Tag Archives: Rio Tinto

Panguna landowners say ‘no’ to BCL’s proposed return to mining on Bougainville

Bougainville Revolutionary Army fighters look down on the Panguna mine in 1996

One PNG | 24 April 2017

Panguna landowners have reacted angrily to a report that the PNG Government supports formerly Rio Tinto-linked company BCL in its bid to convince authorities it should be given exploration rights at the controversial Panguna minesite – the scene of major civil unrest in Bougainville in the 1990s.

The President of the Special Mining Lease Landowners Association, Philip Miriori, said his group was 100% opposed and that many other Bougainvillians shared this view.

Claims of unanimous landowner support for BCL were wrong and insulting, Mr Miriori said, adding it was time PNG Prime Minister O’Neill and Bougainville President Momis heard some true facts.  

He also went on to say:

“In fact, during the first phase the issue of an exploration licence, we are the only Landowner Association that has a say as it will be our minerals and land that will be disturbed and subject to exploration. It is only later, when the mine is redeveloped that the other Landowners will need to consider their position.”

“Our group owns the land and the mineral rights for the minesite.  Nothing can occur on the site without our permission,” Mr Miriori said.

“We are being deliberately passed over despite Bougainville Government assurances that no action would be taken on the minesite without proper respect to people’s views.

“Many Bougainvillians were angered at the statements about PNG Government support for BCL. I expect we will hear much more this week,” he said.

Mr Miriori was referring to a planned gathering of ex-combatants from the Bougainville conflict, which erupted on the back of BCL and Rio Tinto’s operation of the old Panguna, leaving only environmental carnage and deep-seated disputes over improper payments and lack of accountability with the death of many of our friends and family.

“All this will do is further motivate our people to stand up against BCL, stronger and more vocally,” Mr Miriori said.

“Most people in Bougainville know of Francis Ona’s words: ‘BCL should never be allowed to return to Bougainville’.”

The SML group made their position very clear to Bougainville’s President Momis at a meeting in late February and another earlier in December last year.

“We said we will never accept BCL.  It is the same company that caused turmoil in Bougainville which lasted more than 10years. It is run by ex-Rio people. And it continues to break its promises, try to bully us and misrepresent us, as it tries to drive a wedge between our people and ignore our rights as the owners of the minerals.”

“It is time people woke up to this.  In 28 years, BCL has done nothing for Bougainville or PNG except make empty promises or ignore us. Why would we even consider giving BCL anything – they have given us nothing and they owe millions in unpaid rent and hundreds of millions in compensation for ruining the environment.

“There is a better way forward which will finally get rid of BCL and bring some real hope back for Panguna and future Bougainville independence and prosperity.”

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Looking beyond Panguna – A post-2020 strategy for Bougainville

Dr Kristian Lasslett* | International State Crime Initiative | 19 April 2017

Bougainville Copper Limited is back in the headlines.

The proposed reopening of Panguna has been framed by senior politicians as the only viable solution to Bougainville’s political and economic challenges. 

President Momis’ response to a question submitted by Radio New Zealand International on the reopening of Panguna, is indicative of ABG policy in this respect. Momis replied:

We have a timeline to meet. And unfortunately agriculture, fisheries, and other things just won’t enable us to meet those timelines. Mining is the only thing that will generate so much revenue to assist the government to provide services and help to develop capacity to handle the new public service powers.

In an earlier interview with SBS, Momis argued ‘the vast majority of Bougainvilleans, I would say over 97%, want the [Panguna] mine to be open’.

Bougainville’s new Vice President – formerly Director of the Office of Panguna Negotiations –  is reported to have adopted a similar stance in a recent statement to the press:

Mr Masono said that the region would have fiscal self-reliance and also the majority of Bougainvilleans would enjoy a better life again when the mine re-opens. He said there was opposition to the mine re-opening but they were a minority. Mr Masono said that the mine would bring quick development and it still had a large known reserve yet to be mined.

The Vice President is also quoted as saying ‘we need Panguna to finance independence for Bougainville’.

Nevertheless, an examination of the often difficult to access reporting on potential development strategies for Bougainville, reveals something of a broad consensus. The island needs diversified industries, with a strong rump of attention devoted to agriculture. With a young and able workforce, this make sense.

One only needs to face westwards from Bougainville, towards Papua New Guinea, to find a cautionary example of what happens when agriculture is ignored, and all the policy eggs are placed in the extractive basket.

Also, agriculture is one tract of development that can leave industry in local hands, lessening the risk of exploitative relationships, or capital flight overseas.

Of course, agriculture is not the only option. Fisheries and tourism, have also been pointed to as fertile future tracts for potential economic development.

Another notable point of consensus is Panguna’s high risk status, which has dim prospect of producing considerable returns in the foreseeable future. Of course, few development specialists dismiss mining entirely – but its role is primarily one of a potential revenue generator at a later point of time, once central economic and governance pillars have been erected.

What is also interesting to observe is that the available survey data – see Table 1 below –  suggests many Bougainvilleans agree with the recommendations of development specialists; they see in the rush towards large-scale mining much false hope, and believe a stable, prosperous future will be secured through a diversified economic strategy built through participatory policy design.

 To cite one example. In 2013 a peace and development analysis (PDA) was conducted under the leadership of the UNDP. It is described as a ‘collaborative effort of the Autonomous Bougainville Government (ABG), the UN in Papua New Guinea through the UN Development Programme (UNDP) and its office in Bougainville, Interpeace’.

The joint-project  involved interviews with 1100 people across Bougainville.

A discussion paper shared the study’s preliminary findings. Published in 2014, it states: 

There is a broad popular perception that the ABG in its focus on the Panguna mine has largely neglected other sectors, such as tourism or alluvial mining, but especially agriculture which provides the livelihood for most Bougainvilleans. Not surprisingly, there is considerable interest among Bougainvilleans for the smaller scale, slower development path. 

It adds, ‘as the Panguna mine shows, a big stone in a small pond has big ripple effects everywhere’.

