MAC/20: Mines and Communities

Ok Tedi's final chapter

Published by MAC on 2007-07-21


Ok Tedi's final chapter

21st July 2007

As noted in the article below, "planning must begin in earnest on mine closure" on the notorious OK Tedi mine. Let us just hope it is better than the initial planning that led to it dumping its waste straight into the river system.


Ok Tedi's final chapter

The PNG National, http://www.thenational.com.pg/071907/editorial1.htm

19th July 2007

Without too much fuss or fanfare what is arguably the most important corporate position in Papua New Guinea has changed hands.

As noted in The National yesterday, Alan Breen has taken over from Keith Faulkner as managing director of Ok Tedi Mining Ltd.

Ok Tedi has had a long and difficult history dating back to the 1960s when geologists from Kennecott Copper were among the first western people to walk into the difficult terrain of the Star Mountains to discover the massive copper-gold orebody.

Kennecott walked away from the mine after a falling out with the government of the day, largely over currency issues that would potentially impact on profitability. Eventually BHP was invited by the government to take its place and to pursue development.

The mine was started up during very difficult times as the Bougainville crisis gripped the country, encouraging the government to fast-track
development despite some environmental concerns.

The giant US engineering firm, Bechtel, was forced to abandon the idea of building a tailings dam after an earthquake badly impacted on initial work and raised awareness of the enormous dangers presented by a large tailings dam.

The PNG Government subsequently allowed the mine to dump huge quantities of tailings into the Ok Tedi and Fly River systems after receipt of advice from various environmental scientists that these river systems would cope with the tailings.

History proved them to be wrong. What has ensued is a classic case of one of the worst environmental damages in the history of mining with vast virgin forest areas inundated by tailings that have caused widespread damage to the ecosystem.

BHP Billiton eventually did not want to face the odour of the environmental damage it had created and walked away from the mine, passing on its 52% equity to the newly established Papua New Guinea Sustainable Program Ltd.

BHP Billiton quit the mine even though it had known that the last decade of its mine life was likely to be its most lucrative years because higher grade ores would be mined.

It had taken 11 years from the start of gold mining in 1984 for the Ok Tedi mine to turn in its first corporate profit and, over the years BHP Billiton was forced to write off most of its development costs.

It was during BHP Billiton's departure as the mine operator that the no-nonsense, straight talking Keith Faulkner took over as managing director and, by all accounts, he successfully drove a cultural change that has greatly enhanced Ok Tedi's reputation and its ongoing role in the economy.

Even as he left, a big new programme to mitigate future environmental impacts was underway, and Faulkner concluded a mine continuation agreement that will see K1.1 billion spent over five years on community projects in vast areas of Western province.

Alan Breen has stepped into Faulkner's shoes at a critical juncture in Ok Tedi's history.

It is a tribute to the good work carried out by Faulkner, and the country's growing reputation as a significant copper and gold producer, that Ok Tedi has managed to attract a person of the calibre of Breen, one of Australia's highly regarded mining industry executives.

Breen has filled various senior mining industry roles over the past 30 years and has come to Papua New Guinea from his previous position as general manager of the big and highly successful Boyne Island aluminium smelter in Gladstone, Queensland, which is owned and operated by mining giant Rio Tinto.

At this critical juncture in Ok Tedi's history - it has been paying record profits, dividends and royalties to the PNG Government, landowners and its shareholders - as we have intimated, the mine is also at the closing chapter of its history.

Breen will have the critical role of trying to see if large quantities of inferred resources can be converted to reserves to provide additional life to the mine or he will conversely face the task of ensuring smooth mine closure.

On current plans the mine will run out of mineral reserves and shut down its operations in 2013, which is only six years away. Within the next year or two planning must begin in earnest on mine closure.

The latest mine continuation agreement will bear the brunt of the task of helping communities in Tabubil, Kiunga and along the Fly River cope with this eventuality, and mine closure plans that will be drawn up will strive to minimise ongoing and future environmental impacts.


OTMLs US$153mil mine tailing pipeline

The PNG National, http://www.thenational.com.pg/072007/business2.htm

21st July 2007

CONTRACTORS have recently converged into the small township of Tabubil, Western province for the Ok Tedi Mining Ltds (OTML) mine waste tailing project.

Mostly from Lihir, the contractors will be laying 130km-pipeline that will transport the sulphide concentrate for storage in specially-prepared containment areas at Bige.

