Bougainville - Economy
Panguna, located in the mountains of central Bougainville, is the site of one of the world’s largest copper and gold mines. Between 1972 and 1989, it served as an economic lifeline for the PNG Government. Panguna was the first major mining project in PNG, its single most important economic asset and essential to the improved economic viability of PNG as a newly-independent state. If done well, mining at Panguna could eventually generate large revenues for Bougainville and boost its long-term economic prospects. It is, however, unlikely to be a quick process.
The islands of Bougainville were part of German New Guinea from the 1880s until World War I, when they became annexed to Australia’s New Guinea territories. Later, in 1975 they became part of independent Papua New Guinea. The people of Bougainville lived off their land largely from subsistence gardening, hunting and fishing, in a matrilineal system where each person was identified by membership of their mother’s clan.
Bougainville’s economy is very limited. It is nowhere close to meeting a fiscal self-reliance threshold; indeed, there may be no possibility of Bougainville ever achieving fiscal self-reliance using a technical statutory definition of the term. Most Bougainvilleans have cashless, subsistence livelihoods. The fiscal base for autonomy is far from consolidated, and revenues for the government will be constrained for some time to come.
There are, of course, challenges in boosting the Bougainville economy without a reliance on mining investment. These include the workforce required, law and order, transport and infrastructure. Major trunk roads, airports and jetties need to be upgraded to transport goods and services, and the power supply network needs to expand.118 But, most importantly, the political will must be there.
Discovery of copper deposits in the 1960s led to the establishment of a huge copper mine on the island of Bougainville by Conzinc Riotinto Australia (CRA). The Panguna open cut mine was at that time the largest in the world. The company registered various traditional landowners of the Nasioi language group, but excluded women despite their position as traditional custodians of the land under the matrilineal system.
The Papua New Guinea Independence Constitution had stated land ownership was to just below the surface of the soil; this meant that all mineral rights would belong to the State. Bougainvillians had a different concept of land, seeing it as their lifeblood in political, emotional and social terms. As mining operations continued and provided 45% of Papua New Guinea’s national export revenue, some groups in Bougainville felt resentment at substantial payouts going to certain landowner groups and not to others.
Anger over the non-payment of royalties, the pollution of the rivers by the tailings from the mine and a belief that the mining land would never be restored to its natural state, made many landowners resentful that their traditional lives would be lost forever to the mining operation. There was also conflict between some native Bougainvilleans and others (mainly workers from the main island of Papua New Guinea) brought in to work on the mine. Tensions exploded in 1988 when disgruntled landowner (and later secessionist campaigner) Francis Ona led sabotage attacks on the mine. By 1989 he had forced the mine’s closure.
The mine is seen by some as a shortcut to prosperity. Given the lack of economic alternatives, Bougainville is unlikely to achieve fiscal self-reliance for many years without a return to mining in some form. Re-opening Panguna was the most realistic way of contributing to broad based economic growth. Operated by Bougainville Copper Limited (BCL), a subsidiary of Rio Tinto, the mine generated 44 percent of PNG’s foreign currency earnings and 17 per cent of PNG’s internal revenue in its 17 years of operation.
But the mine caused significant problems in Bougainville. From the start, in the mid-1960s, local landowners had opposed development of the mine. Bougainvilleans resented the huge influx of workers from other parts of PNG, the environmental problems caused by the mine, and the fact that most of the profits went elsewhere.
Only 5.63 per cent of the mine’s earnings went to Bougainville. Of this, 4.27 per cent was given to the provincial government and just 1.36 per cent to local landowners.30 For many Bougainvilleans, this was not enough to compensate for the loss of land, livelihood and environmental damage. Objections over the mine soon became entangled with calls for self-determination. A ‘sense of grievance’ began to infiltrate Bougainvillean identity and from this sentiment was born a secessionist movement which has continued to dominate the political life of Bougainville.
ro-independence Bougainvilleans are not unified in their views on the Panguna mine. Some Bougainvillean secessionists maintain fundamental objections regarding the social desirability of mining, regardless of its economic costs and benefits.
The Bougainville crisis has been cited as ‘the deadliest, bloodiest, and most destructive conflict in the South Pacific since World War 2’. In April 1988, the Panguna Landowners Association (PLA) lodged a PGK10 billion (US$11.6 billion) compensation claim against BCL. In November, the landowners’ protests turned violent, key infrastructure was sabotaged using stolen explosives, and mining operations at Panguna were halted. In 1989, the PNG Government declared a state of emergency. The mine was forced to close and more than 15,000 non-Bougainvilleans left the island.
Bougainville’s major transport and electricity infrastructure was destroyed during the crisis. Entire villages were burned to the ground. Essential services such as health and education were crippled, and the island’s economy regressed into subsistence. Bougainville fell from being the top performer on PNG provincial socio-economic indicators to the bottom,
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