ok tedi cases.pdf

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Ok Tedi Case Study“If this were your village...?”

Barbara SharpDirector, OfforSharpIAP2 Australasian Symposium, 6th September, 2007

Good afternoon, everyone.

What I want to talk to you about today is what the blokes on the SBS program, Top Gear, mightcall a torture test of the IAP2 values and processes.

It’s a feature of working in developing nations that everything is hard, tougher, more complex. Theprocess I will take you through was public participation at top speed, and you can bet there weregears that whined under the pressure and bits that fell off.

But what I will tell you is that public participation and the principles we used to reinforce thechassis in these rugged conditions got us across the line in one piece.

And leaves us proud of our design and garage-built modelling and construction.


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Summary

• The Problem

• The Response

• The Outcome

• First World Parallels

What I’ll do today is talk about the particular nature of the problem to be resolved at Ok Tedi, theresponse to it, and the outcome, the actual deal struck. The hope for the future.

What I’d like to finish on is how such a rarified example as Ok Tedi actually had its roots in theFirst World.

And then I’d like to open discussion with you about the parallels there are across nations andacross the human condition.


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Western Province, Papua New Guinea

THE PROBLEM

First, how many of you have heard of the Ok Tedi mine?

What have you heard? Good? Bad?

These days, if I hear someone see the words “Ok Tedi” and they say, OKAY TEDDY, I think either,they’re very young, or, just maybe Ok Tedi’s notoriety is finally fading.

The Ok Tedi mine is - and remains - one of the worst environmentally damaging mining operationsin the world. Not the worst, but most certainly, but carrying one of the worst reputations .

Let me give you some “biographical” facts – if you like – that give you a picture not only of the

environmental dimension, but the social dimension in which we were operating.• In the Star Mountains• Port Moresby capital• Remote even by PNG standards• 20 kms from Papuan border • It’s big – 1 ! times as big as Tasmania• Ok Tedi (“ok” = river), tributary of Fly, Strickland River


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Fly River & WP

• topography - mountains andvast ood plain

• rain - 11 m annual rainfall at MtFubilan (


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Western Province

• subsistence economy - sagoand sh

• river is the life source -transport, food, communication

• poor institutional capacity

• low life expectancy

• poor literacy, health services,maternity and neo-natal care(bush births)

• largely a subsistence economy – live on sago, fish for protein• river is the life source, transport and food, communication• poor institutional capacity – life expectancy low, literacy, health service delivery, babies not

born in hospitals

Many of the people living along these rivers have no power, no refrigeration, no roads, certainlyno supermarkets or cinema complexes.

What they do have in even 2007 are the diseases borne of poor sanitation and unreliable watersupply, or simply lack of water reserves for washing and cleaning on a daily basis.

Papua New Guineans mostly die of malaria or tuberculosis.But it is better than when exploration began and the first white faces were seen by the local Minpeople more than 40 years ago.


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For the past 25 years, gigantic shovels have gauged the walls of the Mt Fubilan copper pit.

And bulldozers have pushed waste rock over a cliff and down into the deep ravines of the Ok Tediand Ok Mani.


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[Text for next two slides]

The mine dumps 90,000 tonnes of waste rock into the river system each year. It has done so formost of its 25 years of gold and copper extraction.

It dumps its waste into the river, because there is no choice.

It is done legally, with PNG government sanction and regulation. The PNG government is a 30 percent shareholder of the mine.

This riverine waste disposal method has caused problems of sedimentation and over-bankflooding and consequent die-back of vegetation.


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Ok Mani 1979 Ok Mani 2004

Mid Ok Tedi 1979 Mid Ok Tedi 2004


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For the people whose lives have revolved around the river for thousands of years, this means:• they are losing arable land and their food gardens are flooded for longer in the year • they must travel further and further to harvest their staple food source of sago• and their sago yields are dwindling from the changed local environment.


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Now let’s flip the coin…

In 1998, the Panguna mine, operated by Bougainville Copper Limited, then producer of PNG’slargest single income source, was shutdown in a violent uprising.

Ok Tedi, which was beginning to ship its prized copper concentrate to Europe and Japan was thenation’s next life-line.


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The economicdimension

• 2,000 employees, 97% PNG

• 1,800 contractors, many localbusinesses and employees

• >35% of PNG export earnings

• >14% total internal revenue

• >10% PNG GDP

• single greatest contributor toWP economy

Ok Tedi Mining Limited employs about 2,000 people. 97 per cent of them are Papua NewGuineans. Papua New Guinean contractors employ another 1,800 people.

