Rio Tinto to quit Bougainville's Panguna minePublished by MAC on 2016-07-10
Source: Statement, Australian, Mining.com, Post Courier (2016-07-08)
After many years of majority ownership of the Bougainville's Panguna mine, Rio Tinto has announced the sale of its majority stake in Bougainville Copper Ltd (BCL) to an Australian equity investment company. It would then be shared between the country's Autonomous Government (ABG) and that of Papua New Guinea. If one or other doesn't take up the "offer" BCL could then be sold to a third party.
The company has been reviewing its holding for some time - see for example: London Calling asks: Is Rio Tinto getting cold feet in Bougainville?
Now, it seems to have found it's not profitable (for itself at least) to attempt to revive the mine, or to explore for further copper-gold reserves elsewhere on the island. (These points were made in MAC's own 2015 negative commercial analysis. See: Would restarting Bougainville's Panguna contribute to sustainable development?)
The deal has aroused the wrath of Bougainville ABG president, John Momis, who seems to view it as providing a trojan horse for Papua New Guinea to exploit Bougainville mineral resources beyond the date when the island's citizens may well have voted to terminate its union with Papua New Guinea.
But the Meekamui Council of Chiefs, headed by Chris Uma, has voiced its mistrust of the ABG, declaring that the agreement by which Rio Tinto secured the Panguna lease in the first place, is illegal, in which case "the company will be charged for stealing our resources and creating massive environmental damages to our land".
Meanwhile, John Momis has sent a letter to the International Council on Mining and Metals (ICMM), asking it to expel Rio Tinto from the Council if it fails to observe the Council's sustainable development standards.
"Rio refuses to accept any responsibility for these and the many other negative impacts that were the costs of its vast profits. In their greedy irresponsibility they now propose to walk away from Panguna without further thought about the damage that they caused".
Rio Tinto quits closed Bougainville copper mine
By Rhiannon Hoyle
30 June 2016
SYDNEY--Rio Tinto PLC RIO said it is walking away from a closed copper mine on the South Pacific island of Bougainville that was at the center of a decade-long civil war, transferring its controlling stake to an independent trustee.
The Panguna copper operation in an autonomous region of Papua New Guinea has been shuttered since 1989, when militants, frustrated the local community wasn't benefiting from revenues and angry about environmental damage, forced the mine to shut down. A secessionist rebellion that led to thousands of deaths ended with a cease-fire in 1998 but the mine has remained closed.
Rio Tinto announced in 2014 it was reviewing options for its controlling stake in the company that controls the deposit, as the Bougainville government passed interim mining laws that replaced its mining lease with an exploration license.
On Thursday, the Anglo-Australian miner said it has transferred its almost-54% holding in Bougainville Copper Ltd. (BOC.AU) to Melbourne-based Equity Trustees Ltd., which will distribute the shares between Papua New Guinea and Bougainville. Rio Tinto said the deed entitles Bougainville to 68% of its stake in Bougainville Copper and Papua New Guinea to the rest.
Following the transfer, the governments of Bougainville and Papua New Guinea--which already holds 19% of the company--will each own 36%, said Rio Tinto. Public shareholders own the remaining holdings.
"The ultimate distribution of our shares provides a platform for the autonomous Bougainville government and Papua New Guinea government to work together on future options for the resource," Rio Tinto copper and coal chief executive Chris Salisbury said in a statement.
A 2012 study forecast that it could cost US$5.2 billion to get the site back into operation. The study estimated there was at least another five million metric tons of copper and 19 million troy ounces of gold to be mined at the site, which was producing around 166,000 metric tons of copper and 450,000 troy ounces of gold a year before it closed.
Some landowners oppose reopening the mine, however, and had demanded more compensation for past environmental damage along the nearby Jaba River.
In a statement earlier this month, Bougainville Copper said it had reached an agreement to settle some long-standing claims and that it was committed to "return to active exploration and profitable, sustainable mining" at the site.
Write to Rhiannon Hoyle at rhiannon.hoyle[at]wsj.com
Rio Tinto exits PNG, gives away copper-gold mine with $51bn in reserves
30 June 2016
Mining giant Rio Tinto has given away a 54% stake in a Papua New Guinean copper and gold mine, which has reserves estimated to be worth $51 billion.
