AUSTRALIA
AFTER THE GOLD RUSH
45’
JULY 2000
After the Goldrush
What happens when a foreign mining company bails out of a big project in a developing country? Who wins? Who loses?
Additional interviews by Jonathan Holmes and Heather Ewart.
02:53
PAUL ANDERSON, MANAGING DIRECTOR, BHP:
We're not comfortable with our role as operator of that mine.
03:01
ANDREW FOWLER:
After two decades, BHP wants out from its huge gold and copper mine at Ok Tedi in Papua New Guinea.
What it's not comfortable with is the huge scale of environmental damage this mine has caused.
03:16
MAUN TEPKE, VILLAGER:
A rich man came with a lot of money and he destroyed my environment.
He got richer and made me poorer.
ANDREW FOWLER:
BHP claims to have only recently learned how bad the damage is.
But what's stirred it to action now? And when did it really find out?
03:35
BILL TOWNSEND, FORMER STRUCTURAL ENGINEER, PNG GOVT:
If BHP didn't know what was going on, they weren't listening to their own staff.
03:46
ANDREW FOWLER:
Tonight on Four Corners, After the Gold Rush -- BHP's Ok Tedi legacy and who will have to pay.
04:30
The huge Ok Tedi gold and copper mine high in the remote Star Mountains of Papua New Guinea.
Here, miners lopped off the top of a mountain to get at a thick layer of gold.
Then they scooped a hole to get the copper out.
Ok Tedi now pumps $30 million in royalties and taxes each year into PNG's economy.
05:03
STUART GREEN, OK TEDI MINING LIMITED:
Today, we mine approximately 80 million tons per year. And on a basis of 235 tons per day, on average, we process 30 million tons and we have about 55 million tons of waste per year.
05:23
ANDREW FOWLER:
It's this waste that's created an environmental catastrophe for the mine and is embarrassing the mine's controlling shareholder BHP.
After mine rock is pulverised to extract the copper, the remains are pumped directly into the Ok Tedi River.
Sediment also leaches out from the waste dumps of discarded rock.
05:51
The heaviest waste ends up on the river floor as a bed of sediment, forcing the river to rise and spill its banks, drowning forests and killing the villagers' gardens.
Bige village on the banks of the Ok Tedi River.
06:16
GITAWA KAMBARE, BIGE VILLAGE:
Here was -- before it was big lagoon and big swamp.
And there is the sago trees around and people used to get sagos there and we used to eat and satisfy.
ANDREW FOWLER:
This area used to be a lagoon where the villagers fished and swam.
Now it's full of sediment -- waste from the mine upriver.
06:43
GITAWA KAMBARE:
This side of the bank of the river -- on this side now we are standing -- the bank of the river we were making garden.
Most of the people in this Bige village, we were making garden right from here all the way down.
Most of our gardens were on the bank of the river.
And the flood of Ok Tedi River comes down and kills all the things in the garden.
07:13
ANDREW FOWLER:
Before the mine, the people of Bige lived by catching fish and growing food in their gardens.
Like the thousands of others on the banks of the Ok Tedi and Fly Rivers, their subsistence lifestyle is fast disappearing.
And many more are likely to face a similar fate as the waste from the mine makes its way downstream to the Gulf of Papua.
If pollution was all that Ok Tedi created, PNG could say good riddance to BHP and the mine.
But it's not that simple.
08:01
The town of Tabubil, built to service the mine, is the upside to Ok Tedi.
It's home to 10,000 people -- employees and their families.
Here there are schools, hospitals, shops, new houses and services only dreamt of by most Papua New Guineans.
And here at Tabubil is an emerging middle class in one of PNG's most undeveloped provinces.
08:53
ATIMENG BUHUPE, COMMUNITY RELATIONS MANAGER, OTML:
The local communities have now learnt new lifestyles.
People are more educated. There are, you know, uh -- you know, better houses and so on.
09:17
ANDREW FOWLER:
Like most people in Tabubil, Atimeng Buhupe works for the mine.
His wife Sarah is employed in a clothing factory which makes the company's uniforms.
Their daughter Imelda goes to the local company-funded school.
ATIMENG BUHUPE:
I was growing up at a time during -- just before independence.
I had some experience of what it was like to be living in this area without telephones, you know.
Fairly sort of high death rates and, you know, the area infested with malaria and so on.
With the mine opening up, it has sort of improved that situation.
10:10
DR ROGER HIGGINS GENERAL MANAGER, OTML:
People have the same aspirations if they are people from the Star Mountains as people everywhere else has -- have.
And that are aspirations that their kids can go to school, they've got somewhere to take their kids if they get sick, the consumer goods -- everybody likes to be able to buy some new clothes or some nice food or maybe watch television.
And those things simply were not here before the project and would not be here without the mine.
10:35
SIR MICHAEL SOMARE, MINISTER FOR MINING:
It was good.
And suddenly when there was a devaluation of the kina, things dropped and of course --
ANDREW FOWLER:
The trade-off hasn't only been for Tabubil.
Sir Michael Somare was the prime minister who helped negotiate the deal that got the Ok Tedi mine started -- with his government as a shareholder.
Now, as Minister for Mining, he's well aware of the revenue the mine generates for the national economy.
11:02
SIR MICHAEL SOMARE:
And the Government does benefit a lot from the mine through its taxes and also it's important that we provide job opportunity, training opportunity for our people.
11:17
ANDREW FOWLER:
BHP's recent announcement that it is considering pulling out of Ok Tedi has sent everyone into a spin.
It's a move almost universally opposed in PNG.
11:28
SIR MICHAEL SOMARE:
We want the mine to continue to develop because it provides, say, about 10 per cent of our economic development.
11:38
ATIMENG BUHUPE:
I don't know what's going to happen in the future, honestly.
I am -- in fact, like other employees that you've talked with, I've enjoyed working for BHP because they provide good training.
11:55
ANDREW FOWLER:
BHP's intention also troubles the General Manager of Ok Tedi Mining Limited, OTML, the company that manages the mine for BHP.
Roger Higgins warned BHP's boss about the impact the decision would have on the local community.
12:11
DR ROGER HIGGINS:
I tried to explain how we saw it from the Ok Tedi perspective, what those dimensions were.
Because the Ok Tedi perspective is not necessarily the same as the Government's perspective as a shareholder or as BHP's perspective as the managing shareholder.
12:34
ANDREW FOWLER:
In all, BHP's intention to quit has united a diverse group of people, all keen for the company not to go.
OTML, the people of Tabubil, the PNG Government, and more surprising, perhaps, even the villagers down the river.
They want BHP to stay to clean up the mess.
12:55
OLD MAN:
It's no good for BHP to destroy our environment and just leave us like this and go.
They have to develop our area before they leave.
ISAIAH MAUN, BIGE VILLAGE: I don't feel good because I don't know what is going to happen in the future -- in 50 years time or 100 years time.
For myself and for Bige people and for all of us around, living around the mining area, it is better the company should do something before it goes away.
13:40
PAUL ANDERSON:
With regard to Ok Tedi, Ok Tedi -- we've pretty well canvassed anybody and everybody who has an opinion on Ok Tedi and that's a lot of people.
It's taken us quite a while.
ANDREW FOWLER:
Early this year, BHP's new boss Paul Anderson addressed a dinner of investors and bankers where he promised to deliver value to his shareholders.
