Tag Archives: Rio Tinto

New report names top British companies responsible for toxic mining legacies

Kalimantan, Indonesia. Coal mining operation. Credit: Daniel Beltrá

BHP and Rio Tinto have a long history of extracting minerals then pulling out, leaving devastation in their wake. Climate justice organisation London Mining Network reveals the extent of this in a new report.

London Mining Network | Feb 19, 2020 

London Mining Network has published a new report entitled ‘Cut and run: How Britain’s top two mining companies have wrecked ecosystems without being held to account’. The report includes examples from Southeast Asia of where the British-Australian multinationals BHP and Rio Tinto have left legacies of conflict and environmental destruction, long after they’ve fled the scene.

Recent examples of mining messes include Brumadinho, the tailings (mining waste) dam owned by Brazilian mining company Vale, which collapsed in January 2019 in Minas Gerais, Brazil. Vale executives, along with its German advisors TUV Sud, were recently charged with the homicide of 272 people; 14 people are still missing. Vale, along with BHP, jointly own the Samarco iron ore mine and tailings dam which also collapsed in 2015, causing Brazil’s worst environmental disaster in history and the deaths of 20 people. The trauma due to loss of life, displacement and job loss and the environmental repercussions of contamination of river systems in both catastrophes will be felt for decades to come. The entire mining industry needs to be held to account for such mining messes, and laws made which demand the cleaning up of messes made by mining companies before they pull out of projects.

Despite the best efforts of the industry, particularly BHP, to greenwash the extraction of fossil fuels and metals, the practice of ‘cutting and running’ when companies close mining operations tells us another story. The harm that extraction causes people and the planet doesn’t end once the companies disappear.

On 10th February, BHP became the world’s top copper producer, but this isn’t good news for the communities affected by their copper mines, and the other metals and minerals it extracts. In 2002, the company walked away from the Ok Tedi copper-gold mine it had controlled since 1982 in Papua New Guinea. For years it had dumped waste straight into the local river system. Eventually the company concluded that it should no longer do that and should not have operated the mine after all. But 18 years later the contamination and mess remains.

Rio Tinto was the majority owner of the Panguna mine in Bougainville, operated by Bougainville Copper Ltd (BCL), for 45 years. It dumped toxic mining waste the copper-gold mine in Bougainville (an island off the coast of Papua New Guinea) straight into the local river system between 1972 and 1988. This caused such outrage that it sparked a war for independence from Papua New Guinea, a war in which thousands were killed and independence was not won. The mine was abandoned. In 2016 Rio Tinto gave the mine to the authorities in Bougainville and Papua New Guinea but they do not have the financial or technical means to clean up the waste.

For shareholders in Rio Tinto and BHP, the deadly legacies of these mines make for risky investments, as the report illustrates.

Co-author of the report, Hal Rhoades, from The Gaia Foundation, said:

“This report shows how British multinationals have profited from destroying ecosystems and people’s livelihoods on vast scales in the Global South, while leaving their mess behind for communities to deal with. These are the same companies who are now trying to convince us that they hold the answers to the climate emergency. We cannot continue to pay lip service to tackling climate change while allowing the world’s largest corporations to devastate ecosystems that help regulate the climate and the communities that care for them. Holding these companies accountable and calling out their greenwashing is a crucial part of climate justice.”

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Rio Tinto behaviour ‘outrageous’ – NZ Environment Minister

The flooded Mataura River rips past the former Mataura paper mill. Photo: Stephen Jaquiery

Conan Young | Radio New Zealand | 13 February 2020

Environment Minister David Parker says he has had enough of Rio Tinto and is considering legal action against the owner of the Tiwai Point aluminium smelter over its failure to deal with its hazardous waste.

Parker’s tough words follow claims the company reneged on a verbal agreement given last week to remove the waste that has been stored in the Southland town of Mataura for the past six years. 

The the 10,000 tonnes of ouvea premix in a disused paper mill came close to being inundated by flood waters last week which could have set off a highly dangerous cloud of ammonia gas.