The final UNDP/ABG report published the same year echoed these conclusions, with greater depth. The report notes:

The far more important finding however is that Bougainvilleans are not in a position to develop an informed opinion and make an informed choice [over Panguna’s reopening] … most Bougainvilleans have no access to detailed information from a source they trust, such as how long it would take and how much it would cost for the mine to be re-opened, what the projections are of the revenue it is likely to generate (reportedly such projection are available, but not widely known or easily accessible), what share of that revenue can be realistically expected to stay in Bougainville, and how that would be shared. Nor do they have enough trustworthy information about what the environmental impacts might be with today’s technology and knowledge.

The report adds, similar to the earlier draft: ‘There is certainly a strong strand of opinion among Bougainvilleans in favor of the “small is beautiful” vision’.

Late in 2014 – six months after the UNDP/ABG findings were to hand – Jubilee Australia** published a report based on interviews and focus groups conducted in the mine lease area with 82 participants. It draws conclusions sympathetic to the UNDP/ABG study.

Although, perhaps not surprisingly, given that the Jubilee report focuses on the mine lease area, it documented much higher levels of opposition to Panguna’s reopening, and a strong inclination towards justice and healing first, and a focusing of energies on sustainable forms of development.

President Momis rejected Jubilee’s report. He told the ABC, ‘the overwhelming response [on Bougainville] is support for reopening the mine’. Momis argued, this was especially the case in the mine impacted areas: ‘In the public consultations with Panguna mine lease landowners, many stated explicitly their view that Bougainville’s best hope of achieving the kind of fiscal self-reliance needed for either real autonomy or independence lies in mining’.

Echoing the President’s line, ANU academic Joanne Wallis penned a sharp critique of Jubilee Australia, claiming the ABG had ‘conducted a long and inclusive consultation process with the affected landowners and wider society to establish whether they want the mine to reopen … Reports from these consultations indicate that the majority of Bougainvilleans do want to [sic] mine to reopen … Jubilee Australia has uncritically accepted the anti-mining voices of a small number of interview respondents’.

The available data, however, suggests a much higher level of popular scepticism towards Panguna’s reopening, and the benefits its might accrue locally, than is conceded by Wallis or President Momis.

Indeed, the  views coming from the interview data (see Table 1 below) collected by the UNDP, ABG and Jubilee Australia exhibit a strong strain of realism, that contrasts with the, at times, millenarian prophesy  being ascribed to the Panguna project by select policy makers and commentators.

Certainly, since 2010 policy statements issued by the ABG have suggested that the reopening of mine, will produce ample revenues for independent statehood, while providing the wealth needed to compensate victims of the mine, and repair damage to the ecosystem.

At times the promise of Panguna has reached fever pitch. A document produced by one ‘landowner association’, heavily relied upon by the ABG to rally support for its reopening objective, claims:

  • ‘It is proposed [the mine will] pay a royalty of 3.5% of sales to landowners … If we assume there are 5000 adult descendants of the original 510 titleholders, this corresponds to K 49,920 per annum or K 4,160 gross per adult landowner per month’.
  • ‘Landowner[s] will [also] hold about 5093 shares valued at about 385,031 and producing annual dividends of some K26,076 in addition to the royalty stream’
  •  ‘Adult Bougainvillean excluding landowners will own 566 BCL shares worth K42784 producing K2,896 dividend per annum’.
  • ‘It will create thousand[s] of jobs for us and provide a FREEPASS to every Bougainvillean for free education, free healthcare and good income opportunities’.

U-Vistract would blush at such bold claims.

Less credence has been given to the unfavourable global economic conditions, the considerable risk involved, the evidence of strong local opposition, foreseeable damage to the environment, or indeed the likely origins of an ‘angel’ investor who might come in and invest the billions required to reopen Panguna (and the pound of flesh they would want in return, for such a high-risk investment). 

Also while BCL is now ‘the devil we own’ – what does this actually means. BCL holds little in the way of tangible mining assets, and may be heir to liabilities emerging from previous corporate actions (although BCL states in its 2016 annual report ‘the company is not aware of any liability being incurred under any environmental legislation’, and has previously discounted liability for war crimes committed by the PNGDF, using BCL logistic support).

Even by Rio Tinto’s own admission: ‘The carrying value [of Bougainville Copper Limited] has previously been fully impaired and therefore the transfer resulted in no financial impact for the year ended 31 December 2016’. In other words, the ‘gifting’ of BCL to the ABG and PNG governments resulted in no financial loss to Rio Tinto, because from Rio Tinto’s perspective the company is of no value. 

Moreover, the ‘devil’ is something of a shell of its former self – it has no Managing Director, while three managers are being retained as consultants***. It also has to be questioned why a Prime Minister who was head of state when the PNG government committed some of the worst human rights abuses during the conflict, now enjoys an annual fee of K151,000 as a BCL Director, and indeed why BCL appointed another former politician as Director – with support from PM O’Neill and President Momis – who was found guilty of three misconduct charges by a Leadership Tribunal in 2007, and featured negatively in a Public Accounts Committee report for his involvement in the Konebada Petroleum Park Authority.

That aside, it ought to be noted, there is also strong consensus among both researchers and the grass-roots, on some of the more significant threats confronting any long-term economic strategy – and that centres on poor governance and corruption. Considerable evidence has been accumulated on grand corruption, mismanagement and irregular transactions inside the ABG, at levels which might be described as systematic; yet the issues remains unnervingly untouched.

