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Giving Away The River: Environmental Issues In The Construction Of The Ok Tedi Mine, 1981-84

Bill Townsend*
Department of Minerals and Energy, Papua New Guinea.

The role of the State in the development of the Ok Tedi mine is reviewed and conclusions drawn concerning reasons for the failure to implement adequate environmental safeguards. The administrative and organisational pathways through which the States financial and environmental interests were incorporated into project planning and implementation are outlined and it is concluded that problems of management and co-ordination resulted in environmental considerations being ignored or playing a secondary role to financial concerns. The adoption of a "fast track" approach to development has resulted in significant financial losses through abandonment of engineering projects such as the hydro-dam only after significant expenditures had already been made. The project is judged to have a poor environmental and accident record.

The Ok Tedi gold and copper deposit, located in the Star Mountains near the Indonesian border, was discovered in 1968. Initial proving of the ore deposit and setting up the project was done by the Kennecott Mining Company, who considered the project to be primarily a copper mine (Jackson, n.d.). After Kennecott dropped the project on March 12, 1975, Papua New Guinea continued development of the mine with technical advice from Behre Dolbear, a mining consultant from New York City. As this project was being developed it was considered by many to be the cornerstone of the Papua New Guinea economy.

After further drilling and the dramatic increase in gold prices in 1980 the mine was considered as an excellent example of staged development with the gold ore at the top of the deposit and copper ore underneath. In Stage I the ore at the top of Mount Fubilan would be processed to extract gold. Stage II included two processing lines; one for gold and one for high grade copper ore. Finally, Stage HI involved processing relatively large quantities of low grade copper ore. With this staged mining procedure shown to be feasible, a new company was formed with three private partners: BHP of Australia, AMOCO Oil Company of Indiana, and a German consortium of companies. Papua New Guinea, with a 20 per cent share, became the fourth partner and plans were developed to begin construction of the mine. Bechtel and Morrison Knudson International (B-MKI) were selected as the prime contractor and the pre-construction work began in May, 1981.

Construction of the Stage I infrastructure, containing the facilities and support systems necessary to mine gold, was authorised in mid-1981. The agreement between OTML and the State is contained primarily in the Mining (Ok Tedi Agreement) Act 1976 dated 22 March 1976, the Mining (Ok Tedi Supplemental Agreement) Act dated 26 June 1980, and the Construction Feasibility Study, ten volumes which give details about the transportation systems, townsites, power supply, process plant, ore reserves, and waste disposal. In general the 1976 Ok Tedi Act specified the components which the mining company would build and the Feasibility Study listed quantities and the construction sequence. The Supplemental Agreement, Schedule B, described the requirements of the Environmental Impact Study and the environmental management program which were to be carried out by OTML.

This paper will discuss construction of the Ok Tedi project and agreements that relate to protection of the river system in order to show specifically what happened to the environmental programme during Stage I construction. It will not discuss the thinking and negotiations that led to the agreed environmental programme (Pintz, 1984). Nor will it discuss the anticipated impact of the mine on the local peoples environment, both social and physical (Jackson, n.d.). Others have studied the actual social impact of Stage I construction and mine operation (Hyndman, 1988; Ulijaszek et al., 1987).

. It was understood by the State that mining and development of the townsite, mine, hydro-electric facility, and waste disposal system would have a major environmental impact on the immediate area of the mine. What the State wanted was to limit the mine impact to the area adjacent to the upper Ok Tedi River. In order to do this it was necessary to control the impact of the mine on the river system. Thus, the State's commitment to environmental protection was centred on limiting the impact the Ok Tedi River, in order to avoid the environmental disaster which accompanied the Bougainville Copper Mine (Hyndman, 1988).

From 1975 unfit 1979 while. the project. was still considered to be economically marginal because of low copper and gold prices and inadequate ore reserves, the mining company was not agreeable to the State's requirement to contain the incompetent waste material which was scheduled for disposal in dumps adjacent to the mine on the South side (the "Southern dumps"). The material originally planned for disposal there is made up of about 130 million tonnes of soil and soft rock which will decompose quickly and enter the Ok Tedi river system very soon after being deposited. The agreement ended up at the arbitrary figure of 60 million tonnes of incompetent waste which could be disposed of in the Southern Dumps. When metal prices rose to relatively high levels in 1979 the mining company finally agreed to this condition.

The planned protection of the environment consisted primarily of the tailings dam on the Ok Ma which was on the critical path for construction. This meant that any delay in beginning or completing construction would delay operation of the completed plant. Transportation of the tailings from the Process Plant, originally at Teranaki, to the Ok Ma reservoir was to be by pipe-lines, a completely closed system. In the event of major storms or malfunction of the principal system, the cyanide would be neutralized by chemical treatment of the tailings. Functioning of the tailings dam to neutralize the cyanide by natural decay and retention of the tailings fines by settling out of the particles was not considered to be automatic. It was considered necessary by both the State and the Mining company that the effluent from the reservoir be monitored in order to ensure the desired protection of the river system in the event of major storms or other conditions that could reduce the effectiveness of the tailings pond.

