The Panguna Mine

by Don Vernon

The mineralisation which led to the development of the Panguna mine was discovered in 1961 and confirmed by Conzinc Riotinto Australia Ltd (CRA) in 1964. After extensive exploration and the preparation of a detailed feasibility study, an agreement was negotiated with the Australian Government and subsequently ratified by the Papua New Guinea House of Assembly in 1967 (renegotiated in 1974 by the pre-independence Papua New Guinea Government under its first prime minister, then Chief Minister Michael Somare) and a decision to proceed with developing the mine was made in 1969. The plant was commissioned in 1972 and closed as a result of rebel activity in 1989.

This article describes briefly the mine’s operation and then highlights four of the major issues facing the company during its 25 years on Bougainville. After that I will touch on some of the positive aspects of the mining operation in order to give some balance to my account.

My own contact with Bougainville goes back to 1966 when I was project manager of the CRA evaluation team working out of Melbourne. My family and I moved to Panguna in 1970 when I took up the role of assistant general manager. In 1975 I became managing director of Bougainville Copper Ltd (BCL). When I moved back to Melbourne in 1977, I remained on the BCL Board, becoming chairman from 1979 to 1986. My years on Bougainville were among the most interesting and fulfilling in my professional career.

The Mine

The Panguna operation consisted of a low grade copper–gold orebody which was mined by conventional open cut methods using electric shovels and 100–150 tonne trucks. Approximately 100,000 tonnes of waste rock per day was stored on the down-stream side of the mine, and over 100,000 tonnes of ore went to the concentrator each day. There a conventional crushing, grinding and flotation process produced a concentrate slurry containing 30 per cent copper and one ounce per tonne of gold. The tailings material was discharged from the concentrator into the Jaba River which carried the material to the west coast. The concentrate slurry was pumped to the port on the east coast where it was filtered, dried and loaded onto 25,000 tonne ships for export to overseas copper–gold smelters.

Initially the major customers were Japan, Germany and Spain but subsequently the customer list was expanded to include China and South Korea. Technically, the operation was regarded as one of the most efficient in the world. Credit for this achievement must go initially to the original designers but subsequently to the local managers and staff, over 80 per cent of whom were Papua New Guineans. It must be said that this was made possible by the excellent training facilities developed by the company for the training of tradesmen in particular, but also plant operators for all earthmoving equipment, concentrator operators and powerhouse operators. Separate facilities were also provided for training small business personnel who were interested in undertaking contract work for the company. In fact, so successful were the training programs on Bougainville that they were subsequently introduced to all other CRA activities in Australia.

Major Issues

Four major issues stand out when considering the history of the mine: land ownership; communication problems; fragmentation within Papua New Guinea and the environmental consequences of the mining operation.

Land Ownership

To the casual observer flying over Bougainville’s rugged Crown Prince Range in the mid-1960s, the idea that a developer needed to worry about land issues would have seemed ludicrous. Where the mining lease was to be gazetted, there were thickly forested mountain slopes, often covered in clouds, with only the occasional small hamlet and garden clearing. The area was obviously thinly populated by subsistence farmers and hunter gatherers and closer inspection confirmed that there was very little cash cropping. Yet we were to learn that every square metre of the apparent wilderness belonged to someone under customary land law.

I remember that, not long after I first visited Bougainville in 1966, I spoke with Gene Ogan, who knew more about Nasioi land tenure than any other Westerner. He was of the opinion that land ownership arrangements among the Nasioi were more complex than any other he had experienced. If we were looking for a difficult place in which to develop a mine the Nasioi census division of what was then the Bougainville District of the Territory of Papua and New Guinea was just such a place. History, of course, proved Eugene Ogan to have been correct.