14:01
PAUL ANDERSON:
As I'm sure all of you are aware, BHP has undergone significant change over the last year.
In a portfolio and financial management sense, there is considerable progress that's been made to address the more dysfunctional aspects of BHP's portfolio.
And while we --
14:18
ANDREW FOWLER:
After extracting $8 billion in gold and copper, Paul Anderson now identifies Ok Tedi as "a dysfunctional aspect "of BHP's portfolio."
PAUL ANDERSON:
We're not comfortable with our role as operator of that mine and we -- we have put together a proposal that we'll be reviewing with our partners and with the Government and other people as to where we might go forward in the future under the assumption that the mine does continue to operate.
14:51
ANDREW FOWLER:
But why now after 16 years does BHP want to get out?
Anderson says they have only just found out the pollution is worse than expected.
But BHP shouldn't need a rear-vision mirror to discover what went wrong.
Four Corners can reveal many of the mine's environmental problems were made known to the company years ago.
After the gold rush, when the copper came on-stream in 1987 and copper sediment started pouring into the river, the warnings were loud and clear.
15:31
JUNNE COSMAS, EREKTA VILLAGE:
We knew that there was something wrong with the river when we saw changes in the plants and animals and whatever that surrounded our village or the river.
We knew then that --
ANDREW FOWLER:
Junne Cosmas is a landowner from the Fly River village of Erekta, near where the Fly meets the Ok Tedi River.
She started to notice the damage by 1989.
15:58
JUNNE COSMAS:
The trees, they started changing colour, which normally they wouldn't change colour but those trees, they were changing colour and we knew something was wrong.
And the good places that we go fishing, we couldn't catch much fish in those areas.
16:16
ANDREW FOWLER:
Two years later, one of PNG's biggest commercial fishing companies saw evidence of why the fish were missing.
BARRY SHACKLES, FORMER COMMERCIAL FISHERMAN:
You could see that the off-river lagoons, the entrances to them were silting up faster which virtually means the water in the lagoon doesn't run out when the river drops because the sandbar holds the water back in the lagoons.
The bait fish, etc., basically live and breed in the off-river wetlands.
And if access is denied to them back to the main river, there's got to be some sort of a problem occurs.
The barramundi can't get in.
16:53
ANDREW FOWLER:
Barry Shackles saw his catch of barramundi drop by a half each year.
BARRY SHACKLES:
About '91, we had a good year in '91 and then, '92, the catch dropped to 35 ton, although we had two boats working. '93, the catch dropped to 10 ton.
And after 10 ton, I didn't have enough money to keep fishing.
It's that simple.
17:17
ANDREW FOWLER:
By 1993, Barry Shackles was out of business.
Both he and Junne Cosmas raised their concerns with Ok Tedi but they say the company was unconvinced by stories on the ground.
17:32
JUNNE COSMAS:
They told us there was nothing wrong but we knew there was something wrong.
And we knew it even before -- the local people knew it even before Western science proved that there was something wrong.
They didn't want to listen to us in the beginning, the company, even our government.
17:48
BARRY SHACKLES:
They weren't presenting me with their figures.
They were virtually saying there's as many fish as there used to be.
My catch effort said there's not. That's all.
18:04
ANDREW FOWLER:
In fact, the operating company has a history of downplaying the environmental fallout from Ok Tedi.
This was the mountain that became the mine.
There were high hopes and promises in the early days that the impact on this pristine wilderness could be contained.
Ok Tedi was supposed to have a tailings dam to store its waste sediment.
A tailings dam minimises the impact mine waste has on a river system.
18:44
When a river carrying waste and sediment reaches a tailings dam, the water slows down and the waste drops to the river floor.
The relatively clean water on the surface then flows over the dam wall and continues downstream.
The saga of trying to build such a dam at Ok Tedi puts in question BHP's claim that they have only recently become aware of the extent of the damage caused by the mine.
19:17
DR. BILL TOWNSEND:
They considered a number of different scenarios -- what would the cost of the project be?
What would the damage to the environment be?
ANDREW FOWLER:
Bill Townsend was a structural engineer who worked for the PNG Government from 1981 to 1984.
He advised them they needed a tailings dam.
But Townsend suspects the operating company was never serious about building such a dam.
19:44
BILL TOWNSEND:
I got the impression that they were looking for short-term solutions and not a long-term solution, that they were -- it looked like they were postponing the tailings dam to where they would eventually not have to build it at all.
20:00
ANDREW FOWLER:
Construction did finally start on a tailings dam in 1983 as this company film shows.
But Townsend believes OTML was more interested in getting the mine up and running than building the dam on the adjoining Ok Ma River to contain its waste.
10:22
BILL TOWNSEND:
In order to get back on schedule, they pulled crew off the Ok Ma and put them on process-plant construction to get the process-plant construction back on line, which meant that the Ok Ma tailings dam was getting farther and farther behind.
20:42
ANDREW FOWLER:
A few months later, the partially completed dam collapsed.
The company looked for another site.
But Bill Townsend says OTML considered that the cost of alternative locations was too high.
BILL TOWNSEND:
OTML's reaction to spending $300 million on a tailings dam was, "This produces a cost of tailings disposal which is higher than the world standard therefore we will keep looking for another site."
21:15
ANDREW FOWLER:
OTML maintains it did all it could to get a tailings dam built but it didn't want production to be held up.
And by this stage, the company's investment was already significant.
21:28
DR ROGER HIGGINS, GENERAL MANAGER, OTML:
The staff had been recruited.
People had been employed.
Local people were already receiving -- had a school here which they had not had prior to that.
There was a hospital here that had not been here prior to that.
So it's not as if the project decided that it would proceed and be built without a tailings dam.
It was largely built.
21:47
ANDREW FOWLER:
A tailings dam was never built.
The PNG Government withdrew its insistence on a dam because it feared the mine would pull out if it pushed OTML too hard.
The waste was pumped directly into the river.
BHP claims it didn't fully understand the consequences of that decision until recently.
Yet at the time, OTML asked its own experts to calculate the impact of a mine without a tailings dam.
22:21
MIKE ABRAMSKI, FORMER ENVIRONMENT CHEMIST, OTML:
We kind of assumed that it was just for comparison purposes, to demonstrate the effectiveness of the tailings dam.
So we did some calculations and of course, the figures were sky-high and ridiculous in comparison to any environmental guidelines.
22:40
ANDREW FOWLER:
Mike Abramski, who worked as OTML's chief environmental chemist until 1985, recalls what he felt when the waste started pouring into the river.
MIKE ABRAMSKI:
Shock, absolute shock, yeah.
Couldn't believe that it was true. We couldn't believe --
Firstly, I think the consensus amongst the environmental specialists working there at the time was, in my opinion, that firstly, no-one in their right mind would go ahead and build a mine like this without a tailings dam.
Not even the most moth-eaten mining engineer would be so out of touch with the present, at the time, as to even propose that.
And secondly, that no government would allow that.
When mining started to take place, when the tailings started coming down the river, then those beautiful rivers were being turned into gutters for mining waste.
And that, to me, was very hard to live with, to look at.
23:47
ANDREW FOWLER:
Abramski left OTML disillusioned.
The person who received his data on the impact of a mine without a tailings dam is now General Manager of OTML.
