The President of Bougainville, John Momis, wants work on restarting the giant Panguna gold and copper mine to begin later this year. In this exclusive interview with Business Advantage PNG, he outlines the steps now needed to restart operations.

Business Advantage PNG (BAPNG): Why do Bougainvilleans now support re-opening the mine?

John Momis (JM): The Panguna Mine was the primary source of the war, which reduced Bougainville to basics. We need to deal with it because the Panguna Mine is a mega project. We need the revenue to be generated from it—revenue for the government as well as income for the people. So with the way things are going, we don’t have much option really.

We don’t have much money coming from the National Government in terms of its commitment to allocate adequate funding for reconstruction and for the big job of creating an autonomous government. I think, once the mine is open, Bougainville will be very well off, and we can manage to reconstruct Bougainville and promote sustainable businesses.

‘The former commander of the Bougainville Revolutionary Army, Sam Kauona, is now on side and in agreement with the need to re-open the mine.’

With the collaboration of credible partners from outside, the government itself will have enough money to create a new government. We also need money to create something that’s sustainable and in accordance with the principles of good governance and democracy.

BAPNG: Is there much opposition among local landowners and Bougainville people to the re-opening of the mine?

JM: There is a little bit of opposition but with clarification and with our efforts to create awareness, more and more people are in support: ex-combatants generally, the landowners themselves and the population in general. So, there is not much opposition. There is opposition from some quarters, and that is quite small, due to a lack of understanding.

The former commander of the Bougainville Revolutionary Army, Sam Kauona, is now on side and in agreement with the need to re-open the mine. He also agrees with the new mining law, which I expect the Autonomous Bougainville Government (ABG) to pass by September this year.

BAPNG: The landowners’ umbrella group is seeking a payment of K10 billion (US$4.45 billion). How critical is that before any real work gets under way? Does it have to be in cash or could it be in some other form?

JM: No, it doesn’t have to be [in cash]. As a matter of fact, I am advocating that we should, without too much delay, start negotiations with Bougainville Copper Ltd (BCL) so that they can address some of the burning issues affecting the landowners whose land and whose lives have been detrimentally affected. But we can’t do that unless BCL are given some kind of guarantee that they will be allowed to operate. So, the sooner we negotiate with them, the better for us.

‘Well, people say that the lease has expired, but precedents have been set that say that once leases are expired they must be renewed to the same company, and that is BCL. So, that’s the assumption we’re working under.’

The K10 billion [that] people are talking about can be provided in different forms of development assistance to villagers to rebuild their villages and sort out some of the problems they’ve had as a result of the mine.

It’s not a question of paying K10 billion at one go.

BAPNG: Do you see BCL as the only viable company to re-open the mine itself, or do you see the possibility of another mining company competing for the rights?

JM: The landowners themselves want BCL. That’s their declared condition. I don’t necessarily believe BCL is the only one, but because they legally own the leases, we’ve got to start with them, and under our own law, BCL will have to meet our conditions. I have also mentioned to BCL that perhaps there is a place for a third party to be involved.

BAPNG:         What role would they have?

JM: A third party may want to take up shares.

BAPNG: The landowners say that the mining lease for BCL to operate the mine has expired—Rio Tinto has told us that it’s still working on the assumption that the lease entitlement is still alive. What’s your understanding of the status of the original lease?

JM: Well, people say that the lease has expired, but precedents have been set that say that once leases are expired they must be renewed to the same company, and that is BCL. So, that’s the assumption we’re working under.

BAPNG: The landowners’ prerequisites for re-opening the mine indicate they want to actually own the mining lease and then sublease it to the mining company. Have we misinterpreted that, and is that viable anyway?

JM: That is an issue that has to be discussed between us [the ABG] and the [National] Government and the landowners. Under our new proposed mining law, the landowners own the resources. They have total ownership of the resources, but the government has the custodial role. Only the Government can issue licences, both at the exploration stage and development stage, and the Government is responsible for governance of benefits. The Government is [also] responsible for ensuring that environmental impact studies are conducted so that you know that there are no detrimental impacts on the environment and the life of the people. So, the issue of whether the people themselves will own the lease and negotiate is an issue that has not been discussed in full.

BAPNG:   What do you regard as critical in order to get the mine up and running again?

JM: Law and order and rule of law–that’s number one. That is why we’ve spent a lot of time holding forums to allow people to participate in discussions of important issues including law and order, ownership, distribution of benefits and, of course, environmental impacts on the land.

Getting all the different factions together—landowners, ex-combatants, other citizens of Bougainville and the government—is crucially important. Once we come to a consensus, then people will have a sense of ownership of the project, and this also extends to whichever mining company that finally agrees to participate under our conditions.

‘We have had positive discussions with executives from BCL, but we now have to sensitise Rio Tinto executives in London about the way in which we want to proceed.’

We’ve already started the initial discussions with BCL about some of the issues that must be resolved before they start their construction work. It has done a study of the order of magnitude that seems to be very attractive and confirms that currently the mine is a mega project.

BAPNG: BCL estimates it could take five years to rehabilitate the environment and conditions in order to actually get the mine operating again.  Do you see the length of time as a problem?

JM: For us, we need to start generating revenue as soon as possible. We have a time line—2015 and onwards is the ideal window. We have to conduct a referendum to determine our final political status. The historic moment of designing our future is imminent and we need money to achieve that. Procrastinating on opening the mine, even five years, is a bit far.  We must come to an agreement to allow BCL to come and set up their liaison office in Arawa to deal with some of the practical problems, which are not immense, which are not insurmountable, to enable BCL to start spending money on reconstruction work, and that will bring a lot of income to the people and revenue to the ABG, and I think that is what we need.

People, I think, misunderstand that you must wait for the production phase. Reconstruction is where companies spend a lot of money and that’s what we want.  We don’t want to procrastinate on that.

BAPNG: So would you like to see BCL physically return by the end of this year? Can you see it happening?

JM: That’s correct, yes. We will go for that. Of course, we have to take precautions. We have to do things right, and hence the lengthy period of consultation we’ve been having. That should iron out a lot of the problems and help us to come to a consensus to decide what to do.

We have had positive discussions with executives from BCL, but we now have to sensitise Rio Tinto executives in London about the way in which we want to proceed. So far, we have been successful in taking a consensual approach towards restarting the mine.