06 | 27
2011

The curse of mineral wealth

Categories: Asia-Pacific, Corporate profit, Corporate responsibility, Corruption, Globalisation, PNG, Solomon Islands

by: Bakchos
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The heading of this post is not at attempt at an inscrutable Oscar Wilde type conundrum, it is a statement of fact for indigenous people unfortunate enough to inhabit land endowed with natural wealth. Indigenous natural wealth brings with it the curse of the attention of the ‘western juggernaut of greed’ which exploits and destroys indigenous cultures in the name of corporate profit and white man’s insatiable greed for other people’s property.

The following article appeared in today’s PNG Post-Courier newspaper and was recounted in Dateline segment aired on 26 June 2011, has its genesis in the ‘western juggernaut of greed’:

Prime Minister Sir Michael Somare has accused Australian mining giant Rio Tinto and its subsidiary Bougainville Copper Limited (BCL) of being behind the PNG military’s bloody suppression of Bougainville rebels opposed to the company’s Panguna copper mine.

An affidavit written by Sir Michael when he was Opposition Leader in 2001 – and never made public – alleges that Rio played an active role in military operations that ultimately led to a civil war and blockade of the island in which 15,000 people died between 1989 and 1997.

“Because of Rio Tinto’s financial influence in PNG, the company controlled the government,” Mr Somare’s affidavit states.

“The government of PNG followed Rio Tinto’s instructions and carried out its requests … BCL was directly involved in the military operations on Bougainville, and it played an active role. BCL supplied helicopters, which were used as gunships, the pilots, troop transportation, fuel and troop barracks.”

The Somare affidavit was lodged as part of an ongoing class action in the United States by the islanders against Rio Tinto. The case has been bogged down in legal argument for 10 years, preventing much of the evidence, including the Somare affidavit, from being made public. In his signed statement, Sir Michael claims that without Rio Tinto, there would never have been a war.

“It is my opinion that absent Rio Tinto’s mining activity on Bougainville or its insistence that the Panguna mine be re-opened, the government would not have engaged in hostilities or taken military action on the island.” The affidavit will complicate Rio Tinto’s current attempts to reopen the mine, which is being supported by Sir Michael’s Government.

Sir Michael was unaware that SBS’s Dateline program had obtained his signed statement from sealed US court material until his office was contacted this week. Sir Michael is recovering from double heart surgery in Singapore and his office was unable to say if he still stood by his comments.

The ailing leader’s statement reinforces claims from the islander litigants and former rebels that Rio Tinto had a hand in the military’s efforts.

Sam Kauona, a former fighter, said: “It didn’t surprise me, all the time we knew.”

BCL chief executive Peter Taylor was aware of the affidavit, but said he was surprised Sir Michael would “make these accusations knowing they’re completely unfounded”.

The background to the Post-Courier’s article

Bougainville is an island situated in the south-western Pacific which geographically belongs to the western Solomon Islands and politically to Papua New Guinea. The population of Bougainville was estimated at 109,000 in 1980. The city of Arawa is the island’s administrative headquarters and the city of Kieta is where most of the island’s commercial enterprise is found.

The following timeline provides a brief outline of Bougainville’s history:

30,000 BC (approx.) The island of Bougainville was populated, probably by migration from New Ireland
1500 AD (approx.) 300 – 400 years ago a further immigration wave arrived on the islands, but from what is now Papua/Papua New Guinea.[i]
1768 Discovery of Buka (Bouka) and Bougainville by Louis Antoine Bougainville.
1800s The Netherlands occupied the western half of the island of the present Papua/Papua New Guinea
1884 Germany takes over the north-eastern and Great Britain the south-eastern quadrant of present Papua/Papua New Guinea
1899 Exchange of letters between Germany and Great Britain, whereby Bougainville was separated from the rest of the Solomon Islands and attached to the north-eastern quadrant of Papua New Guinea (then held by Germany) against German concessions re the settlement of Samoa.
1906 Britain transfers the south-eastern quadrant, Papuasia, to Australia
1914 

 

 