Rio Tinto’s website states it is committed to mitigating its operations’ impact and has stories about its efforts to help look after the environment, from bears in Canada to native trees in Australia.

Parker said Rio Tinto needed to clean up its “mess” in Southland.

“For them to try and escape some responsibility for cleaning up the mess that comes from their own smelter. It’s outrageous. I can’t reconcile it with their statements of corporate responsibility that they put on their own website.

“You know, they talk about preserving grizzly bears in Canada and migrating birds in Australia. Well perhaps they could take the same stance when it comes to the people and the environment of Southland.”

Rio Tinto thought it had dealt with the problem when it paid Bahrain’s Taha Industries to take the dross off its hands in 2014.

That company went into liquidation in 2016 and the waste sat in the old paper mill until a deal was cut last year between the Government and local councils to move the waste from the Mataura mill and other sites over six years.

Fast forward to last week, and Gore District Council chief executive Steve Parry said it had a verbal agreement with the chief executive of the smelter, Stewart Hamilton, to speed up the removal of the dross, and and store it at the smelter.

But days later, Parry said, the head of the smelter had reneged on that deal.

Parker said that was disgraceful.

“Central government agreed to kick in a million dollars, the smelter a bit more than a million dollars and the councils some hundreds of thousands of dollars to get the clean-up started in a major way.

“You know, we didn’t bring to bear those underlying legal liability issues but, you know, maybe we the Government should be looking at suing them now. I’ve had enough.”

Parry said he was told that Rio Tinto did not want to import any extra liability on the site until its strategic review on the future of the Tiwai Point smelter was completed at the end of March. The contract in place provides for moving the dross from the factory in up to two-and-a-half years.

“Given the floods we’ve just had that was considered to be just too long.” The high-level agreement in principle was for a three-month removal period starting at the end of March, Parry said.

Parry said as a small council, Gore would be reluctant to take legal action on its own.

“What we don’t want to see is a process bogged down in legal action which could take a long time and cost a lot of money.

“We need to remember there is a contract in place, it is still running, it’s performing to expectations and in two, two-and-a-half years that warehouse in Mataura will be cleared out.”

Rio Tinto is carrying out a strategic review of the Southland aluminium smelter.

Parker told Morning Report he was staggered that Rio Tinto had tried to connect the waste from aluminium production with its strategic review.

“It’s got a history of crying wolf over their financial situation to try to wring out concessions from successive New Zealand Governments,” he said.

“They’re trying to hide behind a contract they had that went wrong. They paid a company to take this dross from this site and in the end that dross was just dumped at various sites around Southland. It wasn’t processed. Rio Tinto say it’s not their problem that their contractor didn’t do it.”

The minister said any court action would not take place quickly, and he didn’t want to overstate the risk given the highest flood on record did not get into the warehouse. But there was a contrast between Rio Tinto’s statements on the environment and its conduct in New Zealand.

Smelter chief executive Stewart Hamilton did not return RNZ’s calls asking for comment. He released a statement which did not address whether the company had given a verbal undertaking.

“We remain committed to a solution that removes the material,” the statement reads. “NZAS has committed to contributing $1.75 million to the costs of safely removing and processing the material.”

Sort Out The Dross action group spokesperson Cherie Chapman said Rio Tinto should take care of its waste instead of palming off the problem on to the people of Southland.

“The community is very angry, very concerned, very bewildered about why this stuff has not been picked up at speed and taken out of the end of the Mataura paper mill.”

Chapman said it was important to remember that nobody in Mataura had a say about the dross being stored in the middle of their town.

“It was snuck in to those buildings without any consents whatsoever, and the resource consent was then retrospective. Shortly after the company went into liquidation. The council has no recourse really when a company goes into liquidation, this is why I think Rio Tinto needs to pick up its act.”

Chapman was sending out an open invitation to the smelter to attend a public meeting in Mataura tomorrow night to discuss the problem and what should be done about it.

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

Panguna. RNZ/Johnny Blades.

