Bougainville /PNG Government News: Benefits to reap in mutual relationships and working together


 “What an opportunity it is that Bougainville has two Ministers in Government. What an opportunity missed it will be if the Ministers do not work in consultation and in tandem with ABG in the remaining months of to the next elections mid next year.

May be the newly appointed Minister for Bougainville Affairs will work around the clock to stitch up the loose ties and ends, mend the fractures and pick up the broken pieces to get a meaningful working relationship established with Bougainville Members of the House .

“Our four national MPs and 40 MHRs must come together and walk along the same path, in the same direction, with the same purpose, bearing the same cross on a journey towards a common Good, welfare and wellbeing of the People.

In a nutshell, have we a leader or a group of leaders that can deliver on the vision for everyone? “

A commentary by – Simon Pentanu

“It will also be something close to political deceit if together our combined political leadership does not deliver on the political promises and pledges that candidates swear to at elections that, if elected, they would do their utmost to rebuild and resurrect Bougainville.

This is the unequivocal challenge the Third House of Representatives faces head on through the referendum preparations and the myriad challenges from now to 2020.

Opportunities missed are opportunities lost and gone.”

Leadership Challenges of Autonomous Government   The Hon Patrick Nisira MP, Vice President of the Autonomous Region of Bougainville, Papua New Guinea see below Canberra Australia event 28 April

It has taken a very determined and audacious Prime Minister and his government to give real and long overdue facelift to Port Moresby, the nation’s capital. Mt Hagen has also benefited, so also will Lae city when the new wharf and Nadzab Terminal upgrades are completed.

This in stark reality has meant someone biting the political bullet and defraying all manners of politically loaded invectives and the courage of one’s convictions to do something that others have only played lip service to.

The PM and the Government’s decision has led to renovations and recovery of the decaying and decadent concrete monolith called the Pineapple Building and the adjacent time-ravaged Central Government Offices complex. The offices will save any Government in the future hugely exorbitant outlays in private rentals that real estate owners and operators have been thriving on handsomely for years.

Some of the Provinces and their provincial centres are also benefiting from this. Milne Bay is an example. Alotau, a peaceful town is welcoming an onset of national business travellers. The upgrade of Gurney airport for international flights will be good for the local economy with tourists and business travellers a good sales and marketing pitch for the province and the country. Similarly, if they walk the talk other provinces with business potential and cultural pull will reap benefits in a similar way.

The New Guinea Islands region has always attracted visitors. After the devastation of Rabaul by the volcanic eruption in September 1994, the growth of Kokopo has been an astonishing success in planning, funding, managing and implementing a resurgence through a combined effort of the ENB Provincial Government and the Gazelle Restoration Authority. I mention this because the PM and his Government’s support and delivery of any infrastructural development is being done on the back of what the province already has.

If Bougainville’s leaders also put their foot where their mouth is in demanding basic infrastructural development and upgrades by holding the PM to his repeated remarks that his main concern in rebuilding B’ville is through development. Time and again the PM has said openly that his main concern is to deliver development on Bougainville.

What an opportunity it is that Bougainville has two Ministers in Government. What an opportunity missed it will be if the Ministers do not work in consultation and in tandem with ABG in the remaining months of to the next elections mid next year.

May be the newly appointed Minister for Bougainville Affairs will work around the clock to stitch up the loose ties and ends, mend the fractures and pick up the broken pieces to get a meaningful working relationship established with Bougainville Members of the House .

Our four national MPs and 40 MHRs must come together and walk along the same path, in the same direction, with the same purpose, bearing the same cross on a journey towards a common Good, welfare and wellbeing of the People.

Bougainville has the natural resources and untapped wealth to do it. It has a relatively small population that can share the resources more than adequately and equally for everyone’s benefit .Have we got the collective minds, the sobriety and the goodwill to do it?

In a nutshell, have we a leader or a group of leaders that can deliver on the vision for everyone?

It will be a disappointment if elected leaders in the National Parliament and the Bougainville House of Representatives do not find the common chord and the core values that the people expect leaders to be bound by and if they do not rise above individual preoccupations toward a political precept that confers a duty of service to and care for all citizens.

Leadership Challenges of Autonomous Government

The Hon Patrick Nisira MP, Vice President of the Autonomous Region of Bougainville, Papua New Guinea Thursday 28 April 2016 11:00 – 12:00pm Acton Theatre, JG Crawford Building (132) Lennox Crossing, ANU


Papua New Guinea’s Autonomous Region of Bougainville is at a critical juncture. Still dealing with the debilitating effects of an at times brutal civil conflict from 1988 to 1997, the Autonomous Bougainville Government is working to rebuild its economy and governance structures while navigating the final stages of a peace process, including a referendum on its political future due to take place by 2020. Vice President Patrick Nisira, a key member of the Autonomous Bougainville Government elected to lead Bougainville through to 2020, will offer some first-hand perspectives about the unique leadership challenges facing his government over the next few years.

About the speaker

The Hon Patrick Nisira MP is the Vice President of the Autonomous Region of Bougainville, Papua New Guinea. Mr Nisira also holds the position of Minister for Peace, the Referendum and Veterans Affairs. Mr Nisira was first elected to Parliament in 2007 in the seat of Halia (Buka Island, North Bougainville) as an independent. He served as Minister for Works, Transport and Civil Aviation from 2007-2010 in the government led by Presidents James Tanis and Joseph Kabui. Re-elected in the 2010 general elections, Mr Nisira was appointed Vice President in the Autonomous Bougainville Government led by President John Momis. Nisira held his seat in the 2015 general elections and was reappointed Vice President in the second Momis government.




Bougainville President Press Release : First address of the State to Bougainville


First address of the State to Bougainville

Part One

ABG President Chief Dr John Momis speaks on key issues that ABG is currently addressing. Momis made his first appearance for this year at a media conference held on Monday 8th 2016.

President Momis, firstly wished all citizens of Bougainville a Happy New Year.

He wasted no time in addressing the issues and challenges faced by his government the Autonomous Bougainville Government (ABG);

• Bougainville Peace Agreement (BPA)

2016 will bring some big changes and improvement to Bougainville.
If we look at the bigger vision of what BPA is, you will begin to see that only in Bougainville, WE have a strong government.

We have the right to vote for a referendum to get independence.

PNG constitution does not allow other provinces to get autonomy the same as Bougainville. PNG constitution does not allow any other provinces to get independence.

This is a unique right of the constitution of Papua New Guinea. This, the Bougainville Peace Agreement (BPA) is a result of Peace in Bougainville an outcome that ended the war, a bloody war that killed 15-20,000 people.

The powers, which the ABG already has, cannot be taken back by the national government. It is irretrievable. It is protected under the provision called double entrancement clause in the peace agreement.

The National Government cannot get back all the powers that Bougainville has already drawn down.

According to the Peace Agreement, and inline with the constitution, the National Government and ABG must work together to achieve results of the peace agreement.

The two must have a joint partnership in implementing the peace agreement. This means that the national government has a very big responsibility to make available all the provision funds to operate ABG and fund services to the people of Bougainville.

The national government is not at liberty with all funds. When doing so, the national government has broken the constitution and the peace agreement.

ABG has a lot of power under the Bougainville Peace Agreement. But because we don’t have enough knowledge and experience all these powers are not in use and are not functioning.

When we have enough educated people and if we build capacity then all powers will function and the people will see the results and outcome of the true meaning of drawing down those powers.

But before that can happen as well, the government (ABG) must make new policies and laws. Having draw down of powers without policies and legislation will not bring out any results. And they become non-existent although already existing. This is a big problem in Bougainville because there are not enough educated people with experience in law, planning, and finance to make new policies.

• ABG’s biggest challenge
This means that Bougainville must have a lot of educated people who can make laws to encourage new ideas.

ABG’s biggest challenge is not having enough human resource that is equipped with a capacity of creating new laws and policies that can move the region forward.

• National government breaking law

The National Government is breaking the law when it is not meeting all the funding under the Bougainville Peace Agreement that is suppose to compliment the functions of the Autonomous Bougainville Government. This is a controversy to the constitution of the National Government and the Bougainville Peace Agreement and the leaders and people of Bougainville.

ABG is not begging the National Government for money. The National Government owes ABG money.

Before the crisis, Bougainville was the main income driver for the National Government. Contribution from Bougainville to the National Government was tremendous.

And so, the action of the National Government shows that the government has no gratitude of Bougainville’s contribution in the past.

• Joint Supervisory Body (JSB) 15th and 16th of February 2016

The Autonomous Bougainville Government will raise this issue again at the Joint Supervisory Body (JSB) meeting that will be held on the 15th and 16th of February.

JSB is a special meeting held between the National Government and the ABG to address and resolve critical issues raised by the ABG to the National Government and from the National Government to ABG. It is a special meeting held between both governments to negotiate inline with the peace agreement.

We hope that there is already work done to resolve a lot of issues faced by ABG.

To be continued…

State’s first address to the Public
Part 2 (A continuation from part one)

President Chief Dr John Momis elaborated on the five principles of his government during his first term as the president for the second house of government in 2010.

Five principles
The five principles as first announced in the inauguration of the 2010 government:
1. Unification of all Bougainvilleans.
2. Securing the political future of the Bougainville Peace Agreement.
3. Promoting Good governance in the rule of law.
4. Public Awareness

1. Unification
A principle that believes in strengthening unity amongst the people and government by acknowleding that:
• The outcome of the referendum will be difficult to achieve if their is no unity. The outcome of the referendum will be a result of the two governments (GoPNG and ABG) consulting each other on the outcome.
• It means that for unity to take place, we must agree to become a member of a team.
• Unity means encouraging a lot of debates on referendum in Bougainville and PNG.

2. Securing the political future of the Bougainville Peace Agreement
A principle that believes in strengthening the ABG by:
• Strengthening and increasing the laws of Bougainville. ABG has its own laws already. Mining laws, Lands, Education etc
• A preparedness of the ABG to conduct the referendum successfully and the questions to consider in preparation for the vote
• Encouraging ABG to archieve complete autonomy. ABG autonomy is 90% of Independence.
• Preparing Bougainville for referendum.

Good governance in the rule of law
A principle that believes in good governance in the rule of law by:
• Accepting and upholding a democratic system of government.
• Upholding the constitution and law and order and not agreeing to the traditional or customary way or any other way of upholding the law.

Building public awareness
A principle that believes in using the media as the way forward for awareness:
• The media must sing and dance the same tune when disseminating information about mining, referendum, investment, and development…
• The media and NGOs must not confuse the public with wrong information.
• It refers to ABG having dialogue discussion with the people of Bougainville and the government and PNG.
• For both ABG and GoPNG to jointly implement the peace agreement.

President Chief Dr John Momis urged for every citizen to take responsibility with their lives.

Responsible of each citizen
It is every citizen’s responsibility to:
• Go to church and have a strong relationship with God.
• Have an interpersonal relationship with your family (ies), clan, community,
• Be concerned about issues in your local area, community, and societies within your constituency, other constituencies and around Bougainville.

