Ok Tedi Mine: Some Facts and Figures

The environmental and human tragedy that is still unfolding at the Ok Tedi mine in Papua New Guinea raises fundamental questions about the governance of natural resources. These questions concern the balance of power between inexperienced, cash-poor governments and powerful multinational industries; the provision of and access to information that is technical in nature; communication across language and cultural barriers; and the need for institutional structures that allow for effective complaint and redress when things go wrong. Such issues are directly relevant to the global mining industry’s ongoing efforts to reduce its adverse social and environmental impact and to be more accountable for its actions.

The story in brief

Papua New Guinea, a country of only 5 million people, is a botanical treasure island. Its relatively pristine rain forests, mountains, rivers, and reefs harbor a host of rare plants, animals, and birds, including flying foxes, river turtles, the longest lizard, and the largest orchid, bat, and butterfly species in the world (NRI and World Bank 2002:8).

Yet, in the 1990s, the country became a byword for the ecological destruction that can result when a young, weak government and an international mining corporation ignore environmental concerns and the voices of local communities.

The main source of trouble has been the Ok Tedi mine, situated deep in the rainforest-covered Star Mountains of Papua New Guinea’s Western Province. Since the mid-1980s, the large copper and gold mine has released about 30 million tons of mine tailings (a fine sand of crushed rock and metals) into the Ok Tedi tributary of the Fly River every year (Kirsch 2001:1). The result has been ecological disaster. By the early 1990s, fish were dying, turtles disappearing, and canoes running aground midstream as sedimentation raised riverbeds. The overflow destroyed food gardens in downstream indigenous communities and killed thousands of trees.

The mine’s main shareholders—Australia-based Broken Hill Proprietary or BHP (renamed BHP Billiton after merging with UK-based Billiton in 2001) and the Papua New Guinea government—failed for years to respond adequately to the ecological consequences of its operations. After the case became an international cause celebre, the indigenous peoples living along the Ok Tedi and Fly rivers sued the BHP and received $28.6m in an out-of-court compensation settlement (NRI and World Bank 2002).

Today, although a limited dredging operation has been introduced, mine waste continues to pour into local rivers. While the mine’s operations—and along with them, its boost to the national economy—are scheduled to end in 2010, its ecological impact will linger for decades. Ok Tedi Mining Ltd. (OTML), the company that operates the mine, itself acknowledges that more than 2,000 square kilometers of rain forest could be stunted (OTML 2003b). BHP Billiton, however, has walked away from Ok Tedi. In February 2002, its 52 percent equity share in the mine was transferred to an offshore trust, set up on behalf of the Papua New Guinea people (Finlayson 2002:6). The government gave BHP Billiton legal indemnity from responsibility for future mine-related damage to the Ok Tedi ecosystem, although the legality of this deal may be challenged in the country’s courts.

What went wrong? The answers—explored in the following pages—lie in the interplay of several factors, all related to governance. They include the linkage of the mine with nation-building and economic development in a newly independent country; the political marginalization of local communities and weakness of local government institutions; the government’s over-reliance on BHP for information about environmental costs and benefits; and the government’s conflicting role as both mine shareholder and regulator.

Ok Tedi Mine: The political and economic context

Papua New Guinea’s first central government was elected upon independence from Australia in 1975. The young nation experienced an abrupt transition to rule by a weak, centralized government whose authority was rivalled by traditional clan systems. The new government faced high expectations from its people; it also faced external pressure from multilateral lending organizations such as the World Bank and International Monetary Fund and from corporate partners in the mining industry.

Papua New Guinea is rich in mineral wealth. Large-scale mining began in the 1930s, under Australian colonial rule, in the Wau-Bulolo area. In 1972, a massive copper mine began operating at Panguna on the island of Bougainville, discharging its waste directly into the Jaba River. Over the next 15 years, the Bougainville mine became the world’s biggest copper producer (Filer 1997:59; Finlayson 2002:1).

The copper and gold deposits at Ok Tedi on Mount Fubilan, almost 2,000 meters high in the rain forest-swathed Star Mountains, presented a daunting challenge. The terrain is inaccessible and prone to high rainfall, frequent earthquakes, and landslides (King 1997:96). But the ores presented a tantalizing prospect to Papua New Guinea’s young government. By 1974, mining’s contribution to the national income had already increased substantially, and a new mine at Ok Tedi promised to raise it even more.

The government wanted to use income from the mine to develop infrastructure and services and to boost Papua New Guinea’s international standing as a major minerals exporter. It was encouraged in this by the World Bank and the Australian government, whose Export Finance and Insurance Corporation helped fund exploratory studies at Mount Fubilan (IWT 1994:60; MPI and AID/WATCH 1999:23).

In 1976, the state of Papua New Guinea authorized BHP, Australia’s biggest mining corporation, to prepare a development plan for the mine. Four years later, the government committed to a partnership in Ok Tedi Mining Limited with a 20 percent shareholding. The other shareholders were BHP, Amoco Minerals, and a consortium of German companies (King 1997:98). The mine began operating in 1984 and within a decade became one of the world’s largest copper producers—extracting about 30 million tons of ore. By 1996, the Papua New Guinea government owned 30 percent of shares, BHP 52 percent and Inmet, a Canadian mining company, 18 percent (King 1997:98).

Virtually all of Papua New Guinea’s land is in customary ownership, with the owners grouped into small communal clans (Hancock and Omundsen 1998:1). The state, however, claims legal ownership of all mineral resources beneath customary lands. As a result, only the government and its potential corporate partners were involved in deciding whether and how to develop Mt. Fubilan’s ores, assessing the Ok Tedi mine’s potential environmental and social impacts, and deciding how to ameliorate those impacts (Hancock and Omundsen 1998:3).