1914 Australian forces occupied also the German part, i.e. the north-eastern quadrant, and thus possessed the eastern half of the island, including Buka and Bougainville.
1918 After the defeat of Germany in WW1, the German territories, collectively called New Guinea, became part of a League of Nations mandate and were placed under Australian administration along with the Australian territory of Papua (1920)
1945 After a Japanese occupation in the Second World War 1942-1944, the island of Bougainville was returned to Australian administration as part of the UN Trust Territory of Papua New Guinea.
1962 Australia was rebuked by the United Nations for the slow progress toward independence.[ii]
1964 Australia creates the House of Assembly in Papua New Guinea, in which Bougainville received one seat
1966 The rich mineral deposits at Panguna were discovered in 1960. The Australian colonial authorities reportedly dealt very harshly with the inhabitants, who were forced off their land without compensation, and homes, gardens, traditions, etc. were destroyed. In 1966, the Australian colonial administration of the Territory of Papua and New Guinea forced the Bougainvilleans to accept the opening of the Panguna mine, which was to bring profit to the company (CRA) and shareholders, but also assist Australia in funding the administration of the Territory.[iii]
1972 BCL initiates operations (however, preliminary work had been going on from 1966)
1974, 

July

As part of an expansion of autonomy, Bougainville, the neighbouring Buka island, and a few atolls were formed into the North Solomons Province
1975, 16 September PNG independent; Bougainville and Buka remain the North Solomons Province, as part of the new nation-state PNG
1979 Creation of the Panguna Landowners’ Association (PLA) – formed to facilitate the relationship between locals and the mining company.
1988 The New Panguna Landowners’ Association (New PLA) breaks away from the Panguna Landowners’ Association. It is headed by Francis Ona.
1988 Creation of BRA, headed by one Sam Savona, a former PNGDF officer. The BRA had its origin in the New Panguna Landowners’ Association.
1988, November BRA attacks—sabotage—against BCL commence
1989, 15 May BCL close down
1990, February Cease-fire agreed; effective March 2, 1990; total blockade of goods and services by PNG
1990, 17 May The Bougainville Revolutionary Army declares Bougainville independent and forms the Bougainville Interim Government (BIG). BIG consists of: 

  • Francis Ona, President, Republic of Bougainville
  • Sam Kauona, Minister of Defence
  • Joseph Kabui, Minister of Justice
1997, March In accordance with agreement of January 1997, the private military company Sandline sets up an operational HQ in Papua New Guinea to commence planning of a military invasion of Bougainville. The PNG Defence Force rebels and Sandline has to leave the PNG.
1998, Cease-fire brokered predominantly by New Zealand and Australia
2001 Peace Agreement
2002, 

March

The PNG parliament approves autonomy status for Bougainville
2005, 15 June Election of first autonomous government of Bougainville headed by Joseph Kabui
2005, 25 July Francis Ona dies after a short illness
2008, February Acerbic discussions between PNG central government and the ABG; ABG will have supervisory powers over mining in Bougainville, but wants full ownership, which the central government is not willing to relinquish[iv]
2015-2020 In accordance with peace agreement of 2001, referendum on independence will be held

A few years before Independence, in 1972, copper extraction began at Panguna, which with time became the largest open-cut copper mine in the world and one of the largest open-cut mines, overall. The mining rights had been accorded to an Australian firm, Bougainville Copper Ltd. (BCL), a subsidiary of the British company, Rio Tinto Zinc, RTZ, the largest diversified mining multinational company in the world. A feeling of having been left out soon seized the inhabitants, who felt that all benefits from the very profitable mine accrued to the central government in Port-Moresby, while the local management of the mine engaged in unacceptable methods for the discarding of ore tailings by depositing these directly in the river system, which became polluted and unstable as prone to flooding.

Bougainvilleans grew increasingly resentful of the fact that mining revenues went to RTZ (eighty percent) and the national government (twenty percent), and that many of the mining jobs went to workers from other parts of PNG. Compounding matters, poisonous tailings and chemical pollutants stemming from mining operations destroyed local fisheries, contaminated drinking water, and undermined crop production, threatening the livelihoods of local landowners.

Accordingly, on the islanders’ view, the advantages, within Papua New Guinea, went to the central government in Port-Moresby and the disadvantages, including a stark reduction in the local population’s possibility of exploitation of the river system to provide their living, fell on the island. In fact, over the seventeen years—1972 to 1989—the mine was active, its open pit developed into covering some 400 hectares and, in the same period, generated one billion tonnes of ore tailings. According to Martin R. Miriori of the Bougainville Information Office in neighbouring Salomon Islands, anecdotal evidence indicates that one river system became light blue and was biologically dead. On Bougainville, such sentiments were superimposed on the collective memory of two centuries of foreign domination, German, British and Australian, and led to a secessionist guerrilla war, which lasted from 1988 to the late 1990s. Summed up by Miriori, the grievances of the Bougainvilleans were:

  • The environmental destruction caused by the huge opencast mine.
  • The increasing implantation of Papua New Guineans in Bougainville.
  • A cultural break-down.
  • Lack of government funding.
  • The growing political power of the Papua New Guinean state, “built with Bougainvillean finance”, over people and resources on Bougainville.

