Papua New Guinea’s government opens new controversy regarding the Ok Tedi Mine

Papua New Guinea’s government opens new controversy regarding the Ok Tedi Mine

ok-tedi-aerial-2The controversial Ok Tedi copper and gold mine doesn’t belong anymore to BHP Billiton. Papua New Guinea’s government decided to whip full control of the pit from the hands of the company and put a stop to the legal immunity for environmental damage that BHP enjoyed.

The change was announced this week, as Prime Minister Peter O’Neill gave the government total ownership of the mine.

In the 1990s, Ok Tedi was in the center of a major waterways pollution scandal. At the time, BHP Billiton wanted to shut down the mine, but it was so lucrative to Papua New Guinea that the government managed to keep the mine open, creating a deal and offering the Anglo-Australian company an exit package that included immunity from prosecution for the damage.

The deal was struck in 2001 with BHP Billiton offloading its majority stake to a Singapore-based charitable trust called PNG Sustainable Development Program Limited (PNGSDP), which was responsible for the administration of the mine’s ongoing profits and had the mission to develop projects in the polluted Western Province. This meant that, until last Wednesday (18), the country’s government owned the remaining 37 percent stake in Ok Tedi.

Pollution caused by the exploration of Ok Tedi mine

In exchange for the deal, BHP was immune to the compensation claims made by landholders affected by their pollution scandal. However, Peter O’Neill squashed that immunity and established new laws during this week: the fresh regulation opens the door to compensation claims and to the cancelation of PNG Sustainable Development Program Limited’s shares in Ok Tedi, giving full control to the government.

In the meantime, PNGSDP is looking for legal advice. The program’s chairman, Mekere Morauta, condemned the move and considered it a “blatant grab for power and money”. He added that:

We have a duty to the people of Western Province who own the mine and receive the dividends paid to PNGSDP in the form of social and economic development to protect their rights and their assets. I guarantee them that we will do all that we can.

While BHP Billiton hasn’t pronounced about the matter yet, the Prime Minister O’Neill said the government had been trying to purchase the Ok Tedi shares from PNGSDP, but then the talks were interrupted. Trying to convince the parliament to change the law, he said:

This parliament has done gross injustice to our people, denying their right to have access to have their say and have their claims against the damage that was done to the environment and themselves.

This proposed bill now removes that waiver for BHP Billiton, meaning that the land owners or any other affected party are free to bring any action or enforce any right.

PNGSDP has described the government’s takeover as legally and morally unacceptable and also unconstitutional. The program estimates the Ok Tedi mine to be worth around $804 million, plus several millions in annual dividends to the local people.