SOPAC AND ENVIRONMENTAL MANAGEMENT MINING

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By Helena McLeod

SUVA, Fiji Islands (January 6, 2000 – SOPAC)---The Pacific was at one time well known for stories of gold and wealth.

The Solomon Islands was named after the golden idea of King Solomon's Mines, and the region today boasts some world-class mines and deposits.

Papua New Guinea (PNG) has a number of mines, including the Ok Tedi copper mine; Lihir, Porgera and Misima gold mines; the closed Bougainville copper mine; and a large nickel mine in the planning stages. New Caledonia has nickel deposits and mines of considerable size. Fiji claims one of the largest porphyry copper deposits at Namosi as well as two gold mines. The Solomon Islands has recently opened Gold Ridge, its first gold mine, and promises many further lucrative deposits.

The significance of mineral exploitation to some island countries is reflected in the export earnings. In PNG, the mineral sector accounted for 32% of export earnings in 1997; in the Solomon Islands nearly 30% in 1997; and in Fiji an estimated 8.6% in 1998.

Currently there is a large overhaul of policy in the Pacific to make sure these benefits are not undermined by environmental and social costs.

REFORM IN PAPUA NEW GUINEA

PNG has a well-developed mineral sector and comprehensive environmental legislation. Currently three acts are relevant to environmental management. These are the Environmental Planning Act (1978), the Environmental Contaminants Act, and the Water Resources Act (1982).

Critics of the existing regulatory process say that it is cumbersome with projects of all sizes requiring a full environmental impact assessment (EIA). Approval under this regime is through ministerial discretion. A new proposed Environmental Bill seeks to integrate these existing acts into a single transparent and 'one-stop-shop approval' process. The proponent submits a preliminary account of proposed operations, and from this the project is classified as a Level 1 to Level 3 activity.

Level 1 projects are small concerns with minimal or no expected environmental impacts. Regulations, policies, codes of practice and standards will control this level. Level 2 activities have expected medium environmental impacts and will be subject to permitting conditions. Only Level 3 activities with significant expected environmental impacts will be subject to a full-blown EIA process. This process will also include social as well as biophysical impact assessment. Most approvals will be at the administrative level rather than the political level.

Although PNG has the human resources to generate the required legislation and policy, many of the small Pacific island developing countries face significant human resource shortages and the development of environ-mental, social and other legislation may be hindered. Not only are government departments financially under-resourced, but high emigration, elevated private sector wages, sometimes unmeritocratic systems of promotion, and a naturally small human resource base, mean that ability to develop comprehensive legislation may be constrained. Mineral departments in some Pacific states also face the problem of little experience in very newly developed mineral sectors.

ROLE OF SOPAC

The South Pacific Applied Geoscience Commission (SOPAC) is an independent regional body comprising 18 Pacific member countries. For nearly three decades, it has attempted to act as an extension of its Pacific island member countries' governments, to provide expertise, advice and manpower where it is requested. SOPAC's Mineral Unit previously focused on the promotion of regional mineral resources through mineral evaluation and assessment, and resource policy development. This last area has grown in importance in response to the changing needs of the island members. Social and environmental aspects of policy are being given particular importance.

ENVIRONMENTAL MANAGEMENT POLICIES

FIJI:

The unique attachment to the land of indigenous Pacific peoples, and dependence on exploiting natural resources for welfare, mean that society and the environment are inextricably linked. Mineral explorers and developers must quickly come to terms with this if projects are to progress smoothly in the Pacific. Since 1998, the Fiji Mineral Resources Department (MRD), through an AusAid funded institutional strengthening scheme, has been overhauling its current mining legislation. SOPAC has been working closely with the Fiji Government, to develop a compensation policy for landowners negatively impacted by mineral exploration and development, as part of this process. The policy is currently undergoing stakeholder review. However, new initiatives require compensation for social and cultural impact through Community Development Schemes, which include educational scholarships and business initiatives. Compensation is also required to cover environmental damage, such as river and soil contamination that affects communities outside the mining lease. Payment for noise and dust nuisance, loss of recreational and conservation use values and for permanently lost land are also included. Friction between landowners and industry due to existing incomprehensive compensation policy will hopefully be rectified if the proposals are passed. The revisions to the Mining Act also propose extensive reworking of the environmental management requirements, which regulate the mining sector.

Proposals include the requirement to submit an environmental management plan and a mine closure plan at the start of operations. SOPAC is also working with the Fiji MRD to develop guidelines for reclamation bonds that will be paid by the operator to cover the cost of rehabilitation by a third party. The importance of effective security bonds was recently brought home to the Fiji Government when the future of the country's second gold mine, Mt Kasi, then operated by Pacific Islands Gold Ltd hung in the balance. A potentially serious environmental problem would have been faced if the mine had gone.

POLICY

Mining Environmental Management, November 1999 into liquidation, as the bond held at that time would not cover estimated rehabilitation costs. Security deposits are arguably more important to small island developing states than to developed countries, as a small tax base and low revenue make reclamation of abandoned mine sites difficult. Awareness is growing that environmental damage carries very real financial as well as social costs.

SOLOMON ISLANDS:

Even when environmental legislation is in place, Pacific small island developing states often lack the resources to monitor and enforce the regulations effectively. A company that sees environmental and social best practice as crucial to the development of a project will tend to bring greater benefits to a country, whereas an operator who sees the environment as secondary may well lower standards if enforcement of legislation is not ongoing. This could cause overall losses to the country in the long run.

