Port Moresby, 16 June 1969
This statement has been prepared in order to inform the Members of the House of the background and significance of the large low-grade deposits of copper ore which have been revealed at Panguna in the Bougainville District, and of the measures being taken by Bougainville Copper Pty. Limited and the Administration to bring the proposed copper mine into early production. This statement sets out in greater detail material which has already been published in official statements.
The deposit has been shown to contain at least 760,000,000 tons of ore with a grade of 0.47% copper, and 0.4 dwt. gold per ton. Such deposits can be economically mined only on a very large scale, using heavy mechanical equipment, which permits a low unit production cost per ton.
The further task of developing such a deposit to the stage of production demands specialised knowledge, and experience in large scale operations possessed only by an international mining company such as Bougainville Copper Pty. Limited.
The financial commitment is so big that a mining company embarking on such an operation must seek preliminary guarantees from the Government that it will receive the authorities and mining rights necessary to permit it to achieve production to recoup its investment together with appropriate profit. This is why the Administration entered into a formal agreement with Bougainville Copper Pty. Limited in 1967.2
The Bougainville copper project has now been brought close to the stage of production by Bougainville Copper Pty. Limited. In the process various landowners in the areas have expressed opposition to the operations of the Company on their land and also to making land available for town and port sites and for supporting industries.3 However, the project promises such far reaching economic benefits to the Territory that the Administration must press on to bring it to fruition.
The Company has now applied for and been granted a special mining lease at the site of the mine, and is thereby committed by its agreement with the Administration to proceed, within 5 years, to production and export of copper concentrates. It has published details of preliminary marketing arrangements with seven Japanese copper smelters and has expressed confidence in its capacity to sell the whole of its production during the first 15 years of operation. Estimates of total capital required have also been published.
The account which follows begins with the discovery of the Panguna deposits and continues to the present stage of development in which the Company is poised for the massive construction phase of the operation.
Discovery of the Panguna copper deposit
The Panguna area was known to gold miners in the period 1933 to 1951. The early miners noted that copper minerals were present at Panguna and Kupei, but they did not have the geological experience or the financial resources to lead them to look for a major low-grade copper deposit. Their efforts brought no lasting benefits to Bougainville. In 1960 the area was visited by an Administration geologist who reported that it might contain a major low-grade copper deposit.
When the Company began prospecting the area in 19644 it soon became apparent that the sand in the Kawerong River and the streams draining the Panguna area contained consistent traces of copper. Further sampling of the soils in the area confirmed that copper in small quantities was present over a wide area, and the Company’s geologists began to think that there might be a large deposit in the rocks under the surface soil.
Diamond drills were brought in to bore holes deep into the mountain to give samples of the rocks. Assays of the samples confirmed that there was a small amount of copper and a very little gold in the rocks over a fairly large area. At this stage the Company knew that there was a large low-grade deposit, but it had to find out how large, and whether there would be enough copper to pay for the cost of mining it.
Many more diamond drills were brought in by helicopter and a road from the Kieta coast was cut through the rough mountain ranges. Eventually, by December, 1968, after four years of exploration and research, and at a cost of more than $16,000,000, the Company estimated that the deposits contained at least 760,000,000 tons of rock containing 0.47% copper and 0.4 dwt. of gold per ton. Such a deposit would be worked profitably only on a very large scale, but would require a capital investment of about $300,000,000 to establish the operation.
Bougainville Copper Agreement
One or the important features of the Bougainville project is the Mining (Bougainville Copper Agreement) Ordinance 1967. For the benefit of new Members of this House I will give a brief outline of how the Ordinance was brought into force. After the first two years of prospecting, with expenditure already standing at $4,000,000, it became apparent that the further testing of the deposit would require additional expenditure of at least another $6,000,000, and it was estimated that establishment of a mine would require a total investment of at least $100,000,000 (this was an under-estimate, because the actual figures have turned out to be an additional $12,000,0005 and a total investment of nearly $300,000,000).
At that time the only rights held by the Company were its prospecting authorities which were granted for only two year periods, and which gave the right to investigate the deposits but not to mine and sell copper.