Ok Tedi filled the Bougainvillean economic gap, giving the nation about 20 per cent of its exportincome, and ten per cent of its GDP.

The Min people whose land is where the Mt Fubilan gold and copper resource, and the Tabubiltownship are located, negotiated one of the richest compensation packages for their land rights inPNG.

They secured contracts, jobs and royalties far beyond what they could have believed possiblewhen they were first approached by the white prospectors.

Their future seemed secure, grand, longer and safer. No longer did they need to slash the densebush and till the unforgiving limestone earth to feed their children root crops, and fattened pigs.

This was the beginning of the Ok Tedi Dilemma.

Aspirations for Western development were being realised, but the price to be paid for it was alsobeing realised.

In 1999, OTML released to the broader public and the communities 24 volumes of technicalreports that spelt out in detail the price being paid.

The dieback of vegetation and effects of over-bank flooding would last for generations and mayeventually affect most of the floodplain.


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The villagers of the lower Ok Tedi and middle Fly River didn’t need a bunch of scientists to tellthem change was happening.


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With the help of Melbourne legal firm, Slater and Gordon, two legal actions were pursued in theVictorian Supreme Court by some of the villages against majority shareholder, BHP Ltd.

The first was settled out of court, the deal pumping AU$150 million into the downriver economy.

The second, a class action, and a constitutional challenge in the PNG courts, was mounted, butlater withdrawn by Slater & Gordon and their plaintiffs.

But if only it were so simple as a polluting bogey being brought to justice for its environmentalvandalism.

What the environmental reports looked at was four options for reducing the damage. The bestoption for arresting the environmental damage was to shut down the mine immediately.

That prospect, more than the description of inter-generational flooding regimes, frightened thecommunities that had come by now to depend on the mine.

Their economic and social well-being, their desire for what comes with modern development – notfast cars and mobile phones – but safe water, power and access to medicines – was under threatwith sudden mine closure.

The mine, rightly or wrongly, also filled the gap left by failing government infrastructure. Hospitalsand health services, housing, roads, education support, jobs.

This was the national economic boon of resource development writ SMALL.


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And so the Community Mine Continuation Agreements were offered as compensation with amixture of cash and development projects.

Clan leaders for their part agreed, then, that the mine should continue to operate. The companyhad the first cut of its social licence to operate.

Even so, BHP (to become BHP Billiton) could see the writing on the wall.

A late clause in the CMCAs released BHPB from future liability, and paved the way for their exitfrom a mine that no longer accorded with their environmental policies.

In 2002, BHP wrote down its losses on Ok Tedi, gifting its 52 per cent share to a trust fund, thePNG Sustainable Development Program Limited – PNG SDP.

Where the rest of this case study unfolds is in the mid-term review of the CMCAs, in 2005.

The mid-term was half-way between the CMCAs being agreed in 2002 and the predicted closureof the mine in 2013.

The other important trigger was - as history is our guide to the future – a commitment to tell thecommunities of any new evidence of environmental damage, and a consequent review ofcompensation.


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Acid Rock Drainage is a problem with just about every copper and gold mine in the world. It wasdeemed less of a problem at Ok Tedi, because of the neutralising properties of the limestone richStar Mountains.

“Don’t decide without data” would have to be the engineers’ instinct, and by 2000, the data fromscientific studies was showing ARD problems at the Bige dredge site – ironically, the mitigationsolution for the sedimentation problem - but, more significantly, changes to the chemistry of theriver system itself.

The worm turned.

With sedimentation and dieback, the river would eventually recover.

With acid oxidation in the mine sediments, you were suddenly talking toxic effects on the riverecosystem.

Despite what Ok Tedi’s critics had told the world, dieback wasn’t poisoning the river.

Now that qualification was no longer a refuge.

When the company began diligently telling the community leaders what their studies were finding,you could see a dawning despair creeping into their leaders’ eyes.

I remember a meeting with leaders. “ Enough!” They said.

“Don’t keep telling us how it is killing our river! Tell us what you can do about it.”

Worse was to watch as they realised, too, that their oppressor, the company that polluted their

life-blood of generations was also their only hope of survival.What ARD meant this time was the possibility already seriously diminished fish stocks in the riverwould be further reduced by the chemical pollution.


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“...all power is a trust,that we are accountablefor its exercise, and that,from the people, and forthe people, all springs,and all must exist”.

Benjamin Disraeli

It was at that moment, the company’s boss knew what he already knew in theory. There had to bea way for the communities, the company and the nation to talk through the mucky, complex,seemingly intractable, contradictory mess of Ok Tedi.