24:00
DR. ROGER HIGGINS:
I was the environment manager at the time.
I was not the company's managing director, nor was I a member of the board of directors.
I was one of the people they asked to give advice.
We looked at it.
We did some work to see what we thought that effect would be and we told people what we thought that would be.
That was our job.
24:17
ANDREW FOWLER:
What was the effect that you told them it would be?
DR. ROGER HIGGINS:
Obviously, without a tailings dam there would be much more sediment in the river.
DR. BILL TOWNSEND:
Roger Higgins was the Director of Environmental Department, doing the monitoring and doing the projections.
So if BHP didn't know what was going on, they weren't listening to their own staff.
24:40
ANDREW FOWLER:
14 years after it began pumping waste into the river system, the operating company finally began an effort to clean it up.
KEN VOIGT, MINE WASTE MANAGER, OTML:
We started them in March 1998, and what we've done here is dredged a big hole in the river to trap mine sediment that comes down from the mining operations.
And that's to reduce the bed-level here, because what we're getting around this region here is dieback that's being caused through increased flooding over the flood plain.
So the idea is to OK, this is the dredging operations for Ok Tedi Mining Limited.
take sediment out of the river to reduce the bed and therefore to reduce the amount of flooding, so we can try and address the dieback problem.
25:23
ANDREW FOWLER:
OTML's dredging operation is an acknowledgment of the problem.
But it only came after a long and bitter legal battle.
BHP settled out of court in 1996 with a $150 million compensation payout to landowners.
It also promised to find a way to deal with the waste.
There are signs some of the dieback is being controlled by dredging, but even the operating company, OTML, admits it's not the solution.
25:57
KEN VOIGT:
It would be very difficult to improve the environment probably in the Fly, through dredging, because you'd have to dredge in several different locations and the concern there is where would you put the sediment?
Would it be a worse environmental problem than not taking it out in the first place?
So I think you would have to dredge all the way up the Fly to take this existing sediment out to try and improve it immediately.
26:24
ANDREW FOWLER:
Why did BHP ignore the environmental damage at Ok Tedi for so long?
And why does it now want to get out of a mine that under normal circumstances is expected to enter its most profitable phase?
We invited the company to appear in this film but BHP declined to record an interview.
4 Corners would've also liked to have asked the company whether it's concluded that future liabilities might overwhelm future profits from this mine.
There are several problems looming.
An old opponent, law firm Slater and Gordon, are about to re-enter the fray.
They plan renewed litigation on behalf of their long-term clients, the Fly River landowners.
Slaters say BHP has failed to deliver on its 1996 promise to deal with the waste at Ok Tedi.
2719
NICK STYANT-BROWNE, LAWYER, SLATER AND GORDON:
I think this is a fundamental development in the history of Ok Tedi and a real spanner in the works in terms of all of the negotiations which are presently taking place to enable BHP to exit.
The fact of the matter is that this represents a huge potential liability for both BHP and OTML, and it's really not possible to complete any transaction and for BHP to get out until such time as this litigation is resolved.
27:48
ANDREW FOWLER:
Slater and Gordon aren't the only people threatening legal action.
Perry Zeipi was PNG's minister for the environment in the late '80s and he wants to take BHP to the International Court of Justice in The Hague.
28:04
PERRY ZEIPI, FORMER PNG MINISTER FOR THE ENVIRONMENT:
But I'd like this matter to go higher and higher so that all the world can know what the foreign company has done to the beauty of the Fly River.
And must be recorded once and for all so that no repetition is done, not even only to the Fly River but what about our creeks and our rivers?
It's been naturally blessed by the Lord Himself and we must give it back to the Lord.
28:27
ANDREW FOWLER:
Both these legal threats are for damage already done.
But BHP must also be worried about future claims against it.
NICK STYANT-BROWNE:
There's no doubt that BHP's responsible for future damage.
They put the mine in there, they've been running it for well over 10 years and they're responsible for future damage.
And it's just not good enough for BHP to somehow make this everyone else's problem.
You need to understand that that's what they're doing now.
They're saying, "Look, this is a problem for the PNG government, for the local people," and they've kind of passed the problem on to the other stakeholders.
And they ought not be allowed to get away with it.
29:26
ANDREW FOWLER:
The eventual damage to the river is unknown.
But evidence is mounting that the effects of the mine have reached as far as the mouth of the Fly River, over 400km downstream.
Here, traditional landowners are demanding compensation for erosion they say is caused by BHP's ships.
And if the company doesn't pay up, they're threatening to blockade the river.
29:55
LEWIS SIWARE, LANDOWNER, LOWER FLY RIVER:
We are going to work on a plan of action which we hope will result in the blockade of the river, until such time that the company listens to us.
We're not going to allow BHP to leave this soil until it has cleaned up its mess.
30:14
ANDREW FOWLER:
BHP may be assessing even bigger and more frightening liabilities.
Just a few weeks ago, the World Bank delivered a confidential report to the PNG Government.
It identified two environmental dangers that could escalate at Ok Tedi.
One is copper.
Most copper is extracted during processing, but some is left behind in the waste.
It's copper combined with heavy silt that forces fish from the river and can affect their breeding.
30:53
BARRY SHACKLES:
The barramundi which went to the coast to spawn would get out of this stinging environment and wouldn't want to come back up the river again after the spawning.
They'd go off to other rivers.
For a fish living in constant silt after a cleaner river, it must be like us living in a dust storm. I don’t know.
ANDREW FOWLER:
Company evidence confirms high levels of copper in the river at times.
These appear on a graph as spikes.
It's these periodic high concentrations of copper that are the problem.
They can kill off sensitive algae and affect the food chain.
An independent report is critical of the way OTML states copper levels as averages.
31:52
BARRY SHACKLES:
It's like saying 1 cup of cyanide today and 364 cups of water gives you a daily average of cyanide that won't kill you.
It's the cup of cyanide on the thick day that kills you.
It's the bad day with the sediment that kills the fish, not the yearly average.
32:09
DR ROGER HIGGINS:
They possibly kill the algae and possibly kill the fish, yes.
But it's all 'possibly'.
That's why we say it's of concern.
That's why I've said we need to keep monitoring it.
32:21
ANDREW FOWLER:
An even bigger environmental liability than copper may be looming.
Acid rock drainage. It's a problem directly related to exposed mine waste.
When rock waste from a mine is exposed to the air, microscopic organisms can be activated to produce acid.
This acid can wash down into the river system.
Acid hot spots can spring up hundreds of kilometres away in swamps and lagoons, killing fish, making them sick or vulnerable to disease.
The extent of acid rock drainage at Ok Tedi is unknown.
The World Bank believes it can be controlled during mining, but says it's "essentially uncontrollable thereafter".
The operating company's own web site says, in a worst case situation, compensation for acid rock drainage could be as much as US$3.7 billion each year for 50 years.
OTML says the risk of acid rock drainage -- ARD -- is very low and the General Manager is hopeful they have it under control.
33:44
DR ROGER HIGGINS:
The river here is very benign in terms of its acidity because most of the catchment which we're in is limestone, which is the natural counter to acidity and that's why the river is not being affected by ARD and why it possibly won't.
It's one thing to say possibly it is, but the implication, the flip side of that is possibly it won't.
And the very large amounts of limestone in the river are the natural buffering, the natural counter to acidity.
