Environment devastation: BHP lies about Ok Tedi

Tuesday, November 14, 1995

By Allen Jennings TABUBIL, Papua New Guinea — "This is the single biggest mining devastation of the environment in the world ... and is being defended by outrageous laws cooked up by an authoritarian government", said Ralph Nader, US consumer rights activist, referring to the BHPcontrolled Ok Tedi copper mine in Papua New Guinea. Paradoxically, the apparent authoritarianism of the PNG government on this issue stems from a position of weakness, from a loss of sovereignty, as the World Bank takes hold of the country's economic levers and allows foreign companies like BHP greater freedom to plunder this resourcerich country. Nevertheless, while BHP executives should be dreaming of rising profits, they have been given nightmares by a persistent and escalating campaign to force the "Big Australian" to put people before profits. A sudden onslaught of publicity from BHP is proof of their concerns. On a recent visit to the Ok Tedi mine, in the cloudcovered Star Mountains near the Irian Jaya (West Papua) border, I was impressed more than anything by the mine's engineering achievements. In this remote jungle region, which experiences seismic activity, 10metre annual rainfall and regular landslides, the 3000metre Mt Fubilan is being decapitated and dumped into the Ok Tedi River at a rate of some 80,000 tonnes of untreated tailings each day. Just one part in 114 (0.87%) of the material milled is extracted as copper with less than one part per million as gold. The rest of the mountain, with its (unextracted) copper, manganese, iron, cadmium, zinc and lead, plus the cyanide and arsenic used in the extraction process, ends up in the Ok Tedi River. Not surprisingly, the concoction I saw in the "stream" beside the mill was peppermintbrown. The young PNG engineer, who gave me an unofficial tour, explained how the mine had dramatically increased its output this year, operating 24 hours a day "to get it out as fast as possible". His task for that day, however, was to prepare for a complete shutdown of the mill to replace aging pipes. He pointed out that the pipe carrying the copper slurry some 200 kilometres from the mine to the Fly River port of Kiunga had broken "more than half a dozen times" since the mine opened.

BHP's PR blitz

As impressive as these 24houraday engineering feats may be, BHP's public relations team was also putting in lengthy shifts. By chance, members of BHP's PR unit gave me a lift to the airport. Jay Rhodes, a young, confident American, had recently been flown into Ok Tedi's supply town, Tabubil, from BHP's San Francisco office because of the upcoming vote on the "BHP Bill", as he put it. With him was an Australian film crew, filming Ok Tedi's "good work" around the town, "so that the TV channels around the world will have something new to show". They were also on the alert for antiOk Tedi activists, with the cameraman warning the others to "keep an eye on" two young European men in Tabubil, one of whom had a camera and "looked like a journalist or a greenie". At that time, in midSeptember, the PNG government was due to vote on the "BHP bill", the Ok Tedi Eighth Supplemental Agreement Bill, 1995. The bill includes a takeitorleaveit compensation offer along with massive fines and criminal convictions for future claims, including those claims made against BHP in the current legal battle in the Victorian Supreme Court. If enacted, this bill would "make it a criminal offence to do such things as to commence legal proceedings, maintain existing proceedings, give evidence in any compensation proceedings, counsel any person in relation to such proceedings, and so on". Not surprisingly, the International Commission of Jurists condemned the bill and appealed to the PNG government not to proceed with it. Not only was BHP's role in drafting the bill clearly exposed, but BHP's managing director, John Prescott, admitted that BHP would need to sign the legislation before it could go ahead. Consequently, BHP was found guilty of contempt by the Victorian Supreme Court. Meanwhile, in Tabubil, Jay was busy improving "draft documents" about this bill to "inform all the villagers along the river of the facts". Explaining that because he would have no credibility with the villagers along the Ok Tedi and Fly Rivers, BHP were carrying in nationals by helicopter to present the "facts" to as many of the 30,000 villagers adversely affected by the mine as possible, before the vote was taken. "They will be dropped into a village and then walk between neighbouring villages, spending a day or so in each place talking about the bill", he said. Shortly afterwards, these "facts" appeared as fullpage advertisements in PNG's daily newspapers, sponsored by both BHP and the PNG government, the joint owners of the mine, in an attempt to "set the record straight". The list of "facts" begins: "Ok Tedi Mining Limited (OTML) conducts its operations in an environmentally responsible manner". This is quite surprising given the tomes of evidence which refute this. The International Water Tribunal stated that: "If no such storage [a tailings dam] is feasible, the jury believes that the externalised costs of the project grossly exceed the benefits and, consequently, the activities of Ok Tedi should be phased out". This current PR push is not only aimed at the villagers. Ok Tedi's publicity in PNG is insidious. Its glossy booklets can be found, like the Bible, beside every bed in every hotel room in Tabubil and even as far afield as the coffee tables of the Australian High Commission in Port Moresby. In a massive Australiawide media blitz, the PR team's efforts are now providing the "answers for our global future" through footage of BHP's "good work" in PNG, ensuring that we, along with the PNG villagers, get "the full picture on Ok Tedi". The film crew assured me that the new footage would also be seen in North America and Japan. Surprisingly, these advertisements do not consistently deny that the Ok Tedi mine is contaminating the river system. One of BHP's Australian newspaper advertisements states: "The shallower river now floods more frequently, inundating some riverside gardens. When the floods recede the silt left behind places the adjacent trees under stress, causing them to shed their leaves. Some die."; "Fish numbers have decreased in the Ok Tedi and to a lesser extent the middle Fly."; "We accept there has been impact here and are doing everything possible to ensure that communities are properly compensated."


