September 19, 2013 / 6:12 AM / 7 years ago

PNG government takes full ownership of Ok Tedi mine

Sept 19 (Reuters) - Papua New Guinea’s government has taken 100 percent ownership of the controversial Ok Tedi gold and copper mine after a lingering dispute with a development fund with controlled the majority stake on behalf of people in the area.

PNG’s parliament this week pushed through laws for the government to take full ownership of the giant mine, and also to remove a 12-year old immunity deal for the mine’s former owner, BHP Billiton Ltd, for environmental damage in the country’s Western Province.

“The government in 2001 made a very bad decision in granting immunity to a corporate giant, preventing its own people from exercising their right under law to sue for permanent damages done to their environment and their livelihood,” Prime Minister Peter O’Neill told parliament.

The move means profits from the Ok Tedi mine will now be available to the national government to spend, rather than current arrangements where the proceeds were divided between the Western Province and the national government in Port Moresby.

The decision has also sparked a major row between O’Neill and former prime minister Mekere Morauta, who is chairman of the Sustainable Development Program that controlled the majority stake in the mine.

The big Ok Tedi mine, in a mountainous region in PNG’s west, has been operating since the 1980s but has been blamed for substantial environmental damage along the Fly River because it dumped its mine tailings into the river systems.

In return for legal immunity, former owners BHP Billiton in 2001 divested its controlling share in the mine to the Sustainable Development Program charitable trust, which held 63 percent of the mine. The PNG government controlled the remaining share.

The changes mean BHP could face claims from landowners over long-term environmental damage, although previous PNG governments approved the dumping of tailings into the rivers.

BHP, which is no longer active in the resource-rich South Pacific nation, declined to comment on the move.

The mine is expected to keep operating for another 10 years, although its life could be extended.

Morauta has criticised the government actions, accusing the government of theft, and signalling a likely court challenge.

“This is very important legislation. For the first time expropriating assets without payment from the people of Papua New Guinea, not from foreigners,” he told reporters.

The sustainable Development Program also controls a $1.4 billion fund, based in Singapore, which is used to promote development in the Western Province.

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