34:14
ANDREW FOWLER:
Can PNG rely on the company's optimism?
MIKE ABRAMSKI:
I think what happens in these mining companies is that you have a group of people who have this project -- to get on with, to build this mine, to -- to get this ore out, and -- and to make a big profit for the company.
And they're all very -- um -- very -- very -- working hard in that direction.
And, um -- and they tend to -- to egg themselves on with saying, "Oh, yeah, we can fix that," and "We will fix that -- later."
The engineers, anyway, have this attitude that a good engineer can solve almost anything.
35:00
ANDREW FOWLER:
So in walking away from Ok Tedi, BHP must be calculating what it stands to lose by staying.
It faces renewed legal action from landowners along the Fly River, a case against it in the International Court of Justice, claims for damages from landowners at the mouth of the river and, possibly, crippling bills for copper damage and acid rock drainage.
When it all adds up, the intention to pull out isn't all that surprising.
35:34
RICHARD ROSSITER, RESOURCE ANALYST, MACQUARIE BANK:
I think the liability issue is an extremely important issue and, obviously, the critical element in the negotiation in terms of BHP exiting the project.
Obviously, that is the big grey area, because there's so many unknowns and so many issues.
But that is the critical issue for them to resolve going forward.
35:54
ANDREW FOWLER:
There's speculation BHP wants an indemnity from the PNG Government against future compensation claims, in return for cleaning up some of the damage it's caused.
A decision to walk away from Ok Tedi will leave the Government with an acute dilemma.
PNG can't walk away. It doesn't want the mine to close and it must look for a new partner.
36:21
SIR MICHAEL SOMARE:
So Government, when considering Ok Tedi's decision to pull out, would also be looking -- looking for other developers.
So, we're quite open about, you know, who the other developers would be.
We have to treat them on their credentials -- look at what they have done and experience that they can, um -- bring to continue the mine until, uh -- mine closes, when -- when gold and copper depletes.
36:50
ANDREW FOWLER:
So it is very important that you find a buyer?
SIR MICHAEL SOMARE:
Yes. Yes.
We have to find a buyer.
ANDREW FOWLER:
Finding a suitable buyer might not be so easy.
The PNG Chamber of Mines believes only a handful of companies are qualified to run a huge open-cut copper mine like Ok Tedi.
37:10
GREG ANDERSON, EXECUTIVE DIRECTOR, PNG CHAMBER OF MINES:
I think it's just there is a broad concern that -- that, as I say, that we get somebody, if BHP does in fact go, if that's what happens, that we get someone who has that -- international mining experience.
It's possible that people who are not -- don't even have any mining expertise at all could try to get involved.
And that would be one thing that I could see is a possible problem.
37:38
ANDREW FOWLER:
Experienced and reputable mining companies will know they face the same problems that BHP is trying to leave behind.
Alex Maun was one of the landowners involved in the earlier legal challenge against BHP.
He's already flagged landowners will take on any newcomer.
37:58
ALEX MAUN, YERAN VILLAGE:
We will demand that BHP is responsible for cleaning up the mess -- unless BHP transferred liabilities to the new mining company.
Then we will pursue the new company.
38:14
ANDREW FOWLER:
So, in order to attract a new buyer, the PNG Government may be forced to indemnify them from future legal actions like Maun's.
Do you think it would be fair to indemnify the new owner?
38:28
SIR MICHAEL SOMARE:
That's -- well, that's something that the Government, I think, need to -- need to consider very seriously, yeah.
ANDREW FOWLER:
What do you think, personally?
SIR MICHAEL SOMARE:
Um -- my view personally?
Yes, but I think that's a decision that Government has to take.
39:15
ANDREW FOWLER:
Developing nations often make a trade-off -- pollution for investment and jobs.
But what's the trade-off for a multinational?
Having profited from the development, what are their long-term responsibilities?
39:32
MIKE ABRAMSKI:
At the top of the mission statement of every mining company stands, um -- a sentence which goes something like this -- "To maximise profit to the shareholders."
The first -- the first point on the mission statement is not to be kind to the environment.
39:50
DR BILL TOWNSEND:
When a company like BHP does business on an international market they should be required to live by the standards of the country that they came from.
The environmental standards in Australia should apply to BHP.
40:06
PAUL ANDERSON:
Portfolio management is critical to BHP's long-term success.
ANDREW FOWLER:
BHP's corporate standards also worry the World Bank.
In assessing the Ok Tedi mine it says, BHP focuses too much on the risks to "the company and its shareholders".
But the company's own charter says it has a corporate responsibility to the environment.
40:32
RICHARD ROSSITER:
Essentially, BHP must demonstrate that it has the will to, basically, exit the project with the primary goal being to look at the environmental and social side, and to be seen really fitting its charter, rather than to have made a short-term financial gain in terms of exiting the project.
41:03
ANDREW FOWLER:
There are clear losers in this story.
On the Fly River, villagers have recently been catapulted into the cash economy by the mine.
Pollution of their fishing grounds and gardens means they're now dependent on the compensation they receive from Ok Tedi.
But the compensation appears disproportionate to the problems they now face.
Since the 1996 legal case, Junne Cosmas from Erecta village has received just 200 kina compensation -- about $100.
41:39
JUNNE COSMAS:
With 200 kina I can buy 20 kilos of rice. Um -- maybe about 10 large tinned fish. Um -- bully beef, maybe 10. Uh -- sugar, maybe five. And, maybe, one or two odd things.
You can't get a lot.
And that would last you, maybe, for two weeks, and it's gone.
You know -- and that's all the money. Hmm.
42:20
NOLEEN KONGWORIN, DANDE VILLAGE:
Yes, the money -- there is lots of money that is flowing into Western Province -- but, I would say, the people who are working at the mine, who have been employed by the mine, are benefiting.
But people like us -- Sorry. We are not.
42:49
ANDREW FOWLER:
There may be other losers too.
Down near the dredging site village women are paid by the mine to plant trees, rehabilitating the land.
The mine is also trying to develop local agriculture.
Yet, it's questionable whether the work the mine brings will last.
At most, Ok Tedi will only be open for another 10 years.
43:24
Sarah Buhupe makes the company's uniforms in this locally owned factory.
She hopes the skills she's learnt here will enable her to work for herself later on.
She and her husband are holding on to the hopes and expectations the mine has brought.
43:46
ATIMENG BUHUPE:
We can't go back to the old lifestyle, because we now have permanent houses.
And we can't turn the clock back and expect people to be living, you know, like in here where there was no township and no electricity, no roads, no airstrips and so on.
44:10
DR ROGER HIGGINS:
I'm not at all ashamed of what -- of the very, very good things that Ok Tedi has done here, and the benefits it's brought to people.
I don't intend to be ashamed by that.
I wish it could've been done differently, yes.
But that -- I'm not sure that I would say it shouldn't have been done at all.
I think there are a lot of people who have benefited greatly.
44:28
ANDREW FOWLER:
Ok Tedi is the mine PNG doesn't want to lose.
It's also the mine BHP doesn't want to keep.
The Big Australian now wants to unload this mine to protect its corporate image.
But it'll be judged on just how it makes its exit from Ok Tedi.