To use two notable examples:

  • The National Court  implicated Bougainville’s Minister for Economic Development, Fidelis Semoso, in the misappropriation of K2.7 million, which the Court claims Semoso benefited from through a K470, 000 payment to his wife. The National Court  did not stop the Momis government from appointing Semoso to a key Ministerial post.
  • Auditor General findings that the: ‘Autonomous Bougainville Government did not have in place a corporate plan with clearly identified corporate goals, objectives and strategies to enhance service delivery. I was not able to review procedures and mechanisms devised to facilitate effective service delivery to its people. Further, I was not able to test the integrity and reliability of Autonomous Bougainville Government internal controls and risk management procedures … As at the time of my audit inspection the Autonomous Bougainville Government did not have in place an Internal Audit Function’. It is added by the Auditor General: ‘I was not able to ascertain the extent to which the Autonomous Bougainville Government annual budget of K264,651,600 was implemented and achieved’. And perhaps most worrying of all:  ‘I was not able to ascertain the effectiveness of the Autonomous Bougainville Government procurement management system due to non-existence of key documents such as PSTB [Provincial Supply and Tender Board] minutes, contract files containing signed contracts, tender boxes, tenders or and quotation registers, Register of Declarations by PSTB Board members, and project management files’.

The damage of corruption and poor governance is not only the public funds squandered, it’s the cultures of graft and impunity that attach to such environments, which fosters policy stasis, mismanagement and popular distrust.

All of which raise tough questions, which likely require complex answers, best produced through healthy levels of debate, knowledge exchange, and collaboration.

Indeed, everyone with a strong devotion to Bougainville’s success, share one point of solidarity – a common desire to see the island thrive, with a new generation enjoying peace, culture, sovereignty, and opportunities that can see them realise their innate capacities. Differences exist on how this will best be achieved.

The reality is, Bougainville sits on the cusp of a referendum that will be one of the most significant votes in the region’s history. A clear set of strategies and implementing procedures are needed to facilitate the outcomes.

One would hope the ABG is currently producing, or indeed about to publish, a detailed white paper that will set out its post-referendum strategic goals, along with indicia of success, and implementing mechanisms, modelled against all the likely outcomes.

After all, it would seem perhaps the greatest threat to progress on Bougainville, would be to find out in 2019 that the Emperor has no clothes.

*Dr Kristian Lasslett is Director of the Institute for Research in Social Sciences, Ulster University, UK. He is the author of State Crime on the Margins of Empire: Rio Tinto, the War on Bougainville and Resistance to Mining

**The author is a member of Jubilee Australia’s Research Committee.

*** BCL states in its annual report ‘since 12th September 2016, the company Secretary and Community Relations Manage have provided management services to the company under consultancy services agreements. On 1st January 2017 an Exexutive General Manager was retained under a consultancy services agreement. Going forward, due to the company’s small size and non-operational status, there is no Managing Director’.

 Table 1 – Bougainville Interview Data

PEACE, (SECURITY) AND DEVELOPMENT ANALYSIS – BOUGAINVILLE.

EMERGING FINDINGS. DISCUSSION DRAFT.

Author: ABG and UNDP

Date: 2014

Methodology: Interviews and group conversations with 1,100 Bougainvilleans; and literature review.

Key findings

There is a broad popular perception that the ABG in its focus on the Panguna mine has largely neglected other sectors, such as tourism or alluvial mining, but especially agriculture which provides the livelihood for most Bougainvilleans. Not surprisingly, there is considerable interest among Bougainvilleans for the smaller scale, slower development path. This not only because that is where their livelihoods lie, but also because they see it as less controversial and conflict-triggering, and more environmentally friendly. The years under blockade showed the remarkable resilience but also creativity and inventiveness of the people of Bougainville, vital capacities that are undermined by approaches that offer too much money too easily.

The ABG’s Medium-Term Development Plan 2011-2015 (possibly only concluded in 2013?) doesn’t raise the question of development model options, but the 2010 Economic Development Policy wants to pursue both at the same time: “large scale industrial enterprises such as mining and broad-based economic development based on natural resources such as cash crops.” Nobody among the Bougainville population seems to know much about these policies and plans. Some countries in the world of have been able to combine both relatively well, others not so well. But combining both is easier in a large country than in the small geographical, demographic and social ‘pond’ that is Bougainville. As the Panguna mine shows, a big stone in a small pond has big ripple effects everywhere.

‘Coconut or copper’ – what society does Bougainville want to become? There is a urgent but non-existent public debate to be had about the development model that Bougainville wants to follow. This is not a purely economic debate; the choices, as Bougainvilleans have already experienced, have major social and cultural consequences. The end-of-spectrum options are on the one hand the fast track, capital intensive, larger scale, development model that is well represented by the Panguna mine but also by e.g. the Torokina Palm Oil project, and on the other hand, the slower, smaller scale, less capital intensive model. This is less profitable in absolute numbers but offers more equitable opportunities and benefits. The first approach implies a stronger engagement with and presence of ‘outsiders’, the latter has more opportunities to remain Bougainville driven and –owned. Bougainvilleans need to not that also the latter approach still relies on a cash economy, and will have social, cultural and political impacts.

Governments that rely mostly on the extraction of natural resources to provide their income, have less incentive to build the governance relationship with their citizens, that enables the raising of revenue via taxation without extensive and expensive enforcement.

An attempted ‘consultation’ process in the form of ‘Mining Forums’, is perceived as an attempt to convince people to be favourable to the re-opening of the Panguna mine rather than a genuine consultation. In that sense it increased the distrust.

There is both demand and ‘advise’ for more participatory governance and policy making. This will require however changes in attitudes and collaborative leadership at many levels, but also new ways of working.

There is a ‘truth’ telling aspect in traditional reconciliation processes. But there has been as yet no meaningful effort to document and verify what actually happened, so that Bougainvilleans can learn from the past. At the moment it seems there is no broader and verified historical narrative that the current generation can offer to the next ones, at home and in school.

[There is] widespread suspicion that Australia’s engagement with Bougainville today is largely driven by self-interest in the Panguna mine. Several Australian programmes are –rightly or wrongly- perceived through that lens. These include the Panguna Peacebuilding Strategy (which received support from a then AusAid programme and now from the ‘Strongim Pipol, Strongim Nesen’ Australia-supported programme) and even the ‘Render Safe’ operation in Torokina.

Peace and Development Analysis: Findings and Emerging Priorities

Author: ABG and UNDP

Date: 2014

Methodology: Interviews and group conversations with 1,100 Bougainvilleans; and literature review.