Both the Company and the Administration could see that the Company would be foolish to continue spending such large sums unless it could be sure that if it decided to set up a mining operation it would be granted all the various leases of land which would be necessary for its essential installations—the mine, the concentrator to separate the copper minerals from the rock, areas for stacking waste rock near the mine and areas for stacking the tailings left after the copper has been taken out, land for company roads, dams, power lines, pipe lines, and land for a town site and port site.
This land would be acquired variously under the Mining Ordinance, Land Ordinance, Water Resources Ordinance and perhaps the Papua and New Guinea Harbours Board Ordinance.
After much discussion between the Company, the Administration and the Department of External Territories, an Agreement was signed on 6th June, 1967, between the Company and the Administration. The Agreement sets out the various things that the Company and the Administration would each guarantee to do.
The Company agreed to continue its expensive further investigations and, if possible, it would set up a mine, concentrator, port, etc. and proceed to export copper concentrates. It agreed to pay royalties to the Administration and, after an initial tax-free period, to pay specially high rates of income tax. It agreed to establish a new company to work the mine and to offer the Administration 20% of the new company’s shares at par. For its part the Administration guaranteed to give the Company a three year tax-free start so that it could quickly repay its loans before it started to pay the higher taxes. The Administration also guaranteed to grant the various leases required and to make land available for support purposes such as the town and port.
A company could not venture into such large-scale investigations without some guarantee that it would be given the facilities to proceed to production. It is also clear that the Administration must honour its obligations under the Agreement ensuring that the necessary leases are granted, and by ensuring that the Company is not obstructed in its lawful operations.
What is the Bougainville copper project?
The feasibility of working this low-grade deposit at a profit is based on a very large-scale rate of production. It is proposed to mine at a rate of 30,000,000 tons of ore each year, to produce concentrates for export containing about 150,000 tons of copper metal and about 500,000 ounces of gold. Such an operation would be one of the largest copper mines in the world, and would rank as a major gold producer.
Its effect would be to more than double the Territory’s anticipated export income, enlarge internal revenue by way of royalties, dividends, personal and company taxes, fees, duties, service charges, etc., and it would introduce dramatic changes to the way of life of the Bougainville people by lifting them from subsistence village life to a cash economy based on secure employment opportunities, with greatly improved health and education services.
The mine cannot be brought into production until all necessary facilities have been installed or established. There will be a construction period of about three years of intense activity in order to achieve production early in 1972. During this period the Company must complete the following projects:
(1)construction of a new town at Arawa (construction to commence October, 1969);
(2)construction of a port at Loloho with facilities for loading concentrates to ships (construction to commence September, 1969);
(3)construction of a major power house near the port, with fuel storage tanks, etc. (construction of transmission lines to commence January, 1970);
(4)construction of a major road from the port to the mine (completion August, 1970);
(5)construction of a minor road from the mine to tailings dump areas on the western coast (survey in progress);
(6)construction of the concentrator plant to separate copper minerals from the rock ore;
(7)preparation of the pit site, including haul roads and the removal of 30,000,000 tons of over burden from the orebody;
(8)preparation of a site for dumping waste rock near the pit;
(9)preparation of facilities for stacking tailings in a swamp area near the west coast;
(10)construction of a town at the mine with school, post office, etc.;
(11)construction of a dam on the Jaba River to supply water to the mine and concentrator;
(12)installation of a water supply to the Arawa town;
(13)preparation of a quarry—probably near Boromai—to mine and burn limestone for the concentrator; and
(14)procurement of the mining equipment to be used in the breaking and transport of the ore and waste rock.
In addition to the above mentioned Company activities there will be various obligations which the Administration must accept as matters of urgency during the construction period. These include:
(1)prompt granting of the various land leases required for essential operations;
(2)improvements to the Aropa airstrip to bring it to limited Fokker Friendship standard (required by January, 1970);
(3)design and construction of theArawa township’s primary schools, technical school, high school, and a major base hospital (construction to commence October, 1969);
(4)improvements to the Aropa–Kieta road (in progress);
(5)construction of a major road from Kieta to the Arawa town and the Loloho port (required by May, 1970); and
(6)installation of a telecommunications system to give 24 hour world-wide communications (required June, 1970).