Environmental monitoring and an Environmental Impact Statement (EIS) were defined in the Supplemental Agreement. Jackson, (n.d. page 85), doubts that OTML was serious about environmental protection because of the small sum that was specified for the Study. The Environmental Impact Statement presented by OTML has serious shortcomings, including a limited time span of measured rainfall and stream flow records, limited information about the chemical and physical properties of the tailings, and a sketchy survey of the natural environment. These factors were severely criticized by the State's environmental consultant (Buckley, 1984). Nevertheless, in spite of its limited scientific rigour the EIS does contain a lot of useful information and sets down guidelines which would provide a level of protection to the river system. The EIS written by OTML's consultants gives criteria for chemical and particulate pollution of the Ok Tedi River from the tailings dam effluent.

There is uncertainty and a great deal of debate concerning the level of damage caused by various pollutions to specific plants and animals that live in and adjacent to a river system. An environmentalist will interpret data so that the grey area of uncertainty is considered unacceptable or at least risky. An entrepreneur, on the other hand, will be searching for the limit beyond which damage will occur and thus will tend to consider the grey area of uncertainty as acceptable. That is, there is no damage if it cannot he clearly proven. In order to prevent stalemate in negotiations it was decided not to address this issue until after mine operations had begun (Pintz 1984 p.90). The problem with this deferral is that resolving the conflict between the environmentalist and entrepreneurial interpretation of data is no easier after mining has begun than it was before mining started.

The agreement to postpone the decision on acceptable environmental impact put the burden of decision and enforcement on the State in 1983, when OTML requested approval of the Interim Tailings Scheme. As a practical issue, all of the staff who negotiated the agreement had left government by the time that decisions needed to be made.

During construction and commencement of mining operations, (from 1982 through 1984), OTML gathered much data, as required by the agreement, and talked to many technical specialists on environmental issues. This gave OTML a great deal of time and information to develop and support its viewpoint. The State, on the other hand, had all new staff and more limited resources and support for presenting the other side of the environmental argument Meanwhile, reduced profitability of the mine hardened OTML's resolve not to spend the money necessary to build the tailings dam.

Table 1. Sequence of Events for Stage I Construction

February 1981 First MRDC staff hired
May 18, 1981 Begin Pre-construction phase
August 18, 1981 Authorization given for Stage 1 construction
September 1981 Second MRDC staff hired January 1982 Re-organize MRDC
November 17, 1982 State informed project is eight months behind schedule
January 1983 Terminate Ok Menga hydro construction
March 1983 OTML Task Force
March 1983 Re-organize MRDC
August 1983 OTML presents Interim Tailings scheme
November 1983 Visit Malaysian minesite
January 7, 1984 Landslide at Ok Ma dam site
January 25, 1984 State approves Interim Tailings scheme
February 1984 MRDC receives 1982 environmental monitoring report from OTML
May 1984 Begin operation of process plant
December 31, 1984 Deadline for OTML to let contracts for half of tailings dam construction
March 18, 1986 Parliament ratifies Sixth Supplemental Agreement
January 1, 1989 Environmental study due on impact on Fly River
January 1, 1990 Permanent tailings dam construction to begin

As both an active shareholder and the owner of the natural resource, Papua New Guinea recognised that there would be decisions to make. In order to co-ordinate its role on the Ok Tedi Project the National Executive Council set up a three-level organisation; a small group of senior ministers to control political discussions, a committee of public servants to co-ordinate the government departments involved in the project, and a separate company (Mineral Resources Development Company) to manage the State's interest in the project.

Originally the State's negotiators who wrote the project agreement were public servants working at the First Assistant Secretary level. The departments of Minerals and Energy, Finance, Justice, and the National Planning Office were most active at this time and formed the working core of the Ok Tedi Management Committee. Many of the individuals who were active in the negotiations were personally committed to protection of the environment but none of the core departments had environmental protection as a primary departmental responsibility. The Water Resources Bureau is charged with protection of the country's rivers but they were not active in planning the project. During negotiations and planning, there was no one present who was primarily concerned with protection of the environment.

In order to manage and co-ordinate the State's interest on the Ok Tedi project it was planned to set up a separate company for the project. This was considered necessary because many of the government departments were not organised to support the project in an effective way, particularly considering that there would be unusual demands made by the project. This company, Mineral Resources Development Company (MRDC), was never completely established after the initial appointment of a manager in September 1981 was a failure; nor was MRDC ever given authority to represent the State. The intention, in 1981, was that MRDC would co-ordinate and manage the activity of governmental departments on the project and would thus be working at the secretarial level. By 1983 when the original tailings scheme was being abandoned by OTML, MRDC had been re-organized to function as a division within Minerals and Energy. At this time MRDC reported to the Ok Tedi Co-ordinator who reported to the First Assistant Secretary. Thus, following re-organization the State's co-ordination team was now functioning well below the secretary level with a correspondingly weakened ability to influence policy decisions and to co-ordinate the States role on the project. All reports and recommendations from MRDC went through Minerals and Energy and were supported or vetoed depending on the Department's programme.