Accessed at: http://ipat-interpeace.org/resource/development-emerging-priorities-interpeace/

Note: This is the final report, the above is the draft report.

Key Findings

Key findings suggest that Bougainville is not post-conflict, as the historical drivers of conflict remain present today. Bougainvilleans still resist outsiders because of a perceived threat to Bougainville’s resources. Unfortunately culture and identity, unequal distribution of benefits and costs related to resources, internal jalousies and disputes and leadership rivalries are still pervasive.

The PDA [Peace and Development Analysis] highlights effective governance as an important prerequisite for a strong future of Bougainville. Efforts so far at strengthening governance have been neither visible nor convincing to the Bougainville population at large and will significantly undermine peace building efforts if not expeditiously addressed. Anecdotally economic development must constitute a strong pillar that should support Bougainville’s future however, there has not been convincing evidence for this to the people of Bougainville that this is likely to be achieved. The PDA suggests a stronger demand for investment in the non-mining sector where most Bougainvilleans get their livelihood.

Whatever trajectory is chosen, The PDA vividly points out that most Bougainvilleans are of the view that there is stagnation on the issues that matter most, but are not mobilizing into collective action to address them. This is mostly hampered by the lack of collaborative leadership that is widely disconnected with the people. The analysis also opined that the people of Bougainville were not in a position to make informed choices in the 2015 elections and also in the referendum to be held 2015-2020.

Development efforts in Bougainville are reported to have been largely unconnected to peace and security and there is evidence abound that development resources and investments can be a significant driver of conflict. There is increasing dispute over land in Bougainville as a whole, and the Panguna mine experiences highlights the critical tension point of how benefits and costs are shared, as well as the sensitivities towards outsiders. Development has to be pursued with great sensitivity to conflict to avoid doing no harm.

The indications are that personal trauma remains widespread, more than fifteen years after most of the violence subsided, and is to a degree being transmitted to the next generation.

There is a major disconnect between the ABG and the citizens of Bougainville. People acknowledge progress in the rehabilitation of infrastructure and the revitalization of health and educational services, but the ABG has low performance legitimacy with regard to many other issues that matter: political unity, increased public security, strengthening of governance capacities at all levels, improving economic opportunities and development of relevant skills. Various experiences and perceptions contribute to this state of affairs: the limited amounts of money that reach the local level; the lack of transparency and accountability at all levels about budgets, allocation choices and how the money has been spent (Open Budget); corruption (real or perceived); individuals associated with the ABG who have not reconciled with the people; poor performance of the public service including the police (absenteeism, lack of competency, lack of leadership); failure to communicate timely, relevant and trustworthy information about critical issues; lack of the ability to meaningfully participate in critical policy questions for Bougainville; and consultations that are perceived as attempts to make people accept an already decided policy choice (the Mining Forums).

Demand for bottom-up governance: People don’t just want a better functioning and better communicating ABG and House of Representatives – they demand less top down and more bottom-up governance.

Strong demand for investment in the non-mining sector: The PDA confirms the Autonomy Review observation that the non-mining sector, where most Bougainvilleans seek their livelihood, has been neglected. There is a strong demand for the creation of downstream processing facilities to add value, but also for more internal markets, access to credit (Bank South Pacific puts conditions that most cannot meet), agricultural extension services and technical training relevant for an agro-based economy. This demand is sometimes reinforced by reservations about the consequences of re-opening the Panguna mine, and a desire to preserve and protect Bougainville’s environment.

No structured support for small scale and medium enterprise business development: While it is not too difficult for Bougainvilleans to start up a small business (there are serious challenges for non-Bougainvilleans), there is so far neither policy nor practical support from the government to do so. In addition, business people cannot count on police protection of their business. As a result, business people are reluctant to pay taxes.

Re-opening the Panguna mine: As mentioned earlier, there are at least four different, meaningful perspectives on this question. The PDA found no evidence of majority support for any one of them. The far more important finding however is that Bougainvilleans are not in a position to develop an informed opinion and make an informed choice. This is not limited to broad access to and understanding of the Mine Bill drafts. Land ownership remains a critical issue, and has relevance beyond the Panguna mine area, with at least some Bougainvilleans contesting state ownership of the resources underneath the soil. Furthermore, most Bougainvilleans have no access to detailed information from a source they trust, such as how long it would take and how much it would cost for the mine to be re-opened, what the projections are of the revenue it is likely to generate (reportedly such projection are available, but not widely known or easily accessible), what share of that revenue can be realistically expected to stay in Bougainville, and how that would be shared. Nor do they have enough trustworthy information about what the environmental impacts might be with today’s technology and knowledge.

There is certainly a strong strand of opinion among Bougainvilleans in favor of the ‘small is beautiful’ vision. It is of course possible to try and combine both, as the 2010 Economic Development Policy proposes. But this is easier in a larger space: Bougainville is a geographically and demographically small space: major interventions can have far-reaching impacts.

The rapid, capital-intensive path may be too easily associated with negative impacts. Many other countries with important natural resources (oil, gas, gold, bauxite, copper etc.) have managed them in ways that increase the potential for conflict: where resources wealth is accumulated by a small political and economic elite, rather than shared widely, social inequalities may increase rapidly. Further, since government can be funded from resource extraction revenue, it doesn’t need to tax the people, and hence has little incentive to govern in participatory, transparent, responsive and accountable ways. Environmental protection laws may exist but are not enforced. However some countries are managing the revenue from national resources for the public good, investing in communities today and in future generations, and have strong and enforceable environmental protection policies in place. The ‘small is beautiful’ non-mining sector based vision will have to take into account the projected futures for copra and cocoa as primary products, and the competitiveness (in terms of price/quality) of more processed products on regional and world markets.

The current ABG leadership has appropriately been drawing attention to the economic viability of an independent Bougainville, but that question is not on the forefront of most people’s minds. The issue was also too quickly linked with a drive to re-open the Panguna mine, presented – and/or perceived – as the only available option. The valid question of the economic and/or fiscal viability of an independent Bougainville has therefore become marred in suspicions about foreign and personal interest agendas related to the mine.

