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Kværner builds the plant: New controversial gold mine in Papua New Guinea

Kværner is, along with two other companies, responsible for planning and construction work of the new gold mine on the island Lihir in Papua New Guinea. The mining activity started in May this year, but environmentalists warned about the consequences even before the activity started. Tonnes of toxic waste will be dumped straight into the ocean every day. Experts consider the sea areas around Lihir as one of the areas with the richest bio diversity world wide, and it is estimated that at least seven kilometres of coral reef will be lost.

Artikkelen er mer enn to år gammel. Ting kan ha endret seg.

Kværner is, along with two other companies, responsible for planning and construction work of the new gold mine on the island Lihir in Papua New Guinea. The mining activity started in May this year, but environmentalists warned about the consequences even before the activity started. Tonnes of toxic waste will be dumped straight into the ocean every day. Experts consider the sea areas around Lihir as one of the areas with the richest bio diversity world wide, and it is estimated that at least seven kilometres of coral reef will be lost.


By Morten Rønning
Norwatch

The investors behind Lihir Gold Limited (LGL), among others the British-Australian Rio Tinto and the Papua New Guinean government, claim that the island with a size of 200 square kilometres is too small for depositing the toxic waste. Therefore, the company will, throughout the 36 years of mining, transport 89 million tonnes of mud and 330 million tonnes of polluted waste rock through a pipeline into the ocean to a depth of 125 metres. The gold reserves in Lihir, which is situated north-east of the mainland, is considered one of the world's largest, approximately 42.5 million ounces in total.

When asked by NorWatch how Kværner assesses the environmental impacts from this mine, we are referred to the mining company itself.

The Future in Our Hands (FIOH) consider Kværner's supplies to the Lihir mine as another glaring example of Norwegian companies' dubious undertakings in the South.

- Mining activity in these areas has already had huge negative consequences for people and for the environment. Can a company as big and rich as Kværner really be known to make profit on such a destructive activity?, asks Tor Traasdahl, manager of FIOH.

Heavy metals
In ore processing, 1800 tonnes of cyanide will be used per year, and the waste will, in addition to cyanide, contain substances such as arsenic, aluminium, cadmium, copper, iron, lead, manganese, zinc, chrome, and quicksilver. Many of these substances are very poisonous even in small quantities. One example is copper, which is poisonous for animals and human beings in a concentrate of 1 particle per 1,000,000 (i.e. in a concentration of  0,001 per thousand.)

- We clean the waste of cyanide before every discharge, says the person in charge of the environment in Rio Tinto's subsidiary Lihir Gold Management, John Forth, to NorWatch.

Other mines in the area also discharge waste into the ocean. Both in the Philippines and in the Misima mine in Papua New Guinea, this way of handling waste has lead to big damages to marine life, and it has had negative consequences for the local population, among other things it has resulted in reduced fish catch. In the company's own prospectus of the mine, it is said that the discharges will reduce the diversity of life in the coral reefs.

- Discharge of waste into the ocean is allowed in many places. For example, the American Environmental Protection Agency will consider permitting such discharge in places where the conditions are favourable, says John Forth.

According to the company's own prospectus, the mining activity will also ruin the island's most important nesting places of the Melanesian oven hen, a bird of the megapode family.

"Can a company as big and rich as Kværner really be known to make profit on such a destructive activity?"
Tor Traasdahl, manager of FIVH (The Future in Our Hands)

Secured against lawsuits
The company holds the right to prospect for gold on the entire island. The first mine will cover an area of 2 square kilometres and will reach a depth of 300 metres.

The land owners among the 5,500 inhabitants of the island have had to sign an agreement (memory of understanding) with the company to get their part of the fee paid by LGL for extracting gold from their areas. The agreement gives the land owners the right to 20% of the fee paid, 50% goes to local authorities, and 30% to the local development agency. In the agreement, the inhabitants renounce the right to advance claims against the company in the future.

The first payments were recently made, after the sale of gold from the mine started in June this year. According to the plan, the company will pay a monthly fee for the next 36 years. Next year, the company estimates to produce 550,000 ounces of gold.

The relationship between the local population who have had to move away from their areas, and the newly-arrived construction workers, has come to a head. Early 1996, the frustrated local population interrupted the work.

Kværner's assignment
Kværner Metal Davy Nonferrous Division in California carries out the assignment for LGL. In co-operation with the Australian company Kinhill Engineering, and the American company Fluor Daniel Inc., they are in charge of planning, construction work, provision of machinery, and construction management.

This includes the responsibility for equipment for ore crushing and processing, an oxygen plant, a diesel aggregate, equipment for cleaning acids and washing carbon, mud disposal, in addition to buildings, quay structures, airplane runway, industrial area, and churches. In essence, the mining activity as such is the only thing the partners are not involved in. At most, the three companies have had 2000 workers in Lihir. The work commenced in 1994, and it will be finished by the end of this year.

Jill Sherman, sales manager in the Kværner company, is unwilling to inform how much their contract with LGL is worth, and only refers to the costs of the entire LGL project, which amount to US$ 750 million. The contract of the three partners represents approximately 15% of the expenses of the part of the project which they are in charge of.

Kværner in Papua New Guinea
Kværner Metals Davy Nonferrous Division in California is, along with the partners Kinhill Engineering and Fluor Daniel Inc., in charge of projecting and construction work in a recently started gold mine on the island Lihir. The company was part of former Trafalgar House, which was taken over by Kværner in April 1996. In total, the three partners have had up to 2000 workers in Lihir.
The work will be finished by the fourth quarter of this year.
The main shareholders in Kværner are Bergesen d.y. ASA, Chase Manhattan, the Norwegian National Insurance Fund, and Orkla ASA.

Lihir Gold Limited
Lihir Gold Limited operates as a subsidiary of Rio Tinto, the world's largest mining company. They hold around 17% of the voting shares through the company Southern Gold Bahamas. The Canadian company Vengold Inc. is another owner of this company. Additional owners in LGL are, among others, Nuigini Mining, and the Papua New Guinean government. 
The financing of the mining project is spread among several institutions. Union Bank of Switzerland has lent US$ 300 million to the project. This loan is partly guaranteed through MIGA (Multilateral Investment Guarantee Agency), a subdivision of the World Bank. Other guarantees have been pledged by the Canadian Export Development Corporation, and the Australian Export Finance and Insurance Corporation. 

Norwatch Newsletter 12/97

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