The Big, Ugly Australian Goes to OK Tedi
Imhof, Aviva, Multinational Monitor
Australia's largest company, BHP, has long conducted environmentally destructive mining operations near the Ok Tedi and Fly rivers in the remote Western Province of Papua New Guinea (PNG) with little public scrutiny. That suddenly changed in 1995, when the "Big Australian," as the company calls itself, helped draft a bill that eliminates the rights of PNG citizens adversely affected by the mine to seek compensation in court. Now BHP is paying a heavy price for its actions, as the outside world takes a hard look for the first time at the destructive effects of the company's mining operations on the people whose rights BHP sought to strip.
BHP's Ok Tedi copper and gold mine is located on Mount Fubilan in the Star Mountains adjacent to the West Papuan border. This remote and geologically unstable region receives about 10 meters of rainfall annually and is home to thousands of tribal residents. Ok Tedi is the third largest open-cut copper mine in the world, and accounts for 16 percent of the country's export earnings. The mine is owned by BHP (52 percent), the PNG government (30 percent) and Mettal Mining Corporation (a Canadian subsidiary of German Mettalgesellschaft) (18 percent). In the mid-1970s, BHP organized the consortium, Ok Tedi Mining Limited (OTML), which manages the mine. In 1987, BHP assumed total control over OTML's operations, which are expected to continue through 2010.
Thanks to recent increases in world copper prices, Ok Tedi generated $120 million in earnings last year, accounting for 13 percent of BHP's total profits and making Ok Tedi the fifth-largest source of BHP earnings. Although it has been a big money maker in its 11 years of operation, OTML did not pay any taxes to the PNG government until October 1995, when it made a $3.75 million payment.
Long, dangerous tail
The heightened international scrutiny of its operations that followed its effort to have legislation protecting the company has created a public relations problem for BHP, because it has operated the Ok Tedi mine in a fashion that would not be tolerated in Australia or any other industrialized country.
The mine dumps 80,000 tons of tailings (rock waste) containing copper, zinc, cadmium and lead into the Fly and Ok Tedi Rivers every day. Originally, the PNG government made OTML's operations conditional upon the construction of a tailings dam, which would have filtered out much of the waste now dumped in the rivers. But after the original tailings dam was destroyed by a landslide in 1984, OTML made a successful pitch to forge ahead without a tailings dam, exacting a predictable toll on a once-pristine river system.
This circumvention of PNG environmental laws and regulations is not an isolated event. Repeatedly, BHP has been able to shape the rules to meet its own operating needs, often enjoying exemptions from PNG's environmental regulations. A detailed report released by the Australian Conservation Foundation (ACF) in 1992 found that "There is no routine independent assessment of the compliance monitoring nor of the interpretation of data. This 'in-house' approach means that OTML is not publicly accountable for its environmental performance in any meaningful manner."
In 1991, OTML's own reports revealed that fish stocks in the upper Ok Tedi had declined between 50 percent and 80 percent from pre-mine levels. ACF reported the next year that the first 70 kilometers of the river was "almost biologically dead and species diversity over the next 130 kilometers had been dramatically reduced. Fertile river bank subsistence gardens, plantations and approximately eight square kilometers of forest have been destroyed." ACF also found that the sediment flowing into the Fly River from the mine has elevated copper levels in fish and bottom sediment.
"We used to drink, wash and fish in the river," says Alex Maun, a spokesperson for Ok Tedi landowners. "But when the mining began in 1984, the river became polluted - it is only caused by the mining. …