Port Moresby, 24 October 1966
Bougainville mineral prospecting dispute: operations of Conzinc Riotinto of Australia Limited
Forwarded herewith are two copies of a paper prepared in the Department of Lands, Surveys and Mines, under date of 21st October, 1966, in which the prevailing circumstances at Panguna and the Kieta area are described, and suggestions made as to measures which might be taken to reduce the resistance being shown by landowners and other sectors of the local community against the present and proposed operations of Conzinc Riotinto of Australia Limited.1
2. The conclusion to be drawn from this paper is that the existing local situation demands immediate relief unless there is an acceptance by the Government and the Administration of the risks of riots and suicides,2 with the consequent effects on international opinion and on the future prospects of foreign investment in the Territory. In view of the seriousness of the consequences for the Territory if the situation results in violence, or if the Company finds its position untenable, it is considered that the Administration must take the lead in seeking a solution.
3. Listed at paragraph 21 of the paper, and discussed in the paragraphs following thereafter, are various suggested measures which might be taken in an attempt to create a more favourable atmosphere. These measures are:
(1) acceptance of the concept of sharing royalties with the landowners;
(2) making provision for resettlement of native people disturbed by mining operations;
(3) making provision for participation by local people in the capital structure of the operation;
(4) crash programmes for developmental projects in the general area of southern Bougainville, and in the particular areas of the mining operations;
(5) organised effort to improve public relations between the local people and the Administration and the Company respectively;
(6) convening of a conference between representatives of the local people and senior representatives of the Administration.
4. Of these suggested measures it is considered that only a compromise in the matter of royalties could be implemented quickly, with any prospect of having a significant immediate effect. It would also offer face-saving advantages if the resistant landowners were to accept the compromise.
5. The House of Assembly at its next meeting will consider the Bill of Mr. Paul Lapun M.H.A., which proposes a sharing of royalties by landowners, and the House will no doubt debate the matter also in a general context. The House contains a majority of elected Members, most of whom have inadequate experience to fully assess the economic and political significance of the matter upon which they will be required to vote. Because of this it will be the responsibility of the Administration to consider the likely consequences of both the passage and the defeat of the Bill, and to advise the House accordingly.
6. In the light of the circumstances outlined in the paper, would the Government give consideration to reviewing its policy on the matter of royalties? If it is decided to undertake such a review it would be important that the matter be finalised before the House considers the amending Bill to be presented at its November meeting.
[NAA: A452, 1966/5530]
1 Not printed.
2 The report quoted a local Administration officer who had written: ‘I regard the threats of suicide as being quite serious. I would like it appreciated at a Headquarters level that I feel suicides are probable. I also feel that we may well have to use physical persuasion to remove people from drill rigs’.