Bougainville Copper Limited (BCL) is a subsidiary of Conzinc Riotinto Australia (CRA) which discovered a major copper deposit at Panguna. on Bougainville Island in the North Solomons, in 1964. In 1967 CRA signed an agreement with the Australian Administration to set up Bougainville Copper Mining Company. Some 53.6 percent of the shares were to be held by CRA, 26.4 percent by public shareholders and 20 percent by the Australian Administration on behalf of the colony of PNG. Mining operations began in 1969 and copper was first exported in 1972. In 1973 the Bougainville Mining Company was renamed Bougainville Copper Ltd (BCL).
Some Bougainvilleans opposed the project and others, particularly owners of the land which had been taken over by BCL, wanted more than the token compensation which they had been offered. In 1974 the BCL Agreement was renegotiated on what were, by world standards, terms very generous to PNG. However, many Bougainvilleans believed that they were being inadequately compensated.
Concern about the effect of mining on the physical and social environment, and resentment over inadequate compensation, led in 1979 to the establishment of the Panguna Landowners Association (PLA). BCL reluctantly responded by establishing a Road Mine Tailings Lease Trust Fund (RMTLTF) to review the situation. The dispute was complicated by the emergence of a younger, educated group of Bougainvilleans, whose members claimed that compensation to the landowners had been inequitably distributed and questioned the authority of the PLA. In 1987 this group formed the New Panguna Landowners Association (NPLA) which, in 1988, demanded K 10 billion compensation, many times the mine’s total gross earnings between 1972 and 1987. When BCL failed to meet this unrealistic claim, some members of the NPLA, led by Francis Ona, resorted to sabotage and terrorism and formed the Bougainville Revolutionary Army (BRA). BRA activities forced the closure of the mine in May 1989. In December BCL announced that the mine would remain closed indefinitely.
Between 1972 and 1989 BCL contributed K 1.17 billion (67 percent of the total BCL income of K 1. 175 billion) to the PNG economy. Of this amount, 61.5 percent went to the national government, 4.3 percent to the North Solomons provincial government, and 1.4 percent to those who had been recognized as owners of the land occupied by the mine. In 1989 BCL provided 30 percent of PNG export earnings, 11 percent of GDP and 15 percent of national government revenue.