Solwara 1 Deep Sea Mining Project

Last updated: April 2018

The Solwara 1 project, being developed by Canadian company Nautilus Minerals, is intended to extract high-grade Seafloor Massive Sulphide (SMS) deposits of copper, gold, zinc and silver from the Bismarck Sea, Papua New Guinea. The project is set at 1,600 metres water depth and if developed would be the world’s first deep sea mining project. Solwara 1 is located approximately thirty kilometres from the nearest coast (New Ireland Province) and fifty kilometres north of the international Port of Rabaul (East New Britain Province).

Solwara 1 located in the Bismarck Sea, Papua New Guinea

The project is expected to start its operations in 2018. It has been granted an operating license by the Papua New Guinea Government without having been given free, prior and informed consent of nearby coastal communities. Continue reading “Solwara 1 Deep Sea Mining Project”

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.

Continue reading “Current Views on Resumption of Large-Scale Mining in Bougainville”

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.

Continue reading “The Lessons of Panguna”

History of the Government and Mining in Papua New Guinea

Last updated: September 2019

Papua New Guinea (PNG) has a long history of mining, and the extractives industry has been central to development of the nation. While some may label PNG as being blessed with an abundance of mineral resources, others argue that it may instead be labelled as a ‘resource curse’. Auty first used the term, arguing “not only may resource-rich countries fail to benefit from a favourable endowment, they may actually perform worse than less well-endowed countries” (1993, p. 1). If one examines the history of mining in PNG, in particular the litany of mining projects with disastrous ecological and human rights records, such as Panguna, Porgera, and Ok Tedi, it is clear that this resource curse exists. Due to this pattern, it is essential to look at the role of the government, as it is not only a key stakeholder but also possesses the power to police and scrutinise various mining projects.

The following section will use the Ok Tedi, Panguna, Porgera and Lihir mines to show an overall theme of government mismanagement and mishandling. It is important to remember that all of these mines, with the exception of Lihir (which began in 1997) began production before the introduction of the Mining Act 1992 and the Environment Act 2000. In most instances, all mining companies involved were not held to existing legislation such as the Environmental Planning Act, but were instead bound by their own agreements passed by the Papua New Guinea Parliament (Banks, 2001, p. 36). It is crucial to question whether such legislature would have contributed towards the government taking different courses of action.

Location of Ok Tedi, Panguna, Porgera, Lihir and Solwara 1 Mines

Ok Tedi Mine

The Ok Tedi mine is located in the Star Mountains of Western Province. Ok Tedi Mining Limited (OTML) began mining for gold in 1984. OTML was a joint venture of Broken Hill Proprietary (BHP), the PNG government, and Inmet, a Canadian mining corporation (Banks, 2001, pp. 16-17). Despite the intention to extract gold, it soon became one of the world’s biggest copper mines, producing over 400 million tonnes of ore by 1996 (World Wildlife Fund, n.d.-b).

A condition of the mining agreement with the government stated that a tailings dam was to be built to filter the waste material. Although this was met by BHP, a landslide destroyed the dam and the company successfully negotiated to continue operations without a new dam (World Wildlife Fund, n.d.-b). This led to toxic mine waste being pumped into the nearby Ok Tedi River (Hettler, Irion, & Lehmann, 1997, p. 280), a tributary of the greater Fly River.

It is estimated that 90 million tonnes of waste rock, tailings and other particles were released into the river during each year of production, resulting in a range of severe ecological impacts on the river and surrounding land (United Nations Environment Programme, n.d.). The amount of waste disposed, for example, has exceeded the carrying capacity of the river and led to the width between the river banks increasing by over ten metres. Additionally, suspended materials are said to be carried down hundreds of kilometres of river systems, including the Fly River, and can be traced in the Gulf of Papua (Hettler, Irion, & Lehmann, 1997, p. 280). Studies have reported a dramatic loss of fish stock and the dieback of rainforests along the river’s edge (Bice, 2013). As a result, over 30,000 people that are estimated to live along the river are no longer able to
harvest from their gardens or catch fish from the river because of health hazards, thereby drastically impacting their way of life (World Wildlife Fund, n.d.-b). In an ethnographic interview conducted by Stuart Kirsch and a discussion of the impact on local quality of life, one person pleaded that “we are hungry, we are angry, and we are not happy about the pollution” (Kirsch, 2007). Many have noted that the overtly regional impact of Ok Tedi presents a different case to mines that simply affect the communities within close proximity to the area. This is due to the mass pollution of the river system, and thus the scope for those affected becomes far wider and more difficult to address (Banks, 2001, p. 25).

