The Big, Ugly Australian Goes to OK Tedi

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. …

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