PNG President emphasises stance on Panguna minePublished by MAC on 2021-02-10
Source: Bloomberg, Loop PNG, Radio New Zealand (2021-02-08)
Bougainville's President has firmly rejected a claim that an Australian company, Caballus Mining, will operate the Panguna mine.
Bougainville President rejects landowner group's Caballus idea
Radio New Zealand - https://www.rnz.co.nz/international/pacific-news/435341/bougainville-president-rejects-landowner-group-s-caballus-idea
28 January 2021
Papua New Guinea - Bougainville's President has firmly rejected a claim that an Australian company, Caballus Mining, will operate the Panguna mine.
Ishmael Toroama has released a statement in response to a landowner group, Panguna Tangkuúrang Chiefs, claiming that they'd given approval for Caballus.
The company had been in talks with the Autonomous Bougainville Government under former president John Momis regarding the potential re-opening of the large copper and gold mine.
But Toroama has made a clear departure from any links with the company.
He said the idea of Caballus operating a mine on Bougainville was shelved after their failed attempt to co-sponsor amendments to mining legislation with the former Momis administration.
The President of the autonomous Papua New Guinea region said there was no current plan for a particular company to re-oen the mine.
The Tangkuúrang Chiefs group, which does not represent all Panguna landowners, released a statement last week.
"Today, we are very happy and honoured to announce that we have chosen Jeff McGlinn and Caballus Mining, based in Perth Western Australia to be our partner in re-opening Panguna Mine and as a direct result, rebuild Bougainville for all Bougainvilleans," the statement said.
The Chiefs group said that Caballus was chosen after of a due diligence process, in which the ABG had on five separate occasions met with government officials and large corporations in Australia.
But Toroama roundly dismissed this.
"Let me make it clear that the current ABG under my Presidency is not in colluding with Caballus, RTZ, Bougainville Copper Limited (BCL) or any landowner group to redevelop the Panguna Mine at this time," Toroama said.
"Statements by companies or landowner groups with a vested interest in Panguna who claim to be working with the current ABG are false; we are not backing any company or any landowner group to reopen the mine."
The president said his government was committed to protecting landowner rights from undue influence by persons wishing to reopen the mine.
Access to Bougainville's Panguna copper mine is controlled by landowners. Vehicles going up to the mountainous mine area must first pass Morgan Junction checkpoint. Photo: Johnny Blades / RNZ Pacific
The controversial mine, which was the flashpoint which started a civil war that raged through much of the 1990s on Bougainville, was forced to close in 1989 as hostilities began.
But the former operator of the mine, Bougainville Copper Limited, estimated in 2019 that there was $US58 billion worth of mineral reserves still to be tapped.
With an overwhelming majority of Bougainvilleans having voted for independence from PNG less than two years ago in a non-binding referendum, some Bougainvilleans see the re-opening of the mine as a natural step towards economic independence.
However President Toroama cautioned that a moratorium remained in place over Panguna as well as the surrounding areas within the proximity of the mine.
"The Panguna Mine remains a very sensitive issue on Bougainville and parties wishing to reopen it must maintain a sense of decorum," he said.
Toroama said any company wishing to develop Bougainville's mineral resources be it Panguna or the exploration of a green field site must come through the proper channels.
President emphasises stance on Panguna reopening
Loop PNG - https://www.looppng.com/business/president-emphasises-stance-panguna-reopening-97257
30 January 2021
The president made this statement after a landowner group announced that they have partnered with Caballus Mining, a firm based in Perth, to re-open Panguna Mine.
“The idea of Caballus operating a mine on Bougainville has long been shelved after their failed attempt to co-sponsor the mining amendments with the former Momis-led ABG,” said Toroama.
“Let me make it clear that the current ABG under my Presidency is not colluding with Caballus, RTZ, Bougainville Copper Limited or any landowner group.
“Statements by companies or landowner groups with a vested interest in Panguna, who claim to be working with the current ABG, are false. We are not backing any company or any landowner group to reopen the mine.