The various items are inter-related in such a way that a particular item, say the road from the port to the mine, must be completed before heavy equipment can be moved to the mine. Similarly the coastal town must be completed to provide accommodation for key personnel in the earliest stage of construction, and large temporary camps must be erected before the arrival of the temporary construction workers. Again, the procurement and arrival of capital equipment must be programmed to permit efficient use of the wharf and port storage capacity.
The Company has estimated that if construction and other preparations are carried out with the necessary speed, production could commence in about three years—i.e. probably early in 1972. There are urgent financial reasons why this period should be kept as short as possible. The large loans involved will carry a heavy interest charge, and this loan money will be largely expended by the end of the construction period. It is therefore of the greatest urgency that every effort be expended by the Company and by the Administration to prevent delays in establishing the operation. The Administration has a threefold financial interest in securing the early achievement of export production—as a taxing authority, as a potential shareholder in the enterprise, and for balance of payment reasons.
Land requirements
The Administration has the responsibility to ensure that the various mining and land leases required are granted without delay—this applies particularly in respect of the Arawa town and the industrial land required near the Loloho port.
The company has applied for and been granted a special mining lease of approximately 10,000 acres in the vicinity of Panguna, as shown in attachments 1 and 2.6 This lease will accommodate the open pit mine, the concentrator plant, a town to accommodate expatriate and local workers and a site in the Kawerong valley for stacking waste rock.
Although very little of this land is improved it contains the village of Moroni (population 53) and the four hamlets of Dapera (population 186). It will be necessary for these people to move from their present locations, but they will be compensated for the disturbance, and if necessary, will be given other land to live on.
The owners of the land within the special mining lease will receive compensation for damage to the land and for inconvenience; they will receive the occupation fee of at least $20,000 in January of each year. The first year’s fees have been paid by the Company to the Administration and will be distributed to the owners as soon as they have established their claim to the land. The landowners in the special mining lease will also receive about $80,000 in royalty payments each year the mine is in full production. These royalty payments will be made every month. Thus the landowners (a group numbering some 1,000 men, women and children) will receive a total of about $100,000 each year, to be divided among them in proportion to the respective areas owned, and the land will be returned to them when the mine is finished.
It is expected that the Company will, in the near future, apply for leases for mining purposes for:
(1)the main company road from Loloho to the mine;
(2)a minor road from the mine to the tailings area and water supply dam on the Jaba coastal area;
(3)an area for stacking tailings on the swamp areas of the western coast; and
(4)possibly for leases to mine limestone near Boromai and to mine construction materials near Willy’s Nob on the lower Pinei area.
It is expected that the land required for the above mentioned leases for mining purposes will not exceed 40,000 acres.
The total land involved under the Mining Ordinance would thus amount to about 50,000 acres comprising 10,000 acres in the special mining lease and possibly 40,000 acres as leases for mining purposes. This land would all attract income to the landowners of at least $2 per acre for each year of the lease, plus compensation for damages, and, in the case of the special mining lease which produces the copper, the landowners’ share of royalty.
On the special mining lease it will be necessary to relocate the people of Moroni (53) and Dapera (186). The remaining leases for mining purposes will not involve relocation or resettlement of village people.
It is expected that the Company will apply for a lease under the Water Resources Ordinance to accommodate a dam and pumping station on the Jaba River, as shown on attachment 2. This dam would provide water for the concentrator and for tailings disposal. It is not expected that this lease would seriously affect the people living in the area.
It is expected that an installation will be placed in the upper Bovo River to bleed off a water supply for the Arawa town and port facilities. This would not involve a major dam or inundation of land. A small area of about 1 to 2 acres would be required for storage tanks, water filtration and purification.