The decision to hand back the shares in its subsidiary Bougainville Copper Limited (ASX:BOC) to an independent trustee, follows a company review of the asset that was triggered by the Bouganville government’s pressure to restart mining at Panguna or give it up.
"Decision follows a company review of the asset that was triggered by the Bouganville government’s pressure to restart mining at Panguna or give it up."
“Our review looked at a broad range of options and by distributing our shares in this way we aim to provide landowners, those closest to the mine, and the people of Bouganville a greater say in the future of Panguna,” Chris Salisbury, Rio’s copper and coal chief executive said in a statement.
The trustee, noted Rio, will manage the distribution of its shares between the autonomous Bouganville government and the PNG government, providing them with a platform to work together on options for the resource.
In a separate statement, Bougainville Copper said its board of directors is considering the implications of Rio’s move. The company’s Chairman and Managing Director Peter Taylor will resign, and Robert Burns has been appointed acting chairman.
The Panguna mine was once a major producer and one of the largest open pit mines in the world. It’s believed to still hold about 5.3 million tonnes of copper and 19.3 million ounces of gold. However, it could cost up to A$10 billion to restart production, The Australian reports (subs. required).
Bougainville was the mine operator until local opposition sparked a civil war and forced it to shutdown in 1989.
Rio’s decision on Panguna echoes a similar move two years ago, when the company decided to give away its 19.1% stake in Northern Dynasty Minerals, a company leading the controversial Pebble Mine copper and gold project in the Bristol Bay region of Alaska.
Disgust at PNG Government Share Deal with Rio Tinto
3 July 2016
“I am calling for an urgent meeting of the Joint Supervisory Body to deal with what is now not just a major dispute between Bougainville and the National Government, but also the gravest threat to the Bougainville Peace Agreement, and the future of peace between PNG and Bougainville, in the 15 years since the signing of the Agreement in August 2001
The key issue is not Panguna reopening, or any commercial considerations involved. In fact, given both low commodity prices and sovereign risk issues, there is little likelihood of reopening for a long time.
Rather, the key issue is the future of peace.”
President Momis today expressed shock and disgust at a “disgusting and shady deal” between the National Government and Rio Tinto. He said that the National Government was deeply involved in Rio Tinto’s decision to transfer 17.4 per cent equity in Bougainville Copper Ltd (BCL), making the national Government equal shareholder, with the Autonomous Bougainville Government, in BCL.
President Momis said :
“Rio Tinto officials verbally advised me on Wednesday night or Rio’s decision to transfer its shares to a trust, with 17.4 per cent to be available to PNG and 36.4 per cent to the ABG. The ABG has been aware since 2013 that PNG was proposing to purchase Rio’s 53.8 per cent majority equity in BCL.
I advised the Prime Minister on many occasions that Panguna Mine and BCL share issues were deeply sensitive for Bougainville.
I told him that National Government majority ownership in BCL could endanger peace. I expressed the same views to Rio Tinto in meetings in July 2015 and February 2016.
“So I am shocked to find that without consulting the ABG, they have entered a disgusting and shady deal over Rio shares in BCL. Making the National Government and ABG equal shareholders gives the National Government equal power with the ABG over decisions on Panguna. So equal shares is just as offensive as majority PNG ownership.
“This decision is a grave threat to the Bougainville Peace Agreement. The National Government and Rio originally cooperated to force an unjust Panguna mining deal on Bougainville. They are now continuing their partnership against Bougainville.
It is deeply worrying that Rio and PNG are again conspiring against Bougainville in this share deal.
“There can be no doubt the National Government was involved. Rio officials first advised me of the Rio share decision around 9.00 p.m on the night of Wednesday 29 June. But a subsidiary of national Government company, Petromin, accepted the Rio Tinto shares the very next day – Thursday 30th June.
I can see no way Petromin could have been ready to jump on 30 June if PNG was not fully involved in Rio’s decision on its BCL shares.