Aaron Clark | Bloomberg News | January 27, 2020

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

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

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

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

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

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

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

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

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

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

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

Barrick declined to comment.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Bougainville’s Faustian Bargain

Over 2,000 residents, including chiefs, elders, and politicians attended the historic ceasefire signing ceremony on the island of Bougainville, April 30, 1998. Credit: AP Photo/Australian Defence PR

An ongoing independence referendum does not address the key question at the root of the conflict: the future of the Panguna mine.

Paul R. Williams* and Carly Fabian* | The Diplomat | November 27, 2019

On the small island of Bougainville, a region of Papua New Guinea, voters are currently taking part in a long-awaited referendum on independence that started this Saturday. Twenty years after the end of the deadly Bougainville conflict, this referendum gives voters the chance to decide between substantial political autonomy or complete independence. While the voting period lasts until December 7, early estimates predict that Bougainvilleans will vote overwhelmingly for independence.  

The peace agreement that ended the conflict in 2001 has so far allowed the region to take incremental steps toward enhanced self-government while maintaining a delicate peace. Whether this peace process will result in a durable peace depends entirely on the outcome of the referendum, the final and most important step of the process.

The structure of the referendum, however, renders it an imperfect and perhaps even fatally flawed vehicle for resolving the conflict. Notably, the referendum is not binding on Papua New Guinea, meaning that the outcome will depend on whether Papua New Guinea accepts the outcome of the referendum, or whether it imposes conditions on Bougainville’s independence. Most importantly, the referendum does not address the key question at the root of the conflict: the future of the open-pit Panguna mine on the island.

The Bougainville conflict centered around the Panguna mine, a large-scale copper and gold mine that was built in 1972 amid significant local opposition. During its operation, the mine was responsible for over 40 percent of Papua New Guinea’s national export revenue. The mine dramatically reshaped local society as the mining company clear-cut forests, forcibly relocated villages, and introduced thousands of higher-paid foreign workers to operate the mine. The millions of tons of pollution created by the mine’s operations also quickly contaminated the surrounding bodies of water and agricultural lands.  Collectively, these changes presented what the indigenous Bougainville people viewed as an existential threat to their way of life.

In 1989, Bougainvilleans forcibly shut down the mine. This provoked a harsh armed response from Papua New Guinea.  In response, the rebels declared independence from Papua New Guinea.  Over the next decade, the two sides fought over the future of the mine and, by extension, Bougainville’s political, environmental, and economic independence.  The conflict, marked by atrocities, forced relocation, and a debilitating blockade by Papua New Guinea, resulted in 20,000 deaths, 10 percent of Bougainville’s population, as well as the displacement over another 30 percent of the population.

Somewhat surprisingly, the comprehensive and detailed peace agreement that ended the conflict did not address the future of the mine – the primary conflict driver.  The agreement instead focused on increased self-government and a path to potential independence. This framing has so far allowed Bougainville and Papua New Guinea to maintain a delicate peace as the Bougainville government assumed greater governing responsibility yet kept the mine closed.

At the same time, this framework also presented Papua New Guinea with an opportunity to separate the promise of political independence from Bougainville’s broader goal of protecting the environment and its indigenous way of life. With growing external pressure to reopen the mine, these issues have increasingly been framed as mutually exclusive options that Bougainville must inevitably choose between.

Since the creation of the Autonomous Bougainville Government in 2005, Papua New Guinea and other external funders have provided the Bougainville government with the majority of its funding.  Bougainvilleans have so far envisioned a future economy centered on sustainable agriculture and fishing industries.  It will take significant time, patience, and investment, however, for these industries to produce revenue that could replace the external aid Bougainville currently receives.

To prepare for independence, Papua New Guinea has pressured the Bougainville government to instead achieve fiscal self-reliance by reopening the Panguna mine.  A number of mining companies have expressed an interest in contracting and operating a reopened mine.  Notably, both the government of Papua New Guinea and the government of Bougainville each hold a substantial (36.4 percent) ownership interest in the mine, which was transferred to them in 2016 by the mine’s previous majority shareholder Rio Tinto.

