Rio Tinto subsidiary Bougainville Copper has been stripped of all its exploration and mining licences by the Bougainville Government.
The company’s Panguna mine was once one of the biggest in the world but it was also the spark that lit a decade-long civil war in the 1990s in which 20,000 people died.
Bougainville’s parliament initiated the move when it passed a new Mining Act on Friday.
The legislation devolves power to regulate mining from the Papua New Guinea government to Bougainville’s Autonomous Government but at the same time it strips Bougainville Copper Ltd (BCL) of its seven exploration licences and its special mining lease over Panguna.
Although the company retains first right of refusal on negotiations to operate the mine, the legislation will put the Bougainville Government in a stronger negotiating position.
“We have invited them to come and negotiate with us and if they don’t meet our mutually acceptable terms then they are welcome to go,” Bougainville President John Momis told Radio Australia’s Pacific Beat.
“That is the only thing they have; first right of refusal.”
President Momis says the decision to cancel the licences came after wide-ranging consultations with the community on Bougainville.
“If we didn’t [cancel the licences], the landowners and the ex-combatants wouldn’t have allowed BCL to come back,” President Momis said.
Some ex-combatants and grassroots groups are worried by the legislation.
“This mining Bill will likely lay the foundations for another Bougainville crisis,” the Panguna Veteran’s Association said in a statement shortly before the Act was passed.
“Rio Tinto/BCL owned and controlled our minerals before and it led to the war.
“Under this Bill, Rio Tinto/BCL owns and will control our minerals – why would the result be any different this time?”
The chairman of the Me’ekamui Government of Unity, one of the groups descended from those started by civil war leader Francis Ona, is also concerned.
“This is a dangerous and destabilizing move and is not acceptable to the Me’ekamui,” Philip Miriori said.
President Momis says the critics who believe the new legislation leaves too much power in the hands of Rio Tinto and Bougainville Copper have been given the inaccurate information.
I think [the critics] are being misled deliberately by outsiders who have a vested interestJohn Momis, president of the Autonomous Bougainville Government
“The critics are totally wrong – we have stripped Bougainville Copper of all powers,” he said.
“I think [the critics] are being misled deliberately by outsiders who have a vested interest.”
Some landowners groups have signed agreements with small unregulated mining companies.
Bougainville is due to hold a referendum on independence between 2015 and 2020.
Landowners and other groups that support mining see it as one means to obtain the economic self-reliance needed to have a real choice in the referendum.
Earlier this year, Mr Momis told the Australia Papua New Guinea Business Forum, he was not assuming that the Rio Tinto-owned copper mine on Bougainville would re-open or that Rio Tinto or Bougainville copper would be the operator.
However, now Mr Momis says extensive consultations have shown that landowners prefer to deal with BCL rather than a new potential operator.
“They talk of preferring the devil they know and not a new devil,” he said.