Conflict and "capital logic"

  • 27/02/1994

Conflict and RAPACIOUS gold, copper and silver mining came to Papua New Guinea in the 1920s with white colonisers and multinationals. Australian explorers found gold for the taking in the Wau-Bulolo area, a mountainous region swathed with forests. Gold from Wau dominated the export earnings of PNG for three decades. Then, in the 1950s, the engorged mining companies deserted the land. The boom town became a ghost of its former self. Abandoned machinery now lies strewn across the countryside like rusted skeletons and fertile land along the river is gouged deep and waterlogged.

Work on PNG's largest mine began in 1964, when Conzinc Rio Tinto of Australia (CRA), a subsidiary of the London-based multinational Rio Tinto Zinc Corp, began exploration in Bougainville for copper. Bougainville Copper Ltd (BCL) was established in 1967. BCL's gigantic Panguna mine began production in 1972 and soon became one of the world's largest copper and gold mines. Between 1974 and its closure in 1989, BCL contributed about 16 per cent of PNG's internally generated income and 44 per cent of its exports. But of the 765 million kina that accrued to the PNG economy from the mine, only K23.5 million went to the landowning, mine-affected people.

On September 1, 1975, exactly 14 days before Independence, the furious people of Bougainville declared an independent Republic of North Solomons. The then district premier asked, "Are we a fat cow to be milked for the rest of the country?"

Behind the disaster From the inception, CRA faced popular hostility. Says a 1966 Patrol Report: "The people along this ridge were against any interference by the company...they owned the land and thus the copper and didn't want the company to take it away and leave their children with nothing." Sean Dorney, in his book Papua New Guinea, quotes a villager saying in 1967 that losing land was like "taking the bones out of a man's legs -- the man would not be able to walk".

The impact of the company's mining activities brought urbanisation, characterised by heavy male migration from outside the province. The Bougainvillians became more dependent on store-stocked provisions than on locally-grown food. Salaries, wages and compensation became key sources of income, apart from cash cropping.

Describing the late 1980s, John Connell of the University of Sydney says, "The depletion of bushland and the widespread use of shotguns (now banned in some areas) have reduced the significance of hunting and gathering; wild pigs are increasingly difficult to find, possums are rapidly declining in numbers and the demise of the flying fox population in 1987 substantially depleted the variety and volume of hunted species. Fishing in the streams has declined because of limited fish numbers that have followed river pollution, the erosion and changing sediment loads of rivers, some use of domestic detergents in rivers and more effective fishing techniques. There is now much less garden land per capita than there was a quarter of a century ago."

The local population saw the mine as a rip-off. Between 1969 and 1980, BCL did provide compensation for crops, resettlement, nuisance, land occupation, river pollution and loss of bushland. Villagers were entitled to compensation for damage to their houses, gardens and cash crops, loss of rights of way and all consequential damage -- including $200 per head for hardship caused by the change in lifestyle. But the total compensation was a pathetic K17 million, and royalties to landowners were only 0.2 per cent of the gross profits.

The Panguna Landowners' Association (PLA), formed in 1979 to negotiate with the company, bombed; finally, amid charges of corruption, a militant group headed by Francis Ona, a graduate surveyor-turned-driver with BCL, took over in 1987. As the open-cut pit at Panguna grew deeper and more land flowed down the Jaba river, Ona grew angrier. BCL had removed 1.215 billion tonnes of the people's land in ore and turned 99.4 per cent of that into waste.

In May 1988, the people organised a day-long protest and closed the mine. They demanded 20 per cent of the national government's ownership share and Kl0 billion as compensation from the company for long-term environmental damage. Even after BCL belatedly presented a consultant's to assuage fears of environmental damage, the people refused to believe that an epidemic introduced from East New Britain had killed the flying fox population.

Militant landowners then blocked key access roads and finally bombed mine installations in November 1988. In mid-l989, the secessionist demand was revived and the mine closed down permanently.

Blackade orderd
After discussions failed, the Port Moresby government ordered a total blockade of the island in 1990. It was only in early 1993 that the national government was again able to get a foothold on the island. The secessionist Bougainville Revolutionary Army began to retreat.

But as Naihuao Aiko of Port Moresby's University of Papua New Guinea said, "Even in their defeat, the people of Bougainville have shown the strength of their tradition. When the armed forces went in, they found people without clothes or medicines but nobody had starved during the years of being blockaded. They had gone back to their traditional gardens and they had enough to eat." In fact, Aiko claimed, "The movement's long success in holding out has led to a renewed interest in traditional knowledge and resource use in the country."

The still-unresolved Bougainville experience has revealed that the state of PNG, heavily dependent on income from mineral resources to feed its corpulent bureaucracy, first acts like a macroeconomic agent with its own vested interests in balancing its books. The state's environmental laws have never been strictly applied to major projects like the Panguna or the Ok Tedi mine. But it has realised that people must be involved. The Mount Kare gold mine was the first mine where the local people shared equity with a multinational and not just received royalties and compensation (See box).

Social scientists offer two major theses to explain the collision between landowning communities and multinational companies: first, that turmoil and conflict are inevitable; second, that conflict is inherent in the distribution of benefits. Colin Filer, an anthropologist based in Port Moresby, says that the people see the impact on the physical environmental as damage done to their society. It is this deeper sense of social disorder that leads to tension. According to Filer, the mining industry appears to believe that it is possible to control the opposition of local landowners by increasing the compensation package; but all past experience points to that fact that "deals done with one generation of landowners will be repudiated by the next generation, regardless of the manner in which these deals are negotiated".

distribution of benefitis
However, Australian-based anthropologists Rolf Gerritsen and Martha MacIntyre disagree with Filer and suggest that the social, economic and political impacts of mining are "principally about the distribution and redistribution of benefits". Analysing the flow of capital during the life of a mining project, they conclude that the "capital logic" of a project is moulded by its financial flows. And it is the imperatives of implementation and not economic greed that make governments steamroll the villagers.

During the first eight years of a project -- its establishment phase -- the company spends its own equity capital and the drive is to convince villagers about the benefits and allay fears. Land is not disturbed and the compensation seems generous.

In the crucial construction phase, large amounts of finances are borrowed and each day is an expense without revenues. The company is concerned only with its relationship to the administration -- the people are marginal. But it is now that the potential winners and losers at the village level become clear and the scale of environmental damage begins to be understood by landowners.

It is in the 11th to 25th years, the operational phase of the project, that the fat hits the fire. The company is keen to increase its turnover. The landowners start to redefine the project's impact and benefits. Conflicts emerge. Negotiations are done in a hurry and the identification of beneficiaries is slipshod. Since the long-term consequences of mining are impossible to predict, mining companies work to downplay all problems.

The solution, Gerritsen and MacIntyre propose, lies in redistributing gains from mining away from Papua New Guineans at large to the landowners of a mine's area.

Whatever the cause of tension, it is clear that poor, illiterate and powerless villagers in PNG have negotiated with, and even repulsed, multinationals more than any other developing world community.

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