The development partners are not making available to the Bougainville authorities and people relevant experiences and approaches from other countries. This includes for example insights into the experiences of places that chose autonomy (Aceh) or independence (Timor Leste), of the challenges that new countries have faced after independence (Timor Leste, Kosovo, South Sudan), of the different political economies in the management of major natural resources. Many if not most people in Bougainville are also not aware of global platforms such as the International Cocoa Organization, or of global movements and experiences with approaches such as the Extractive Industries Transparency Initiative, the Round Table on Sustainable Palm Oil Standard and the Palm Oil Buyers Scorecard, or the Open Budget and participatory budgeting movements.

Voices of Bougainville

Author: Jubilee Australia

Methodology: Interviews with 82 leaders and landowners in the mine affected area.

Date: 2014

Accessed at: http://www.jubileeaustralia.org/page/resources

Note: This report was abruptly dismissed by the ABG, as being flawed and inaccurate. It is notable, however, the close correlation between the ABG/UNDP’s own findings, and Jubilee Australia’s results.

Key findings

Opposition to the opening of the mine was near universal; individuals not only expressed their personal opposition but reported that this was the feeling of the majority in the area. The three main reasons for this opposition were: the negative environmental and social consequences associated with the first period of mining, the role the mine played in sparking the conflict, and the lack of meaningful reconciliation and justice, associated with which is ongoing trauma from  the conflict period.

Respondents were deeply critical of recent consultations surrounding the proposed reopening of the mine. Some felt that the consultations had not been sufficiently inclusive of communities that would be directly affected by the reopening, and that youth, women and elders had been excluded and/or their opinions disregarded. Others felt that they had been poorly represented by the landowner associations or their elected representatives; others felt that there had been misleading statements in the media about the enthusiasm of Panguna residents for the mine reopening, and about what the reopening would mean. Others still appear to have deliberately chosen not to engage because of ongoing trauma associated with the conflict, and mistrust of the actors pushing for reopening.

Interviewees’ expressed a desire for more microprojects, and increased support for subsistence farming. This reflects respondents’ wish for a development that is localised, based on improving people’s current living conditions, and is respectful of their traditional ways.

When discussing alternatives to mining, all interviewees (64 plus the FGD) but one stated that there exist many other promising economic activities that could represent a solid source of revenue that would buttress Bougainville’s future development and wellbeing. This included: Horticulture;  Animal farming & subsistence animal farming; Alluvial gold panning; Fisheries & Fishing & prawn farming; Forestry & logging; Carbon trade; Water-export; Micro projects; Transformed goods & industries; Hydro-power; Timber; Tourism & eco-tourism.

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Rio Tinto challenged over Bougainville legacy at AGM in London

Rio Tinto’s Annual General Meeting was held in London on 12 April, 2017. The London Mining Network attended the AGM and has published a report that includes, among many issues, a section on Bougainville and the Panguna mine…

Richard Solly | Co-ordinator of the London Mining Network

I asked about the company’s legacy in Bougainville. I said: “Concerning the June 2016 transfer of Rio Tinto’s shares in Bougainville Copper Ltd to the governments of Papua New Guinea and Bougainville, a note on page 167 of the 2016 Annual Report says, ‘The carrying value has previously been fully impaired and therefore the transfer resulted in no financial impact for the year ended 31 December 2016.’ I suppose this is equivalent to saying that the shares are worthless. Presumably the only way of extracting any value from the shares would involve re-opening the mine – but Bougainville Copper Ltd estimates that the costs of re-opening the Panguna mine would exceed US$5 billion, and this does not account for the expenses of concluding several essential ‘due diligence’ studies. It would take years to get the mine up and running again, and doing so would deepen dangerous divisions among the people of Bougainville.

“I have two questions. Did Rio Tinto or BCL ever commission any studies of the environmental damage caused by the mine waste to the Jaba river and surrounding regions, including an assessment of clean-up costs? If so, will the company make those studies public? How does Rio Tinto reconcile its claimed commitment to sustainable development, environmental stewardship and protection of the environment, with the mess it has left behind on Bougainville, surely one of the greatest environmental disasters in the world?”

[Rion Tinto Chairman] Jan du Plessis said that Rio Tinto had decided long ago that it would not be allowed to go back into Bougainville, and it had no desire to do so; but in the right hands and under the right conditions a mine could be developed. The fact that Rio Tinto believed that in its hands the asset has no value does not mean that it would have no value in other hands. Stakeholders including – now – local landowners could decide how they wanted to use the asset.

Jan du Plessis added that when Bougainville Copper left the site in 1989, because it was forced to leave, he knew it was compliant with all environmental and other obligations. The company now had no idea of the current situation of the site as it had not been allowed to go on site since. He was quite certain that there was no report about environmental damage, as the company had not been there for 30 years.

I said that I was asking about studies and reports that may have been done when the company was active at the mine. Jan du Plessis replied that by 1989 the company was fully compliant with its environmental and other obligations and that since then it had conducted no further studies. I should have mentioned – but failed to do so – that John Momis, President of the Bougainville Autonomous Government, has spoken of the inadequacy of the environmental regulations in place at the time that Rio Tinto was mining in Bougainville, and of the possibility of suing the company for its legacy of pollution.

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Rio Tinto walks away from environmental responsibility for Bougainville’s Panguna mine

Silent rusting mine machinery litters the Panguna mine site, abandoned 28 years ago. Photo by Catherine Wilson.

Catherine Wilson | Mongabay | 6 April 2017 

The people of Bougainville Island successfully shut down the mine in 1989, but now find themselves left to cope with its environmental fallout.

  • Rio Tinto operated the Panguna copper mine in Bougainville from 1972 until 1989, when local landowners — angered about pollution and revenue sharing — forced the mine to shut down.
  • Rio Tinto divested its share of the mine in 2016, and now believes it has no obligation to address the mine’s environmental legacy.
  • Today, Bougainville — an autonomous region in Papua New Guinea — is devastated by damages wrought by both war and the mine.
  • The Bougainville government is considering re-opening the mine in order to fund a cleanup.

