Hidden Valley case raises the spectre of Ok Tedi

Matthew Stevens
Matthew Stevens

January 9th, 2011, 1:13 pm #1

http://www.theaustralian.com.au/busines ... 5983870511

From the Australian newspaper

Hidden Valley case raises the spectre of Ok Tedi
Matthew Stevens From: The Australian January 08, 2011 12:00AM
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IS Sam Basil the new Rex Dagi?

Sam Basil is the energetic and thoroughly modern member for Bulolo in the Papua New Guinea parliament and he is making a bit of a name for himself right now having launched uncertain legal action against the operators of his country's newest gold mine, Hidden Valley.

Basil is said to be seeking compensation for 110 landowners whose crops were damaged in recent flooding of the Watut. River. He claims the river's overflow was amplified by sediment produced by run-off from the construction of the mine.

While not accepting that the spoiling of locals crops and gardens was due to mine waste, the Hidden Valley JV has made a series of what it describes as "voluntary payments" to local communities and established an advisory panel to review the impact of the mine on the Watut river system.


Related Coverage
Stockwatch: key stock movements The Daily Telegraph, 2 days ago
MP sues Newcrest over PNG goldmine The Australian, 3 days ago
Newcrest JV hit by lawsuit The Australian, 3 days ago
Rising prices boost mine hopes The Australian, 27 Dec 2010
An opportunity to kickstart economy The Australian, 27 Dec 2010

Inevitably, Basil's challenge to the operation of Hidden Valley raises the spectre of Ok Tedi, that extraordinary legal and ethical landmark in the engagement of global mining with resource-rich Third World host nations.

For all the vast differences between the two operations and their potential to pollute the local river systems, Ok Tedi certainly seems to be at the front of Basil's mind.

On his Facebook page, Basil says he intends to sponsor land owners around Hidden Valley and local politicians on a tour of some of the more contentious mining sites around PNG. Basil named Ok Tedi, Lihir and the now closed Misima mines as the three he would like to show his people.

But the difference between any and all of these operations and Hidden Valley is vast. Indeed, it would be fair to observe that Hidden Valley (owned equally by Newcrest and South Africa's Harmony Gold) is very much the product of the controversy over the way Ok Tedi and Lihir, in particular, manage their impact on the local environment. Ok Tedi, by infamous necessity, dumps its mine tailings into the Fly River while Lihir pumps its mining waste into the deep ocean off the eponymous island.

Hidden Valley, which was fully commissioned last October, is a far more sustainable proposition with a fully engineered tailings storage system, which means no processing residue or tailings is released into the local river system.

Which all brings us to Rex Dagi, who, along with another Yonggom leader, Alex Maun, sued BHP Billiton on behalf of 30,000 landowners for the damage caused to the lower Fly River by the Ok Tedi copper and gold mine in the rain-drenched heights of the Star Mountains in PNG's Western Highlands.

The legal argument between Dagi, Maun and BHP ran for three years from late 1994, cost $20 million and produced $100m worth of revision to the compensation arrangements for peoples of the lower Fly River. And, ultimately, the dispute over the way Ok Tedi managed (or failed to manage) its impact on the local environment forced BHP to accept that successful mining was more than just working within the host country laws.

BHP's long-established defence of Ok Tedi's tailings management was that the PNG government and the communities concerned had approved the release of waste into the Fly River.

That position was permanently repudiated at the turn of the century when BHP, by then under the management direction of US import Paul Anderson, moved to shut the mine because it could not justify the impact of mining on the river system. Ok Tedi subsequently became the mistake that BHP would never again make. It is now company policy that it will not build or acquire mines that release tailings into river systems or the ocean.

For all that, though, Ok Tedi is still a working mine and it is still running its tailings down the Fly.

BHP told the PNG government in 2000 that it wanted to close the mine. But the fact is that neither the government nor BHP's partner in the mine, Canada's Inmet, wanted that to happen. In the end BHP came up with an ingenious exit strategy that was built on Anderson's inspired observation to fellow BHP directors that, given the company no longer wanted to own or manage the mine, it should probably stop accepting the revenues and earnings generated by its operation.

BHP transferred its 52 per cent stake in Ok Tedi into a new vehicle, the PNG Sustainable Development Program. The fund would receive all the Ok Tedi dividend payments that would have otherwise accrued to BHP, and would indemnify the PNG government for any liability for claims and damages caused by Ok Tedi's operation and extend that indemnity to BHP. The fund would be operated independently of BHP and the government.