44:49
END
Reporter: Andrew Fowler
Producer: Anne Delaney
Research: Peter Cronau
AFTER THE GOLD RUSH
45’
JULY 2000
After the Goldrush
What happens when a foreign mining company bails out of a big project in a developing country? Who wins? Who loses?
Additional interviews by Jonathan Holmes and Heather Ewart.
02:53
PAUL ANDERSON, MANAGING DIRECTOR, BHP:
We're not comfortable with our role as operator of that mine.
03:01
ANDREW FOWLER:
After two decades, BHP wants out from its huge gold and copper mine at Ok Tedi in Papua New Guinea.
What it's not comfortable with is the huge scale of environmental damage this mine has caused.
03:16
MAUN TEPKE, VILLAGER:
A rich man came with a lot of money and he destroyed my environment.
He got richer and made me poorer.
ANDREW FOWLER:
BHP claims to have only recently learned how bad the damage is.
But what's stirred it to action now? And when did it really find out?
03:35
BILL TOWNSEND, FORMER STRUCTURAL ENGINEER, PNG GOVT:
If BHP didn't know what was going on, they weren't listening to their own staff.
03:46
ANDREW FOWLER:
Tonight on Four Corners, After the Gold Rush -- BHP's Ok Tedi legacy and who will have to pay.
04:30
The huge Ok Tedi gold and copper mine high in the remote Star Mountains of Papua New Guinea.
Here, miners lopped off the top of a mountain to get at a thick layer of gold.
Then they scooped a hole to get the copper out.
Ok Tedi now pumps $30 million in royalties and taxes each year into PNG's economy.
05:03
STUART GREEN, OK TEDI MINING LIMITED:
Today, we mine approximately 80 million tons per year. And on a basis of 235 tons per day, on average, we process 30 million tons and we have about 55 million tons of waste per year.
05:23
ANDREW FOWLER:
It's this waste that's created an environmental catastrophe for the mine and is embarrassing the mine's controlling shareholder BHP.
After mine rock is pulverised to extract the copper, the remains are pumped directly into the Ok Tedi River.
Sediment also leaches out from the waste dumps of discarded rock.
05:51
The heaviest waste ends up on the river floor as a bed of sediment, forcing the river to rise and spill its banks, drowning forests and killing the villagers' gardens.
Bige village on the banks of the Ok Tedi River.
06:16
GITAWA KAMBARE, BIGE VILLAGE:
Here was -- before it was big lagoon and big swamp.
And there is the sago trees around and people used to get sagos there and we used to eat and satisfy.
ANDREW FOWLER:
This area used to be a lagoon where the villagers fished and swam.
Now it's full of sediment -- waste from the mine upriver.
06:43
GITAWA KAMBARE:
This side of the bank of the river -- on this side now we are standing -- the bank of the river we were making garden.
Most of the people in this Bige village, we were making garden right from here all the way down.
Most of our gardens were on the bank of the river.
And the flood of Ok Tedi River comes down and kills all the things in the garden.
07:13
ANDREW FOWLER:
Before the mine, the people of Bige lived by catching fish and growing food in their gardens.
Like the thousands of others on the banks of the Ok Tedi and Fly Rivers, their subsistence lifestyle is fast disappearing.
And many more are likely to face a similar fate as the waste from the mine makes its way downstream to the Gulf of Papua.
If pollution was all that Ok Tedi created, PNG could say good riddance to BHP and the mine.
But it's not that simple.
08:01
The town of Tabubil, built to service the mine, is the upside to Ok Tedi.
It's home to 10,000 people -- employees and their families.
Here there are schools, hospitals, shops, new houses and services only dreamt of by most Papua New Guineans.
And here at Tabubil is an emerging middle class in one of PNG's most undeveloped provinces.
08:53
ATIMENG BUHUPE, COMMUNITY RELATIONS MANAGER, OTML:
The local communities have now learnt new lifestyles.
People are more educated. There are, you know, uh -- you know, better houses and so on.
09:17
ANDREW FOWLER:
Like most people in Tabubil, Atimeng Buhupe works for the mine.
His wife Sarah is employed in a clothing factory which makes the company's uniforms.
Their daughter Imelda goes to the local company-funded school.
ATIMENG BUHUPE:
I was growing up at a time during -- just before independence.
I had some experience of what it was like to be living in this area without telephones, you know.
Fairly sort of high death rates and, you know, the area infested with malaria and so on.
With the mine opening up, it has sort of improved that situation.
10:10
DR ROGER HIGGINS GENERAL MANAGER, OTML:
People have the same aspirations if they are people from the Star Mountains as people everywhere else has -- have.
And that are aspirations that their kids can go to school, they've got somewhere to take their kids if they get sick, the consumer goods -- everybody likes to be able to buy some new clothes or some nice food or maybe watch television.
And those things simply were not here before the project and would not be here without the mine.
10:35
SIR MICHAEL SOMARE, MINISTER FOR MINING:
It was good.
And suddenly when there was a devaluation of the kina, things dropped and of course --
ANDREW FOWLER:
The trade-off hasn't only been for Tabubil.
Sir Michael Somare was the prime minister who helped negotiate the deal that got the Ok Tedi mine started -- with his government as a shareholder.
Now, as Minister for Mining, he's well aware of the revenue the mine generates for the national economy.
11:02
SIR MICHAEL SOMARE:
And the Government does benefit a lot from the mine through its taxes and also it's important that we provide job opportunity, training opportunity for our people.
11:17
ANDREW FOWLER:
BHP's recent announcement that it is considering pulling out of Ok Tedi has sent everyone into a spin.
It's a move almost universally opposed in PNG.
11:28
SIR MICHAEL SOMARE:
We want the mine to continue to develop because it provides, say, about 10 per cent of our economic development.
11:38
ATIMENG BUHUPE:
I don't know what's going to happen in the future, honestly.
I am -- in fact, like other employees that you've talked with, I've enjoyed working for BHP because they provide good training.
11:55
ANDREW FOWLER:
BHP's intention also troubles the General Manager of Ok Tedi Mining Limited, OTML, the company that manages the mine for BHP.
Roger Higgins warned BHP's boss about the impact the decision would have on the local community.
12:11
DR ROGER HIGGINS:
I tried to explain how we saw it from the Ok Tedi perspective, what those dimensions were.
Because the Ok Tedi perspective is not necessarily the same as the Government's perspective as a shareholder or as BHP's perspective as the managing shareholder.
12:34
ANDREW FOWLER:
In all, BHP's intention to quit has united a diverse group of people, all keen for the company not to go.
OTML, the people of Tabubil, the PNG Government, and more surprising, perhaps, even the villagers down the river.
They want BHP to stay to clean up the mess.
12:55
OLD MAN:
It's no good for BHP to destroy our environment and just leave us like this and go.
They have to develop our area before they leave.
ISAIAH MAUN, BIGE VILLAGE: I don't feel good because I don't know what is going to happen in the future -- in 50 years time or 100 years time.
For myself and for Bige people and for all of us around, living around the mining area, it is better the company should do something before it goes away.
13:40
PAUL ANDERSON:
With regard to Ok Tedi, Ok Tedi -- we've pretty well canvassed anybody and everybody who has an opinion on Ok Tedi and that's a lot of people.
It's taken us quite a while.
ANDREW FOWLER:
Early this year, BHP's new boss Paul Anderson addressed a dinner of investors and bankers where he promised to deliver value to his shareholders.