British-Australian mining giant Rio Tinto was for 45 years the majority-owner of the Panguna copper mine in Bougainville, an autonomous region in Papua New Guinea (PNG). But now it has given up its 53.8 percent stake in the mine’s operating company, Bougainville Copper Ltd (BCL), and announced it rejects any corporate responsibility for environmental damage wrought during operations from 1972 to 1989.

The company believes it no longer has any obligation to address the mine’s environmental legacy because it adhered to PNG’s laws of the day and was forced to abandon the extraction venture due to armed conflict.

“When BCL had to leave the site in 1989, we believe BCL operated Panguna in compliance with applicable laws and standards until 1989 when it was required to leave the country…..Given the lack of access since then, it has not been possible for Rio Tinto or BCL to confirm the nature, extent or cause of any alleged damage or pollution,” a spokesperson for Rio Tinto at their London headquarters told Mongabay.

The controversial open-pit mine, once one of the world’s largest, hit world news headlines almost three decades ago when indigenous landowners forced it to shut down. Angered about tailings and mine-waste contamination of agricultural land and nearby waterways, as well as inequity in revenue and benefit-sharing, landowners used a campaign of sabotage to halt operations in 1989, subsequently precipitating a decade-long civil war.

The mine’s social and environmental legacy

Now, rusting mine trucks and machinery litter the long-abandoned mine site in one of Bougainville Island’s remote mountain valleys, while gutted mine buildings have been resourcefully adapted and reoccupied by local villagers as dwellings.  But rivers and streams in the vicinity remain contaminated, tailings dumps have become unstable and chemical storage areas are deteriorating.

“In terms of the environmental damage and social disruption, it is a moral negligence on the part of Rio Tinto to have caused so much damage to the environment and to people’s lives, and to now walk away,” said Chief Dr. John Momis, president of the Autonomous Region of Bougainville.

Rio Tinto claims on its website that “respect for the environment is central to our approach. Wherever possible we prevent – or otherwise minimize, mitigate and remediate – harmful effects that our operations may have.”

However, the Bougainville Copper Agreement Act of 1967 — drafted when the region was under Australian administration as part of the former Territory of Papua and New Guinea — does not incorporate any significant environmental regulations or liability of BCL for the rehabilitation or restoration of areas affected by mining activities.

“Rio is now deeply hypocritical in its blatant disregard of the higher corporate responsibility standards it says it has adopted,” President Momis declared in a June 2016 media statement, following announcement of the company’s divestment. “Corporate social responsibility means responsible companies accept that their responsibilities go beyond the legal requirements of the day.”

Lee Godden, Director of the Centre for Resources, Energy and Environmental Law at Australia’s University of Melbourne, commented that:

“Many of the early agreements between mining companies and the PNG Government did not contain effective clauses for environmental damage remediation….Typically it is not possible to retrospectively amend those agreements in light of subsequent damage or subsequent international law principles that have operated to address some of the balance of power problems in these early agreements.”

The Nasioi people were the first indigenous peoples to force a global mining multinational to flee one of its most lucrative extractive ventures. Photo by Catherine Wilson.

Putting pressure on Rio Tinto

Determined that the mining multinational should not escape accountability for environmental and social legacy issues, President Momis has called for “an international campaign to force Rio Tinto to accept its responsibilities” and sought advice on taking legal action.

However, taking the matter to court requires considerable funds — which the Bougainville Government, still heavily dependent on international aid and financial support from the national government, has limited access to. “We have financial constraints and these financial constraints make it difficult for us,” President Momis admitted.

And while Rio Tinto’s divestment resulted in the Bougainville Government acquiring an extra 36.4 percent shareholding in the Panguna mine and the PNG Government 17.4 percent  (with the latter gifting its shares to “the landowners and the people of Bougainville”), their value is negligible unless the mine is in production.

Even during the 17 years of copper extraction in Panguna, which generated an estimated 1.7 billion kina in total revenue (roughly US$1.44 billion at the time), only 1.4 percent was granted to landowners, while 61.5 percent went to the PNG Government.  Local resentment about the marked inequity of economic benefits was one of the major factors in the escalation of the civil war.

In 1989, indigenous landowners demanded compensation of 10 billion kina for the mine’s detrimental environmental and social impacts, as well as benefit-sharing grievances. When this was not met by Rio Tinto and BCL, they formed a rebel group, known as the Bougainville Revolutionary Army, and used explosives to destroy the mine’s power supply and bring the functioning of the mine to a standstill. In so doing, the Nasioi people of Central Bougainville became known as the first indigenous peoples in the world to force a global mining multinational to abandon one of its most lucrative ventures.

The PNG Government responded by imposing a blockade on Bougainville in 1990 and deployed its armed forces to quell the uprising. A civil war then raged between the national military and armed revolutionary groups, wreaking widespread destruction across the islands and leading to an estimated death toll of 15,000-20,000 lives, until a permanent ceasefire in 1998.

Today the long-term processes of post-conflict peace building, disarmament, reconciliation and reconstruction continue to consume the energy and resources of the government, international donors and local leaders and communities.  And memories of the violence, atrocities and injustices of the conflict are still vivid in the minds of many people throughout the region.

An estimated one-third of men and one in five women who were exposed to violence during the war now suffer from Post-Traumatic Stress Disorder (PTSD), while more than one in three men and women believe there is continuing lack of peace in their communities, according to a recent study by the United Nations Development Program.

The abandoned Panguna mine pit, as it is today. Photo by Catherine Wilson.

Walking away from the mine

For at least the past seven years, Rio Tinto has been engaged in discussions with the Bougainville Government about the possibility of returning to Panguna to recommence extraction of the estimated 3 million tonnes of copper reserves remaining there.

Rio Tinto’s final decision last year to exit Bougainville has been attributed primarily to both the dramatic fall in commodity prices in recent years and investor risks — including substantial opposition to the company’s return by landowners and communities in the Panguna mine lease area and the region’s uncertain political future.