President Momis made other announcements.
New announcement are:
• Vice President Patrick Nisira and his team was in Scotland to learn about how referendum was conducted in that area
• This year there will be more trauma counseling programs under the UN Peace Building fund in Bougainville.
• ABG will have funding to implement economic programs tailored for people who can become self-reliant including the government.
• ABG will approve the new Public Service structure for Bougainville this year. All positions will be reviewed, approved and advertised.
• The Bougainville Peace Agreement (BPA) is now known as the model peace agreement in the world.

Bougainville Independence News: Is China in frame as midwife to a Bougainville nation?


China’s constructions on ­reclaimed rocks in the South China Sea are a headache for ASEAN, the US and Australia, what if Beijing became the patron of Bougainville a large emerging island state that stares across the ­Pacific to the US fortress of Guam?

Rowan Callick Reporting in THE Australian

Earlier this year 130 operations were performed on the US Navy hospital ship Mercy. Its nurses, dentists and optometrists saw more than 6000 patients and its veterinary surgeons treated 140 dogs and cats and more than 2500 farm animals, during a two-week stay in Bougainville and in Rabaul, also in Papua New Guinea.

The US’s Pacific Command is a massive deliverer of humanitarian services every year around the Asia-Pacific. And Bougainville, an autonomous region of PNG, is a worthy recipient.

Conditions have deteriorated on the island, which after boasting the best living standards in PNG before civil war broke out in 1989 is now one of the nation’s worst performing provinces, with few job prospects and poor health and education levels, even for a country languishing at 157th of the 187 nations on the UN human development index.

But there is another, strategically potent, reason why the US might well wish to pay particular attention to Bougainville. That’s because within five years its 250,000 people will go to a referendum on independence and Bougainville, with deepwater ports and lengthy runways that could be swiftly rehabilitated, lies 2500km straight across the horizon from Guam.

PNG Prime Minister Peter O’Neill recently told The Australian a “yes” vote would not necessarily lead to independence, which remained the responsibility of the national parliament.

“We have a diverse and tribal country, so we can ask ourselves, where does it stop? We have no ­interest in thinking about independence, but about services, and the wellbeing of the people on Bougainville,” he said.

Nevertheless, the odds are strong on Bougainvilleans opting for independence. An independent but economically struggling Bougainville would be forced swiftly to seek patrons. The Autonomous Bougainville Government, led by former priest John Momis, has repeatedly stated an economically viable future requires the return of mining.

Rio Tinto has demonstrated its lack of confidence in reopening Bougainville Copper Ltd — which would cost an estimated $6.5 billion — by instigating a review of its 53.6 per cent stake, which has been under way for more than a year.

A groundbreaking ceremony, or Bel Kol (the cooling of anger), at which landowners, ABG, mine owners and other groups would bury the hatchet, has been postponed yet again due to the hostility of former combatants, some of whom retain their small arms.

It looks increasingly possible that Rio Tinto will walk away from the mine, which it was forced to close 26 years ago, despite it still containing copper, gold and other metals worth about $50bn and ­locals strongly backing its reopening at elections despite a hard core waving the threat of violence to keep it closed.

It could hand its shareholding to a trust for Bougainvilleans, as BHP did when it walked away from the environmental controversies at the Ok Tedi mine.

Or Rio could try to sell it, in which case the PNG government might be a buyer — or might ­nationalisation it, as happened at Ok Tedi two years ago. The ­national government is already the second largest owner of BCL, with a 19.1 per cent stake.

But nationalisation would be very hard to effect and counter-productive to the good relations needed for any chance of a referendum outcome supporting continued PNG sovereignty.

The bottom line is that only one source can provide the cash and the engineering required to resurrect the mine — the Chinese government. China is the only country to be expanding rapidly its aid — however tied — in the Asia-Pacific as part of President Xi Jinping’s maritime silk road ­vision.

Mr Momis, 75, a complex figure who has evinced strong nationalist feelings for PNG and Bougainville, has strong connections with Beijing, where he served as ambassador from 2006 to 2009.

Australia has worked to maintain strong links with Bougainville too, having played a major role, working alongside New Zealand, in the peace process and providing continuing aid. But the relationship suffered some turbulence when Canberra announced in the May budget the opening of a consulate on Bougainville before it had been fully agreed by Port ­Moresby.

Whoever becomes Bougainville’s best friend, whether it ­remains part of PNG or seeks to strike out on its own, must have deep pockets.

The stakes are also high, as Asia-Pacific waters, already the world’s most crucial trading channels, become increasingly crowded with the escalation of spending on ocean-going navies, including by Australia.

Bougainville has been a highly strategic island before. In 1943, it was where US fighters shot down Isoroku Yamamoto, the commander-in-chief of the Japanese Imperial Navy.

The Australian Strategic Policy Institute warned two years ago that “misunderstandings between Port Moresby and the ABG persist … The most likely referendum outcome — PNG refusing to ratify a clear but far from unanimous vote for an independence Bougainville is utterly unprepared for — would be destabilising”.

“Australian interests would be profoundly engaged if the situation there deteriorates sharply.”

ASPI director Peter Jennings added this week that the sharper maritime strategic competition emerging in the region made ­Pacific islands even more vulnerable to exploitation from powers eager to secure access for ships, aircraft and intelligence-gathering capabilities.

Would restarting Bougainville’s Panguna contribute to sustainable development?


As pointed out by US AID eighteen months ago: “It… remains unclear how the ABG would finance an independent Bougainville. Many have pinned the financial health of Bougainville on the re-opening of the mine.

“This is problematic, however. Even if the mine were to open prior to the referendum [on independence] (which seems very unlikely), it would take years before it generated revenue for the government

Published by MAC on 2015-10-17
Source: Nostromo Research with Dr Mark Muller (2015-10-17)

Exclusive report

The decade-long civil war, unleashed on the indigenous inhabitants of Bouainville between 1988 and 1998 is unique in recent South Pacific history. Directly and indirectly it cost the lives of up to 20,000 children, women and men.

Although there were several reasons why it lasted lasted so long, it was primarily the presence of the island’s massive Rio Tinto-owned Panguna copper-gold mine which triggered the rebellion that quickly resulted in a horrendous, bloody, conflict, characterised by numerous atrocities.

It is now seven years since a reconciliation process between the combatants was brokered by the New Zealand government. So far, peace has largely prevailed.

Nonetheless vigorous disagreement exists between various land-owner groups and the Bougainville Autonomous Government, over one burning issue:

Should the Panguna mine be re-opened by BCL, Rio Tinto’s subsidiary on Bougainville; offered to other bidders; or closed down for ever?

The report which follows does not take political sides.

Instead, it presents an objective assessment of what the economic, social and environmental costs would be, should the government of Bougainville (or Papua New Guinea) decide to try to revive the mine.

Its conclusions are unequivocal: nothing will be gained by Bougainville’s citizens in doing this.

And much more will be lost, in terms of jeopardising any advances in promoting sustainable livelihoods.

Restarting Panguna: between a rock and a hard place

Nostromo Research with Dr Mark Muller

15 October 2015

Executive summary

  • Bougainville Copper Ltd (BCL) estimates that the costs of re-opening the Panguna mine will exceed US$5 billion
  • But this doesn’t account for the expenses of concluding several essential “due diligence” studies
  • Even if these go well, a new mine is at least five – possibly ten years – away from any profitable production
  • Judging by the amounts and grades of copper and gold in the existing Panguna mine lease area, any company re-opening the mine will struggle to compete against global competitors, and is likely to fail
  • In order to attract mine development funds, BCL must acquire new prospecting ground outside the current licence area. It’s doubtful this would yield significant fresh economically-recoverable ore reserves
  • There do exist technologies for re-work existing wastes and to access ore which remained at the mine when it was closed in 1989
  • However, even if these were implemented, they would necessitate significant additional operating costs; and would materially increase threats to the integrity and health of landowners’ land and water
  • It’s highly improbable that any other mining company – including Rio Tinto and Chinese ventures – would be seriously interested in re-opening Panguna
  • Major global banks are most unlikely to supply the funding needed for this purpose
  • The new Bougainville Mining Act may offer attractive taxation and royalty terms to community groups and foreign mining companies
  • However, these measures will severely limit the financial returns to central government, thus severely limiting other alternative models to ensure Bougainville’s sustainable development


Could Panguna be re-opened while avoiding past devastation and destruction?

Put simply, we ask if there’s any possibility that a future operator could employ “cleaner” technologies – those which were unavailable, or not employed, during the earlier period of Panguna’s life?

If so, would these mark any real improvement on what went on before – in social, environmental and economic terms?

At first sight, the answer seems to be a qualified “yes”. For example, some metals could be recovered from existing waste stock piles without needing to open new pits – an example of this being the large Kolwezi copper tailings project in DR Congo.

Bougainville Copper Ltd (BCL)’s chairman Peter Taylor told shareholders in the company’s 2007 Annual Report that Rio Tinto had shown it “has been possible to apply new software and techniques to BCL’s old data and reproduce it in a form that places BCL years ahead of any other potential developer..It is also possible that grades [of ore] once designated as waste can be economically processed and thus prolong the life of the mine and substantially increase its output” [BCL Annual Report 2007, 20 February 2008].

What he seemed to mean by this statement was that, so long as BCL has access to its in-house records and they are in good order, the ore still untouched in the abandoned pit, along with existing stockpiles of lower-grade copper, may be amenable to profitable extraction. Techniques for doing so are much improved on what they were when the mine was forced to close in 1989.

Another possibility, long-established in mining, is to reduce the ore “cut off” grade at the point it is milled, thus enabling lower-grade material – previously discarded and stock-piled – to enter production. Again, the technology for doing this has advanced considerably over the past twenty-six years.

However, it is doubtful that BCL – or any other company- would employ either of these two strategies . Historically, Panguna’s tailings were piped directly into the Jaba River, thence flowing into Empress Augusta Bay. While it might be economically worthwhile to extract metals from tailings that still lie along the Jaba flood plain and in stock piles close to the pit, accessing those on the seabed will be much more problematic.

Of course, BCL might argue that re-working these wastes is a key part of whatever the Bougainville government might insist upon for implementation of a the mining rehabilitation and closure process, process – as mandated under the Bougainville Mining Act of March 2015 (1).

Nonetheless, what is likely to rule out the extraction of sea-bed tailings is the sheer expense involved (2).

So, presuming that BCL decides on economic grounds not to recycle any, or most, of its historic wastes, the burning question is: how then will it dispose of the fresh ones that are bound to be created if mining is resumed?

The practice of riverine tailings disposal has been repeatedly condemned by lawyers and others in Papua New Guinea itself (3). Storing huge amounts of Panguna tailings and overburden on land will inevitably provoke the very resurgence of land-owner opposition that BCL and the present government claim they want to avert.

