MAC: Mines and Communities

Bougainville: New voices raised against mine re-opening

Published by MAC on 2011-03-08
Source: Postcourier, Radio New Zealand, Islands Business

In recent months Rio Tinto's Bougainville Copper subsidiary (BCL), backed by Bougainville's president, has acted as if  re-opening  the closed-down Panguna mine is - if not  a foregone conclusion - certainly backed by the majority of the area's landowners.

Increasingly however, and as two new landower associations are added to the list of those empowered to make the final decision, further voices of dissent are being raised.

For related article this week, see: Tayloring a new Panguna mine for Bougainville

Rebel hits out against mine talks

By Gorethy Kennth


28 February 2011

BOUGAINVILLE'S feared rebel Me'ekamui hardliner Chris Uma has lashed out at the Autonomous Bougainville Government and the Panguna landowners for talking about the mine re-opening before addressing outstanding issues.

Mr Uma, who still has a big following in Bougainville said this was not the time to talk about the mine re-opening but speak on issues at hand.

He said the responsible authorities should address the issue of compensation, and sorting out all other outstanding issues before speaking of re-opening of the mine.

Mr Uma claimed all authorities concerned have erred in their move to progress the talks on the mine re-opening because the "paitman" or rebel fighters had been left out of the talks so far.

"We the fighters and I am speaking on behalf of all of us from Buin, Kieta and Buka are not happy with the current talks on the re-opening of the mine," Mr Uma said angrily.

"We should address the problems we faced during the crisis and the outstanding issues.

"We should not go straight to opening the Panguna Mine.

"Lives were lost, damages done and we can't ignore these things and pretend that we are okay.

"Bougainville is not yet normal, there are still issues we still have to sort out first.

"Things like compensation, I also want the mine pit measurement looked at and people compensated fairly for the damages done to this hole.

"We have to address and settle this before we can start talking about mine re-opening."

Mr Uma was claiming that they were deliberately left out of the meetings but said if this continued they'll be just happy to fight as they were fighters without real jobs.

Bougainville mining prospects fraught with complexities, says academic

Radio New Zealand

14 February 2011

An academic has sounded a note of caution around discussions over the potential re-opening of the Panguna mine in the autonomous Papua New Guinea province of Bougainville.

A meeting is planned for next week in Arawa to discuss landowner issues around the upcoming review of the Bougainville Copper Agreement.

Bougainville's President John Momis says the bulk of the people in the province want the mine to be reopened, and that his government is working to ensure equitable sharing with landowners.

But Ted Wolfers, Professor of Politics at the University of Wollongong, says that addressing landowner equity is just one of a number of complex issues:

"Because not only have you got landowners involved, you've got state ownership of a proportion of BCL; you've got to convince BCL or whoever takes it over to invest huge sums of money in restarting the mine and you've also got a court case pending in the United States over what is seen as some of the things it allegedly did wrong in the early stages of the conflict."

Academic Ted Wolfers

Two new associations added for lease area

By Gorethy Kenneth


4 March 2010

BOUGAINVILLEANS have created two new landowner associations to add to the six known Panguna Mine lease area groups.

They are the Middle Lower Tailing lease and the South West Coastal Corridor Mine Tailing - Patrick Hermosate.

The original six landowners associations include:
- Rorovana Lease;
- Special Mining Lease;
- Port Mine Access Road lease;
- Dapera/Iaba pump station mine lease;
- Upper Tailing lease; and
- Lower Tailing lease.

The Middle Lower Tailing lease landowner association is a splinter from the Upper and Lower Tailing Lease associations.

The South West Coastal Corridor Mine Tailing is made up of landowning groups along the coast directly affected by the tailings waste from the Panguna Mine.

Interim executive director of the South West Coastal Corridor Mine Tailing group, Patrick Heromate in a statement warned the leaders to be very cautious, conscious and careful about the representations of the meetings.

"Panguna mine has caused a lot of problems that led to a civil war in Bougainville where lives of people have been lost," Mr Heromate said.

"Leaders and landowners must be very mindful in the cause to open the Panguna Mine. We don't want your decision to ignite another crisis that could be more devastating that the last crisis.

"Though we may be telling the world that Panguna landowner's talks have been successful, don't forget that you are not corroborating with every landowners.

"You have been meeting with the six landowner associations. You will now have eight not six as you have continued to advocate.

"There are two new landowner associations that must be added on in your future meetings," Heromate singled out to all the leaders both ABG and National Government."

