In late November and early December of 1988 part of the operations of Bougainville Copper Limited (BCL) came under attack resulting in damage to some facilities. Explosives were stolen from the mine magazine by armed men, two buildings were burnt down and a number of other buildings and items of equipment were damaged. On two occasions, transmission pylons carrying power from the coastal power station to the mine were felled using explosives. Although the power supply was rapidly restored on both occasions, in order to minimise further loss and interruption to business, production could not be resumed after the second incident until steps were taken by the National Government to secure BCL's employees and assets.

In all, damage to facilities was estimated at K1.3 million and eight days production was lost involving 13,700 tonnes of concentrate. The exceptional efforts of BCL employees during these disturbances enabled the normal high operating standards to be maintained, and the most rapid possible resumption of operations following the stoppages.

The situation appeared to stem from dissatisfaction on the part of some of the villagers with the share of the income they received from the mining operation, and with the distribution of this among various claimants. The problems in Bougainville were a part of a wide-spread issue about how the income from mining operations in Papua New Guinea should be distributed. BCL stood ready at all times to participate with the Government in any discussion of these problems.

Since the commencement of operations in 1972 until 1988, total income generated by BCL was distributed as follows:

K million %

Landowners (from compensation payments and royalty) 22 1

Provincial Government (from royalty, and sales and other taxes) 75 5

National Government (from income tax, dividends, dividend

withholding tax, and customs duties and other taxes) 919 58

Non-government share-holders (from dividends) 577 36

In addition there were substantial indirect benefits to the Nation and the Province from taxes paid by employees (K113 million) and from local businesses servicing the mining operation

Disturbances in Bougainville continued in early 1989, but were not directed particularly at BCL facilities, and operations continued normally.

In April and May there were further attacks on facilities, culminating in suspension of operations on 15 May 1989. With the exception of an abortive attempt to resume production in early September, the mine remained inoperative for the rest of the year as a result of continued attacks on employees and facilities. Altogether 231 days' production were lost during the year. Two employees died and 20 were injured during the year as a result of the violence. Power supplies to the mine were cut by the felling of several power pylons with the use of explosives.

In the face of deteriorating law and order the Government declared a State of Emergency on 26 June 1989, and with extensions this remained in force through to the end of the year. Several attempts were made by the Government during the year to settle landowners' grievances, without success. These involved an offer by the Government of substantial public works together with the provision of part of the Government's equity in the mine and an increased share of royalties.

BCL offered expenditure on community projects of some K40 million, conditional on the re-establishment of profitable operations. These offers, and efforts by the Provincial Government and Churches to establish dialogue with the militants failed to resolve the crisis.

As a result, the BCL Board decided towards the end of 1989 that it was necessary to substantially reduce the size of the BCL establishment in Bougainville . When further attacks on BCL employees took place in January, it was decided that no BCL employees should remain on Bougainville until the situation improved. A major retrenchment program commenced on 7 January 1990 and the withdrawal from the island was completed by 24 March 1990.

Arrangements were made with local Bougainvillean contractor groups for the care and surveillance of BCL's assets on the island. This arrangement proved most difficult and ceased on 1 June 1990 when the BCL's Loloho power station ceased operations due to lack of fuel.

Damage to facilities was estimated to be approximately K8 million, involving principally the power pylons, administrative and workshop buildings, a process water pump station and a number of items of mobile equipment. Repairs were confirmed to the power reticulation system where eight of the ten pylons toppled were replaced.

The Papua New Guinea security forces withdrew from the island in early March 1990 leaving the militants in control of Bougainville . A unilateral declaration of independence on Bougainville on 17 May 1990 was immediately rejected by the National Government and failed to gain any international recognition. It led to the shutdown by the National Government of all telecommunications with Bougainville and the imposition of a blockage, which was lifted on 3 January1991.

Following talks between representatives of Bougainville and the National Government an accord was signed on 5 August 1990 under which the National Government undertook to re-establish services in Bougainville and the Bougainville representatives agreed to defer declarations on the island's political status. Subsequent attempts by the national government to land supplies on Bougainville failed when the militants demanded control of their distribution. In September following a request from local representatives, National Government personnel returned to Buka, just north of the main island and services were restored there.

The re-opening of the mine was dependent on political stability being re-established on Bougainville . In the absence of reliable communications and access to Bougainville BCL could not make an accurate assessment of the condition and extent of deterioration of plant and equipment on the island. Although at that time, BCL remained committed to re-opening the mine when conditions on the island permitted it to do so, the longer the mine remained inoperable the greater the cost of restoration and resumption of operations.

An important factor in the Peace Progress was the formation of five interim authorities in which local leaders were prominent. These authorities co-operated with the National Government in bringing about a more normal way of life for the people they represent. Unfortunately, it was not possible to establish the sixth and last interim authority for the area centred on Panguna where the remaining hardcore elements of the Bougainville Revolutionary Army (BRA) continue their opposition. They are under increasing pressure because of the improvements brought to the rest of the province.

In 2003, although there is now regular contact between representatives of the National Government and the majority of the people of the North Solomons Province , political problems including the matter of secession have not yet been resolved.