For the uninitiated it was not immediately obvious that the Nasioi derived rights to land through matrilineal inheritance, especially as these rights appeared to be exercised by men. Nor did European concepts of land tenure provide a satisfactory template for the complexities of customary land law in the mountains of Bougainville. Yet the company had, through its early research, gained a fair impression of the paramount role land played in the lives of all the people of Papua New Guinea. It also recognised that the project that was taking shape would have a considerable impact on the people of central Bougainville. In order to incorporate sociological factors into its planning, BCL sponsored a multifaceted research program under the auspices of the University of Hawai’i and the Development Studies Centre of The Australian National University. The study was coordinated by Douglas Oliver.

Of course, the company’s need for land extended beyond the 3,671 hectares of the special mining lease which covered the ore body, the mine’s workshops, crusher, concentrator and Panguna township. To the west was the tailings lease that encroached upon the Nagovis and Banoni census divisions. To the east the port mine access road extended 26 kilometres down the mountains and across the coastal plain to Loloho (Dodoko), site of a custom built port and a power house which generated electricity for the mine and for the new town at Arawa. The latter was an open town built on the site of an expatriate owned copra plantation. As such it was not a BCL lease although many BCL employees lived there.

In total, just over 13,000 hectares were included in the company’s leases, or about 1.5 per cent of Bougainville’s total area. Eventually, the Administration determined that 806 blocks of land defined by local custom were affected, 510 of which lay within the special mining lease. The ‘owners’ of these blocks (perhaps ‘custodian’ would be a better word), were the people to whom royalties, occupation fees, compensation and other payments were made. A fortunate minority received these payments for blocks around the fringes of the mine that were left untouched by development. Others, however, saw their land literally disappear as the pit grew or else watched it gradually disappear under waste rock or tailings.

Within the special mining lease it was necessary to relocate the people of a number of hamlets early in the life of the mine. About 300 people were affected, predominantly from Moroni, Dapera and Piruari. Initially it was intended to follow the Administration’s example at Arawa and to purchase a coastal plantation on which to resettle the displaced people. Broad, fertile acres with cash-cropping potential and road access seemed, to Australian eyes, to be preferable to the hard scrabble existence of the mountain villagers.

That view was not shared by people within the special mining lease. Their ties to their land went very deep indeed, as we soon realised. This was where their ancestors had lived, where their parents were buried and where every rock and pool had widely understood significance. We might see it as a difficult environment, but to them it was home. If we move to a coastal plantation, they said, the local people will see us as intruders speaking a different language. The fact that you will give us legal title to our new blocks would mean nothing to those whose ancestors once owned the plantation. They are simply waiting for the white man to leave before resuming what is rightfully theirs. We mountain people, they said, could never take up coastal land without incurring the enmity of the local clans.

So a compromise was worked out whereby the inhabitants were resettled locally. Some moved to neighbouring villages, but others were resettled in permanent material houses on the waste dump itself, close enough to the mine and concentrator to constantly hear the noise and see the reflected light of the 24 hour-a-day, 365 day-a-year operation. Admittedly, the new accommodation was seen as superior to the old and was accompanied by cash payments. And it should also be noted that some of the villagers found well-paid work with the company. Yet it was an unsatisfactory arrangement and I have never thought otherwise.

The problem with land went beyond the nature of its inheritance and the numerous kinds of rights to land enjoyed by various kinfolk. For what is probably the first time in the island’s history a land shortage developed on Bougainville and, in part, the company was to blame. Later in this article I will describe the efforts made by BCL to improve the standard of living of Bougainvilleans. For the moment, it is enough to record that success in this area assisted in increasing the birth rate to around 3.5 per cent, well above the national average and very high by world standards. In 1971, when the mine was being constructed, life expectancy was around 47 years. A decade later it had risen to 60 years. In the same period infant mortality dropped by 60 per cent.

Not only was mine development instrumental in increasing the number of mouths to feed, but it also led to a change in land-use patterns through an increase in cash cropping. Prior to the mine the Bougainville road network was rudimentary, most plantation crops of cocoa and copra being transported in small coastal vessels. The construction of a first-class sealed road from Kieta to Panguna, and an extension of a dirt road west of Panguna to the confluence of the Kawerong and the Jaba rivers made it relatively easy for local government to build a connection to the road linking Boku and Buin. This new, expanding network was a catalyst for cash-crop plantings and land for gardens became less plentiful. As a result, customary land law was subjected to new demands and, over time, this may have contributed to disputes and a growth in intergenerational misunderstanding.

