Ok Tedi Mine, PNG – Compensation negotiations
The problem: The Ok Tedi mine is a copper and gold mine operating for the past 25 years in the Star Mountains of Papua New Guinea. It is well known for its environmental damage to the Fly River system, and for a number of high-profile legal actions taken against its former majority shareholder and operator, BHP Billiton.
The mine’s riverine tailings disposal method had resulted in significant environmental impacts on the river system, and on the livelihoods of the more than 50,000 people living down river from the mine.
In 2001, the operating company, Ok Tedi Mining Limited (OTML), negotiated agreements with these downriver communities, called Community Mine Continuation Agreements (CMCAs). These agreements sought the communities’ consent for the mine to continue, even given the known impact of the mine on their environment. These agreements were due for review – and re-negotiation due to increased impacts – after five years.
The business objective: The company had to meet its legal and moral obligations without threat of disruption to the operation. It needed stronger relationships with its host communities and to manage the costs of any increased compensation within acceptable commercial parameters.
The solution: OfforSharp was asked to design and project manage the review of the CMCAs. Using the Informed Consensus model, we put in place a highly-participative negotiation process involving a multi-stakeholder working group, an independent facilitation team, independent observers and public reporting.
The outcome: Over an 18-month period, a new regional assistance package was negotiated that included increased compensation moneys, access to new development funds and establishment of a new development foundation with a high-level of community ownership. Its total value was estimated at K1.2 billion (AUD700 million), with the majority of funds geared to company profitability.
The regional assistance package reflected the interests of both the impacted communities and OTML. An evaluation by participants marked it as a manifestly fair process for delivering for all parties.
Other significant outcomes of the Informed Consensus process included a commitment to greater village autonomy in setting development objectives and distributing funding, improved regional banking so that compensation moneys’ could be delivered directly to family bank accounts and greatly improved relationships between the company and communities.
More information on the Ok Tedi Informed Consensus process can be found at www.wanbelistap.com. |