And it is far from risk-free. Numerous incidents of collapse of such facilities have been recorded year-on year over past decades (One of the most recent occurred at Canada’s Mount Polley copper-gold mine in mid-2014, when a massive tailings spill caused dramatic changes in the local ecosystem) (4).

Reducing the ore cut-off grade is, in theory, quite a sensible strategy. But it inevitably results in more wastes being created at greater operational costs. Usually, companies resort to this only when market prices are high enough to justify it – which they certainly aren’t at present.

In-situ leaching, usually using sulphuric or hydrochloric acid, is another technique which might theoretically be employed to reduce the highly visible and damaging consequences of resuming a traditional “pick, shovel, and dump” operation.

However, since the Panguna orebody consists of igneous/volcanic rock, almost certainly it would require “fracturing” that rock to create the permeability needed for the leaching chemicals to move through to the ore. The prospect of such “fracking” – widely condemned by environmentalists in the US and Europe – would doubtless create alarm among Panguna landowners, and pose a continual threat of contamination to their vital community water supplies.

What are the practical risks to resuming mining at Paguna?

BCL’s version of events from 1989 – 2010

Since the Panguna mine was forced to close in 1989, BCL concedes it has not been possible “to mothball properly the assets or to undertake preparations for prolonged closure”. In a statement made in February 1994, it said that available “studies” (unspecified) indicated “initial production could be re-established within some 18 months from the achievement of the requisite conditions for a return to the island”. Output would then be “built up progressively to the full rate of pre-closure production over a period which would depend upon the conditions of the time” [BCL Annual Report 1993, 16 February 1994].

This vague, unhelpful statement provided little cause for optimism, and in the light of events over the past twenty one years has proved virtually meaningless.

The total cost of returning the mine to full production was at the time of closure said to be “at the upper end of the previously reported range of only 300-500 million kina, spread over a number of years” [BCL Annual Report 1993 ibid] (5)

Nontheless, ten years later BCL was saying: “…[M]etal prices alone will not determine the future of mining on Bougainville” and that: “There is no indication from landowners or the Bougainville government that mining will be welcome”. Moreover: “It must… be assumed that mine site assets continue to deteriorate with time, and therefore the cost of a restart increases…[A]ny potential developer seeking funding to restart the project is faced with the additional issues of PNG country risk and the long period of disturbance originating in the violent closure of the mine…For the record, the company is not doing any mining feasibility work nor is it planned” [BCL Annual Report 2003, 26 February 2004].

By the end of the next decade, BCL appeared to be more optimistic about re-establishing the logistics for a return to the mining lease area, in order to assess the state of Panguna’s assets, and hopefully to access new exploration sites. In its 2009 Annual Report, the company said that management was “enthusiastic to study a mine restart once the peace process has been resolved (sic)” and that “Rio Tinto will be of great assistance to BLC in providing world class technical expertise and mine development experience” [BCL Annual Report 2009, 10 February 2010].

In the meantime, an Order of Magnitude study (essentially an assessment of mineral potential), along with exploration studies, had been initiated in 2008. But BCL admitted it had still not benefited from any “technical expertise and mine development experience” which might come from Rio Tinto. It also noted that the mining pre-feasibility study – one essential to estimating the costs of re-opening Panguna- “is a very expensive exercise that won’t be started until there is greater certainty that the Government and landowners support re-development”, although it was hoped that “during the year, certainty will come and the Board will approve the next phase of restart studies” [BCL Annual Report 2009, ibid]

A year later (2010), BCL chairman, Peter Taylor reported that parent company Rio Tinto had recently applied for exploration licences on the Papua New Guinea mainland., thus providing a“good indicator” that it was “looking to be an active participant in PNG’s future mineral development”, adding that: “Bougainville Copper is among those projects that Rio Tinto has on active watch” [BCL Annual Report 2010, 1 March 2011] (6).
Taylor added:: “[S]ome remedial work has been carried out on site as part of the company’s commitment to ensure the mine site is safe whether or not mining is taking place”, and announced it had “plans to do additional work with the cooperation of landowners”. No details were given either of the work done, or of any additional work planned [BCL Annual Report 2010, ibid].

Would the costs outweigh the benefits?

In BCL’s 2011 Annual Report, Peter Taylor asserted : “There is widespread agreement today that Bougainville’s economic future needs mining in order to fund services for the people from its own resources as well address the future question of increased autonomy”. It was yet another unsubstantiated statement by BCL’s chairperson which, we would argue, is an extremely debatable one.

In the same report, Mr Taylor also mentioned that funding and sovereign risk assurance for Panguna would “require a united effort” (whatever that was supposed to mean).

That year, BCL estimated the cost of project re-opening as being “approximately US$3 billion” [BCL Annual Report, 2011, 12 February 2012]

Just twelve months later, this figure had shot up by more than 40% to ”in excess of US$5 billion” [BCL Annual Report 2012, 7 February 2013].

Then, on 25 February 2014, Taylor told BCL shareholders that the Order of Magnitude Study, presented at the 2013 Annual General Meeting, was “being continually re-visited and updated”.

He described a possible new mine at Panguna as one which would process between 60 and 90 million tonnes of ore per annum over a mine life of 24 years”, carrying a capital cost “of at least US$5.2 million” [BCL Annual Report 2013, 25 February 2014].

As for the length of time required to re-start-the mine, Mr Taylor said this “could be between five and seven years from the commencement of a pre-feasibility study study” – which itself was “at least eighteen months away from commencement” [BCL Annual Report 2013, ibid].

At last, BCL appeared to be moving towards a more realistic estimation of the costs and difficulties of re-opening the mine and resuming profitable production. Although the company has gained restricted access to the site over the past two years, in 2014 Taylor conceded that the Order of Magnitude Study – by then two years old – was “based on many assumptions including commodity prices, market demand, investor risk, opportunity costs, security of tenure and others”  [BCL Annual Report 2014, 20 February 2015].

All these assumptions are extremely vulnerable to forthcoming dramatic changes which cannot possibly be predicted much in advance.

The time required to bring Panguna into new production would, by BCL’s own admission, set any start-up back to 2020-2022 at the earliest.

Yet, the pre-feasibility study has yet to be scheduled, let alone carried out. It would have to be followed by what’s usually called a “bankable feasibility study” – without which few, if any, credit-worthy banks or private funds will look twice at making any investment.

This study would need to be farmed out to an independent professional services firm, and could take at least another year to complete, given the sorry state of the Panguna assets that BCL has already agreed have suffered a “long period of disturbance originating in the violent closure of the mine.” (see above).

It should also be pointed out that, while BCL acknowledges the importance of assessing country (or sovereign) risk – presumably of both PNG and Bougainville – no reference has been made at any point by BCL to the necessity of gaining political risk insurance (7).

In addition it is certain that, whichever corporate enterprise may succeed in placing “ boots on Panguna ground”, it will have to secure export credits to finance new equipment and infrastructure, and to cover this by buying such political risk insurance. It is highly doubtful that any government Export Credit Agency (ECA), or the World Bank’s MIGA (Multilateral Investment Guarantee Agency) would step up to this particular plate (8)

More important, however, is that , even were the copper market in a “bullish” state by the time BCL had successfully jumped all these hurdles, its competitors will have leaped ahead of it by miles in other parts of the world.

Mining companies, with far more capacity, security of tenure, and owning considerably more “measured and indicated reserves” of copper, are already anticipating a rise in global demand, despite the current depression in the copper commodities market.

What this clearly means is that, judging by the copper and gold reserves estimated to lie in the former Panguna Special Mining Lease, it is essential for BCL to acquire extensive additional deposits.

But, even if the Bougainville government were to allow any advancement beyond the current mining lease area (a big “if), there is no guarantee whatsoever that fresh diamond drilling would yield any major economically recoverable reserves or resources (9).

Alternative development models

What’s most important is that, while any mining company is awaiting all the required pre-mining permits, funding, insurance and confirmed buyers of its output, the Bougainville government and landowners – almost its entire population – may be placing faith in a dubious, flawed and risky project which could collapse at any point along the way.

As pointed out by US AID eighteen months ago: “It… remains unclear how the ABG would finance an independent Bougainville. Many have pinned the financial health of Bougainville on the re-opening of the mine.

“This is problematic, however. Even if the mine were to open prior to the referendum [on independence] (which seems very unlikely) (sic), it would take years before it generated revenue for the government.

“An adverse circular effect is therefore in place: the mine is necessary to generate revenue for ARG [Autonomous Region of Bougainville] operations, yet the re-opening of the mine is likely to destabilize the ARG. There are further concerns that the ABG lacks the capacity to adequately and transparently account for and manage revenue resources.

“A Bougainville government that does not have the resources or the oversight capacity to provide basic services to its population [contingent on mine re-opening] would be a grave threat to stability” 10).

This has profound implications for Bougainville if, while waiting for the mine to re-open and produce revenues, the government has surrendered, or at the very least delayed, implementation of the possibilities of forging and supporting alternative economic models – regardless of what proportion of these translates into taxation and royalties for Bougainville itself and for landowners.

In fact, the Bougainville Mining Act is distinctly generous to miners, when defining the fees, annual rents, royalties, production levy, security Section 291 Royalties, and the production levy that they must pay (11) .

The Act may prove to be beneficial to indigenous landowners who apply for “indigenous” tenements; and perhaps rightly so. (In fact landowners holding an artisanal mining license are not required to pay a royalty, though they may be subject to a similar separate agreement). But it also appears aimed at attracting external corporate mining outfits, hoping that they will favourably compare these rates to more exigent ones levied in other countries.

In practice, therefore, the Bougainville state – unlike others, such as Tanzania, Argentina and Mongolia – seems about to abandon any quest to substantially ramp up mining revenues which might contribute to an overall social and economic national development.

The new Bougainville Mining Act devotes around half its pages to Community Mining Licences and Tenements. Clearly, considerable importance is now ascribed to promoting landowner-controlled mining ventures, whether they be artisanal, small scale or large scale. And this may be guardedly welcomed.

Nonetheless, indigenous mineral exploitation, like its corporate “big brother”, broadly speaking cannot escape the problems of capital raising, averting environmental destruction, and having to weather commodity market downturns.

When such exploitation conflicts with priorities chosen by other land owners for the use of land, especially for agriculture, and creates fierce competition for scarce development funding, it will certainly not make for overall economic sustainability.

So much then, for Peter Taylor’s boast in 2011 – echoed recently by ABG president John Momis – that: “There is widespread agreement today that Bougainville’s economic future needs mining in order to fund services for the people from its own resources”.

This is manifestly untrue.

The late Moses Havini and his wife Rikha, in 1995 recorded that, within forty years of the end of World War II, Bougainville had become “the richest agricultural region in the Pacific” (12).

With effort, application, and a re-direction of fiscal priorities, the country might regain at least some of that former role.