At the same time that Ok Tedi project matters were being more deeply buried within Minerals and Energy, the mining company was building an active management organization which was based primarily in Port Moresby. (Bechtel had a central office in Melbourne and, of course, the construction activity was centred at Tabubil.) The management of OTML tried to gain as complete control of the project as possible by making contact with key ministers and providing information about the project to the State. In order to keep information flowing between the State and OTML, weekly briefings were held in the Department of Minerals and Energy between OTML, management and representatives of the State. These meetings were useful for communicating detailed information, however, major issues and decisions about the project did not go through this channel. OTML- Management found it expedient to go directly to the decision-makers, the Secretary of Finance, and the Secretary of Minerals and Energy as well as government ministers.

The State's designated representation on the OTML board was the Secretary of Finance and the Secretary of Minerals and Energy. Both Secretaries Morata and Agonia, however, who were major forces for the State in defining the Ok Tedi Agreement, had left their government positions by the time that the environmental issues came up in 1983 and had been replaced by new appointees. The Ok Tedi Act designates the Secretary of Minerals and Energy as the point of contact for OTML and in 1981 the Secretary used MRDC as his designated agent for this liaison. By 1983 MRDC had been completely bypassed as the point of contact.

Ministers of the various departments who sit on the National Executive Council are the principal decision-makers for the State. The normal procedure for communication with these Ministers is a well established part of government which is very cumbersome, particularly in comparison with a fast-moving mining project. In order for the project co-ordination team to make a recommendation to the Minister for Minerals and Energy it was necessary to get the approval of the Department's Ok Tedi Co-ordinator, the First Assistant Secretary, and then the Secretary. Because of this cumbersome procedure, rarely did MRDC brief any Minister and never did MRDC appear before the National Executive Council. OTML on the other hand, could talk to anyone who would listen. It was easy for OTML personnel to get an audience with ministers who were frustrated with departments that could not give them timely briefings about this large and exciting project. Unlike government departments, OTML was quick to give up-to-date information, especially when important issues were at hand. OTML's General Manager often escorted key ministers around the project and often discussed issues with the State's Directors. Never once did the General Manager attend the State briefing sessions that had been set up for communication with the State. The cumbersome procedure established for the State's departments doing business in combination with OTML's direct access to Ministers and key personnel undercut the State's project management team and effectively removed technical considerations from the decision-making process.

The weakness of the State's decision-making process is illustrated by the Task Force which was established by the OTML Board on March 8, 1983. The Board was concerned about construction lagging behind schedule and incurring massive cost overruns. The Task Force was set up to review the whole project management and the construction program. All shareholders were represented on the Task Force including the State, which was represented by MRDC's Assistant Manager Technical. This appointment seemed a major breakthrough, this being the first time the government had been given an equal role on technical matters.

The terms of reference were "The study should determine the required course of action to achieve gold production at the earliest practicable date and at the lowest possible cost- The study should consider all alternatives, including alternatives which do not accord with existing agreements, and should consider deferral of any expenditure that can be practicably deferred". The Task Force interviewed senior management of B-MKI and OTML at Tabubil and at Melbourne. Construction was reviewed for the whole project and all schedules and alternatives were reviewed. Several things became clear to the Task Force:

1. The project was far behind schedule with little chance of making up lost time. With construction of the Ok Menga hydro-electric facility permanently stopped and the Tailings Dam construction temporarily stopped all resources could be diverted to constructing the Process Plant. It appeared that the plant could be operating by June 1984, only a small slippage in the original schedule of operation by May 18, 1984.
2. OTML management and B-MKI were openly hostile toward each other and the situation had developed where each party seemed to be actively concerned with defending its position. Although B-MKI had made mistakes, the Task Force felt that B-MKI was the project's builder and ways should be sought to ease their work- The Task Force observed that OTML management was developing an organisation which was ineffective and duplicated the function of B-MKI. The Task Force felt that OTML management should be reduced so as not to duplicate B-MKI's function and that the construction tasks be clarified.

The Task Force completed its report on March 25, 1983 and gave it to OTML's General Manager for his review and discussion. The major difficulty which the Task Force faced was in recommending measures to correct the deteriorating management situation which OTML had developed. After reviewing the report, the General Manager sent it, along with his rebuttal to the Board. Each of the representatives front the three private shareholders discussed that Task Force report with their own Board members. The State's decision-makers, however, did not seek input from the State's representative. Instead the Prime Minister was briefed by OTML management about topics where its own failings were being reviewed. The Prime Minister then instructed the State's two directors what position to take regarding the report. At no time did any minister or departmental secretary, including the State's board members, discuss the report or the findings of the Task Force with the State's representative who had been involved in a concentrated two-week review of the project which included interviews with Bechtel, Morrison and Knudson International, and OTML management at Tabubil, Port Moresby, and Melbourne, Australia. By this time OTML management had developed such good communications with the top levels of government that the State in this case had less independence than the private shareholders.

