Tag Archives: Solwara 1

Collapse of PNG deep-sea mining venture sparks calls for moratorium

Papua New Guinea out of pocket $157m from failed attempt at mining material from deep-sea vents as opponents point to environmental risk

Ben Doherty | The Guardian | 15 September 2019

The “total failure” of PNG’s controversial deep sea mining project Solwara 1 has spurred calls for a Pacific-wide moratorium on seabed mining for a decade.

The company behind Solwara 1, Nautilus, has gone into administration, with major creditors seeking a restructure to recoup hundreds of millions sunk into the controversial project.

The Solwara 1 project (Solwara is pidgin for ‘salt water’) planned to mine mineral-rich hydrothermal vents, formed by plumes of hot, acidic, mineral-rich water on the floor of the Bismarck Sea. But the project has met with fierce community resistance, legal challenges, and continued funding difficulties.

The PNG government sunk more than 375m Kina (AUD$157m) into the project, money it is attempting, but appears unlikely, to recoup. The project has been “a total failure” prime minister James Marape said.

Deepsea mining has proven contentious wherever it has been proposed and trialled across the world.

Proponents argue deep-sea mining could yield far superior ore to land mining – in silver, gold, copper, manganese, cobalt and zinc – with little, if any, waste product. The industry is potentially worth billions of dollars and could assist the transition to a renewable energy economy, supplying raw materials for key technologies such as batteries, computers and phones. Different mining methods exist, but most involve using converted terrestrial mining machinery to excavate materials from polymetallic nodules or hydrothermal vents on the sea floor, at depths of up to 6000 metres, then drawing a seawater slurry to ships on the surface. The slurry is then “de-watered” and transferred to another vessel for shipping. Extracted seawater is pumped back down and discharged close to the sea floor.

Environmental and legal groups have urged extreme caution, arguing there are potentially massive – and unknown – ramifications for the environment and for nearby communities, and that the global regulatory framework is not yet drafted, and currently deficient. Scientists argue deep sea biodiversity and ecosystems remain understudied and poorly understood, making it impossible to properly assess the potential impacts of mining – including disturbance of seafloor ecosystems; sediment displacement; and noise, vibration, and light pollution – and to establish adequate safeguards. Deepsea mining could worsen the global climate emergency, reducing the ocean’s ability to store carbon by disrupting seafloor sediments.

The Pacific has been seen as a region of immense deepsea mining potential, but some government leaders are now counselling against the rush to embrace seabed mining.

“I ask you all to… support a 10-year moratorium on seabed mining from 2020 to 2030 which would allow for a decade of proper scientific research of our economic zone and territorial waters,” Fiji president Frank Bainimarama told a climate ‘sautalaga’ – an open discussion – at the Pacific Islands Forum last month.

Charlot Salwai, Prime Minister of Vanuatu, supported Fiji’s call for a 10-year moratorium. Civil society organisations have consistently called for a moratorium on seabed mining “to prioritise the health of our communities and recognise values beyond economic gain”.

PNG had previously been one of deepsea mining’s firmest backers, but new prime minister James Marape has said he is wary of the technology, saying PNG had been “burned” by industry promises.

Until that deep sea mining technology is environmentally sound and takes care of our environment at the same time we mine it, that, at this point in time, I support the call made by the Fijian prime minister,” he told the Post Courier.

“If there is an opportunity for deep-sea mining, so long as environmentally it is friendly and the harvest of resources is done in a sustainable manner then we can give considerations to this, but right now it is a show.

“The technology is not proven anywhere and PNG, we burnt almost 300 million Kina in that Nautilus [Solwara 1] project on a concept that someone told us can work, but is… a total failure.”

Jonathan Mesalum from the Alliance of Solwara Warriors, a community group which opposed the Solwara project, said a 10-year moratorium would be welcomed, “but we need to go further to protect our seas, our livelihoods and traditions by imposing a ban”.

He said while Nautilus’s project had collapsed, other companies might take control of the project’s licences and attempt to resurrect it.

“No one knows about the environmental impact: not scientists, not Nautilus, not the government, nor you or I,” Mesalum told The Guardian. “Our biggest fear is there might be interest from other mining companies who wish to continue the project.”

Nautilus developed and successfully tested three undersea robots designed to mine hydrothermal vents on the ocean floor, but funding for its production support vessel dried up midway through construction. Under a restructuring plan approved by a Canadian court, the company will be liquidated and left with no assets. But a PNG government-owned company Eda Kopa is seeking to recoup some of its money, in an ongoing dispute back before court this week.

A new report, Why the Rush?, from the Deep Sea Mining campaign described the Pacific as the “new wild west” for speculative mining ventures, and argued Pacific regional decision-making and political processes have been manipulated by mining companies seeking to take advantage of inchoate and incomplete regulatory frameworks in the region.