14:01
PAUL ANDERSON:
As I'm sure all of you are aware, BHP has undergone significant change over the last year.
In a portfolio and financial management sense, there is considerable progress that's been made to address the more dysfunctional aspects of BHP's portfolio.
And while we --
14:18
ANDREW FOWLER:
After extracting $8 billion in gold and copper, Paul Anderson now identifies Ok Tedi as "a dysfunctional aspect "of BHP's portfolio."
PAUL ANDERSON:
We're not comfortable with our role as operator of that mine and we -- we have put together a proposal that we'll be reviewing with our partners and with the Government and other people as to where we might go forward in the future under the assumption that the mine does continue to operate.
14:51
ANDREW FOWLER:
But why now after 16 years does BHP want to get out?
Anderson says they have only just found out the pollution is worse than expected.
But BHP shouldn't need a rear-vision mirror to discover what went wrong.
Four Corners can reveal many of the mine's environmental problems were made known to the company years ago.
After the gold rush, when the copper came on-stream in 1987 and copper sediment started pouring into the river, the warnings were loud and clear.
15:31
JUNNE COSMAS, EREKTA VILLAGE:
We knew that there was something wrong with the river when we saw changes in the plants and animals and whatever that surrounded our village or the river.
We knew then that --
ANDREW FOWLER:
Junne Cosmas is a landowner from the Fly River village of Erekta, near where the Fly meets the Ok Tedi River.
She started to notice the damage by 1989.
15:58
JUNNE COSMAS:
The trees, they started changing colour, which normally they wouldn't change colour but those trees, they were changing colour and we knew something was wrong.
And the good places that we go fishing, we couldn't catch much fish in those areas.
16:16
ANDREW FOWLER:
Two years later, one of PNG's biggest commercial fishing companies saw evidence of why the fish were missing.
BARRY SHACKLES, FORMER COMMERCIAL FISHERMAN:
You could see that the off-river lagoons, the entrances to them were silting up faster which virtually means the water in the lagoon doesn't run out when the river drops because the sandbar holds the water back in the lagoons.
The bait fish, etc., basically live and breed in the off-river wetlands.
And if access is denied to them back to the main river, there's got to be some sort of a problem occurs.
The barramundi can't get in.
16:53
ANDREW FOWLER:
Barry Shackles saw his catch of barramundi drop by a half each year.
BARRY SHACKLES:
About '91, we had a good year in '91 and then, '92, the catch dropped to 35 ton, although we had two boats working. '93, the catch dropped to 10 ton.
And after 10 ton, I didn't have enough money to keep fishing.
It's that simple.
17:17
ANDREW FOWLER:
By 1993, Barry Shackles was out of business.
Both he and Junne Cosmas raised their concerns with Ok Tedi but they say the company was unconvinced by stories on the ground.
17:32
JUNNE COSMAS:
They told us there was nothing wrong but we knew there was something wrong.
And we knew it even before -- the local people knew it even before Western science proved that there was something wrong.
They didn't want to listen to us in the beginning, the company, even our government.
17:48
BARRY SHACKLES:
They weren't presenting me with their figures.
They were virtually saying there's as many fish as there used to be.
My catch effort said there's not. That's all.
18:04
ANDREW FOWLER:
In fact, the operating company has a history of downplaying the environmental fallout from Ok Tedi.
This was the mountain that became the mine.
There were high hopes and promises in the early days that the impact on this pristine wilderness could be contained.
Ok Tedi was supposed to have a tailings dam to store its waste sediment.
A tailings dam minimises the impact mine waste has on a river system.
18:44
When a river carrying waste and sediment reaches a tailings dam, the water slows down and the waste drops to the river floor.
The relatively clean water on the surface then flows over the dam wall and continues downstream.
The saga of trying to build such a dam at Ok Tedi puts in question BHP's claim that they have only recently become aware of the extent of the damage caused by the mine.
19:17
DR. BILL TOWNSEND:
They considered a number of different scenarios -- what would the cost of the project be?
What would the damage to the environment be?
ANDREW FOWLER:
Bill Townsend was a structural engineer who worked for the PNG Government from 1981 to 1984.
He advised them they needed a tailings dam.
But Townsend suspects the operating company was never serious about building such a dam.
19:44
BILL TOWNSEND:
I got the impression that they were looking for short-term solutions and not a long-term solution, that they were -- it looked like they were postponing the tailings dam to where they would eventually not have to build it at all.
20:00
ANDREW FOWLER:
Construction did finally start on a tailings dam in 1983 as this company film shows.
But Townsend believes OTML was more interested in getting the mine up and running than building the dam on the adjoining Ok Ma River to contain its waste.
10:22
BILL TOWNSEND:
In order to get back on schedule, they pulled crew off the Ok Ma and put them on process-plant construction to get the process-plant construction back on line, which meant that the Ok Ma tailings dam was getting farther and farther behind.
20:42
ANDREW FOWLER:
A few months later, the partially completed dam collapsed.
The company looked for another site.
But Bill Townsend says OTML considered that the cost of alternative locations was too high.
BILL TOWNSEND:
OTML's reaction to spending $300 million on a tailings dam was, "This produces a cost of tailings disposal which is higher than the world standard therefore we will keep looking for another site."
21:15
ANDREW FOWLER:
OTML maintains it did all it could to get a tailings dam built but it didn't want production to be held up.
And by this stage, the company's investment was already significant.
21:28
DR ROGER HIGGINS, GENERAL MANAGER, OTML:
The staff had been recruited.
People had been employed.
Local people were already receiving -- had a school here which they had not had prior to that.
There was a hospital here that had not been here prior to that.
So it's not as if the project decided that it would proceed and be built without a tailings dam.
It was largely built.
21:47
ANDREW FOWLER:
A tailings dam was never built.
The PNG Government withdrew its insistence on a dam because it feared the mine would pull out if it pushed OTML too hard.
The waste was pumped directly into the river.
BHP claims it didn't fully understand the consequences of that decision until recently.
Yet at the time, OTML asked its own experts to calculate the impact of a mine without a tailings dam.
22:21
MIKE ABRAMSKI, FORMER ENVIRONMENT CHEMIST, OTML:
We kind of assumed that it was just for comparison purposes, to demonstrate the effectiveness of the tailings dam.
So we did some calculations and of course, the figures were sky-high and ridiculous in comparison to any environmental guidelines.
22:40
ANDREW FOWLER:
Mike Abramski, who worked as OTML's chief environmental chemist until 1985, recalls what he felt when the waste started pouring into the river.
MIKE ABRAMSKI:
Shock, absolute shock, yeah.
Couldn't believe that it was true. We couldn't believe --
Firstly, I think the consensus amongst the environmental specialists working there at the time was, in my opinion, that firstly, no-one in their right mind would go ahead and build a mine like this without a tailings dam.
Not even the most moth-eaten mining engineer would be so out of touch with the present, at the time, as to even propose that.
And secondly, that no government would allow that.
When mining started to take place, when the tailings started coming down the river, then those beautiful rivers were being turned into gutters for mining waste.
And that, to me, was very hard to live with, to look at.
23:47
ANDREW FOWLER:
Abramski left OTML disillusioned.
The person who received his data on the impact of a mine without a tailings dam is now General Manager of OTML.