The environmental scars from the mine continue to haunt the island. Cleaning up the pollution that remains would potentially cost billions of dollars, a price far out of reach of Bougainville’s current economy. After the transfer of shares, Rio Tinto rejected responsibility for the mine’s environmental damage.  Today, some parties argue that reopening the mine with greater environmental protections is the only feasible option for generating sufficient revenue to remediate the prior environmental damage.

Strong public resistance in Bougainville has so far kept attempts to reopen the mine at bay.  With the arrival of the referendum date, however, the forces coalescing around the reopening of the mine have redoubled their efforts to overcome this public resistance.  Amid this pressure, rather than resolving the conflict, the referendum’s narrow focus on political independence may instead reignite it.

If voters choose independence, Papua New Guinea may present Bougainville with a Faustian bargain: in exchange for independence, Bougainville will first have to achieve fiscal self-reliance by reopening the mine. If that happens, Bougainvilleans will have to choose between abandoning the promise of political independence, which has underpinned the last two decades of peace, and reopening the Panguna mine, which drove a decade conflict.

Dr. Paul R. Williams is the Founder of the Public International Law & Policy Group, and the Rebecca I. Grazier Professor of Law and International Relations at American University.

Carly Fabian is a Research Fellow on Justice, Peace, and Security at the Public International Law & Policy Group.

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Bougainville’s gold mine sparked a war that killed 20,000 – now it could be reopened

Panguna. Stefan Armbruster/SBS News

The people of Bougainville will vote in a referendum this weekend that will decide on its independence from Papua New Guinea. Here, SBS News visits the mine that ignited its decade-long civil war.

Stefan Armbruster | SBS | 23 November 2019

Almost 20 years ago a brutal civil conflict ended in Papua New Guinea in which one in ten people on Bougainville died – but the war set the island on the road to independence.

The conflict was sparked by an Australian-run gold and copper mine, then the world’s largest. It had promised much but delivered very little for the local people.

The Panguna mine’s profits funded Papua New Guinea’s independence from Australia in 1975 and made Australian company Rio Tinto rich, but the Bougainville landowners saw little of the wealth and their rivers and lands were devastated by mining waste.

“What upset the landowners was Panguna mine,” said Sam Kauona, who as a general was the commander of the Bougainville Revolutionary Army, or BRA.

“Panguna mine was creating social disparities, environment problems, social issues and problems, unfair distribution of wealth by the company, that sparked off the sentiments, the desire for independence of Bougainville.”

Bougainville’s rivers and lands were devastated by mining waste. Stefan Armbruster/SBS News

The war started in 1989 when the impoverished people took up arms. The BRA was not highly thought of by outsiders but it shut down the mine and brought the local economy to its knees.

Over the next 10 years, during the ‘Bougainville crisis’, up to 20,000 people died either from fighting with the PNG defence force and its local collaborators or from disease and starvation.

Despite backing from the Australian government and Rio Tinto subsidiary Bougainville Copper Limited (BCL), the PNG government was brought to the negotiating table by the BRA and a peace agreement was signed in 2001.

“When I look at that, it was BRA that won the war,” Mr Kauona said.

“The point of defeat was when the PNG army didn’t have any strength any more, when we went for negotiations we came out with a stronger position, not in a loser position where we’d have to negotiate terms below what we have now.”

Stefan Armbruster/SBS News

The mining legacy has scarred the landscape as much as it has the people of Bougainville in PNG.

At the mine site, Moses Pipiro lives amid the mining facility ruins with about 500 traditional landowners in what until recently was still considered a no-go zone.

“We feel proud, we are happy, and also we are united now, [a] unified position now,” he said.

“But the people, they still cry. We fought to preserve our land and our environment, [and] the PNG defence force, they kill many people here.”

Moses Pipiro lives amid the mining facility ruins. Stefan Armbruster/SBS News

About 200 of their weapons, a mix of homemade guns and captured defence force arms, are secured at the Panguna mine in preparation for the referendum.

