New Internationalist

Mixed Fortunes At Ok Tedi

Issue 101

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PACIFIC ISLANDS [image, unknown] Copper exploitation

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Mixed fortunes at Ok Tedi
A mountain of copper with a golden dome promises a financial bonanza for the Papua New Guinea government as well as Australian, American and West German mining companies. But the repercussions may be tragic for the few hundred people who live around this remote mine site writes Russell Hunter.


A jungle patrol, fighting its way through the craggy Star Mountains near the West Irian border, spotted the characteristic green coloration that means copper. That was in 1963 and patrol officer Des Pfitzer made a note of it in his journal. The Ok Tedi legend had been born. (Ok means river.)

Five years later, the US mining giant Kennecott sent a team 1000 river kilometres into the far northwest of Western Province to search for the mother lode. They found it and proved large deposits of copper with traces of gold, molybdenum and silver. Soon Kennecott was talking with the Australian colonial administration about developing the find. They code-named the operation 'Cloudlands'.

Kennecott, in the meantime, had built a school and a health centre for the people of the Ok Tedi region. It also provided the first wage employment for local people who knew from radio broadcasts how important 'development' was. They weren't sure what it meant but they longed for it to happen to them.

These people of the rainforest blamed the government, more than 800 kilometres away in Port Moresby, when negotiations with Kennecott fell through just before Papua New Guinea gained independence in 1975. But it wasn't entirely the government's fault. At the time Kennecott was a worried company having just had its money-spinning El Teniente copper mine in Chile nationalised. And, with prices of base metals falling, Kennecott had to do some belt-tightening. The Papua New Guinea government, quite reasonably, had been pressing for the best bargain possible. With Kennecott's withdrawal it faced a dilemma: all that copper, with a golden topping, if exploited would go a long way toward filling the vacuum created by an Australian aid grant which was bound to diminish in real terms as each year went by; but it could not afford to develop alone. The government took a deep breath and decided to look for new partners.

Within the year a new consortium had been forged in the form of Australia's largest company, Broken Hill Proprietary (BHP), which had the know how; the US's Amoco Minerals, which had the money; West Germany's Kupferexplorationsgesellschaft (KE), which had the market; and the PNG government which had what the other three wanted. The split was BHP and Amoco 30 per cent each and KE and PNG 20 per cent each.

The Australian government, almost certainly, was delighted at BHP's participation. It made it easier to talk about winding down its grant programme. It also helped to ensure the stability of its nearest neighbour and most significant ex-colony.

It looked like a good deal for Papua New Guinea too because, built into the agreement was provision for additional profits tax, royalties and dividends. Through these and devices such as income tax the government anticipated it could expect returns amounting to about 70 per cent of the mine's total profits.

Workers families near mine site...unskilled outsiders could mean trouble. Photo: Russell Hunter
Workers families near mine site...unskilled outsiders could mean trouble.
Photo: Russell Hunter

Especially attractive was the knowledge that, with the mine being in an almost inaccessible area, it would be an enclave project with little or no immediate impact on the lives of the bulk of the nation's population.

This rosy scenario was tainted, however, by a report commissioned by the PNG government and completed last year. Although confidential, it was leaked to The Times of Papua New Guinea earlier this year. It is highly critical of the government's role in the mine's development, especially of its failure to adequately protect the interests of the people who live in the area of the mine.

While the mine is expected to add 11 per cent to the PNG GDP (1979 prices), the report warns that the local people could find themselves third class citizens in their own home villages as the area is increasingly flooded by highly paid expatriates. 'Most people will remain second or third class citizens in their own districts while thousands of mine employees and other immigrants will bring with them an obvious affluence which will remain unattainable for the majority of people in the district,' argues the report, 'Beer, venereal disease and prostitution will create a variety of social problems and conflicts which few people can foresee.'

Most pioneer workers at the Ok Tedi mine site agree. A man who was a patrol officer in the colonial days before joining Kennecott in 1968, and then the new consortium, summed up their feelings: 'I love these people. I've spent a lot of my life working with them. Now I feel bad about what is going to happen here. These people have simply no conception of the thousands of people that will take over their homeland. To them, 20 people is a big crowd.'