“Yet when I met the Prime Minister to discuss the shares issue two days later, on Saturday 30 June, he said he needed to see the details of the Rio decision, said he had refused to meet the Rio Officials on 30 June, and made no mention of the Petromin acceptance of the shares.
If this is not duplicity of the highest order, the Prime Minister needs to provide a full explanation of the actions of both his Government and himself.
“The Bougainville Peace Agreement is a joint creation of the National Government and Bougainville.
Both committed themselves to work for peace. Rio Tinto and the National Government contributed to the origins of the conflict in the way they dealt with Panguna.
They have no excuse for not understanding the dangers to peace if insensitive decisions are made about Panguna. Neither Rio nor the National Government are free to make such decisions on purely commercial grounds.
The National Government knows the terrible dangers of dealing with Panguna in a way intended to give it greater control over Bougainville. And of course, it is increased control that they want.
“We must all be quite clear here. Giving the National Government equal equity in BCL is a direct threat to peace. The apparent involvement of the National Government in the Rio decision adds deep insult to the clear injury involved in the Rio Tinto shares decision.
“At the same time, I have written to the Prime Minister emphasising that Rio Tinto shares issue still offers us a remarkable opportunity. We can end the Bougainville divisions and conflict for good.
If the National Government agrees to the full dormer 53.8 per cent Rio Tinto equity in BCL going to the ABG, it will be clear that PNG agrees to Bougainville having full control of decisions about Panguna. That will change views of Bougainvilleans.
It will end what are now deep suspicions that, in the lead-up to the Referendum, PNG is seeking to keep control over Bougainville’s affairs. We must not lose this unique chance.
“The key issue is not Panguna reopening, or any commercial considerations involved. In fact, given both low commodity prices and sovereign risk issues, there is little likelihood of reopening for a long time. Rather, the key issue is the future of peace.
“I have spoken with the Speaker of the Bougainville House of Representatives. He will urgently recall the house to meet, to discuss the issues involved in this unacceptable joint decision by Rio Tinto and PNG.
“ In addition, I am calling for an urgent meeting of the Joint Supervisory Body to deal with what is now not just a major dispute between Bougainville and the National Government, but also the gravest threat to the Bougainville Peace Agreement, and the future of peace between PNG and Bougainville, in the 15 years since the signing of the Agreement in August 2001”
John L. Momis
Rio Tinto washes its hands of war crimes
Rio Tinto ‘gives up’ Bougainville Copper stake
30 June 2016
Rio Tinto has exited its 53.8 per cent stake in the ASX-listed Bougainville Copper after a near two-year review of its position.
The mining giant will transfer the holding to an independent trustee who will distribute the shares to both the Autonomous Bougainville Government (ABG) and the Papua New Guinea government.
It will receive no compensation in return despite the stake being worth over $40 million as of the close of trade yesterday.
The decision by Rio will see the ABG receive a greater proportion of its stock, although both ABG and the PNG government will hold an equal share of 36.4 per cent once the stake is transferred.
Bougainville Copper’s prospects rest on the future of the controversial Panguna copper/gold mine in Papua New Guinea, which has been out of operation since it was central to the start of a 10-year civil war that broke out in 1989.
The Panguna mine was a major producer in its heyday and is believed to still house a very significant 5.3 million tonnes of copper and 19.3 million ounces of gold. However, it could cost up to $10 billion to restart production, while the hurdle of public support will be a challenge to clear.
Bougainville Copper’s rights to the mine were stripped in 2014, which led to the Rio review and while it still hopes to reclaim the licence to develop the mine, there has been no significant change to the state of play.
It does, however, retain an exploration licence.
Rio’s stake was worth $92.5m when it first hinted at an exit, with market interest steadily fading since.
“Our review looked at a broad range of options and by distributing our shares in this way we aim to provide landowners, those closest to the mine, and all the people of Bougainville a greater say in the future of Panguna,” Rio Tinto Copper & Coal chief executive Chris Salisbury said.
“The ultimate distribution of our shares also provides a platform for the ABG and PNG government to work together on future options for the resource.”
The deal will see Rio give six months’ notice for termination of its management agreement with the ASX-listed group, while Bougainville Copper chairman Peter Taylor will step aside, with immediate effect.