Although lack of space precludes detailed further examination of the nature of potential alternative, sustainable models of development, we refer to some recent examples, given in a September 2014 report by Jubilee Australia, culled from interviews with “a range of everyday Bougainvilleans living in villages around the Panguna mining area” (13)

The respondents offered many practical example of “concrete alternative (sic) to intensive mining”, with a huge priority given to horticulture & subsistence horticulture, followed by animal husbandry, alluvial gold panning,fisheries, forest and logging, carbon trading, water export, micro projects and other means of sustaining livelihoods (14)

Flying on a wing and a prayer

Let’s look closer at the data provided by BCL for the proven economically recoverable copper and gold reserves in the lease area and accessible before 1989 – the point at which it abandoned the site

(The reader is also referred to our Appendix for a detailed discussion of this issue).

There were 496 million tonnes of these ores, at an average grade of 0.45% for copper, and 0.55 grams per tonne of gold.

“Upgrading” by screening, added 530 million tonnes of ore at a grade of 0.22% for copper and 0.18 grams per tonne of gold – substantially lower than those for the proven reserves. The company said these would produce an additional 195 million tonnes of mill feed, averaging 0.34% copper and 0.47 grams per tonne of gold.

Combining these would produce a total mineable mill feed of an estimated 691 million tonnes of material, averaging 0.40% copper and 0.47 grams per tonne of gold [BCL Annual Report 1999, 7 March 2000]..

These figures have not materially changed since mining began, and should be critically borne in mind when evaluating what BCL now has on offer, after seventeen years of mining one of the world’s most productive and (apparently) most profitable copper-gold projects at the time.

Alas, they offer to Bougainville no more than a “wing and a prayer” for the following reasons:

  • In terms of current copper production and planned expansions, an unprecedented amount of copper may hit world markets by 2020. Theoretically, the availability of supply is not in question. As a few examples,the putative El Teniente mine in Chile, with 2.02 billion tonnes of copper reserves, averaging a grade of 0.86% copper, is expected to open in 2018 and produce fine copper for fifty years
  • Peru’s Metmin claims to hold 926 million tonnes of copper resources, grading 0.51%, while the Antamina mine, also in Peru, boasts probable resources of 454 million tonnes, grading as high as 1.05%.
  • The Grasberg mine in Papua , which ranks as the world’s third largest copper producer, and number one gold miner, currently digs up 240,000 tonnes of rock containing gold and copper ore per day (sic), at a mill cut-off grade of 0.41%. for copper. (In comparison, at peak production, Panguna was producing 150,000 tonnes of rock a day) (15).
  • Coming closest to Panguna in geo-political terms is Papua New Guinea’s Ok Tedi mine wich recently underwent major expansions and drilling for new deposits. As of the beginning of 2014, the company had located 871 million tonnes of additional ore on Mount Fubilan, grading 0.44% copper and 0.54 grammes per tone (g/te) of gold, thus putting it somewhat ahead of Panguna; more important is that it already has the technical ability and capacity to extract the ore without needing to meet the enormous extra capital costs that Bougainville’s equivalent would require.

According to the World Gold Council (WGC), larger and better quality underground mines contain around 8 to 10g/t of gold, with marginal underground mines having averages of around 4 to 6g/t. and open pit mines usually have lower grades from 1g/te to 4g/te – all of which are far higher than those so far confirmed for the Panguna deposits.

(Important to note, too, is that several mines also deliver substantial economic amounts of other metals – such as silver, zinc and molybdenum – thus providing a possible “safety net” if demand for copper or gold becomes negatively impacted).

Put all this data together, and it leads to a virtually incontestable conclusion:

Unless BCL, or any other mining company, can geometrically increase the amount of copper and gold reserves at Panguna, and unless exploration outside the lease area confirms a significant rise in their average grades, the island will be left economically stranded, if and when a new “race for resources” ensues over coming years.

Added to which, a company would need to secure firm contracts with external buyers over a defined time-span. Most of these will have already been concluded, and some of them will stretch out for years. Those contracts traded on futures exchanges (predominantly the London Metal Exchange) can have a life of more than five years, and change hands between buyers and sellers many times over. There is customarily a huge volatility in metals trading, but particularly in copper (16). An opportunity customarily arises for so-called “spot buying” – as when a Chinese smelter, for example, unexpectedly falls short of supply. However, to rely on such transactions alone, in order to bankroll a future mine, would be sheer folly.

Rio Tinto – a blithe prospect for Bougainville

As the majority owner of BCL, any decision Rio Tinto makes as to how, or whether, it should aim at reviving mining and exploration in Bougainville must take into account its current – and future – role as one of the world’s major copper producers. In other words, it has to ask which of its existing projects merits increased investment, and which should be left to “wither on the vine”.

Currently it is entitled to a 40% portion of the Grasberg mine in Papua; and in the first quarter alone of 2015, it gained over 132 million tonnes from the output of its wholly-owned Bingham Canyon mine in Utah (USA), and its share of the Escondida mine in Chile. For the future, it is embarked on development of what promises to be a world-class copper mine at La Granja, Peru.

Rio Tinto’s longer-term “great red hope” lies with the Oyu Tolgoi copper-gold project in Mongolia, with whose government it recently inked a deal to proceed with full commercial output, the copper grade across a number of deposits averaging 0.85% and 0.32% grammes per ton of gold..

In comparison to these, investing in the advent of a Panguna “Mark-11” must seem the distinct stuff of economic fantasy.

Little wonder that, when Rio Tinto initiated its review of Panguna in 2014, it was already seriously contemplating selling-out of the mine, and is currently mooting options for disposing of its entire share holding in BCL (17).

What about China?

Earlier this year, Rio Tinto expressed the view that China was”slowing its own demand for copper” (18) . Bloomberg agreed, recently commenting: “[I]t is difficult to predict when the market will witness [a] turning point. For now the copper price is reacting to the slowdown in China, which last year saw its economy grow at its lowest pace since 1990.

“As a consumer of more than 40 per cent of the world’s copper, any further weakening in China’s growth, without a revival in the rest of the world, could mean years before the price bounces back to previous levels” (19).

Certainly China has roamed the world in recent years in search of a whole gamut of metals at prices it judgese reasonable. In 2014, a Chinese consortium acquired (from Glencore, the world’s premier copper trader) the Las Bambas mine in Peru which, at full capacity, is expected to produce 460,000 tonnes a year of copper over 18 years (20).

This cost the Chinese partners US$5.85 billion – thus coming close to the figure BCL reckons it will need to re-start the Panguna operations.
But this should in no way be interpreted as a sign that China is seriously interested in acquiring the Panguna mine – something that has been recently speculated upon in Bougainville. On the contrary, there is good reason to believe that – apart from a few possible smaller deals or participation in existing joint ventures – the regime is no longer interested in spending a similar amount of money on any venture in Bougainville – and perhaps nowhere else either (21).

Citing developments in Chile – the world’s largest single copper producer, with around a third of the global market – Bloomberg says that: “The average investment of the 10 major mining companies in Chile was more than $8bn in 2012, but fell to $6bn in 2014.

And, while the Chilean company Codelco (the world’s single largest copper miner) “plans to invest more than $20bn over the next five years… that is just to maintain its existing operations and production” (22).

What, then, to make of all this? On the one hand, with costs rising and investment falling, the future for an expanding copper market looks bleak. Any expansion will further reduce copper’s selling-price – and in turn exert a downward impact on the revenues required to finance new production. On the other hand, restricting output now will hopefully lead to a boost in prices – a so-called “bull market – and logically to a revival of copper mining.

But that is not actually the way the market works: a surplus of mined supply results in another drop in prices, and yet again to deep reluctance on the part of investors to throw fresh money after old.

It is therefore highly likely, that, at the point – following the ten or more years it would take for a revived Panguna mine to enter full production – it would have few, if any, customers.

A cautionary end-note

The Bougainville Mining Act (paragraph 236, paragraph 4 (d) ) states that any company wishing to apply for a mining or exploration tenement must have “ sound financial standing and has either established an (sic) bank account in Papua New Guinea to carry out the proposed exploration work programme or mining proposal plans or can produce evidence of financial capacity from a duly authenticated source offshore”.

Whether BCL is now in any position to comply with this condition is doubtful, but its 2014 Annual Report, BCL recorded an overall operating loss of 175.7 million kina (approximately 65 million US dollars). Its former mining licence has been converted by the Bougainville government into an exploration licence, without any guarantee that the company will locate an appreciable amount of new mineral reserves and resources, let alone at the high grade essential to its competing against other mining companies.

(1) The Advisory Council, designated under the Act ,has the power to forbid this type of seabed extraction, citing section 67 paragraph 4.i, of the Act, on “the need to protect fisheries and ecologically important areas of seabed habitats from offshore mining…” On the other hand, the following paragraph (67.4.ii) cites “the need to maintain access to areas of high mining potential” although this is clearly intended to apply to primary, rather than secondary, seabed extraction.

(2) As a comparison, the Nautilus Minerals deep-sea Solwara-1 exploration and mining project, in Papua New Guinea waters, will cost that company at least 120 million US dollars by the point of production, with additional outlays on the running costs of vessels and equipment required for the purpose [See:
(3) See for example: “Constitutional Law Reform Commission recommends total banning of riverine tailings disposal”, Post Courier, 31 July 2014
(4) See: “Mount Polley mining disaster caused major changes to ecosystem – study”, Mining,com, 6 May 2015; http://www/ to-ecosystem-study/
(5) Although the Kina-US dollar exchange rate at this time is not known, five years later it was 2.11 PGK/US$, thus the projected costs then amounted to around 200 million US dollars.
(6) In reality, Rio Tinto has made no significant moves on the PNG mainland in recent years. It pulled out of the Mt Kare prospect in 1993, following an armed attack two years earlier; it withdrew from the Golpu porphyry deposit after spending six years (1996-2002) prospecting it. It also off-loaded its stake in Lihir Gold in 2005. For an invigorating account of Rio Tinto’s chequered experiences at Mt Kare, see: Dave Henton and Andi Flower:“Mount Kare GOLD RUSH; Papua New Guinea, 1988-1994, as told to Andi Flower”, Cotton Tree, Queensland, 2007
(7) For a critical analysis of PIR, see: Roger Moody, “The Risks We Run: Mining, Communities and Political Risk Insurance”, International Books, Utrecht, 2005, page 201 et seq.
(8) See “A guide for feasibility planning for junior mining companies:
(9) Mineral prospecting on Bougainville started from Australia in 1929, most likely by CRA, then a subsidiary of RTZ (later Rio Tinto Ltd). Panguna was “discovered” in 1965, when Bougainville, as part of Papua New Guinea, was under Australian colonial administration. We can reasonably assume that, although no data on exploration outside Panguna is now publicly available, Rio Tinto had earlier ventured into prospecting other parts of the island, and concluded that drilling results from these areas did not justify its applying for an additional exploration or mining licence. Obviously, with much more sophisticated technology, including satellite imaging and three-dimensional deposit modelling, having become available since then, the situation could change were BCL of Rio Tinto allowed to extend prospecting to the island as a whole. At present this seems very unlikely.
(10) Bougainville Stability Desk Study, USAID, 10 October 2013.
(11) According to paragraph 291/1 of the Mining Act:”The holder of a mining lease or quarry lease must pay quarterly—(a) landowners’ royalty, at the rate of 1.5% of mineral value; and (b) regional development royalty, at the rate of 1.25% of mineral value; and (c) health and education royalty, at the rate of 0.5% of mineral value; and production levy, at the rate of 0.5% of mineral value. No mention is made of other taxes, such as corporation tax and windfall tax, and other types of mineral taxation, widely employed elsewhere.
(12) Moses and Rikha Havini, “Bougainville – the long struggle for freedom”, UN International Conference on Indigenous Peoples Environment and Development”, Zurich 1995.
(13) “Voices of Bougaiville: Nikana Kangsi, Nikana Dong Damana (Our Land, Our Future”, Australia, September 2014, page 5.
(14) [“Voices of Bougainville”, ibid, page 43
(15) See: Hammond, Timothy G. “Conflict Resolution in a Hybrid State: The Bougainville Story, “, Foreign Policy Journal, April 22, 2011
(16) See:
(17) .The Australian, 20 April 2015; Wall Street Journal, 18 August 2014].
(18) Bloomberg, 27 April 2015
(19) Bloomberg, ibid
(20) Engineering & Mining Journal, August 2014
(21) The only Chinese company which appears to have taken any interest in Panguna is a minor scrap metal outfit, operating for three years, which was recently attacked by landowners for blatantly disregarding their interests . A spokesperson is quoted as saying: “We the landowners have never called for the government to shelter other people on our land without seeking our consent. We are never respected by the government thus we the people who own the land here in Panguna will never respect them”, adding “The Chinese are not known by the gods of the land.” (PNG Minewatch, 1 May 2015).
(22) Bloomberg, op cit