Migration into Bougainville from other parts of Papua New Guinea also caused some pressure on land in the vicinity of Arawa and Kieta where squatter settlements developed. The growth of these enclaves was to become a point of social concern among Bougainvilleans.

To the expatriates working for BCL, the nature of local land tenure was seen as difficult to grasp and to reconcile with Australian concepts of valuation and compensation. However, I am certain that it was equally difficult for the average Bougainvillean to understand the Australian concept that saw minerals as belonging to the Crown, for the benefit of the nation as a whole. Those landowners who sought advice from the American priests, who were members of the Marist Order, would have received little enlightenment. Some of these priests appeared to believe that the American practice of private mineral rights was the natural order of things. Or it may simply have been that their concern for the moral wellbeing of their parishioners made them fear a development that might reduce the influence of the Church. Whatever the reason, there is no doubt that some individual clergy had little sympathy for Crown ownership of minerals and said so.

Communication Problems

The most fundamental communication problem that confronted the CRA geologists who found the orebody and their successors who built and operated the mine was, quite simply, language. In the 1960s there were still areas of Papua New Guinea where even Neo-Melanesian (Pidgin or Tok Pisin) and Police Motu were not spoken. By the standards of, for example the Highlands, communication with Bougainvilleans was — on the surface — relatively easy as Pidgin was widely understood. Yet Pidgin is a blunt linguistic instrument, unless spoken well. Many Europeans spoke it imperfectly and were not aware of its potential.

Bougainville itself had over 20 distinct languages and well over double that number of associated dialects. The company’s operations affected, from east to west, Torau, Nasioi, Nagovisi and Banoni speakers. Had there been a dominant local language, it might have been possible to encourage its use; in the absence of such a language, it was Pidgin which became the common means of communication with the majority of employees and with most villagers. BCL staff were encouraged to learn Pidgin, as were their families, through formal company-sponsored language programs.

In the first few years the handful of CRA people relied on Administration officers to interpret but, by the time construction started in earnest in 1969, the company had a village relations department that employed Bougainvillean field officers overseen by expatriate managers. As the years went by the senior ranks of the department were filled by Bougainvilleans. The village relations department was focused primarily on the concerns of people within the port, road, mine and tailings leases, but BCL also maintained liaison offices at Buin and Buka at the southern and northern ends of the island respectively. These, however, were viewed with suspicion by the Bougainville Interim Provincial Government established in 1974 and, in the mid-1970s, these two offices were closed. In retrospect this diplomatic concession may have been a mistake as it allowed some quite outrageous rumours to spread unchecked throughout the island.

One of the problems experienced in the first few years was to explain to a technologically unsophisticated audience the nature of a modern resource development when there was no precedent for such an operation in Papua New Guinea. Indeed, few expatriates had a clear idea of the eventual shape and form of the mine and its ancillary operations. Final decisions on lease boundaries were not made until 1970 and a final decision as to the method of tailings disposal was not taken until 1972. That decision was reviewed regularly and, as I mention later, the decision to change the method of tailings disposal was made in 1986.

In 1966 a group of Bougainvilleans was taken on a tour of major Australian mining sites in the hope that they would be able to tell people what an open pit looked like. It is doubtful whether this well-meaning initiative did much good in preparing people for the impact of mining. Yet at least one of these men, a school teacher from Dapera married to a Guava woman, did a sterling job for the company for many years, eventually becoming a manager in the mine’s village relations department.

The local people who acted as village relations officers had a difficult job. They certainly understood the local customs but they were themselves subject to local loyalties and politics and thus under suspicion that they favoured some groups more than others. Alternatively, they might be seen as company stooges. To some extent the presence of a Papua New Guinea Administration office in Panguna (initially staffed by expatriate field officers of the Department of District Services) helped to diffuse the occasional disagreement.

