MINING AND SUSTAINABLE DEVELOPMENT
by Judith Morrison, B.A., M.Litt.(Peace Studies)
Grad.Dip.(Aboriginal & Intercultural Studies)
CONTENTS
- HOW TO FOLLOW THIS CASE STUDYCASE STUDY (BLUE TEXT)
GENERAL ISSUES (MAUVE TEXT)
- INTRODUCTION
- THE REASON FOR A TWO-WAY APPROACH
- THE CONTEXT
- PAPUA NEW GUINEA
- GENERAL ISSUE No. 1
- EXPLORATION & DEVELOPMENT STAGE OF A
MINING PROJECT - VIABILITY
The Initial Planning to Develop
the Ok Tedi Mine
- GENERAL ISSUE NO. 2
- THE DEVELOPMENTAL STAGE - PREDICTING
IMPACTS ON LOCAL COMMUNITIES AND PLANNING THE DIRECTION OF CHANGE
Planning and Predicting How Ok Tedi Would Develop and Who
Would Be Affected
- GENERAL ISSUE No. 3
- ESTABLISHMENT STAGE - CORPORATE RELATIONS
WITH LOCAL COMMUNITIES DURING THE CONSTRUCTION PERIOD
Constructing
the Ok Tedi Mine and Associated Infrastructure in the Star Mountains
- GENERAL ISSUE No. 4
- OPERATIONAL STAGE - CORPORATE RELATIONS
WITH GOVERNMENT ONCE THE MINE IS IN PRODUCTION
OTML's
relationship with the PNG Government
- GENERAL ISSUE No. 5
- OPERATIONAL STAGE - CORPORATE RELATIONS
WITH LOCAL COMMUNITIES AND OTHER INTERESTED PARTIES ONCE THE MINE IS IN
PRODUCTION
How the Mine's Operation Actually Began to Impact on Local
Communities
- GENERAL ISSUE No. 6
- SHORT TERM SUSTAINABILITY DURING THE
OPERATION OF THE MINE
The Way Ok Tedi has Impacted on Local Life Styles
and Life Chances
- GENERAL ISSUE No. 7
- LONG TERM SUSTAINABILITY FOLLOWING THE CLOSURE OF A
MINE Probable Long Term Legacies from Ok Tedi's Presence in Western Province
- GENERAL ISSUE NO. 8
- CONCLUSION - PROMOTING ACCOUNTABLE AND
RESPONSIBLE RELATIONSHIPS IN FUTURE PROJECTS
Suggested questions
relating to this case study
- QUESTIONS
- BIBLIOGRAPHY
- RELATING TO OK TEDI
- BIBLIOGRAPHY
- WEBSITES RELATING TO RESOURCE
DEVELOPMENTS/DECISION-MAKING AND CONFLICT RESOLUTION
This study specifically traces some developments of the mine at Ok Tedi in
the Western Province of Papua New Guinea, and considers some of the
outcomes to date, and how they relate to short term and long term
sustainability.
The General Issues provide a framework to assist readers, stage by stage,
appreciate the context in which mining projects develop. This framework is
then applied to each stage of the Ok Tedi project. It can also be applied
to other mining projects. The framework offers:
- a broad structure which can account for the
complexities and interrelating developments associated with mining in remote
regions
- an understanding of when, where and how planning about
change, uncertainty and risk takes place
- a means to review whether all relevant decisions,
actions and influences are being taken into account to assess consequential
outcomes and responses
- a means to review whether those managing mining
projects are making the most effective use of resources to establish local
community development programs which deal with change and simultaneously
create a sustainable future
- a means for considering what opportunities may present themselves for
rectifying mistakes/unworkable outcomes in the light of what has gone
before.
Readers can follow the Case Study through on its own, the General Issues on
their own, or both simultaneously. The way the story of Ok Tedi is
presented ties in with the structure of the General Issues. Overall, it
offers a guide and a starting point for considering how this type of
analysis might be applied to other mining projects, to:
- identify parallel issues and dynamics in other mining
projects in remote regions both within the Asia/Pacific region and beyond
- trigger constructive thinking about some barriers and
difficulties that need to be addressed to promote sustainability in future
mining projects
- consider the present capacity and constraints on
different stakeholder groups to deal with change, continuity, conflict and
cohesion
- appreciate the wider context in which planning about
change takes place so that complex issues are not reduced to the motivations,
intentions or goals of one particular player or another
- appreciate how understanding the complexities of projects becomes
particularly critical when troubles begin to emerge and protagonists take
up defensive or adversarial positions.
The bibliography may assist readers to further develop their understanding
about the Ok Tedi project and keep informed of developments there. It will
also provide additional references relating to environmental
problem-solving.
THE REASON FOR THIS TWO-WAY APPROACH
Public Disclosure
There are many mining projects being undertaken in the Asia Pacific region
about which we know very little. Most have much less publicly accessible
information available about them than Ok Tedi. Often this limitation makes
it difficult to understand exactly how and why projects have proceeded
along a certain path. Limited disclosure makes it difficult to identify the
correlations between project planning put in place along the way by
corporations, governments and local communities, and the actual outcomes of
these decisions. The reasons for not disclosing details can be to do with
the competitive nature of mining, the competitiveness of claims between
different local groups, or contradictory policies between different
government agencies or factions. These dynamics make it difficult to trace
the correlations between predicted outcomes and actual outcomes. However,
it is through understanding these links and relationships that better
processes can be put into effect which promote and bring about sustainable
development. It can be as important to appreciate where there are gaps in
our understanding about what has happened as it is to critically evaluate
what information is accessible. It is often the case that the issues that
are most newsworthy relate to apportioning blame, recriminations about
environmental degradation/human rights abuses, or backlash expressed by
local communities. All of these issues put groups on the defensive, and it
can then be difficult to get to the information that will even allow us to
learn from hindsight.
The Ok Tedi project generated significant publicity both within PNG and
overseas. It prompted broad international interest, and that interest has
itself fostered the consequent motivation for the corporation and others to
fund research which gives even more detailed information about this complex
project. Most significantly, it has drawn to the attention of a wider
public information about the monitoring for sustainable outcomes that are
being put in place as the mine moves toward closure.
Scale
While large-scale mining corporations have become targets for a great deal
of community pressure and concern about adverse consequences of development
in the third world, it is often the scale of their operations that suggest
they are the worst offenders. However, in each regional context, the
performance of a large-scale mining project undertaken in a remote area
needs to be assessed from two directions. Firstly, their performance needs
to be evaluated in the light of the corporation's own code of conduct and
its performance in its home country, and secondly, it needs to be evaluated
against the performance of other local companies in the host country, or
companies controlled by newly industrialised countries. Large corporations
are realising that they present the most identifiable target in a very
complex web of influences associated with development in third world
countries that lead to unsustainable change and/or environmental
degradation. The same is also true in 'fourth world' situations in
developed countries. Large corporations will continue to incur more
pressure than many other small to medium sized mining companies operating
in similar circumstances which do not attract media attention, but it is
likely that large corporations will ultimately provide the resources and
the incentive to lead the way toward seeking better outcomes.
Papua New Guinea
Papua New Guinea consists of a mainland and a collection of islands of
varying size covering a land area of some 474,000 square kilometres. It
forms the eastern part of the island of New Guinea. The western part is the
Indonesian Province of Irian Jaya. The dominant feature of the mainland is
a central spine of high mountain ranges intersected by valleys and
plateaux. It has a generally hot and humid climate but because of the
mountainous topography and prevailing air streams, conditions vary greatly
from one area to another. Rainfall is the characteristic that
differentiates the seasons, but the timing varies from one area to another.
In the highlands, climatic variations are most striking, and distinct
'micro-climates' are evident from valley to valley.
Approximately 3.6 million people live in Papua New Guinea. English is the
official language. Pidgin and Motu are the other main languages, but there
are approximately 700 different languages or dialects. There is a
multiplicity of clan groupings with a wide variety of physical features and
cultural styles, but all are generally described as Melanesian. The main
concentrations of population are in the rural highland valleys, although
over the last few decades there has been a drift toward towns and cities.
Compared to the population of, say Java, or other countries in Asia, the
overall population density is very low. This is due mainly to the fact that
the tropical rain-forest soil is poor in nutrients. There is no prospect of
high fertility in areas where vital minerals are washed out by tropical
rainfall. The tropical rain-forest conditions present some health problems
for local communities. Malaria and respiratory illnesses are endemic, and
the low nutrient levels in the soil restrict the availability of
protein-rich food crops. Protein is usually derived from fish, game or kept
livestock, such as pigs.
Before the arrival of Europeans, a higher density was only possible in the
fertile regularly flooded areas along white-water rivers, in hill-forests,
upland areas or on volcanic soils. Diversity is one evolutionary response
to shortages of plant nutrients in the soil. This is reflected in
indigenous social arrangements, and the multiplicity of plant species. Even
as recently as a decade ago, plant diversity was underestimated by a factor
of ten.
Subsistence agriculture remains the dominant economic activity. Indigenous
land use involves food gathering in the forests, the cultivation of
rotating 'gardens' which produce mainly high-starch crops such as yams, and
production of protein-rich foods, particularly from pigs, to meet family
and community needs. This simple commodity production is an unexpanded form
of exchange that is geared toward maximising family wealth and well being.
It is distinguishable from capitalist commodity production where the goal
is to maximise profit or surplus. Simple commodity production involves
complex local exchanges of wealth, organised through cultural systems of
exchange. However, many people also produce plantation crops such as
coffee, tea, cocoa and copra for cash. Most land in Papua New Guinea is
owned in a complex and traditional system of clan ownership that has been
legalised into a national land ownership system. Individuals and clans own
all but 5% of the land in Papua New Guinea. In most Papua New Guinean
languages, people's relationship to land is not normally expressed in terms
of alienable, commodifiable possession but rather in terms of an
unalienable or familial association. In the customary conceptual framework,
it is as difficult to imagine the buying or selling of ground as a
commodity as it would be to imagine buying or selling one's mother or
child, or a piece of one's own body.
The initial negotiations to introduce a large-scale mining project takes
place between top level corporation managers and representatives of a host
government. Together these representatives set out their priorities and
goals and consider broadly whether their interests are compatible. The
negotiations between corporations, consortiums and national governments
have a strong focus on the macro-economic advantages that could be derived
from the project. Corporations estimate the expenditure and match that
against predicted revenue, insuring that investment will return a profit
after payments for infrastructure costs, taxes, royalties, compensation,
loan repayments etc. Government analysis focuses on both national and
regional predicted impacts and risks associated with the development, and
plan how they will measure and distribute benefit against relative costs.
They will agree to proceed to the planning stage of the project if
biophysical data and other determinants within the global and national
economy predict a viable outcome. Community liaison may be undertaken at
the earliest phase of exploration, or it may be deferred until the
corporation, its financial backers and the government have developed their
preliminary plans and financial arrangements.
The Initial Planning to Develop the Ok Tedi Mine
In 1968, Kennecott Exploration (Australia) Ltd., a subsidiary of the
transnational mining giant, Kennecott, discovered an ore deposit at Mt.
Fubilan near the Ok Tedi River in the Star Mountains in Western Province.
The site is located in a precipitous mountain range in one of the wettest
places in the world, about 10 metres of rainfall annually. It falls within
the Fly River drainage system of approximately 75,000 square kilometres.
The Fly River carries off about 200,000 million tonnes of water each year,
and carries with it 100 million tonnes of soil and silt to the Gulf of
Papua. It ranks with the Mississippi, the Amazon and the Yangtze as one of
the world's major rivers. It is 1,100 kilometres long and 65 kilometres
wide at the sea where it becomes a maze of channels flowing between
low-lying islands. The regional was virtually totally undeveloped in
western terms. There was virtually no significance given to the
international border between the Australian-controlled territory of Papua
New Guinea and the former territory of Western Papua, now the Indonesian
province of Irian Jaya. The other large-scale mining projects, which have
since been developed in the region, including Porgera in Enga Province and
Freeport in Irian Jaya, had not been initiated at that time. When the ore
body was first discovered, the national government, still under Australian
administration, had little interest in developing these resources. Western
Province was at that time still a very remote region within PNG. The copper
mine on Bougainville island was being established as the primary resource
development project. After independence in 1975, however, the PNG
Government established the Ok Tedi Development Company to carry out further
explorations, which revealed the full magnitude of the mineral wealth of
the area.