A critical factor in the State's organization on the Ok Tedi project was the conflict of interest of some key individuals and departments on the project. The most serious case of this was within the Department of Minerals and Energy, the State's point of contact with OTML. Minerals and Energy had the interest of OTML in mind through the Secretary who was a member of the Board. As a director, the Secretary is primarily responsible for the efficient implementation of the mining project. As Secretary of Minerals and Energy, his responsibilities are different and come into conflict with his responsibilities as Director. The Department of Minerals and Energy includes the Mines Division, charged with safety on mining projects around the country, and the Water Resources Bureau, charged with safe and effective use of the country's water resources. The Chief Inspector of Mines and the Director of the Water Resources Bureau both needed to function freely under their own statutory regulations. Positions relating to the shareholder role were usually formulated by the Division of Policy and Planning while positions relating to standards and regulations were formulated by the department's technical staff: the Mines Division, the Water Resources Bureau, and the Geological Survey.

Often on the Ok Tedi project the Department's position as shareholder conflicted with its position as enforcer of standards and regulations. When in conflict, the Department almost always took the position of the State as shareholder. This meant that when the Department found itself in. conflicting roles it usually chose the position which was not supported by its own technical staff. Ibis was clearly the case when on January 25, 1984 the National Executive Council accepted OTML's request to stop construction of the Ok Ma tailings dam and start construction of the Interim Tailings scheme.

The State's decision to stop construction on the Ok Ma dam and start construction of the Interim Tailings scheme was made in the face of contrary technical input and recommendations from technical staff. Technical staff and institutions who recommended against the Interim Tailings scheme include:

1. The Australian Mineral Development Laboratories (AMDEL), who had been hired by the State to advise on environmental issues including the Interim Tailings scheme, advised that the mine not be allowed to operate using the proposed scheme (AMDEL Report No 154 1).
2. The Chief Inspector of Mines recommended that OTML and the State concentrate all efforts on efficient construction of the agreed tailings system.
3. The Director of the Bureau of Water Resources was adamantly opposed to dumping tailings directly into the river system.
4. MRDC considered the system ineffective for protection of the environment and recommended that the original system be built as quickly as possible.

In spite of unanimous opposition to the proposed scheme by the State's technical advisors NEC decided to accept OTML's recommendations on environmental protection.

Although construction of Stage 1 began in mid-1981, the State never did establish its organisation for managing its role in the construction project. As a result, the State was barely able to produce the required land lease agreements and then only after a monumental effort. The project's management team, Mineral Resources Development Company (MRDC), never reached its authorized staff level of seven. Only two professional staff were hired. (This compares poorly with the State's full time project management team of four for the Bougainville project). Even so the two staff that were hired were severely limited in that they were given no authority to make decisions or direct activities. These two were able to accomplish significant tasks only because of the good will of departments that wanted to support the project.

In addition to not setting up an adequate management team the State was ineffective in using the staff which it did have on the project. For example, in May 198 1, before Stage I construction was formally authourized, MRDC's Assistant Manager Technical, a Civil Engineer, recommended that the State employ an internationally established geo-technical engineer as a consultant to advise the State and project on soil stability problems. This request was prompted by his observation that there were many visible landslides in the upper Ok Tedi basin, particularly near the Ok Menga gorge which was being developed for hydro-electric power. The proposal requested the minimum of outside consultation which would be centred on the Ok Menga hydroelectric dam and the Ok Ma tailings darn. The request was turned down, primarily by staff from the National Planning Office who commented that the cost of US$ 50,000 was too high.

In early 1983 construction of the Ok Menga hydroelectric facility was stopped because of a massive block of land that was moving as a result of the power house construction. The tunnel had been completed through the right bank to gain access to the Ok Menga basin and the turbines had been ordered and shipped to Kiunga for storage. Construction of the Ok Menga facility has never been resumed, but before it was stopped OTML had spent US$ 89,178,084 on it.

Later in 1983, construction began on the Ok Ma tailings darn in a frantic attempt to have it on line in time for production even though the design had not been completed and geological features of the site had not even been mapped. The well-published landslide of January 7, 1984, resulted in the termination of construction of the tailings dam. This event was not unpredictable in that a minor slide in the same area occurred two weeks earlier and the construction of the decant tunnel on the right bank produced a continuously moving land mass that was carefully controlled. Even so -the aborted construction of the tailings darn had cost the project US$ 64,319,158.

The State's 20 per cent share of the OTML, expenditure on the two aborted dam construction projects is more than US$30million. This is more than 500 times the funds requested to advise the State on this aspect of the project- Much more serious than the immediate financial loss to the State is the long term impact on the project of not having hydroelectric power or the environmental protection offered by the tailings dam. One cannot say what would have happened if the proposed consultant had been hired however, the probability of failure on either one of these projects would have been greatly reduced if the State had made a proper technical review.

