Ok Tedi Case Study

If this were your village...?

Barbara Sharp
Director, OfforSharp
IAP2 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, might
call a torture test of the IAP2 values and processes.
Its a feature of working in developing nations that everything is hard, tougher, more complex. The
process I will take you through was public participation at top speed, and you can bet there were
gears 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 the
chassis 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.

Summary
The Problem
The Response
The Outcome
First World Parallels

What Ill do today is talk about the particular nature of the problem to be resolved at Ok Tedi, the
response to it, and the outcome, the actual deal struck. The hope for the future.
What Id like to finish on is how such a rarified example as Ok Tedi actually had its roots in the
First World.
And then Id like to open discussion with you about the parallels there are across nations and
across the human condition.

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,
theyre very young, or, just maybe Ok Tedis notoriety is finally fading.
The Ok Tedi mine is - and remains - one of the worst environmentally damaging mining operations
in 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

Its big 1 times as big as Tasmania

Ok Tedi (ok = river), tributary of Fly, Strickland River

Fly River & WP

topography - mountains and
vast flood plain
rain - 11 m annual rainfall at Mt
Fubilan (<1m Melb)
extreme changes in river levels
sparsely populated
180,000 people
the forgotten province

Its a vast floodplain and delta

Melbourne 1 metre a year

Mt Fubilan 11 metres of rainfall a year

Mountains drop quickly to a plateau

Very high volume of water flow flushes the river

180,000 people (size of Geelong), sparsely populated

the forgotten province of PNG

Western Province
subsistence economy - sago
and fish
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, certainly
no supermarkets or cinema complexes.
What they do have in even 2007 are the diseases borne of poor sanitation and unreliable water
supply, 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 Min
people more than 40 years ago.

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 Tedi
and Ok Mani.

[Text for next two slides]

The mine dumps 90,000 tonnes of waste rock into the river system each year. It has done so for
most 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 per
cent shareholder of the mine.
This riverine waste disposal method has caused problems of sedimentation and over-bank
flooding and consequent die-back of vegetation.

Ok Mani 1979

Mid Ok Tedi 1979

Ok Mani 2004

Mid Ok Tedi 2004

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.

Now lets flip the coin

In 1998, the Panguna mine, operated by Bougainville Copper Limited, then producer of PNGs
largest 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 the
nations next life-line.

The economic
dimension
2,000 employees, 97% PNG
1,800 contractors, many local
businesses and employees
>35% of PNG export earnings
>14% total internal revenue
>10% PNG GDP
single greatest contributor to
WP economy

Ok Tedi Mining Limited employs about 2,000 people. 97 per cent of them are Papua New
Guineans. 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 export
income, and ten per cent of its GDP.
The Min people whose land is where the Mt Fubilan gold and copper resource, and the Tabubil
township are located, negotiated one of the richest compensation packages for their land rights in
PNG.
They secured contracts, jobs and royalties far beyond what they could have believed possible
when they were first approached by the white prospectors.
Their future seemed secure, grand, longer and safer. No longer did they need to slash the dense
bush 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 also
being realised.
In 1999, OTML released to the broader public and the communities 24 volumes of technical
reports that spelt out in detail the price being paid.
The dieback of vegetation and effects of over-bank flooding would last for generations and may
eventually affect most of the floodplain.

The villagers of the lower Ok Tedi and middle Fly River didnt need a bunch of scientists to tell
them change was happening.

With the help of Melbourne legal firm, Slater and Gordon, two legal actions were pursued in the
Victorian 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, but
later withdrawn by Slater & Gordon and their plaintiffs.
But if only it were so simple as a polluting bogey being brought to justice for its environmental
vandalism.
What the environmental reports looked at was four options for reducing the damage. The best
option for arresting the environmental damage was to shut down the mine immediately.
That prospect, more than the description of inter-generational flooding regimes, frightened the
communities that had come by now to depend on the mine.
Their economic and social well-being, their desire for what comes with modern development not
fast cars and mobile phones but safe water, power and access to medicines was under threat
with sudden mine closure.
The mine, rightly or wrongly, also filled the gap left by failing government infrastructure. Hospitals
and health services, housing, roads, education support, jobs.
This was the national economic boon of resource development writ SMALL.

And so the Community Mine Continuation Agreements were offered as compensation with a
mixture of cash and development projects.
Clan leaders for their part agreed, then, that the mine should continue to operate. The company
had 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 exit
from 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, the
PNG 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 closure
of the mine in 2013.
The other important trigger was - as history is our guide to the future a commitment to tell the
communities of any new evidence of environmental damage, and a consequent review of
compensation.