The government sought foreign investment to develop the site. In 1976
appointed Broken Hill Pty Ltd., Australia, and (BHP) to conduct a
feasibility study and form an investor consortium. This consortium
comprised Standard Oil of Indiana, a subsidiary of Amoco Minerals Inc., and
a group of four West German companies entitled
Kupferexplorationgesellschaft. They completed the proposal in 1979. They
planned to mine in three stages. The first was production of gold bullion,
followed by production of gold bullion and copper concentrates, and
finally, production of only copper concentrates. It also proposed that the
PNG Government take up a 25 per cent equity option and provide assistance
worth A$180 million.
If a project appears viable, the corporation and/or the government initiate
programs to interest, inform, persuade and reassure groups in the locality
of the proposed mine how they could derive micro-economic benefit from the
development. Corporations, because of their considerable wealth, will
usually hold the strongest bargaining position in negotiations. It is at
this time that corporations have to consider how they will confront the
potentially ethical dilemmas associated with their relationship with local
communities. On the one hand, they need to institute public relations
campaigns to gain the necessary local support for projects. However,
simultaneously, they must institute processes to negotiate fair and
equitable exchanges and formally binding settlements with communities
within the region, demonstrating that they have addressed and will account
for an appropriate range of community needs and goals brought to light in
relation to the proposed changes. Simultaneously they:
- promote and offer benefits of 'development' in
exchange for natural resources and
- prepare to accommodate, address, and 'manage' diverse local, regional,
national and international concerns, opinions, anxieties and uncertainties
about the predicted mine development, including some which are directly
opposed to the project, or the role government will play in the
establishment of the project.
The tension between these two aspects of 'external relations' is
particularly critical and challenging when projects are being established
in remote regions, where local communities maintain small-scale premodern
modes of production. One of the most profound dilemmas for corporations is
that 'agreements' with local communities who have a different social
system, culture and sense of belonging cannot assume the same fixed degree
of certainty that underlie agreements in the 'modern' sense of the word.
Ongoing review and modification to accommodate local issues will be
necessary as projects move from the planning stage into the establishment
stage and then to the operational stage, and prepare for post-mining
sustainable development when the mine closes.
This issue is most significant with respect to how different groups hold an
interest in land. There are no straightforward preordained answers as to
how corporations should institute processes to acquire land. Each
circumstance will be unique to its own time and place, yet the issue of how
local people belong to and use land will remain a continually relevant
feature which is integral to most aspects of planning for a sustainable
future. It needs to be accounted for in every aspect of mining in remote
projects. In the light of each particular set of circumstances,
corporations are increasingly required to carefully plan how they will
negotiate and campaign to deal effectively with:
- acquisition of land in the vicinity of the project,
including the relevant issues of relocation and compensation, and
- undertake to inform all local groups who may be affected by the impact
of mining about the significance of anticipated outcomes.
If a project is being established in a remote region, there may be few
precedents that suggest how all the relevant stakeholders will deal with
environmental change. There will be a continuing tension as to how the
corporation and the government prioritise and guide processes for
addressing both short and long-term sustainable outcomes, taking into
account how the uncertainties associated with large-scale projects will
bring profound and sometimes irreversible change. They must correlate and
integrate these factors with their need to be competitive and alleviate
costs by avoiding delay in getting projects under way.
'Community liaison' and negotiation ranges across and between a wide range
of sectoral and cultural groups, and power bases, involving various
sections of the corporation itself, its partners and subsidiaries, various
government agencies and different communities. The task of coordinating and
integrating planning across different levels and sections of a large
corporation is always complex. The task is profoundly compounded when the
project being undertaken is in a remote region where many issues relating
to social risk and social cohesion are unprecedented. The project will
involve complex management, negotiation and diplomacy skills as the
corporation plans to establish the necessary infrastructure for the mine
and structure compensation packages, services and functions. Many of these
will be offered as a direct benefit to local communities. The offered
benefits can include road links, shipping links, provision of medical,
educational and communications services for people living within the
locality. Corporations undertake to establish them primarily for their own
purposes, but when the infrastructure is being established in a remote
region, it simultaneously represents one form of regional and national
direct development benefit. The corporation must provide a level of
services and functions which meets the expectations of their own personnel.
It is less straightforward to determine the level of services and functions
which the corporation should be liable to provide for local communities
over the many years of the project and beyond. This becomes a critical
issue for long-term accountability and sustainability when a mine is
introduced into a remote region. In such cases, a corporation becomes an
interim 'surrogate' provider of services that traditionally would be
provided by government. The corporation will have to contend with the issue
of justifying differences in 'standards' between the home country and host
country. Legally enforceable standards of the host country may not entail
the same environmental and social responsibilities that are in place in the
corporation's home country, or in the corporation's own code of conduct.
Projects which entail a surrogacy function can present many problematic
'grey areas' about responsibility and accountability between the
corporation and other interested groups who feel they have a stake in local
issues.
An understanding of local ecological adaptations, social attributes and
local forms of governance which are relevant within the locality of the
mine become the basis for the corporation's promises to offer
micro-economic 'development' benefits. These promises have to merge and
accord with the macro-economic agreements made with regional and national
governments. They have to express a responsibility for micro-economic
arrangements as well as the formal macro-economic agreements made with
national governments. Corporations must synthesise within their own
organisation the necessary management responsibilities and skills, drawing
from both the 'social' as well as the 'physical' sciences, so that
community development aligns workably with the corporation's own material
goals. The integration of information and ideas about how different groups
express their power and legitimacy at local, regional and national level,
and how this relates to the corporation's own power and decision-making
processes, will be profoundly different when developing a project in a less
developed country than it would be if the corporation undertook a similar
project in their home country. Corporations tend to express their
responsibilities in accordance with institutional requirements in place in
'modern' countries and the modern global economy; however, third world host
countries may not have equivalent institutional processes in place, and the
supporting bureaucracy may not maintain the same levels of experience and
expertise that are in place in a developed industrialised country.
Corporations therefore cannot necessarily assume that all institutional
functions will be as straightforward or determined in the host country.
Ultimately the corporation will be judged as to whether it has fulfilled
its responsibilities, including the responsibility to respectfully
acknowledge and address the project's impact on local social systems. This
makes it critical for corporations to consider carefully whether the
information and the assumptions on which they are basing decisions is
reliable and consistent, and is regarded as legitimate and useful by all
concerned. Agreements to proceed with mining need to be based on
appropriate information and decision-making skills to establish how local
people themselves perceive their present or desired lifestyle and how they
are prepared to deal with change.
Articulating Responsibility -The outcome of negotiations is to achieve
settlements so that corporations can fulfil their specific material goals,
but entailed in settlements is the issue of clarifying how change will
impact on sustainability. Corporations will find it increasingly
challenging to define areas of responsibility concerning their relationship
with local social systems, senses of belonging to land, and local forms of
governance throughout the different stages of the mine. They have to
simultaneously balance this responsibility with a responsibility to
acknowledge national government legislation and policies, and
responsibilities to their shareholders and financial backers. There will be
an ongoing dissonance between macro-economic national agreements and
micro-economic interactions with local communities. National governments
may be either unable or unwilling to accept full responsibility for the
range of new dynamics that come with the establishment of a project in a
remote region. They will, however, still be concerned to retain influence
over the direction of community development programs and development
issues. The corporation has to contend with local realities, and the way
other groups perceive these realities, being sensitive to create
development programs that are not misinformed, unrealistic or
paternalistic. The impact a corporation's activities have on a remote
region will require management to continually monitor whether programs for
which they will be deemed responsible are workable and sustainable for
local communities, and to what degree develop ment programs can be sustained
once support and subsidies from the corporation cease.
As planning for the mine develops, the delineation of physical impact areas
becomes critical. Delineations for developing the mine infrastructure have
to workably integrate with the complexity of other ways that people
understand the area. Planning has to take account of ethnic boundaries, how
all local people 'belong' to an area and understand and use its resources,
the scientific understanding of the ecosystem, and government boundaries.
Corporations make predictions about the extent of physical impacts, and
then merge these predictions with their understanding of how the changes
will impact on the region. This is a critical issue because, even though
there are inherent uncertainties associated with predictions, the
preliminary decisions which settle the boundaries of impact, will also set
in place fixed delineations of responsibility and accountability. The
impacts will take place over many years, and will profoundly influence the
life style and life chances of people living in the immediate and
intermediate vicinity of the mine.
Planning and Predicting How Ok Tedi Would Develop and Who Would Be
Affected
In the planning stages in 1978, the BHP consortium asserted that, in the
interests of minimising costs, the tailings produced as a result of the
copper concentration process should be dumped directly into the Ok Tedi
River. They argued that any toxic materials would be diluted downstream,
given the extremely high rainfall. The government, however, was concerned
that once the tailings were dumped, there would be no way of controlling or
monitoring their movement. Being aware that uncontrolled dumping had
created extensive environmental damage and profound local dissatisfaction
on Bougainville, there was a strong argument against free dumping, and this
was backed up by feasibility studies. In 1979 during the planning and
developmental stage, gold prices began to increase and the prospect of
better returns provided the incentive to abide by the conclusions of the
feasibility study, calling for the construction of a permanent tailings dam
and waste dumps. In 1982 Maunsell & Partners prepared an environmental
study to assess the potential environmental impact and establish
environmental standards. On the strength of these reports, agreements were
made between individual shareholding companies, OTML and the PNG
government. They served as the basis for regulating compensation claims to
the Min people living in the area at that time and defining the liability
of the corporation. Special mining leases, held by the PNG government and
sublet to OTML, were granted. The leases covered the minesite area and
surrounding predicted impact areas, including the site on which the
township of Tabubil was to be developed, as well as the hydro-electricity
station and the tailings dam and waste dumps. The leases and agreements
were drawn up on the assumption that a tailings dam would be built.
The compensation arrangements negotiated with landowners living within the
mine lease areas were based on the prediction that this was the locality
that would experience the greatest physical and social disturbance. The
local population of Min peoples from the mountain ranges in Western
province, trace descent from a common ancestress, and share a set of
closely related dialects and cultural practices. In the forest environment
of the Star Mountains where the soil is poor in nutrients, Min clans did
not maintain permanent settlements. They derived their living primarily
through hunting and gathering in a semi-nomadic pattern within the forest.
In many other ecological niches within Papua New Guinea, groups derive a
higher proportion of their sustenance through cultivating root crops, sago
and taro and other staples.
The newly independent state of Papua New Guinea was, at the time of the
establishment of the Ok Tedi mine, attempting to define a fixed system of
land ownership. However, in regions such as Western Province there had
previously been little need for a nationwide bureaucratic commodification
of land. Landholding between the diverse indigenous groups maintaining
subsistence modes of production was expressed mainly in terms of local
social relations. Indigenous landholding was not static and fixed, it was a
very complex, dynamic and fluid sense of belonging to particular areas of
land that changed over time. The concept of entitlement to a fixed
delineated area of land was unprecedented in the region.
The communities in the mountain areas were the major focus of OTML's
planning to institute programs mitigating social change. These landowners
were offered 30% of the anticipated mine royalties. The agreements granted
a further 70% of royalties to the provincial government as well as a
support grant from the national government. The Lower Ok Tedi/Fly River did
not fall within the lease area. The river communities therefore did not
feature extensively in the planning of community development programs. It
was anticipated that they would not incur great physical and social
disturbance.
