Canberra, 13 January 1967
Confidential
Papua and New Guinea—development of copper resources at Bougainville
This submission informs Cabinet of recent developments arising from the discovery by Conzinc Riotinto of Australia Ltd. (C.R.A.) of low grade copper deposits in the island of Bougainville. The company is now carrying out exploratory work to determine the extent of the deposits.
Background
2. The company has mining prospecting rights over three areas of the island. Exploration is at present confined to the Panguna area about 12 miles inland from the coastal headquarters at Kieta. The company has at present 10 drills operating in the area. The total estimated cost of the exploration programme is $5M ($2.5M spent since 1964). Development would be by open cut mining with an estimated capital expenditure of $135M to produce yearly 60–80,000 tons of copper with a value of the order of $50M.
Developments within House of Assembly
3. At the June 1966 meeting of the House, amendments were made to the Mining Ordinances of New Guinea and Papua to provide that the owner of private land would receive—
(a) compensation for damage to his land caused by mining operations;
(b) a minimum of $1 per acre annually where he was deprived of the use of his land because of a licence to prospect;
(c) $2 per acre annually where his land was subject to a lease to mine minerals. 1
These amendments were sponsored by the Government because the previous provisions provided inadequate compensation for owners of native land. The principle of Administration ownership of all minerals was restated in the amending Ordinances.
4. A further amendment moved by the member for Bougainville (Mr Paul Lapun) to provide that the owner would receive 5 per cent of royalties payable in respect of a mining lease over his land was defeated. Mr Lapun moved similar amendments to the Mining Ordinances at the next meeting of the House in November and these bills were passed by 31 votes to 21 votes. These Ordinances await consideration by the Governor-General. 2
Attitude of local people—Bougainville
5. The prospecting activities of C.R.A. are being opposed by some of the local people who claim ownership by native custom to the land for which prospecting licence is held by C.R.A.; it is claimed that ownership of the land entails ownership of the minerals. These people have stated that they want the company to withdraw completely from the area—they would then be prepared to consider conditions under which the company could be permitted to continue its operations. The aims of the people are mixed; some oppose any development which will interfere with their traditional way of life; others aim to secure a larger share of the profits. Reports of field staff of the Administration in the area stated that it was possible that the landowners would attempt to use physical violence to force the company to withdraw.
6. A senior officer of the Administration was sent to the area on 27th December to make a factual report on the situation and relevant extracts from his report are attachment ‘A’.3 It is clear from this report that amendments made to the Mining Ordinance to give landowners a share of mineral royalties (and the earlier amendments referred to in para 3 above) have had no real effect in ameliorating the local attitude of hostility to C.R.A.’s activities there.
7. The member for Bougainville has had meetings with the landowners concerned in attempts to overcome their opposition. The Kieta Local Government Council and other native people in the area are in favour of the proposed mining development continuing under the present law.
Attitude of the missionaries
8. The opposition of the people is supported by Catholic missionaries in the area. Bishop Lemay who is head of the missions involved (a Marist order with Headquarters in the U.S A.) has made several statements opposing Government policy. He advocates the repeal of the Mining Ordinances and other legislation which he considers unsuitable and contravening native custom and tradition.
9. Apart from the Bishop three missionaries are involved. Two of them have stated their opposition to any mining development in the area because they are apprehensive of the social consequences of industrialisation. One is reported as saying that he will advise the people to try all legal means to prevent any progress with C.R.A.’s prospecting and mining. The attitude of another missionary in the area is that the mining company is ‘fair game’ and the people should make maximum demands on it for amenities and services.
10. The report of the Administration officer includes a summary of discussion he had with the Bishop and the three priests on their attitude to mining development. The previous Administrator4 advised that the mission attitudes to the mining legislation could lead to a potentially explosive situation on Bougainville and I have informed the Apostolic Delegate to Australia (The Most Reverend Dominico Enrici) of this. The Apostolic Delegate has written to Bishop Lemay asking for a report on the matter, and underlining the dangers involved and urging him to do all in his power to solve the difficulties which have arisen. I am also examining the possibility of a meeting between the heads of the Catholic missions in the Territory and the new Administrator, who has just taken up duty, to seek to resolve the difficulties with the missionaries concerned.
Continuance of mining activities
11. Present arrangements are for the company to continue their operations (following the normal Christmas New Year break) including the preparation of drill sites, drilling and construction of necessary roads, with Administration protection including such police detachments as are necessary.
12. Only sixty villagers are involved in the opposition to drilling operations at Kokorei, the latest site where opposition has been shown, and fewer than 400 local people are involved in the whole area now under investigation by the company. There are adequate police available locally and on reserve in Rabaul to deal with any disorder which might develop.
Future action on mining ordinances
13. It is considered that the principle of Administration ownership of minerals must be maintained. Revenue from mineral development could be the major source of revenue for the Territory in future years. In determining the attitude which should be taken to the Ordinances referred to in para. 4 some regard however has been paid to the special position which land plays in the lives of native people living in the tribal state. Ownership of lands even though by customary tenure has a special social significance for these people. On balance I have concluded that the payment to landowners of 5% of mineral royalties incorporated in the Ordinances in question should be accepted, in the light of the views expressed in the House of Assembly, especially by native Members. However, such acceptance would probably be on the basis that the figure of 5% will not be increased, and that the House of Assembly will back the full development of mineral deposits in Bougainville and elsewhere in the Territory.
Conclusion
14. Investigation of the copper ore deposits could lead eventually to the development of a major economic asset for the territory. The industry could increase the Territory exports by $50M per year, offer employment to 1400 people in the Territory, increase substantially by way of royalties and increased taxation the Territory’s revenue, and bring substantial benefits by way of improved facilities to the people of Bougainville. This is the largest project ever contemplated in the Territory and it is essential that the project be brought to fruition.
15. The members of the House of Assembly supported C.R.A.’s activities in Bougainville when the Mining Bills were being considered. By protecting the company in carrying out its exploration the Administration is upholding the law as passed by the House—any withdrawal or suspension of C.R.A.’s activities would be a major blow to the Territory’s hopes for industrial development. It might also be interpreted by the local people as a victory over authority and could have serious implications for the maintenance of law and order in this and other areas.
16. For the above reasons it is considered that it is important that the mining exploration and subsequent development should proceed. At the same time the risk of some incidents possibly leading to open clashes with the police must be taken into account. The situation at present is well-controlled and developments are being closely watched.
17. Submitted for information.5
[NAA: A5842, 36]
1 See editorial note ‘Changes to PNG mining legislation’.
2 See editorial note ‘Lapun’s bill and the situation on Bougainville’.
3 Not printed. See Document 83.
4 Sir Donald Cleland.
5 Cabinet ‘noted’ the submission on 18 April 1967 (decision no. 249, NAA: 5842, 36).