APPENDIX: Making sense of the figures

Dr Mark Muller*

14 October 2015

Given (only) the information contained in annual reports published by BCL over the years since mine closure, there is a quite large uncertainty in exactly how much ore and contained metal might be recovered from what remains of the Panguna deposit. It is apparent that BCL, in 2013, has become more optimistic about how much ore (and therefore metal) it might recover from the mine. BCL’s new optimism appears to rely heavily on technological improvements in minerals processing to allow them to mine lower-grade ores economically.

In 2013, BCL envisaged a possible new mine at Panguna that “would process between 60 and 90 million tonnes of ore per annum over a mine life of 24 years” [BCL Annual Report 2013, 25 February 2014], which implies a total recovery of between 1,440 and 2,160 million tonnes of ore.

This 2013 estimate is significantly higher than BCL’s estimate in 1999 of a “total mineable mill feed of an estimated 691 million tonnes of material” [BCL Annual Report 1999, 7 March 2000].
While there is no clear indication of where or how the additional ore might be derived, inferences based on BCL’s more concrete information of 1999 point towards a large proportion of it consisting of significantly lower-grade ore.

In 1999, BCL referred to a resource consisting of both higher-grade and lower-grade components [BCL Annual Report 1999, 7 March 2000]: 496 million tonnes of “higher-grade” ore with an average grade of 0.45% for copper and 0.55 grams per tonne for gold and 530 million tonnes of “lower-grade” ore at a grade of 0.22% for copper and 0.18 grams per tonne for gold.

The latter low-grade component, BCL proposed, could be upgraded by screening to produce an additional 195 million tonnes of mill feed, averaging 0.34% copper and 0.47 grams per tonne of gold which, in combination with the higher-grade ore, would deliver the total mineable mill feed of 691 million tonnes (referred to above), averaging 0.40% copper and 0.47 grams per tonne of gold.

The amounts of in situ copper and gold (and the current in situ US$ value) that correspond with the 691 million tonne resource are:
2.764 million tonnes US$ 17.7 billion (at US$ 6,410 /tonne copper)
324.8 tonnes US$ 12.4 billion (at US$ 38.31 /gram or US$ 1,191.42 /oz gold).

It’s difficult to estimate (or more honestly, guess) what average ore-grades might be assigned to BCL’s much larger total ore production estimates of 2013. The grade values reported from 1999 for the 691 million tonnes resource are almost certainly too high and would significantly overestimate the contained metal. More conservatively, one could consider a weighted average of the “high-grade” and “low-grade” ore grades reported in 1999, yielding average grades of 0.33% for copper and 0.36 grams per tonne for gold, which strictly speaking can only be applied to a 1,026 million tonne ore resource (i.e., 496 million tonnes plus 530 million tonnes).

Such a 1,026 million tonne ore resource would deliver in situ:
3.398 million tonnes US$ 21.8 billion (at US$ 6,410 /tonne copper)
368.2 tonnes US$ 14.1 billion (at US$ 38.31 /gram or US$ 1,191.42 /oz gold).

To complete the analysis one might, speculatively (in all likelihood overestimating the contained metal in the deposit), apply these average grades of 0.33% for copper and 0.36 grams per tonne for gold to the 1,440 (minimum) and 2,160 (maximum) million tonnes of ore that BCL envisaged in 2013 for a 24 year life-of-mine. Doing so yields (in situ):
Minimum 4.769 million tonnes US$ value 30.6 billion (at US$ 6,410 /tonne copper)
Maximum 7.154 million tonnes US$ value 45.9 billion
Minimum 516.8 tonnes US$ value 19.8 billion (at US$ 38.31 /gram or US$ 1,191.42 /oz gold)
Maximum 775.2 tonnes US$ value 29.7 billion.

The amount and value of the metal in the ground of course provides no guarantee that it might be economically or profitably recovered. Even with improvements in minerals processing technology, the cost of processing low-grade ore per ton of metal produced is still high with respect to processing higher-grade ores.

In all the scenarios sketched above, a very large percentage of the ore is low-grade, and judicious mixing of low-grade with high-grade ores will be required to ensure the long term viability of any new mine. Such a finely balanced (marginal) operation would be at high risk of early closure if strategic or economic imperatives, of which there are many (e.g., low commodity prices, shareholder pressure, profit taking), were to lead BCL to extract the higher-grade ore selectively at a faster rate than initially envisaged – leaving behind low-grade ore potentially impossible to recover economically at any commodity price. The risk of such an early mine closure at Panguna is the renewal of significant environmental and land-use impacts without the delivery of promised long-term economic benefits.

Two further points may be of interest:

(i) At current commodity prices, gold accounts for approximately 40% of the in situ US$ value of the deposit.
(ii) Given the small fraction of metals contained in the rock, the amount of tailings waste produced by the mine would be roughly equivalent to the amount of ore processed – i.e., depending on the scenario, anywhere between 691 and 2,160 million tonnes of tailings waste.

* Biographical note: Dr Muller is a highly-experienced senior geophysicist, having worked for over twenty years in the mining industry and academia. He holds a PhD from University of Cambridge, UK and an MSc from the University of the Witwatersrand, South Africa.


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Bougainville Referendum News: Bougainville: hard choices looming for Australia? (part II)

Bn 26

Differences could arise in a number of ways but at the more serious end of the range, possibilities include either a refusal by the PNG Parliament to recognise a pro-independence referendum outcome, or a failure by Papua New Guinea to agree to a referendum going ahead at all.”

Author James Batley worked in the Department of Foreign Affairs and Trade, and in AusAID, between 1984 and 2014: Originally published in the Strategist

In my earlier post I argued that, notwithstanding the strong legal underpinning of the 2001 Bougainville Peace Agreement, it’s possible that Bougainville and Waigani may be on a collision course. What would such a collision mean for Australia?

In the event that a referendum were held and clearly favoured independence with the outcome subsequently ratified by the PNG Parliament—accompanied by an orderly transition—Australia would have little choice but to accept the result. But while this is a possible outcome, it’s by no means the most likely scenario.

Far more likely is a situation in which Papua New Guinea and Bougainville find themselves at odds. Differences could arise in a number of ways but at the more serious end of the range, possibilities include either a refusal by the PNG Parliament to recognise a pro-independence referendum outcome, or a failure by Papua New Guinea to agree to a referendum going ahead at all.

To this, it might be countered that Article XIV of the PNG Constitution includes a range of dispute resolution provisions including through the courts. Yet this ignores the fact that any differences that may arise are far more likely to be political differences than matters of interpretation that are amenable to mediation or judicial resolution.

In either of the disputed situations outlined above Australia would be faced with difficult choices. Of course, Bougainville isn’t Australia’s responsibility, but Australia has a stake in Bougainville’s future, including its relationship with Papua New Guinea. Australia doesn’t have the luxury of not having a view on these questions. In any serious dispute, both sides would look to Australia for support.

Whatever the legal niceties, the PNG government would expect to have the greater claim on Australian support, both on historical grounds and in the light of more recent experience—you-scratch-my-back-and-I’ll-scratch-yours (i.e. Manus) grounds. For their part Bougainvillean groups would point to Australia’s role in acting as midwife to the BPA back in 2000.

In any such scenario a range of Australian interests would be thrown into the balance: Australia’s stake in Papua New Guinea’s long-term security and stability; the state of the bilateral relationship; the risks of renewed violence on Bougainville; the implications of any action (or inaction) on Australia’s part for its broader role in the region.

Many decisions are yet to be taken by the parties themselves, and many variables remain in play. While there are the beginnings of discussion in Bougainville on possible transition scenarios, there’s no requirement for a referendum to be held before 2020, so any breakdown in the process—assuming one does occur—might be years away. So it’s wise not to take the scenario-building too far.

For Australia, however, the key point is this: Downer’s 2000 formula (Australia would ‘accept any settlement negotiated by the parties’) has served successive governments well over the past 15 years when all parties could sincerely declare themselves committed to the BPA. It’s a good formula, and if anything it’s been reinforced by the regular commitment to honouring the BPA included in Ministerial Forum communiques. That said, enough risks are now apparent to suggest that this formula may be reaching its use-by date. Events beyond Australia’s control may require Australia to declare its hand one way or the other.

None of this will be news to Australian officials engaged in PNG policy and, given her personal interest, it’s safe to assume that Julie Bishop understands what’s at stake. That doesn’t make the choices that may be faced any easier.

Much of the above analysis renders the Bougainville issue down to a binary choice: independence or not. Might there be another way of framing the issue? It’s possible that the parties themselves could think of a ‘third way’, even if no such options have been canvassed publicly so far. Even if the PNG and Bougainville governments find themselves seriously at odds on the referendum issue over the course of the next five years, it shouldn’t be assumed that they wouldn’t be able to come up with creative solutions. A worst case scenario isn’t inevitable or even the most likely outcome.

This is where Australian diplomacy could play a role. In 2000, Alexander Downer moved the peace process forward by helping the parties see beyond the immediate binary choices they felt confronted with at the time. The BPA may not have solved the Bougainville question definitively, but it has given the people of Bougainville fifteen years of peace.

It may yet turn out that the key contribution that Australian diplomacy can make is to help the parties see the future as something other than an exclusive yes/no choice.

