    
This is a dramatic unfolding story about the company that owns the
Crandon mine project. Papua New Guinea (PNG) is an independent nation
in the eastern half of the island of New Guinea, and is formerly a colony
of its southern neighbor Australia. BHP Billiton, the owner of Crandon's
Nicolet Minerals Company, is a new Australian/South African conglomerate
that has become the world's largest mining company. The Ok Tedi copper
mine waste disaster has become to BHP what the Exxon Valdez was to Exxon--a
famous international embarassment. Now the merged company wants to avoid
paying liability to fishing communities, but is being stymied in the courts.
PRIVATE POWER
By Simon Divecha
Mineral Policy Institute (Australia)
Znet Commentary
December 18, 2001
In Papua New Guinea a quiet revolution has just taken place, demonstrating
the power of major transnational companies, and writing into law what
has long been the defacto, and until now not publicly acknowledged,
relationship between this country's government and the resource corporations.
With legislation presented to the PNG parliament and passed on the same
day, PNG has sacrificed its sovereign right to protect its citizens
through its legal system, and has passed the power to resolve disputes
directly to a company.
It has also agreed to deprive PNG people of their rights to choose
their own representatives and allow people, who can be handpicked by
a company, to make decisions on behalf of everyone, whether or not the
individuals, villages, clans or communities have agreed to this.
The PNG government at the same time granted a full legal indemnity
for world scale damage, in return for the modern equivalent of some
beads and blankets.
An extraordinary precedent is set for companies to take away the already
difficult to enforce rights of poor communities, to privatise even further
their profits, and socialise the costs and pain onto some of the poorest
people in the world. Today the only things that stand in the way are
two court challenges.
Many people may be familiar with BHP Billiton, the world's largest
mining/minerals company, and its Ok Tedi copper mine in PNG. In 1984,
BHP was allowed to open the mine and to dump 80,000 tonnes of waste
directly into the Ok Tedi River every day. This then flows into PNG's
second largest river, the Fly River. Not surprisingly the waste is having
a devastating impact and the company acknowledges it will kill over
two thousand square kilometres of forest along the Fly/Ok Tedi, and
cause a possible total collapse of the fishery, in addition to the 70
to 90% of fish that are already dead in the Ok Tedi River.
The damage will force villagers to hunt and fish over larger distances
and so make it difficult for them to get enough food to eat. It will
probably lead to protein deficiencies, while destroying every sago tree,
the staple food, for at least half of Fly River.
The damage is increasing, the waste continues to go into the river
every day, and the devastation will last for the better part of this
century at least.
In 1996 30,000 villagers living along the river won a significant
victory. After two years of legal action in Australia, during which
they had to establish their right to sue in an Australian court, they
settled out of court for compensation and the company's commitment that
it would stop dumping its waste into the river. By April 2000, with
the waste dumping continuing, the villagers were back in court suing
BHP for breach of the out of court settlement.
At the same time BHP was looking for the best option, which would
minimise its costs. It decided to quit its share of the mine and effectively
use the 52% it owns, of a mine which closes in 2010, to buy its way
out of trouble by putting it into a 'development trust'.
While much of the decision making processes about how BHP gets out
were conducted behind closed doors, a leaked World Bank report found
the company review looked at "a limited set of technical options ...
that minimises overall risk to shareholders".
It was presenting the least risky options for its shareholders - not,
unsurprisingly, options that produced the lowest risk for the people
of PNG. As the legal action in Australia jumped over procedural hurdles,
BHP merged to become BHP Billiton and remembered some of its old tricks.
During the first legal action, the PNG government had passed a law that
makes it illegal for PNG nationals to take action against a resource
company in an overseas court.
The law, however, had been written by BHP and the electronic word
document properties revealed the BHP lawyers as the authors. BHP was
found guilty of contempt of court in Australia, although they subsequently
squashed the conviction on a technicality.
Back to the present day and two secret documents were in preparation.
The first was the Community Mine Continuation Agreement, to be signed
by people living along the river.