So, what to do?

THE RESPONSE

We are consultants, and we have travelled with OTML since the public release of the diebackscientific reports. (1999)

We have been guides for OTML’s emerging leadership in transparency and respectful dealingswith host communities.So, let me describe the context in which the mid-term review had to respond to the competingdemands of commitment to transparency, and the pragmatism of needing to secure a continuedsocial licence to operate in increasingly precarious circumstances.


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Situation analysis

• unstable agreements- deal envy , divide-and-conquer history

• poor project delivery -distrust

• residual litigationissues - non-CMCAvillages - subversion

• internationalcampaigning -agitation

In 2004, when we first proposed to OTML management how they might do things differently innegotiating the CMCA review, this is what was going on:

• unstable agreements – deal envy • Poor project delivery record - distrust • Residual litigation villages outside of the CMCAs signatories - subversion• International campaigning - agitation

The company’s goals in this environment were to get its relationship on to a stable footing, securetheir operations to mine closure, and to achieve the conversion of the mine’s wealth into realsustainable development.

Genuine, effective sustainable development had eluded OTML and the communities for 25 years.

And so the CMCA Review – “A New Way Forward” - moved into first gear.


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Informed Consensus- 4 + 2

• public participation

• mediation

• interest-based negotiation

• relationship-basedcommunication

• Guiding Principles

• independent process team

The consultation process to “reset the balance” of environmental, social and economic impacts ofOk Tedi is what we call an Informed Consensus process.

Informed Consensus draws on four key disciplines:• Public participation• Mediation• Interest-based negotiation, and• relationship-based communication

We developed an engagement process that drew on each of these, resulting in purpose-builtinfrastructure. If you like, a kit car, to overwork my Top Gear analogy.

The process was further supported by a number of devices or instruments that built the trustcritical to achieve the necessary participation, and which levelled the playing field to overcomepower imbalances.


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Public participation:• Depth of engagement from Inform to Empower


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IAP2 - a continuum


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The IAP2 Core Values

1. Public participation is based on the belief that those who are affected by adecision have a right to be involved in the decision making process.

2. Public participation includes the promise that the public's contribution willinfluence the decision.

3. Public participation promotes sustainable decisions by recognizing andcommunicating the needs and interests of all participants, includingdecision makers.

4. Public participation seeks out and facilitates the involve ment of thosepotentially affected by or interested in a decision.

5. Public participation seeks input from participants in design ing how theyparticipate.

6. Public participation provides participants with the information they need toparticipate in a meaningful way.

7. Public participation communicates to participants how their input affectedthe decision ( feedback ).


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Mediation - 2

Mediation :• Five steps

o Talk-listen

o Listen- talk

o Discuss (common ground and issues to be resolved)

o Negotiate

o Agree


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Interest-basednegotiation - 3

• integrative (interests) v.distributive (positional)

• training for participants

• Harvard Negotiation Project

Interest-based negotiation:• Integrative (interests) v. distributive (positional)• e.g. job negotiations - salary v. security/flexibility etc.• participants were given training in interest-based negotiation• Harvard Negotiation Project (informed by)


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Relationship-basedcommunication - 4

• extrapolates the personal to themulti-party

• shared past and shared future

• imperative for two-waycommunication

• essential lubricant fornegotiation process

Relationship-based communication:• extrapolates the personal to the public• shared past and shared future is explored and established• this demands two-way communication, not one-way• embodies the Guiding Principles

The communication necessary for a process to seek mutual benefit was an essential lubricant forthe process. It’s for good reason that no less than four of the Guiding Principles (which I get toshortly) deal with aspects of communication.


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Guiding Principles

• Integrity

• Transparency

• Equity and participation

• Fairness

• Respect

• Responsiveness

• Adequacy of information

• Timeliness

Level playing field devices or instruments:

The process that I will describe embodies or delivers in some shape or form each of the GuidingPrinciples.

The process had to turn motherhood statements into real-life, practical outcomes. You will see theIAP2 values in there.

A charter or Terms of Reference defines the scope of problem solving. It puts all participants in thesame mental space.


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Independent process supporters

Independent process support:

The Informed Consensus process had to be rigorous.

The world was watching like hawks. It had to deliver on the highest expectations of transparencyand justice.

OTML had the money to make things happen, but not the trust for it all to fall into place.