“My government is committed to protecting landowner rights from undue influence by persons wishing to solicit favours from the Autonomous Bougainville Government in an attempt to reopen the mine.
“Any company wishing to develop Bougainville’s mineral resources, be it Panguna or the exploration of a green field site, must come through the proper channels.
“Bougainville has a mining act that governs the exploitation of our mineral resources, any parties wishing to be involved in the mining industry on Bougainville must comply with the laws of the land.
“As it stands, there is a moratorium in place over Panguna as well as the surrounding areas around the proximity of the mine.
“The Panguna Mine remains a very sensitive issue on Bougainville and parties wishing to reopen it must maintain a sense of decorum that respects the land, the landowners and the ABG.
“We cannot continue to make unfounded claims that are based on promises from the previous regime and its band of leaders and public servants who sought to manipulate the people of Bougainville and wantonly exploit its resources.
“I urge leaders from the past government as well as the current ABG to refrain from making unsubstantiated claims over the future of the mine at this time.
“Let us be frank in our dealings and be considerate of the welfare of all our people on Bougainville. It is high time we stopped using our independence aspirations as a bargaining chip to further our personal agenda.”
The Horse Breeder, the Novelist and the $60 Billion Panguna Mine
January 27, 2020
John Kuhns has been many things: an investment banker, a silicon smelter operator in China and a novelist. His sights are now set on an abandoned mine with an estimated $60 billion of gold and copper.
Kuhns is among a handful of people exploring for minerals and courting landowners on the Pacific island of Bougainville. His rivals include an Arabian-horse breeder, a hedge fund investment manager who keeps wallabies on his estate and a former Australian defense minister.
The involvement of such an eclectic mix of entrepreneurs is a reflection of the fact that this is no ordinary mineral reserve. Rio Tinto Group operated the Paguna mine for 17 years through subsidiary Bougainville Copper Ltd. The global mining behemoth shut it in 1989 as local protests over mine revenue degenerated into a civil war that killed as many as 20,000 people.
The mine has been in limbo ever since. But that may be about to change as the Autonomous Region of Bougainville moves toward independence from Papua New Guinea after a referendum showed an overwhelming majority of the population on the small group of islands wants to establish a new nation.
While the political uncertainty may deter major mining companies from making an immediate investment, the mine’s riches attract entrepreneurs hoping to develop the asset to a point where they can deliver it to a big operator for a fee, said Peter O’Connor, a Sydney-based analyst at Shaw and Partners Ltd. “They have to create a story with a vision,” he said.
Success will depend on earning the trust of thousands of poor, customary landholders, many of whom remember the civil war that was triggered by communities demanding greater compensation from the mine.
“The landowners want to reopen the mine but they are divided by the interested developers,” said Sam Akoitai, a member of the island’s parliament who represents central Bougainville, an area that includes Panguna. “It’s really up to the landowners to come together to understand that the land belongs to the clan and not to some individuals.”
Bougainville Copper, which is no longer associated with Rio, has estimated it would take seven to eight years and $5 billion to $6 billion to rebuild the mine and resume full operations. The company is blamed by many locals for contamination attributed to the mine.
“We retain strong levels of support among customary landowners within the project area,” Bougainville Copper said in a statement. “We have a trusted local team on the ground that continues to engage with project area communities.”
The Bougainville Mining Act 2015 strengthened landowner control and was designed to increase compensation to local communities and the island’s government from future mining to avoid a repeat of the bloodshed of the 1980s and 1990s. The government also decided not to renew Bougainville Copper’s exploration license, which the company is challenging in court.
In June 2019, Kuhns flew several landowners to the U.S. to meet potential investors, including representatives from Barrick Gold Corp. At the Harvard Club in Midtown Manhattan, where stuffed moose, bison and even an elephant head adorn the rooms, the landowners heard Kuhns deliver a PowerPoint presentation introducing potential investors to Bougainville.
Barrick declined to comment.
“Panguna mine can be rejuvenated and can be resuscitated for a couple of billion dollars,” said Kuhns in a follow up phone interview. “It’s going to take a major to do that.”