The program's stated mission was to invest the wealth generated by Ok Tedi in short-term community programs and to establish a long-term fund that would support the economic development of the Western Province beyond Ok Tedi's anticipated closure in 2013 and mitigate the environmental damage done by the mine.

The PNGSDP, technically at least, will celebrate it 10th anniversary later this year. And so far it has run exactly as planned.

In the fund's most recent annual report, chairman Ross Garnaut states that the PNGSDP's core long-term fund had a balance of $US817.9m and would likely hit $US1 billion by the end of 2010.

Interestingly, this fund is all about filling the funding gap when Ok Tedi closes its mining operation in 2013.

But Ok Tedi management is looking at extending the life of the mine until at least 2022 by re-configuring the current pit and starting an underground operation.

A feasibility study based on production running at about a third of its current levels was supposed to have been presented to the shareholders just before Christmas.

The PNGSDP's other key arm is its short-term development fund and that, at last report, had a balance of $US237m.

This fund provides a consistent financial support for an amazing suite of initiatives, from schemes to deliver clean water and sanitation facilities at isolated villages across the province to the construction of supermarkets and roads, from providing financial support for a range of micro-finance schemes to the provision of far deeper pools of core capital for a sustainable forestry business and potentially for a renewable energy scheme being investigated with Origin Energy.

From this distance, it looks a lot like the Ok Tedi-funded PNGSDP is in fact financing a range of infrastructure programs and services that we would expect to be provided in Australia by a state government.

And that, according to The Australian's resident PNG expert, Rowan Callick, is what really links Sam Basil and Rex Dagi.

Callick's theory, long expressed, is that where governments either cannot or will not deliver the services people need or expect, then they will look to the next biggest beast in their area to fill the breach.

And for the people of the Morobe Province, that might well be Hidden Valley and its owners.
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Joined: September 4th, 2002, 9:15 pm

January 9th, 2011, 11:12 pm #2

January 9 2011 at 11:09 PM
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MP sues Newcrest over PNG goldmine
Matt Chambers From: The Australian January 07, 2011 12:00AM
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NEWCREST Mining's Hidden Valley gold project in Papua New Guinea faces more problems with landowners.

The local member of parliament served a fresh writ against the three-month old mine over flood damage to crops.

The 50-50 joint venture between Newcrest and South Africa's Harmony Gold Mining, known as Morobe Mining, says it will vigorously defend any legal action.

The writ alleges mine-related sediment in the Watut River has created a nuisance and seeks damages and injunctions in relation to the Hidden Valley operations, Morobe said.

Since November, Newcrest and Harmony have been making voluntary compensation payments to communities on the Watut for flood damage to crops and gardens.

Morobe says mine-related sediment, along with landslides and rain, may have contributed to the damage.


Related Coverage
Hidden Valley raises Ok Tedi spectre The Australian, 2 days ago
Stockwatch: key stock movements The Daily Telegraph, 2 days ago
Newcrest JV hit by lawsuit The Australian, 3 days ago
Miners rescued from Newcrest mine Perth Now, 28 Dec 2010
Rising prices boost mine hopes The Australian, 27 Dec 2010

According to Morobe, the sediment that entered the Watut from the mine was run-off from mine overburden and construction activities.

Seeking to distance itself from the tailings problems that caused BHP to hand over the Ok Tedi copper mine in PNG in 2002, Morobe stressed it would store tailings and that no mine processing residue or tailings were being discharged into the Watut.

The Hidden Valley mine, which started production in October, is about 300km north west of Port Moresby, in the province of Morobe.

The local MP, Sam Basil, has criticised the PNG environment department and its minister for giving Hidden Valley an environmental permit.

On December 16, Newcrest informed the stockmarket that a writ served by Mr Basil in the National Court of Papua New Guinea had been withdrawn after the establishment of a technical advisory panel to resolve sediment-related issues.

But Mr Basil appears to have changed his mind since then. "The pending legal action now prejudices the ability of the member and his legal adviser to participate in this process," Morobe said yesterday.

The new writ was served on behalf of Mr Basil and a number of traditional landowners living along the Watut River.

Morobe said the compensation payments, of which Mr Basil had been aware, appear to have prompted the writ.