Land required on the east coast area will be needed for installations which will endure beyond the life of the mine. It is expected that the Arawa township and associated industrial areas will remain as a regional centre for Administration and for trade and commerce. For this reason the land required will be acquired by the Administration and leased under the Land Ordinance. Details of the anticipated land needs are as follows:
Town Site
It has been decided that the principal new town will be built on the 1,000 acres of Arawa Plantation and an adjoining area of about 650 acres of native owned land. This area of land will serve the Company’s and the Administration’s immediate needs. Any long range expansion will involve the rehabilitation of uninhabited swamp land.
The town to be built at Arawa will have an eventual population of about 10,000 people, composed of expatriate and local staff employed by the mine, the Administration and the local business and professional people who will form part of the new community. More will be said about the town later in this paper.
It has been asked why the town cannot be built on reclaimed swamp in the first instance. There are two answers to this question. Firstly, as already indicated the need for the town is immediate and imperative. The operation cannot be delayed whilst waste land is reclaimed for a townsite. Secondly, this operation will not survive if the Company cannot attract and retain highly skilled staff.
Bougainville Copper Pty. Limited is in stiff competition for staff with other new and old mines in Australia and other countries. It is a fact of mining life that a company operating in a remote area must be able to offer attractive amenities located in pleasant surroundings in order to attract and retain its staff. With these facts in mind it must be clear that this Company could not agree to build its main town in a swampy unattractive location.
The area to be used for the town was chosen for a number of reasons, the main ones being:
(1) proximity to the mine area, future port and airport sites;
(2) proximity to Kieta, whose inhabitants would have the use of the facilities to be established (schools, hospitals, etc.);
(3) it does not involve the displacement of any large number of people; and
(4) balancing the loss of production and economic contribution to the Territory of a plantation owned by a two company partnership of about 20 people against the total or partial loss of land and livelihood which alternative sites would impose on nearly 500 people, to whom land is of social as well as economic importance.
Port Site
The Company owns Loloho Plantation of 183 acres on Anewa Bay. This will be used to accommodate the Company’s wharf and port facilities, including large storage tanks for diesel oil (1,850 tons) and fuel oil storage tanks (60,000 tons). Other facilities will include storage sheds for approximately 100,000 tons of copper and magnetite concentrates, and a major power generating station. In this general area there will be warehouses and stores, and other industrial installations essential to the total operation.
It will be necessary to provide further land of possibly 600 acres adjacent to Loloho to accommodate this general industrial development. Some of this land will be used in the first instance as a camp for construction workers, and for further processing of copper concentrates.
Site For Support Industries
A further area of about 600 acres will be sought for industrial use by the numerous firms and companies which would be required to support the mine, the town and the district generally. This land would be near the Pinei River several miles inland from the port site, and adjacent to the main company road.
To indicate the range and magnitude of this associated industrial development a preliminary list of probable requirements is given in attachment 3.7
Reclamation Site
In order to provide a margin for future industrial or town expansion an area of about 100 acres of swampy land adjacent to the port area will be acquired. This will be reclaimed through the dumping of town and industrial waste. The land will be chosen with the objective of causing as little disturbance to the landowners as possible.
The Administration faces a major problem of acquisition of land for subsequent leasing under the Land Ordinance. The total area discussed above is summarised:
| Arawa Plantation | 1,000 | acres |
|---|---|---|
| Adjacent native land | 650 | ” |
| Port irdustrial | 600 | ” |
| Other industrial | 600 | ” |
| Reclamation Area | 100 | ” |
| Total | 2,950 | acres |
Since this land is required to support a major industry by world standards it will be clear that where the required land cannot be obtained by negotiated purchase or by leasing under the Land ordinance it must be acquired by compulsory process. In the case of the two industrial areas, where the time factor is critically urgent, it may be necessary to grant the Company leases for mining purposes pending completion of the formalities of purchase or lease under the Land Ordinance.
An important section of the Mining (Bougainville Copper Agreement) Ordinance 1967 is Section 12, which reads:
‘The purposes of this Agreement are a public purpose within the meaning of any law in force in the Territory or a part of the Territory.’