The second the Mine Continuation Act to be passed by the PNG Parliament.
These two documents are BHP's golden payoff, and remove the fundamental
right of a country to protect its citizens from the actions of a foreign
organisation.
Specifically the Act provides that "neither the State nor any Government
Agency may take, pursue or in any way support Proceedings against a
BHP Billiton Party in respect of an Environmental Claim relating to
the operation of the Project" and that it "may be pleaded by a BHP Billiton
party as an absolute bar and defence to any Proceedings taken by the
State or a Government Agency in breach of its terms."
At the same time the Community Agreement deprives people living with
the impacts of the waste of the same rights.
The agreement "is the complete, final and binding basis on which they
agree to support the continuation of the Mine" and they "hereby release
and discharge the Company, BHP, the Company's Shareholders and their
respective associated corporations, directors, officers, employees and
agents and former directors, officers, employees and agents from all
and any demands and claims arising directly or indirectly from the operation
of the Mine..."
Nobody in the west would sign such an agreement, and certainly would
not sign without independent advice. But the two documents go further
ensuring that not only do they deprive people of their common law rights
but also will be recognised, whoever signs the agreement, no matter
what the status of the person is.
"The signature ... by a person representing or purporting to represent
a Community or clan, or that person's delegate, binds all of the members
of that Community or clan". This is true even if "there is no express
authority for that person to sign or execute the Community Mine Continuation
Agreement on behalf of the members of the Community or clan concerned"
This signature also serves to destroy the rights of future generations.
It binds "each existing and future member of that person's Community
or clan, including, without limitation children and persons who are
subsequently born into, or who subsequently join, that Community or
clan". In effect the mining company has been able to handpick people
to sign away all the rights of everyone living in the area and any future
generations.
And just in case anyone suspects bribery or the like, if it happened
"representations, inducement or warranties that may have been so given
are hereby denied and negated"!
BHP Billiton has pulled of an extraordinary and unprecedented shift
by removing the sovereign rights of the PNG state to act for its citizens.
It has done so while setting up system for making agreements with anyone
the company can choose that are binding, indefinitely, on everyone.
In this case a couple of hundred or so people supposedly representing
30,000 plus is regarded as consent for a massive redistribution of rights.
The legislation and agreements also shift responsibilities of the
state to a private company. For Ok Tedi Mining, with BHP now removed
from directly managing it, the Agreement and Act provides for the "establishment
of a regime of environmental monitoring and compliance with which the
Company, in the opinion of its Board of Directors, can comply."
In other words the company gets to choose what it wants to monitor
and comply with, not the state. Also if damage exceeds the very general
criteria in the documents, the company effectively gets to decide the
merits of any such claim.
What stands in the way of all this constitutional challenge to the
legislation by PNG's first Prime Minister, Sir Michael Somare, and an
interim injunction in Australia stopping Ok Tedi mining from getting
any more of the needed signatures to the agreement. Both are due to
be heard on Tuesday 18 December.
The constitutional challenge rests on the basis that the legislation
has removed peoples rights, through unjust deprivation of property,
unreasonably justifiable law, breaking the provision for the equality
of PNG citizens, removing power from the PNG parliament to legislate,
and that it is unjustifiably harsh and oppressive.
The injunction is on the basis that by one person signing the Agreement,
all of the people in that community are supposed to opt out of the legal
action in Australia, that is the action against BHP for breach of the
1996 settlement.
Ok Tedi is an extraordinary case not just for the scale and impact
of one company's damage, but for the excellent documentation and knowledge
of a process that has seen a major corporation take as many liberties
as it can create and are granted.
From the early days, 1978 and on, there is an excellent record demonstrating
that no one should be in any doubt of the problems the mine would cause.
While the scale is more massive than imagined, some of the predictions
are remarkably accurate.
The ability of the company to circumvent the people within the PNG
government trying to hold it to account is also detailed by people involved
at the time.
What it could now also represent is the corporation that has slipped
from sovereign control - enabling national legislation that specifically
recognises and mandates this.
