PNG takeover of Ok Tedi could trigger legal action

PNG's nationalisation of the vast Ok Tedi copper-gold mine is expected to trigger the country's biggest legal challenge.

THE Papua New Guinea government's nationalisation of the vast Ok Tedi copper-gold mine, by a unanimous 62 votes this week, is expected to trigger the country's biggest legal challenge.

This is likely to see the government defend its aggressive move in Port Moresby and in Singapore, where PNG Sustainable Development Program, the trust that owned 63 per cent of the mine, is domiciled.

This structure -- arranged to ensure that most benefits of the mine, the biggest single contributor to government revenue, flow to people in Western Province, where it is located -- was devised with BHP Billiton when it pulled out of Ok Tedi more than a decade ago following environmental disasters.

At stake is not only the mine, worth $860 million, but also the $1.5 billion in a long-term fund established by PNGSDP to be used for the people of the province when the mine closes.

It is understood that PNGSDP would seek to defend its control of the long-term fund through the courts in Singapore, if this were challenged by the government.

Prime Minister Peter O'Neill, proposing the takeover, said that PNGSDP shareholders would be compensated, but the amounts have not been determined. This will be decided by the Prime Minister, acting on cabinet advice.

The act, which cancels PNGSDP's shares in Ok Tedi Mining, also removes BHP's immunity against action for compensation, granted when the trust was established.