The presence of government officers on site served as an avenue of appeal for people who felt aggrieved by the actions of BCL’s village relations officers. However, this office was localised in 1978 with the role being taken over by a Bougainvillean from the Siwai census division. Subsequently, in the mid-1980s, the North Solomons Provincial Government (NSPG) — as the provincial government for Bougainville was named from 1976 — closed the office. The reason for doing so is not known, but it may have been that the growing effectiveness of the Panguna Landowners’ Association made the intermediary ‘ombudsman’ role appear superfluous.

One of the chief difficulties facing BCL was that the village people appeared not to have clearly identifiable leaders able to speak authoritatively on their behalf. The ‘chiefs’, who seem to have emerged in the 1990s as a result of the civil strife, were not evident in the 1970s and 1980s. And, in fairness, it was equally frustrating for village people when they discovered that corporations had hierarchies and that the company people they dealt with on a day-to-day basis had to refer many matters to their managers. The occasional reluctance to make decisions on the part of local field officers may have stemmed from embarrassment at having to go to an expatriate manager or superintendent with what might be interpreted as bad news.

One other factor demonstrates the difficulty of bridging the communications gulf in the mountain villages of central Bougainville. ‘Cargo cult’ thinking was, and probably still is, alive and well in the area. When you see life through such a paradigm it is very hard to carry on a dialogue with people steeped in an entirely different tradition.

There was also an inherent scepticism about BCL’s motives and a reluctance to accept that a business which had forced itself onto an unwilling society was able to act in a disinterested and socially responsible way. The Bougainville Copper Foundation, to which I will return later, is an example. Its aim was to improve the lot of all Bougainvilleans, but its projects were often suspected of being a front for BCL to extract wealth from the island in new and devious ways. Whether this scepticism was purely a reaction to the imposition of the mine, or whether it grew out of the insular nature of traditional Bougainville society, I am not qualified to judge. But I do know that such a mindset existed and that it affected communication between the company and its neighbours.

As I have already intimated the Catholics were a major presence on the island, overshadowing the presence of other Christian churches. In particular they played a major role in education and it was not until 1964 that an Administration high school was opened on Bougainville.

We made a point of keeping in touch with Bishop Leo Lemay SM, as well as the clergy at Tunuru, near Loloho, Morotona on the west coast and at Deomori near Panguna itself. We were also in contact with Father Fingleton from the Buin area. A sometimes trenchant critic of BCL, Father Fingleton nevertheless won my considerable respect for his experience so that I eventually accepted a number of his recommendations.

We also made a point of maintaining a dialogue with a number of academic authorities on Bougainville and Papua New Guinea. I have already mentioned Eugene Ogan and Douglas Oliver; they were just two of a stream of anthropologists whose insights we prized. Others who proved valuable in helping us to understand the fuller implications of our activities in both Bougainville and Papua New Guinea included the historian Jim Griffin and the astute political analyst, Ted Wolfers. And there were others, too numerous to name here, whose advice we were happy to have.

In addition, of course, we endeavoured to maintain communications with the NSPG and the province’s elected representatives in the Papua New Guinea House of Assembly. In retrospect one cannot help but be struck by the wealth of talent contained in Papua New Guinea’s first provincial administration. Under the premiership of first Alexis Sarei and then Leo Hannett, it had men like James Togel, the provincial secretary, the late Theodore Miriung, the province’s first legal officer and Mel Togolo the provincial planner who also later became a BCL director. They were all extremely capable and clearly determined to get the best return for their people from the mining operation.

The one issue that made communications between the company and the NSPG sometimes difficult was that the Bougainville Copper Agreement had been signed before provincial governments had been conceived. This was to become an increasing source of frustration to both parties. The National Government in Port Moresby obviously saw no urgent need to amend the 1974 Agreement in ways that would strengthen the NSPG at the expense of its own income from the mine.