“During the strategic review that led to the announcement in June 2016, Rio Tinto concluded that it would not be in a position to take part in future mining activities at Panguna and that it was in the best interests of BCL and its stakeholders to transfer our 53.8 percent shareholding to those better placed to determine the future direction of the company,” the Rio Tinto spokesperson stated.

However, the massive environmental legacy is still unaddressed and continues to affect the lives of indigenous communities, especially the Barapang, Kurabang, Basikang and Bakoringku clans who own the mine-pit land.  For customary landowners, “the land is like a mother because we feed on the land. It’s nothing compared to money.  I can always go to the land for food and nourishment,” Panguna landowner, Joanne Dateransi, explained.

Rivers and streams in the mine’s vicinity remain polluted and unusable as sources of freshwater or fish. Photo by Catherine Wilson.

There has been no official environmental assessment of the damage since the mine was deserted. But it is known that around 300,000 tonnes of ore and water were excavated every day in Panguna and the mine tailings were discharged down the Jaba River and into the Empress Augusta Bay, while the spoil and overburdens accrued in waste dumps in the Panguna area.  Local communities claim there has been no fish in the local Jaba and Kawerong Rivers for four decades.

The Bougainville authorities also report that:

“The levy banks built by BCL to contain the flooding of nearby areas arising as the bed of the Jaba River rose (because of the depositing of vast amounts of tailings) were breached by floodwaters over 15 years ago. River water polluted by acid leached from the crushed tailings now floods huge areas of our people’s land all along the lower Jaba.”

And, further, a mammoth delta of tailings extends 15 kilometers (9.3 miles) into the sea on the west coast of Bougainville Island.

Social impacts include the forced relocation of at least five villages, such as Dapera and Moroni, to land unsuitable for growing crops and supporting livelihoods, while families were provided with cheap, substandard housing, resulting in severe overcrowding and health problems. The original location of the villages is now a barren terrain of waste rock.

Residents of relocated villages, such as Dapera and Moroni, have endured substandard housing and land unsuitable for food production. Photo by Catherine Wilson.

Funding a cleanup

President Momis says the government is keen to facilitate an expert environmental assessment.

“We are having discussions with the United Nations Environment Program (UNEP) about the possibility of organizing such a study and also a social impact study. We are also contacting international NGOs which support third world nations in the interests of preserving history, forests and ecological balance,” he said.

Following this, the most critical question is how a major environmental cleanup, which could cost billions, can now be pursued.

One option, according to the President’s office, is to set up a trust fund with potential contributions sought from the PNG and Australian Governments, as well as Rio Tinto, although, to date, Rio Tinto has not indicated any willingness to support such an initiative.

“World Bank or Asian Development Bank funding is sometimes available for this type of cleanup, but often that will mean a loan to what are impoverished governments which need to meet a range of other socioeconomic needs in their countries,” Professor Godden also advised.

President Momis suggests that “the only other way to fund a cleanup is through the resumption of mining. It [BCL] is now majority owned by the landowners and the Autonomous Bougainville Government and we believe the cleanup could be done concurrently with the reopening of the mine. During our discussions with them so far they have been conscious of their responsibilities.”

However, the capital investment required to reconstruct and reopen the Panguna mine is estimated to be about 20 billion kina ($6.3 billion) and securing investment of this magnitude will be a challenge in the current investment climate.

Gutted mine buildings in the forested mountain valley are now being reused by local communities. Photo by Catherine Wilson.

Recommencing large-scale mining is also seen by the authorities and some landowner groups as a way to acquire the sizeable revenues needed to generate economic self-sufficiency ahead of a referendum on Independence from PNG. A major provision in the 2001 Bougainville Peace Agreement, the referendum is planned to take place by 2020. At present, only 10 percent of the Bougainville Government’s annual budget of about 300 million kina derives from internal revenue.

Two years ago, the Autonomous Bougainville Government, which was established in 2005, passed its first mining law, thus paving the way with a legal framework for large-scale mining to be reconsidered in the region. The Bougainville Mining Act (2015 ) requires mining-lease applicants to protect the environment and comply with environmental policies and regulations, and stipulates that customary landowners have ownership of mineral resources found on their land. But, while they are entitled to consultation about exploration and mining interests, as well as related benefits and employment, the Bougainville Government retains exclusive powers over the granting of mining tenements and distribution of revenues.

Nevertheless, because of the unique history of the Panguna mine and the fact that its territory is controlled by the local Mekamui Tribal Government, comprising many former rebel leaders and combatants, any development or exploitation of Panguna’s resources will require the final consent of local chiefs and landowners. And reports in recent years have highlighted that a significant proportion of landowners in the Panguna mine lease area oppose large-scale mining on their customary land in the near future.

“We don’t need Rio Tinto or BCL,” Lynette Ona of the Bougainville Indigenous Women’s Landowner Association and a Panguna landowner declared. However, she added that a meeting was being planned in the near future so that people across Bougainville, not only local landowners, could voice their views on the question of mining.  If there is majority consent for this to happen, “then we have to bring in a new company after Independence, so that we can fund the economy, but we don’t want mining now,” Ona emphasized.

The “new BCL,” without Rio Tinto, has only begun articulating its future plans. Any provision, in this context, for an environmental cleanup is very unclear, but will come under severe scrutiny by those most affected, given that the history of the Panguna mine, to date, is a lesson in the shortcomings of corporate social responsibility.

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Bougainville #BCL Mining News : Seven reasons why : BCL no longer the ‘devil-we-know’, but the ‘devil-we-own

Bougainville News | April 6, 2017

“As the ‘devil-we-own’, and one that is subject to the very tough requirements of the Bougainville Mining Act, BCL is now required to seek new investors into some sort of partnership with BCL, and come up with a deal acceptable to the landowners and to the ABG.

At this stage it is a decision that will be subject to the powers of the mine lease landowners under the Bougainville Mining Act to veto the project if they are not satisfied with the conditions for re-opening.

