Melbourne, 6 June 1967
Now that all questions have been resolved and the mining agreement for Bougainville Copper has just been signed,1 I would like to reply to your letter of 19th May2 and thank you for your part in bringing this matter to finality.
Our task now, in anticipation of its ratification is to complete the job of proving up sufficient economic ore reserves and planning an operation which will be attractive enough financially to convince the Administration, prospective lenders and ourselves that we should invest the required capital in its development.
We were disappointed that you were unable to remove our difficulty regarding royalty and your decision will also add to our problems in mounting an economic operation based on this low-grade ore body. However, we remain hopeful that it will be possible to do so and look forward to the continued assistance of the Administration in handling relationships with the local people and providing us with necessary services.
I am grateful that you agreed to drop the word ‘Special’ from the description of the supplementary tax contribution the company will make and regret that we had to ask you to refer this matter back to your colleagues.
I was glad also to be assured that it would be the intention eventually to allow residents of the Territory to hold all of the equity shares taken up by the Administration. As you know 25% of the optioned 20% may be so distributed at any time. I would like to mention, however, that we have found it a wise precaution to defer any public issues to a date when the plant is constructed and initial operating problems have been overcome. In this way we have been spared embarrassments when operations have not commenced as well as had been expected. We have referred to this problem from time to time in our Agreement discussions in Canberra and feel sure the Administration will bear this experience in mind when planning the timing of public participation in the Territory.
We also hope that despite apparent difficulties in financing, it will prove possible for the Administration to retain full beneficial ownership of the remaining shares until the appropriate time comes to also distribute them to the local people. We have always made our interests clear in this regard. We believe the prospect of a substantial Administration shareholding continuing through the early years will assist significantly towards arranging the substantial borrowings essential to the establishment of this project, and we hope that in turn this shareholding will provide rewarding dividends to the Administration and for Territory residents.
I trust that the completion of this Agreement and its ratification by the House in Port Moresby will eventually prove to have been a significant development of3 the Territory. of Papua and New Guinea.
[NAA: A452, 1967/3211]
1 The agreement between the Administration and Bougainville Copper Pty Ltd, a subsidiary of CRA formed in early June (see documentation dated 2 June 1967, NAA: A452, 1967/4362), was signed on 6 June (see copy of agreement in ibid.).
2 Document 109.
3 Presumably, this should read ‘for’.