In reflecting on communication problems I well remember a comment made to me by Mekere Morauta many years ago when he was a banker rather than a politician. At the time Mekere was the first Papua New Guinean to become a director of BCL and he said to me that he had reached the stage where he felt a stranger in his own village. He found it difficult to communicate with his own parents because he did not understand them and they did not understand him. So perhaps we should not be surprised that BCL had difficulties.

Fragmentation of Papua New Guinea

The third major issue that complicated life for BCL management was the fragmentation of Papua New Guinea’s society. This occurred at both the national and at the provincial level. Rarely did one feel that those who spoke on behalf of the authorities had the wholehearted support of the populace.

In retrospect, this is barely surprising. Future generations may well wonder at the expectations of the United Nations and Australia in relation to the heterogenous society that attained self government in 1973 and full independence in 1975. The new nation did not lack talent, intelligence or natural resources. What it did lack was a sense of shared history that extended back more than a few generations. Here were people of Melanesian, Micronesian and Polynesian stock speaking a multitude of tongues: people who, for thousands of years, had been kept apart by rugged mountain ranges and wide tracts of ocean; people whose cultures were as various as their languages or their physical appearance.

Yet we Westerners were swept up in the post-war enthusiasm for shedding our colonial past. Our confidence in the essential rightness of our economic and political systems encouraged the belief that these systems would ‘take’ in virgin soil. Those who saw that the laws and morés that had served the Pacific peoples for millennia might hinder the grafting on of such institutions as representative democracy were politely ignored. Surely the material benefits that would flow from nationhood would more than compensate for any social or cultural adjustments? Why should Papua New Guinea be dependent when, at the time, African nations had apparently made the transition successfully?

Papua New Guinea was even denied (thank goodness) the experience of a war of liberation from an oppressive colonial regime. It thus missed out on developing the social cohesion and the shared myths that such a struggle can create although, in turn, primal loyalties to family, clan and tribe may have been weakened accordingly.

None of these considerations crossed people’s minds when the Bougainville Copper Agreement (1967) was being negotiated — nor when it was revised radically in 1974. Quite simply the wealth and other benefits projected from the operation of the mine were seen by its sponsors as providing the economic support that would permit the new entity to function as a modern nation. And, in a sense, that is what happened. But, what was not foreseen was the way in which the deeply ingrained sense of separateness that characterised so many groups in Papua New Guinea would be accentuated by the project. For this there were many reasons and I will list only a few.

The first is that the people of Bougainville had long believed that theirs was the forgotten district, largely ignored by the Administration of the Territory of Papua and New Guinea. Christian missions had partially filled the vacuum caused by official neglect. The truth of this does not concern us now for it was generally accepted by Bougainvilleans before the 1970s that the Bougainville District was something of a tropical backwater with most Administration attention being directed to the relatively densely populated Highlands region. So, when the riches that flowed from the mine catapulted Bougainville to the position of the wealthiest province (exceeded in per capita Gross Domestic Product only by the National Capital District) there was a sense that the bounty was long overdue — and, among Bougainvilleans, no enthusiasm for sharing that bounty.

Secondly, the Bougainvillean people had experienced a variety of nominal and official overlords in less than a century. The strength and quality of their impact, or lack of it, has been well documented. One suspects that after Bougainvilleans had been exposed and subjected to so many administrative and cultural changes, the subsequent shift to Papua New Guinea sovereignty was seen by many as inflicting yet another alien authority upon people who were beginning to develop a sense of unity for the first time in their history.

Bougainvilleans had long known that their distinctive skin colour distinguished them from other people in Papua New Guinea and linked them to some of the people in the neighbouring Solomon Islands. For most of their history this had meant very little; it certainly had not lead to a strong sense of Bougainvillean identity. An individual had, by all accounts, little faith in any one outside his immediate family and linguistic group. It took the influx of Papua New Guinea citizens from other parts of the country (‘redskins’), in particular those from the Highlands, to promote a stronger sense of Bougainvillean identity. That sense of difference was fuelled by resentment at the thought of the royalties, taxes and other benefits being enjoyed by non-Bougainvilleans while Bougainvilleans underwent the social and environmental impacts that came from playing host to one of the world’s largest copper mines.

