Bougainville Copper Limited is pleased to have accepted an invitation to join Bougainville’s Bel Kol Events Committee.

The Committee is responsible for the organisation of the Bel Kol ceremony. This event will be an adaptation of the traditional practice in which parties hold a ceremony to begin a process of negotiations to restore relationships.

BCL had requested to be included as part of the Committee and was subsequently invited to participate in preparations for the ceremony.

The Committee had recently closed out a phase of internal negotiations between stakeholders in central Bougainville.

With local alignment strengthened, the Committee moved focus to concentrate on preparations for the event itself and this was another factor in the timing of the invitation for BCL’s participation.

In December 2014, BCL joined a broad representation of Kieta and Panguna stakeholders and the Autonomous Bougainville Government as members of the committee.

Despite uncertainty surrounding legal tenure over its mining leases on Bougainville, BCL remains committed to the process of Bel Kol and to the deliberations of the Joint Panguna Negotiation Coordination Committee.

With more regular visits to central Bougainville, BCL will now progress fact finding with urgency to ensure the company has fulfilled its requirements for participation in the Bel Kol ceremony by mid-2015.

BCL wants to ensure there are broadly shared expectations and support for the Bel Kol ceremony.  This will be achieved through discussions and interviews with a range of local stakeholders, as guided by the Events Committee.

Background  by John Momis From the Presentation given at the Australia Papua New Guinea Business Forum in Cairns on May 20, 2014

Let me begin by answering a key question: why would the ABG consider re- opening the very mine that was at the heart of the worst conflict ever to occur amongst Pacific islanders?

There are many factors involved. But the central issues concern the unique political pressures facing the ABG because of the combination of the timetable for the referendum and our lack of a sustainable revenue base. We have strictly limited time in which to get real autonomy working, and before people are faced with a choice about independence. It is that limited time that requires us to focus on exploring the possibility of re-opening Panguna, for all being well, that could occur in the early 2020s, and the ABG would be in receipt of substantial taxation revenues during the projected three year construction period.

I also must make another fundamental point. It relates to the point I have already made about the vital importance of participation by Bougainvilleans in making decisions about the economy.

The ABG’s approach to the reopening of Panguna has been driven, and will continue to be driven, by the wishes of Panguna-affected landowners and the people of Bougainville. I have stated publicly on many occasions that the mine will only re-open if the Panguna lease landowners agree.

So let me outline some of the main things we have been doing to consult landowners and other Bougainvilleans, and to prepare for possible negotiations about the future of the mine. These things have been done slowly, deliberately, and carefully. We have no intention of rushing into making decisions about re- opening the mine. Rather, we are first ensuring that mine lease area landowners are organised in such a way as to be fully involved in every step of the process.

The ABG started to consult with customary landowners about their views on reopening the mine in 2009. Large meetings were held in each lease area in March and July 2010. These meetings established that most landowners were open to the possibility of the Panguna mine re-opening, if certain conditions are met.

Landowners said that problems caused by past mining must be resolved; that new and fair conditions must be applied to any future mining; that landowners must participate fully at all stages of development; and that landowners for different lease areas wanted to have their own representative associations to make sure their specific concerns are adequately addressed.

So from mid-2010, the ABG worked closely with the landowners from the mine lease areas to establish associations to represent their views. There are now nine separate associations. This has been very slow work, but absolutely essential if the landowners’ voices are to be truly heard.

In 2012 and 2013 the ABG organised Regional Forums throughout Bougainville to provide information and solicit the views of stakeholder groups and the Bougainville general public on mining related issues.

The Forums indicated support for reopening Panguna, as long as this could be done in a way that is fair and just and contributes to the welfare, security and wellbeing of the Bougainvilleans.

The ABG also undertook two forums and numerous smaller meetings to engage with ex-combatants, and in late March 2014 held a Bougainville Women’s Mining Forum in Buka attended by over 200 women representatives from all over Bougainville.

Women reiterated the view expressed in other forums that the ABG should consider reopening of Panguna, but only if this can be done in a way that addresses issues from earlier mining and the conflict it created, and if the benefits of any new project are allocated in a way that is fair to Bougainvilleans.

Some critics have said these Forums were staged events, attended only by selected people who the ABG knew supported mining. Nothing could be further from the truth. Invitations went to the widest possible range of organisations. They were asked to select their own representatives. The Forums were open to any who wished to attend. The ABG did not control the agenda or the discussion. So the Forums have provided a very good indication of the views of the community leaders and other opinion leaders of Bougainville.

Against this background of extensive consultations and general support in Bougainville for the reopening of Panguna if stringent conditions can be met, the ABG has undertaken a great deal of work to ensure that customary landowners and the ABG itself are well prepared for negotiations regarding the future of the mine.

Let’s be clear: the ABG is not assuming that the mine will reopen or that, if it is, Bougainville Copper Ltd (BCL)/Rio Tinto will be the operator. Panguna will only reopen if the proposed project and its operator are able to deliver sustainable social and economic benefits for customary landowners and all of Bougainville, and can do so in a way that avoids creating further conflict.

Some critics have attacked the ABG for being willing to even negotiate with BCL. I have been accused of being too close to BCL, of ‘selling out’. In fact, as many of you know, from the late 1960s I was a consistent critic of BCL, and have certainly not become beholden to BCL since becoming Bougainville’s President in 2010. Indeed, I was initially seeking other possible developers for Panguna. But we have two main reasons for now engaging with BCL.