Sir Arnold Amet, former chief justice of PNG, was Governor of Madang province and an MP when Solwara 1 was approved. He said he regrets that the then government didn’t adequately scrutinise the proposal.

“Let’s recognise this failed investment in the upcoming budget and ensure we don’t enter into seabed mining joint ventures in the future or issue any more seabed exploration or mining licences. We now know how deep sea mining companies attempt to manipulate governments according to their own narrow profit motives without any conscience. We look to PM Marape to stand up for Papua New Guineans against the pressure exerted by these corporations.”

The Environmental Defenders Office NSW said deep seabed mining was similar to open cut mining at depths of between hundreds and thousands of metres below the sea’s surface.

“A 10-year moratorium on deepsea mining is an appropriate application of the precautionary principle in circumstances where the consequences and need for this type of mineral exploitation is not well understood,” the EDO’s BJ Kim told The Guardian.

“But it’s not only the risks that are not well understood, it’s also clear that appropriate legal frameworks for mining of this kind are not in place, either in the Pacific or elsewhere. This type of commercial experiment in the ocean should not progress without effective regulatory measures for risk mitigation, monitoring and enforcement of conditions.”

Communities bordering the Solwara 1 project have been concerned about a broad range of environmental impacts, Kim said, including minerals leaching into seawater affecting fisheries and livelihoods, the extinguishment of unique sea species, and the risk of accidents and spillages.

“Communities are still living with the impacts of land-based mining disasters such as Ok Tedi and Panguna. Just this year in the Pacific, we’ve seen oil and ore spills in Solomon Islands and the spillage of an estimated 200,000 litres of toxic red slurry from the Ramu Nickel mine in Madang, PNG.”

Besides PNG, the tiny island nation of Nauru has been deep sea mining’s strongest supporter.

Start-up DeepGreen is seeking to extract cobalt and other metals from a 75,000 sq km zone in the Clarion-Clipperton Zone in the Pacific, over which exclusive control has been granted to Nauru. DeepGreen has secured $150m in funding, the bulk from Swiss-based Allseas, to begin feasibility studies.

Nauru is a country already scarred by mining. More than 80% of the tiny island’s landmass has been rendered uninhabitable by phosphate mining during the 20thC, most by colonial powers the UK and Australia.

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Govt Cuts All Exploration Investments After Nautilus Debacle

Minister should identify the individuals responsible for the decisions that have led to losses of over K375 million.

If there is zero culpability and zero transparency taxpayers can expect they will continue to get fleeced.

Post Courier | September 12, 2019

The government has put a blanket ban on exploration investments after it was dealt a major blow in losing K375 million in the very risky Solwara 1 project.

Its attempts to recoup some money, at least US$50.8 million (K172m) has been constrained so far as Solwara 1 joint venture partner Eda Kopa Limited (Kumul Minerals Holdings Limited subsidiary) had the claim disallowed by the British Columbia Supreme Court appointed monitor PricewaterhouseCoopers (PwC) Canada last month.

KMHL was seeking an unearned contribution claim during the Nautilus Plan of compromise and arrangement process catered for under the Canadian Companies’ Creditors Arrangement Act.

Minister for Public Enterprise and State Investment Sasindran Muthuvel in an interview with Post Courier has told Kumul Minerals and Kumul Petroleum to stop such exploration investments.

He said the deal started from the time of the previous government.

“They went through arbitration and in 2015 they decided to pay upfront US$120 million (K375 million) which was obtained purely as a loan and then we entered into this highly risky project,” Minister Muthuvel said.

“Now we stand to lose all of these monies… the Canadian Court in the process of the developer Nautilus Minerals sought creditor’s protection from (the) British Colombia court in Canada and they appointed PriceWaterHouseCoopers as their administrator.”

“We put our claim for US$50.8 million to retrieve some money back but unfortunately there is very little room or chance for us to get back any funds because they have exhausted all the funds.”

“We stand to lose this major funding which is really a major blow for us.”

Minister Muthuvel said that was a very tough lesson to learn as a Government not to enter into very risky investments.

“This has shown that not necessarily we as a government must embark into every exploration investment.

We should look at our tax regime, we should look at our royalty regimes whereby how we can generate some of the revenue of these tax regimes rather than insisting on equity, especially on this kind of scientific or research project where there is uncertainty to it.”

“To tell you the truth, from day one the project was carrying negative rate of returns, that means we knowing very well that this project is not going to yield any positive income, we knowingly agreed to go into this project with a negative investment or negative rate of returns, which is highly risky and it’s again guaranteed by State.”

Minister Muthuvel also revealed that the investment was not carried out in the books of Kumul Mineral.

“I am appealing to both Kumul Mineral and Kumul Petroleum to stop all kinds of exploration investment, to slow down, and to take stock of what we have and also to help government at this tough economic time.”