OTML had to structure their community planning programs, and settle upon
certain definitions of ethnicity. OTML's community relations policies with
landholders and local populations were developed in conjunction with
national government's new land ownership system, still being formulated at
that time. One local ethnic sub-group, the Wopkaimin, were considered by
the state to be the legally appointed holders of land at the mine site and
township. This group would be allocated royalties from the mine. Another
sub-group, the Faiwolmin, from the nearby mountains, did not receive the
same entitlements, royalties or employment opportunities at the site,
despite their continued claim over the leased land, based on what they
insisted was a common cultural and linguistic heritage. The Faiwolmin did
not derive the same benefit from their status as landholders as the
Wopkaimin, and they held a more peripheral position in the regional economy
created through the impact of the mine. The imposed structure set in place
a 'reality' constituted at one particular point in time, created to be
relevant to the context of the development of the mine. It dictated which
groups of Min would or would not receive capital directly in the form of
royalties and revenue from the mine. These formal arrangements created
their own new expressions of power and status, and a consequent contention
between local populations. The new structures brought forth new definitions
of the past, as well as the present and the future.
The negotiations to acquire land for the Ok Tedi triggered new ways that
Min people could think about 'belonging' to one particular place, one
particular ethnic sub-group at one particular time. The negotiations
themselves created new concepts of 'inclusion' or 'exclusion', particularly
in respect of predicted environmental damage, relocation and compensating
benefits in the form of royalty payments and community programs. The
negotiating teams based their policies for allocating compensation and
benefit on their predictions relating to changes in the biophysical
landscape. The relatively fixed boundaries delineating impact became the
basis for lease agreements between the PNG government and OTML. However,
the notion of fixed ownership of territory was not a concept that was
familiar to local people. The delineation of impact areas and ethnic group
boundaries dictated which groups would be entitled to benefit, and
dramatically and decisively also dictated how and with whom the consortium
was legally bound to negotiate, and to whom they owed responsibility. The
corporation's negotiations about compensation and social programs were
based on their understanding of predicted physical impacts. This became a
particularly critical and troublesome issue as the problems of waste
management increased during the operational stage of the mine. Later in the
case study, it will become apparent that a great deal of contention
developed as to who should have assumed responsibility for the social and
environmental problems which the tailings dam issue brought to the Awin,
Ningerum, Yonggom people and other linguistic groups living further down
the Ok Tedi and Fly Rivers.
To acquire land and establish the minesite and associated infrastructure,
corporations invest a great deal of their own equity capital. They do so on
the basis that it can be recouped once mining begins and generates income
many years later. To be viable, projects need to proceed for the entire
predicted life of the mine. Once the mine is established and becomes
operational, revenue then offsets the vast corporate expenditure and a
competitive profit will be realised for investors. The establishment stage
is a time when there is a sense of urgency for both the corporation and the
national government to get the operation developed quickly for their mutual
benefit.
When construction of the vast infrastructure gets under way, corporations
and their subsidiaries, become heavily involved with budgeting, scheduling
and co-ordination issues. Vast amounts of borrowed capital and government
capital are tied up in projects. They will only bring the ultimate
macro-economic returns once the mine is well into its operational stage.
Both the corporation and the government will be placing a great deal of
importance on the macro-economic imperatives driving the project. How the
establishment of infrastructure immediately impacts on micro-economics at
local and regional levels becomes only one of many interrelating factors
within the overall plan to get the mine established. The construction stage
is the culmination of years of complex and sophisticated planning by teams,
both within the corporation, and within subsidiary construction companies,
who have specific expertise about mining undertaken in different countries
worldwide. It is during the construction stage that mine managers,
construction company managers, incoming workers and local workers actually
become a tangible physical presence in the locality. It is at this time
that many ideas and attitudes are formed, and new relationships and new
local economies develop between incomers and local landholding groups.
Corporations have to make decisions about how they will prioritise their
expenditure of investment capital at this time of crucial scheduling and
coordinated planning, including how they coordinate policies to address
changing local community needs. There may be uncertainties associated with
construction that make it difficult to predict how to most effectively
implement community development programs, or what issues will take the
highest priority in the establishment of local programs. For local people
experiencing the first impacts of change, however, the establishment stage
is the time when the scale of environmental and resource damage begins to
be understood as a physical presence. It is a time when local people will
be considering whether they welcome the changes, and whether they are
satisfied with how the corporation allocates and distributes capital funds
to offset the environmental and social changes, particularly the
significant changes it brings to local economies. The dramatic influx of
capital, goods and services can bring sudden and unsustainable material and
economic change. It is a time when changing circumstances can trigger new
local rivalries. The advent of the mine also puts pre-mining issues within
the context of the new development, so that both old and new problems
become relevant to the impact of the mine. For local people, changes, by
design or luck, create new interpretations of gaining or losing. The vast
changes bring many new definitions of identity, status and power,
particularly through inflowing capital and compensating programs.
Constructing the Ok Tedi Mine and Associated Infrastructure in the Star
Mountains
In 1981, a further joint venture was formed to develop
the mine under the name of Ok Tedi Mining Ltd. (OTML). This consortium
comprised BHP (30%) Amoco (30%) Kupferexplorationgesellschaft (20%) and the
PNG Government (20%). The US-based construction company Bechtel-WKE was
appointed to develop the infrastructure for the mine. The terrain of Western
Province is geologically unstable. The construction project was hindered by
delays caused by landslides and drought. By the time costs had overrun by
US$300 million, relations between all the interested parties were becoming
strained. There were tensions between Bechtel and OTML because the
establishment of the infrastructure was overrunning the predicted 'budget'.
This created the need to obtain large amounts of additional funding to
complete the construction stage. The were tensions between the OTML
partners compounded because of uncertainty about the world price of copper,
and how this would impact on their investments. This in turn created
tensions between the PNG government and the foreign partners.
Metallgesellschaft, working with the Bank of America obtained the
additional funding to complete construction.
Based on a cultural impact study commissioned by the
PNG Government in 1983, the ethnographer Fredrik Barth maintained that
community life and local tradition among Min people would be cataclysmically
disrupted if there was an exodus of migrants from the nearby mountains to the
mine. OTML made public its efforts to monitor the effects of the mine on local
populations in the light of the impact assessment and national government
policies. The policies the corporation developed were protectionist insofar as
they sought to culturally manage, contain and control local indigenous
populations. This was reflected in OTML's employment and housing policies.
Barth's suggestion was that the company refrain from housing mountain
families, in the hope that many would instead take a stronger interest in
small-scale commercial agriculture in the mountains. Agricultural programs
were promoted by both the government and the company. In an attempt to keep
mountain villagers not directly employed at the mine in their home locality,
OTML maintained a policy whereby Faiwolmin mine workers from the nearby
mountain region were deemed to be single men, entitled only to camp
accommodation. However, migrant families of 'single' men were attracted to
Tabubil. Although there was a real presence of different Min people within the
vicinity of the mine, Faiwolmin people did not share an equal social standing
with Wopkaimin people, who were deemed by both the company and the government
to be the holders of the leased land, and therefore the immediate
beneficiaries of compensation.
Establishing the mine was a massive undertaking. The
infrastructure developed for the mine in the early 1980's in the extremely
remote and inaccessible region of Western Province included 170 km of roads,
establishment of the township of Tabubil and treatment facilities for the
copper ore, construction of a hydro-electric power station, and a tug and
barge system with full port facilities to operate over 1300 km of river and
sea.
 This stage of the
project forged many new economic, political and cultural relationships between
local people who lived in the vicinity of the mine. Those most profoundly
affected were local groups who had to be relocated because their land was
needed to establish the minesite and infrastructure. These groups felt the
impact directly on their local subsistence lifestyle. The company provided
through the new township a range of services available for mine personnel and
relocated local people. The introduction of a cash economy and new food
supplies were accessed primarily through compensation funds or through wages.
Compensation became an issue that was important to all local people. Access to
capital became an issue that was directly relative to local people's cultural
connectedness, whether a person was affiliated with a group entitled to
compensation. OTML set up policies and practices to manage and control the
direction of change, and sought to bring about the most compatible means of
accommodating local custom within the context of their own specific interests
in the area. Based on ethnographic advice, government and local participation,
they implemented extensive community development programs.
 There is always an ongoing correlation between
community development programs and environmental impacts. This is integral to
the story of Ok Tedi and concerns two distinct localities and two distinct
sets of relationships between the corporation and groups of local people. The
first, which came about when the mine was in its establishment stage, concerns how issues and
ideas relating to sustainable outcomes for the people of the Star Mountains
were implemented as community programs. The other set of relationships, which
emerged in the later production stage,
concerns the unanticipated environmental outcomes associated with the mine's
impact on the Ok Tedi and Fly River systems and the people who derive a good
proporation of their living from the rivers. The differences between
anticipated outcomes and actual outcomes hinges around the collapse of the
tailings dam while it was still under construction. The people of the Star
Mountains who lived within the mine lease area became the beneficiaries, in
one sense, of a disproportionate share of the capital earmarked for
compensation, insofar as the environmental impact relating to the holding and
treatment of waste material, did not eventuate according to the earlier plans
and predictions for waste treatment. The earlier plans were, however, the
basis for agreements between the government, the corporation and leasing
landholders. The issue of how to deal with the waste treatment was not an
issue with which the Min people had to contend. However, the very presence of
the mine within their region did bring significant and profound material and
social change. Local communities have become progressively less self
sufficient, and in some cases this can be attributed to the takeover of land.
This part of the rainforest could not longer provide the resources from which
they derived a living hunting game, fishing and food gathering from the
forest, supplemented by growing staples, such as taro and potato. The township
through its very creation, triggered responses from people from a much wider
area to 'drift' toward the township from mountain regions. This is a trend
which has also occurred in other parts of PNG in recent decades. In either
case, more food is supplied through local stores and there is more reliance on
a cash economy. There are also higher expectations with regard to community
services such as schools and medical facilities. A high proportion of local
people presently use the amenities and services provided by the corporation to
distribute wealth and well being throughout communities.
The viability of a project depends on the
degree of profit which will be realised from the vast expenditure once a mine is
actually operating. Mine outputs allow corporations to start recouping profit
and offset previous expenditure by repaying loan capital and initiating revenue
payments to the government. Theoretically, at this time, compensation payments
by the corporation to local communities to mitigate environmental damage and
social change are phased out. They are superceded by government payments,
usually in the form of revenue distributed as an agreed representative share of
the wealth accrued from the project. It is a time when the payment of
'compensation' to local communities is superceded by royalty payments which
represent the way that local 'development' benefits will be realised for a
sustainable future. The corporation's responsibility shifts toward overseeing
and maintaining the mining operation, and the government assumes a greater share
of responsibility for maintaining community development.
Many problems can arise at the time of
this transfer of responsibility from corporation to government for capital
payments to indigenous communities who can no longer fully maintain their
previous traditional mode of production. They can arise between national,
regional and local interests about which arm of government should take
responsibility for the allocation and distribution of revenue. It can be a
period characterised by procedural problems about distribution,
misunderstandings about agreements, and inappropriate or inadequate
decision-making and problem-solving. Conflicts of interpretation can develop
between local communities and the mining corporation; between different levels
of government; and among landowning groups over compensation and revenue
payments. The following are two ways that uncertainties associated with
large-scale projects can become serious 'development' problems for governments.
Firstly there is the issue that disastrous
environmental, and therefore social, consequences bring unwelcome and
unsustainable change for local people. If serious
environmental problems arise, the basis for prior agreements may be
called into question. Complex problems and complex agreements can be
over-simplified or reinterpreted, as groups re-consider what benefit they will,
or will not, derive from the project. Disputes about the bases for initial
agreements then begin to be overlaid over the issue of how and who will tackle
the actual problems of rectification. This can bring to the surface a range of
uncertainties that were not settled, or were not able to be settled, in the
planning stages of the project. This is usually the stage when projects begin to
attract adverse media attention, or intervention by watchdog organisations
highlighting environmental problems. At this stage, simmering slow-fuse issues
and problems begin to be openly expressed as dissatisfactions, and groups start
to take up defensive positions. The most immediate way that local communities
can raise claims about liability and 'force' either the corporation or the
government to respond to environmental problems is through legal channels.
However, it may be that local communities will have to contend with strong
government opposition to claims for further compensation to rectify
environmental problems, particularly if civil action could threaten
macro-economic outcomes. In some cases other scrutineers will want to assume the
right to intervene and assess project outcomes independently, such as insurance
company assessors, UN agencies, or international courts.