Bougainville President says US interest in PNG small compared to China

Radio Australia

7 March 2010

Bougainville's President, John Momis, says the United States is conspicuous by its absence and its lack of investment in Papua New Guinea.

His comment follows strident remarks by US Secretary of State, Hillary Clinton, warning that PNG is one of the sites where the US is locked in a strategic competition with China over resources.

Jemima Garrett reports.

Presenter: Jemima Garrett

Speakers:Hillary Clinton, US Secretary of State; John Momis, President, autonomous region of Bougainville.

GARRETT: As the United States attempts to deal with its massive debt, Secretary of State Hillary Clinton is doing her best to ensure climate change programs for the Pacific are spared the axe.

When she went before the United States Foreign Relations Committee, last week, she highlighted US strategic interests.

CLINTON: Let's put aside the moral, humanitarian, do-good side of what we believe in, and let's just talk, you know, straight real politique. We are in a competition with China. Take Papua New Guinea, huge energy find, to go to one of (Republican) Senator (Dick) Lugar's very strong points. Exxon Mobil is producing it. China is in there every day in every way trying to figure out how it's going to come in behind us, come in under us. They're supporting the dictatorial regime that unfortunately is now in charge of Fiji. They have brought all of the leaders of these small Pacific nations to Beijing, wined them and dined them. I mean, if anybody thinks that our retreating on these issues is somehow going to be irrelevant to the maintenance of our leadership in a world where we are competing with China, that is a mistaken notion.

GARRETT: Hillary Clinton may not want to see Pacific climate change programs cut but that has not stopped questions being asked about whether the US has left the door open to China, in this region.

Bougainville is home to the massive British and Australian-owned Panguna copper mine and is prospective for more minerals.

Bougainville's President, John Momis, is one of Papua New Guinea's elder statesmen and its former ambassador to China.

He says the Exxon Mobil lead LNG project is the exception rather than the rule when it comes to US investment.

MOMIS: That's one off. Apart from that the US is conspicuous by its absence Bougainville.

GARRETT: So would you like to see US investment in PNG and Bougainville?

MOMIS: Yes, we would like to but I think they have a policy of not investing in Papua New Guinea.

GARRETT: China, on the other hand is looking into a wide range of projects in PNG.

President Momis says Chinese companies have shown interest in taking a stake in the Panguna copper mine.

Bougainville is still recovering from a civil war in the 1990's which left thousands dead, closed Panguna and destroyed much of the islands infrastructure.

Australia and Papua New Guinea are supporting Bougainville's reconstruction.

President Momis, says economic and social development is a priority and he is keen to welcome new investors.

MOMIS: We now have Chinese entrepreneurs on the ground looking at possibilities of farming, fishing, shipping, starting up a technical college. The Chinese government, ..or the Embassy, has said to us that they would be prepared to build a technical college. We've also had an offer from Europe, a private offer not government, to build a technical college. In my view we need to have good technical colleges to produce educated, technically qualified people.

GARRETT: President Momis has just completed a week long visit to Australia at the invitation of the Australian government.

He flew out on Sunday confident he will get a good hearing for his request that more of Australia's increasing aid budget go to Bougainville.

The visit was just part of a hectic schedule.

MOMIS: When I led a delegation to China we signed 7 MOU's . We are encouraging Chinese and some Australians and Kiwis, and any other investor who is interested, to go into joint venture with us. I have gone public to say we will not encourage stand alone business, foreign business. We would prefer to encourage joint venture businesses. Of course, the question of equity will be negotiated. We don't have the capital not the technol and so on and so forth.

GARRETT: President Momis is working hard to build the commercial capacity of his people and his government.

And after 40 years in public life he is not easily snowed.

MOMIS: I've engaged someone who has had a lot of experience putting together mergers and joint ventures to help us deal with the Chinese, because we don't want to be swamped. Chinese are aggressive entrepreneurs. We are not born entrepreneurs but I am confident. I am talking to people in Australia and New Zealand to help us screen and only accept credible investment and investors in the areas that we need to develop.

POLITICS: Countdown begins for Panguna mine reopening

Bougainvilleans key to mine's success

By Rowan Callick

Islands Business

13 February 2011

Plans are under way for the opening of one of the world's biggest copper and gold mines, with resources worth about $US50 billion, as the China-driven commodities boom keeps rolling on.

So far, so predictable, if awesome.