Two groups of people - the Wopkaimin and the Faiwolmin - own and use the immediate mining area. They co-exist with a harsh environment. Game is as hard to find as flat ground; limestone beneath the forest floor makes a poor base for growing root crops; the rain is unrelenting. A day without a downpour is a rare event. Even the official annual rainfall figure of 8000 mm at the top of 2460-metre Mount Fubilan is probably inaccurate because much of the rain at that point 'falls' upwards on hot air currents before being dropped elsewhere, and therefore is not recorded.

There's no doubt that these 300-or-so quiet, seemingly uncomplicated people, will do well financially when the miners' cut the top off Mount Fubilan. (The snake spirit used to dwell there but it was frightened away by foreign workers. The Wopkaimin and the Faiwolmin do not mourn its passing. They say it was a hostile spirit, anyway.) The owners are guaranteed five per cent of the 1.25 per cent royalties going to Western Province.

But the immediate neighbours of the Wopkaimin and Faiwolmin, not actually on the mine site, will receive only a once-and-for-all compensation for any intrusion on or use of their land. But still their lives will be equally disturbed by the influx of outsiders - Asians, Europeans, and people from many parts of Papua New Guinea. All will be foreigners in the eyes of the people of this remote corner of PNG's Western Province.

New road to the copper...lump sum compensation for peripheral landowners. Photo: Russell Hunter
New road to the copper...lump sum compensation for peripheral landowners.
Photo: Russell Hunter

The report stresses that the consortium must not be seen to be 'stingy' with compensation now because it will only make things worse when the gold and then copper flows. The report, noting there will not be enough local manpower to supply unskilled labour needs, feels the presence of unskilled outsiders 'could provoke labour incidents, work stoppages and violent outbursts requiring police action'.

The local people can in no way envisage the enormity of the project. Professor Richard Jackson of the University of Papua New Guinea, a member of the team which produced the confidential report, visited villages in the Ok Tedi area in 1977. He was told: 'I would like to sell tomatoes to the company. Will they give me a truck and build a road to the village so I can do this? Young men, with only a basic education, said they wanted to work at the mine 'so that we can get money' because 'the older men have too many pigs for us to compete with them for women'. (Pigs have a high value throughout Melanesian society.)

In the face of government indifference, a few people have set about the task of preparing the Ok Tedi people for the cultural upheaval, now only in the tremor stage. Cloudlands Investment Company was formed by the local people with free management assistance from some consortium employees at the site and in Port Moresby. They now own 40 per cent of an aeroplane, a trade store and a liquor tavern, and they have trucking interests. The plan was to make Cloudlands an `umbrella organisation' for local business involvement in the project. Cloudlands, however, is politically unpopular with the national government. Its members represent a minute - insignificant - portion of the voters. And they do not have the backing enjoyed by larger companies, already climbing over each other as they try to cash in on the fat profits to be made from the establishment of a whole town in the middle of nowhere.

The local people look certain to be ripped off. Like the snake spirit, it is feared they too will soon disappear from the land of their ancestors, rich beyond their wildest dreams, miserable beyond their darkest nightmares.

Myriad sub-contract jobs are to be let as the new town grows to a population of about 11,000 by 1990. Local people's numbers are expected to remain at about 360.

BHP has a 14 per cent share in Steamships Limited, one of the South Pacific's biggest trading and shipping companies, which for decades made fortunes out of colonial trading. It will certainly be vying for a substantial share of contracts. But the current mood in Port Moresby is that there will be plenty for everybody - everybody, that is, except Cloudlands.

There is no guarantee that the people's sacrifice will be worthwhile. The transnationals can hardly fail to make a killing. The mine is expected to earn at least $10 billion over the next 25 years. The government will have money for development. Yet little thought seems to have been given to what form this development will take.

This year, arguing that it would save money on official travel, the government spent $7 million on an executive jet - a puzzling move in a country where the government provides no free primary or secondary education. (Tertiary is free if you can afford to get that far.)

Professor Jackson questions the Papua New Guinea government's present pattern of spending: 'If it continues to lavish funds on urban water and power supplies, on VIP jets, on international air terminals on increased public servants wages and on give-away housing, it is difficult to see much real development taking place in rural areas.'

Russell Hunter is a journalist with The Times of PNG.


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