Another example of the State's ineffective use of staff on the Ok Tedi project is the construction progress report MRDC presented on November 17, 1982, to the Ok Tedi Management Committee (made up of representatives from the departments of Finance, Minerals and Energy, Justice and the National Planning Office). The report indicated that construction was eight months behind schedule, a delay which would produce massive cost overruns that would reduce the profitability of the project. One should remember that when the project was considered economically marginal OTML was not willing to include the environmental protection which the State required. Further, the report stated that since the tailings dam was the last major component scheduled for construction in Stage I, it was in the State's interest to monitor this portion of the project carefully. The Management Committee agreed with the report and recommendation. Minerals and Energy had taken over the direction of MRDC however, and was acting as the co-ordinator for the State's activities in construction of the mine. Minerals and Energy had its own agenda of reducing the cut-off grade for gold ore as well as activities on other mining projects so that the warning about cost overruns was ignored and the direction to actively monitor OTML's implementation of the tailings dam was not pursued.

The State's ineffective use of staff is further illustrated by the history of the design of the Ok Ma Dam. The Ok Tedi Task Force was set up in March 1983 with representation from all four shareholders. One of the recommendations of the Task Force was that the Ok Ma Tailings Dam design be finalized immediately so that construction could be properly planned. The State's representative wrote two separate memos to Minerals and Energy with the strong recommendation that the State push for a meeting of interested parties to convene until the design was finalized. The State's Chief Inspector of Mines took a similar position, however, the department decided against taking the recommended action.

On January 7, 1984 a massive earth movement caused OTML to stop construction of the Ok Ma tailings dam. A number of facts should be pointed out about conditions associated with the Ok Ma Dam failure.

1. Construction had begun on the dam foundation even though the dam design had not been completed at the time of the failure.
2. Construction had begun on the dam foundation even though the geological features of the dam site had not been mapped at the time of the failure.
3. Immediately after the landslide, Bechtel stated that the darn could be built on the same site with the dam moved 200 meters upstream
4. In the Ok Ma "Post Mortem" by Hollingsworth and D'Applonia it was stated that the dam could be built on the same site by moving it 150 meters upstream
5. The decision to terminate construction of the Ok Ma Dam and the National

Executive Council's decision to approve the Interim Tailings Scheme was done with no technical input from the State. The whole exercise was handled in the administrative and political arena.

The impact of the January 7, 1984 landslide on the Ok Ma dam site was that the State's chances of meaningful protection of the river system were reduced to nearly zero. In this regard implementation of the Ok Tedi project by the State duplicated the experience of the Bougainville project: that is, tailings are dumped into the river with no effective treatment.

Ok Tedi Mining Limited consistently followed a simple strategy during Stage I Construction to undermine the State's position on environmental protection. This strategy consisted of three parts:

1. Keeping the State's technical staff as far away from meaningful discussion of project components as possible.
2. Removing the 60 million tone limit on incompetent waste agreed for the Southern Dumps.
3. Proposing a highly visible but inadequate mode of tailings disposal after the failure to construct the agreed tailing dam.

OTML's intention to keep the State out of technical review and significant discussion was made very clear at the beginning of the project. The company's General Manager said more than once that he did not want the State to get involved in technical issues. When early planning of the Ok Menga Dam was started, Bechtel sent some of their technical experts to the site for visits and review of the data. This required that all visitors to the project pass through Port Moresby both coming to and leaving the project. These people were instructed by OTML Management not to visit or talk to the State's project management team (Memo dated August 7, 1981). This action effectively undermined the State's technical position by keeping information away from key staff. Unfortunately it also tended to undermine the whole project. It was agreed that the project would be built by the 'Fast Track' approach where the engineer and construction company are the same. This eliminated one technical review of the design which occurs - in typical projects where the engineer and contractor are separate. When OTML successfully undermined the State's technical review of specific project designs, they effectively eliminated a second review which occurs in typical projects. If OTML had an adequate staff of technical personnel then these two short-circuits in the review process would not have seriously affected the project. OTML's technical limitations on the project and lack of commitment to technical rigour became painfully obvious through State I construction. The expenditure of over US$ 200 million on dams that are useless and/or abandoned was a very high price to pay on a project that is now considered marginal.

At the beginning of Stage 1 construction OTML expressed concern about the limitation of dumping only 60 million tonnes of incompetent waste in the Southern Dumps. When it became clear that the State intended to uphold the agreement, OTML Management looked for an alternate method of confining the waste. The plan that was actually pursued was to build the Ok Mani diversion weir to collect both the material from the Southern Dumps as well as the tailings that were proposed to be dumped into the Ok Mani watershed. The river plus all of these mine wastes were to be diverted through a 4 meter diameter tunnel into the Ok Ma reservoir. The State's technical staff immediately expressed concern about whether or not the scheme would work. The size and frequency of flood peaks on the Ok Mani was questioned and eventually OTML increased the design flood peaks on the Ok Mani which meant that a second tunnel would be required to handle the floods up to the annual peak flow. Of greater concern was the envisioned movement of the material down the Ok Mani valley. The State's technical staff as well as OTML's consultants who wrote the Environmental Impact Statement envisioned the incompetent waste moving down the valley in sudden uneven movement which is how natural systems usually work. The concern by the State was that these surges could easily bury or clog up the tunnel, making the whole system inoperative. After commissioning a model study at Manly Vale in Australia and then later a separate technical review by Kloen Leonhoff late in 1984, OTML finally conceded that the system would not work. In the meantime US$ 20 million U.S. was spent on driving the tunnel from the Ok Mani basin through to the Ok Ma basin.