The mine waste tailing project (MWTP) will cost OTML US$153 million (K425.3 million).

The company sought approval from the Minister for Environment and Conservation last December and one that was essential for OTML to be able to complete mining through to mid 2013 when it cease operations.

This will significantly reduce the amount of sulphides in the mill tailing which are currently discharged into the Ok Tedi river system.

It will also reduce the risk of acid rock drainage to the Ok Tedi/Fly river system.

OTML former managing director Keith Faulkner said this was a great challenge to well-document the impact of the mine wastes on the Ok Tedi and Fly river systems.

Mr Faulkner was instrumental in working closely with the local communities to bring about sustainable development despite the damaging impact of mine operations on the environment.

The most concerning development in the past few years had been the increasing risk presented by acid rock drainage, the result of oxidation of sulphide minerals in the waste materials, particularly the mill tailings.

We are working with the Departments of Environment and Conservation, and Mining to ensure that the design, operation, and the long term security of the storage is well understood and also to alleviate any remaining concerns that the community and regulators may have about this MWTP, Mr Faulkner had said.

The OTML 2006 annual review noted that using conventional flotation technology, the sulphide removal process will produce a final tailings stream containing less than 1% sulphur and a sulphide concentrate containing between 42% and 45% sulphur.

The containment areas at Bige will be located with the dredged sands and remain under permanently saturated conditions beneath the water-table.


Miner pays K1.01b

PNG Postcourier

2nd July 2007

A massive "blessing" of K1.01 billion was paid to villagers affected by the OK Tedi Mining Limited's operations last Friday, but the company's top brass has expressed sentiments as to how best the villagers will utilise this money.

The money was paid to six regional areas for environmental damages done to the river systems by the mining company after a Community Mine Continuation Agreement (CMCA) review was conducted.

CMCA independent observer John Kawi said more than 500 meetings were held with villages under the review process, which meant that transparency was involved in the reviewing process.

Mr Kawi expressed concerns that it was only right that the villagers put this money to good use.

"I hope this K1.01 billion may not be something you will be satisfied with but live with it," Mr Kawi said.

However, the villagers, considering the fact that the mine will be shutting down in 2013, have opted to set up an entity called the OK Tedi Fly River Development Foundation that will enable the villagers it sustain their livelihoods after the copper mine closes.

Also under the CMCA agreement, Mr Kawi said women will be receiving 10 per cent of the K1.01 billion, something he described as milestone for any mining company for have done that.

"It was the participation and consultation that enabled this (CMCA) process to be conducted and finished," Mr Kawi said.
"Transparency was involved and I can truly say that it is prime time that this process be done considering the fact that the mine is going to close in six years time."

OK Tedi Mining Limited departing managing director Keith Faulkner added that the CMCA process was conducted in the "most transparent manner".

"We've been transparent and honest in the things we do," Mr Faulkner said.

"But I would tell the villagers that a billion kina is a lot of money and it should be put to good use. This is a blessing and this blessing outweighs the problem."

The CMCA review was signed by OTML, the villagers, PNG Sustainable Development Project and CMCA facilitators, Tanorama (PNG).


OTML passes damage blame onto Government

PNG Postcourier

2nd July 2007

Western Province based copper mining company, OK Tedi Mining Limited (OTML), has shrugged off fuming concerns that it will not be responsible for any environmental damages after the mine's closure in 2013.

Departing managing director Keith Faulkner while responding to questions posed by the media last Friday, fazed out any responsibilities the mining company would incur for environmental damages after the mine closes.

Mr Faulkner said it was the National Government - particularly current Prime Minister Sir Michael Somare who was mining minister in 2001 - who agreed under the Mine Supplementary Plan to continue operation until 2013.

Former operator of the mine, BHP Billiton quit operating the mine in 2001 and decided to close it but according to Mr Faulkner, it was the Government that was too worried about losing economic balances.

"It was the idea of the Government to continue the mine's operation because it (the government) felt that it will undergo an economic devastation if this mine closed," he said.

"The legislation was the thing of the government. We know what has been given to us by Sir Michael."

He added that the mining company and its management will not deny that there are environmental damages and river contaminations.

"We (OTML) will not deny the fact that there is environmental damages and contaminations but we know what we have been given and we'll stand by those facts," Mr Faulkner said.

 

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