Australian Foreign Minister Bob Carr passes on BHP PNG dispute

Greg Earl and Joanna Heath of Australian Financial Review

Australia Foreign Minister  has refused to join the row between Papua New Guinea’s Prime Minister, Peter O’Neill, and BHP Billiton, saying a travel ban on former Ok Tedi mine chairman Ross Garnaut should be dealt with at the consular level.

Foreign Minister Bob Carr

The federal government is reluctant to be drawn into the dispute because it has hopes that the bilateral relationship will improve under the relatively new O’Neill government.
Mr O’Neill has accused BHP of having a colonial mentality towards PNG by not giving up full control over the fund that has majority ownership of the Ok Tedi copper mine and has imposed a travel ban on Professor Garnaut due to his critical comments on the issue.
Australian National University development expert Stephen Howes said on Tuesday it was ironic that the government had washed its hands of the dispute when a new economic co-operation treaty had been settled between the two countries only last December, which should have provided for free business travel.
Observers are surprised Mr O’Neill has attacked BHP so strongly because he is publicly committed to resources development and some speculate about personality tensions between Mr O’Neill and Professor Garnaut. Others say the central government is under pressure from local opponents of the mine to have more control over the fund before it pushes ahead with extending the mine due to its important role in funding the country’s budget.
BHP has already ceded control over appointing directors to the PNG Sustainable Development Program fund, which majority owns the mine, but Mr O’Neill has not explained clearly how he wants the fund to run now it is more independent. Analysts said he might feel that the changes to how directors are appointed might not result in fast enough board change to the institution, which spends 30 per cent of its earnings and places the rest in a long term savings fund.
Lowy Institute for International Policy analyst Jenny Hayward-Jones said the fund had been a good way for BHP to deal with the consequences of mining pollution a decade ago and had contributed to PNG development. But she said there could be localised grievances about how money was spent that was fuelling Mr O’Neill’s criticism. “I don’t think this reflects any change in approach to mining companies and I don’t think the government is seeking a conflict with BHP,” she said.
Professor Howes, who has conducted a review of the fund, said it had helped BHP exit the Ok Tedi mine but had also benefited PNG more than expected due to the recent higher copper price.
Australia’s need for a refugee processing center on PNG’s Manus Island means this is particularly sensitive time for the government to enter a commercial dispute in PNG.
Senator Carr said: “Our high commissioner in Port Moresby has engaged with the government of PNG about this, making representations on Mr Garnaut’s behalf. I think that is best handled at that level.”