So, we took verification a step further.• Administrator • Facilitators• Observer • Advisers

These essentially said, “you don’t have to trust Ok Tedi in order to participate. There’s someonethere keeping you ALL honest, even the Goliath, OTML”.


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Community representation

Stakeholders:

There’s no public participation discussion without stakeholders.

Who are we talking about at Ok Tedi?


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Roundtable membership


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Staging:

Stage One: preparation and planning

This was where we brought the parties together to agree what the process should look like.

A couple of workshops with CMCA trustees looked at options and agreed on the working groupstructure.

The next key task was to go down into the villages, tell them first-hand the environmentalpredictions, and seek their support for the ensuing review consultation process.

They liked it. They’d been waiting and waiting for it.

In a rigorously applied selection process, we also asked them to nominate their leaders for boththe regional representation, and then the working group.

We asked them to tell those leaders what their concerns and aspirations were, what they wantedtaken to the negotiating table.

Stage Two: agenda setting

The newly nominated leaders brought those issues to the working group table, and an agenda ofwhat was common ground and – therefore - what was in dispute was set out.

Finding common ground is critical to mediation processes, as it serves to reduce the perception ofust how much distance there is between the parties.

There was furious agreement at first between OTML and the leaders about sustainabledevelopment objectives and better project delivery.What was different was how sustainable development ( expressed as parity in some instances )might be achieved and, of course, how much it would cost.


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Stage Three: problem solving & creating options (negotiating)

This is where the real value and the true beauty of interest-based negotiation blooms.

You have your diverse interests jostling for the ascendancy, and it is this dynamic that panel beatsa mutually-agreed outcome.

It is also the scariest part of the process, as it is impossible to predict the sorts of possibilities andcreative options that multifarious interests on an issue can germinate.

Stage Four: agreeing

The outcome at Ok Tedi was a Memorandum of Agreement, but it could have been any

manifestation of a record of what has been agreed. In this case, it was a statement, endorsed bythe parties.

And, of course, celebrated with a customary sing sing .


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The meeting cycle

The Process:

So, what does this mean on the ground?

This drawing, though, totally misrepresents the scale of just about everything associated withimplementing this process.

We’re talking about close to 500 facilitated meetings, meetings that were arranged usinghelicopters, river barges, dinghies and hours on foot travelling to villages.

Each village patrol took seven weeks with five teams of facilitators, observers, leaders and OTMLcommunity relations people working simultaneously up and down the river corridor.


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Meetings, meetings

• 450 facilitated village meetings

• 45 regional meetings

• 6 working group meetings

• various side meetings

• gov’t, PNG SDP, foundationmodel at Rabaul

• 18 months’ duration

We held 450 village meetings, 45 regional meetings, six working group meetings, organisedvarious side meetings with government and the PNG SDP, and took leaders on a visit to look at afoundation model.

All this in 18 months.

There are few newspapers, and limited radio reach for telling people that teams were on theirway.

No websites to go to for more information (well, there is a website, but no means for thecommunities to get access – it’s for external stakeholders).


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Communication materials were – as much as possible – written in simple English, translatable intoTok Pisin or Motu.

We used posters, drawings, leaflets and left them behind for review.

OTML had to be hands-off for the communication, except for providing logistic support.

The communication - after the first tranche of communication about the ARD impacts and theconsultation process - was largely done by the independent facilitators.


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The Outcome

Financial package

• Total K1.1 million (AU600 million)(conservative USD1.75 Cu, USD500 Au)

• K324 million OTMLcompensation

• half of 10% governmentdividend (K500 million)

• K24 million annually from PNGSDP

Sustainable developmentpackage

• Ok Tedi Fly River DevelopmentFoundation

• increased community decision-making

• improved enabling services -banking

• self-determination

THE OUTCOME

While much of the negotiations focussed on the money, with some extreme anchoring happening,to me the enduring value that was agreed was the development foundation.

OTML had set up a development foundation as part of the original CMCA agreements. It deliveredthe project commitments in the CMCAs.

What OTML offered was for that foundation to be largely owned by the downriver and minecommunities, in a step towards self-determination.

This offer arose from the listening-talking process, in which OTML heard the leaders say theywanted more say in how compensation was spent.

They got it, and discussions are underway with a transition group to decide the future of that newfoundation.


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Goals

• better relationships withcommunities

• stability until mine closure(2013)

• real sustainable developmentoutcomes

We did a survey of participants as part of an evaluation of the process for the OTML board.

All those who responded – leaders, the company, the SDP, government, the independent teammembers - said it was a good outcome that met the company’s goals.