This underlines the importance of selecting the right company for project development. Ross Mining NL started production at Gold Ridge mine in the Solomon Islands in 1998. So far it has proved a dedication to environmental and social best practice. In its environmental management plan commitments have been made to best practice standards including; all water leaving the site satisfying drinking water standards; ongoing rehabilitation; and, tailings disposal in a tailings dam, which meets the guidelines of the International Commission on Large Dams (ICOLD). Water used in the mining process is all recycled and the system is completely self-contained.

Prior to mine closure, a water treatment plant and a 'polishing pond' will be located at the tailings dam site to enable water to be treated to drinking water standard, prior to release. The EIA for Gold Ridge also included extensive attention to the social impacts. The mine has involved the relocation of over 800 people, many of whom lead a subsistence life. Families were given the choice to move to Lungga Village, purpose built to their specifications, or to be compensated financially. The village comprises over 100 houses, a school, a cultural center, a clinic, a woman's center, a church and headquarters for the Land Owners Association. Gold Ridge hopes to have a majority of local staff at all levels within 5 years. Women are also extensively involved in the rehabilitation work.

Credit is also due to the Solomon Islands Government, which has acted effectively although constrained by very limited resources. A fish kill earlier this year in a neighboring river, thought to be related to a leak from the tailings dam, was dealt with quickly by the government and company. The government called for an environmental audit and, with support from SOPAC, selected an independent consultancy firm to carry out the audit at the expense of the company. Now all wastewater pumps are physically supervised 24 hours per day. In addition, the latest computer management technology is used to oversee each area of mine operations from a central location.

The success of Gold Ridge has been equally dependent on the attitude of Ross Mining to the environmental, social and cultural aspects of mining and the Solomon Islands Government for its transparency in dealing with the company and support for the mine, despite low resources in the mineral resources department. Choosing the right company to develop a resource is essential in a country such as the Solomon Islands and requires a transparent and unbiased tendering process. In 1997, SOPAC was asked by the Solomon Islands Government to set up such a process and worked with the government departments to select criteria, which the companies bidding for the tenement would be ranked against. Initial agreement was made to accept the outcome of the tendering process. Each company was ranked on their track record of environmental, financial, social and other chosen criteria and the best company determined.

Gold Ridge adds an estimated 30% to the Solomon Islands Gross Domestic Produce and injects millions of dollars into the local economy. SOPAC, at the invitation of the government, anticipates participating in the selection of an equally successful operator, through a similar process, for a nickel project.

OFFSHORE MINERAL POLICY

Offshore mineral policy is an area where the Pacific is leading the world.

In November 1997, PNG granted two exploration licenses in the Bismarck Sea. These were the first to be granted for underwater polymetallic massive sulphides internationally. The huge exclusive economic zones of Pacific island countries mean that the potential for wealth generation from offshore mineral deposits is immense. Already sizeable deposits of manganese nodules have been discovered in the economic zone off the Cook Islands and cobalt-rich crust in the Federated States of Micronesia, Marshall Islands and Kiribati. Preliminary exploration and research is taking place in many Pacific nations' waters for other mineral deposits.

In February 1999, SOPAC organized an Offshore Mineral Workshop in Madang, PNG, which was hosted by the Department of Mineral Resources. The purpose was to revise the Offshore Mineral Policy Green Paper that a PNG interagency committee had developed. Once again, environmental issues were of particular concern to the international expertise gathered in Madang.

Not only is there relatively little known about the type of mining methods that would be utilized in exploitation, but also the life forms existing at this depth are little studied. It is known that some unique and potentially economically lucrative biota live around the deep-sea chimneys where much of the exploration work is focused. The workshop developed a number of revisions to the Green Paper including the requirement that exploration license holders should undertake the collection of baseline data during their exploration activities. This should be proportional to the level of exploration activity in that area. Prior to pilot testing, the license holder must submit to the state an environmental assessment report for the planned activities and a monitoring plan designed to facilitate completion of an environmental assessment for the commercial mining stage. The Green Paper will be further developed by the PNG interagency committee before going to Cabinet. SOPAC is developing a number of recommendations produced by the workshop more fully as international guidelines for offshore mineral exploration and development.

These will be published early in 2000 as the 'Madang Guidelines.' This year, SOPAC has worked with the Fiji MRD and completed an offshore mineral policy for Fiji. SOPAC is soon to undertake an offshore mineral policy for the Solomon Islands. There are also plans for SOPAC to undertake formulation of offshore mineral policies, as part of its 2000 Work Program, for other Pacific island states.

MAXIMIZING BENEFITS

In summary, the exploitation of minerals and aggregate in Pacific island states has the potential to bring sustainable development to some Pacific island nations, if environmental and social impacts can be controlled and minimized. SOPAC will continue to work with its island member countries to bring this about. Industry must also play its part in realizing that successful mining in the Pacific small island developing states comes from an appreciation and prioritization of best practice environmental and social goals.

This article was written by:

Helena McLeod, Resource Economist SOPAC GPO Suva, Fiji Tel: (+679) 381377 Fax: (+679) 370040 E-mail: helena@sopac.org.fj 

It was also published in the November issue of the London Mining Environmental Management Magazine - a mining journal publication.

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