Such a law in force in the Territory is the Land Ordinance 1962. Sections 17 to 23 of that Ordinance set out the ways in which the Administration may. acquire land for a public purpose. Such ways include compulsory acquisition if landowners will not sell the required land. This power of compulsory acquisition will be used, if necessary, in respect of the purchase of Arawa Plantation and also in respect of the purchase of other land on the east coast adjacent to Arawa and the port site if the owners refuse to sell the land. But the Administration still hopes to be able to negotiate purchases from the indigenous landowners concerned, and is making every effort to do so.
What Bougainville copper will mean to the Territory
The impact of the project will be noticed most dramatically in respect of the Territory’s level of exports. Current exports are valued at about $58,000,000. Under the planned increase in the Development Programme agricultural exports should reach a level of $84,000,000 by the year 1972–73.
In 1972–73 it is expected that export of copper concentrates will commence, and that the value of that year’s production of copper will be $111,000,000. This would result in a more than doubling of Territory exports to nearly $200,000,000.
Attachment 4 shows the export achievements since 1966 and the projected growth of exports, (under the Development Programme), to the year 1974–75. The tremendous impact of the new industry on the Territory’s export income is obvious.
During the development of the project there will be three different stages of revenue collection by the Administration. During the construction period in the years before 1972–73 when exports of concentrates will begin the Administration will receive substantial revenue generated through company tax paid by contractors, personal income tax paid by construction workers, fees, duties and service charges etc. Preliminary estimates indicate that this revenue will gradually increase to more than $7,000,000 in the year 1971–72, with a total of more than $17,000,000 over the construction period.
The second increase in revenue collections will occur when exports of copper concentrates commence in 1972–73. The company will not be liable to pay company tax at this early stage but will commence paying royalties and dividends. The Administration will receive from $1,000,000 to $2,000,000 per annum in royalties from this date depending upon the export price of copper and production levels achieved during the period. Indirect revenue from subcontractors and construction workers will cease, but a substantial increase in total revenue collections will occur if the Administration exercises its opinion to purchase 20 percent of the company’s shares. Depending upon the price of copper and the company’s dividend policies, total revenue received by 1973–74 could be as high as $16,000,000 per annum.
It is expected that the company will commence to pay company tax by 1981–82. A conservative estimate indicated Administration revenue collections of about $30,000,000 but depending upon world copper prices this could be as high as $50,000,000 per year.
The Company desires that the indigenous residents of the Territory will participate financially in the Bougainville Copper project and thus reap a proportion of the cash benefits to be derived from the project. To this end the Company intends to reserve for Papuans and New Guineans a proportion of those shares in the project which will be offered to the general public and is studying the methods whereby this could be achieved.
The Company expects that during the construction period the work-force will reach about 4,000 men. Owing to the shortage of skilled local construction workers and the necessity for speed it is likely that many of the construction workers will be recruited from sources outside the Territory. Recruitment will be on the basis of a short contract with provision for compulsory repatriation at the end of the contract. The Company’s recruitment programme will be carried out in a way which will not prevent other industries from also gaining a fair share of the skilled and semi-skilled people becoming available in the Territory. During the construction period the Company will gradually increase its permanent work force so that when production commences early in 1972 the permanent work force will number about 1,800 workers comprising about 700 expatriates and 1100 Papuans and New Guineans. As the indigenous people acquire the necessary skills they will be recruited by the Company to replace expatriate workers. This means that the Company will open up employment to Papuans and New Guineans in the fields of skilled labour, and also in technical, middle range and senior executive and professional fields.
The Administration will need to expand its staff in the District by about 770 by the year 1972–73 (170 expatriate and 600 local).
It is expected that by the year 1972–73 commercial, industrial and service industries will provide employment for a further 200 expatriate and 700 local people.
In all avenues of employment there will be progressive increases in the proportion of local workers as the Company’s training programme and the Administration’s Educational services take effect.
The new town at Arawa will ultimately have several primary schools. The first of these schools is expected to commence enrolling pupils by February, 1970. As pupil numbers increase this school will be expanded or new schools built. The town will also have a secondary school to be completed by December, 1970. It will cater for the educational needs of about 250 students. A technical college will also be completed by December, 1970.