But few people expected ever to hear of this vast pit ever again-except those canny investors who hung on to their shares for decades.

It is the Bougainville copper mine in Papua New Guinea, where production was suspended-the owners insist, not closed-on May 15, 1989.

Bougainville Copper Ltd-which is 53.58 percent owned by British-Australian mining giant

Rio Tinto Ltd, 19.06 percent by the Papua New Guinea Government, and 27.36 percent by other shareholders-believes it will cost about $US3 billion to reopen the mine.

The vast trucks and electricity pylons may have been blown up or rusted or cannibalised, but the resources in the mine have not, of course, been damaged or diminished over the last 21 years.

It contains 3.5 million tonnes of copper, worth today about $32.4 billion, and 12.7 million ounces of gold, worth today about $17.8 billion.

It is capable of producing annually up to 170,000 tonnes of copper and 500,000 ounces of gold.

The copper price has risen four times since the mine closed, the gold price seven times. The two metals' values have usually run counter-cyclically. This year, they have been peaking together.

But the cost of capital is also high and is likely to come at a premium given the tumultuous history of the mine.

Peter Taylor, who has been chairman of BCL since 2003, managing director since 2000, and who worked on Bougainville as the company secretary from 1985-87, says his focus is not on the hardware or the engineering or on raising the $US3 billion.

"The key to the door," he says, "is the landowners. Until they say to BCL, as a united group, we want the mine and we want you to run it. Then, I'll focus on the process that would follow.

"But we must ensure the landowners retain the number one importance. And the Bougainville government's support is also critical."

So far, in this direction, so good.

Taylor says: "All the signs are that the leaders on Bougainville want the mine open-and as soon as possible, rather than just 'some day.' And the national government agrees."

The overwhelming focus on the mine as a national economy maker or breaker, that provided maximum pressure as it opened 40 years ago, is no longer present.

It remains the crucial income earner for Bougainville itself, but for PNG, the spotlight has shifted to the $16.5 billion ExxonMobil-led venture piping gas from the Southern Highlands to Port Moresby, where it will be liquefied for export to Asia-by far the biggest project ever conceived in the Pacific islands.

In this context, Port Moresby might more readily contemplate transferring its 19 percent ownership of Bougainville Copper to the island itself-where preliminary discussions have contemplated the autonomous government retaining 60 percent, and landowners taking on 40 percent.

On a pro rata basis, the owners of this 19 percent share would have to raise $570 million towards the mine's reopening.

It is possible that Chinese entities, eager to obtain reliable sources of resources, may be prepared to help fund it, either in return for some equity themselves, or for future copper output.

Bougainville's new president, John Momis, elected for five years in June, recently led a group of 34-including former combatants in the civil war-to China, where Momis recently served as PNG ambassador.

He said: "The Chinese have expressed an interest in the mine, but we are keeping all our options open."
Former Australian prime minister Bob Hawke, who has strong Chinese commercial connections, also discussed the re-opening of the mine in late November, in a meeting in Port Moresby with Momis, in the office of veteran PNG Prime Minister Michael Somare.
Momis, a former Catholic priest and deputy prime minister, had presented a letter to the then BCL managing director Paul Quodling in 1987, while he was campaigning for the PNG election.That letter demanded that the company give three percent of its gross income to the Bougainville provincial government.

During the civil war, a leading rebel attempted to shoot Momis at close range from behind, but the pistol jammed.

He says now: "We are keen to reopen the Panguna mine, and we are holding talks with the landowners.

"Of course, Bougainville needs the mine to be reopened under a new regime. All parties should learn lessons from the crisis, and collaborate to build a better future."

Under the peace accord with PNG, Bougainville has the right to administer its own mining and land laws.

The World Bank has been funding a programme to help Bougainville draft its own mining regime.

Taylor hopes this will complement the PNG mining legislation, which has helped facilitate a massive resources boom there.

Since BCL suspended the mine, numerous other groups, some of them extremely shadowy, have attempted to insinuate themselves into this hugely prospective mining zone.

But Taylor says, "The Bougainvilleans have seen them come to the island and haven't in the end liked them."

"Thus they have come back to BCL, the devil they know, despite all their past disagreements. The rogues have done BCL a favour."

There is no timetable for the mine's reopening. But once an agreement is reached with the landowners, a feasibility study is approved and finance in place, it will take a further 2-3 years to get mining under way again.

