Q: Can you give a brief overview of Bougainville Copper Limited?
HITCHCOCK: It is an exciting new era for BCL as an independently-managed Papua New Guinea company.
We are listed on the Australian Securities Exchange (ASX) and the people of Papua New Guinea and Bougainville have a significant stake with the governments of PNG and Bougainville being our two major shareholders.
As a company, our core objective is to work cooperatively towards realising the vision of resuming active exploration and sustainable copper, gold and silver mining at Panguna, in central Bougainville, after mining ceased in 1989 due to conflict.
The successful redevelopment of the mine will deliver broad economic and social benefits and that is a prospect we are excited about.
Along with our Port Moresby office we have established a full-time team in Bougainville with an office in Buka. We were pleased to hold our first board meeting there in more than 27 years in August.
We are fortunate to have a strong board with a wealth of experience in PNG and Bougainville and a capable management team.
The board was further strengthened by the recent appointments of distinguished Bougainvillean Mel Togolo, who has extensive mining industry experience along with Peter Graham.
Peter served as managing director of ExxonMobil PNG Limited which was responsible for the US$19 billion (K57 billion) PNG LNG project and is also the current chief executive of Ok Tedi Mining Limited.
The board also features former Prime Minister Sir Rabbie Namaliu, Dame Carol Kidu, and Sir Moi Avei and is chaired by PNG and international mining industry veteran Robert Burns.
Q: Can you explain BCL’s plans to reopen the Panguna mine and what will that entail?
HITCHCOCK: There is certainly a lot of work to do if the vision of a new Panguna project is to be realised.
Our approach is being guided by a redevelopment plan which has four distinct stages.
The plan has the backing of the Bougainville government and strong support among project area landowners.
We estimate that we are around halfway through the first stage (stage zero) and community and stakeholder engagement remains a priority focus.
We are increasing our presence in the project areas with our local engagement team led by well-regarded Bougainvilleans.
Community inclusion and support is essential to the redevelopment process. With the agreement of landowners, we intend to commence the necessary technical, environmental and social baseline studies that will guide further work.
We will also negotiate with landowners the benefits of mining as the project advances.
The third stage would see us conduct a bankable feasibility study and obtain the necessary permits and approvals with the final stage being the construction and operation of the mine.
We have sufficient financial resources to complete the first two stages and will look to secure additional finance to help fund the feasibility study and project construction.
The company has set realistic objectives and if mining is to recommence, it would be several years away.
Q: Panguna mine has a sensitive history surrounding its closure. How is BCL catering for this in its plans to reopen the mine and what has been the feedback?
HITCHCOCK: We and the global mining industry have learnt many lessons from the past but see a bright future for Bougainville and are committed to supporting that future.
There is a sensitive history. But given BCL’s long-standing involvement in both Papua New Guinea and Bougainville, it is something we understand and appreciate as a company.
We have, for example, always retained a positive local presence throughout the period of the mine’s closure.
We have continued supporting initiatives such as Bougainville Copper Foundation which has provided educational opportunities for more than 1000 Bougainvilleans since the mine closed and we continue to support other community projects and initiatives.
BCL is also a very different company today, with Rio Tinto no longer involved and the people of PNG and Bougainville effectively our major shareholders.
We are governed and regulated by the Autonomous Bougainville Government and will be shaped and guided by the Bougainville people.
Since returning to Bougainville, our direct engagement with stakeholders, including landowners, the government and the community more broadly has been positive, and BCL has been extremely well-received overall, including in central project areas.
That is not to say there are no challenges and there are of course people with differing views.
A dispute for example over the leadership of one of the nine project area landowner associations has added a layer of complexity to our engagement.
This is subject to an ongoing National Court mediation process and we are hopeful of a timely, satisfactory resolution.
Q: What are some economic benefits that will be gained from reopening Panguna mine?
HITCHCOCK: The project certainly has the potential to generate significant broad-based economic benefits. While it was a different time, when the mine last operated between 1972 and 1989, the production value represented around 44 per cent of Papua New Guinea’s exports, with a production value of K5.2 billion.
It also resulted in the training of some 12,000 employees, including many apprentices who helped build capacity in the PNG and Bougainville workforce.
Under the new Panguna project, the construction phase alone will cost an estimated US$4-6 billion (K12- 14 billion) and that will present a range of opportunities for employment and local business in the provision of goods and services.
The mine would also generate significant tax and royalty revenue over the 25 year plus operational life of the project.
There will be a need for certainty in relation to the tax regime that would apply.
Benefits will also be negotiated with landowners in project areas and shareholders will see dividends from their project equity.
A project of this scale will help stimulate the economy in different and significant ways, training and employment, new business opportunities in the supply of goods and services and the provision of new infrastructure to name a few.
Q: What are your views on the distribution of Rio Tinto’s shares by the PNG government and the Bougainville referendum in 2019?
HITCHCOCK: The exit of Rio Tinto saw its 53.8 per cent shareholding transferred to the ABG and the Papua New Guinea government, with each now currently holding a 36.45 per cent share as the major shareholders.
The PNG government already held a 19.1 per cent share.
Prime Minister Peter O’Neill had said that 17.39 per cent of the PNG government shareholding will be transferred to the people of Bougainville.
As an independently managed company, we will continue to serve all of our shareholders to the best of our ability. But the final configuration of the shareholding is not something we have expressed a view on.
In terms of the proposed referendum, that is very much a matter for the people of Bougainville and we will respect whatever decision they make.
We also, of course, fully recognise and support the Bougainville peace agreement.
Q: Mining companies usually partner with the province they operate in to bring about development. What are BCL’s plans for Bougainville in non-mining sectors such as agriculture and tourism?
HITCHCOCK: BCL certainly recognises the challenges that come through the impact of a large mining operation on a smaller, lesser developed economy such as Bougainville.
Therefore, we will do everything we can during the operating life to encourage and nurture a broader-based economy that can flourish when mining is finished.
The continued development of Bougainville’s other important industries, including agriculture and tourism and other services
are critical to future economic success.
In terms of our efforts as a company in mineral resources and given the potential scale of our operation, we certainly see ourselves complementing other sectors and providing impetus for them to grow.
For instance, redevelopment would lead to much improved infrastructure and services which other sectors and industries would benefit from.
Employment opportunities are a major dividend of growth and economic diversity and we are certainly committed to being proactive in these areas, working with government, local communities and industry to support initiatives
that support sustainable development.
The goods and services requirements of a major mining operation, for example, provide all kinds of opportunities for such things as agriculture in the provision of fresh food and it will also be a catalyst in areas like transport and accommodation.
When you build capacity, you put structures in place to then cater for growth in non-mining related industries such as tourism, you also promote local innovation and business which is something BCL is very keen to foster.