australia was a major participant in two past interventions on the island, and its strategic connections run deep. Australia must ensure that it is adequately prepared for the coming challenges in Bougainville.

The 2001 Bougainville Peace Agreement stipulated that a referendum on independence would be held between 15 June 2015 and 15 June 2020. Last year, John Momis, president of the Autonomous Bougainville Government, and Peter O’Neill, prime minister of PNG, agreed on a target date of 15 June 2019. Two months ago, however, O’Neill backtracked on that commitment. He cited the ‘proper establishment of rule of law, proper establishment of a government structure on Bougainville, [and] proper disposal of weapons’ as conditions for the referendum to go ahead, and said that if those criteria weren’t met, the referendum ‘may not be possible’.

In response, Momis denied that good governance or complete weapons disposal were prerequisites for the referendum. Furthermore, he claimed that PNG was ‘hampering’ Bougainville’s disarmament and good governance efforts by failing to give Bougainville the grant money it was owed. PNG faces severe financial difficulties stemming from government overspending and overreliance on the commodities sector, which declined sharply in 2015. Revenue projections took a 20% hit, but government spending remained the same.

PNG has since defaulted on its electricity bills for government buildings and been suspended from voting in the UN for failure to pay its membership dues. The cost of supporting the Autonomous Bougainville Government and the peace process may be behind O’Neill’s recent backflip on the referendum. Depriving the Bougainville government of funds may save PNG money while also impeding efforts to organise an effective independence campaign.

This disagreement could derail the peace process just as it’s approaching its conclusion, and it’s possible that Bougainville may choose to fight to hold the referendum, rather than accept delays and weak promises from PNG.

The conflict on the island stems from the establishment of the Panguna mine in 1972 by Conzinc Riotinto of Australia. The mine displaced local landowners and caused environmental issues. The people of Bougainville were angry about a lack of compensation from one of the world’s richest copper mines. And the mine and its construction brought mainland Papuans to Bougainville, creating ethnic tensions.

Those factors led to an outbreak of violence and then armed conflict in 1988. The Bougainville Revolutionary Army fought against increasingly brutal PNG defence forces, which used Australian-supplied helicopters to attack villages and allegedly drop executed detainees’ bodies into the ocean.

A fragile peace process began in the early 1990s, encouraged by Australia and the wider Pacific community. The process led to a peace conference in 1994 between the PNG government and Bougainville leaders. An Australian-led multinational peacekeeping force was deployed to protect the conference and its attendees. The conference, however, collapsed when a few key Bougainvillean leaders refused to attend and PNG soldiers attacked other leaders who did.

Violence resumed following the collapse of the conference, reaching its peak in late 1996 and early 1997. A major scandal—the hiring of Sandline mercenaries to fight in Bougainville in 1997—forced the PNG prime minister, Julius Chan, to resign, effectively ending PNG’s military attempts to pacify Bougainville.

New Zealand–sponsored talks in 1997 led to the deployment of a new peacekeeping mission to the island. The Truce Monitoring Group was a mix of military, police and government agency personnel from Australia, New Zealand, Fiji and Vanuatu. PNG and Bougainville concluded a peace agreement in 2001, and the mission withdrew in July 2003. Throughout the period, Australia played a key role.

It may well again. Given the potential for violence during the referendum, it was always likely that Australia and New Zealand would be asked to support the effort in some capacity, potentially with observers on the ground. A return to violence could require an even more substantial peacekeeping mission. Given that weapons are still present in Bougainville, it behoves Australia and New Zealand to support the disarmament process, even with their own financial resources if PNG proves unable. Pressure also should be placed on O’Neill to abide by the timetable agreed with Momis. PNG recalcitrance will likely slow the rate that weapons are handed in if former fighters believe there could be a return to conflict.

Bougainville is an issue that Australia will have to deal with, one way or another. Right now there’s a chance to smooth the way towards the referendum and potential independence. If negotiations break down and violence returns, however, Australia’s involvement will be much more difficult.

* Declan Sullivan is a master’s candidate at the Strategic and Defence Studies Centre at the Australian National University.

Advertisements

Leave a comment

Filed under Mine construction, Papua New Guinea

O’Neill tells Papua New Guinea resources sector there will be no new taxes

Prime Minister Peter O’Neill announced no new resources sector taxes.  Source: Business Advantage International

David James | Business Advantage | 29 November 2017

Papua New Guinea’s Prime Minister, Peter O’Neill, told the PNG Mining and Petroleum Conference yesterday that there would be no new taxes for the resources sector. Meanwhile, presentations by the major industry players suggest the next 12 months will be critical in determining the future growth of the sector.

