SYDNEY - Foreign mining companies are jostling for exploration rights on the Papua New Guinea island of Bougainville ahead of a crucial independence vote next year that some fear could revive tensions that sparked a civil war that killed 20,000 in the 1980s.
The island will need mining royalties to maintain a viable economy if the referendum backs independence, but unresolved issues over the Panguna copper mine are still a sensitive point with traditional landowners. Villagers shut the pit down in 1989, triggering the previous lethal conflict.
The referendum is the culmination of the Bougainville Peace Agreement, which formally ended the decade-long bloody civil war. It will take place as the US and Australia aim to work closely with Papua New Guinea to develop its Lombrum Naval Base to counterbalance China’s growing maritime influence in the region.
In January, the Autonomous Bougainville Government (ABG) said that an indefinite moratorium had been imposed on work at Panguna, which was the world’s biggest open-cut copper mine when it was being operated by Bougainville Copper Limited (BCL), a unit of Anglo-Australian mining giant Rio Tinto.
Rio exited in 2016, transferring its 53.8% shareholding to the ABG and the PNG government, but there has been speculation the mine could reopen. PNG’s government gave its shareholding to traditional landowners in the Panguna area.
“If we went ahead now, you could be causing a total explosion of the situation again,” ABG president John Momis said after the moratorium was declared.
“As far as the people are concerned and as the government, we cannot allow foreign companies to be causing division and using a very emotional situation [on] the ground to cause another war.”
In 1972, there were suggestions of colonialism and commercial exploitation over a decision to grant a mining license to Rio Tinto after minimal consultation with local villagers. Bougainville was then being ruled by Australia under a United Nations mandate that ended with PNG’s achievement of independence in 1974.
The Panguna mine effectively underwrote that process: at one point copper from the mine was contributing 45% of PNG’s annual export earnings and generating more than US$740 million from tax income and dividends.
But little of this money reached tribal groups; instead, they complained that tailings from the mine were killing their fish and poisoning farmland. In 1989, the Nasioi people broke into the site and shut the mine down.
When PNG sent riot police and troops to the island, villagers formed the Bougainville Revolutionary Army, a rag-tag separatist group that plunged the region into a decade-long civil war that left most of its infrastructure in ruins.
A fragile peace was achieved in the late 1990s under monitoring groups led by Australia and New Zealand, but the wounds remain raw. Several tribes maintain “no-go” areas to keep foreign firms out, and the remnants of the BRA, known as the Me’ekamui group, only disarmed this October.
Bougainville, which has closer ethnic links to the Solomon Islands than Papua New Guinea, was granted a limited form of autonomy under a formal 2001 peace treaty. The referendum, tentatively scheduled for 15 June next year, will decide whether the island should become completely independent.
However, it will not happen unless the ABG can find some way to bridge the gap between developers and traditional landowners who fear a repeat of the Panguna fallout.
Rio Tinto left behind an environmental mess of sludge and rusting equipment that some analysts estimate could cost US$1 billion to put right. The firm contends that it has already complied with regulatory requirements.
Momis knows that without mining, Bougainville will stay part of Papua New Guinea, as the island managed to cover only 14% of its total expenditure of US$50 million last year from domestic sources — mostly sales of farm products. It is expected to need a budget three times bigger if it votes for independence.
Leaving the door ajar, Momis has said that the moratorium only covers mining at Panguna, which is inaccessible in any case because of a ‘no-go’ order. A new mining law passed in 2014 clarified the regulatory situation and has attracted interest from firms in Australia, China, Canada and elsewhere.
But there is a catch: the law gave traditional landowners control over minerals on their land and the right to participate in any development decisions that might affect their interests. So the fate of Bougainville’s separatist movement now rests with those who started it in the 1980s.
Landowners that do deals with mining companies will have to face the wrath of neighbouring tribes that could bear the consequences of mining. There are strong risks that tensions could boil over even before the referendum.
The wild card in this game of chance is PNG, which is not obliged to allow Bougainville to break away even if there is a ‘yes’ vote.
Indeed, it may prefer to keep a tight rein on its renegade region, especially if predictions of a vast untapped treasure of copper, gold and other minerals are realised.