Panguna Mine

The Panguna copper mine is located in the Autonomous Region of Bougainville (AROB). Operated by Bougainville Copper Limited (BCL, owned by Australian company Conzinc Rio Tinto), Panguna began in 1972 and was the world’s largest copper mine at the time (Agnew, 2018, p. 1). The financial success of Panguna was crucial in funding the Independence of PNG in 1975 (Havini, 2013, p. 43).

Earlier in 1964, before mining began, rights to the mining site traditionally held by the Nasioi people were stripped away by the Australian government, which was still in colonial administrative control of PNG at the time (Phillips, 2015). The Bougainville Copper Agreement (BCA) states that the Australian government were to assist the Company in carrying out mining activities and also intervene with anything that may hinder the mining process (1976, p. 8). There are also policies in the BCA for BCL to dispose of tailings and other waste in a method that is efficient and viable for the overall operation (1976, p. 25). Roughly 50 million tonnes of tailings were dumped into rivers during each year of the mining operation, destroying the ecology and surrounding land (Phillips, 2015).

In November 1988, due to many grievances concerning a lack of compensation for ecological and social harm, the Bougainville Revolutionary Army (BRA) began their crusade against the mine and BCL by disrupting operations in any possible manner. Less than four months later, the PNG government sent in PNG Defence Force troops in an attempt to eliminate the BRA and reclaim an important state asset. After operations stopped due to the violence, the BRA continued their stronghold and showed no signs of backing down, mainly due to none of their demands being met. The BRA were also seeking the secession of Bougainville from PNG. In early 1990, the PNG government attempted to stop the rebellion, including implementing a blockade, only to withdraw a few weeks later on the grounds of an unstable ceasefire (Filer, 1990, p. 1)

Former Prime Minister Michael Somare has claimed that Rio Tinto were driving many of the actions and decisions of the government, particularly in imposing the blockade (Thomson, 2011). In a sworn affidavit Somare states that the government was controlled by Rio Tinto due to its financial presence in PNG and that BCL played an active role in Bougainville military operations by supplying many of the weapons, supplies and transport for troops. Somare argues that if it were not for Rio Tinto’s involvement, the government would not have been involved in any warfare or bloodshed (Thomson, 2011).

The Panguna mine disaster has been described as the worst political and economic crisis since PNG’s independence (Filer, 1990, p. 1). One could also argue that it is the biggest social crisis to occur in the country, as over 20,000 people lost their lives in the civil war (Radio New Zealand, 2018c). Despite such a violent past, current Prime Minister Peter O’Neill has made it clear that the mine could still be reopened in upcoming years and that ultimately, the national government will override any prohibition made by Bougainville (Radio New Zealand, 2018c).

Porgera Mine

The Porgera Mine is situated in the Porgera Valley, Enga Province. It began production in 1991 and is owned and operated by the Porgera Joint Venture (PJV), of which the mining company, Barrick, is the majority shareholder. The remainder of shares are held by the national government, provincial government and local landowners (Golub, 2014, p. 5). Like the other mining projects mentioned in this section, Porgera has been one of the most productive mines in the world (Golub, 2014, p. 5). The project not only shares this similarity with other mines, but also its method of waste disposal. More than 95% of the collected ore is discharged as tailings into the Pongema River, a tributary of the Strickland and Fly Rivers (Golub, 2014, p. 5). Villagers who live along the river system through which tailings are deposited suffer greatly from the impacts of the waste (Coumans, 2006). Somewhat ironically, Barrick warned locals not to use the river due to the high levels of mercury and other toxic elements (Coumans, 2006), thus showing that they knew full well the impact the disposal would have, and yet took no measures to mitigate harm.

Barrick security guards are authorised to use lethal force (O’Malley, 2009) and have admitted to killing people who have wandered into the mine area and taken ore (Coumans, 2006). In 2009, police raided villages and burned down hundreds of houses (Amnesty International, 2010, pp. 3-4). On top of this, the government approved ‘Operation Ipili’ which involved the deployment of additional police and the heavily armed Mobile Squad in order to quash locals taking ore illegally from the mine (Amnesty International, 2010, p. 5). The mining company supported these troops by providing food, accommodation and fuel (Amnesty International, 2010, p. 5).

Lihir Mine

The Lihir mine is located on Lihir Island, off the northeast coast of New Ireland. Production at the Lihir gold mine began in 1997. It is owned solely by Newcrest Mining. Like the other mining projects discussed, it is also one of the biggest producers of gold in the country (Fitzgerald, 2012). The mine pumps 110 million cubic metres of waste and dumps 20 million tonnes of waste rock into the nearby harbour each year. This conflicts with the London Resolution, signed by the PNG government, which makes the dumping of waste into oceans illegal. Lihir is also one of the six areas in PNG that is identified as having extremely rich biodiversity (Forest Peoples Programme, 2003, p. 12).