It became obvious that the tailings dam was far behind schedule in August 1983 and that it was unlikely that tailings impoundment would be possible when the process plant was ready for operation. At this time OTML made a lot of noise about protecting the environment, held special meetings at Tabubil, and sent a delegation to Malaysia to observed a tailings impoundment project that was being used at the Mamut niine. There were several important differences between the observed Mamut disposal system and the one which Ok Tedi was proposing. First of all, the rainfall at the Malaysian site was a fraction of the rainfall at the Ok Tedi site. More importantly the system at the Malaysian site was completely contained, with no significant waste entering the watershed. At Ok Tedi, the proposal was to discharge most of the wastes directly into the river with only superficial treatment. The State's technical staff recommended rejection of the interim tailings scheme for several reasons:

1. Construction was far behind schedule and the last thing the project needed was an additional demand on already overloaded construction staff.
2. The proposed scheme would do very little to protect the environment. It was felt that tailings with fine particles and a high concentration of heavy metals would cause substantial damage to the river system.
3. OTML, with its hit-and-miss construction record, was proposing to build a large pile of sands which could easily fail in a catastrophic manner.

It is enlightening to consider OTML's explanation of the Interim Tailings environmental impact. The argument for using cyclones to split off the course fraction of tailings for storage on the downstream face of the Ok Ningi Dam was that it is the coarse particles that damage fish gills. When the State expressed concern about the impact of cyanide and other chemicals on the marine life in the rivers the response was "fish exhibit avoidance behaviour". That is, fish don't like to live in rivers that have high levels of particulate pollution so they migrate to tile side streams. This means that since the chemicals are confined to the main stream they won't hurt the fish. The State responded with, " If the fish are in the side streams to avoid the fines then why should the project spend money to remove the coarse particles from the tailings?" This argument was never answered by OTML.

Three separate incidents are described briefly here to show the level of OTML's commitment to environmental protection. The first one has to do with the river monitoring which OTML is required to report to the State at six-month intervals. Water samples are collected at a number of stations from the mine down the Ok Tedi and Fly Rivers and analysed once a month for heavy metals and particulate pollution. The first report period, from July 1982 through December 1982, corresponded with a severe drought. This interval also corresponded with the major construction effort to build the access road to the mine and develop the site for the process plant construction. This construction location and effort put massive amounts of heavy metals into the river system. Unfortunately for the State the results of the river sampling were not reported until more than one year later so that all consideration of the Interim Tailings scheme and approval were completed before the results were reported. Also, because of the severe drought, water holes which are preferred for drinking water dried up and local people moved to the rivers for drinking water. In particular, the village of Bosset moved several miles to camp adjacent to the Fly River to get drinking water from the Fly River. This delayed environmental report was the State's first clear indication that heavy metal pollution would be a serious problem.

On June 14, 1984, a barge being towed across the Gulf of the Papua leaned far enough to one side that 15 containers of sodium cyanide and some stainless steel containers of hydrogen peroxide slid off the barge into the water. This accident caused one of the containers to burst open, setting free 180 60litre drums which had a specific gravity of approximately one, depending on the amount of sodium cyanide in each of the drums. This meant that they would float near the surface where they were carried towards shore by the wind and current. There was considerable discussion about recovering the 14 intact containers as well as the 180 drums that were set free from the broken container. Most of the 180 drums were found but none of the 14 containers were found. It was speculated that the drums in these containers imploded as they sank, spilling the sodium cyanide. A barge was prepared with the cranes and hoists necessary to salvage any containers that were found. Meanwhile, it was discovered that the stainless steel hydrogen peroxide tanks lost in the same incident were not economically salvageable. Upon discovering this, OTML immediately dropped the salvage operation and dismantled the barge.

On June 19, 1984, approximately 1000 cubic meters of untreated tailings were dumped into the Ok Tedi River. These tailings contained free cyanide at a concentration of between 100 and 400 PPM which, when diluted, would produce concentrations of cyanide at Ningerum, 73 km downstream from the mine, of about 200 PPB. This concentration is considerably higher than the agreed criterion of 5 PPB and is considerably higher than levels which fish can tolerate. Hundreds of fish and prawns and several crocodiles were killed. It is reported that at least one villager collected and ate dead fish and one tortoise was eaten by villagers. Two days after the spill, on June 21. OTML environmental staff found ten dead fish and one crocodile at Ningerum. OTML said that their upper management became aware of the seriousness of the situation on June 27. The incident was not reported to the Department of Minerals and Energy until July 3, two weeks after it occurred.