Bougainville Referendum News: Bougainville: hard choices looming for Australia? (part I)


“In Canberra the orthodox view remains that an independent Bougainville would complicate Australia’s strategic environment. It could destabilise both Papua New Guinea and Solomon Islands, and would inevitably be a weak and possibly internally conflicted state requiring substantial external assistance for an extended period, with this cost being largely borne by Australia.

The counter-argument—that a peaceful separation of Bougainville from the rest of Papua New Guinea would settle once and for all what has been an issue for all of Papua New Guinea’s history as an independent country—is rarely heard.”

Author James Batley worked in the Department of Foreign Affairs and Trade, and in AusAID, between 1984 and 2014 including postings in Papua New Guinea, Solomon Islands, Vanuatu and Fiji. He currently works as a Distinguished Policy Fellow in the State, Society and Governance in Melanesia program in the Coral Bell School of Asia Pacific Affairs at ANU: Published The Strategist
Picture Above Arawa 2014: Australia’s Foreign Minister Julie Bishop has taken a personal interest in Bougainville.

The 2001 Bougainville Peace Agreement (BPA) marked the formal end to the 1990s Bougainville conflict, even though a truce, and subsequently a ceasefire, had been in place since late 1997. Among other things, the BPA provided for a delayed referendum on Bougainville’s future relationship with Papua New Guinea. Under an agreed formula, the referendum will be held between June 2015 and June 2020.

There are now clear risks, however, that the BPA mightn’t last the distance. This post looks at where things are headed on Bougainville and, in particular, at some difficult choices the Australian Government may need to make in the coming period.

Foreign Minister Julie Bishop has taken a personal interest in Bougainville, having visited it both in opposition and in government. She’s been careful to avoid commenting on the independence question although there’s no reason to think that the Abbott Government’s approach will be different from that of its predecessors; it will have a strong preference for Bougainville to remain part of Papua New Guinea.

In Canberra the orthodox view remains that an independent Bougainville would complicate Australia’s strategic environment. It could destabilise both Papua New Guinea and Solomon Islands, and would inevitably be a weak and possibly internally conflicted state requiring substantial external assistance for an extended period, with this cost being largely borne by Australia.

The counter-argument—that a peaceful separation of Bougainville from the rest of Papua New Guinea would settle once and for all what has been an issue for all of Papua New Guinea’s history as an independent country—is rarely heard.

For all that, Australia’s formal position on Bougainville’s independence is in fact one of neutrality. This position was first set out in March 2000 by then-Foreign Minister Alexander Downer. During the course of negotiations on the Bougainville Peace Agreement, Downer announced that Australia would ‘accept any settlement negotiated by the parties’.

Downer never made any secret of the fact that Australia’s preference was for Bougainville to remain part of Papua New Guinea. Even so, his March 2000 announcement was seen—particularly on Bougainville—as a significant change in Australian government policy because it meant, in theory at least, that Australia was open to any negotiated outcome, including independence. Previously, during the course of the Bougainville crisis from 1988 onwards, Australia’s position had been that Bougainville was an integral part of Papua New Guinea; that position was part of the reason for strong anti-Australian sentiment among pro-independence leaders on Bougainville.

The perception of a significant policy change was reinforced by Downer’s role, later in 2000, in helping to broker the crucial ‘delayed referendum’ provisions of the Bougainville Peace Agreement (BPA). These provide for an independence referendum 10 to 15 years after the election of a Bougainville government (as it subsequently turned out, this means June 2015–June 2020), plus a requirement for the outcome to be ratified by the PNG Parliament. Downer argued that this outcome gave reassurance to both sides: for pro-independence Bougainvilleans a successful referendum, although non-binding, would have irresistible moral force among the international community; for the PNG government, at the same time, sovereignty would ultimately be preserved by giving the PNG Parliament the final say.

The BPA has a strong legal foundation. Its terms were enshrined in law through an amendment to the PNG Constitution (Article XIV). Furthermore, no amendments to that part of the Constitution can be passed unless also approved by a two-thirds majority in the Bougainville legislature. On the timing of the referendum, the language included in Article XIV is unequivocal:

The Referendum shall be held … not earlier than 10 years and, notwithstanding any other provision [emphasis added], not more than 15 years after the election of the first Bougainville Government.

Australia took as a given that PNG governments of any stripe would want Bougainville to remain part of Papua New Guinea—and that they would (and should) take advantage of the delay in the timing of the referendum to convince Bougainvilleans of the benefits of autonomy over independence.

Whatever Papua New Guinea’s efforts over the years since the BPA was signed, most informed observers would now take the view that majority Bougainvillean opinion remains firmly pro-independence, even if differences exist on the question of how ready Bougainville is for independence and therefore on the best timing for this.

Campaigning for the May 2015 elections in Bougainville was conducted explicitly on the grounds that the incoming government (which has a five year term) would be the one to negotiate the exact timing of the referendum. All presidential candidates, including the winner, John Momis, were pro-independence in outlook.

The PNG government hasn’t publicly walked away from the BPA; on the contrary, it continues to assert its commitment to it. The communiques from successive PNG–Australia Ministerial Forums continue to include routine (perhaps by now ritual) affirmations of the PNG government’s ‘ongoing commitment to the full implementation of the Bougainville Peace Agreement’.

It would be prudent at least to contemplate ways in which all this could go wrong. Papua New Guinea’s reaction to the May 2015 budget announcement that an Australian consulate would be established in Buka suggested that Australia had touched a raw nerve in Waigani, and gave a valuable insight into the importance and sensitivity of this issue for the O’Neill government. Certainly, the Port Moresby rumour mill increasingly suggests that Prime Minister O’Neill is giving serious thought as to how Papua New Guinea can preserve its interests in Bougainville in the long term.

Many on Bougainville fear that the PNG government will find a way to prevent the referendum from going ahead at all. So it’s at least possible that Bougainville and Waigani may be on a collision course. In a second post I will look at the implications of any such collision for Australian policy.

Bougainville Economic News: Grand Chief Momis wants to jumpstart economic activities that will transform to economic growth

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“Let us be realistic and practical this time. Let us learn to accept realities and work for solutions and alternatives. Let us stop dwelling on problems, but instead come up with solutions,” President Momis said.

“We all know that we have been denied what is constitutionally and legally ours on matters of funding. This government will continue to work through diplomatic channels and if necessary, the courts to demand what is due us,”

“With this in mind, we work on the premise and framework that at this time we have limited resources

ABG President Grand Chief Dr. John Momis economic statement (see below )

The Autonomous Bougainville Government’s third House met on 21st July) for the first time as it begins its five year tenure.

In his first address to the third House’s first sitting, ABG President Grand Chief Dr. John Momis told the new members that they all share the same honor and privilege of having been chosen by the people of Bougainville to lead and provide them with a better life and a better future.

“Our people see in us the workers with responsibility for the realization of their dreams and aspirations, more than ever they want us to amplify their voice as they shout to be freed from the grip of poverty and marginalized life,” the President said.

“They want us to create meaningful and sustainable projects for them to breathe a little and ease their pain and suffering, they want us to create laws, policies and programs that will raise their dignity as persons,” he said.

The President went on to say that the people would like their leaders to guarantee that their children of the next generation shall overcome better than they are today, they want us to get them out of the depths of the poverty so they can gradually enjoy in the next years decency in food, clothing, shelter and education for their children.

President Momis said that he expects the third Autonomous Bougainville House of Representatives to make a difference as he reiterated the six major tasks that his government would be addressing.

The six major tasks outlined by the Momis led Government are Unification of all Bougainvilleans, Improving welfare of all Bougainvilleans by promoting appropriate economic development, Securing Bougainville’s future by fully implementing the three pillars of the Bougainville Peace Agreement: achieving full autonomy, preparing for the referendum and achieving complete weapons disposal.

These also include Promoting good governance and the rule of law and ending corruption, Public Awareness and Improving basic services, as outlined by the President Grand Chief Dr. John Momis during his inaugural address in June.

“During the Crises we were one, we stood our ground and we fought and made sacrifices but unfortunately instead of emerging as a rejuvenated community we disintegrated and went our different ways, we were all weakened and paralyzed by the absence of a culture we once had as Melanesians,” the President said.

“Today I stand before you to pose this challenge to each and every one of you, let us not fail our people, let us not abandon our people, we have heard enough, seen enough, discussed enough-this is the time for all of us to roll up our sleeves and soil our hands.

Momis on Economic Development

Since the formation of the third house of the Autonomous Bougainville Government in June a new Ministry, the Ministry of Economic Development was created in order to fast track economic projects and activities.

ABG President Grand Chief Dr John Momis said that creating favourable economic conditions will jumpstart economic activities that will transform to economic growth and in turn will provide the basis for the ABG to have the basis for fiscal self-reliance through its own taxes.

“Let us be realistic and practical this time. Let us learn to accept realities and work for solutions and alternatives. Let us stop dwelling on problems, but instead come up with solutions,” President Momis said.

“We all know that we have been denied what is constitutionally and legally ours on matters of funding. This government will continue to work through diplomatic channels and if necessary, the courts to demand what is due us,” the President added

“With this in mind, we work on the premise and framework that at this time we have limited resources.

The President has already issued directives to the ABG Ministry of Finance and Ministry of Economic Development to start an inventory of what it has in resources, identify all potential internal sources of revenue and determine the gap between what we have and what we want to achieve.

The two ministries must also act on narrowing the gap, formulate policies and laws to raise revenue, implement policies and laws on control and proper fund management, increase savings mechanisms in our operation and define guarantees for our domestic and international investors.

“I must make it clear, here and now, that we need both those domestic and foreign investors. Domestic investors in Bougainville are already doing much. We have significant local investment in large and small stores, in guest houses, in PMVs, in construction of buildings and roads and many other sectors,” the President said

These local investors who have taken many risks since the conflict ended, need for more support and encouragement and developing plans and mechanisms for the incentive they need must be a major focus of our new ministry.

For the most part, foreign investors will be encouraged to operate in other sectors where domestic investors do not have the capacity.

“Fiscal self-reliance is a tall order at this point in time. Yet, I firmly believe that when we work together purposively and want it badly enough we can achieve it,” Momis said

Bougainville Government News alert : New ministers announced by the ABG President Chief Dr John Momis.



The new ministers announced and declared by the ABG President Chief Dr John Momis.

