Renewal

Mining and independence

The World Bank and Australian colonial administration maintained during the 1960s that in order for Papua New Guinea to obtain independence, it must open up its natural resources to international investment. Only then would there be sufficient taxation receipts to fund a state created in Australia’s image.

Fifty years later the same economic argument is advanced, this time by the Autonomous Bougainville Government (ABG). Facing the prospect of independent statehood, which now appears likely following a resounding vote to leave Papua New Guinea in the 2019 Bougainville independence referendum, like its colonial predecessor the ABG has looked to Panguna as the means through which to fund the state and enliven the market structure it inherited.

Minutes record the ABG’s position in a meeting with different landowner factions.

President John Momis observed:

‘Panguna mine he said must be opened and there is an important need for a Unified Stand by ABG and Panguna Landowners’.

An intervention by the Minister for Natural Resources is also summarised.

‘Minister Michael Oni explained that there was no two ways about Panguna mine being opened in the not too distant future’.

Strong support for the government’s position was provided by two leading members of the Panguna Landowners Association Executive who had been voted out of office in 1987, Lawrence Daveona and Michael Pariu.

Both men were looking to reinvigorate pro-mining landowner bodies, and unite them under an umbrella organization which could negotiate the mine’s reopening.

As this new organ emerged, documents from the period reveal the commercial calculations underpinning this endeavour.

One document states:

‘Here is a mine worth K 4.4 Billion to us capable of producing K 1.2 Billion per annum (K522 Million each per annum for National Government and ABG/Bougainvilleans and K235 Million per annum for Landowners), for us per annum without us having to spend money on it. It will create thousands of jobs for us and provide a FREEPASS to every Bougainvillean for free education, free healthcare and good income opportunities.’

It is predicted that a reopened Panguna would provide all landowner families with a sizable annual income through royalty payments:

‘If we assume there are 4000 adult descendants of the original 510 titleholders, this corresponds to K 35,714 per annum or about K2, 976 per adult landowner per month’.

While cargo cults are often a disparaging gloss used to depict a wide range of movements in Papua New Guinea, here was an example of a euphoric landowner faction who attributed almost millenarian qualities to the mine reopening.

Bougainville Copper Limited fanned these gusts of enthusiasm for reopening coming from pro-mining quarters. A presentation in London by BCL records:

‘Reopening the mine and ABG economic independence are intertwined’.

‘Militants are becoming more amenable to re-opening but are being replaced by outside parties with vested business interests opposed to reopening the mine’.

‘The current ABG and PNG governments are supportive but the political situation remains fluid … President Momis declared support for reopening Panguna’

‘ABG income from Panguna will help make the Province economically self-reliant and accelerate social benefits such as health, education and employment’.

As a select ensemble of interest groups rallied around the mine’s reopening, international institutions brought their weight to bear on this delicate power balance.

The World Bank funded international consultant firm Adam Smith International to formulate the ABG’s mineral policy and draft a new Mining Act. Meanwhile the Australian government funded advisers to help prime and facilitate Panguna mine negotiations. Kiaps and District Officers were no more, today it is polished consultants and international academics.

As mining is reintroduced this time around, on a rationale with a much older vintage, the scale of the proposed industrial enterprise has expanded. Previously all sites outside Panguna had been ring-fenced from mining under a moratorium agreement. This has been lifted.

Under the policy framework established by Adam Smith International, foreign mining firms are gaining exploration licenses throughout the island, in conjunction with local fixers. This is inciting heightened tension, as the chequered track record of the companies being invited in are exposed to the public.

In contrast to the ensemble of actors promoting mining as the bridge to self-reliance and independence, a significant groundswell at the grass-roots level have argued for an alternative bridge grounded in indigenous systems of tenure, production, governance, and social management. They offer, it is argued, a sustainable framework for exerting sovereignty, governing without the need for significant taxation receipts, and retaining value on Bougainville where it is produced. On the other hand, it is claimed, increasing dependency on international commodity and financial markets erodes sovereignty, diminishes political independence, increases vulnerability to international economic cycles, drains value from the island, and harms local assets.

This perspective, while finding vocal expression, lacks a political movement that could feasibly organise, resource, and operationalise in practice its overarching principles.

By contrast the market and governmental structures modified and built upon since colonial times, has the support of the ABG, business factions, international donors, investors, and foreign governments.

1. Meeting Minutes, Panguna Management Consultative Committee Meeting with President Momis and Ministers, Conference Room, Autonomous Bougainville Government Administration, 10 November 2011.

2. The Opportunity Presented by BCL as a Going Concern, 21 March 2007.

3. Bougainville Copper Limited, 2011 Update, September 2011.

4. Kalia Limited, Exploration License Presentation, 24 November 2017.

5. United Nations Development Programme, Peace and Development Analysis, March 2014.

6. Jubilee Australia, Voices of Bougainville, September 2014.

The Mining Act

A decision was made by the Autonomous Bougainville Government (ABG) in 2011 to reopen Panguna.

Six years later the ABG lifted a moratorium that had prohibited mining outside Panguna. Now the entire island’s mineral wealth can be explored.

A similar proposal had been submitted back in 1989 by the North Solomons Premier, Joseph Kabui. In that instance all exploration rights would have gone to a joint-venture in which Kabui, and his political colleague, John Momis, were shareholders, alongside an Australian investor.

Now it was envisaged that a wider set of actors would be able to bid for Bougainville’s mineral wealth.

However, while mining powers had been devolved to the ABG under the Bougainville Peace Agreement, the government lacked a policy, legislative or administrative apparatus through which to facilitate this growing political desire for large-scale mines across the island.