‘I believe we have emerged stronger,’ he said. ‘The global economy has turned the corner. We have maintained the faith and we can see light at the end of the tunnel.’

O’Neill claimed ‘it is time to invest in Papua New Guinea,’ pointing to the anticipated Total-run Papua LNG project, and the proposed Wafi Golpu and Frieda River mines.

‘This is not a time for us to make many changes but to maintain discipline.’

O’Neill said there is an upswing in the global economy and the commodity cycle, but he warned that the country cannot depend on it.

‘We cannot continue to over-rely on the mineral and petroleum sector to advance our goals,’ he said.

Cautious optimism

Business leaders presenting at the conference expressed cautious optimism about the prospects.

Andrew Barry, Managing Director of ExxonMobil PNG said the existing PNG LNG project is running above expectations. ‘We are on track to produce a total of 8.2 million tonnes of LNG this year, which is about 20 per cent beyond what we first thought the plant could achieve when the facilities were designed.

He said drilling at the Muruk field led to a new discovery near the Hides field. A K1 billion kina investment will be made next year ‘to tie the Angore field into the production system at Hides,’ he said.

Philippe Blanchard, Managing Director of Total E&P PNG said the company is well advanced in its engineering studies, field surveys and appraisals program for Papua LNG. He said the company has also begun to assess commercial viability, looking at the project structure, financing and the LNG market.

‘The environment is changing a lot,’ he said, adding that the company will need to see how to take advantage to get the best project.

Blanchard said integrating with established infrastructure is a complex task. ‘Our gas is very different from the gas in PNG LNG. We need to find the right elements between what is existing and what we want to build.’

Critical time

Peter Botten, Managing Director of Oil Search, observed that the ‘next 12 months is the most critical in all the years I have been here.’

‘The LNG market has never been more dynamic. We are also seeing some of the best exploration opportunities I have seen in PNG.

‘PNG LNG is a stellar world class project but there are legacy issues.’

Botten said the number of LNG-importing countries is expected to rise by 100 by 2020. He said there is strong demand in Asia, with demand in the first quarter of this year up by 37 per cent in China on the previous corresponding period, by 14 per cent in South Korea, by 12 per cent in Taiwan and by 9 per cent in Japan.

He said LNG is increasingly preferred to nuclear and coal.

Botten noted that there is a five-to-seven year investment horizon for new projects, and current planned activities are only likely to produce ‘about half of what is needed’.

‘The window is opening for new demand.’

New Mining Act

Botten added that about 30-35 per cent of LNG is now traded in the spot market, with large companies like ExxonMobil and Total building their own positions. He said it ‘changes the financing’ and the types of alliances that are formed.

Johnson Tuke, Minister for Mining, told the conference that a revised Mining Act is ‘now before the National Executive Council.’

Tuke said the mining sector has made ‘an impressive turnaround.’ The Wafi Golpu and Frieda River proposals remain a priority for the government, he said.

Leave a comment

Filed under Financial returns, Papua New Guinea

Ok Tedi Mining Ltd damaged by O’Neill

O’Neill may have turned the Ok Tedi mine into a corporate disaster, as Morauta claims below, but Morauta can hardly claim that under his leadership the outcomes for the poor people of Western Province were any better…  

Mekere Morauta | 14 June 2017

At a rally in Kiunga today, the former Prime Minister and current chairman of PNG Sustainable Development Program Ltd, Sir Mekere Morauta, told Western Province people the sad story of the Ok Tedi mine since Prime Minister Peter O’Neill took it in 2013.

He told them that the latest annual financial results are a disgrace, and confirm his worst fears about Mr O’Neill’s expropriation without compensation in 2013.

“They show that a well-managed and very profitable company under PNGSDP’s majority ownership has been turned into a corporate disaster under Mr O’Neill, as I predicted,” Sir Mekere said.

“OTML made a loss of K350 million in 2015, by far the largest in its history and far outstripping the K15 million loss caused by the very severe drought in 1997. The company never made a loss under PNGSDP majority ownership.

“This is Mr O’Neill’s dirty little secret. He and the OTML Board micro-managed by Dr Jacob Weiss have tried to hide the loss by not publishing OTML’s 2015 Annual Review, or its 2015 and 2016 quarterly financial results.