The new Ministers are;

1. Hon John Momis Buin, Minister for Planning and Inter-government Relations (Department of the President and the Bougainville Executive Council)
2. Hon. Patrick Nisira Halia, Minister for Referendum, Peace and Veterans Affairs (Department of the Referendum, Veteran’s Affairs and Peace)
3. Hon. Albert Punghau (Motuna Huyono) Minister for Treasury and Finance ( Department of Treasury and Finance)
4. Hon. Raymond Masono (Atolls) Minister for Public Service (Department of Public Service)
5. Hon Willie Masiu Minister for Justice (Department of Justice and the Principal Legal Advisor)
6. Hon. Robin Wilson (Terra) Minister for Mineral and Energy Resources (Department of Mineral and Energy Resources)
7. Hon Luke Karaston Minister for Technical Services (Department of Technical Services)
8. Hon Dennis Lokonai Minister for Health (Department of Health)
9. Hon Thomas Pata’aku Minister for Education (Department of Education)
10. Hon. Jacob Tooke (Baubake) Minister for Community Government (Department of Community Government)
11. Hon Josephine Getsi Minister for Community Development (Department of Community Development)
12. Hon Nicholas Darku Minister for Primary Industries (Department of Primary Industries)
13. Hon Fidelis Semoso Minister for Economic Development (Department of Economic Development)
14. Hon John Tabinaman Minister for Lands, Physical Planning, Environment and Conservation (Department of Lands, Physical Planning, Environment and Conservation)

Bougainville News : New speaker of house Simon Pentanu hits the ground running

Swearing In

“In building and strengthening the Parliament through you as members, the Speaker’s role in the Bougainville Parliament is not one of just a Presiding Officer or Chairman of meetings of the House. I will call on all my previous experience as a parliamentary officer and Clerk of a the Parliament of a successful sovereign nation, an experience that extends over 25 years.  With this experience and background I am confident this places in a position to ensure that the management and administration of the parliamentary service is above board and that everything we do is transparent.”

Simon Pentanu Speaker, House of Representatives Autonomous Bougainville Government 2015-2020

Read full speech HERE

Picture above: ABG speaker Mr. Simon Pentanu was welcome by his Pokpok people when he returned home. The ceremony was very significant and he was accompanied by member for North Nasioi, Hon. Nicholas Darku, Hon. M. Kokiai member for central regional women and Noah Doko rep, Mr. Michael Pariu.

In this article Mr Pentanu thanks the outgoing  ABG Speaker for the last seven years, ANDREW MIRIKI and passes on his best wishes to the Port Moresby Bougainville Association celebrating the Anniversary of ABG (see below)


By Aloysius Laukai

The newly elected ABG House of Representatives Speaker, SIMON PENTANU has started working on strengthening the ABG House of Representatives.

In his first Broadcast on New Dawn FM, MR. PENTANU said that the time of partying is over and that he was now ready to do his work in strengthening Parliamentary Services to support the Government of the day.

simon New Dawn

He said that his office will prepare for the induction of members of the ABG to make sure they know what their role and responsibilities are as members of the ABG House.Pentanu said that his office will support the members to understand their work so that they can properly deliver as required by their constituencies.

He said that his office will do more in strengthening the members by carrying out educational programs to support the members work.

The ABG speaker also thanked the ABG House for having faith in him and elected him as the Speaker of the 3rd ABG House.

Meanwhile, the ABG Parliamentary services staff prepared a lunch to welcome the new Speaker at the House of Representatives.

This completed the one-week of running around since the Inauguration of the 3rd ABG House on Monday this week.


The outgoing ABG Speaker for the last seven years, ANDREW MIRIKI  officially handed all office keys of the ABG Parliament house to the newly elected speaker, SIMON PENTANU.

The brief but very significant ceremony was witnessed by the Acting clerk, EDWIN KENEHATA and his deputy at the Speaker’s office.

Before handing off the keys, MR. MIRIKI gave a full brief of what he had done and what he could not do in the last seven years.

He also outlined some programs that the new Speaker need to continue with example the Twinning arrangement between the New South Wales Parliament and the ABG house. MIRKI said that he was happy to handover to the new Speaker to continue with the work and also promised to support the speaker if he is needed.

He said that he was now packing up and would leave the Speaker’s house in Kubu in four weeks to allow the new speaker to move and carry out his work.

New Dawn FM understands that this was a rare ceremony as most people leave office without handing over to the successor as they do not accept the change

Message from Simon Pentanu Speaker House of Representatives Bougainville.

On the occasion of Port Moresby Bougainville Association celebrations to mark Third Anniversary of ABG.

It’s a beautiful day in Bougainville. I hope it is too in Port Moresby where PBA is hosting its premier event where Bougainvilleans, with families and friends, get together today to mark this Third Anniversary of our ABG and our current political status as an Autonomous Region.

PBA is the natural facilitator of these events with the support our tertiary students, our women and those that always volunteer to assist the PBA Executive. I know that the message from this Executive has been: “PBA will not do it for you, we will do it with you.”That was the basis of the spirit of success in 2014. I’m sure it is the same spirit for AROB Day 2015.

I am proud to have been associated with the PBA, in particular with the members of the present Executive. I will continue to support the Association in my role as Speaker. I am confident we will build a closer consultative relationship with PBA through which your contributions will be appreciated and valued towards a common Good for all. No matter the distances we are all together. I wish you all a successful Day of Peaceful and Happy Celebrations. Simon Pentanu Speaker House of Representatives

Bougainville 2015 Elections : Chief Momis ABG President full inauguration speech

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The third ABG will increase the speed of transfer. Priority areas include: land; environment; mining health and safety; fisheries; incorporation of associations; police; and the ABG’s foreign affairs powers – proposing names on the PNG visa warning list, work permit applications for Bougainville, and so on.

With autonomy, significant new powers were fully transferred through development of many new laws passed, including physical planning, Public Finance Management, Mining, and a separate Bougainville Public Service.

How did the ABG perform in relation to these matters between 2010 and 2015?

  • great unity,
  • a tremendous sense of purpose,
  • intense energy, and

an unwavering commitment to the course we intend to follow.On behalf of all the newly elected members of the third ABG, I commit all of us to work on behalf of all Bougainvilleans to ensure that our common dreams and aspirations are achieved.

Thank you all for joining me in marking this beginning of what I believe will be the most exciting, but also challenging, five years in the history of Bougainville.


Chief Momis -Bougainville President Inauguration statement – June 2015

PHOTO above : The current elected ABG President Hon Chief Dr John Momis and Acting Prime Minister for PNG Hon Leo Dion

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Introductory Report from by Aloysius Laukai: Managing Editor Bougainville News

The ABG President, Chief DR.John Momis yesterday said Panguna may never Open although Bougainville’s financial woes can be resolved immediately if it opens.

Speaking at the Inauguration ceremony, DR. MOMIS said that under the Bougainville’s law on Mining, the landowners have the power to decide what’s on their land and no one can push them around.

President Momis said that options are if the landowners want or if BCL wants to re-invest in Panguna it’s up to them to decide as the ABG can just facilitate the process.

He said that if PANGUNA is allowed to open it can take up to seven years for reconstruction to commence before actually getting Copper ore from the ground.

For a complete new mine it would take over fifteen years for exploration to take place and to get the first ore from the ground.

He said some options are already available for the Government to consider if PANGUNA does not open.

photo JM 78





Fellow Bougainvilleans, and Guests from elsewhere in PNG and from other parts of the world: I welcome you all to the Inauguration of the Autonomous Bougainville Government’s 3rd House of Representatives.

There are 2 major reasons why this day, 15 June 2015, is important to all Bougainvilleans.

First, it marks 10 years since we began our journey to self-determination under the Bougainville Peace Agreement.

Second this day starts the 5 year period during which we are guaranteed the right to participate in a referendum on our independence.

The Bougainville Peace Agreement is the real basis for us all being here today. It provides us with an exclusive right to self-determination. We can choose and shape our future, a right unique in PNG, and rare internationally. We should celebrate this right, as we do by being here today.

We also celebrate and are grateful for the support we receive from our many partners, especially the two most important, PNG and Australia. We rely mainly on PNG grants and donor funding – especially that from Australia.

The Peace Agreement is a political and constitutional contract between the National Government and Bougainville. It must be honoured in full.

The Agreement is not a gift without any strings attached. Instead it will deliver real benefits only if we work hard to make use of the opportunities provided to us. We cannot just sit back and wait for the National Government and donors to deliver us to a promised land.

Only we Bougainvilleans can build the new Bougainville we want. We must grasp our opportunities. We cannot ignore the requirements of the Agreement. Without it, we would have no legitimate basis for what we do.

Ladies and Gentlemen, I must acknowledge the vital contributions of those that have helped us to achieve the things that have got us here today.

First, I congratulate the people of Bougainville, for participating actively and peacefully in the process to select Bougainville’s leaders.

Next I acknowledge those who led the peace process. Some are no longer with us. But their contributions are not forgotten.

The first ABG Presidents provided the solid foundations for the ABG. I acknowledge the presence here today of not only Rose Kabui, widow of the 1st President, the late Joseph Kabui, but also the 2nd President, James Tanis.

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I thank members of the 2nd House for their contributions to Bougainville, from 2010 to 2015. The 3rd House will be standing on their shoulders.

I thank the Bougainville Electoral Commission, the electoral officials, their advisers, and the donors, whose efforts delivered the general elections.

To the other 8 presidential candidates, I offer my congratulations. You contributed to debate about how to meet the needs of Bougainvilleans. Presidential candidates were invited today. I aim to work closely with them. I also thank all the candidates in other seats, as well as their committees, scrutineers, and supporters.  Voters had real choices of leadership and policies.

I acknowledge the presence of senior National Government representatives. In the absence of the Prime Minister (who is overseas) acting Prime Minister Hon. Leo Dion is with us. Others include Governor of East Sepik, Hon. Sir Michael Somare; Minister for Foreign Affairs, Hon. Mr. Rimbink Pato; and Minister for State Enterprises, Hon. Ben Micah. The Peace Agreement was a joint creation with PNG, and ongoing partnership is needed for it to bear fruit.

I acknowledge the Chief Justice. All ABG members deeply appreciate the recognition of the ABG by the participation of PNG’s  highest judicial officer.

We are honoured too by the presence of three senior colleagues, all who played major roles in empowering the PNG people.They have been friends of Bougainville, playing major roles in peace-building. I refer to Sir John Kaputin, Sir Rabbie Namaliu and Sir Moi Avei. We salute you all and welcome you

Finally, I acknowledge the presence of international community partner representatives – the UN, Solomon Islands, Australia, New Zealand, China and the United States of America, whose support is of critical importance to us.

I also offer my humble thanks to my people, for the honour of returning me to the leadership of Bougainville

I turn now to consider the work of the ABG. On this same date in 2010, I outlined five major tasks then facing the newly elected 2nd ABG.

I want to share here my honest assessment of both successes and failures of the ABG in its efforts to carry out those tasks in the last 5 years, and indicate priorities (some of them new) in what the 3rd ABG will do.

The first task was unification. Progress in the past 5 years has included:

  • Many reconciliations;
  • The 2011 ceasefire ending the 5 year Konnou conflict;
  • Increasing engagement with Me’ekamui groups;
  • Progress towards ending the Morgan Junction roadblock. But although Bougainville is more unified than in 2010, much still needs to be done. Unification continues to be essential as we prepare for the referendum.

The ABG’s 2nd task was improving the welfare of all Bougainvilleans, by promoting appropriate economic development.

