|
Amendments
During 1974 the Government of Papua New Guinea requested Bougainville Copper Limited (BCL) to renegotiate the Bougainville Copper Agreement , which regulates the basis for the company's operations in Papua New Guinea . After carefully considering the various alternatives, Directors agreed to this and later agreed to recommend results of the renegotiation to the shareholders at an Extraordinary General Meeting held on 10 December. Shareholders ratified the proposed amendments to the Agreement, which became effective on 23 December 1974 when the High Commissioner assented to the Act.
Under the terms of the Bougainville Copper Agreement, the Government was responsible for the provision of satisfactory community health, education and police facilities. However, BCL found it necessary to progressively increase its role in community support activities.
BCL's operations were governed by the Bougainville Copper Agreement as amended in 1974. This provided that the Government and BCL meet together every seven years (commencing in 1981) with a view to considering in good faith whether the Agreement was continuing to operate fairly to each of them and with a view to further discuss in good faith any problems arising from the practical operation of the Agreement. If at any such meeting it was agreed that these difficulties exist, then the two parties had to use their best endeavours to agree upon such changes as may be required in that regard. In this context the Government and BCL held several meetings throughout 1981 and both parties raised a number of topics for discussion.
During the same year the Provincial Government started discussions with the National Government and they raised a number of issues. In essence the Provincial Government was seeking a larger share of the dividends and tax that flow from BCL's operations. Unfortunately as no agreement was reached between those two parties, it had a detrimental effect on BCL's operations.
At the beginning of October the Community Governments on Bougainville took unilateral action in order to put pressure on the National Government by setting up road blocks thus preventing BCL employees living in Arawa from reaching work. As a result BCL lost four days of production with a value of approximately K4 million. It should be emphasised that these actions were not directed at BCL but were simply using the company as a ‘lever' in order to extract concessions from the National Government.
The lack of agreement between the Provincial and National Governments prevented any worthwhile progress on certain aspects of BCL's review discussions. As a number of the issues raised by the company concerned the provision of government services to Bougainville Island , the agreement of the Provincial Government was necessary for any changes to be effected in practice. The Provincial Government had taken the position that it refused to be involved in any tripartite discussions with the National Government and BCL until its own discussions with the National Government were satisfactorily resolves. As a result BCL's discussions were held in abeyance.
The failure of National and Provincial Governments to reach agreement delayed BCL's exploration program. Further exploration within BCL's Prospecting Authorities was conditional on government consent. While legal authority for this consent lay with the National Government, it was necessary to have the support of the Provincial Government and the Community Governments, representing the landowners involved, before any progress could be made.
The Agreement provides for the National Government and BCL to meet every seven years to review whether the Agreement continues to operate fairly. Such a review was due in 1988. BCL indicated its readiness to commence this review in late 1987 and subsequently during the year.
They review would have provided an opportunity for BCL to again press for the lifting of the moratorium on mineral exploration in the North Solomons Province . Despite dissatisfaction on the part of some people in the vicinity of the Panguna operations with their share of the benefits from the operation, there were indications that other people in the province would have welcomed exploration in the hope that it might lead to development opportunities through mining.
Constitutional provisions were being drawn up in anticipation of autonomy for the North Solomons Province in 2002. The power sharing arrangements will be important for BCL with respect to control over matters associated with exploration and mining. Currently BCL mining rights and obligations on Bougainville are governed by the Bougainville Copper Agreement legislation. This Act of Parliament gives statutory force to a contract between the National Government and BCL. Any arrangement that transfers some or all powers with respect to exploration and mining to Bougainville will necessarily impact this agreement. BCL has not entered into formal talks with either the National Government or Bougainville parties on how the Bougainville Copper Agreement will be accommodated under future power sharing arrangements.
Exploration
Prior to 1939 small quantities of gold were extracted from mines situated in the vicinity of Panguna and Kupei. Few signs of copper were evident at the surface as the area was covered by dense jungle. In significant areas mineralisation was concealed by superficial deposits of volcanic ash and boulder terrace. It was only after an intensive geochemical sampling program and an extensive diamond drilling program in the Panguna that the presence of the orebody was established.
The geochemical sampling program was part of a search for porphyry copper orebodies launched in 1960 by CRA Exploration (now Rio Tinto ). In 1964 the search focused on Panguna and the surrounding district, which is covered by Prospecting Authorities (PA's) held by Bougainville Mining Limited (now Bougainville Copper Limited) The PA's cover an area of 600 square kilometres. A special mining lease was granted in March 1969 pursuant to the Bougainville Copper Agreement , to enable it to evaluate the copper/gold orebody.
Exploration in Papua New Guinea requires the granting of a PA. In 1969 after the company's copper find at Panguna became public, other companies made applications for PA's. These PA's covered almost the whole island. The uncertain effects of widespread exploration created Bougainvillean discontent. By notice in the Government Gazette dated 22 April 1971, a moratorium was declared on the issuing of further PA's and mining tenements on Bougainville . Unaffected by the moratorium were the PA's held by Bougainville Mining Limited. However by agreement with the National Government formalised in the 1974 Agreement renegotiations, BCL has not undertaken exploration on these PA's on condition that the Government maintains the company's rights through automatic renewal of its PA's.
By 1989, the moratorium had been in place for over 15 years. During this time BCL demonstrated its ability to develop a successful mining operation on a scale commensurate with other major mining developments around the world. This massive operation was successfully integrated with the lives and aspirations of the local population. Differences occurred and existed but amicable solutions were found.
BCL always showed its willingness to make substantial investments to maintain its cost competitive position despite the dramatic fall in copper prices during its years of operation. These investments allowed BCL to pay tax and dividends to the Government, consistently.
All mines have a finite time and the Panguna deposit was no exception. On the basis of its mining rates and known recoverable proven ore reserves, had mining continued after 1989, the Panguna deposit would have been exhausted before the year 2000. It was intended to review the reserves situation in light of the performance of the pre-concentration screening plant. Nevertheless, the Panguna deposit was not infinite.
As new deposits take considerable time to find, evaluate and bring into operation (the Panguna development took 9 years and Ok Tedi 17 years), it was prudent from the early 80s to consider the lifting of the moratorium so that BCL could resume exploration on Bougainville .
Knowledge gained from this exploration would have allowed development options to be considered which may have included consideration of the continuity of operations at Panguna. The exact nature and pace of any possible development of a new orebody would be dependent upon the extent of mineralisation, the grade, the distance from Panguna and expectations concerning metal prices.
In 1986, BCL was in a unique position to assist in the further development of mineral deposits, which may exist on Bougainville Island , having demonstrated over the past 15 years its successful integration into the Papua New Guinea economy. |
ABOUT US 