Acid Rock Drainage is a problem with just about every copper and gold mine in the world. It was
deemed less of a problem at Ok Tedi, because of the neutralising properties of the limestone rich
Star Mountains.
Dont decide without data would have to be the engineers instinct, and by 2000, the data from
scientific studies was showing ARD problems at the Bige dredge site ironically, the mitigation
solution for the sedimentation problem - but, more significantly, changes to the chemistry of the
river 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 river
ecosystem.
Despite what Ok Tedis critics had told the world, dieback wasnt 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.
Dont 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 river
would be further reduced by the chemical pollution.

...all power is a trust,

that we are accountable
for its exercise, and that,
from the people, and for
the people, all springs,
and all must exist.

Benjamin Disraeli

It was at that moment, the companys boss knew what he already knew in theory. There had to be
a 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 dieback
scientific reports. (1999)
We have been guides for OTMLs emerging leadership in transparency and respectful dealings
with host communities.
So, let me describe the context in which the mid-term review had to respond to the competing
demands of commitment to transparency, and the pragmatism of needing to secure a continued
social licence to operate in increasingly precarious circumstances.

Situation analysis
unstable agreements
- deal envy, divideand-conquer history
poor project delivery distrust
residual litigation
issues - non-CMCA
villages - subversion
international
campaigning agitation

In 2004, when we first proposed to OTML management how they might do things differently in
negotiating 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 companys goals in this environment were to get its relationship on to a stable footing, secure
their operations to mine closure, and to achieve the conversion of the mines wealth into real
sustainable 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.

Informed Consensus
-4+2
public participation
mediation
interest-based negotiation
relationship-based
communication
Guiding Principles
independent process team

The consultation process to reset the balance of environmental, social and economic impacts of
Ok 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-built

infrastructure. 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 trust
critical to achieve the necessary participation, and which levelled the playing field to overcome
power imbalances.

Public participation:

Depth of engagement from Inform to Empower

IAP2 - a continuum

The IAP2 Core Values

1. Public participation is based on the belief that those who are affected by a
decision have a right to be involved in the decision making process.
2. Public participation includes the promise that the public's contribution will
influence the decision.
3. Public participation promotes sustainable decisions by recognizing and
communicating the needs and interests of all participants, including
decision makers.
4. Public participation seeks out and facilitates the involvement of those
potentially affected by or interested in a decision.
5. Public participation seeks input from participants in designing how they
participate.
6. Public participation provides participants with the information they need to
participate in a meaningful way.
7. Public participation communicates to participants how their input affected
the decision (feedback).

Mediation - 2

Mediation:

Five steps
o

Talk-listen

Listen- talk

Discuss (common ground and issues to be resolved)

Negotiate

Agree

Interest-based
negotiation - 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)

Relationship-based
communication - 4
extrapolates the personal to the
multi-party
shared past and shared future
imperative for two-way
communication
essential lubricant for
negotiation 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 for
the process. Its for good reason that no less than four of the Guiding Principles (which I get to
shortly) deal with aspects of communication.

Guiding Principles
Integrity

Adequacy of information

Transparency

Timeliness

Equity and participation

Fairness
Respect
Responsiveness

Level playing field devices or instruments:

The process that I will describe embodies or delivers in some shape or form each of the Guiding
Principles.
The process had to turn motherhood statements into real-life, practical outcomes. You will see the
IAP2 values in there.
A charter or Terms of Reference defines the scope of problem solving. It puts all participants in the
same mental space.

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 transparency
and 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 dont have to trust Ok Tedi in order to participate. Theres someone
there keeping you ALL honest, even the Goliath, OTML.

Community representation

Stakeholders:
Theres no public participation discussion without stakeholders.
Who are we talking about at Ok Tedi?

Roundtable membership

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 group
structure.
The next key task was to go down into the villages, tell them first-hand the environmental
predictions, and seek their support for the ensuing review consultation process.
They liked it. Theyd been waiting and waiting for it.
In a rigorously applied selection process, we also asked them to nominate their leaders for both
the regional representation, and then the working group.
We asked them to tell those leaders what their concerns and aspirations were, what they wanted
taken to the negotiating table.
Stage Two: agenda setting
The newly nominated leaders brought those issues to the working group table, and an agenda of
what 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 of
just how much distance there is between the parties.
There was furious agreement at first between OTML and the leaders about sustainable
development 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.