From these critical incidents in which the mining company failed to release information or take action one can judge that environmental safety has been a very low priority in the project.

The original Ok Tedi agreement included a pipeline to transport tailings from the plant to the Ok Ma Reservoir. Capacity of the reservoir was calculated such that there would be adequate time for the fine tailings particles to settle out and the free cyanide, which is quite unstable, to decompose from exposure to natural sunlight and oxygen while in the reservoir. Even with such a large reservoir it was not certain that the effluent would be sufficiently clean. Therefore, a programme to monitor the levels of free cyanide, heavy metals and particulate concentrations was proposed. The clear intention of the agreement was that there would be no significant impact on the Ok Tedi River from operation of the mine. It was always understood that the Ok Ningi and Ok Mani tributaries would have significant impact from the mine and that during construction there would be an unavoidable impact However, the agreement and the Environmental Impact Statement included levels of contamination that would assure the continuance of aquatic life in the Ok Tedi River itself. Certainly the Fly River, into which the Ok Tedi flows, would experience no serious impact from the mine operating as originally planned.

With the construction of the Interim Tailings Scheme it was obvious that the project could not stay within the agreed maximum levels of contamination. The State was faced with the problem of what criteria to adopt for heavy metal, particulate, and cyanide pollution. OTML insisted that with the cyanide detox system operating the cyanide was neutralized and the tailings rendered totally inert That is, there would be no chemical impact because the tailings were supposedly non-toxic.

The government's project management team and Director of the Water Resources Bureau felt that professional advice should be sought and measurements of heavy metals in the river system determined independently from OTML. In order to do this water samples were taken from the Ok Mani, Ok Tedi, and Fly River for analysis. In addition tailings from the operating plant were collected and sent to the University of Papua New Guinea for toxicity testing. AMDEL, The Australian Mineral Development Laboratories, was employed under the direction of the Director of the Water Resources Bureau to review the reports prepared by OTML on the environmental impact of the interim tailings scheme and to advise the State on criteria for acceptable contamination of the river system. AMDEL was highly critical of the Interim Tailings scheme and OTML's presented information (or lack of it). AMDEL recommended levels of cyanide, heavy metal, and particulate pollution of the Ok Tedi River for adoption (Buckley, 1984). This recommendation formed the basis for criteria established for the project by the Bureau of Water Resources. It is clear that these criteria were exceeded several times by Stage 1 process rates. Obviously if the mining rates were increased even more to accommodate Stage II or Stage Ill then there would be more and larger breaches of the criteria (see Mowbray this volume).

Perhaps the best way to express the impact of tailings on the Ok Tedi and Fly Rivers is to project the impact expected on aquatic life (Mowbray, this volume). Mowbray conducted toxicity tests at UPNG on live mosquito fish and shrimps collected near the University. He used samples of tailings collected in June and November 1984 to determine the concentrations which would kill half of the animals in 9 days, a standard measure of toxicity. The result found was that tailings concentrations of.004 and .001 would kill half the mosquito fish and shrimps respectively. Using these results and calculating the concentration of tailings in the Ok Tedi and Fly Rivers it was determined how far down the river the tailings would be toxic enough to poison the animals tested. It was calculated that for high production levels and low river flow the shrimps would be affected for all of the Ok Tedi River and a major portion of the Fly River (Mowbray, 1986).

In order to consider the impact of mine wastes on the Ok Tedi River system several things must be considered. First of all particulate pollution and heavy metals are not introduced into the Ok Tedi by tailings alone. A substantial input will come from the stable Northern Dumps and the unstable Southern Dumps. Because of the pollution from the dumps as well as the residual tailings particles which have settled out to the river bed, impact from the mine will continue long after mining has stopped. This of course means that stress on biological systems is expected to continue after mining operations have ceased.

Another way to consider the impact of tailings on the river system is to use OTML's own assessment of the Interim Tailings Scheme (OTML, October, 1984, Addendum No.1). This document was prepared in October, 1984. five months after the ITS began operation. For 30,000 tonnes per day processing rate, from 1985-1990, OTML predicts that suspended sediment concentrations will reduce the fisheries status in the Lower Ok Tedi from good to one of between poor and extremely poor. That is, OTML project a 'moderate to severe biological impact on the Lower Ok Tedi and a minor impact on the Fly River'. For increased mine process rates scheduled for Stage Ill with no tailings dam OTML says that 'excessive concentrations of suspended solids will decimate the fish populations in the Lower OK Tedi'. The impact of this tailings disposal on the Fly River at Kuambit, the first large settlement on the Fly River below the mouth of the Ok Tedi River, would be to reduce it from a good fishery to between poor and extremely poor. OTML's projection of impact on the Middle Fly is that there would be reduced numbers of fish species and individuals. In both cases OTML says that local people should he compensated for expenses incurred by having to go by motor boat to swamps for subsistence fishing.