In addition a large new primary school will be built at the Panguna mine town.
These new schools will form a valuable educational complex. The primary schools will serve not only the residents of the new towns but also the surrounding indigenous population. The technical and high schools will, it is expected, serve the whole of the Bougainville District.
The Company has already established a heavy training programme. The aims of the Company’s training programme are:—
(1)to meet, and where possible, exceed the manning guide lines in relation to indigenous labour content;
(2)to examine methods and undertake steps to provide effective practical and theoretical training for indigenous employees;
(3)to provide additional academic instruction to enable employees to profit from industrial training; and
(4)to explore and undertake steps to obtain an adequate supply of technically qualified personnel.
The programme includes systematic training courses whereby employees recruited at the school-leaving stage are either passed directly to full-time university courses, or are taken through formal in-service training courses leading to senior management responsibilities in the technical, clerical and executive fields.
It is estimated that this programme, when fully underway, will involve the Company in an annual expenditure of about $500,000.
A major regional hospital will be built at Arawa town. It will have 30–35 intermediate beds and 200 public beds. Like the regional hospital at Goroka it will be equipped with all specialist facilities to serve the medical needs of the whole of the Bougainville District. Building of the first stage should be commenced in December, 1969 and be completed in December, 1970. The second stage should be completed in April, 1971 and the final stage in December, 1971.
During the construction period additional temporary hospital facilities will be provided at Kieta and at the mine site.
The Company will construct a port at the site of its Loloho Plantation on Anewa Bay about 8 miles north from Kieta. Associated with the port installation will be loading facilities for shipping concentrates, tank farms for storage of fuel and oil, warehouses, etc.
Near the port the Company will construct its powerhouse, and will require land for a site for further processing of copper concentrates.
It is important to keep in mind that this project will be one of the largest mining operations in the world. The scale of the physical operation is unprecedented in the industrial history of the Territory. It is apparent that an operation on this scale will require support from a large variety of subsidiary industries. For example, the equipment using rubber tyres will create a demand for a major rubber goods warehouse and retreading factory.
The suppliers of heavy earth moving machinery will require warehouses and repair service shops, as will the electrical equipment companies, steel fabricators, timber merchants, hardware and builders suppliers, etc.
Most of this and similar industrial development will be required in direct support of the mining operation but will also serve the needs of the surrounding district.
The volume of air traffic to and from Aropa will be increased many fold. Already the airlines have announced increases in the number of scheduled flights. Work has begun in connection with improvement of the airstrip to allow handling of Fokker Friendship (F.27) aircraft. This work will cost the Administration a sum of approximately $500,000.
The road from Aropa airport to Kieta is being improved to carry the great increase of traffic which will take place.
A new heavy duty road from Kieta to link with the Company’s road at Loloho will be constructed at a cost of approximately $500,000.
The Company’s road from Loloho to the mine will of course be a major road. It is estimated to cost about $8,000,000. A lesser road will be required from the mine to serve the Company’s pumping station and tailings disposal operations on the west coast. This road will complete a virtual trans-island link which could in the future connect with a road system along the west coast.
Improved communication with Rabaul has been established. By August, 1969 it is hoped to complete a similar direct link to Lae, and by June, 1970 the operation will call for a major system of 24–36 channels connecting at Lae with the Territory network and the ‘Seacom’ system. This will permit 24 hour service to the rest of the world.
The Company proposes to establish a major power generating station near its port. The station will initially generate 120 megawatts of electric power, with a provision for extension if required. This electricity would be used mostly for the Company’s operations, but sufficient power will be made available to the Papua and New Guinea Electricity Commission to permit distribution to the Arawa town and Kieta.
The output from the new station will greatly exceed the total power generated in the rest of the Territory. For comparison—the new Rouna No. 2 hydro-electric station generates 30 megawatts—Rabaul uses about 5 megawatts.
The new Arawa town will have an eventual population of about 10,000 people, expatriate and local. These will be mine workers, Administration staff, and the personnel associated with the private, commercial, professional and industrial activities essential to the existence of such a town.