Secondly, there are issues of uncertainty
associated with unpredictable factors generated well beyond the locality of the
mine which also have the capacity to undermine the project's macro-economic
viability. Many external factors, such as the world price of other export
commodities, can force governments to rely more heavily on large scale resource
extraction projects. Factors such as global interest rates, exchange rates, and
market commodity prices are crucial to maintaining a trade balance. Fluctuations
can influence the profitability and viability of projects, and put pressure on
governments to reconsider national interests over regional interests or local
community interests.
While a corporation's risk is underwritten through insurance companies,
third world countries have to rely on international agencies such as the World
Bank and the International Monetary Fund if investment in development projects
contributes to the risk of serious national economic problems. If there is a
slowdown in the global economy, developing countries can experience economic
shocks due to reductions in demand for commodity and mineral exports and
consequently falls in commodity prices and net barter terms of trade. This can
lead to an increase in interest and debt service payments in part attributable
to a rise in real interest rates, and a fall in development assistance in the
form of aid and other capital flows. This can present serious consequences for
economic, social and political stability through inflation and disequilibrium in
government financies. There are underlying contradictory explanations of
economic crisis, and therefore the usefulness of international assistance from
agencies such as the IMF to help governments maintain stability as they attempt
to administer broad social, economic and political transformations. The IMF's
monetarist model emphasises the role of the national balance of payments in
achieving equilibrium between the demand and supply of money. Real income is
usually assumed to be fixed at full capacity level of output, so that changes in
nominal income involve changes in prices rather than output. The IMFs model
suggests that balance of payments deficits are attributable primarily to
domestic policy 'mistakes' over control of the money supply, internal factors,
rather than the external shocks over which individual countries have little
control. Conversely, however, the United Nations Conference on Trade and
Development (UNCTAD) promote a structuralist view of macroeconomics. The
structuralist view maintains that crises in internal economies of less developed
countries are largely caused by global factors over which individual countries
have little control, and that application of the monetarist theoretical model
does not adequately consider the lack of balance betwen different supplies and
demands in different sectors of internal economies and between different groups
where many people maintain premodern modes of production and there are other
exchange values operating besides cash. From a structuralist perspective,
problems such as inflation result from attempts to bring about rapid economic
growth when there are profound constraints in the existing economic,
institutional and socio-political structures. While both views concede that
changes in money supply occur in response to political factors, the debate is
whether the changes permit or are the actual cause of negative outcomes, such as
inflation, within internal economies. Given these uncertainties, it becomes very
difficult to predict whether social and environmental 'costs' offset capitalist
economic benefits. The IMF can impose conditions and structural adjustments on
loans to rectify what they perceive to be domestic policy 'mistakes' over
control of the money supply. This can force indebted governments that have
become heavily reliant on the revenue from large-scale projects to review their
original plans to plough benefit back to affected communities. Decreases in
predicted revenues can restrict the ability of government to assume
responsibility for maintaining local community development programs set in place
by corporations.
OTML's relationship with the PNG Government
The mining for high grade gold ore on the cap of Mt.
Fubilan, which overlays the larger copper/gold ore body, went into production
in 1984 and operated until late 1986. The second stage of mining for both
copper and gold production then went into operation, with gold production
ending in September 1988. OTML had produced nearly 60 tons of gold from the
cap. In its last full year of gold production, the mine produced profits of
K77 million. The project then started on its third stage, for the long term
production of copper concentrate. Disputes about the allocation of revenue
from the Panguna mine on Bougainville had been one of the factors which
precipitated the dramatic halting of copper production there in 1989. By 1991
the Ok Tedi mine accounted for all of Papua New Guinea's copper exports and
18% of its gold exports. Export sales in 1991 earned Papua New Guinea K441
million, or 34% of the total export earnings for the year. The challenge was
whether the vast sums of investment capital that were finally being returned
to the government as profit could be directed toward regional sustainability
in Western Province, and avoid a repetition of the dissatisfactions that had
been expressed on Bougainville. Mining operations are highly import-dependent,
and substantial capital still has to go toward offseting the cost of imports
of equipment, supplies, fuel, spares and wages. Additionally a substantial
amount of the revenue had to go toward repaying debts accrued throughout the
difficult establishment stage of the project. Unanticiaped engineering
problems had extended the construction
stage and therefore the costs considerably.
 In 1984 during the construction stage, mud slides had
made it impossible to proceed on the site that had been cleared for the
tailings dam. Concerns were raised by environmental agencies within the PNG
government about pollution issues. However, there was also resistance from
within the government to a scheme to push ahead with gold production, and
abandon copper production altogether once the gold had been extracted. The
government had heavily invested 'development' capital in the project. The
world price of other exports, such as cocoa and copra slumped drastically in
the 1980's, and the government had become increasingly reliant on the
anticipated revenue from the mine to fulfil its nation-wide development
programs. The government's ultimate reaction to OTML's proposal to abandon the
later copper production phase was an ultimatum which threatened to stop gold
production just as it was beginning. In 1984, therefore, the government
allowed OTML to use an interim tailings system to return the sand fraction of
tailings to the Ok Ninga valley.
 As the first gold-producing phase was drawing to a
close in 1986 the PNG Department of Environment and Conservation applied
pressure on OTML to set their environmental objectives for the Fly River, and
work toward an acceptable particulate level to protect fisheries, provide an
'early warning' monitoring system for policy makers and prescribe impact
levels that must not be exceeded. The government suspended the requirement to
construct tailings facilities and waste dumps, pending the outcome of the
environmental study. However, the definition of what constituted the 'river
system' in terms of OTML's environmental responsibilities was ambiguous. In
accordance with agreements between OTML and the PNG government, they were not
required to carry out any environmental monitoring studies in the Ok Tedi
River itself, only in the Fly River below the confluence of the Ok Tedi and
the Fly River at D'Albertis Junction. In 1988 due to the difficulties
associated with tailings separation in the copper mining process, the
government allowed OTML to stop using any interm tailings sytem, and to dump
their tailings and waste directly into the river system.
The emerging independent state of PNG was founded, like
its previous Administrator, Australia, on a Westminster system of government.
However, the number of parties and groupings reflects the fragmentary,
small-scale nature of PNG society, and elected members tend to represent
territories rather than ideologies. The outcome is that no single party
dominates, and government is invariably by loosely-knit coalitions involving
changing party loyalties. Papua New Guinea politicians frequently claim that
their clan, tribal, regional or party followers expect them to flourish by
fair means or (by Westminster standards) foul, but the end result, traditional
group prosperity in particular, is to varying degrees considered to justify
the means. The PNG government, since independence, increasingly faced
difficulties in establishing linkages between the mining sector and other
sectors of the economy. While mining activity was bringing benefit in the form
of infrastructure, such as roads, airstrips, harbours, schools, hospitals,
employment training, jobs and some small business development, it was also
bringing a set of social costs including damage to the environment, disruption
to communities and life styles and threats to traditional values and customs,
over which the question of compensation and distribution of revenue remained
contentious. The notion of state authority over minerals conflicted directly
with general notions of traditional land ownership or custody within
Melanesian society. This was generating a great deal of debate between
national government legislation which controls the granting of leases for
mining purposes and an indigenous culture dominated by subsistence production
land-usage practices.
This political climate had a profound impact on how
project developments were implemented, and how threats posed to particular
communities were represented. In Papua New Guinea, dissatisfactions can lead
to a range of protests, expressed as despair, frustration, migration or gang
activity, and in other cases, such as Ok Tedi, in a greater collective
insistence by landowners over matters of compensation and ecological
responsibility. The dissatisfactions expressed by the river communities, their
efforts to have their claims for rectification and compensation addressed by
the corporation, through the courts in Papua New Guinea, and subsequently
through the courts in Australia, have to be appreciated within the context of
a void in state mechanisms for dispute settlement and conflict control where
local tribal means of dispute resolution no longer prove adequate or
appropriate.
The national government, given that the country was
embroiled in a major economic crisis, was anxious to avoid a drastic decrease
in revenue from Ok Tedi. It had become dependent on the entire long term
return on the project. The government was also a major stakeholder in the mine
itself. The decision had been made to raise a loan and acquire a substantial
share in the venture to ultimately provide benefit which could be ploughed
into nation-wide development projects. The investment in Ok Tedi had diverted
funds which might have been used in other ways to foster national development.
From 1984 when the mine started producing, the PNG government's share of the
mine received no direct returns. Their declared profits went overseas to
service the debt incured to initially invest in the mine. It was only in 1990
that the PNG government received K19 million profit from the overall annual
profit of around K450 million. This requirement to serve the foreign debt
meant that there was far less capital being directed toward national
development projects which might have distributed wealth more equitably across
the country as a whole. As the Ok Tedi copper mining processing costs and
problems escalated, the difficulties were compounded by a worldwide decline in
copper prices. The government could not expect significant returns in the form
of royalties and taxation until the operation had been running for many more
years. In fact, profits from Ok Tedi decreased from K77 million in 1987 to
K20.7 million in 1988, just at the time when the government was facing an
economic crises due to world fluctuations in export crop prices. The
government faced a situation where they could not afford to jeopardise
production from the Ok Tedi mine, despite the fact that it was discharging
huge amounts of waste into the Fly River system.
The internal economic destabilization which came about
in 1989 forced the government to seek the help of the World Bank. To fall in
line with World Bank and IMF 'structural adjustment and stabilisation
programs, the government devalued the currency by 10%, cut public expenditure
by K80 million, created a pay freeze and curtailed credit growth.
Subsequently, the government agreed to a letter of intent with the IMF in line
with these measures and was granted a loan of K82 million plus a further US$50
million from the World Bank. In May 1990, the government was also promised
further loans totalling K676 million which were conditional on additional
adjustment and stabilisation measures, such as the removal of import levies,
the lifting of import bans, and the introduction of a 3% processing tax on the
sale price of domestically produced products, all of which were directed
toward a liberalization of the economy and exposure to international
competition, the promotion of capital-intensive modernisation and a switch to
indirect taxes and levies as a source of government revenue. It is
questionable whether the national government would have necessarily taken
these actions to offset its problematic relationship with international
capital through devaluation, import liberalisation, credit controls, public
spending cuts, raising indirect taxation, etc. if the world price of its
export crops had not fallen. The outcome of the structural adjustment program
meant that PNG could no longer direct its path toward development as it has
originally intended.
In 1990 OTML established the Lower Ok Tedi-Fly River
Development Trust. The reason given by the company for its establishment was
that they realised royalties paid to the government were not reaching village
people living downstream from the mine either as compensation or as direct
benefit. The purpose of the Trust was to allocate funds to establish
development programs. K2.5 million per year was to be paid to help villagers
adjust to a life without their customary uses of the river, including fresh
water and fish. However, it did not serve as a two-way channel for
negotiation. Calls through petitions to both the national government and OTML
by representatives of the river communities to actually stop the dumping of
tailings into the river system were ignored. So was a claim taken to the
International Water Tribunal, which condemned the way the operation was being
managed. Although payment of compensation to the river communities did not
form part of the original agreements made between the corporation and the
government, establishing the Trust was a means of alleviating dissatisfaction,
and a threatened shut down of the entire Ok Tedi project, which would have
resulted in a cataclysmic decline in foreign exchange for Papua New Guinea and
an undermining of international confidence in Papua New Guinea as a minerals
exporter.