During Stage I construction OTML successfully changed the level of environmental protection to its own benefit. In 1981, at the beginning of Stage I construction the State's position, which OTML agreed to was that there would be no significant pollution of the Ok Tedi river from operation of the process plant. By 1984, at the end of Stage 1 construction, the discussion was 'what is an acceptable level of pollution of the Ok Tedi and Fly Rivers?' Thus, the State had retreated from the position that there was to be no pollution of the river system to a position of uncertainty about exactly what level of pollution to accept.

In order to determine how much toxic waste can be discharged into the Ok Tedi and Fly Rivers an environmental study is being done. However, OTML is making the major expenditure on the study and directing the collection of data. The State has been unwilling to make major expenditures on environmental protection and is poorly staffed to direct such a study. One can be sure that staff wishing to stay employed by OTML will be looking for data to support OTML's position on the environmental impact of mining operations.

A careful and thorough study of the impact of the Ok Tedi mine on the environment should assess the bodies of water adjacent to the Fly River. These include Lakes Bosset and Murray which have some commercial fishing value as well as the swamps adjacent to the Fly River. Also, the Fly river delta area and Torres Strait should be considered for possible impact. A short-term load of tailings is not likely to produce a significant impact on these larger bodies of water, however, over the life of the mine the build-up of heavy metals could be enough to produce impacts on sensitive plants and animals. The approach to environmental monitoring and analysis used by OTML is not likely to be adequate to predict this impact reliably. They simply are not taking enough samples for analysis. If OTML is careful with their work and reporting then they should be able to assess the impact of mining and tailings disposal on the Fly River itself.

Everybody wants to protect the environment and have safe fishing industries and other by-products of a healthy river system. The crucial question is how much a company or country is willing to spend to attain a particular level of environmental quality or protection. For the mining company the answer is to do as little as possible because it reduces profits. A country, on the other hand, has responsibilities other than profit. Quality of life for its citizens becomes a factor as well as development of human resources so that the country is more able to control its future. In the case of the Ok Tedi project the State, under two successive governments, was not willing to spend the money necessary to set up the project management team. Further, the staff that were hired were not given adequate authority to represent the State. In the original agreement the State did not require an appropriate funding level to do an adequate environmental impact study. When the project deviated from the original agreement the State was not willing to fund environmental monitoring which its consultants recommended. In January 1984, after the Ok Ma landslide, when OTML petitioned the National Executive Council to drop the agreed environmental protection programme the State capitulated without even consulting its own technical advisors.

Finally the State agreed on March 18, 1986 to postpone construction of the tailings dam until January 1, 1990. This is essentially the end of Stage 11, which means that most of the gold ore and high-grade copper ore will have already been mined. What the project was scheduled to face in 1990 was Stage Ill, mining of a large quantity of lower grade copper ore. The revenues from Stage Ill in today's metals market will not come even close to paying for the construction of the proposed tailings dam. Thus, by agreeing to postpone construction of the tailings dam until 1990, the State agreed to conditions under which the possibility of constructing the dam were nearly zero. One can conclude that in the case of the Ok Tedi project the Government of Papua New Guinea did not take the necessary steps to produce the environmental protection which it claimed as one of its initial goals.

Buckley, R. C. 1984. Ok Tedi Project: Interim tailings disposal scheme: Environmental impacts and legal implications. AMDEL Report No 1535 for Bureau of Water Resources, Department of Minerals and Energy, Papua New Guinea, May 1984.

Hyndman, D. 1988. Melanesian resistance to Ecocide and ethnocide: transnational mining projects and the fourth world on the island of New Guinea. In: Bodley, J.H. (Ed.) Tribal peoples and development issues: A global overview. Mayfileld Publ. Co. California.

Jackson, R. n.d. [ 1982]. Ok Tedi, The Pot of Gold. UPNG press, Port Moresby, Papua New Guinea.

Mowbray, D. 1986. Biological impact of Ok Tedi Mine Tailings, Cyanide and heavy metals on the Ok Tedi/Fly River Ecosystems in Papua New Guinea. (pp 90) Report to Bureau of Water Resources, Papua New Guinea.

Pintz, W. S. 1984. Ok Tedi, Evolution of a third World Mining Project. (pp 206) Mining Journal Books, London.

Ulijaszek, S. J.. D. C. Hyndman, J. A. Lourie, and A. Pumuye 1987. Mining, modernisation and dietary change among the Wopkain-tin of Papua New Guinea. Ecology of Food and Nutrition, 20: 143-136.

*Dr Townsend was employed by MRDC from March 1981-December 1984 with primary responsibility to advise the State on technical matters and to co-ordinate the activities of the State's technical personnel working on the OTML Project. Recognising the problems of a conflict of interest within the Department of Minerals and Energy the Government later transferred the Bureau of Water Resources to the Department of Environment and Conservation.. Hence much of the technical advice which was ignored during tile development of the Ok Tedi project is now available to the National Executive Council and Government via an independent Ministry. Hopefully this will lead to more careful consideration of environmental issues in future mining projects within die country. Editor's footnote.