First, the leaders of the landowners from the mine lease areas have consistently indicated that they prefer to deal with BCL rather than a new potential operator. They talk of preferring the ‘devil they know, and not a new devil’. In large part they mean that they acknowledge that BCL both accepts that it played a role in what went wrong at Panguna and is prepared to contribute to finding workable solutions. They fear that a new developer may not have the same attitude. They also acknowledge, quite openly, that BCL did some things very well, especially training of Bougainvilleans. If we are committed to fully involving the landowners, we must listen to them on this issue. Second, the ABG accepts that BCL has existing legal rights that cannot simply be ignored.

So, if the negotiations we are preparing for do get underway later this year, as we hope, they will begin with BCL. But if we are unable to reach an acceptable agreement, the ABG and the landowners will seek other potential developers with a proven track record of developing and managing similar large scale but low grade copper and gold deposits.

Authorising the establishment of the nine associations to represent landowners, and the holding of the Forums have been important steps in preparing for negotiations on the future of Panguna. But in addition the ABG has done much else.

We have established:

• a Ministerial Committee chaired by the President to provide political direction in the preparation for and conduct of the negotiations;
• a Steering Group of senior ABG officials to direct the preparations for negotiations; and
• an Office of Panguna Negotiations to undertake the work involved;

We have approved a Negotiation Structure which will ensure input into negotiations by all Bougainvilleans, and specific opportunities for input by key interest groups including landowners, women and ex-combatants;

For well over a year, we have been engaging with BCL and landowners regarding the conduct of a reconciliation ceremony or “Bel Kol”, as the first step towards BCL establishing a presence on Bougainville;

Through the ABG budget we have allocated substantial funding (some K7 million) to these preparations from our own resources, a large amount given the small size of the ABG budget;

We have negotiated with BCL, the Government of Papua New Guineas (GPNG) and development agencies to provide funding for ABG and landowners to participate fully and effectively in negotiations over coming years;

We have taken the lead in establishing a multi-donor trust fund as part of mechanisms intended to ensure that funding for preparations for negotiations, and participation by landowners and the ABG, are provided with no strings attached and managed transparently;

The ABG also took the lead in establishing a ‘Panguna Negotiations Joint Coordination Committee’ (JPNCC) comprised of representatives of the ABG, GPNG, BCL and Landowner Associations. The JPNCC has met regularly since March 2013 and has made significant progress in preparations for possible negotiations on the future of the Panguna mine. Its key role is to coordinate preparation for negotiations, including the conduct of environmental and social baseline studies.

These baseline studies must be conducted regardless of whether Panguna reopens or not, because they will generate critical information needed to address urgent environmental and social issues created by earlier mining and related activities.

The studies will also help ensure that Landowners and the ABG have critically important available to them. That will be needed to negotiate strong and fair agreements with the National Government and BCL or other investors. The information will also ensure that the ABG, BCL and the National Government understand what are the most urgent and important issues for landowners and other people affected by Panguna.

All the baseline studies and the consultants undertaking them will be approved and overseen by the JPNCC, rather than only by the developer, which is normally the case in Papua New Guinea. This too ensures that Bougainvilleans (ABG and landowners representatives) are actively participating in decision- making at all stages.

It also means that the ABG and landowners can together ensure that the baseline studies are carried out to a high technical standard. This increases the likelihood that baseline study results can be accepted by all stakeholders. In pursuit of those goals, the ABG is also organising for independent experts like the United Nations Environment Program to monitor the scope and quality of the studies.

Landowners will also be directly involved in the conduct of the baseline studies, for the consultants will be required to employ and train as many as practicable. In this way significant economic opportunities will be created. It also allows landowners to assure themselves of the quality of the studies.

In terms of future preparations for negotiations regarding Panguna, the ABG hopes that the Bel Kol ceremony can happen in July 2014. BCL will then be able to establish an office in Arawa. Work can then begin to identify and address immediate environmental issues.

The immediate focus will be those arising from contaminants that were not properly disposed of because of BCL’s forced departure from Bougainville. Work will also commence on identifying and addressing the most urgent social needs faced by landowners in the Panguna area. BCL will also be able to commence technical investigations necessary for undertaking its next levels of feasibility studies.

One further point concerning preparations is that for the past 12 months or so, the ABG and the landowner representatives have been identifying, and discussing, the agenda of issues that Bougainvilleans will want addressed when negotiations begin. In addition to key issues such as protection of the environment and a fair economic return to Bougainville, our focus is already on those same issues I mentioned above. In other words, if mining goes ahead, it must provide economic opportunities for as many Bougainvilleans as possible, ensure an equitable spread of economic opportunities, and ensure active participation by Bougainvilleans in decision-making at all stages, including once the mine is operating.

An additional key issue already being considered by the ABG is how best to ensure that a significant part of the funds generated by any future mining is used not just for past compensation and immediate needs, but is instead used to build a diversified and sustainable Bougainville economy.

Through the various steps I have outlined, we have moved gradually to the point where I believe we can soon begin negotiations with BCL. Of course, unlike other mining negotiations elsewhere in PNG, they will not relate solely to future mining operations. They will also deal with how best to respond to environmental damage caused by past mining, and also with other significant ‘legacy’ issues.

The negotiations will take time, particularly because of time expected to be needed to conduct baseline and other technical studies. While we hope for a successful outcome, we will be ready to negotiate with other highly reputable miners if an agreement cannot be reached with BCL.

Ultimately, while we hope for success, we cannot even assume that Panguna will prove a viable project for re-opening. It is for that reason that I have made it clear that the ABG will be identifying other prospective areas, where landowners are open to exploration and mining. Exploration may then be permitted in a limited number of such areas. Of course, ‘green-field’ exploration projects are a different proposition from re-opening the already proven resource at Panguna. It’s likely that if minerals are found, it would be at least 15 years from exploration to beginning of production.

* From the Presentation given at the Australia Papua New Guinea Business Forum in Cairns on May 20, 2014