Provincial government was a pragmatic attempt by the Papua New Guinea Government to mollify the secessionist inclinations of its most far-flung district. As an institution, it served for a while to satisfy the need of Bougainvilleans for a greater say in their own destiny. But it soon became apparent that the National Government did not see a need to grant the NSPG more than a token role in major economic decisions. Given the calibre and the ambitions of the Bougainvillean provincial leadership this limited view was bound to lead to a clash sooner or later. The rapid development that occurred in Bougainville after 1972 created an expectation of further social and economic growth — spurred by the province’s soaring population. Each year the case for directing a greater proportion of the benefits from mining to the NSPG and to the local landowners appeared more obvious.

BCL was repeatedly forced to point out to the NSPG and to local landowners that its legitimacy rested on the 1967 and 1974 mining agreements: agreements that predated provincial government. In 1974 it had been agreed that the National Government and BCL would meet every seven years to thrash out the differences that experience suggested would inevitably develop in such an important and comprehensive relationship. In both 1981 and 1988 BCL wrote to the authorities in Port Moresby, reminding them that the seven year review was imminent. Those letters contained a list of issues that the company wished to raise at the meetings; but on both occasions BCL recommended the presence of Bougainvillean representatives at the review. Prior to sending these letters, BCL had ascertained the willingness of Bougainvilleans to attend.

The Papua New Guinea authorities agreed that the NSPG should send representatives; whereupon the Provincial Government approached the Papua New Guinea Government and requested discussions between the NSPG and the National Government so that they could arrive at a common negotiating position vis a vis BCL. Such discussions were held in 1981 without success. But in 1988 this was not acceptable to the Papua New Guinea Government. The NSPG refused to nominate representatives to attend the review — and BCL refused to attend without representation of those people most directly affected by the mine.

One can only wonder what pressures caused the people in Port Moresby to give the 1988 meeting a low priority. Perhaps they thought that the needs of the other provinces made the anticipated demands of the nation’s wealthiest province appear churlish. Perhaps, as so often happens, political goals eclipsed the national good. Whatever the reason, we are left wondering whether the closure of the mine and the subsequent prolonged disaster inflicted on the people of Bougainville — and of Papua New Guinea as a whole — might have been averted had the 1981 and 1988 reviews been conducted as originally intended.

The inability of the politicians and public servants in Port Moresby to understand the viewpoint of their opposite numbers in Arawa is surprising. Yet this inability is mirrored within the Bougainville Province itself, where the landowners most affected by the mining operations appear to have felt that their own provincial representatives had failed to assist them. The fact is, of course, that many Bougainvillean people outside the lease areas were beneficiaries of the burgeoning economy and infrastructure inspired by mining. Even those who strongly advocated secession from Papua New Guinea did so in the belief that mining would continue and would fund their political and constitutional aspirations. Where the frustrations of the local people were echoed was in political pamphleteering. Here the controversial nature of the content served to obscure the genuine grievances. For the most part it is probably true to say that in 1988 the population of other parts of Bougainville looked with some envy at the evidence of material prosperity in central Bougainville and had only qualified sympathy for the losses experienced by the Nasioi and Nagovis people.

Environmental Impacts

The environmental impact of the Panguna mine was obvious and considerable. Over the 17 year life of the operation some 10 million tonnes of copper–gold concentrate were extracted from about 1.25 billion tonnes of material in the concentrator. What remained fell into two categories; the solid waste rock and the finer residue, known as tailings, that remained after the copper–gold content had been extracted. Tailings which were in slurry form, were discharged into the Kawerong River, a tributary of the Jaba River. The silt laden Jaba meanders westward across the flat coastal plains to the sea where it has formed a delta of about 900–1,000 hectares.