Among those also interested in Panguna is Jeff McGlinn, who made his fortune in mining and construction services through Western Australia-based NRW Holdings Ltd., which he co-founded. McGlinn, who resigned from NRW in 2010, is part of the glamorous world of Arabian horse breeding, mixing with models and celebrities at parties on the French Riviera and promoting luxury brands. He once gave an Arabian colt to Italian opera singer Andrea Bocelli.
McGlinn’s roots in mining give him valuable experience for Panguna — one of NRW’s businesses was constructing dams that hold mining waste. He’s also linked to a recent effort by the island’s government to kick start development, when it created Bougainville Advance Mining. The government’s Executive Council proposed last year an amendment to the 2015 mining act that would give all available mining rights to the new company, in which McGlinn’s Caballus Mining would hold a stake.
That amendment drew criticism from landowners, as well as Bougainville Copper, the former mine operator, which says the proposal undermines its rights to mine Panguna. The bill was later shelved. A representative of Caballus said McGlinn was unavailable to comment.
Another interested party is Richard Hains, son of the Australian billionaire David Hains. Richard, famous for keeping wallabies on his Gloucestershire estate, has helped develop mines in some of the world’s most difficult places. He’s the largest shareholder of RTG Mining Inc., whose management team has financed, built and operated mines across Africa and Asia, including the Boroo gold mine in Mongolia.
“Some of the best opportunities in the mining business in the 21st century are now in the more difficult commercial environments,” Hains said in a phone interview.
RTG believes it can restart production at Panguna through a staged process in as little as 18 months for about $800 million.
“It’s far smarter to start with a smaller footprint,” said RTG Chairman Michael Carrick. “Then in consultation with the community, we can turn up the mine’s operation.”
RTG operates a joint venture with the Special Mining Lease Osikaiyang Landowners Association, a Panguna landowners group. The JV employs 15 people, including Philip Miriori, the chairman of the landowners group.
There are bigger fish too. Fortescue Metals Group Ltd. said in an emailed statement it has sent representatives to Bougainville to learn about the region and potential opportunities, confirming earlier reports. Founder Andrew Forrest is Australia’s second-richest person with a $10.2 billion fortune, according to the Bloomberg Billionaires Index.
Shaw and Partners’ O’Connor said Chinese miners may also have a chance of redeveloping Panguna because they have a greater risk appetite and access to cheap financing.
But the Panguna landowners group Chairman Miriori said the people he represents aren’t interested in working with Chinese developers because of their poor environmental track record.
If anyone wins the right to develop Panguna or other parts of the autonomous region they will need to do so cautiously. Violence remains a constant threat in a community that is still fiercely divided.
A geologist working for Perth-based Kalia Ltd. was killed and seven others were injured in an attack in northern Bougainville in December, according to the local government and the company, whose chairman is former Australia Minister for Defence David Johnston. Authorities subsequently suspended Kalia’s exploration expeditions and geological field work.
There’s also a moratorium on work at Panguna because of sensitivity to restarting the mine, said Raymond Masono, Bougainville’s vice president and minister for mineral and energy resources.
“We are no longer talking with any investors about Panguna until the moratorium is lifted, and we don’t know when” that will be, he said by phone. “The government is treading very carefully on this particular mine.”
But prospects for restarting Panguna and allowing for the development of new mines are bolstered by the idea that Bougainville would need revenue to have any chance of financing an independent state. Many hope the mineral wealth could ultimately help reduce poverty for the region’s 300,000 people where estimated per capita GDP is only about $1,100.
That would depend not only on clearing the way to restart production, but a government able to make sure that enough of the proceeds are used to fund development. “Given the failure of mining in PNG to deliver really anything like sustainable development, those hopes may end up being disappointed,” said Luke Fletcher, executive director of Jubilee Australia, a group that has tracked the effect of resource extraction.
But the lure of riches mean miners aren’t likely to give up.
“Bougainville had almost no exploration for nearly 40 years,” said Mike Johnston, executive director of Kalia. “There’s no other place like it on the planet.”