There is no explanation anywhere in the latest 2016 Annual Review to account for a loss of this magnitude.

“The only explanation can be the waste and mismanagement we have come to expect of the O’Neill Government.”

Mr O’Neill has decimated OTML profits. Under PNGSDP, average annual profits were almost K1.2 billion a year; under Mr O’Neill they are just K100 million.

OTML used to be the biggest taxpayer in PNG, which helped the national Government pay for education, health and infrastructure maintenance.

Under PNGSDP average annual taxes were K640 million; under Mr O’Neill they are just K100 million. OTML paid practically NO company tax at all in 2015 and 2016.

PNGSDP’s profitable and well run mine delivered large dividends: K288 million a year was paid on average to the State and the people of Western Province. A further K426 million a year went to PNGSDP.

After administration costs (which are capped), two-thirds was saved in the Long Term Fund and one-third went to the Development Fund to support programs for the people of Western Province and PNG.

Under Mr O’Neill total dividends have fallen to just K68 million a year on average, and no dividends at all were paid in 2013 and 2015. Only K150 million was paid in 2016 compared to K723 million in 2012, PNGSDP’s last full year of ownership.

PNGSDP received K5.5 billion in dividends from OTML between 2002 and 2012. Two-thirds of these dividends were invested in the Long Term Fund to be used after the mine closes. The balance of the LTF at the end of March 2017 had grown to K4.3 billion ($US1.36 billion).

Moreover, the LTF remains safe and well protected from the tentacles of the octopus.

One-third of these dividends (about K1.8 billion) were used for development programs in PNG and especially Western Province.

In total Western Province received more than K4.7 billion in direct benefits from OTML and PNGSDP: K2.0 billion in royalties, CMCA and other payments, K1.7 billion in dividends from OTML, K400 million for Kiunga-Tabubil road maintenance and more than K600 million in development projects from PNGSDP.

In October 2013, shortly after the expropriation of PNGSDP’s shares in OTML, Sir Mekere warned that OTML faced the same fate as the Tolukuma gold mine under state ownership:

State ownership “would spell disaster for Ok Tedi. Tolukuma has been ruined since it was turned into a State-Owned Enterprise, and instead of an asset it has become a huge liability. Ok Tedi will suffer the same fate. It will die a long and painful death. There will be risks to jobs and wages. There will be a lower standard of operations, including in workplace health and safety. The quality of environmental management will fall. Transparency and accountability will be compromised, especially in the area of contracts.”

Sir Mekere said his predictions had come true. “Mr O’Neill has killed Western Province’s Golden Goose.”

1 Comment

Filed under Financial returns, Papua New Guinea

Bougainville Copper moving to reopen controversial Panguna mine with Government backing

Reopening the Panguna mine could give the Bougainville Government a much-desired source of revenue claims the ABG. (AAP Image: Ilya Gridneff, file)

Eric Tlozek | ABC News | 4 May 2017

The company which used to the run the controversial Panguna copper mine on the island of Bougainville is now trying to reopen it with the support of the island’s Government.

It has been almost three decades since Panguna was abandoned, after anger about the mine led to the outbreak of an armed insurgency known as the “Bougainville crisis”.

Now the Bougainville Government believes it needs the mine to reopen, so the region can have a source of revenue that could enable it to become independent from Papua New Guinea.

The bid by the Bougainville Copper Limited (BCL) to reopen its Panguna mine is stronger than one might expect, given the mine led to an armed insurgency and its abandonment left central Bougainville with many environmental problems.

But this time it will be quite different and the landowners will be brought along on the journey.

BCL secretary Mark Hitchcock said restarting the mine would allow the company to address some of the environmental and social problems it left behind.

“We did have to leave in a hurry and things were not closed down the way that a normal mine would close,” Mr Hitchcock said.

“When we go back, we’ll be conducting our baseline studies to see what the situation is and we will, as the mine progresses, progressively work on some of those environmental issues.

“But with the people, the mine will only work if we involve them all the way along.”

BCL was owned by Rio Tinto, but the mining giant gave its shareholding to the PNG Government and to the Autonomous Bougainville Government, the entity created as part of the Bougainville Peace Agreement to end the crisis.

The PNG Government said it would then give its shareholding to unspecified landowners in Bougainville, creating uncertainty about who the company must deal with and leaving the Bougainville Government without a controlling stake.