“Okay these weapons are here, but the war is over, no more war in Bougainville, they are for monumentation but we have no money,” he said.

In the vast pit nearby, it is thought there is still $85 billion worth of copper and gold, enough to fund a fledgling independent state, but Panguna’s troubled past means the mine has an uncertain future.

The mine oozes blue polluted water and just downriver a devastated landscape unfolds where the tailings were pumped.

The mine oozing blue polluted water. Stefan Armbruster/SBS News

“It destroys everything, like fish, we used to catch fish here before,” said Barnabas Piruari, a downstream villager who blames his skin disease on the pollution.

Their livelihoods gone with the water and land spoilt, people scratch a living by panning for gold amid the mine waste and reopening the mine is not popular.

“Make some kind of different mining, not the one they’ve done before,” said Salithia Bitanuma, another downstream villager.

Villager Barnabas Piruari says the polluted water “destroy everything”. Stefan Armbruster/SBS News

On the other side of the Crown Prince mountain range that runs the length of the island, there is a fire burning in the heart of Bougainville, no longer to wage war but to exploit their abundant resources.

Former combatant Jose Nouibiri smelts gold, a booming business in the former BCL mining town of Arawa, once the island’s capital.

“We were the first ones to establish this business, now some companies start up here, business is very good now but we have competition but we make 200 grams or 300 grams a day,” he said after melting down a customer’s gold dust.

The lump of gold is the result of weeks of backbreaking work by the villager in the tailings waste of the Panguna mine.

“During the crisis I was one of the fighters and helped the BRA,” Mr Noubiri said proudly.

“After the crisis I left Bougainville [for Port Moresby] to go find a job to support family and children get an education.”

The Bougainville conflict was sparked by an Australian-run gold and copper mine. Stefan Armbruster/SBS News

Three decades ago Awara was a thriving town with a population of 12,000 people but was physically and economically destroyed after the world’s largest copper and gold mine was shut down.

A decade of civil war saw it burned to the ground and abandoned.

“That was here and also other parts of Arawa town, this was a battlefield,” said former mayor and peace broker Theresa Jaintong, reflecting on the war and running gun-battles on her street.

Twenty years of neglect under the 2001 peace agreement has left Arawa, like much of Bougainville, impoverished. There are few businesses and jobs, limited health and education services.

Ms Jaintong’s grandchildren are part of Arawa’s booming population and reopening the Panguna mine is seen by many as a controversial choice but a vital one for the economic future.

“They’re talking about the economic side of agriculture and fisheries but we cannot do it quickly because we have to turn it into cash, Panguna is readily available,” Ms Jaintong said.

Stefan Armbruster/SBS News

With Bougainville expected to vote for independence this weekend, there is a new generation of leaders emerging with hopes for a return to the good times in Arawa.

“My vision for Arawa is it’s going to be the capital of the new Bougainville,” Arawa deputy mayor Genevieve Korokoro said.

Tens of millions in Australian infrastructure aid has rebuilt roads, schools and hospitals in the past decade.

More changes are coming to the town where it is sometimes impossible to get better than dial-up speed internet, a digital future.

“Oh yes, there’s a fibre optic cable coming in from Huawei China,” deputy mayor Korokoro said with a smile.

It will still be a long way from the golden days in Arawa.

Awaiting another customer, Mr Noubiri has changed his mind since he fought to shut down the Panguna mine.

“When we are independent we don’t need money from the outside, we use alluvial mining and pay tax to the government and give money to develop education and health and everything,” he said.

“I support the opening of the Panguna mine because it’s going to generate revenue for our government to stand up and look after our people.”

Up at the Panguna mine, Moses Pipiro is taking a more cautious approach.

“After the referendum, we shall see, if we talk about opening the Panguna mine, we create division again, because now we are focused on the unity on Bougainville,” he said.

“If we try to talk about opening the mine, we create the other monster again”

Change may be coming to Bougainville but its future, like its past, will be determined by what’s in the ground.

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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.”

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Filed under Bougainville, Financial returns, Human rights

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.

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