All houses in the town will be of modern construction and will be connected to water, electricity and sewage services. In addition recreational and entertainment facilities will be incorporated in the town plan.
This town will remain as a permanent regional centre for administration and commerce after the mining ceases.
It is seldom that the life of a mine can be accurately forecast in its early stages. Mining is still an important industry in Kalgoorlie, W.A., Broken Hill, N.S.W., Mt. Lyell, Tasmania, and Mt. Morgan, Queensland, after more than 60 years of operation. The total life of the Mt. Isa field can be expected to exceed 60 years.
The published figures relating to the Bougainville project show a life of about 25 years, but it is known that substantial additional tonnages of lower grade ore exist within the Special Mining Lease, and that additional ore exists below the planned bottom level of the pit. It also seems likely that there would be additional suitable ore nearby and perhaps in a few years the people will have become used to mining, and recognising its benefits would then not object to the Company making further detailed investigations. The overall prospect of a life greatly in excess of 25 years is particularly promising at this pre-production stage of the operation.
General conclusions
Earlier in this paper it was stated that the effect of the Bougainville copper project would be to more than double the Territory’s export income; to introduce massive new revenue to the Treasury by way of dividends, royalties, company and individual income taxes, fees, duties and service charges; and to make possible dramatic advances in the way of life of the people of the area who will be able to enter into a cash economy based on secure employment and greatly improved education and health services.
It is hoped that the detailed information given in the paper will confirm that statement, and permit Members of the House to see the project in its proper perspective as an event of unprecedented economic and social significance in the history of the Territory.
It should be kept in mind that without the technical and financial strength of a major international mining company it is most unlikely that the significance of the Bougainville copper deposits would have been recognised. Few companies have the resources to risk $16,000,000 in investigations (which might not disclose a feasible operation), or to continue with the further massive investment required to bring the mine into production ($300,000,000).
It would not be difficult to imagine the added economic and social benefits if another such deposit were discovered in the Territory. The chances of such a discovery are by no means remote. Several large foreign mining companies are today investigating interesting mineral occurrences in other parts of the Territory including the Western District, the Sepik District and the Central District. The successful establishment of the Bougainville Copper project will encourage such companies to continue their exploration efforts.
The Administration believes that the Bougainville Copper project offers a most important opportunity for the Territory to take a significant step forward toward economic self-reliance. Because of this the project is seen as of national rather than local importance, and it is seen as a unit in the mining industry rather than as a single mine.
The Administration intends to fulfil its obligations under its Agreement with the Company and take all steps necessary to bring this great national asset into production.
Honourable Members, the facts are placed before you in order that you may be fully informed as to what is involved in this project.8
1 The statement was also known as the ‘White Paper’ on the Bougainville project (see undated and anonymous DOET paper, NAA: A452, 1969/3026). A draft of the paper had been criticised in DOET. In a minute to Mentz, Kelloway wrote: ‘I have read the draft of the proposed statement to the House of Assembly … While I think it is a very comprehensive statement of all the facts involved it seems to me that it has not been framed in a way suitable for public release at the present juncture … I think that the statement should have a much heavier emphasis on the positive benefits which will flow rrom the copper development. These benefits should be spelled out in some detail as they effect the indigenous population. Paragraphs 55 and 56 give an estimate of the additional revenue anticipated from the project. From the point of view of the Territory public these figures will have little impact—they need to be translated into terms of the additional social services, schools, hospitals etc., which can conceivably be provided with this sort of money … I think that this emphasis should run all through the document but particularly should be highlighted in the introduction and in the conclusion … While I do not doubt the necessity to insist that the Administration will proceed with the project and take all the measures necessary I think that any such statement should be promptly coupled with a reminder of the benefits to be expected from the project. Paragraph 51 for example should not stop at say{ing} land must be acquired by compulsory process—it should go on to remind the reader of all that is hanging on this project for the inhabitants of the Territory … There are one or two places where the phraseology gives the impression that the Administration’s primary reason for continuing with the project is that it is committed to the undertakers … I think it would be advantageous whenever such an impression is given to remind the reader of the reasons for this commitment … I think it is also very important that the statement should highlight all the benefits which the people of Bougainville in particular will receive from the establishment of the industry. Most of the basic information, town, hospital, schools, etc., is there. But the benefits for Bougainville in particular ought to be spelled out in a special section … As I see it the primary purpose of this statement is not simply to give factual information but to give factual information in a way which produces the most favourable possible impression on native opinion. I think it would be highly desirable therefore if the statement were referred to [the Social Change Advisory Committee] for advice’ (4 June 1969, NAA: A452, 1969/2443).