There’s been progress. Cocoa production is better than expected when the cocoa pod borer arrived. Small-scale gold production has increased. The ABG has 2 new ships. A partnership with a Chinese consortium is doing metal fabrication at Toniva, producing bricks and aggregate using Jaba tailings material, opening a wholesale store in Buka, and creating over 100 jobs.

The K300 million in National Government SIF funds since 2011 has contributed infrastructure, contracts and jobs. Our POGE partnership delivers basic goods at lower prices, starting with rice.We need more broad-based development to bring improvements in people’s lives.

We face obstacles. Attracting credible investors is hard due to the risks of our post-conflict situation, made worse by ongoing law and order problems.Another factor is limited ABG funds. Because of PNG’s fiscal crisis when negotiating the Peace Agreement, the main National Government grants cover only basic costs of delivering services.

We have little internal revenue. The Agreement does provide a Restoration and Development grant, with a formula intended to increase when National budget development expenditure rises.With rising commodity prices, PNG development expenditure increased rapidly from 2005-06.

The grant should now be over K75 million a year, but we’ve got only K15 million most years. Arrears are now well over K400 million. The National Government SIF funds since 2011 are helpful. But as conditional grants, they are no substitute for the Restoration and Development Grant.

The ABG has been trying for three years to get the Peace Agreement provisions on this grant honoured. We must pursue this matter vigorously.Although finding appropriate foreign investors is an important goal, we also recognise that Bougainvilleans are hard-working people. We can expand our economy by building on things our people are already familiar with, such as:

  • Moving from copra to virgin coconut oil;
  • Serious efforts on downstream cocoa processing;
  • Increased seaweed production;
  • More small-scale gold production, and assisting producers to invest in appropriate machinery for more safe and efficient production
  • Producing house bricks, as is already happening using Jaba River tailings.

The ABG’s third major task is securing Bougainville’s future by full implementation of the Peace Agreement, which means:

The radical new Bougainville Mining Act means any new mining will be on totally different terms from under the Bougainville Copper Agreement. The biggest protection is that no development will be possible unless both landowners and the ABG are satisfied with all the conditions for mining.

It is certainly possible Panguna will not re-open, if landowners oppose it, or if BCL don’t return and alternative developers can’t be found. But other communities want mining exploration and those possibilities will be evaluated.

Under our March 2015 Bougainville Mining Act, customary land owners also own minerals. They can reject mining exploration and development. So Panguna will not re-open without landowner agreement. That means clear agreement by a clear majority of landowners, with no manipulation of consent.

Our only realistic option for rapid fiscal self reliance and improved levels of services is large-scale mining. Re-opening the Panguna mine would provide the best chance of early revenue, as it could open in 6 or 7 years. Alternative new mining projects would take from 15 to 30 years from exploration to production.

The referendum timetable places pressure on us to achieve fiscal self reliance rapidly. Our annual budget is over K300 million, but internally derived revenue is only about K30 million. Gradual economic expansion will not deliver self-reliance (covering costs of current services) as well as providing the much improved levels of services Bougainvilleans both expect and deserve.

Cheap and reliable power will be vital for such projects, as well as for improving the lives of people by village electrification. So the 3rd ABG will work towards a hydro-electric grid. Two hydro projects are already in progress, one at Togerau, and one on the Ramazon River, funded by the ADB.

Our Chinese joint venture plans one at Toniva. These projects must progress as soon as possible. I will discuss support for the Togerau project with its main organiser, Sam Akoitai. I will seek funding for a scoping study for developing the hydro-electric grid.

Promoting these and similar activities will be a key priority of a new Ministry of Economic Development that my Government will establish.

Achieving full autonomy,

and  Preparing for the referendum, and

Achieving complete weapons disposal.

Several options have been discussed for setting the date. Although I’ve suggested considering 2019, I’m open to all possibilities. I will consult widely on the issue, with both the new ABG and the Bougainville community.I have strong views on the process to be used to set the referendum date.

The Peace Agreement clearly states that maximum period for delay of the referendum is 15 years after the ABG is established, which is mid-2020.

That maximum delay cannot be extended except on a decision by the ABG. Weapons and governance can be considered when deciding the date between 2015 and 2020, but they cannot be used to delay the referendum beyond 2020.

Suggestions at the National level that the referendum could be delayed beyond 2020 on the grounds of weapons or governance are a matter of grave concern for the ABG. Any such attempt would breach the Peace Agreement. However, I remain optimistic that good sense will prevail, and that the clear meaning of the Peace Agreement and the PNG Constitution will be honoured.                       

We are on the threshold of perhaps the most important, and portentous, five years in our history. To achieve all that is necessary in that period will require:


At the same time I must point to the need for more coordinated planning of the use of fiscal resources of the ABG, the National Government, the donors, and the Bougainville MPs. Limited coordination causes confused objectives, overlap, and even waste. I propose developing a new mechanism for consulting the National Government, MPs and donors so as to agree both development goals under a rolling plan, and what aspects of the plan each will fund.

There could be considerable pressure on the new ABG to be very restrained in our spending. We will face the major challenge of trying to achieve more while using less funds. I ask all ABG members as well as all other Bougainvilleans to understand these financial difficulties that we face.

The financial resources available to us will of course have a huge impact on what the 3rd ABG can achieve. And although what I have just outlined might suggest that the ABG has plenty of funds available, the truth is otherwise. That’s not only because of the limited funds guaranteed by the Peace Agreement, but also because of the current fiscal problems of the National Government. Those problems are mainly caused by falling natural resource prices. As a result 2015 SIF funds for the ABG expected from Port Moresby may be under threat.

We will explore partnerships with high quality hospitals in other countries. We must aim high, towards our own university, high quality technical colleges, a computer literate population. During the next five years, I will be seeking a massive expansion in Technical and Vocational Education and Training, beginning with development of at least one high quality Technical School.

Development also depends on our population being both healthy and well-educated. So our development plans must seek the highest possible health standards and the best education facilities in the Pacific.

Economic opportunities and good education are also critically important to law and order. For example, semi-educated young men with no employment or business opportunities have been a major factor in our ongoing law and order problems since the early 1980s.

So we must pursue real improvements in health and education, and basic infrastructure too. Economic opportunities, good health and good education all go together. They contribute to our economic development. That then generates the tax revenue needed for fiscal self-reliance.

The ABG also has a sixth major task – to improve basic services.

Since the late 1990 we have made progress in restoring health and education services destroyed during the conflict. But service standards are worse than before the conflict. The ABG must solve the problems faced by our people. Our other efforts mean little if the basic condition of people’s lives don’t improve.

Awareness will need to be a major priority as the referendum approaches. So we will explore options for cost-effective and widely accessed awareness methods.

In the process we learned about the practical difficulties and high expense of conducting awareness and consultation campaigns. The basic truth is that with unlimited funds and personnel, we could do far more. But funds are limited.

The fifth ABG task is public awareness. The 2nd ABG put much effort into awareness and consultation on mining policies, both Panguna, and the Bougainville Mining Act. With awareness of the Peace Agreement, there was much training of staff, but little awareness was actually conducted.

Under the 2nd ABG proposals for reform of the Council of Elders, COEs will be re-named as ‘Community Governments’. Together with custom-based village assemblies, they will have more responsibility for law and order, working more closely with police, administering small-scale mining licences and so on.

Bougainville’s the rule of law situation is generally better than many other parts of PNG. But much more is needed. We need progress on weapons. Our Police Service needs to be more respected and integrated into rural communities, and responsive to local leadership.

In terms of corruption I fear we’ve made little progress. The situation MUST change under the new House. So reform of the Public Service will continue. I will resume efforts to establish an office of the PNG Ombudsman to work with us to establish the highest standards of conduct for leaders and Public Servants.

The fourth task for the ABG is promoting good governance and the rule of law, and ending corruption. In terms of good governance, in general, the processes of the ABG were strengthened, and worked well in the last 5 years. But good governance involves much more than that.

So clearly weapons disposal must be a major priority for the 3rd ABG. So I propose holding a summit of former combatant leaders, including Me’ekamui groups, as well as other sectors of the community, to consider the ways ahead.

Fourth, international community support may be required to encourage implementation of the referendum outcome. We must make sure weapons disposal issues do not undermine international community support.

Third, the National Parliament has the final decision on the outcome of the referendum, and could use weapons issues to decide against independence.

Second, weapons availability could result in referendum observers determining the referendum is not “free and fair”, as required by the Peace Agreement.

First, disagreement between the governments on weapons could push the date back towards mid-2020.

Without much more complete weapons disposal our law and order situation will only get worse, and we risk major problems over implementation of the referendum result. There are four main issues here.

On achieving complete weapons disposal, despite progress on reconciliation there’s been almost no progress since 2005. Weapons not destroyed during the UN supervised disposal process from 2002 to 2005 include those: held by Me’ekamui groups; captured at Kangu Beach in 1996; secretly retained by some BRA and BRF elements; or held by criminals. Since then, some additional weapons have been added, including some WWII and modern weapons

On preparing for the referendum, the 2nd ABG achieved some progress by proposing establishment of a joint government working group, which reported to the JSB. But the real preparatory work begins now, with the election of the 3rd ABG. Key issues remain to be negotiated, including the referendum date, and the question to be asked in the referendum.

With these and other serious problem areas, the key leaders and officers involved are often not aware what the Agreement requires. So the ABG will seek a better understanding so that the Agreement is implemented in full.

Other aspects of the autonomy arrangements have not been fully implemented. The Restoration and Development Grant arrears is one example. Another is failure to appoint the ABG choice of head of the Police in Bougainville (the Agreement requires appointment of the ABG nominee as ACP – something that the Police Commissioner has not ever done).

I will seek the earliest possible National Government agreement on an agreed approach to timely negotiation of the necessary funding to accompany every transferred power.

The key issue is not just transfer. The ABG must also get PNG agreement to funds in the main Recurrent Grant for salaries and operational costs for transferred powers. Without such funds, we have no capacity to use newly transferred powers. Subject to negotiations between the governments, the Peace Agreement guarantees this funding for any newly transferred power.

The 3rd ABG will increase the speed of transfer. Priority areas include: land; environment; mining health and safety; fisheries; incorporation of associations; police; and the ABG’s foreign affairs powers – proposing names on the PNG visa warning list, work permit applications for Bougainville, and so on.

With autonomy, significant new powers were fully transferred through development of many new laws passed, including physical planning, Public Finance Management, Mining, and a separate Bougainville Public Service.

How did the ABG perform in relation to these matters between 2010 and 2015?

  • great unity,
  • a tremendous sense of purpose,
  • intense energy, and

an unwavering commitment to the course we intend to follow.On behalf of all the newly elected members of the 3rd ABG, I commit all of us to work on behalf of all Bougainvilleans to ensure that our common dreams and aspirations are achieved.

Thank you all for joining me in marking this beginning of what I believe will be the most exciting, but also challenging, five years in the history of Bougainville

photo JM 80