The distrbutional problems which arise
once a mine is operating and begins to
produce the promised capital benefits are often expressed most profoundly at
local level. Problems and tensions are critically linked to what safety nets for
sustainability will be possible in the immediate and intermediate vicinity of
the mine, given that communities in these areas experience dramatic and
unprecedented changes in their lifestyle. There may be confusion as to how
traditional patterns of life can be adapted when there is a rapid growth in
infrastructure. Inflowing capital benefits from the mine, either from the
corporation or from the government, may not necessarily integrate well in the
short term with pre-existing small-scale patterns of resource use and
distribution. As well as the construction attracting a workforce, it also
attracts people from a wide area around the mine who have no certainty of
benefiting from the operation. This can destabilise existing regional
demographics and can create disparities and frictions between local people and
new arrivals. An area that previously supported small sustainable communities
can become subject to overpopulation. Fringe communities develop, and this can
be where the greatest contradictions are expressed between local cultural values
and introduced values and behaviours. Traditional values expressed through
transmission of an oral culture for a specific set of circumstances may not
provide guidance for appropriate behaviour in the changing circumstances, and
some cultural values may carry diminished legitimacy. The introduction of a cash
economy can inflate the cost of living and destablise the value of income
derived from traditional activities. Communities both in the immediate vicinity
of the mine, and in neighbouring areas, will start to draw conclusions as to
whether there has been adequate benefit from the project. Either the corporation
or the government may not structure the distribution of revenue from the mine in
such a way that expectations of earlier promises are realised in the light of
changes. Local landholders may not feel that the degree of dislocation,
disadvantage or disorder experienced during the establishment stage of the mine has brought
worthwhile realities. Many unforseen disadvantages or distributional problems
can offset the anticipated direct benefit. Rivalries and conflicts can develop
between different ethnic or social groups. The corporation may perceive that
government agencies should ultimately assume responsibility for regulating and
resolving factional dissatisfactions, disputes and discrepancies within the
region overall. Dissatisfaction can be expressed in a range of ways including
apathy, confusion, internal conflict and in extreme cases open hostility, all of
which have a potential risk for jeopardising continuing good relations between
the corporation and different local communities.
How the Mine's Operation Actually Began to
Impact on Local Communities
By 1988 when the second stage of mining had
begun to extract copper as well as gold, the communities who lived at the
lower level of the mountain range where the river slows down, began to feel
the full impact of the waste material from the copper mining in the river
system.
The impact was far more significant than had been previously
predicted. Life-forms in the river began to react to the silting and pollution
problems in the Ok Tedi and Fly Rivers.
At times of heavy rain when the river flooded, the increased
sediment from the mine was deposited as mud in local food-producing gardens,
sago swamps and forests. It destroyed areas previously rich with diverse flora
and fauna. It was at this stage that the problems came to the attention of the
Australian Conservation Foundation, and publicity was generated in Australia
and elsewhere about the problems.
OTML responses raised two pertinent issues.
In 1989, the corporation indicated that the cost of a new dam would make the
project non-viable. Viability did not mean there would not be enormous
long-term profits. It would mean, however, that, because the estimated cost of
a new large tailings dam would be as much again as the initial outlay for
establishing the mine itself, the joint venture would have to accumulate the
funds for a further capital outlay by justifying the environmental necessity
and the subsequent overall reduction to profit levels from the mine to their
overseas lenders. This was one of the problems they faced in attracting
further funding. A decade of experiencing the 'unpredictability' of the local
terrain, meant that estimators were now more accurately able to predict the
real costs and difficulties associated with a tailings dam. The second issue
OTML raised was that the high rainfall in the mine area caused frequent
landslips, as the mine was situated on a fault line of geologic plates. Their
engineers considered that a large dam was not advisable due to the threat of
sudden destruction by earthquake. If this happened, all the waste material
would collapse into the river system at one time with catastrophic outcomes. A
consultancy report prepared by OTML in 1989 for the government indicated that
free dumping in the Fly River could cause a 70 per cent reduction of the fish
catch 155 kilometres downstream of the mine, a 30 per cent reduction 600
kilometres downstream, and an unknowable effect at the time on the delta and
the Gulf of Papua. These predictions were based on the impact of mine
sediments, not the mine-generated copper levels in the river system. The
environmental monitoring focused only on fish survival, not that of any other
aquatic organisms, terrestrial life or human life.
 The land owned by the communities who lived
along the river did not fall within the Mine Lease Area. There had been no
formal agreements drawn up between these landowners, the corporation and the
government. Few social impact assessments had been carried out or contingency
plans put in place to take account of adverse impacts on river communities.
The preliminary planning had predicted that the sediment level in the Ok Tedi
River would be low. However, these early estimates proved to be very
inaccurate. By 1994 the sediment levels were 100 times higher than had been
predicted.
In 1992 some landowning groups who lived
along the river system and the Western Provincial Government sought legal
advice to restrain the corporation from further pollution of the Fly River
system. They were advised that although they appeared to have a warranted
claim, no local law firm had the resources to make the claim against BHP, the
managing company. Slater and Gordon, a firm of Australian solicitors, agreed
to act on behalf of at least 30,000 people who lived along the banks of the Ok
Tedi and Fly Rivers, representing over 500 clan groups in 102 villages, on a
fee deferred basis. Writs were lodged against BHP in the Supreme Court of
Victoria seeking injunctions to restrain the dumping of tailings into the
river system and a range of compensations to alleviate the damage. Victoria
was chosen in order to demonstrate to Australians the degree of damage the
Australian company had caused to the environment in one of its overseas
operations.
In May 1994, Rex Dagi, Alex Maun and two
others who derived their living downstream from the Ok Tedi mine, on behalf of
approximately 6000 villagers, lodged their claim in the Supreme Court of
Victoria, Australia, against BHP Minerals, the managing company and part owner
of the OTML, seeking Aus$2 billion in compensatory damages and $2 billion in
exemplarary damages plus an injunction to stop the dumping of tailings. Their
claim was that their subsistence livelihood had been severely damaged by
pollution of the river on which they depended. Two significant arguments were
offered by BHP's solicitors.
The first concerned the jurisdiction of the
Australian court to hear and determine the issues. While the Judge ruled out
some claims founded upon possession of land, he proceded with claims directed
purely at the activities of BHP and OTML. This has set a precedent for
bringing actions against a company under the laws of the company's home
country. BHP's response to the claim was that the mine operates in compliance
with Papua New Guinea law, and that their actions were further validated
because the national government was in fact a shareholder in the joint
venture. Throughout the two year period prior to the compensation claim coming
to court, BHP strongly maintained the importance of its compliance with Papua
New Guinea law.
In August 1995 the 'Eighth Ok Tedi
Agreement' was drawn up. It differed from previous agreements which had been
drawn up directly between the corporation and the government, insofar as this
new agreement specifically required the compliance of Ok Tedi and Fly River
landowners as well as compliance from groups in the mine lease area in the
vicinity of the mine. The Agreement offered a A$15.8 million lump sum and
A$4.5 million each year for the next 15 years of mining operations for the
river dwellers. OTML claimed that the long-term impact on the river system was
reversible in time and ultimately environmental damage would be mitigated by
natural regeneration. The Agreement was linked to legislation that effectively
prohibited further legal action by any landowners against BHP or any other Ok
Tedi partner. The Australian solicitors for the landowners in their claim
against BHP claimed that the Agreement denied the landowners access to due
process in court and abrogated the fundamental democratic rights of citizens
in disregard of international treaties and the PNG Constitution. The draft
bill to go before the PNG government to enact the Agreement, while providing
automatic compensation to local people for changes to their environment, also
reiterated the stipulations preventing landowners from making legitimate
claims for damages. The allegation was made by Slater and Gordon that BHP
lawyers contributed to the drafting of the Agreement in an attempt to block
legal actions coming before the courts in Australia. Justice Philip Cummins
ruled that BHP were in contempt by interferring with the administration of
justice when they collaborated with the PNG government to draft the Agreement
and enable the passing of legislation to end the massive environmental damages
claim. Slater and Gordon further applied for a restraining order to stop BHP
consenting to the legislation. BHP elected not to give its consent to the
bill.
The second significant argument put forward by BHP's
solicitors with regard to the claim of compensation due to negligence was
that, because the villages were subsistence dwellers, and because there was no
monetary loss, there could not have been economic loss, and thus the claim
should be struck out. Slater and Gordon's argument was that the environment
did provide a benefit which could be assessed in monetary terms, because of
the value that could be placed on the provision of the elements of their
subsistence which would have to be replaced because of the environmental
damage. This was upheld by the Judge.
In carefully worded advertisements in
prominent Australian newspapers, BHP sought to counter the adverse publicity,
concentrating on the benefits that BHP's involvement in the region had brought
in health, education and services. However, they did not adequately explain
how the benefit was distributed, and whether the people whose livelihoods
depended on the Ok Tedi and Fly Rivers were being appropriately compensated
for ongoing pollution and damage to the river system. The advertisements
provoked a complaint to the Advertising Standards Council by the Australian
Council for Overseas Aid, the Australian Conservation Foundation, and the
Australian Consumers Association. The finding for contempt of court was
subsequently struck out in the Court of Appeal on a procedural technicality,
but the compensation claim was to proceed.
In June 1996, BHP opted to settle the case
before it went to court. The key issue of the resolution had been to seek a
firm commitment to find an alternative tailings dump for the mine waste. BHP
as managing company in OTML undertook to work with the community to pipe the
tailings to unused land and dredge the Ok Tedi River. The cost of these
measures could total $A450 million. As well as the $A110 million compensation
deal reached with some villagers in 1995, another $A40 million would also be
paid to people in the worst-affected areas, particularly along the Ok Tedi
River, and to move villages and develop new business opportunities where
people had been deprived of a living by the pollution. The BHP settlement
costs also included the villagers' legal bill of $A7.6 million. All of these
costs will have to be met from future earnings from the mine which recorded a
profit of $A250 million in 1995.
The PNG Government increased its stake in
the mine from 20 to 30 per cent to apply the extra 10 per cent equity directly
for the benefit of the people of the Western Province.
During the operational stage of long term projects, problems
can arise which undermine local adjustments and community development programs.
Land acquisition settlements or compensation agreements are usually drawn up
through fixed legal frameworks appropriate for a particular set of circumstances
at a particular time. Corporations have to consider whether the initial
agreements allow them to deal appropriately with changes in local circumstances,
particularly given that initial agreements are based on predictions, and not on
actualities. Realities may differ from predictions in a number of ways that
affect sustainability. They mostly relate to the shift from a traditional
lifestyle toward more centralised permanent settlements and more reliance on a
cash economy. Projects impact dramatically on small-scale traditionally based
social systems where power, status, wealth and legality are not immutably fixed.
With the passing of time, the very presence of the mine brings change within
traditionally-based expressions of power and rights to hold and use land. Some
people who feel they deserve recompense may have missed out on receiving
benefit. Capital payments provided to original claimants may not be realised as
a benefit where it is most needed. Capital may also not be available as a
benefit by those who inherit the land in the next generation, but who will
inherit the damage to the land that has to be lived with. If the modern legal
system predominates as the basis for agreements to the extent that it overrides
premodern processes for settling issues, groups who express dissatisfaction with
projects, or particular aspects of a project, can become marginalised or ignored
by decision-makers. As social relations regarding land use, power and local
alliegance change and re-form over the term of a project in the light of new
circumstances, those managing the mine may no longer see how, within the
'modern' legal agreements that have been set in place, they can provide workable
solutions for new problems. Some of these elements contributed to the
dissatisfactions expressed on Bougainville which led to the rebellion in 1989.
In Papua New Guinea and in other third
world countries, backlash from local communities has been a contributing factor
to a shift toward decision-making and authority being taken up by provincial and
local governments. This shift alone will not necessarily alleviate the tendency
for corporations and national governments to control change by attempting to
eliminate or reduce conflict, based on the notion that groups who hold most
power are usually in the best position to look for the best solutions. The basis
for this assumption is that conflict is antithetical to teamwork and
productivity. From the perspective of planners and managers seeking to maintain
the mining project's schedule to stay competitive in the global economy, local
factional rivalries or the emergence of unexpected problems which affect local
communities can come to be seen as a risk which threatens their schedule, rather
than being an integral component of the scheduling. There has been a tendency
for corporations and governments to manage negotiatons primarily through
channels where they have most compliance. However, if existing local powerful
factions are 'harnessed' by decision-makers in order to gain compliance as
quickly as possible, a situation can develop whereby some groups are denied the
right and the means to define themselves, their rights, and their own way of
dealing with ongoing and new problems. 'Managing' how individuals should respond
to changing circumstances can drift toward 'coersion'.
The issues of compliance, agreement and
disclosure are at the heart of promoting short term and long term cooperative
relations, and consolidated planning about sustainability within an entire
region. Long term planning and commitment to sustainability will require
corporations to develop new management skills and new bases for agreements which
realistically define their own, and others' responsibilities in appropriately
broad terms, so they are empowered to respond realistically to gradual
adaptations to change which actually take place within local communities. This
can avoid the sudden emergence of new claims, interpretations, or demands where
corporate managers no longer perceive that they have the means or the
responsibility to make a response.