The heavy waste rock was trucked into some of the short, steep valleys that run into the Kawerong within the special mining lease. Over the years these filled up creating some 300 hectares of flat land, but totally obliterating the underlying terrain. The tailings, given their large solids content, were a special challenge. In many mines they are contained behind dam walls, but in the seismically unstable Crown Prince Range with a very high rainfall and not many miles away from an active volcano, this was not an option. In the late 1960s the technology for shifting very large tonnages of slurry over such long distances by pipeline had yet to be developed. The best expert evidence was that river deposition would carry 80 per cent of the tailings out to sea. The rest would fall to the bed of the Kawerong/Jaba causing it to rise and spread laterally.

We now realise that the hydrological experts underestimated the extent of this deposition and the consequent spread of tailings. Only some 60 per cent was carried out to sea. After ten years tailings disposal was revisited. By this time pipeline technology had advanced, and, in 1986, the decision was made to build a 33 kilometre tailings pipeline from the concentrator to the Jaba delta. Construction of this US$76 million project was more than 70 per cent complete when the mine closed.

There is no simple solution to any tailings problem; while pipeline disposal into deep water is usually judged preferable to the lateral spread of material that results from riverine disposal, there is always going to be destruction of life on the sea floor. Also, a pipeline is an extremely expensive solution. Yet the environmental burden born by the villages in Nagovis justified the cost.

From the start of operations BCL carried out environmental research into the effect of its activities. Some of that work focused on how best to treat the 9,000 hectares of tailings. The closure of the mine has meant that nature has been left to do the job unaided and that the years of trialling which species and soil additives best promoted regrowth have been futile. Perhaps not futile, for some of that knowledge may well prove useful in other situations.

The environmental impacts of BCL’s operations were real and considerable. However, the perception of environmental change went beyond the reality. Over time the mine became a convenient explanation for any aspect of day-to-day existence that people believed had deteriorated over time. If the weather seemed wetter or drier than before, then BCL was to blame. If the crops were not as prolific, or the game not as abundant, as they had been — then the mining operation was probably the cause. Various illnesses were obviously caused by chemical pollution — or so it seemed to many people in central Bougainville. When no scientific basis for the claims could be found it was automatically assumed that BCL was not telling the truth.

In 1988 the Papua New Guinea ministers for Minerals and Energy, and for Provincial Affairs, visited Panguna and heard these complaints. As a result, the Government commissioned a New Zealand consultancy, Applied Geology Associates (AGA) to report on the environmental and social impacts of the mine, past, present and future. The AGA report acknowledged the substantial environmental impact of the mine, but failed to find any significant levels of chemical pollution that would substantiate the broad range of concerns expressed by the villagers. As soon as this finding was announced Francis Ona (then secretary to the New Panguna Landowner’s Association and later the leader of the secessionist Bougainville Revolutionary Army) condemned the AGA study as a ‘whitewash’. By dashing the hopes of those who felt entitled to another form of compensation, the AGA study intensified the level of public frustration and support for those prepared to resort to violence.

The environmental issue is critical to understanding the outcome for the Panguna mine. However, the important lesson is to appreciate the social consequences of imposing major changes on the environment and the way environmental decisions were shaped by extraneous political, economic, and even technological, factors.

Positive Aspects

The four issues I have just mentioned were all serious enough to have brought the mining operation to a close long before 1989, were it not for the fact that the mine had considerable benefits for Papua New Guinea and for Bougainville Province. The contribution that BCL made to the new nation through taxes, royalties and other imposts is well known. So too is the contribution that flowed from the Papua New Guinea Government’s shareholding in the company — and to this should be added the dividends that went to individual Papua New Guinea shareholders. What I want to do now is to briefly examine some of the positive aspects of the mine for the people of Bougainville.

The mineral royalties paid by BCL that the National Government eventually redirected to the NSPG, plus the direct taxes that the NSPG levied on the company, accounted for over a third of the Province’s budget by 1988. That the NSPG was able to raise another third from other provincial taxes was only possible because of the multiplier effect of the mine. Without BCL the provincial tax base would have been smaller and Bougainville would have relied heavily on National Government grants and subsidies. Instead of being the national leader in terms of income, health, education and political evolution, Bougainville would, in all probability, have remained a relative backwater.