24:00
DR. ROGER HIGGINS:
I was the environment manager at the time.
I was not the company's managing director, nor was I a member of the board of directors.
I was one of the people they asked to give advice.
We looked at it.
We did some work to see what we thought that effect would be and we told people what we thought that would be.
That was our job.
24:17
ANDREW FOWLER:
What was the effect that you told them it would be?
DR. ROGER HIGGINS:
Obviously, without a tailings dam there would be much more sediment in the river.
DR. BILL TOWNSEND:
Roger Higgins was the Director of Environmental Department, doing the monitoring and doing the projections.
So if BHP didn't know what was going on, they weren't listening to their own staff.
24:40
ANDREW FOWLER:
14 years after it began pumping waste into the river system, the operating company finally began an effort to clean it up.
KEN VOIGT, MINE WASTE MANAGER, OTML:
We started them in March 1998, and what we've done here is dredged a big hole in the river to trap mine sediment that comes down from the mining operations.
And that's to reduce the bed-level here, because what we're getting around this region here is dieback that's being caused through increased flooding over the flood plain.
So the idea is to OK, this is the dredging operations for Ok Tedi Mining Limited.
take sediment out of the river to reduce the bed and therefore to reduce the amount of flooding, so we can try and address the dieback problem.
25:23
ANDREW FOWLER:
OTML's dredging operation is an acknowledgment of the problem.
But it only came after a long and bitter legal battle.
BHP settled out of court in 1996 with a $150 million compensation payout to landowners.
It also promised to find a way to deal with the waste.
There are signs some of the dieback is being controlled by dredging, but even the operating company, OTML, admits it's not the solution.
25:57
KEN VOIGT:
It would be very difficult to improve the environment probably in the Fly, through dredging, because you'd have to dredge in several different locations and the concern there is where would you put the sediment?
Would it be a worse environmental problem than not taking it out in the first place?
So I think you would have to dredge all the way up the Fly to take this existing sediment out to try and improve it immediately.
26:24
ANDREW FOWLER:
Why did BHP ignore the environmental damage at Ok Tedi for so long?
And why does it now want to get out of a mine that under normal circumstances is expected to enter its most profitable phase?
We invited the company to appear in this film but BHP declined to record an interview.
4 Corners would've also liked to have asked the company whether it's concluded that future liabilities might overwhelm future profits from this mine.
There are several problems looming.
An old opponent, law firm Slater and Gordon, are about to re-enter the fray.
They plan renewed litigation on behalf of their long-term clients, the Fly River landowners.
Slaters say BHP has failed to deliver on its 1996 promise to deal with the waste at Ok Tedi.
2719
NICK STYANT-BROWNE, LAWYER, SLATER AND GORDON:
I think this is a fundamental development in the history of Ok Tedi and a real spanner in the works in terms of all of the negotiations which are presently taking place to enable BHP to exit.
The fact of the matter is that this represents a huge potential liability for both BHP and OTML, and it's really not possible to complete any transaction and for BHP to get out until such time as this litigation is resolved.
27:48
ANDREW FOWLER:
Slater and Gordon aren't the only people threatening legal action.
Perry Zeipi was PNG's minister for the environment in the late '80s and he wants to take BHP to the International Court of Justice in The Hague.
28:04
PERRY ZEIPI, FORMER PNG MINISTER FOR THE ENVIRONMENT:
But I'd like this matter to go higher and higher so that all the world can know what the foreign company has done to the beauty of the Fly River.
And must be recorded once and for all so that no repetition is done, not even only to the Fly River but what about our creeks and our rivers?
It's been naturally blessed by the Lord Himself and we must give it back to the Lord.
28:27
ANDREW FOWLER:
Both these legal threats are for damage already done.
But BHP must also be worried about future claims against it.
NICK STYANT-BROWNE:
There's no doubt that BHP's responsible for future damage.
They put the mine in there, they've been running it for well over 10 years and they're responsible for future damage.
And it's just not good enough for BHP to somehow make this everyone else's problem.
You need to understand that that's what they're doing now.
They're saying, "Look, this is a problem for the PNG government, for the local people," and they've kind of passed the problem on to the other stakeholders.
And they ought not be allowed to get away with it.
29:26
ANDREW FOWLER:
The eventual damage to the river is unknown.
But evidence is mounting that the effects of the mine have reached as far as the mouth of the Fly River, over 400km downstream.
Here, traditional landowners are demanding compensation for erosion they say is caused by BHP's ships.
And if the company doesn't pay up, they're threatening to blockade the river.
29:55
LEWIS SIWARE, LANDOWNER, LOWER FLY RIVER:
We are going to work on a plan of action which we hope will result in the blockade of the river, until such time that the company listens to us.
We're not going to allow BHP to leave this soil until it has cleaned up its mess.
30:14
ANDREW FOWLER:
BHP may be assessing even bigger and more frightening liabilities.
Just a few weeks ago, the World Bank delivered a confidential report to the PNG Government.
It identified two environmental dangers that could escalate at Ok Tedi.
One is copper.
Most copper is extracted during processing, but some is left behind in the waste.
It's copper combined with heavy silt that forces fish from the river and can affect their breeding.
30:53
BARRY SHACKLES:
The barramundi which went to the coast to spawn would get out of this stinging environment and wouldn't want to come back up the river again after the spawning.
They'd go off to other rivers.
For a fish living in constant silt after a cleaner river, it must be like us living in a dust storm. I don’t know.
ANDREW FOWLER:
Company evidence confirms high levels of copper in the river at times.
These appear on a graph as spikes.
It's these periodic high concentrations of copper that are the problem.
They can kill off sensitive algae and affect the food chain.
An independent report is critical of the way OTML states copper levels as averages.
31:52
BARRY SHACKLES:
It's like saying 1 cup of cyanide today and 364 cups of water gives you a daily average of cyanide that won't kill you.
It's the cup of cyanide on the thick day that kills you.
It's the bad day with the sediment that kills the fish, not the yearly average.
32:09
DR ROGER HIGGINS:
They possibly kill the algae and possibly kill the fish, yes.
But it's all 'possibly'.
That's why we say it's of concern.
That's why I've said we need to keep monitoring it.
32:21
ANDREW FOWLER:
An even bigger environmental liability than copper may be looming.
Acid rock drainage. It's a problem directly related to exposed mine waste.
When rock waste from a mine is exposed to the air, microscopic organisms can be activated to produce acid.
This acid can wash down into the river system.
Acid hot spots can spring up hundreds of kilometres away in swamps and lagoons, killing fish, making them sick or vulnerable to disease.
The extent of acid rock drainage at Ok Tedi is unknown.
The World Bank believes it can be controlled during mining, but says it's "essentially uncontrollable thereafter".
The operating company's own web site says, in a worst case situation, compensation for acid rock drainage could be as much as US$3.7 billion each year for 50 years.
OTML says the risk of acid rock drainage -- ARD -- is very low and the General Manager is hopeful they have it under control.
33:44
DR ROGER HIGGINS:
The river here is very benign in terms of its acidity because most of the catchment which we're in is limestone, which is the natural counter to acidity and that's why the river is not being affected by ARD and why it possibly won't.
It's one thing to say possibly it is, but the implication, the flip side of that is possibly it won't.
And the very large amounts of limestone in the river are the natural buffering, the natural counter to acidity.