The goals were:• Better relationships with the communities• Stability until mine closure• And real sustainable development outcomes.


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For me, one of the most significant outcomes was recognition of the needs of women andchildren.

Women do not share the same opportunities as men in PNG, yet they are the key to providing forthe future.

We pushed to have a representative of women and children at the table, just as we did to have anadvocate for the environment and for health and education services delivery, which came in theshape of church representatives.

It was their place at the table and their advocacy that contributed to all parties unifying aroundgenuine sustainable development outcomes.


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Another important outcome is that the process, I hope, will strongly influence how OTML and thePNG SDP will approach the hugely important conversation with communities about mine closure.

The World Bank identified for the rest of the world that the task of managing the wind down of theeconomic dependence of local and national communities on the mine as an economicpowerhouse was far from inconsiderable.

They articulated the dilemma that is Ok Tedi – the conflict between environment and age-oldlivelihoods and the riches of development.

There is a price for everything.

What this process did was provide a safe forum for the leaders to say, Enough! No more.

Or what they did say, which was, You’ve ruined our river, our life, so now you must pay. And this ishow we want you to do it.

This discussion could not have happened without the robustness that the Informed Consensusprocess provided through the independent instruments.

But most of all, it couldn’t have happened without the strength of commitment and leadership ofthe communities and of the company.

It might be hard to think of something good coming out of Ok Tedi. But that says more aboutWestern media than anything else. (and I’ll let [later speaker] John Faine tackle that one)


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FIRST WORLD PARALLELS

The Ok Tedi story is a bit of a weird one.

It is a torture test, and most processes don’t operate with such high stakes.

But the underpinning process design was both Western and Melanesian.

Its wellspring was knowledge from Harvard University, from Lawrence Susskind, from IAP2, fromour own experience of how people responded to adversity in windswept landscapes, from the surfof sewerage outfalls, from the architectural drawings of multi-unit developments.

From the Papua New Guineans, we mirrored a long tradition of oratory, in lengthy discussion in

long houses, or men’s houses. Papua New Guineans talk.Talk has spared many lives.


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People are human all over the world. Their hopes, worries, prejudices, foibles and flaws are allhuman, no matter where they live and the colour of their skin.

They all need to feel safe, they nearly all resist change, they all need to have hope.

What’s different - but not as different as you might think - is their ability to sort through complex,technical issues and come to a joint decision.

In the PNG setting, we need to get the pace just right. We have to acknowledge the tensions ofdifferent clans, as the United Nations has to acknowledge the different cultures in a negotiation.

This is not only so that sound decisions are made, but so that sound decisions can be seen to bemade.

The mixture of push and giving space is as critical to success in the PNG settings we’ve been in,as it is in Thailand, in Gippsland, the Mornington Peninsula, leafy Camberwell and theMaribyrnong River.

The evaluation responses universally said the pace at Ok Tedi was right. It could have had better,more thorough communication, I think, but that would have taken more time, and OTML’sintervention.

Taking more time would also have pushed the process into the PNG elections, and nobodywanted the elections to interfere with the good work of the process.

I’m sure you’ve all had similar experiences of juggling such external imperatives!

But that’s my point. Same, same, as they say in PNG, same the world over.


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Our Informed Consensus process is already being used at another site in PNG.

Its application is strong in the mining sector, which has struggled in recent years with the conceptof Free, Prior and Informed Consent .

You will recognise the IAP2 values inherent in the FPIC concept.

It’s the “consent” word that has, I think, stopped the concept being picked up more widely in themining sector. There is a desire to consult, but discomfort in taking it deeper into the engagementcontinuum.

No company that I can think of will willingly hand over decision-making – Empower in IAP2 talk –for a huge capital project to a host community, or any community outside of company control. Itdefies capitalism.What is perfectly legitimate - and perfectly achievable - is to talk openly with communities andother stakeholders and negotiate a fair and equal outcome – one that is mutually acceptable.

That seems to be the case at Ok Tedi. It looks like it has survived the torture test.

I qualify this, because I must in the Land of the Unexpected.


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SUMMARY

So, we started with an entrenched environmental and social problem at Ok Tedi.

We responded using all the widgets we had ever used before, and we have what seems to be arobust outcome.

I am very curious to hear what you think and if you see similarities with your work either in Australia or other settings.

In Australia, we tend to mark the end of a long haul with the tink of beer glass on beer glass downat the pub.

Can I show you what they do in PNG?SLIDE – signing ceremony video.

Thank-you for listening.

For more information: www.wanbelistap.com and www.offorsharp.com.au

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