MAC: Mines and Communities

Latest Legal news on Ok Tedi

Published by MAC on 2001-05-01

Latest Legal news on Ok Tedi

In Focus Pacific Archive 19/02/2002

Both sides have claimed victory in the latest step in the legal battle between PNG's Ok Tedi Mining and an Australian law firm.

Law firm Slater and Gordon had taken out an injunction against Ok Tedi Mining Ltd (OTML) in the Supreme Court of Victoria, amid concerns landowners affected by environmental damage caused by the Ok Tedi copper and gold mine would lose their right to fight OTML in future court action. But after just one day in court, OTML gave assurances that Fly River and Ok Tedi landowners who had signed compensation agreements would not lose their right to take part in Slater and Gordon's class action against the mine.

And as Pacific Beat's James Panichi reports, the stage is now set for OTML's legal showdown with landowners over the payment of compensation.

The Melbourne lawyers representing the PNG landowners had demanded that an interim court injunction taken out against OTML last December be extended by the Supreme Court of Victoria.

Law firm Slater and Gordon feared that the compensation deals being offered to Papua New Guinea villagers would have compromised the class action it had commenced against the mine in 2000.

Mine Continuation Agreements: fair or flawed?

The compensation packages, called Mine Continuation Agreements (MCAs), offer individual and community compensation to landowners affected by the environmental impact of the Ok Tedi mine since 1981.

However, Slater and Gordon argued the MCAs - which according to OTML have been signed by up to 95 per cent of affected villagers - were also opt-out notices.

In other words, it was feared that by signing MCAs, villagers could forfeit their right to any future involvement in legal actions against OTML.

South Fly MP Gabia Gagarimabu took out the interim court injunction in December, on the grounds that the gathering of signatures undermined the class action and amounted to contempt of court. That injunction has now been lifted and OTML may continue to gather signatures for the MCAs.

Meanwhile, Papua New Guinea legislation enacting the MCAs has also come under attack, with PNG Opposition Leader Sir Michael Somare challenging legislation in the country's Supreme Court.

Agreement reached on MCAs

OTML came to an agreement with Slater and Gordon after offering assurances the MCAs would not preclude signatories from taking part in a class action, expected to be heard next year.

Slater and Gordon's Tim Hammond says the agreement, which cut short what was expected have been a long hearing, represents a positive outcome.

The contempt of court settlement is exactly what we sought", Mr Hammond says.

There have been several undertakings or promises made by the lawyers for OTML that [...] the landowners who still want to pursue the court case are still free to do so."

We're now on to the main game and that is fighting the original proceedings." But OTML has also claimed victory, in the wake of the agreement with Slater and Gordon. The mining company says the two-day court hearing scuppered claims that Ok Tedi and Fly River villagers had been coerced into signing MCAs, while the settlement will allow OTML to continue gathering signatures.

OTML's Manager of External Relations, Atimeng Buhupe, says it is vital for affected villages that the signing of MCAs continue.

"There had been a misundering [about the MCAs] and basically people didn't understand what was happening and what the injunction was all about," Mr Buhupe says.

"The process was legitimate, it was done with understanding from all sides, all stakeholders concerned and it was independently observed."

"We don't know why [Slater and Gordon] took out the injunction. Our concern had only been that the injunction and the whole court process delayed the implementation process and stopped the communities from [...] receiving benefits."

The main game resumes

Slater and Gordon is now expected to proceed with its Supreme Court class action against OTML, which began in April 2000.

The hearing, which is expected to recommence next year, follows a 1996 $32.5 million out-of-court settlement in which OTML compensated 30 thousand villagers whose livelihood had been affected by the mine. The compensation agreement included a commitment by the mine to stop dumping its waste into the Fly River.

But when landowners alleged waste was still being dumped into the river, they commenced a new round of legal action, claiming the terms of settlement had not been respected.

Earlier this month, Australian mining giant BHP-Billiton announced plans to exit OTML by transferring its 52 per cent stake in the mine to a trust fund.

To mine or not to mine?

In spite of the bitter legal wrangling, all parties agree the Ok Tedi mine - 18 kilometres from the PNG-Indonesian border - has had a devastating impact on local communities.

Fishing stocks on the Fly River have declined by 70 to 90 percent and 500 square kilometres of forest have been affected as a result of mine effluents, or "tailings".

But the mine has also been good for local residents, with high employment over the past twenty years sparking a rise in life expectancy and living standards.

What's more, 30 percent of the mine still owned by the Papua New Guinea government while exports from Ok Tedi account for 10 percent of the country's gross national product.

So, while environmental activists want to close down the mine, government and community pressure may be enough to keep the mine operating for at least another eight years.

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