How the Corporation Extended its Areas of
Responsibility for Community Development
BHP, as the corporation with managerial responsibility
over OTML, responded to the adverse publicity about the environmental damage
by justifying the corporation's performance, responsibilities and libabilities
in terms which are more meaningful to audiences who take for granted the
benefits of a modern lifestyle. The public relations material did not present
a balanced appraisal of how the pollution problems were actually impacting on
sustainability. Their focus was to report on the amount of money that was
being invested in community development programs, rather than explicitly
specifying how the compensation was being distributed.
Tabubil, which by this time had a population of over
10,000, had been subsidised to become the largest regional centre in the
western part of Papua New Guinea, providing many services for local
communities, non-government and government agencies. The corporation had made
vast contributions toward this local infrastructure, establishing primary and
secondary schools, churches, a hospital and an extensive health program, a
supermarket, open markets and a large number of localy owned businesses which
in various ways were connected to the presence of the mine. The Min people,
particularly the immediate lease landowners, had been the predominant
beneficiaries of programs to establish entrepreneurial businesses. OTML
through its community relations teams have worked to address and respond to
many of the openly expressed and more covert new rivalries between groups, as
people from other tribal groups, including the river communities, have been
attracted to the town and have attempted to emulate the business opportunities
being developed by Min people. Before the court case, one of the unresolved
issues was whether the corporation or the government should assume ultimate
responsibility and develop processes to deal with troubling and conflicting
perceptions of unequal development throughout the overall region of Western
Province. Given that the mine was into the production stage, there was contention as to
whether the corporation or the national government was contractually obliged
to provide capital realised as revenue from the mine for obviously-needed
compensation to landowners who lived outside the legally-defined mine lease
area. The majority of the corporation's community development budget continued
to provide benefit to those who were legally entitled to it, those who lived
within the mine lease area.
Because the tailings dam was not built, landowners
within the mining perimeter did not have to contend with the significant issue
of waste disposal. While the establishment of the mine undoubtedly brought
profound dislocation, and therefore impacted directly on the lifestyle of Min
peoples, the corporation had been offsetting this disadvantage and assisting
groups with cultural and social transformations through development programs
for many years. The environmental impact, which was a direct hazard to health,
well-being and personal security, was felt most severely by the villagers who
lived further down the Ok Tedi and Fly Rivers who were not accounted for in
former formal agreements originally drawn up between the corporation and the
government.
 The priority for the Ok Tedi and Fly River landowners
was to stop tailings from entering their river system. It had caused
considerable disruption to their traditional lifestyle, and offered them very
few of the perceived advantages offered to Min groups. Their decision to take
their claims through the Courts both in Papua New Guinea and Australia has
resulted in a significant precedent for actions concerning environmental
pollution. Of equal importance and significance, it provided the catalyst and
the opportunity to create a new working arrangement with the corporation. OTML
agreed to extend the scope of the Fly River Development Trust in order that
all groups can now receive benefit from the mine in a spirit of co-operation.
The litigation provided recognition that the rights and needs of people from
subsistence lifestyles can not be relegated in importance, and that they can
have adequate standing to pursue claims for social justice through courts. The
litigation also prompted significant motivation for change in corporate
culture which had previously taken the attitude that it is enough to adhere to
standards, regulations and processes instituted by the host country. It set a
precedent that transnational corporations can be made accountable in their
home country, both through the legal system and through public opinion, once
relevant information is accessable which would not necessarily be publicly
disclosed or debated. The initial agreements had not incorporated the rights
of traditional owners as an important starting
point for negotiations. The responses of the communities who
subsequently made claims both against the corporation and the government were
treated as 'problems' to be resolved and dealt with by those whose primary
concern was to maintain the mine as a viable means of returning a benefit on
their vast investment.
Recitifcation
A community consultation program has been established to keep
stakeholders informed of current scientific research work to mitigate the
environmental degradation. In 1997 a compensation agreement was made for the
use of land where a dredging trial would be set up. Although the trial is not
yet complete, studies suggest it will deliver only limited environmental
benefits.
Dredging entails digging a slot two kilometres long, 140 metres wide and
eight metres deep in the river bed. The slot traps sediment, and the dredge
removes it in a continuous operation. With less sediment in the river, the
channel downstream should gradually erode down toward its original bed level,
and gradually decrease the flooding frequency. The sediment removed by the
dredge is being placed onshore within one-kilometre-square sediment
embankments.
This operation has so far removed at least 10
million tonnes of sediment from the river bed. The chemical characteristics of
the waste material will change when removed from the water. The embankments
will be revegetated and monitored for toxicity levels in consultation with
local people. The corporation assert that the river water consistently shows
copper concentrations are within World Health Organisation drinking water
standards, and that where fish still live in the river, they are safe to eat,
but local people remain doubtful that the water is safe.
OTML have investigated more than fifty alternative
waste disposal schemes, but have not been able to devise any system that will
successful and reliably retain mine waste. It is apparent that no one action
will resolve all the issues which allow the mine to operate workably without
polluting the river over the remaining ten years of mine life. Early mine
closure would provide the most straightforward environmental solution, but at
this stage it would also have the greatest adverse social impact. Immediate
closure would not allow the necessary time and funds to more gradually put in
place compensatory economic programs, given that many people now rely on a
cash economy which is heavily dependent on the mine, and there are presently
no other significant modern economic activities in Western Province.
The General Issues in this case study
work through some of the inter-related issues that arise in relation to
different stages of a mining project. The very first stage relating to
preliminary agreements appears to be the most straightforward. However, the
complexities of the subsequent stages all relate back to underlying assumptions
held by top level managers who draw up the initial agreements. Corporations are
driven by an imperative to secure land and begin to recoup profit as quickly as
possible. It is one of the single most important features of both their own and
a national government's timetable in terms of financial flows and security for
the venture. This pressure can contribute to short-sighted settlements between
groups who hold the most power and influence, and share common ideological and
economic aspirations. One of the underlying problems with 'development' programs
where the goal is to inject vast amounts of money into a region is that the
distribution of money in itself does not create a capitalist economy, and this
is particularly so when there are ideological and practical gaps in how that
money can be directed toward capitalist enterprises equitably.
The Way the Mine has Impacted on Local Life Styles and
Life Chances
Two different stories emerge about Ok Tedi and
sustainability.
-
The first consideration is whether the development
programs and infrastructure planned and put in place during the establishment stage for Min people living in
the vicinity of the mine lease area can be sustained once the mine closes.
The economic activity and development programs introduced throughout the
last two decades have injected vast amounts of capital and modern
infrastructure into the region. The goal has been to offset the social and
environmental change incurred by the Min people who can no longer rely on
their traditional land for subsistence.
A major development program has been to provide
health services. Tabubil Health Centre has a 24-bed hospital, a 10-bed
isolation unit and an outpatients department. It was primarily established
to provide facilities for its workforce and mine lease villages, but it
treats more than 12,000 patients a month. The medical services cover
medicine, surgery, obstetrics, maternal and child health clinics, family
planning, cervical cancer testing, dental laboratory, X-ray, occupational
health, community health and public health. Mass X-ray screening is
undertaken for tuberculosis, respiratory disorders and heart disease. There
is also an internationally recognised malaria control and research program.
This has, according to OTML, brought the following changes since the project
started:
- Infant mortality down from 300 per thousand to
less than 15 per thousand.
- Average life span up from 30 years to more than 50
- Incidence of malaria among village children down
to less than 15% from 70%, and among adults to 6% from 35% (in about a
40km radius of the mine).
The health services may not be maintained at this
high level by government or non-government agencies if the town cannot
maintain its role as a modern regional centre with amenties such as shops
and supporting community services which maintain public health in an urban
environment. It is also questionable whether the government or
non-government agencies will be able to maintain the present range of other
services to the area, including communications, transport and educational
facilities. The Ok Tedi mine still has a ten year life, but if it closes
earlier, it is debateable whether the Min people, and other groups who have
been drawn to the town, will actually still have available the physical and
economic infrastructure necessary to continue to participate in the cash
economy in a sustainable way.
-
The second consideration is whether the adverse
affects on the river system , and the belated development of compensatory
programs now being put in place will provide a sustainable future for the
Awin, Ningerum, Yonggom people and many other linguistic groups living
further down the Ok Tedi and Fly Rivers. Through the Fly River Development
Trust which was established in 1990, OTML have initiated some community
development enterprises. The corporation has established aid posts, tanks
for the storage of clean water, clinics and health sub-centres in strategic
villages along the Ok Tedi/Fly River system, access roads for some villages,
ferries and bridges. Some commercial enterprises now provide employment,
most of which is dependent on Tabubil, but other enterprises could continue
if alternative markets can be found after the mine closes and the township
diminishes. The advantage for the people living along the rivers is that,
even allowing for the disruption that the environmental pollution has
brought, they can develop enterprises while still essentially retaining
their traditional village based social system. They have experienced far
less social and economic dislocation than those groups who live closer to
the minesite.
The advent of Ok Tedi, and other mines in the western
region of Papua New Guinea, including Porgera in Enga Province, and the
Freeport in Irian Jaya have prompted rapid transitions as people who had
previously maintained small-scale subsistence lifestyles in relative
isolation shifted toward an urbanised lifestyle using modern amenities
eminating from the township of Tabubil. The introduced infrastructure relies
for its very existence on the vast resources of the corporation and its
financiers in the global economy. The economic driving force that created
Tabubil will ultimately be re-directed to serve the next mining project when
Ok Tedi closes. It will create a similar cultural and social enclave
elsewhere, designed primarily to serve the modern needs and expectations of
mine workers and their families.
The mine presently employs 18000 people, 90% of whom
are Papua New Guineans. Another 1000 work for contractors and service
providers. Many send part of their earnings to local villages throughout PNG
These jobs generate Kina 18 million in wages and related revenue. Another
Kina 20 million is paid to the national government in taxes. OTML has
contributed Kina 300 million in community infrastructure and local business
and agricultural programs. When the mine no longer operates, there is great
uncertainty as to how the different tribal groups will perceive the
developments that the mine has brought to their region, and how they will
relate to each other, the regional and national government, and other
resource development corporations.
Reporting About Development and Sustainability
Most of what outsiders know about the impact of change
on the local communities comes through media reporting or community relations
material from the corporation. Many representations about changes the
operations have brought are at odds with one another, because they belie the
complexities of the project over time and place. It is unlikely that many of
the stories and issues that local people are contending with would be so well
known if the tailings dam issue had not generated such broad and controversial
publicity abroad. Since the settlement of the claims which came before the
Australian courts, OTML offer a far more balanced representation of the issues
associated with Ok Tedi. However, like most large organisations, they are
inclined to present issues selectively. Publicity for audiences who take for
granted the benefits of a modern lifestyle represent the contrasts of a
corporation bringing rational and scientific culture to a 'timeless'
traditional landscape. The corporation also presents images that in subtle
ways contradict this image of a 'backward' people, because they also represent
the common commitment and the active, vibrant and meaningful participation by
local people who have been keen to adapt their skills and contribute
significantly to work on the project. These seemingly contradictory
representations are all part of the reality for local people coping with
practical adjustments to a contemporary situation.
Rather than whether the representations are 'true' or
'false', the key issue is how the corporation exercises its degree of control over public images and
perceptions of local people, whose lives are now inextricably enmeshed with
the project. There is no doubt that the story of the Ok Tedi mine tells of a
massive planning and engineering feat. However, until the court case, local
people had little opportunity to express some major contradictions they felt
about the corporation. The way modern technology and scientific expertise was
applied within the physical, political and social climate of the region
entailed many significant shortcomings. Until OTML and BHP were forced by
public opinion in Australia and elsewhere to make broader disclosures, there
was an unwillingness to concede that predictions about the mine's impact on
the regional eco-system had been grossly inaccurate, and in fact some
disclosures were inaccurate or biased to the point of misrepresentation. The
corporation and the national government sought to maintain control over how
the mine's impact on the regional eco-system , and therefore on the lives of
local people, was reported. It was biased to promote how the corporation had
given 'backward' people opportunities to reap the benefits of modernity.
