Editorial The power of local politics

The Bougainville mine is located on an island of the same name in the archipelago nation of Papua New Guinea. With a capacity to produce 185 million tonnes of copper in concentrate annually and sufficient reserves to maintain production for at least 11 years, it is one of the world’s largest copper mines. A substantial gold credit in the ore also makes it one of the world’s lowest cost operations.

Bougainville Copper became a public company in 1973, two years before Papua New Guinea gained independence, but it is 20% owned by the government. Another 54% is owned by CRA Ltd. of Australia, a mining giant which in turn is 49% owned by the even larger mining company, RTZ of the United Kingdom.

All in all, Bougainville seems to have just about everything going for it — substantial reserves, solid financial backing, sound management and government support.

But Bougainville halted production in mid-May, declared force majeure on some shipments of concentrate, put most of its 3,600 workers on leave and now is laying off some 300 employees.

What went wrong at Bougainville? It seems that not enough attention was paid to the people who live on the island. Whatever steps the companies involved took to overcome objections of local residents, they just weren’t enough.

The villagers, like other Pacific islanders, hold the land in reverence and, during the past half year, have been mounting an escalating campaign of sabotage in efforts to obtain compensation (they’ve asked for about $15 billion) for damage done to the island by the open pit mine. At least 13 people have been killed so far, and CRA says it will not reopen the mine until the safety of its 3,600 employees is assured.

Further complicating the issue is the fact that the mining companies were getting involved in a political issue over which they had no control. Villagers on the island have never squared themselves with being part of Papua New Guinea and have openly advocated separating from that nation in favor of union with the Solomon Islands. In effect, the involvement of the Papua New Guinea government was one more factor weighing against the project as far as the villagers were concerned.

It may be easy to dismiss the problems that plague a mine halfway around the world. After all, Canadian copper producers benefit from any supply disruptions caused by problems in Papua New Guinea.

But those who say it couldn’t happen here should think again. There are several projects under way in Canada that could be delayed or even cancelled altogether because of land-claim settlements and environment concerns to mention just two popular issues. In fact, the strength of urban based anti-mining groups is based largely on their ability to tap the depth of emotion that can be stirred in remote communities.

The Cigar Lake project in Saskatchewan, because of the high grade of its uranium reserves, is one such mining venture. It is pitting the ability of outside agents to arouse the fears of local residents against the ability of the mining companies to openly present all of the facts available on how the project will develop.

Those involved in the mining industry are confident that if the project is examined openly and honestly, the benefits will be seen to outweigh whatever drawbacks there may be.

The Kiggavik uranium deposit in the Northwest Territories is likewise facing opposition from some local residents. Westmin’s mines on Vancouver Island have also come under fire from some environmental activists because they are located within a park boundary. In northwestern Ontario, natives’ desires to benefit from mine development have resulted in at least one agreement affecting hiring practices and the procurement of local goods and services.

The rights and wrongs of these situations are not the point. It doesn’t help to be 100% right if a project is halted. What companies have to do is recognize the sensitivity of local issues and allow for them. Farsighted companies are doing just that; trying to understand the concerns of local residents and adjust their plans accordingly.

The alternative may not be as drastic as what’s happening on Bougainville Island, but there’s no doubt that having local residents on your side makes mining a lot easier. What went wrong at Bougainville is a lesson every mine operator should learn — never underestimate the power of local politics.

]]>