The approximately 2,000 landowners living at the headwaters of the Ok Tedi River held customary rights to the area covered by the proposed operations (Finlayson 2002: 9). These villagers alone were included in negotiations with the mining conglomerate, agreeing to lease 7,000 hectares of land to OTML in return for a benefits and compensation package that included cash, jobs, and education and health facilities. The indigenous communities living downstream of the proposed mine were excluded from the mine consultation process. It was not until 1997, after mine waste had devastated their lives for almost a decade, that leases for these villages were finally negotiated as part of an out-of-court compensation settlement (Kirsch 2001:4).

Before the project was approved, OTML agreed to build a tailings dam to protect the Fly River as recommended in an Environmental Impact Assessment (EIA) by Australian consultants commissioned by the company. The report concluded that even with such a dam in place, copper and other heavy metals would have severe effects on fish downstream of the mine (Townsend and Townsend 1996). In January 1984, however, a landslide destroyed the dam’s foundations. Under pressure from BHP not to force the expensive building of another dam, the government granted OTML temporary permission to release mine waste into the headwaters of the Ok Tedi River. In 1988, after a rebellion by indigenous landowners in Bougainville forced Papua New Guinea’s other major copper mine (and revenue-earner) to close, the government renewed OTML’s interim river disposal license. It is still in effect (Filer 1997:59).

The fallout

The well-documented environmental and social consequences of these decisions have been enormous. For almost two decades, the mine has discharged about 30 million tons of metal-tainted mine tailings and 40 million tons of waste rock a year into the Ok Tedi River, which in turn discharges its load into the Fly River. Before it reaches the Gulf of Papua in the Torres Straits, the Fly flows through dense primary tropical rain forest, wetlands, and savanna. The river system supports the greatest biological diversity in Australasia, including 128 recorded native freshwater species, with 17 unique to the Fly basin (Swales et al. 1998:100).

This chronic build-up of waste has had a devastating effect on the 50,000 people who live in the 120 villages along the two rivers and depend on them for subsistence fishing and other river-based resources. Before the mine, taro and bananas were commonly grown in village gardens and riverside sago palms often provided the mainstay of local diets. But since the early 1990s, the build-up of sediment in the rivers and subsequent flooding of forests have dramatically altered the local environment. Fish stocks have fallen by 70–90 percent, animals have migrated, and about 1,300 square kilometers of vegetation have died or become blighted, forcing villagers to hunt and fish over larger distances (BHP 1999:9; Higgins 2002:2). Copper concentrations in the water are about 30 times background levels, though the river still meets World Health Organization drinking water standards (BHP 1999:8–9).

For the Yonggom people and their neighbors living along the lower Ok Tedi and Fly rivers, the mine’s ecological impact violated a centuries-old way of life. From the late 1980s, they described in interviews and anguished letters to the OTML and government officials how pollution and flooding were eroding their traditional subsistence lifestyles, forcing some villagers to relocate. “The animals living along the river banks—the pigs, cassowaries, pigeons and bandicoots—have all disappeared...now the places where turtles laid their eggs have been covered up,” said one. “Before women travelled by canoe on their own, but today the river is too dangerous” (Kirsch 1997:124). An anthropologist working with the Wopkaimin people described the mine waste’s impact on local wildlife and people as “ecocide” (King 1997:96).

A voiceless people

As Ok Tedi Mining’s own literature acknowledges, its arrival changed the lives of the people forever (OTDF 2001:6). The horticulturalist indigenous tribes of Papua New Guinea’s Western Province had lived in small clan-based settlements for hundreds of years, cultivating small garden-farms and hunting and gathering food from the rain forest (IWT 1994:71; Kirsch 2003).

The Ok Tedi mine introduced industrial jobs, urban living, a cash economy, and supermarket food to the region, based around the company town of Tabubil. Yet, little was done to consult or prepare its indigenous residents for this upheaval (Finlayson 2002:17). Lack of communication isolated the downstream communities from their new corporate neighbor. Confusion over language, the role of customary clan leaders, and cultural and spiritual values also fed into OTML’s failure to quickly recognize and deal with the environmental disaster that ensued.

When personnel in the company’s environment and community affairs departments first received complaints from villagers, they found them imprecise, exaggerated, and confusing. “People are suffering from sores,” stated one letter. “The rain makes us sick. The air we breathe leaves us short of breath. And the sun now burns our skin”(Kirsch 2001:5). The villagers’ letters reflected their holistic and spiritual view of nature and human society as inextricably linked. But the jumbling together of evidence of mine waste impacts with clan mythologies blunted their message and helped prevent the initiation of a political process through which the communities’ grievances could be effectively heard (Burton 1997:42–44).

At the same time, local peoples had little experience with modern political environments. Traditionally, disputes were often settled without formal procedures. Clan leaders who gained their legitimacy through lineage were more influential than elected local officials and members of parliament (Burton 1997:33). These clan leaders wrote letters and sent petitions to as many interested parties as they could think of, making little distinction as to who was responsible for taking action. This helped create a situation whereby even though OTML’s community relations staff recorded villagers’ grievances, their reports were not considered important enough for senior management to act on and instead lay “filed away in forgotten corners” until it was too late to prevent court action (Burton 1997:42,52).

When anthropologist Stuart Kirsch visited the Yonggom communities in 1992, several years after the first letters of complaint were written, little formal assessment of environmental damage had been carried out by either mining company or government. He described the villagers as “in a state of despair, feeling both frustrated and completely ignored in their efforts to obtain restitution” (Kirsch 2001:9).