However, the underlying contradiction that is now evident is that modern
technology cannot offer solutions to rectify the vast environmental damage and
consequential social upheaval, due primarily to unanticipated levels of
pollution created by the mine. Affected stakeholders had a right to be
informed and express their concern about how the corporation would work
through the inherent difficulties of operating in challenging tropical
rainforest conditions. Given the vast scale of the project, and the fact that
many of the early predictions relating to the mine's impact on the eco-system
were based on inaccuracies, some of the long-term outcomes for the river
system, the Gulf of Papua, and for Australian coastal zones, such as the
Barrier Reef, at this time must be unknowable.
There was also a profound contradiction felt by local
people about the decision-making processes adopted by corporate management.
The corporation, with its enormous wealth and ability to impose changes over
an entire region, 'managed' community relations within a vast hierarchical
structure. This meant that decisions which directly affected local people were
made by people who did not and would not in the future have to live with the
outcomes in the region, and many lived outside Papua New Guinea. Local people
had been used to small-scale traditionally based lifestyles. Decisions which
directly affected their lives, and the lives of future generations in the
region, were being taken by top-level managerial people within the corporation
who had only a 'filtered' version of local people's experiences coping with
the adjustments to the consequences of the mining operation. From a local
perspective, the shift away from inclusive small-scale social processes to a
relatively impersonal hierarchical structure for making decisions about local
resources itself presented a major contradiction. Despite earlier assurances
that the mine would bring benefits, the reality that prompted the river
communities to seek redress through the courts was that they were not even
being compensated for unanticipated severe disadvantages caused by pollution.
There were few actual 'advancements' in the way scientific and rational
culture was being applied. In fact, because the corporation controlled most
reporting of the project, local people had been disempowered and marginalised.
Sustainability will ultimately rely on holistic,
inclusive decision-making processes, and more open and transparent reporting
procedures. BHP Managing Director and CEO, Mr Paul Anderson, commented in
August 1999 that the reports, considered as a whole, illustrate the difficulty
of finding a way forward for the mine. "There are no easy answers offered by
these reports for BHP, the other shareholders in the project or for Papua New
Guinea. But we are determined to find the best answer. Having considered the
environmental and social reports, we feel the responsible course of action is
for the mine to continue to operate while the PNG Government, shareholders and
local communities decide on the longer term future for the mine.
"Obviously, the PNG Government and the local
communities will need to find how to best balance their short term and long
term interests with the environmental impact of the mine. The future of the
mine is ultimately their decision. The PNG Government and local communities
have so far indicated that they do not want the mine to close. From BHP's
perspective as a shareholder, the easy conclusion to reach,with the benefit of
these reports and 20/20 hindsight, is that the mine is not compatible with our
environmental values and the Company should never have become involved. That
is the easy conclusion. The difficult issue we face is where to go from here.
More than 50 000 people depend on the economic activity the mine generates."
"BHP will need to decide what its future involvement
with the mine should be. In doing so, and recognising that OTML will be
consulting local communities and affected landowners, BHP will seek the views
of the PNG Government, the Australian Government, the World Bank and
non-government organisations."
One of the major issues facing the people of Western
Province, according to the Minerals Council of Australia, is that there is a
"shortage of human capital and skills". There are underlying biases,
contradictions and gaps in this representation of the issues. It assumes that
the particular 'public'being addressed need only concern itself with 'modern'
skills and opportunities. What is being denied is an equal representation of
how people in Papua New Guinea express, and have expressed for thousands of
years, their human capital and skills. This is part of the perceptual problem
that is at the heart of changing decision-making processes to ensure
sustainable futures.
The Probable Long Term Legacies of Ok Tedi's Presence
in the Region of Western Province
Since the court case, OTML has extended its community
programs to encompass the needs of both Min peoples and river communities. A
Food Security Working Committee which has input from OTML, local and
provincial governments and local communities, are developing:
- development of the Star Mountain Clothing Factory in
Tabubil, a wholly locally owned enterprise combining local talent and
training skills provided by the Tropical North Queensland Institute of TAFE.
- Community-based training programs in crop production
and livestock management, breeding and distribution of poultry, rabbits and
goats and food crop research, the development of superior crop varieties,
including local staples and introduced crops such as rice. They are also
developing studies as to the viability of other sustainable cash crops, such
as pineapples, chillies and other spices. The programs are also introducing
agricultural resource packets into local schools.
- Through the Fly River Development Trust, they have
established North Fly Rubber Limited in partnership with OTML. Another
company, Team Rubber, has also been established near the port of Kiunga,
which is an alliance between OTML, Western Province Division of Agriculture
and Lifestock and North Fly Rubber Limited.
- Commercial fishing enterprises have been
developed. The produce is presently sold to catering and food outlets in
Tabubil. OTML have constructed and installed freezer storage facilities at
Obo and Manda.
The development of more sophisticated and
universally accepted social and environmental impact auditing mechanisms, such
as those being developed within the UN (see references), are leading the way for
projects to be evaluated not only for the quality and quantity of initial social
assessment material, but the quality of processes which corporations and relevant
government agencies instituteto apply their understanding of local circumstances
in decision-making. Impact assessments are articulating why it is not enough for
corporations simply to express a high respect for traditional ideologies,
values, protocols, and decision-making mechanisms; they must go further and set
in place processes which address all groups rights and responsibilities in the
light of changes that projects actually bring to the lives of local people.
Broader-based cross-sectoral and cross-cultural decision-making processes will
help to accommodate traditional attributes and uphold all peope's rights to be
clearly understood and able speak on their own behalf. This would articulate a
clearer recognition of the stresses that indigenous communities undergo as they
attempt to identify potential advantages and disadvantages in micro-economic
terms. They will be attempting to identify and weigh up the significance of
offered incentives against the social change that will result from the mining
activity which impacts on their lifestyle and their sense of belonging. If a
'modern' approach toward managing cross-cultural change predominates, those in
control can lose sight of the fact that the goals of local people will be far
more ambiguous, complex and profound. Local people will be making comparisons
between past, present and future uses of land and life style choices. There is a
long way to go toward overcoming the inherent contradictions between the rights
of local communities to benefit from development and the rights of both
corporations and governments to participate competitively within the global
economy.
Large corporations are adapting to think
more strategically about the balance they control between 'persuasion' and
'coercion', and how this is integral to their relationship with both national
governments and local communities. Backing out of eco-catastrophes is becoming
increasingly more complex and costly for corporations. Adverse perceptions of
corporate management are beginning to be expressed through networks which
actually support the mining industry, such as insurance companies, as well as in
the way that 'global risk' is being politicised through international agencies
such as the UN or through environmental movements. People who work in the mining
industry are confronted with an increasingly more apparent moral dilemma, as in
many different localities, resource development projects fail to fulfil promises
to maintain adequate environmental standards and help alleviate poverty and
provide access to the benefits enjoyed by wealthy countries. One way of coping
with this dilemma is to account for environmental problems that occur in third
world countries through relativist ethics, whereby a corporation's actions and
ensuing problems are interpreted as having been determined by the state of the
system at a particular time. Limiting responsibility through such justifications
means that the problems of poor or less powerful people can be abandoned, and
this can also extend to abandoning poor countries. This approach to the politics
of social/environmental problems has been dubbed 'eco-Fascism'. However, in
first world countries such as Australia, as a higher number of environmental
officer positions, and even senior management positions, are filled by people
whose understanding and skills are drawn from outside the conventional corporate
recruitment pools, the debate about environmental ethics is being more
meaningfully incorporated into the cultures of organsiations.
The requirement to actually demonstrate
environmental accountability is prompting corporations to confront and modify
accepted conventions about public disclosure. In some circumstances, disclosures
about environmental performance are being represented as a facet of corporate
competitive advantage. However, it still remains challenging to imagine how
corporations could make equivalent disclosures as to how they address social
impacts. What may at least be possible in the future are more meaningful
discloses about the actual processes that
have been instituted by the various stakeholders to deal with the complexity of
cross-sectoral and cross-cultural problems, agreements that are not simply based
on systems that serve the legitimate purposes of the most powerful groups. A
corporation which can specify the processes they have adopted to address
sensitive and complex social issues is in a better position to articulate
accountability for social outcomes.
To benefit from organisational
innovation, corporations are beginning to think and act holistically, rather
than outsourcing functions which were formerly considered beyond the scope of
conventional corporate managers. Participatory processes which empower local
communities and allow them to share control for monitoring and responding to
change is still somewhat alien within existing corporate culture, but
increasingly there is a recognition that sharing power can be a way of staying
competitive and profitable. It is less straightforward to envisage what
incentives will induce government agencies to similarly share power. Their focus
is control, so they have less incentive to share power, and this issue becomes
more critical and prone to stress in third world countries. It therefore still
remains challenging to guage how the trend will develop to build into the
relationships between organisations the ethics which address social change,
unequal development and sustainability.
The fundamental question that needs to be
addressed relating to long term sustainability is what type of training and
problem-sovling skills are being developed within mining corporations and other
associated organisations to bring about alternative non-coercive change which
does not simply suggest, for either corporations or local indigenous people, a
world of local self-sufficiency based upon small communites. The hope is that
better intermediary skills will prompt participants from different backgrounds
and ideologies to address change which looks for modifications within present
systems - means which are not necessarily anti-technology, but against the
social relations that lead to technology being used as an instrument of control.
- 'Why' and 'when' do events turn a mining project into
a social and/or environmental drama.
- Which groups are experiencing the consequences most
severely?
- How are they presently coping and how are they likely
to cope in the future?
- Who is providing the information about these issues?
- Who has made the important decisions, why were they
taken, and who is taking responsibility for them?
- Who else is experiencing consequences from the
project?
- Why is an understanding of the sequence of
decision-making important for dealing effectively with rectifying
environmental problems?
- What is the regional, national and international scope
of the project?
- What is the regional, national and international scope
of the problem-solving?
- What practical skills and processes will help to
address unequal development?
- How does OTML describe 'benefits'?
- What time frame do the benefits cover?
- Do local people describe benefits differently?
- Who do you think should control the distribution of
benefit?
- If you refer to the web pages, which ones do you think
offer large organisations new intermediary skills which can be applied in
real-life situations?
- How would you describe the dilemma about
responsibility for recitification of the Ok Tedi/Fly River? It is primarily:
- A North-South issue, a conflict about legal/illegal
actions?
- An issue of control over natural resources?
- An issue to retain or enhance a way of life?
- A conflict over broader religious, moral and
environmental issues?
Barth, Fredrik and Unni Wikan, (1982) Cultural Impact of the Ok Tedi Project: Final Report.
Boroko: Institute of Papua New Guinea Studies. 56pp.
Barth, F., (1983) 'Cultural Impact Study of the Ok Tedi
Project' in Bikmaus, Vol. 4, No. 1, pp. 56-65.
Broken Hill Proprietary Co. Ltd.,
BHP and Ok Tedi: The Facts, September 1995, 7pp. BHP Melbourne.
BHP Websites:
http://www.bhp.com.au/environment/oktedi/oktedi.htm
http://www.bhp.com.au/press/bhp_press/data/19990811a.htm
Brunton, Brian D. (1988) ‘The Miners Strike at Tabubil’
Times of PNG 20-26 October 1988
Burton John E. (1991) The Ningerum
LGC Area. Ok-Fly Social Monitoring Project Report No. 2. Report for OTML.
Waigani: Unisearch PNG
Burton, John E., (1993) General
Overview and 1992 Advance Report Summary for Ningerum-Awin Area Study.
Report for Ok Tedi Mining Ltd. Ok-Fly Social Monitoring Project Report No. 3,
Waigani: Unisearch PNG.
Burton, John E. 1994 ‘Local-level Mining Benefits in a
Mal-Administered Regional Economy: The Case of Western Province, PNG’ Paper
delivered at Workshop on Mining in the Asia-Pacific Region, ANU, 18-20 September
1994 18pp.
