$58 billion verses democracy: Bouganville

There’s trouble on the horizon in Bouganville. 18 years ago may seem a bit of time, but there was a massive civil war in this island very close to New Zealand.

Bouganville has a semi-autonomous government, which is proposing legislation that will make significant changes to its mining law, including granting powers to a new company to take mining leases across the island.

Bouganville, together with Papua New Guinea, has some of the poorest people in the world, without much reticulated electricity or water. As significant aid donors New Zealand is working with others to improve this.

But as often occurs, when a whole set of really poor people with a really weak government, get the promise of massive long term wealth dangled in front of them, things generally go from bad to worse for all concerned; it’s called the Resource Curse. And once you’ve got it, as Oxfam notes it’s really hard to recover from.

The alternative industry that largely died during the 9-year conflict was coca. Not an easy choice to restore all those cocoa trees when the great binge-purge cycle of mining wealth beckons.

In the 1980s, Bouganville produced the most cocoa of any province in Papua New Guinea. Alongside Copra, this was the backbone of a thriving rural economy, and it provided critical income for thousands of people. So there are alternative economic choices to weigh up.

But here the choice comes, fast and big.

The proposed amendments to the 2015 Bouganville Mining Act will give the Autonomous Bouganville Government the power to hand over mining leases to all parts of the island not under lease to Bouganville Advanced Mining . The ABG would have 60% ownership of Bouganville Advanced Mining, while 40% would be owned by a foreign partner Caballus Mining of Perth.

In a meeting a few days ago, the proposal was rejected by the Panguna Landowners (name reminiscent of Pandora for those preferring the epic fictional version rather than the real one), ex-combatants, No Mining groups, the eight Association Chairmen of the mining affected areas, and the general public in Arawa who attended, according to the Post Courier of February 11^th.

Bouganville’s chaos generated from the Panguna Mine was also fictionalised in the New Zealand novel and film Mr Pip.

https://www.youtube.com/watch?v=tRn3gr8Pt_o

But in real life, what occurred last time mining at scale occurred on Bouganville, was a massive civil war broke out leaving about 20,000 dead and many more injured and traumatised and most nascent civil institutions trashed and burnt to the ground. It’s the institutional and mental damage that Mr Pip illustrated so well.

Given the irreparable environmental damage to the Jaba River and to the whole of Bouganville society, it’s hard not to see more massive social disruption from the new proposals.

On top of this is the Bouganville referendum for full independence from Papua New Guinea, is due in June this year.

Yep, democratic process building a big civic fire right next to a commercial one.

So while full independence appears superficially popular, a weak government will have to form all kinds of civil institutions and will need massive tax revenues to do it. So they propose to get that income by letting mining leases all over the island. What could possibly go wrong?

On first blush the legislation runs over the rights of existing landowners, and of the previous copper mining company running Panguna Mine. What possible motivations could there be in play between those seeking permanent leadership of a new country and commercial mining interests?

The governments of Papua New Guinea and Bouganville retain 36.45% each of BCL. So there is major skin in the game from government already (Rio Tinto no longer has a share).

And the existing mining company will of course be heading to any court it can find to protect its interests. BCL, which has a market capitalisation of just $41 million at the moment, estimates that it would take seven to eight years and $5 to $6 billion to resume operations. Plus, as I have seen from many an in-house slide show, you go there and you have stepped into a whole new lower level of health and safety: the locals really do loathe you and will regularly sabotage, torch, harass and cause major threat and injury. No one is holding back if you work there.

Separating from Papua New Guinea will feel instinctively right to the locals because the Papua New Guinea armed forces forced military peace on the island. But is also means future Bouganville governments and peoples are cut off from any of the civil and institutional strength that the PNG government has, as well as the strong presences of large aid institutions like the World Bank, ADB, and major donor organisations from Australia and the EU. Unless it needs pointing out, this is on our front door. One of the closest parallels to what may happen should full independence occur, is in the South Sudan – North Sudan split: more civil strife within peoples where there is barely any government o begin with and donor governments have to pour billions to prop it up out of total and utter chaos and suffering.

Luke Fletcher, executive director of Jubilee Australia Ltd, a non-profit that has tracked the effect of resource extraction on the economies of Papua New Guinea and Bouganville, said that resuming industrial-scale mining had plenty of potential to rekindle resentment.

“The thing about Panguna is, the community is fiercely divided about whether there should be mining or not. It’s tinder box.”