In 1989, after a series of sabotage acts, the copper mine at Panguna closed. In thet year the Panguna copper mine closed, it represented forty-five percent of all exports from the PNG and seventeen percent of the total revenue of the PNG government.

In April 1990, the PNG military and civil service had to leave the island, and on 22 April 1990, the PNG central government declared a total blockade against Bougainville which was followed by several unsuccessful attempts to re-take the island.  Following on from these unsuccessful military operations, it became clear to the PNG government that a military solution was not a viable option at that time, considering the equipment, troops and military training available. In a frantic effort to find a solution, the PNG Prime Minister, Sir Julius Chan, engaged a private military company, Sandline, to lead an invasion of Bougainville. In the face of this challenge senior officers within the PNG military revolted and the Sandline operation was cancelled. PNG refused payment of the second instalment and Sandline’s claim was referred to international arbitration, which the PNG lost.

After intense diplomatic activity by New Zealand and Australia, a cease-fire was finally agreed in 1998 leading, in March 2002, to a declaration by the Parliament of PNG of autonomy for Bougainville and stating that a referendum on independence would be held ten to fifteen years later.[v] Once the PNG military could return to the island, they destroyed a number of dwellings and created “care centres”, i.e. de facto concentration camps, which contained upwards of 24,000 persons. Approximately 20,000 Bougainvilleans were killed in the course of the civil war which followed the act of succession by Bougainville in 1989.

The secessionist crisis should also be seen on the background of a conflict between a Western juridical view, which by regal (sovereign) rights accords the property ownership of subsoil assets to the national government, while customary (tribal) law sees soil and underground as one.  The guardians of the traditional view in Bougainville were in particular the women, since the society is matrilineal and the women the traditional land-owners. Although, initially, the latter point might not appear of great import in the present context, i.e. if society was matri- or patrilineal, yet the subsequent dealings with a western patrilineal legal concept set, which diluted the traditional matrilineal role in property ownership, put severe strain also on the traditional, cultural welfare of the population and led to a partial break-down of the value system that organised society and the relationship between generations within society. To complicate matters, the Melanesian business concept includes re-negotiation of the distribution of profits, e.g. from a mining concession, even after the signature of a contract. On this point the inhabitants encountered the Western juridical culture of the Australian and British owners of the mining rights. The result, obviously, was incomprehension on both sides.

Sarei v. Rio Tinto

In 2002, a number of plaintiffs from the PNG brought a claim at the District Court of Central California under Alien Tort Claims Act (ATCA) of 1789 (28 USC §1350) (ATCA) alleging that they or their family members were victims of international law violations committed in connection with the operations of a copper mine in the PNG by the mining company Rio Tinto Ltd.[vi] The District Court found that the plaintiffs had stated cognisable ATCA claims for racial discrimination, crimes against humanity and violations of the laws of war, but dismissed the claims with reference for one claim to the state action doctrine and for the rest to the political questions doctrine.

The plaintiffs appealed. In a ground-breaking ruling in 2006, the US Ninth Circuit (Central California) overturned the decision of the 2002 trial court and ruled, inter alia, that (i) ius cogens claims are actionable under the US ATCA as per Sosa v. Alvarez-Machain,[vii] (ii) violations of UNCLOS (United Nations Convention of the Law of the Sea) claims are not necessarily ius cogens claims, but the widespread ratification of that treaty can provide the basis for an ATCA claim; (iii) corporations can be held vicariously liable for violations of ius cogens norms, (iv) ius cogens violations cannot be “official acts” under the act of state doctrine, and (v) ATCA does not require that claimants exhaust local remedies. The defendant in the case, Rio Tinto PLC, then submitted a petition for rehearing and rehearing en banc, which the Appeals Court (9th Cir.) granted on 12 April 2007.

The most important finding of the 2007 court was that (aliens’) “nonfrivolous claims against international mining company for vicarious liability for violations of jus cogens norms were actionable under ATCA”.

The cost of western greed is the destruction of indigenous cultures.


[i] Guy Wilson-Roberts in Adams (2000).

[ii] Sc. in United Nations (1962, 24-26).

[iii] Miriori (1996, 2).

[iv] “Explosive mines”.

[v] “Autonomy Approved for Bougainville”, UN Wire (28 March 2002).

[vi] Sarei v. Rio Tinto plc 211 F. Supp. 2d 1116 C. D. Cal, Jul 9, 2002.

[vii] 542 U.S. 692, 124 S. Ct. 2739, 159 L.ed. 2nd 718 (2004).

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