34:14
ANDREW FOWLER:
Can PNG rely on the company's optimism?
MIKE ABRAMSKI:
I think what happens in these mining companies is that you have a group of people who have this project -- to get on with, to build this mine, to -- to get this ore out, and -- and to make a big profit for the company.
And they're all very -- um -- very -- very -- working hard in that direction.
And, um -- and they tend to -- to egg themselves on with saying, "Oh, yeah, we can fix that," and "We will fix that -- later."
The engineers, anyway, have this attitude that a good engineer can solve almost anything.
35:00
ANDREW FOWLER:
So in walking away from Ok Tedi, BHP must be calculating what it stands to lose by staying.
It faces renewed legal action from landowners along the Fly River, a case against it in the International Court of Justice, claims for damages from landowners at the mouth of the river and, possibly, crippling bills for copper damage and acid rock drainage.
When it all adds up, the intention to pull out isn't all that surprising.
35:34
RICHARD ROSSITER, RESOURCE ANALYST, MACQUARIE BANK:
I think the liability issue is an extremely important issue and, obviously, the critical element in the negotiation in terms of BHP exiting the project.
Obviously, that is the big grey area, because there's so many unknowns and so many issues.
But that is the critical issue for them to resolve going forward.
35:54
ANDREW FOWLER:
There's speculation BHP wants an indemnity from the PNG Government against future compensation claims, in return for cleaning up some of the damage it's caused.
A decision to walk away from Ok Tedi will leave the Government with an acute dilemma.
PNG can't walk away. It doesn't want the mine to close and it must look for a new partner.
36:21
SIR MICHAEL SOMARE:
So Government, when considering Ok Tedi's decision to pull out, would also be looking -- looking for other developers.
So, we're quite open about, you know, who the other developers would be.
We have to treat them on their credentials -- look at what they have done and experience that they can, um -- bring to continue the mine until, uh -- mine closes, when -- when gold and copper depletes.
36:50
ANDREW FOWLER:
So it is very important that you find a buyer?
SIR MICHAEL SOMARE:
Yes. Yes.
We have to find a buyer.
ANDREW FOWLER:
Finding a suitable buyer might not be so easy.
The PNG Chamber of Mines believes only a handful of companies are qualified to run a huge open-cut copper mine like Ok Tedi.
37:10
GREG ANDERSON, EXECUTIVE DIRECTOR, PNG CHAMBER OF MINES:
I think it's just there is a broad concern that -- that, as I say, that we get somebody, if BHP does in fact go, if that's what happens, that we get someone who has that -- international mining experience.
It's possible that people who are not -- don't even have any mining expertise at all could try to get involved.
And that would be one thing that I could see is a possible problem.
37:38
ANDREW FOWLER:
Experienced and reputable mining companies will know they face the same problems that BHP is trying to leave behind.
Alex Maun was one of the landowners involved in the earlier legal challenge against BHP.
He's already flagged landowners will take on any newcomer.
37:58
ALEX MAUN, YERAN VILLAGE:
We will demand that BHP is responsible for cleaning up the mess -- unless BHP transferred liabilities to the new mining company.
Then we will pursue the new company.
38:14
ANDREW FOWLER:
So, in order to attract a new buyer, the PNG Government may be forced to indemnify them from future legal actions like Maun's.
Do you think it would be fair to indemnify the new owner?
38:28
SIR MICHAEL SOMARE:
That's -- well, that's something that the Government, I think, need to -- need to consider very seriously, yeah.
ANDREW FOWLER:
What do you think, personally?
SIR MICHAEL SOMARE:
Um -- my view personally?
Yes, but I think that's a decision that Government has to take.
39:15
ANDREW FOWLER:
Developing nations often make a trade-off -- pollution for investment and jobs.
But what's the trade-off for a multinational?
Having profited from the development, what are their long-term responsibilities?
39:32
MIKE ABRAMSKI:
At the top of the mission statement of every mining company stands, um -- a sentence which goes something like this -- "To maximise profit to the shareholders."
The first -- the first point on the mission statement is not to be kind to the environment.
39:50
DR BILL TOWNSEND:
When a company like BHP does business on an international market they should be required to live by the standards of the country that they came from.
The environmental standards in Australia should apply to BHP.
40:06
PAUL ANDERSON:
Portfolio management is critical to BHP's long-term success.
ANDREW FOWLER:
BHP's corporate standards also worry the World Bank.
In assessing the Ok Tedi mine it says, BHP focuses too much on the risks to "the company and its shareholders".
But the company's own charter says it has a corporate responsibility to the environment.
40:32
RICHARD ROSSITER:
Essentially, BHP must demonstrate that it has the will to, basically, exit the project with the primary goal being to look at the environmental and social side, and to be seen really fitting its charter, rather than to have made a short-term financial gain in terms of exiting the project.
41:03
ANDREW FOWLER:
There are clear losers in this story.
On the Fly River, villagers have recently been catapulted into the cash economy by the mine.
Pollution of their fishing grounds and gardens means they're now dependent on the compensation they receive from Ok Tedi.
But the compensation appears disproportionate to the problems they now face.
Since the 1996 legal case, Junne Cosmas from Erecta village has received just 200 kina compensation -- about $100.
41:39
JUNNE COSMAS:
With 200 kina I can buy 20 kilos of rice. Um -- maybe about 10 large tinned fish. Um -- bully beef, maybe 10. Uh -- sugar, maybe five. And, maybe, one or two odd things.
You can't get a lot.
And that would last you, maybe, for two weeks, and it's gone.
You know -- and that's all the money. Hmm.
42:20
NOLEEN KONGWORIN, DANDE VILLAGE:
Yes, the money -- there is lots of money that is flowing into Western Province -- but, I would say, the people who are working at the mine, who have been employed by the mine, are benefiting.
But people like us -- Sorry. We are not.
42:49
ANDREW FOWLER:
There may be other losers too.
Down near the dredging site village women are paid by the mine to plant trees, rehabilitating the land.
The mine is also trying to develop local agriculture.
Yet, it's questionable whether the work the mine brings will last.
At most, Ok Tedi will only be open for another 10 years.
43:24
Sarah Buhupe makes the company's uniforms in this locally owned factory.
She hopes the skills she's learnt here will enable her to work for herself later on.
She and her husband are holding on to the hopes and expectations the mine has brought.
43:46
ATIMENG BUHUPE:
We can't go back to the old lifestyle, because we now have permanent houses.
And we can't turn the clock back and expect people to be living, you know, like in here where there was no township and no electricity, no roads, no airstrips and so on.
44:10
DR ROGER HIGGINS:
I'm not at all ashamed of what -- of the very, very good things that Ok Tedi has done here, and the benefits it's brought to people.
I don't intend to be ashamed by that.
I wish it could've been done differently, yes.
But that -- I'm not sure that I would say it shouldn't have been done at all.
I think there are a lot of people who have benefited greatly.
44:28
ANDREW FOWLER:
Ok Tedi is the mine PNG doesn't want to lose.
It's also the mine BHP doesn't want to keep.
The Big Australian now wants to unload this mine to protect its corporate image.
But it'll be judged on just how it makes its exit from Ok Tedi.
44:49
END
Reporter: Andrew Fowler
Producer: Anne Delaney
Research: Peter Cronau