As BHP admits that it is contaminating the river system, the debate come down to political and legal wrangles over appropriate levels of compensation for past and future damage. Ok Tedi's annual sales for the year ending May 31, 1995, were $1.02 billion, with declared after tax profits of $250 million. Constructing a new tailings dam to reduce pollution levels would cost anywhere between $300 million and $2 billion (the original tailings dam was destroyed by a landslide in 1984). The company's recent compensation offer, agreed to in the Ok Tedi Eighth Supplemental Agreement Bill, would provide a lump sum payment of 10 million Kina (approximately $10 million) followed by yearly payments of K4 million to the 30,000 villagers along the Ok Tedi and Fly Rivers, or about $133 per person per year. This is 1.6% of the mine's annual profits. Unfortunately for the villagers, however, "the payment will be made to the Fly River Provincial Government which must establish a distribution method to be approved by the National Government", which is BHP's partner in the mine. The profitdriven logic of the compensation offer is clear: a $300 million minimum for a tailings dam versus a $10 million lump sum compensation payment followed by $4 million yearly pay-outs. One rather cynical person told me that "these people will claim for whatever they can get". Others in Tabubil, however, asked how the uprooting of their traditional lifestyles could even be measured, let alone compensated. Shanty towns around Tabubil are but one example of these unmeasurable changes. Some were talking of broader notions of compensation, including greater government control over foreign companies to ensure that a larger percentage of profits remain in the country.

Structural adjustment

Along with the villagers living on the Ok Tedi and Fly Rivers, PNG grassroots organisations have continued the campaign against BHP. During the recent NGO forum, held in parallel with the September South Pacific Forum in Madang, BHP's activities in PNG were universally condemned. Structural adjustment in the region, however, was the forum's predominant theme. Some of the World Bank edicts agreed to by the PNG government in the first stage of the recently signed structural adjustment package (SAP) include: abolishing a statutory minimum wage; a wage freeze; higher health fees; removing trade restrictions; removing import bans and restructuring expenditure in all government departments, to name but a few. By far the most contentious of the SAP edicts, however, has been the attempt to register customary land, something which cuts deep into PNG traditional culture, in a country where almost all land is owned by its indigenous land owners. It is not difficult to see whose interests are served by the SAP conditions. It is extremely awkward for companies like BHP to operate in a country where there are no clear land boundaries and no register of land ownership. If they cannot buy the land, foreign mining ventures at least want to know who to buy off. PNG is being forced to open up to foreign resource developers and improve operating conditions for them. As Peti Lafanama, from Melanesian Solidarity, said, "the Lihir project [a recently floated gold mine] depends on the government agreeing to the terms of the SAP". In spite of Nader's comments, the PNG government in 20 years of independence has not proved to be authoritarian. It is a government swamped by the outside influence of companies like Ok Tedi, which provides 20% of the country's export earnings, the Australian government, which provides a large percentage of its national budget, and now international lending institutions offering enormous loans. Like most developing countries the PNG government is losing its ability to formulate policies which will defend the interests of its people. Lafanama said, "Contrary to the government's view, we do not see the crisis as merely a financial one which will take us 18 months to overcome as the government is telling us. The crisis in our view is more substantial. It is about the model of development we have pursued since independence. It is about our definition of development, the means of achieving the goals of development, and it is about who will bring about development to our people and our country. Unless these fundamental questions are addressed, SAP will only be a temporary relief rather than a cure to the crisis." Closer to the Ok Tedi mine where the financial benefits are greater, many locals would disagree; they are happy to take the money despite the pollution and social disruption. Yet even in Tabubil, PNG's Broken Hill, the protest stickers throughout the town openly proclaim: "Ok Tedi is not OK".