Yesterday, Newcrest Mining shares fell 58c to a three-month low of $39.26, in line with other gold stocks on the ASX.

Hidden Valley is expected to produce 250,000 ounces of gold a year for 14 years from two open pit mines.


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Anonymous
Anonymous

January 16th, 2011, 12:50 am #3

There can be absolutely no comparison between Hidden Valley and Ok Tedi. The MP is a shameless media whore who puts his own needs ahead of his people. I'm sure there is still opportunity for Mr. Basil to sit with the mine's owners and work through the issues as opposed to going ahead with the court challenge which will see no winners except lawyers in the end. I suppose this is where you can draw the comparison to Ok Tedi.
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Ltd
Ltd

January 16th, 2011, 5:52 am #4

It is indeed true, that seems to be a classic title for Sam Basil. It is an act of desperation from someone in parliament who has a joined a weak opposition bench and can't see much development to his electorate
Last edited by 7milebeach on January 16th, 2011, 8:40 pm, edited 1 time in total.
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Joined: January 13th, 2011, 12:19 pm

January 17th, 2011, 1:51 am #5

Sam Basil is the only MP worrying about the terrible destruction and chemical pollution in the watut and associated river. the tailings dumped in the rivers are messing up the natural river courses, that is not fiction. people are being left with flooded gardens and chemical burns not only yhat but the terrible toll on the babies born without limbs, stillborn and sightless are the effect of mercury and arsenic poisoning. see the tok piksa report last monday? I think Basil is doing fine and we need more of his ilk in parliament. your suggestion of his whoring for media support is baseless. what is his reward? you could probably stand against him in the next election or even your own LLG election but could you have the poularity he has? Lus ting, Basil is straight, honest and doing something for his people against the greedy multinationals who could never have the same operation in their country because of strict enviromental issues. Now in PNg they slip brown envelopes to the right people and kill thousands with their wastes. Go basil sort the bastards out
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Meri Wau
Meri Wau

January 19th, 2011, 8:30 am #6

Well said, Asples.Obviously the writer was not from within our electorate and could not see that Basil is our only Member who has ever delivered basic services to our electorate since 1975,let alone having the guts to stand up against a multi-national company that promised a large amount of money for extr servies "IF" Basil would desist then withdrew the offer when he wouldn't.
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Meri Wau and Asples
Meri Wau and Asples

January 21st, 2011, 6:18 am #7

Hi guys,

I personally think sam is a media ..... but I do believe in what he is fighting for in this suit...
We look after the bridge and border with your electorate. I personally hope Sam does actually finish what he started we are all watching and boganville started from somthing like this....

So I hope the courts realise and so does the govt of the day..
PNGuineans are not push overs or kanakas like the old days.. These days with the rise of PNG and also our natural agression that we all possess!! We wont allow Multi Nationals to roll one over on us..

Boganville set a precedent and I am sure there is more to follow good on you Sam Basil I hope you are doing this for the right reasons!! Not only for your name but for the silent majority suffering in Morobe...

Meri Wau I was a child and I know who you are I hope the business community in the area is doing its bit as well..

Wan bel Markham bridge mangi " No bridge No Mine ol by karim gold blo ol na painim narapela rot..
Last edited by 7milebeach on January 21st, 2011, 12:57 pm, edited 1 time in total.
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tinz
tinz

January 21st, 2011, 7:56 pm #8

Well said, Asples.Obviously the writer was not from within our electorate and could not see that Basil is our only Member who has ever delivered basic services to our electorate since 1975,let alone having the guts to stand up against a multi-national company that promised a large amount of money for extr servies "IF" Basil would desist then withdrew the offer when he wouldn't.
What basic services has he delivered. Can you be specific. Name some.
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Meri Wau
Meri Wau

January 23rd, 2011, 8:37 am #9

I will leave this to someone else to answer for you as it will be claimed that my interest is personal but believe me,everything that is reported in the media is true.
If you know who I am you also know that I don't lie(well,I have been known to exaggerate,my daughters will all say but I don't make things up from nothing) and I do give credit where it is due.
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Student
Student

February 5th, 2011, 11:48 am #10

Sam Basil as the Elected MP for Wau Bulolo is really doing a good job.Pre Sam Basil, not much was known about the people living in the caves,dungeons and canyons up there.
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