2 For example, see Documents 100, 106, 116 (footnote 1) and 121.
3 Opposition along the coastal strip had been increasing as preparations for a port and mining town gained momentum (for background, see Document 260). In early May, Ellis had written that the ‘500 people of the Arawa, Bairima, Rorovana and Lonsero villages in the affected area object strongly to the Company utilising any of their land’—although now ‘the people in the area of the proposed mining operations … are reconciled to the C.R.A. plans for development on their land’. He added that resistance had become associated with ‘some calls for a referendum with a view to Bougainville becoming independent, or more directly, for immediate independence. These calls for immediate independence are limited to some individuals and not coherent groups. On the other hand, a certain element of individual leaders favours an independent Bougainville at some indetermined time in the future’. Key agitators were said to be Lapun, F.R. McKillop (the owner of Arawa Plantation) and Barry Middlemiss, an employee of the latter. Concluding, Ellis noted ‘an emotionally stirred hardened attitude’ whose ‘easy solution’ would be a ‘cooling off’. Yet he could not ‘see how this can be allowed to take place and [I] therefore believe that the pressure will have to be kept on. This will entail further field staff commitments, more intensive patrolling, consultation and explanatory activity to assist in the cooling off process’ (paper by Ellis, 2 May 1969, NAA: A452, 1969/2217). Hay shared this sense of urgency, writing to Warwick Smith: ‘my own conclusion is that there is no reason at all to reconsider or review decisions made on the town site at Kieta or any of the decisions connected therewith. The attitude which the Administration has maintained and will maintain is that the decision was made by the Government after full consideration and that it will be carried out. It may well be that individual reports reaching you … will give the impression that the situation is more tense than it really is’ (letter, 5 May 1969, NAA: A452, 1968/5563). Meanwhile, the company continued to push the Administration. In a conference of 7 and 8 May, CRA insisted that ‘delays in the project were now becoming critical and extremely costly and strongly pressed that the Administration should endeavour to remove indigenous opposition a little more forcefully (i.e. the Administration should be prepared to accept a somewhat greater risk of precipitating a hostile reaction) in order to avoid costly delays and adhere to the Company’s timing schedule’ (minutes of meeting, NAA: A452, 1969/2443; see also footnote 2, Document 260).
4 See editorial note ‘Mineral discoveries on Bougainville Island’.
5 This should probably read $120,000,000.
6 Not printed—see Bougainville map at back of volume.
7 Not printed.
8 After debate, the House adopted the following motion: ‘That the House take note of the paper, and fully endorses the huge Bougainville copper venture as being a major and essential development in the economic future of the Territory, but requests that, prior to the acquisition of any native lands whatsoever in connection with the activities of CRA on Bougainville, the Administration should hold consultations with the Company and all landowners in the general area, in order to discuss land values and compensation levels for economic crops’ (undated and anonymous DOET paper, NAA: A452, 1969/3026). The House’s consideration of the Administration’s paper had been preceded by visits of various MHAs to Bougainville, including one by a group consisting of Lokoloko, Abal, Langro and Oala Rarua. The group had been invited by Lue and was reported to be ‘very sympathetic’ toward the Government position (telex 3755, Hay to DOET, 23 May 1969, NAA: A452, 1969/2443). Rarua later conveyed suggestions including that the acquisition of Arawa be accompanied by a two year moratorium on the possession of adjoining land (attachment to letter, Hay to Warwick Smith, 6 June 1969, ibid.). Somare and Voutas also visited Bougainville during this period (telex 3755, Hay to DOET, 23 May 1969, ibid.).