Enter the World Bank and Australian Government. Through loans and foreign aid grants, consultants were brought in to create a policy, administrative and legislative framework.

Adam Smith International (ASI), for instance, was contracted through World Bank funding to design Bougainville’s policy and legislative framework.

The consultants brought to Bougainville by ASI enjoyed close ties to the mining industry, including Rio Tinto.

More generally speaking ASI has a reputation for advancing the interests of international investors, at the cost of local communities. They promote regimes of privatization, deregulation, and low taxation in ‘developing’ countries.

The firm has sparked controversy over its ‘inappropriate’ methods, to quote a UK House of Commons Committee statement.

Alongside World Bank dollars, Australian aid funded foreign experts to advise the ABG, and those landowner factions supporting Panguna’s reopening.

Key experts include Anthony Regan. At the time Regan was based at an Australian National University research centre funded by the Australian Department of Foreign Affairs.

As part of the funding agreement centre scholars agreed to brief Australia’s foreign, defence, and intelligence agencies, drawing on data acquired from the region.

Another key expert brought to Bougainville is Professor Ciaran O’Faircheallaigh. He is the Chief Investigator of a controversial study funded by the mining industry. This includes Rio Tinto who contributed an undisclosed amount.

The growing role played by outside consultants with close links to the mining industry and foreign governments provoked increased resistance on Bougainville.

As a draft of the Mining Act was circulated tensions grew.

One local Chief wrote to his member of parliament stating: ‘As our member of Eivio Torau in the ABG Parliament, I can suggest to you on behalf of the people in the villages who are aware of the current situation, that you will bring great pain and mourning on our people if you choose to vote to pass the current Bill. This Bill would put us back into the position we were before 1989 from which we honestly believed we were freed’.

Noah Doko, who would become a Member of Parliament for Central Bougainvillle in 2015, wrote a year before: ‘Let us all realise the truth - this mining Bill will likely lay the foundations for another Bougainville crisis’.

Peacebuilder Blaise Iruinu pleaded ‘don't interfere with my people's affairs at any time and particularly at this delicate stage when we are making much progress. It is likely to destabilise our society, undo our work and create division and tension’.

Petitions signed from leaders across the island were submitted in protest. They contained striking criticism of the ABG and the foreign consultants funded from abroad.

Nonetheless, the Mining Act drafted by ASI was passed in 2015 by the ABG. There has been credible claims many MPs did not read it and were unaware of its contents.

Subsequent analysis produced by Jubillee Australia warned it did not uphold the principles of free prior informed consent. They also pointed to the significant criminal sanctions legislated for those protesting anticipated mining projects.

As exploration licenses are issued across Bougainville, it remains to be seen how this framework engineered using expertise drawn from Britain and Australia will mediate local politics, if growing level of resistance are experienced like back in the 1960s.

It is also unclear if existing tensions will escalate as some fear putting the peace process in peril.

Concepts such as independence, self-reliance, sovereignty and development, are central to political aspirations on Bougainville at all levels. However, their meaning for different groups often varies quite considerably. For some these ideals are achieved by building on the legacies bequeathed from the colonial era, for others it is through their selective dismantlement. For some it is about reviving culture, tradition and local savvy, for others it is a matter of importing skills, education, and expertise from abroad. Of course, these are the two extremes, in between lies a considerable spectrum of views and positions.

These different potential fault-lines of contention will not necessarily provoke new hostilities as some fear. To see these different positions clash, a seismic event would be required that accelerates and compresses the associated tensions to the point where they become combustible. There would also need to be a trigger.

But as the question of independence materializes on the immediate horizon for Bougainville, the presence again of the World Bank, and the Australian government, in the form of consultants and policies promoting an extractive led political economy – has echoes of the past. Except now these moves are being primed by an Autonomous Bougainville government sympathetic the economic rationale first articulated in the 1960s by the colonial regime. Resistance comes from communities, activists and ex-combatants with the benefit of hindsight.

7. World Bank. (2013) Contract Data - Development Of A Mining Policy Submission; Development Of A Mining Legislation For The Arob; And Development Of The Mining Regulations.

8. World Bank. (2015) Contract Data - ABG Consultant for Panguna Negotiations.

9. World Bank. (2016) Implementation Completion Report Review, PG Mining Sector Inst Strengthening TA 2, 14 September.

10. Masty, J. S. and Uzzell, M. (2004) Building Support for Privatisation, Adam Smith International.

11. Julie Baxter (Adam Smith International) (2015), 'Bougainville: A New Dawn?', The Guardian, 21 August.

12. Australian Department of Foreign Affairs (2014), Questions on Notice/In Writing, Senate Foreign Affairs, Defence and Trade Legislation Committee, 23 October.

13. Lasslett, K. (2013) 'AusAID Fuels Bougainville Mining Tensions', New Matilda, 23 April.

14. Hill, B. and Regan, A. (2012) 'Bougainville Violence Threat Comes from Minority Says Expert', Pacific Beat, ABC Radio, 15 February.

15. Parakaka Resolution, 1 August 2014.

16. Letter from Michael Aite, Senior Chief of Eivo Torau, to the Hon Member of Eivo Torau Melchior Dare, 5 August 2014.

17. Urgent Letter of Concern from Blaise Iruinu, Panguna Joint Supervisory Committee, to the President Hon. John Momis, et al, 5 August 2014.

18. Doko, N. and Birunoim, J. (2014) Bougainville Mining Policy or Australia's Bougainville Mining Policy?, Letter to ABG Speaker, Andrew Miriki, 6 August.

19. Jubilee Australia. (2015) The Devil in the Detail: Analysis of the Bougainville Mining Act 2015, October.