Mr Hitchcock said that has created another problem to be resolved.

“The ABG and the landowners are a little bit concerned about who the actual owners are, after Prime Minister O’Neill said that he was going to gift them to the people of Bougainville and the landowner,” he said.

“So that’s one of the issues we need to sort out. “

The controversial Panguna mine was one of the richest copper mines in the world. (ABC News, file photo)

The PNG and Bougainville Governments have just agreed to create a Joint Steering Committee to resolve this and other issues.

BCL executive chairman Rob Burns said that was a major step forward.

“So we’ve got commitment in that respect that all parties are going to work together and it’s terrific news for BCL,” Mr Burns said.

BCL was stripped of its mining tenements and left with just an exploration licence, but it still has all the resource data for the site.

Other companies have expressed an interest in mining Panguna, but the Bougainville Government is giving preference to BCL because it owns part of the company.

Raymond Masono, Bougainville’s Deputy President and Mining Minister, said “BCL is not longer the devil that we know”.

“We actually own this devil as a major shareholder in the company,” he said.

“Also, BCL under the Bougainville Mining Act has the first right of refusal to Panguna.”

BCL return expected to face opposition

The main reason the Autonomous Bougainville Government is supporting a resumption of mining is revenue.

There will be a referendum in 2019 on whether the region should become fully independent of Papua New Guinea, and the Bougainville Government believes a mine is the best way to guarantee income for a new country.

“We believe that Panguna can bankroll Bougainville’s autonomy and independence if the people so decide in the 2019 referendum,” Mr Masono said.

The Bougainville Government, headed by President John Momis, believes most landowners support reopening the mine.

The Bougainville Government says most landowners support the resumption of mining, but other residents may be less convinced.

A United Nations Development Program report in 2014 found there was no evidence of majority support for reopening the mine amongst the general population.

There are also some organised groups who oppose BCL’s return.

Mr Burns said the company was aware of “active detractors”.

“We believe that they’re a very minor group and the most vocal of that group have competing interests in our Panguna mineral rights and they aren’t truly representative of landowners,” he said.

The push to reopen Panguna is part of a broader move by the Bougainville Government to lift its moratorium on mining in general.

BCL’s attempt will surely be watched by companies and investors to see how well the damage of the Bougainville crisis has healed.

1 Comment

Filed under Environmental impact, Financial returns, Human rights, Papua New Guinea

K50 Million Dividends Paid To Landowners Of Western Province

Post Courier | April 25, 2017

PRIME Minister Peter O’Neill has presented a cheque of K50 million in dividends to the OK Tedi landowners of Western Province.
Mr O’Neill made this presentation following the heads of agreement signing for the transfer of 33 percent equity interest in OTML to the Western Province group yesterday.
He also clarified at the signing that his government has always had the best interest of the people and it was their initial desire to give back the mine to the people including all funds that belong to them.
He said the story of the mine and the people of Western Province is a sad story because the people have been let down by many developers and previous governments.
He said that was why the current government has taken a bold step in correcting all those mistakes and one step was to have full custody of the mine.
“I have made a commitment in 2013 with a desire to return ownership of the mine therefore the heads of agreement signing is the conclusion of this commitment.
This is the time to develop resources and maximise it and there is no doubt that we still need developers however we still need to fix issues that has been prolonged for a very long time such as having all the funds fixed and returned to the people.
All funds from the sustainable development program are still parked and this government has not approved one project under these funds as they are before the court therefore we have not utilised a toea of those funds,” he said.
“I am satisfied with the agreement that is being signed because, the mine can now be managed by the landowners and this has achieved our desire as government to return ownership back to the people.
“We want to give benefits back to the rightful owners, transfer of CMCA back to people, see conclusion of court cases and give money back to the people as well as turning the mine into a profitable project for the benefit of everyone,” he said.

