Current Views on Resumption of Large-Scale Mining in Bougainville

The current (2016) relationship between local-level politics and large-scale mining in Bougainville has both similarities and differences to that which existed between 1987 and 1989, especially with respect to the extent of community opposition to Large-Scale Mining (LSM). The current situation has of course been deeply influenced by dramatic changes arising from the conflict itself. Although the Panguna mine has been closed since 1989, the possibility of reopening it ensures that LSM is a factor in political relationships between Papua New Guinea (PNG) and Bougainville, and also within Bougainville.

The differences between the two situations include a major shift in the state’s ‘corner’, largely resulting from the 2001 BPA, which made legislative authority over mining available to the ABG. There is also much greater complexity in each of the company, state and community ‘corners’ and in their mutual relationship, along with emergence of a new, multifaceted ‘fourth estate’ corner. Major differences arising from the complex post-conflict situation include: the national government’s much-reduced role in Bougainville as compared to 1988; the ABG’s limited capacity and reach in a situation where several parallel ‘governments’ claim ‘sovereignty’ over all or part of the autonomous region; armed groups remaining a factor to contend with; and numerous fringe foreign mining interests seeking to play significant roles in alliance with different local factions. A major similarity is that multiple Bougainvillean groups with considerable autonomy from one another, aware that important decisions on the future of mining may be made in the foreseeable future, all seek to ensure that their voices are heard.

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The Lessons of Panguna

The construction, operation and closure of the Panguna copper mine on the island of Bougainville, in the period from 1967 to 1989, provides a clear illustration of the process of modernisation and its political repercussions. But, in this case, the illustration also served to inform the new model of stakeholder politics that was applied to the large-scale mining industry at a global scale.

The Panguna mine exemplified the technical innovations that were typical of the new generation of open-cut mining projects. However, because it was commissioned at the very start of the process of modernisation, no environmental conditions were attached to the licences granted by the Australian colonial administration, so the mine was designed to discharge its waste material directly into the Jaba River. The construction of this most modern mine was also accompanied by the construction of a modern mining town to accommodate the families of a workforce with multiple technical skills. Long-distance commuting was not yet thought to be an economic option for the employment of this type of workforce.

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Ramu Nickel Project

The US$2.1bn Ramu nickel project near Madang, on the north coast of PNG, is one of the largest and most ambitious mining and processing projects to have been successfully brought into production in PNG during the past decade. Construction was largely completed by 2012 and the plant has since been progressively brought into production.

The production figures until the end of 2015 are shown in the table below, demonstrating the consistent improvement in operating performance.

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Frieda River Copper-Gold

Frieda River represents one of the largest undeveloped copper-gold deposits in the world. The Horse-Ivaal-Trukai, Ekwai and Koki (HITEK) global Mineral Resource is estimated at over 2.7 billion tonnes of mineralisation at an average grade of 0.42% copper and 0.23g/t gold and contains 13 million tonnes of copper and 20 million ounces of gold.

Location

The Frieda River project is 70km south of the Sepik River on the border of the Sanduan and East Sepik Provinces of Papua New Guinea some 500km upriver from the coast.

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Highlands Pacific Limited

For more than 20 years Highlands Pacific Limited has been successfully operating in Papua New Guinea (PNG). It is now arguably PNG’s premier minerals explorer, developer and producer, advancing some of the country’s most important copper, gold and nickel assets. The PNG incorporated company, listed on the ASX and POMSoX Exchanges (under the code HIG) provides investors with leverage to the country’s significant mineral resource endowment. Approximately 30% of Highlands Pacific share register is held by the PNG Government and PNG based funds with the rest by international investors. Highlands Pacific is a joint venture partner in the massive Frieda River Copper-Gold project in the East Sepik Province, holds exploration ground 20km north of the Ok Tedi mine in the Star Mountains which is prospective for copper-gold, has an investment in the producing US$2b Ramu Nickel-Cobalt Mine near Madang, and exploration ground on Normanby Island targeting nickel laterites.

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Bougainville Copper Limited

Bougainville Copper Limited (BCL) is a subsidiary of Conzinc Riotinto Australia (CRA) which discovered a major copper deposit at Panguna. on Bougainville Island in the North Solomons, in 1964. In 1967 CRA signed an agreement with the Australian Administration to set up Bougainville Copper Mining Company. Some 53.6 percent of the shares were to be held by CRA, 26.4 percent by public shareholders and 20 percent by the Australian Administration on behalf of the colony of PNG. Mining operations began in 1969 and copper was first exported in 1972. In 1973 the Bougainville Mining Company was renamed Bougainville Copper Ltd (BCL).

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