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PNG’s Ok Tedi mine to shut down

Wednesday 29 July 2015 | Published in Regional


PORT MORESBY – Papua New Guinea’s controversial Ok Tedi mine will slash its workforce and halt production due to weak copper prices and recent dry weather, managing director Peter Graham has told staff.

Low water levels in the Fly River have seen the company struggle to transport copper ore from their port in Kiunga to customers at the mouth of the river.

It has also affected the supply routes for diesel and food.

In a letter to staff, Ok Tedi’s managing director Peter Graham said 15 per cent of the Papua New Guinean workforce and 30 per cent of its expatriate employees would be retrenched.

“I know many people reading this memo will be shocked and find it hard to believe that such drastic action has to be taken,” Graham said.

“These very difficult decisions have been taken to ensure that the business will be viable for the long term,” he said.

Aside from the retrenchments, Ok Tedi will be standing down most of its workforce without pay, but offering some allowances.

Employees who have children attending company-run schools in Tabubil, have been asked to transfer their children to schools in their home provinces.

A board meeting on July 23 decided to declare a “force majeure” and advised shareholders the company would not be able to meet its obligations.

Graham said while most employees were being flown home, a skeleton crew would be on site for maintenance and security, while the company assesses the weather situation.

Ok Tedi said weather reports predict only a 20 per cent chance of normal rainfall in the next six months.

The company is coordinating with the Western Province administration on an emergency response given the likely impact the shutdown will have on communities dependent on the mine.

Ok Tedi faced a similar situation in 1997 and 1998, when its operations were shut down for more than six months, following an El Nino weather pattern.

In 2015 global gold and copper prices have dropped to their lowest point for many years.

Since the 1980s, the Ok Tedi mine created billions of dollars of revenue for Australian company BHP but waste dumped into the river system caused widespread damage.

BHP handed over its majority share to a local trust in 2001 in return for legal immunity.

In 2013, the PNG government passed legislation to take over the PNG Sustainable Development Program – effectively nationalising the mine.

The Government approved an extension for mining and exploration within the area, but those plans have now ground to a halt.