Leave a comment

Filed under Financial returns, Papua New Guinea

O’Neill indicates support for BCL to start operation

O'Neill and Momis pose

O’Neill and Momis (photo Tony Kaybing)

The National aka The Loggers Times | April 20, 2017

PRIME Minister Peter O’Neill has indicated his support for Bougainville Copper Ltd (BCL) to resume its operations on Bougainville.
Bougainville President Chief Dr John Momis said this would provide BCL with the level of assurance they needed to manage sovereign risk and take meaningful steps to start feasibility work.
Momis said that Prime Minister Peter O’Neill agreed that a steering committee would be established with joint representation from the national government, ABG Government, landowners and Bougainville Copper Ltd.
The steering committee would be convened by an independent chairman to ensure that all parties’ interests were heard.
“As president, I am very conscious of the sensitivity of this issue, but I am pleased that the vast majority of landowners have now agreed that Bougainville Copper Ltd should be given the opportunity to rehabilitate the mine,” Momis said.
He said the economic benefits of that could not be denied, but Bougainville should ensure that any future mining operations were respectful to the people, protected their environment and benefits flowed through to the people.

Leave a comment

Filed under Financial returns, Papua New Guinea

We must protect our seas

These giant seabed mining machines will do enormous damage

 Editorial | The National aka The Loggers Times | March 20, 2017

PRIME Minister Peter O’Neill has conveyed another powerful message about the imminent threats of pollution, illegal fishing and climate change to Pacific Island nations, including Papua New Guinea.

And he has called on island nations around the world to come together for global action to protect their communities from marine damage.

O’Neill told leaders attending the Pacific Regional Preparatory High-Level Meeting for the United Nations Conference on Oceans in Suva, Fiji, that they had valid marine resources concerns that must be taken up by the global community.

“Pollution, illegal fishing and climate change destroys ecosystems in island nation maritime areas. We did not cause these problems but these problems cause damage to our communities today and into the future.”

The meeting in Suva on Thursday and Friday focused on building consensus and establishing a way forward to seek the global community’s support and assistance in preventing the destruction of marine resources in the island nations.

This is the third occasion that O’Neill has raised concern about the imminent dangers that the Pacific Island community faces.

In 2015, he warned to global leaders attending the COP21 UN climate change conference in Paris to find a workable solution to save lives and protect island communities.

And last year, he warned leaders attending the Pacific Island Forum (PIF) meeting in Pohnpei, Federated States of Micronesia, that the threat posed by illegal fishing on their economic survival was growing.

As chairman of the PIF, O’Neill is spearheading the Pacific Island community’s cause for greater attention by the global community on these pertinent issues.

This is part of his address to leaders at the Suva meeting:

“Our ocean and its vast resources, not only provide nourishment for us, it also provides 20 per cent of the world’s protein and economic returns for our countries from fisheries.

Our ocean is a highway for significant shipping and trade generating significant economic value but with minimal returns to us.

But, we are seeing alarming statistics about the health of our ocean; of the poor state of our coral reefs caused by coral bleaching and pollution, of the negative consequences for our marine biodiversity and of the levels of Illegal Unreported and Unregulated fisheries.

So we need to not only make declarations but to accelerate and step up our actions and demand the same of others to restore our ocean’s health, through embracing integrated ocean management approaches and sustainably managing and conserving our coastal, inshore and ocean resources.”

Insofar as Papua New Guinea is concerned, the effects of climate change are already evident in the Carterets Islands, islands in Manus and the outer atolls in coastal provinces that have experienced the rise in the sea level.

While climate change needs a global approach and solution, illegal fishing remains a sticky point for individual island nations.

The PIF meeting last September resolved for greater action in dealing with illegal fishing and related activities.

The increase in illegal fishing and human trafficking, especially by fishermen and companies of Asian origin, in our region is a growing concern.

These illegal activities seriously affect the economic survival of the small island nations, especially when large importers like the European Union and the United States raise questions and threaten to impose trade restrictions.

Efforts by the fisheries authorities of the various, mostly ill-equipped island countries and their collective voice, the Forum Fisheries Agency, have been largely unsuccessful in effectively curbing illegal fishing.

In a way, the PNG National Fisheries Authority (NFA) is far better placed to monitor and report on illegal fishing.

The NFA has, over the years, drawn on the assistance of the maritime element of the PNG Defence Force and the Australian Navy to patrol our waters.

For the smaller island nations, a lot is left to goodwill and hope that sovereign territorial rights will be respected by our neighbours.

Still, we may never get to know the full extent of what is happening on the high seas.

Ongoing incursions into territorial waters are indicative of blatant disrespect for sovereignty. And such a practice does nothing to help mutual relations between countries.

Repercussions of illegal fishing are not only about economic losses for small island nations but there are also greater environmental concerns involving the maintenance of marine species.

1 Comment

Filed under Environmental impact, Papua New Guinea