The introduction of the mine has profoundly changed local people’s lives. Due to dumping waste in the sea, people have been forced to buy salt to cook with, have had their beaches lost through land reclamation and seen their villages bulldozed to make way for piles of ore (Papua New Guinea Mine Watch, 2015b). Additionally, local people also claim to no longer be able to live a Melanesian way of life as the profits of the mine have made them greedy and self-centred (Forest Peoples Programme, 2003, p. 19).

In comparison to the other mining examples included in this section, the Lihir mine sets a better socio-environmental standard, despite the issues discussed. For example, operations only began after an agreement was made between the community, the government, and the company (Bainton, Ballard, Gillespie, & Hall, 2011, p. 88). At the same time, however, the agreement does not outline any provisions or regulatory frameworks for the preservation of cultural heritage (Bainton, Ballard, Gillespie, & Hall, 2011, p. 89).

Underlying Themes

The examples of Ok Tedi, Panguna, Porgera and Lihir demonstrate that PNG has a troubled history of mining developments. In all cases, the government has acted in a way that puts the interests of the foreign multinational corporation and their own economic gain over that of local social and environmental impacts, which are classic features of a capitalist regime (Schultz, 2014). In some instances, the government has colluded with mining companies to perpetrate violence against aggrieved local landowners, such as in Porgera and Panguna. The repetition of these events and the problems that these cases demonstrate, shows that there has been little active effort to change the way such developments are handled. A good example of this is the Prime Minister’s discussions around re-opening the Panguna mine, which ignores the history and devastation that was caused by the project. The Autonomous Bougainville Government (ABG) led by John Momis, publicly supports this move, but the attitudes of local landowning groups are divided and contentious.

Reference

  • Phillips, Hayley. A Sea of Voices: Deep sea mining and the Solwara 1 Project in Papua New Guinea. Diss. The University of Waikato, 2019.

Nautilus Minerals Inc.

Last updated: September 2019

Nautilus is a Canadian company that is endeavouring to become the world’s first successful DSM multinational corporation. The company was founded in 1987, yet no information can be found of Nautilus’ interests or operations prior to the beginnings of Solwara 1 in the early 2000s. Nautilus has two major shareholders, MB Holding Company LLC and Metalloinvest Holding (Cyprus) Limited, who respectively hold 30.4% and 19.2% shares (Nautilus Minerals Inc, 2018). It is unclear exactly what groups constitute the remaining minor shares of the company, however Anglo American, one of the world’s largest multinational mining corporations, were former shareholders. They withdrew their share in May 2018, citing that their investment in the project “was inconsistent with its commitments to sustainability, human rights and environmental stewardship” (Radio New Zealand, 2018b). This is an absolutely crucial point to consider, and begs the question as to why a mining corporation is more concerned with the environmental risks of Solwara 1 than either Nautilus or the national government.

The two main shareholders of Nautilus have formed Deep Sea Mining Finance (DSMF), which is tasked with securing the funding for Solwara 1 (BankTrack & Deep Sea Mining Campaign, 2017). As of June 2018, Nautilus had borrowed a total of US$11,250,000 with a further US$22,750,000 available under the loan agreement with DSMF (Nautilus Minerals Inc., 2018).

Due to the nature of Solwara 1 as being a ‘world first’ venture, it is sensible to examine the history of Nautilus Minerals and whether the corporation’s past can help predict the outcome of this particular mining project. In particular, it is important to observe that many members of management have previously been involved in mining projects that caused environmental and social harm in PNG such as Lihir, Porgera and Panguna (Nautilus Minerals Inc., 2015, p. 66-67).

Nautilus in the Pacific

In addition to PNG, Nautilus is also interested in other areas of the Pacific. The company holds exploration licenses in Fiji, Tonga, Vanuatu, Solomon Islands and the Clarion-Clipperton Zone (CCZ) in the eastern Pacific off the coast of Mexico. In all of these locations (including PNG), Nautilus is concerned with extracting the same type of mineral, seafloor massive sulphides (SMS).