Should either the PNG government or ABG not accept the stake offered by Rio within two months, it will be offered up for the other party to take control.
The departure of Rio from the project echoes a similar decision to walk away from the Northern Dynasty Minerals project in Alaska in April 2014, as it gifted its stake in that controversial project to charitable enterprises.
Leader calls decision as ‘sour’
3 July 2016
The Meekamui Council Of Chiefs leader Chris Uma has called the decision by Rio Tinto to exit Panguna mine as nothing but a sweetheart deal gone sour with one party crying foul.
Meekamui Council Of Chiefs made up of paramount chiefs from (6) six major clans sit on the council and control all traditional land and resources on Bougainville.
Meekamui does not recognise or trust ABG to handle any issues regarding land because of past bad decision by politicians that forced the Bougainville crisis.
The Meekamui council of chiefs believed in the 1948 General Assembly of the UN adopted and proclaimed the Universal declaration of Human Rights.
Article 17 of the declaration states:
(1)Everyone has the right to own property alone as well as in association with others.
(2)no one shall be arbitrarily deprived of his property.
We believed that in 1975 when PNG became independent it adopted this rights into constitutional law and prohibits its termination by an ordinary law by parliament.
Meekamui believe that our land was unlawfully acquired by Australian Government for CRA and the 1967 (BCA) Bougainville Copper Agreement may have been rendered defective in 1975 when PNG gained independence.
Chief Uma said if the above is proven to be true and, headed by
Mr Uma explained that ABG and the state should not be dragged in to clean up the mess of Rio Tinto but stay our of business.
“Let me assure my people that I will stop at nothing to correct the wrong and injustice suffered.”
Mr Uma has appealled to the Prime Minister to reject the Rio Tinto deal as a con deal hacked out to escape corporate responsibity to clean up their mess.
Mr Uma also announced that Meekamui Council Of Chiefs have appointed a two man task force team headed by Meekamui Special Envoy John Jaintong and Reuben Siara Lawyer who filed the court case in the United States against Rio Tinto for Ten billion.
The task force will look into refiling the case at the US courts to:
Make application to liquidate BCL and BCF and return proceeds to fund projects, and inform stock exchange to deregister the company.
Rio Tinto decision open to lawsuit
3 July 2016
"The Rio Tinto decision now opens itself to a bitter lawsuit of violation of human rights,environmental damages, and importantly illegally operating Panguna mine and stealing copper gold and silver from my land.
"I make this statement with good legal advice that the pre Independence law that validates Bougainville Copper Mining Agreement in 1967 may have been nullified in 1975 when PNG gained Independence.
"The task force we set up will examine documents with the view to File a Supreme Court Case Against the State for interpretation of the law on rights of inheritance of customary land.
"We are also challenging the legality of Section 5 Mining Act and Section 6 Oil and Gas act that gave the state and provincial Government powers to hold equity in resources projects.
"These acts makes a mockery of the constitution of this country which recognised inheritance of land a Supreme Constitutional Law.
"We in Bougainville reject Governments involvement in business in whatever form or shape.
"The task force we established will look at assets of Bougainville copper and especially assets of Bougainville Copper Foundation which my people owned by the charter which BCL regards as its subsidiary.
"I expect BCL management to hand over assets of BCF to the task force without a fight".
President Bougainville, Dr. John Momis, lashes out “greedy irresponsibility” of Rio Tinto
8 July 2016
“Rio has advised me that it is free to ignore the damage it caused because its subsidiary (BCL) operated Panguna according to the laws of the 1970s and 1980s. It therefore does not regard itself as bound by the much higher corporate responsibility standards of today. Rio also say that BCL was closed by Bougainvilleans opposed to mining.
‘Bougainville rejects those argument. The corporate responsibility standards that Rio accepts today largely result from what it learned from its Bougainville experience.”
President of the Autonomous Region of Bougainville, Dr. John Momis, lashed out today at what he termed the “greedy irresponsibility” of global mining giant, Rio Tinto. He has requested the Speaker of the Bougainville House of Representatives to call a special meeting of the House in Buka next Wednesday, 13th July
He was discussing Rio’s decision of 30 June to end its majority shareholding in its subsidiary, Bougainville Copper Ltd (BCL).