Modern mining is a capital-intensive industry and critics often claim it does little to combat joblessness. Yet at the end of 1988 BCL had over 3,500 employees, 83 per cent of whom were Papua New Guinea citizens. Of this national workforce Bougainvilleans made up about a third — although others were employed by the numerous contactors engaged by the company. However, ultimately the greatest long-term benefit to both the people of Papua New Guinea and those of the Bougainville Province was not the wages paid to employees or contractors but rather the training that BCL gave its people.

It was fully understood from the start that the company would localise its operations as quickly as possible. A truly remarkable training effort from the very start of building the mine meant that, when operations started, Papua New Guinea citizens who may never have driven a car were confidently driving 105 tonne tip trucks, bulldozers and giant shovels. Not only did they operate these complex machines safely and competently, but they did so with an efficiency that exceeded that of many Australian mines. The mine training college which BCL built at Panguna was the best technical training facility in Papua New Guinea. More than 12,000 employees undertook its courses and many emerged as fully qualified tradesmen with skills that would serve them for life. In addition, the company sponsored the tertiary education of promising young Papua New Guineans in both Papua New Guinea and Australian institutions, including postgraduate studies. From their ranks would come the professionalism that would take the company into the 21st century — or so it was thought.

BCL also set out to encourage local business both through training and, wherever possible, through tailoring its needs to the capacities of local producers. The Panguna Development Foundation, later called the Bougainville Copper Foundation (BCF), opened for business in 1971, before production began. Its objectives were:

  • to make grants and donations in Papua New Guinea for charitable, public, scientific, educational and artistic purposes;
  • to assist and promote participation by Papua New Guineans in commerce, services and industry;
  • to provide medical, educational and welfare services for people in Papua New Guinea, and
  • to provide and assist in the provision of training in professional, commercial, agricultural and industrial skills to people in Papua New Guinea.

The foundation was financially underpinned by BCL, but decisions were made by an executive committee, the majority of whose members were Papua New Guineans. BCL provided management services to the Foundation on the understanding that none of the BCF’s income or property was transferred to BCL.

An early BCF initiative was Arawa Enterprises, a retail–wholesale trading company, created in the hope that through local share ownership it would be possible to direct some of the financial returns from trading to the community. BCF also took over the agricultural extension work started by BCL through a subsidiary called the North Solomons Agricultural Foundation. Thus, indirectly, a mining company found itself seeking to create provincial self-sufficiency in pork, bacon, eggs and vegetables. Yet another BCF offshoot was the North Solomons Medical Foundation set up to create an alternative to the public hospital. The Medical Foundation’s clinic and small hospital were initially funded by the BCF, but it was intended that costs would be covered by fees. Despite this, the Medical Foundation proved to be a most popular facility.

The fundamental aim of the BCF was to support community activities and projects. As a charitable body it was legally bound to distribute 80 per cent of its net income to worthy causes. And this it did, largely in the areas of education and health, with some money going to social and cultural projects. I believe that the BCF did a lot of good although, for reasons I have already touched upon, its activities were viewed with suspicion by those who did not want to concede unselfish motives to BCL.

It is not easy for someone like myself to write objectively about an island, a people and an operation that were the focus of my personal and professional life for so many years. In the broadest way possible the Panguna mine seems to encapsulate the classic conundrum that lies at the heart of many great minerals operations; the benefits are great and widely spread. The disadvantages, however, are localised and acutely felt by a small number. I believe that BCL was ahead of its time in seeking to do the honourable thing by the people of Bougainville. Not many companies, even today, can match the effort BCL devoted to understanding and ameliorating the social and environmental impact of its activities. The closure of the mine was a major economic and social setback for Papua New Guinea and a dreadful human disaster for Bougainville, and I do not intend to gloss over this stark fact. Yet, insofar as later mining projects in Papua New Guinea were allowed to involve the local landowners in consultations over their planning and operation — in a way that was denied to BCL and the Bougainvilleans — it may be that the experience has served as a very expensive lesson.

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