Rio Tinto subsidiary takes legal advice after being stripped of its Bougainville mining licences | Pacific Beat

Rio Tinto subsidiary takes legal advice after being stripped of its Bougainville mining licences

Rio Tinto subsidiary takes legal advice after being stripped of its Bougainville mining licences

Updated 13 August 2014, 12:47 AEST

The Rio Tinto subsidiary Bougainville Copper is unhappy with the Bougainville parliament's decision to strip the company of its exploration licences and the lease on its mine in the autonomous region.

The company's Panguna mine used to be one of the biggest copper mines in the world but it was closed in 1989 after it became the spark which ignited a civil war on the island. On Friday, the Bougainville parliament passed a new Mining Act which gives it the power to regulate mining. The Act also cancelled exploration and mining licences issued under PNG legislation.

Presenter: Jemima Garrett

Peter Taylor, Chairman and Managing Director of the Rio Tinto subsidiary Bougainville Copper

TAYLOR: Well, I can't say I am very pleased. It is not the way I would have preferred to have progress the possibility of re-opening the mine. The way we have been proceeding is through negotiations and we have a body that has been set up and it has met at least ten times to discuss the future of the mine and that was proceeding rather well, I thought. It has representatives from all the main parties including the landowners, the two governments the national and the PNG government plus the company, and this really to a large extent pre-empts the outcome of these negostiations because it has made a decision, a unilateral decision, about the existing mining lease and exploration licences.
GARRETT: What sort of dollar figure would you put on the exploration and mining icences that have been stripped away by this legislation?
TAYLOR: Well, I have never done an evaluation of the valuation of the licences per se, but essentially it is the right to mine so whatever people's view of the projects value is, and it definitely has a pretty high value, this essentially puts an end to that value and you have got to reassess whether what is now in the PNG legislation provides any value at all. What we have been delivered, I am told, is an exploration licence over a part of the former land that we had for mining purposes and I am not sure that is enough, adequate t meet the needs should the project be given the green light.
GARRETT: Are you considering legal action over this new legislation?
TAYLOR: At this stage there is no decision being made to take legal action but the company BCL is obviously taking advice on what its options are and the possibility of legal action I wouldn't dismiss although it is not my preferred way of moving forward. My preferred way of moving forward is to negotiate an outcome, the very process that i mentioned earlier, with all the parties and try to get a mutually satisfactory result, rather than one of the parties simply changing the ground rules.
GARRETT: Bougainville President John Momis says that there was no alternative, that landowners would not have allowed Bougainville Copper back on the island without the provisions included in this legislation. What is your reaction to that?
TAYLOR: Well, I haven't heard that said before. The progress that we were making at the joint meeting which included landowners suggested to me that the majority of landowners did want the company back as the operator, that they did want the mine re-opened. Obviously, the detail of the terms needed to be worked out. But, you know, perhaps President Momis has a better feel for what the landowners as a whole want, than I do. Of course, when you are talking about the landowners there are a number of landowner groups, at least six and some others who are on the periphery of the mine site. Not just the mine site, but the road to the mine, the port and the other ancillary lease areas and they don't speak entirely with a united front so there might be some that took that view but I think that detracts from the most important aspect of this, and that is that there should have been in my view, a continuation of the combined, that is all in negotiations with all the parties before any decision was made on what the tenement situation should be.
GARRETT: Has Bougainville Copper really lost that much? If you are to go back you will need a social licence and with or without this new legislation you were going to have to negotiate new terms of operation with landowners.
TAYLOR: That is true but under the legislation, as I understand it, when you need a new licence, the landowners and other interested parties have certain veto rights. Now we already had granted licences which meant that it gave us some certainty that if we were to go back, the area that we needed had already been marked out. Under the new arrangements the area that would be needed to actually operate this mine, it is not just the mining lease itself, there are other areas like the port, the road, and so on are not covered, as I understand it, under this new arrangement so all of that is up in the air. No major development is going to go ahead and big money being spent until such time as there is surety as to the tenure and we simply don't have that at this stage.
GARRETT: Some groups on Bougainville are still opposed to mining and they say Bougainville copper still has too much power. What do you say to them?
TAYLOR: I never expect everybody in a community to agree on the one course of action so it is almost inevitable that some people will oppose any development, including a mining development. But, i believe a majority of people, the landowners and other Bougainvilleans, are amenable to redeveloping the mining operation so that they can have the sorts of facilities that were available in the community before the mine ceased operation.
GARRETT: So where do you see things going from here? What are the next steps?
TAYLOR: Well, I don't want to take any pre-emptive steps. I am still looking at the situation. I haven't seen the final copy of the Act as yet. I have seen the draft but not the final copy. I just want to get technical and legal advice on what the true implications are and just see whether there is still some avenue for coming to a mutually acceptable agreement with the relevant parties, that will give Bougainville Copper sufficient security to allow it to continue with the projects that are already in the planning stage, and there are community projects that we are fairly advanced in organising and I wouldn't like to see those stop but I could hardly justify spending my shareholders money on projects when the shareholders' rights, the company's rights for the future are uncertain.
GARRETT: So is this legislation enough for Bougainville Copper to actually consider pulling out of the project altogether?
TAYLOR: Pulling out of the project is not something that has entered my thought process at this stage. 

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