He released his letter of 4 July to the International Council of Mining and Metals (ICMM) Chair.
Copy of letter ...
Momis to ICMM – 4 July 2016
It complains of Rio’s failure to meet the ICCM’s Sustainable Development principles.
President Momis said:
‘Rio Tinto’s predecessor, Conzinc RioTinto Australia (CRA), made immense profits from operating the Panguna mine – so much so that BCL was often described as the “jewel” in the CRA crown. But in operating the mine, it was Bougainville that bore severe environmental and social costs.
‘Environmental damage includes the massive pit, kilometres wide and hundreds of metres deep, never remediated in any way.
It includes the vast areas filled by billions of tons of mine tailings tipped into the Kawerong and Jaba rivers, now lifeless as a result of acid rock leaching. Fish life in the many rivers and creeks running into the two main dead rivers has also been destroyed.
The tailings filled river valleys. The levy ban built to contain the tailings was breached more than ten years ago. Huge swamps have swallowed forest and farm land. Large dumps of chemicals are yet to be cleaned up.
‘Social impacts include the appalling living conditions of the thousands of people involuntarily resettled by the mine.
‘Rio refuses to accept any responsibility for these and the many other negative impacts that were the costs of its vast profits. In their greedy irresponsibility they now propose to walk away from Panguna without further thought about the damage that they caused.
‘ICMM’s website http://www.icmm.com/our-work/sustainable-development-framework claims that by ICMM membership companies such as Tio Tinto commit to “implement and measure their performance against 10 sustainable development principles”. The ICMM says that it conducts “an annual assessment of member performance against their principles”.
‘ICMM Principle 3 commits Rio to “Uphold fundamental human rights and respect cultures, customs and values in dealing with employees and others who are affected by our activities”.
This committs companies to “minimize involuntary resettlement and compensate fairly for adverse effects on the community where they cannot be avoided.”
BCL paid the derisory compensation levels to relocated villages required in the 1970s and 1980s. But not only is it clear that these levels were far too low then, in addition, the relocated villagers suffering has continued and increased dramatically since the 1980s, with no compensation.
And Rio plans to walk away with no thought as to their future suffering, all caused by a mine these people never wanted.
‘ICMM Principle 6 requires Rio to “rehabilitate land disturbed or occupied by operations in accordance with appropriate post-mining land uses’. No rehabilitation has occurred.
‘ICMM principle 10 requires Rio to ‘provide information [to stakeholders] that is timely, accurate and relevant, and to engage with and respond to stakeholders through open consultation processes. Rio has completely failed in these responsibilities. It has not provided any information to Bougainvillean stakeholders about its review or its plans.
‘Rio has advised me that it is free to ignore the damage it caused because its subsidiary (BCL) operated Panguna according to the laws of the 1970s and 1980s. It therefore does not regard itself as bound by the much higher corporate responsibility standards of today. Rio also say that BCL was closed by Bougainvilleans opposed to mining.
‘Bougainville rejects those argument. The corporate responsibility standards that Rio accepts today largely result from what it learned from its Bougainville experience. The war in Bougainville was not about ending mining – it was a cry for mining on just terms, similar to those that are delivered by good standards of corporate responsibility. To ignore today’s standards is hypocrisy.
‘In a situation of low copper prices and the likely high sovereign risk of Bougainville, it’s unlikely that Panguna will reopen for a long time. In those circumstances, Rio must have responsibilities for rehabilitation and other activities similar to those arising in a mine closure situation.’
The President said he had asked the ICMM Chair, Mr. Andrew Michelmore, to investigate Rio’s failure to meet the mining industry standards set as conditions of ICMM membership. ‘I have asked the ICMM to required Rio Tinto to meet those standards. I have called on the ICMM to expel Rio if it fails to adhere to ICMM principles. Rio Tinto’s behaviour towards Bougainville exhibits greed and irresponsibility which the mining industry must reject.’
John L. Momis