Nautilus’ Areas of Interest in the Pacific

It is unclear exactly how Nautilus is currently involved in these Pacific nations, as for the majority of these projects, the most recent information accessible is from 2012. As of 2012, Nautilus had applied for a total of 17 prospecting licences (PL), for the purposes of locating, evaluating and sampling mineral material in Fiji and were granted 14. The company also held 41 PL in Vanuatu, and 92 PL in Solomon Islands. In Tonga, Nautilus held 16 PL and has applied for a further 30. In this case, however, it is known that Nautilus began its exploration during 2008 (Matangi Tonga Online, 2008) and employs a country manager (Nautilus Minerals Inc., 2015, p. 67). In relation to prospective mining in Tonga, a report prepared for Nautilus explicitly states that the “tenements do not include any habitable land or coastal waters; there is no requirement to negotiate access rights with local landowners” (Jankowski, 2012, p. 31). This mirrors Nautilus’ stance regarding Solwara 1, and will be discussed further below. From the information available, it would seem that Nautilus has a solid grip on DSM operations in the Pacific, and will be a big player in the industry going forwards.

There is greater detail available surrounding Nautilus’ involvement in the CCZ, which is likely due to the level of importance and mineral potential the area holds for the company. The CCZ venture is not being operated through Nautilus itself, but its subsidiary, Tonga Offshore Mining Limited (TOML). TOML is ‘sponsored’ by the Tongan government (note there is no information that details their involvement any further than this) (Nautilus Minerals, n.d.-b), and perhaps foreshadows the direction the Tongan government will take in DSM within their own country. This move also demonstrates the willingness of the Tongan government to participate in transnational capitalism, which values economic gain over environmental or social damage (Schultz, 2014).

Nautilus has projected that the CCZ has a mineral resource base of 685 million wet tonnes (natural state of extracted material before processing) (Jamasmie, 2016). Due to its significant mineral wealth, the CCZ has attracted a lot of world interest. Other companies who hold various licences in the CCZ are from Germany, Korea, Russia and the United Kingdom amongst others (Nautilus Minerals, n.d.-b). Unlike Solwara 1 and other potential DSM project sites, the CCZ is unique in the sense that it falls outside of Exclusive Economic Zones (EEZ) and is thus bound by different regulatory bodies and frameworks. The International Seabed Authority is the body that has the authority to govern and issue licences in this area (Vella, 2015).

Nautilus has also applied for an exploration licence along the Kermadec Arc within New Zealand’s EEZ, an area totalling 50,000 square kilometres (Clark, 2015). No comment can be found on the state of the application. In past years, New Zealand’s Environmental Protection Authority (EPA) has declined applications for DSM due to the significant environmental threats posed (Jamasmie, 2015). The EPA have, however, granted an application for the mining of iron sand off the Taranaki coast, which will still be permissible irrespective of a recent decision to ban offshore oil and gas exploration in NZ (Young, 2018). The ban does not include DSM for minerals. The area that Nautilus is interested in is also the proposed site of the Kermadec Ocean Sanctuary, which would render 620,000 square kilometres of sea as one of the world’s largest marine reserves (McCormack, 2018), and prohibit mining activity.

Nautilus in Papua New Guinea

Solwara 1 is the primary focus of Nautilus (Nautilus Minerals Inc., 2015, p. 5), but the company has a wider interest in PNG. Solwara 1 is effectively only a small part of a greater area within which Nautilus holds, or have applied for, a large number of exploration licences (Lipton, 2012, pp. 1-2). The map below demonstrates that Nautilus’ sights are not only focused near the coast of New Ireland, but almost the entire expanse of the Bismarck Sea. Within this area are a further 18 sites of interest, which the company has labelled Solwara 2 through to 19 (Lipton, 2012, p. 2). Exploration and testing has occurred in all of these sites, with Nautilus directing particular attention towards Solwara 12 due to promising levels of mineral deposits (Lipton, 2012, p. 7).

Extent of Nautilus’ Exploration Licences within the Bismarck Sea, as of 2012

One of the main reasons Nautilus cite for their interest in PNG is the high grade of minerals found during exploration. The average grade of Solwara 1 gold deposits is four times higher than terrestrial deposits, and the copper grade is ten times higher (Clark, 2015). High grades of minerals result in less effort required in extraction as the mineral percentage in each tonne of ore is greater (Lioudis, 2018). The high grade of minerals found at the bottom of the Bismarck Sea, as well as the numerous licences held by Nautilus to explore this area, suggests that Nautilus will likely maintain its presence in PNG long after the mining of Solwara 1, should it go ahead successfully.

Reference

  • Phillips, Hayley. A Sea of Voices: Deep sea mining and the Solwara 1 Project in Papua New Guinea. Diss. The University of Waikato, 2019.

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.

Continue reading “Frieda River Copper-Gold”

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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