As of last week, September 5, according to PwC’s update on the process currently underway, Eda Kopa and the Nautilus Group have individually led applications for the September 10, 2019 Court hearing in Canada.

“Eda Kopa is seeking to set a schedule to have the validity of their claim (the “Eda Kopa Claim”) determined.

“The Nautilus Group is seeking to have the validity of the Eda Kopa Claim determined on September 10, 2019, or as soon as reasonably practical afterwards,” PwC Canada stated in its last update on the process.

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Another call for PNG to cancel sea bed mining licences

Radio New Zealand | 6 September 2019

The former governor of Papua New Guinea’s Madang province, Sir Arnold Amet, has renewed his call for the government to cancel sea bed mining licenses.

This comes as Canadian miner Nautilus, in which the PNG government has a 15 percent stake, is fighting through the courts for its economic survival.

Sir Arnold said he feared that Nautilus, which had been close to beginning sea bed mining at its Solwara One site in the Bismarck Sea, could on sell its PNG licenses.

The James Marape government is backing the call made by Pacific Forum leaders for a 10 year moratorium on seabed mining, but Sir Arnold said it must go further.

“Our preference is, quite obviously, for cancellation of those licenses and a total ban until such time as science can truly satisfy us that that [seabed mining] is worthwhile and economically and environmentally sustainable project. At the moment there is no such evidence,” Sir Arnold said.

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Govt Ignored Warning On Ramu Mine Toxic Waste – Kaluwin

Elias Nanau | Post Courier |  September 5, 2019

Head of the school of environmental science and geography at the University of Papua New Guinea, Professor Chalapan Kaluwin, says the government was forewarned about the impacts of toxic waste from the Ramu nickel mine likely to find its way to the sea.

He said this was during the development of the mine and while he was living overseas, as part of a group who did research on the oceans and likely environmental impacts on communities.

Prof Kaluwin told the national oceans forum yesterday in Port Moresby that their advice to the government was to dump waste at a valley inland.

“I was working for the Australians,” he said. “We were asked to look at the maritime aspect of it.”

He said the slurry would end up at the ocean “because it’s so close and we know the depth, we have done research on depth with Australians and Americans”.

“The document is still there,” he said.

“The science for this is that it’s a chronic zinc oxide that ended in the ocean and it’s toxic.”

Prof Kaluwin said because of the lack of capacity by the government or compelling interest in earning money, their advice was ignored.

“They were more interested in money but not protecting the seas; not protecting the long-term sustainability of people living in Madang and along the coast,” he said.

“We did research all the way from Milne Bay to Madang… all the way to Indonesia… we knew the currents – how it was acting.

“There’s some fine particles that can be swinging in and out of Madang.”

Prof Kaluwin, who has been vocal in opposing the Solwara 1 project in New Ireland, warned mining in the Central Province could face a similar tragedy.

He said the country must be reminded that if “we considered technology, we should be able to know how to use it”.

“Science tells you that you bring in a new technology until you test it,” he said, describing the Solwara 1 undersea mining project as dangerous and an attempt to use PNG as a guinea pig to test technology.

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Moratorium on deep sea mining in PNG welcomed

PACNEWS | 4 September 2019

Papua New Guinea Prime Minister, James Marape supported Fiji’s call at the Pacific Islands Forum for a 10-year moratorium on seabed mining.

The PM’s support for a moratorium was welcomed by the PNG Council of Churches at its meeting last week. However, the churches and civil society remind the Prime Minister that the environmental, social and economic risks of seabed mining necessitate a complete ban.

An open letter to PM Marape published in June from the PNG Council of Churches, Voice of Milne Bay, Alliance of Solwara Warriors, Bismarck Ramu Group, and the Center for Environmental Law and Community Rights seeks commitments to cancel all licences issued to Nautilus, to not issue any more sea bed mining exploration or mining licences, and to invest in truly sustainable local enterprises that will benefit local economies.

Jonathon Mesulam of the Alliance of Solwara Warriors said, “We thank our Prime Minister for heeding the calls of our communities by backing a 10-year moratorium on seabed mining. But we need to go further to protect our seas, our livelihoods and traditions by imposing a ban.”

Peter Bosip, Director, Center for Environmental Law and Community Rights claimed, “PNG’s recent history is littered with many examples of land-based mines with disastrous impacts. It is very difficult to monitor and regulate the impacts of land-based mining let alone mines deep under the sea. Globally, ocean ecosystems are already under stress due to pollution, plastics, overfishing, climate change and accelerating biodiversity loss.

“PNG has no need for seabed mining” stated Christina Tony of the Bismarck Ramu Group.  “We are blessed with abundant fisheries, productive agricultural lands and marine life. Seabed mining will benefit only a small number of people who are already wealthy and not bring prosperity to our communities.”