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 beats
a mutually-agreed outcome.
It is also the scariest part of the process, as it is impossible to predict the sorts of possibilities and
creative 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 by
the parties.
And, of course, celebrated with a customary sing sing.

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 with
implementing this process.
Were talking about close to 500 facilitated meetings, meetings that were arranged using
helicopters, river barges, dinghies and hours on foot travelling to villages.
Each village patrol took seven weeks with five teams of facilitators, observers, leaders and OTML
community relations people working simultaneously up and down the river corridor.

Meetings, meetings
450 facilitated village meetings
45 regional meetings
6 working group meetings
various side meetings
govt, PNG SDP, foundation
model at Rabaul
18 months duration

We held 450 village meetings, 45 regional meetings, six working group meetings, organised
various side meetings with government and the PNG SDP, and took leaders on a visit to look at a
foundation model.
All this in 18 months.
There are few newspapers, and limited radio reach for telling people that teams were on their
way.
No websites to go to for more information (well, there is a website, but no means for the
communities to get access its for external stakeholders).

Communication materials were as much as possible written in simple English, translatable into
Tok 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 the
consultation process - was largely done by the independent facilitators.

The Outcome
Financial package

Sustainable development
package

Total K1.1 million (AU600 million)

(conservative USD1.75 Cu, USD500 Au)

K324 million OTML

compensation
half of 10% government
dividend (K500 million)
K24 million annually from PNG
SDP

Ok Tedi Fly River Development

Foundation
increased community decisionmaking
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 delivered
the project commitments in the CMCAs.
What OTML offered was for that foundation to be largely owned by the downriver and mine
communities, in a step towards self-determination.
This offer arose from the listening-talking process, in which OTML heard the leaders say they
wanted more say in how compensation was spent.
They got it, and discussions are underway with a transition group to decide the future of that new
foundation.

Goals
better relationships with
communities
stability until mine closure
(2013)
real sustainable development
outcomes

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 team
members - said it was a good outcome that met the companys goals.
The goals were:

Better relationships with the communities

Stability until mine closure

And real sustainable development outcomes.

For me, one of the most significant outcomes was recognition of the needs of women and
children.
Women do not share the same opportunities as men in PNG, yet they are the key to providing for
the future.
We pushed to have a representative of women and children at the table, just as we did to have an
advocate for the environment and for health and education services delivery, which came in the
shape of church representatives.
It was their place at the table and their advocacy that contributed to all parties unifying around
genuine sustainable development outcomes.

Another important outcome is that the process, I hope, will strongly influence how OTML and the
PNG 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 the
economic dependence of local and national communities on the mine as an economic
powerhouse was far from inconsiderable.
They articulated the dilemma that is Ok Tedi the conflict between environment and age-old
livelihoods 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, Youve ruined our river, our life, so now you must pay. And this is
how we want you to do it.
This discussion could not have happened without the robustness that the Informed Consensus
process provided through the independent instruments.
But most of all, it couldnt have happened without the strength of commitment and leadership of
the communities and of the company.
It might be hard to think of something good coming out of Ok Tedi. But that says more about
Western media than anything else. (and Ill let [later speaker] John Faine tackle that one)

FIRST WORLD PARALLELS

The Ok Tedi story is a bit of a weird one.
It is a torture test, and most processes dont 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, from
our own experience of how people responded to adversity in windswept landscapes, from the surf
of 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 mens houses. Papua New Guineans talk.
Talk has spared many lives.

People are human all over the world. Their hopes, worries, prejudices, foibles and flaws are all
human, 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.
Whats 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 of
different 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 be
made.
The mixture of push and giving space is as critical to success in the PNG settings weve been in,
as it is in Thailand, in Gippsland, the Mornington Peninsula, leafy Camberwell and the
Maribyrnong 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 OTMLs
intervention.
Taking more time would also have pushed the process into the PNG elections, and nobody
wanted the elections to interfere with the good work of the process.
Im sure youve all had similar experiences of juggling such external imperatives!
But thats my point. Same, same, as they say in PNG, same the world over.

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 concept
of Free, Prior and Informed Consent.
You will recognise the IAP2 values inherent in the FPIC concept.
Its the consent word that has, I think, stopped the concept being picked up more widely in the
mining sector. There is a desire to consult, but discomfort in taking it deeper into the engagement
continuum.
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. It
defies capitalism.
What is perfectly legitimate - and perfectly achievable - is to talk openly with communities and
other 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.

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 a
robust 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 down
at 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