Byrne, G.M., Ghiyandiwe M.M. and James, P.M. (1978) Ok Tedi Landslide Study,
GSPNG Report
Donaldson, T., (1991) 'Multinational Corporate Ethics:
Rights and Norms' in (eds.) Sethi, S.P., Steidlmeier, P. & Falbe C.M., Scaling the Corporate Wall, Prentice Hall, New
Jersey.
Dorney, S., (1989) "Earnestness and Exotica: A Foreign
Correspondent and the Elections" in King, P., (Ed.) Pangu
Returns to Power: The 1982 Elections in Papua New Guinea, Political and
Social Change Monograph 9, Department of Political and Social Change, Research
School of Pacific Studies, Australian National University, Canberra. pp.
51-58.
Durkin, P., (1995) 'Scrutiny of Australian Companies
Operating in Asia: Is There a Need for Greater Home Government Appraisal?' in Australian Environmental Law News, No. 4, pp.
51-58.
Filer, C., (1996a) 'The Melanesian Way of Menacing the
Mining Industry', in B. Burt (ed) Environment and
Development in the Pacific, National Centre for Development Studies,
Australian National University, Canberra.
Filer, C., (1996b) 'The Dialectics of Negation and
Negotiation in the Anthropology of Mineral Resource Development in Papua New
Guinea' Papua New Guinea National Research Institute, University of Papua New
Guinea.
Gerritsen R. & MacIntyre, M., (1991) 'Dilemmas of
Distribution: The Misima Gold Mine, Papua New Guinea' in (eds.) Connell, J.
& Howitt, R., Mining and Indigenous Peoples in
Australiasia, Sydney University Press
Gordon, J., (1996) Environmental
Litigation: The Ok Tedi Example, address to the Environmental Defender's
Office Perth. Slater & Gordon, Barristers and Solicitors, Melbourne &
Perth.
Hughes, P.J. & Sullivan, M.E., (1992) The Environmental Effects of Mining and Petroleum
Production in Papua New Guinea, University of Papua New
Guinea.
Hyndman, David C., 1987, ‘Mining, Modernization and
Movements of Social Protest in Papua New Guinea’, Social
Analysis 21:20-38
Hyndman, David C. (1988) ‘Ok Tedi: New Guinea’s Disaster
Mine’ The Ecologist 18(1): 24-29
Hyndman, David C. (1988) ‘Melanesian Resistance to
Ecocide and Ethnocide: Transnational Mining Projects and the Fourth World on the
Island of New Guinea; In J.H. Bodley (ed) Tribal Peoples
and Development Issues, Calfornia: Mayfield Publishing Co.
Hyndman, David C. (1991) ‘Wopkaimin Landowners, the Ok
Tedi Project and the Creation of the Fly River Socio-Ecological Region’ In
D.Lawrence and T.Cansfield-Smith (Eds) pp. 355-365.
Hyndman, David C. (1991) ‘Zipping Down the Fly on the Ok
Tedi Project’ In (Eds) John Connell and Richard Howitt, Mining and Indigenous Peoples in Australiasia, Sydney
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Hyndman, David C. (1995 Ancestral
Rainforests and the Mountain of Gold: The Political Ecology of the Wopkaimin of
New Guinea, Boulder, Westview Press.
David Hyndman - Changing relations of production in the
creation of the Ok Tedi mining enclave in Papua New Guinea
http://coombs.anu.edu.au/Depts/RSPAS/RMAP/hyndman.htm
Jackson, Richard T. (1988) ‘The Australian Colonial
Experience in Papua New Guinea; In R.L. Heathcote (ed.) The Australian Experience: Essays in Australian Land
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Jackson, Richard T. (1993) Cracked
Pot or Copper Bottomed Investment? The Development of the Ok Tedi Project
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Cook University of North Queensland
Jackson, Richard T. (1991) ‘Not Without Influence:
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Jorgensen, D. (1990 ‘The Telefolip and the Architecture
of Ethnic Identity in the Sepik Headwaters’ In B. Craig and D. Hydnman (Eds) Children of Afek: Tradition and Change among the
Mountain-Ok of Central New Guinea, Oceania Monograph 40, Sydney: University
of Sydney pp. 151-160.
Ka’au, J. (1993) ‘Hear the Landowners – They are the
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Trust. Report for Ok Tedi Mining Ltd. Waigani: Unisearch PNG Pty. Ltd.
King, Peter (1982) Papua New
Guinea: 1981 AJPH 28(3):465-470
Kirsch, Stuart, 1989 ‘The Yonggom, the refugee camps
along the border, and the impact of the Ok Tedi mine’, Research in Melanesia 13: 30-61
Lamb, K.P., 1977 ‘Copper Mining on the Ok Tedi and Upper
Fly Rivers’ in John H. Winslow (ed.) The Melanesian
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Lindenbaum, S., (1994) ‘Reflections on the Production of
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nutritional status of the Wopkaimin of the Star Mountains, Papua New Guinea’ Journal of Anatomy 142(8):230
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Australia, Dickson, ACT
Minerals Council of Australia Websites:
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http://www.minerals.org.au/schools/ok_tedi2.asp
McGill, S.C., (1983) ‘Project financing Applied to the Ok
Tedi Mine- A Government Perspective’ Natural Resources
Forum 7(2):115-129
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Nurse, G., (1990) ‘The Dynamics of Changes in Health
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Politics and Culture in a Mining Township in Papua New Guinea’ in Identities Vol. 1 No. 1, pp. 63-84.
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for the Environmental Management of Australian Mining Companies Operating in
Papua New Guinea. A Discussion Paper, Australian Conservation Foundation,
Fitzroy, Vic.
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BIBLIOGRAPHY OF INFORMATIVE OR INTERESTING WEBSITES
RELATING TO RESOURCE DEVELOPMENTS/DECISION-MAKING AND CONFLICT RESOLUTION
Asia Pacific Research Institute at Macquarie
University
http://www.aprim.net/
Australian Centre for Mining Environmental Research
http://www.emiaa.org.au/emiaaw/acmer.htm
Berghof Research Center for Constructive Conflict
Management, Germany
http://www.b.shuttle.de/berghof/index.htm
Bibliography of Consensus Decision Making
http://au.spunk.org/texts/biblio/sp000880.txt
Canadian Government Peacebuilding Network with links to
The Canadian International Development Agency (CIDA)
http://www.dfait-maeci.gc.ca/peacebuilding/index-e.asp
Centre for Conflict Resolution, South Africa
http://ccrweb.ccr.uct.ac.za/
Centre for International Development and Conflict
Management, University of Maryland
http://www.bsos.umd.edu/cidcm/
Centre for Creativity, Strategy and Change, Warwick
Business School
incorporating Corporate Citizenship
http://www.wbs.warwick.ac.uk/school/research.htm
Centre for Rural Development and Training, University of
Wolverhampton
http://www.wlv.ac.uk/crdt/indexm.htm
Centre for Social and Environmental Accounting Research,
University of Dundee
http://www.dundee.ac.uk/accountancy/csear/
Centre for Sustainable Design
http://www.cfsd.org.uk/
Community Aid Abroad – Indonesian Project
http://www.caa.org.au/pr/1998/ptkem.htm
Conflict Resolution Consortium, University of Colorado,
Boulder
http://www.Colorado.EDU/conflict/
International Online Training Program On Intractable
Conflict of specific interest
http://www.colorado.edu/conflict/peace/
Contemporary Conflicts in Africa
http://www.synapse.net/~acdi20/welcome.htm
Corporate Watch – Report on Freeport Mine in Irian
Jaya
http://www.corpwatch.org/trac/feature/freeport/enviro.htm
CSIRO Exploration and Mining
http://www.dem.csiro.au/
CSIRO Minerals – Ok Tedi Research
http://www.minerals.csiro.au/public/work/stories/pr_okt.htm
Earthwatch Australia
http://www.earthwatch.org/australia.htm
Economic Strategy Institute
http://www.econstrat.org/
Eldis – A Gateway to Development Information from the
UK
http://www.ids.ac.uk/eldis/
Environment Australia Online
http://www.environment.gov.au/index.htm
http://www.environment.gov.au/epcg/esd/nsesd/conflict.htm
The Environmental Technology and Public Policy Program,
MIT, USA
http://web.mit.edu/dusp/etpp/index.htm
Five E’s Website – Ecologic Economic Equity Evaluation
Education
http://www.eeeee.net/
Florida Conflict Resolution Consortium
http://www.ispa.fsu.edu/consensus.htm
Foundation for Business and Sustainable Development,
Norway
http://challenge.bi.no/default.htm
Freeport Mine, Irian Jaya - Report
http://www.cs.utexas.edu/users/cline/papua/mines.htm
Global Vision – Communicating Sustainability
http://www.igc.apc.org/glencree/gvtrust.htm
Institute for Global Communications (IGC)
http://www.igc.org/igc/gateway/about.htm
International Cooperative for Environmental Leadership
http://www.icel.org/
International Centre for the Environment and
Mining and Environental Research Network
http://www.bath.ac.uk/ICE/
International Centre for Trade and Sustainable
Development, Geneva
http://www.ictsd.org/default.htm
International Institute for Asian Studies - Dutch
Resources
http://iias.leidenuniv.nl/index.htm
International Institute for Environment and
Development
http://www.oneworld.org/iied/index.htm
International Institute for Negotiation and Conflict
Management, School of Law, University of Technology, Sydney
http://www.law.uts.edu.au/iincm/index.htm
Kalimantan – John Land Report
http://jinx.sistm.unsw.edu.au/~greenlft/1998/305/305p17.htm
Mining and Sustainable Development in the Americas
http://www.idrc.ca/mpri/index_e.htm
Mining & Petroleum Info Page - Gateway to Australian
mining & petroleum companies on the world wide web
http://www.oberon.com.au/Mining_InfoPage/
Mining in Indonesia
http://www.kalimantan.com/indonesiamap.htm
Organisation for Security and Cooperation in Europe - The
Economic and Environmental Dimension
http://www.osce.org/indexe-gi.htm
Participation in International Development
http://trochim.human.cornell.edu/gallery/katsumot/shuzo.htm
Peace Science Society (International)
http://pss.la.psu.edu/
PEACE Foundation, (Planning Education Agriculture
Community Environment) University of Natal
http://www.medimage.co.za/und/peace/peace.htm
People, Land Management, Environment and Change
http://202.253.138.133/Scripts/dbml.exe?TEMPLATE=/ENV/PLEC/index.dbm&type=1
Program on Negotiation, Harvard University
Executive Education Series – Creating and Managing
International Business Relationships. New Strategies for Preventing and
Resolving Conflicts with Foreign Partners
http://pon.execseminars.com/international/index.htm
Program on Nonviolent Sanctions and Cultural Survival,
Harvard University
http://data.fas.harvard.edu/cfia/pnscs/
Research Institute for International Technical and
Economic Cooperation
http://www.rwth-aachen.de/fiz/Ww/English/Research/Forsch.htm
Research School of Pacific and Asian Studies -
Departments
http://rspas.anu.edu.au/depts.htm
Research School of Pacific and Asian Studies – Resources
via Coombsweb
http://coombs.anu.edu.au/
John Rivers - Building Trust Between Landowners and
Mining Companies for Community Development
http://rspas.anu.edu.au/melanesia/rivers.htm
Resolve - Center for Environmental and Public Policy
Dispute Resolution
http://www.resolv.org/Default.htm
Society for Professionals in Dispute Resolution
http://www.spidr.org/
SustainAbility
http://www.sustainability.co.uk/sustainability.htm
ToBi – NGO Taskforce on Business and Industry
http://www.coopamerica.org/isf/isfmain.htm
United Nations Conference on Trade and Development
http://www.unctad.org/en/hopebook/main.en.htm
United Nations Social and Economic Policy Forum
http://www.globalpolicy.org/socecon/
World Bank Research
http://www.worldbank.org/research/
http://www.worldbank.org/html/fpd/mining/index.htm
World Bank – The Economics of Civil War, Crime and
Violence
http://www.worldbank.org/research/conflict/projparticip.htm
Worldwatch
http://www.worldwatch.org/
Dimo Yagcioglu – Conflict Resolution and Ethnicity Home
Page
http://www.geocities.com/Athens/8945/
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