Mine ready

to negotiate Haiveta reveals government plans for takeover at Sandline inquiry

By Sam Vulum

Bougainville Copper Limited, the developer of the controversial Panguna copper mine in the North Solomons Province has finally indicated that is prepared to listen to landowners’ demands for greater participation in the operations of the world’s second-largest open-pit copper mine. This comes nine years after millions of kina’s worth of destruction and the loss of hundreds of lives.

“Greater landowners’ participation,” was briefly discussed at the 24th annual general meeting of BCL in the Papua New Guinea cap ital, Port Moresby, on April 29. Answering questions by a principal Panguna mine landowner, Sevenrinus Ampoai, at the meeting, BCL chairman David Karpin said the Bougainville mine agreement would be reviewed to include equity for the Panguna landowners.

“There will be changes to the Bougainville Agreement. Equity will be a relevant matter to future discussions on the agreement,” Karpin said.

Ampoai reminded the BCL chairman and members of the board of directors that the agreement was not equitable to Panguna landowners because it was negotiated and signed by the national government and CRA Ltd. BCL’s 1996 annual report shows that the company has set aside K 15.9 million (SUSIO million) for compen sation payments to landowners for the period 1990 to 1996.

According to the report, the amount is being held in an interest bearing account.

Government plans were revealed during the Commission of Inquiry into the engagement of Sandline mercenaries. Chris Haiveta, former PNG deputy prime minister, told the inquiry the government

had planned “Operation Oyster” to recapture Panguna mine and “Operation Valentine” to acquire CRA’s interest in the mine.

He said the involvement of two controversial entities in the Sandline deal - Rupert McGowan and Jardine Fleming Inc - was to advise the government to give Panguna and Bougainville landown ers “a better deal”.

Haiveta said the government would give at least 20 per cent equi ty in BCL if it succeeded in acquiring CRA’s 53.6 per cent control ling interest. He told the inquiry the government wanted to increase its current stake in BCL by buying out CRA’s controlling interest. It would then be in a position to give Bougainvillians “20 or 25 per cent” equity, at no cost, as part of the resolution to the nine-year Bougainville crisis. He said he had hired Jardine Flemming Inc as financial broker for the acquisition. Jardine acted as financial advis er in the successful Orogen Mining Ltd float. “The government has [a] 19.1 per cent [stake] at the moment and we hope that by buying 53.6 per cent we would have a total control of 72.7 per cent,” he said. “That would give up, say, 20 to 25 per cent that we would give to the landowners, the North Solomons provincial government and the people of Bougainville.”

The revelations, however, fell short of touching on earlier reports that heavy share trading and a sudden increase in prices in Bougainville copper shares occurred before the government’s mer cenary deal was exposed. The BCL chairman confirmed the trading and indicated that investigations were continuing. The Australian government wrote to the Australian Stock Exchange (ASX) in early March seeking information on who bought more than one million shares in BCL just before news broke of the mercenary plan.

It was suggested that the share trading involved members of the PNG government, but no names were mentioned. More than one million shares in BCL were purchased for around 60 cents each on February 14, 18 and 19. The ASX traced the trades to Brisbane based firm Morgan Stockbroking, a co-manager of the Orogen Minerals float last year.

The Panguna mine was closed on May 15, 1989, by disgruntled landowners over lack of adequate benefits from mining operations.

The landowners had demanded from the government and BCL, a hefty KlO-billion ($U56.95-billion) compensation for environmen tal damage. Militant landowners later took up arms and shut down the mine as well as government services to Bougainville.

Meanwhile, in his supplementary statement to shareholders, Karpin renewed BCL’s commitment to resume mining operations, subject to economic viability and when conditions permitted on war tom Bougainville. Karpin reiterated that BCL had not been able to assess the condition of the mine since 1990.

“It should be noted that economic viability of any future opera tions will depend on a number of factors which cannot be accurate ly predicted this time, including the cost of recommissioning, likely future operating cost, government and community requirements, the copper/gold market and the economic outlook at the time,” he said.

“It is not possible at present to determine when this might be achieved or determine the degree of damage and deterioration to assests which might have occurred during the period of suspen sion.”

Since its inception in 1972 until cessation of operations in 1989, the mine produced concentrate containing three million tonnes of copper, 306 tonnes of gold and 784 tonnes of silver.

The production had a .value of K 5.2 billion (SUS 3.6 billion) which represented 44 per cent of PNG’s exports in that period.

Contributions to the national government in the form of taxes, duties

Foreign media, soldiers and public at Murray barracks during the crisis