The lengthiest part of that process would be caused by the lead-time needed to order the huge trucks and other new equipment to operate the mine. But Rio's size would enable it, if it chose, to push Bougainville higher up its priority chain and so receive equipment already ordered for other projects.

Taylor says BCL will facilitate landowners' meetings and help ensure the reconciliation process goes ahead. "But we're mindful we should not be seen to influence the proceedings."

He says: "Everything needs to be worked out as the agreement is renegotiated-including environmental issues such as tailings disposal, revenue sharing, ownership. And the landowners need to be resourced to participate effectively."

All in marked contrast with the lead-up to the first incarnation of the mine, when the company was not permitted by the Australian government to negotiate directly with landowners.

"The situation is quite the reverse this time," says Taylor. "The landowners are setting the agenda, though everyone will put their wish-lists on the table."

He wants to see the landowners obtain equity in the project because it makes them "part of your business," as well as giving them a share of the income stream.

"The balance needs to change in favour of those who are giving up the most, and they are the landowners. To make the project successful and saleable, they have to be part of the company."

Compared with such an achievement, raising the $US3 billion will be a minor challenge.

The redevelopment of the mine could involve the present BCL components raising their own funding, borrowing the money from banks, forward-selling production, or bringing in new partners, or any combination.

Three big selling points of the project, are that it already has a port at Loloho, an access road winding up 30km of rugged terrain, and most importantly, has pre-stripped ore ready to extract, with 200 million tonnes available immediately.

"They give us a big leg-up," says Taylor.

Technology has improved since the mine was suspended, he says-showing for instance, that tailings can be safely stored even in a seismically active area. "The landowners have to say which method they prefer," Taylor says. Previously, they were disposed of in the Jaba River, a cause of controversy during the period of strife.

They will also discuss whether, or to what degree, workers fly in and fly out to the island, or are based there, as they were before in the largely destroyed town of Arawa.

Taylor says that the more workers can be recruited locally, the better-though "we have received numerous inquiries from ex-employees asking when we are re-opening."

As the Ok Tedi mine-which has become hugely profitable since BHP-Billiton quit it-prepares to scale down as the resource declines, that would be an obvious source of skilled staff.
All such elements of the reopening require feasibility studies, says Taylor.

The other big factor exciting interest in the reopening of the Panguna pit, is the likelihood that it will lead to the end of the moratorium on exploration that began in 1971, as a result of the controversy over that first Bougainville mine.

Seven exploration licences covering 20 percent of the island are held by BCL and the potential to find new orebodies near the existing pit are considerable, which would take that mine well beyond its projected mine life of up to 20 years.

No one else holds any other exploration permits-as yet, though a German funded aeromagnetic survey 25 years ago revealed many highly prospective zones. Through the last 21 years, the principal owner, Rio Tinto, did not close down BCL-it has remained listed, playing a low-key role waiting for the climate to change.

But the share price has doubled since August and tripled since May, as the likelihood of a reopening dawned on investors-rallied in Europe by Axel Sturm, the energetic German president of the European shareholders of Bougainville Copper. The company has even made a profit most years, from placing its remaining cash in Australian listed investment companies.

Taylor says that even since the mine closed, the BCL Foundation has continued to fund 100 scholarships a year.

He says: "A generation of Bougainvilleans has missed out on employment."

As an intriguing sideshow, a case has been winding its way through the American courts in which Bougainvilleans have claimed damages from Rio Tinto over the operation of the mine.

This has become a test case for the American jurisdiction, and ultimately the Supreme Court there is likely to rule on whether its jurisdiction stretches overseas. It is now unlikely to do so until some time after the mine has reopened.

But as Taylor says, the key remains the landowners-though others, such as former Bougainville Revolutionary Army "general" Ishmael Toroama, are insisting that all the demands made by other Bougainvilleans during the fighting, remain extant.
"Panguna-after the war-now belongs to all Bougainvilleans," he says, insisting that the original claims for environmental compensation remain extant.

The recently elected Bougainville government, however, and the Panguna Landowners Assocation, have begun a series of intense discussions in order to move the process forward towards reopening.

Lawrence Daveona, the interim secretary of the PLOA and one of the long-standing leading figures on the issue, congratulated the Bougainville affairs minister in the national government, Fidelis Semoso, for his recent role in bringing together the leaders of the six mine lease areas, in a way unprecedented in the association's 38 years.

No one is publicly talking timetables yet. But in the minds of most of the stakeholders, the countdown has already begun.

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