Preventing it is an extraordinary resilient community, a community
which signed over 1300 affidavits in just 3 days, stating that the individuals
never consented to have their rights removed.
These are also communities where people from remote villages, with
no power, phones, faxes, email, newspapers or TV are well aware of the
injustices being perpetrated on them.
Three weeks ago, at a meeting in a remote village, hardly anyone was
present. Then came a murmur, and the rumble grew louder, until the entire
local community poured over the hill in full war paint and traditional
dress chanting 'BHP its right to sue, BHP its right to sue...'
Most of the background to the article is or will soon be on the MPI
website http://www.mpi.org.au/oktedi/analysis.html
BRIEFS
Author: Joyce Moullakis; Michelle Singer; Mark Skulley; Bill Pheasant
Date: 18 Dec 2001
Words: 565
Publication: Australian Financial Review
Section: News
Page: 7
(snip)
Legal actions in Victoria and Papua New Guinea could result in the
closure of the BHP Billiton-controlled Ok Tedi mine, its managing director,
Dr Roger Higgins, warned yesterday. The comments came as litigation,
brought by Slater & Gordon over BHP Billiton's actions to end its association
with the mine, was to resume in Melbourne. Another case, challenging
the validity of legislation passed last week in the PNG Parliament to
facilitate BHP's exit, will begin in Port Moresby today. Dr Higgins
said BHP's preferred option had been to close the mine, but other shareholders
and villagers near the mine had wanted it to remain open. Actions which
damaged that consent to operate or which created a climate of hostility
might end the company's ability to continue to mine and to offer compensation
to affected areas, he said. Author: Bill Pheasant
Dear Friends
BHP has suffered a further blow in its attempt to depart the Ok Tedi
and mine and seek legal indemnity.
The Victorian Supreme Court, In Melbourne, Australia, today (21/12/01)
decided that the company had a serious breach of agreement case to answer
(arising from claims by 30,000 Western Province landowners that it has
failed to undertake environmental remediations required in a 1995 agreement),
and that the full case will commence on February 11th, 2002.
In the meantime an injunction on BHP and OTML's attempts to get landowners
to sign Mine Continuation Agreements (MCAs) should be extended until
February.
The MCAs are, in effect, opt-out agreements whereby landowners are
convinced to withdraw legal action against the mine operators and BHP,
and agree for the mine to continue operations.
The Mine Continuation Agreement "is the complete, final and binding
basis on which they (landowners) agree to support the continuation of
the Mine" and they "hereby release and discharge the Company, BHP, the
Company's Shareholders and their respective associated corporations,
directors, officers, employees and agents and former directors, officers,
employees and agents from all and any demands and claims arising directly
or indirectly from the operation of the Mine..."
OTML will have to cease collecting these agreements and cannot use
the fact that MCAs have been signed as an inducement to get new people
to opt out.
BHP Billiton had hoped to be out of the mine by Jan 1st.
This court decision is an excellent win in the long fight to force
BHP Billiton to be accountable to local landowners for its environmental
and social damage at the Ok Tedi mine. It frustrates BHP Billiton's
efforts to 'cut and run' with legal indemnity for its liabilities, the
effect of which is to leave the mine' mess for local landowners and
the PNG Government to fix over many generations to come.
Happy Christmas and may the New Year bring even more power to the
people!
Geoff Evans
Mineral Policy Institute
Web: http://www. mpi.org.au
P.O. Box 21 Bondi Junction, NSW 1355 Australia
Phone: 61 (0)2 93875540 Mobile: 0418 261 404
Fax: 61 (0)2 93861497
And from BHP Billiton:
http://www.bhpbilliton.com
BHP Billiton Announced as World's Most Respected Resources Company
BHP Billiton has been acknowledged as the world's most respected resources
company in the annual Financial Times/Price Waterhouse Coopers World's
Most Respected Companies Survey. http://www.bhpbilliton.com/bb/newsCentre/atBHPBillitonDown.jsp?id=News%2F2001%2FNewsatBHPBilliton201201.xml
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