Nautilus is now approaching liquidation and PM Marape has described Solwara 1 as “a total failure”.  PNG’s investment in Nautilus has resulted in loss equivalent to one third of its last national health budget. The PNG Government through Eda Kopa (Solwara) Limited is attempting to recoup some of its financial loss through the Canadian courts. Smaller shareholders considering a class action are hoping to collaborate with Eda Kopa.

A new international report describes how Nautilus’ early investors pushed the PNG Government into purchasing a 15% share in its Solwara 1 project.  These investors increased the company’s share price with false promises of vast wealth and then walked away as multi-millionaires, leaving the company to flounder.

Sir Arnold Amet stated, “The approval of Solwara 1 occurred under my watch as an MP and Governor for Madang’. I regret that the O’Neill government didn’t adequately scrutinize that project and took up 15% equity in Nautilus PNG. It’s time to rectify that situation.

“Lets recognise this failed investment in the upcoming budget and ensure we don’t enter into seabed mining joint ventures in the future or issue any more seabed exploration or mining licences.  We now know how deep sea mining companies attempt to manipulate governments according to their own narrow profit motives without any conscience. We look to PM Marape to stand up for Papua New Guineans against the pressure exerted by these corporations,” he said .

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Canada rejects State claim against Nautilus Minerals

Eda Kopa Claim Disallowed By Monitor

Matthew Vari | Post Courier | September 2, 2019

Nautilus Minerals Solwara 1 joint venture partner Eda Kopa Limited has had its claim of US$50.8 (K172.8) million disallowed by the British Columbia Supreme Court appointed monitor PricewaterhouseCoopers (PwC) Canada.

This presents a setback for the state owned investment under Kumul Minerals Holdings Limited, as it seeks the unearned contribution claim during the Nautilus Plan of compromise and arrangement process catered for under the Canadian Companies’ Creditors Arrangement Act (CCAA).

According to documents from the monitor’s (PwC’s) status update as of August 28 last week, it referred to its Monitor’s Fourth Report, dated August 9, which called for a need for resolution with respect to Eda Kopa’s claims and CCAA proceedings.

Where the monitor disallowed the claim on the basis that Eda Kopa’s claim is an equity claim, and that the agreements between Eda Kopa and the Nautilus Group do not support any such claim.

The report also stated that on July 31, Eda Kopa sought to dispute the monitor’s disallowance by submitting a Notice of Dispute, however, according to the monitor the notice did not provide any new information to the Nautilus Group or the Monitor, and, accordingly, neither saw any basis for withdrawing or amending the disallowance of Eda Kopa’s claim.

According to the monitor on August 6, it and Nautilus received notice Eda Kopa retained Canadian counsel and led for an appeal that is set for September 10 this month to hear Eda Kopa’s appeal of the disallowance of its claim.

A resolution to the matter is expected to be reached on or shortly after September 10.

According to the monitor’s update if a resolution cannot be achieved in both Eda Kopa’s claim through the CCAA process or its general relationship with Nautilus going forward then the plan will not be implemented resulting in no distribution to affected creditors as anticipated and the Nautilus group restructuring will fail.

The CCAA plan was approved early in August at a meeting of affected creditors along with an acquisition plan by its main lender Deep Sea Mining Finance Limited would take over a number of the 44 entities registered under the Nautilus Group in nine jurisdictions around the world.

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BSP still milking taxpayers for Solwara 1 loan

BSP profits at taxpayers expense for a loan that it should never have given.

If the Fleming had any conscience the bank would write off the loan

Fleming: Payments For Solwara Loan Made Since Day 1

Matthew Vari | Post Courier | 2 September 2019

Payments for the State’s loan from Bank South Pacific for its 15 per cent stake in the now defunct Solwara 1 project have been made since day one.

The K375 ($120) million bullet loan taken out by Kumul Minerals Holdings Limited subsidiary Eda Kopa in 2014 will fully mature in 2021 according to BSP Group CEO Robin Fleming.

Mr Fleming was referring to queries from stakeholders, at BSP’s half year presentation last week, if the bank was calling upon the State’s guarantee on the loan taken out for its equity in the project, which the bank has denied.

“There has been no call on the State, and Eda Kopa, the Solwara (1) loan is in the name of Eda Kopa. “It has an expiry date of 2021, but no guarantee has been called upon.

“All payments to BSP have been made since day one, the loan has been fully serviced and the manner which that loan was structured was that you have a borrower in the name of Eda Kopa Limited and co-underwritten or fully supported by the Independent State of PNG.

“In terms of the original approval of that facility, which doesn’t mature until 2021, all payments have been made whenever they are due,” Mr Fleming said.

He said discussions really are with Kumul Minerals who owns Eda Kopa to clean up their own balance sheet and possibly look to have it more directly with the Independent State of PNG which provides the guarantee.

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