In addition, it will be subject to the ABG being satisfied – on behalf of all Bougainvilleans – that the project conditions are just and equitable.

As well as other Bougainvilleans may want to understand better why I announced ABG support for BCL. There are several separate but powerful reasons.

ABG President Chief Dr John Momis

The Autonomous Bougainville Government’s decision to support Bougainville Copper Limited’s proposal for reopening the Panguna Mine is only in principle.

ABG President Chief Dr John Momis said that at this stage it is a decision that will be subject to the powers of the mine lease landowners under the Bougainville Mining Act to veto the project if they are not satisfied with the conditions for re-opening.

In addition, it will be subject to the ABG being satisfied – on behalf of all Bougainvilleans – that the project conditions are just and equitable.

“As well as other Bougainvilleans may want to understand better why I announced ABG support for BCL. There are several separate but powerful reasons,” Momis said.

Momis explained that the first is that BCL is no longer owned by Rio. Rather, the ABG holds over 33 per cent of BCL shares, and the National Government has promised that the 17.4 per cent shares it received from Rio will be transferred to ownership of Bougainvilleans, including Panguna landowners.

This means that BCL is now a different company. It is not a subsidiary of Rio Tinto. Instead it is majority owned by Bougainvilleans.

“As a result, as stated recently by the new Vice President, BCL is no longer the ‘devil-we-know’, but is instead the ‘devil-we-own,” Momis said.

“As the ‘devil-we-own’, and one that is subject to the very tough requirements of the Bougainville Mining Act, BCL is now required to seek new investors into some sort of partnership with BCL, and come up with a deal acceptable to the landowners and to the ABG,” Momis said

Without such a deal, BCL will have little option but to cease existence – to liquidate and to distribute its remaining funds to its shareholders. At that point, Bougainville will be able to seek other potential developers.

A second reason why the ABG supports BCL is that BCL still holds an Exploration Licence over the area of the former Special Mining Lease. While it holds that licence, we must deal with BCL.

A third reason is that BCL is a reputable company, with reputable board members and management.

A fourth reason is that BCL still holds all the drilling and exploration data for the ore body at Panguna.

A fifth reason is that BCL shows willingness to deal with the legacy issues left by the operation when it closed in 1989.

A sixth reason is that BCL has shown responsibility over the past 5 years in working closely with the ABG and the 6 relevant landowner associations to gradually develop responsible and workable arrangements for making the payment of the 1990 land rents and occupation fees etc.

The seventh and final reason is that the leaders of the combined landowner associations have almost unanimously consistently indicated their support for BCL as the preferred company to become involved in re-opening Panguna.

“I emphasize, however, that despite all these reasons for supporting the BCL proposal, there are as yet no guarantees that it will be BCL that re-opens the mine,” Momis said.

“I must repeat the point already made that everything will depend on whether the ABG and the landowners are satisfied with the proposal that BCL eventually puts forward – provided of course that BCL is able to get the funding partners it will need to put forward a viable proposal,” Momis added.

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Bougainville to continue pursuit of Rio Tinto

It is a bit late now Mr Momis, how long have you been President and done nothing?

Sounds like an election soundbite not a genuine commitment! 

Radio New Zealand | 27 March, 2017

The President of Bougainville, John Momis, says his government is going ahead with legal action against mining giant Rio Tinto over the destruction caused by the Panguna mine.

Rio Tinto was the majority owner of Bougainville Copper Ltd, which ran the mine for 20 years before it was shut down by a civil war, fostered by environmental and social damage attributed to the mine.

Rio Tinto’s shares in BCL were given to the Papua New Guinea and Bougainville governments and the multi-national walked away from further involvement.

Mr Momis, whose government was now the biggest shareholder in BCL, said his administration would still prosecute Rio Tinto over its Panguna legacy.

“We are going to pursue this matter as a moral issue because they caused so much damage and just think they can get away scot free,” he said.

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President Momis announces support for the new Bougainville Copper Limited (BCL)

Bougainville News | 16 March 2017

President of the Autonomous Bougainville Government Chief Dr John Momis has announced his support of the new Bougainville Copper Limited (BCL) .

The new BCL is step away from the post-colonial and pre-crisis arrangement that had Bougainville at a disadvantage; it is partly owned by the Autonomous Bougainville Government, the National Government, Panguna Landowners and people of Bougainville to develop the defunct Panguna Mine with the landowners for the benefit of Bougainville.

President Momis said the ABG as regulator will work together and support BCL explore alternative Panguna development options that will accommodate the interest of project stakeholders to fast track the development of the Panguna resources.

“Since BCL was invited to formally re-engage in discussions in Bougainville in 2012, the landowners have consistently stated their preference to work with BCL as the developer,” Momis said.

This was recently reaffirmed by the nine (9) Landowner Associations in Buka on 23 February 2017 after the BCL team led by Chairman Rob Burns made presentations to the ABG leaders and the nince landowner association executives and representatives on the new BCL’s development proposal for Panguna.

During that visit the Chairman present to the ABG leaders and the landowners a staed development proposal outlining how different the new Panguna approach will be under the new BCL hich now owned by the ABG, the Panguna landowners, people of Bougainville and the National Government.

Due to the recent majority of shares transferred by the Rio Tinto to ABG and the National Government, the ABG and the landowners now view BCL as not the devil we know but the devil we won.

The ABG and the landowners will now have to take advantage of this scenario and work out a positive strategy for an outcome that will be equitably beneficial for all stakeholders especially the landowners.

The ABG and the landowners have also committed to addressing the immediate challenges to progressing the Panguna project and looks forward to working in partnership with BCL through the project development cycle.

During discussions held this week between the BCL and the ABG, the two parties reaffirmed their commitment in which a way forward can be agreed for the immediate addressing of stage 0- Removing impediments under the BCL proposed staged development proposal presented during 23 – 24 February visit.

In those discussions it was also mentioned for BCL’s consideration to find ways and opportunities in its exploration to project development financing phase to support the ABG’s immediate development agendas as a way of building a long term unwavering development in Panguna.

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