By John McGregor, a translator and political violence researcher
The mass transition to renewable energy will require a fundamental redesign of much of our technology and the infrastructure that supports it. Copper will be required in far greater quantities than it is currently.
A July 2022 analysis by S&P Global has identified that there will be a shortfall in the supply of copper as economies try to reach net-zero emissions by 2050. Without the available copper, it will not be possible to implement the technological changes required for a renewable economy.
Even if major economies can’t reach their reduction targets (a likely outcome), there will nevertheless be a notable increase in demand for copper and an eventual shortfall. This predictable shortfall will drive strategic national decisions. As copper is, or will be, so central to the economy of the emerging nation of Bougainville, this global demand for copper will direct Bougainville’s politics in the coming decades. Due to its resources and location in the Pacific, Bougainville will find itself at the center of the Western Powers ongoing campaign against China.
The S&P Global report analyzes the technological solutions that are currently being implemented to achieve the net-zero emissions goals established by different nations and finds that all aspects of the renewable energy transition will need more copper than current alternatives. The automotive sector is projected to be the biggest driver of copper demand because electric vehicles require significantly more copper than their internal combustion equivalents, but there are also smaller projected increases from transmission and distribution, and power generation. Emerging economies will also contribute to this greater demand for copper.
As the report notes, China is a key player in all phases of the copper industry:
China holds a preeminent position in copper smelting (47%), refining (42%), and usage (54%), in addition to its sizable position in production, making it the epicenter of world copper.
To maintain these high levels, China is the world’s largest importer of copper ores and concentrates.
China has invested heavily in overseas copper projects, particularly in Africa and is also expanding its diplomatic and commercial presence in the Pacific, where the nation of Bougainville is looking to re-open its large copper mine, which has been shut for over 30 years.
The Panguna mine was established in 1969 while the territory was under Australian colonial control as part of Papua New Guinea and soon became a source of contention with the local population. Bougainville Copper Limited, a subsidiary of Conzinc Rio Tinto of Australia, operated the mine from 1972 to 1989, when locals forced the mine’s closure towards the beginning of a decade-long conflict. In these years, the mine produced 3 million tonnes of copper, 306 tonnes of gold, and 784 tonnes of silver.
Bougainville made an initial play for independence in 1975 as PNG was itself gaining independence from Australia, but was unsuccessful. The territory remained part of PNG, under a marginal degree of autonomy. The Panguna mine generated 44% of PNG’s foreign currency earnings while it operated, but only a small proportion of this flowed to Bougainville. In April 1988 the local landowners association filed a compensation claim against BCL and in November protestors sabotaged powerlines with stolen explosives.
In 1989, the uprising closed the mine and the PNG government declared a state of emergency. The PNG military engaged in a brutal campaign of repression and in 1990 imposed a blockade on the island. Former PNG PM Sir Michael Somare has testified that Rio Tinto’s influence over the government of PNG was so great that it directed government operations and even supplied resources for the fight. In 1996, the government of Julius Chan entered into an agreement with mercenaries Sandline International (who subcontracted to the South African Executive Outcomes). One of the long-term aims of the plan was detailed in a secret report to the government in 1996:
Retake and hold Panguna mine – this is the key element to the problem – the cause of it, the symbol of it and probably the end of the conflict.
The Sandline Affair, as it became known, resulted in Chan’s resignation under military and popular pressure.
The Bougainville combatants only declared a permanent ceasefire in 1998 and under the 2001 peace agreement, the territory was guaranteed an independence referendum.
When the Autonomous Bougainville Government passed the Bougainville Mining Act 2015, it converted BCL’s leases into exploration licenses and subsequently refused to renew them. In July 2016, Rio Tinto transferred half of its shares in BCL to the ABG and half to PNG (and in the process attempted to distance itself from any responsibility for the environmental and health effects of the mine ). The remaining shareholders are public and institutional, and the PNG government has committed to transferring its shares to Bougainville.
In November 2019, 98% of Bougainvilleans voted for independence from PNG and initiated a process of negotiations.
Although there is still a judicial review pending into the refusal to extend BCL’s exploration licenses, and BCL is not the only party to have made claims to the mine, a May 2022 article from the ABG announcing that the mine will reopen was explicit:
The ABG and the Panguna landowners have also agreed that the government with the landowners will jointly establish a completely new local Bougainville entity to develop the mine, and not an existing entity that has had history with the Panguna Mine.
ABG President Ishmael Toroama was also explicit about Panguna’s role in Bougainville’s independence:
The Panguna Mine was the economic guarantee for Papua New Guinea’s independence in 1975, in the same manner the Panguna will be the economic guarantor for Bougainville’s Independence.
Bougainville will need sizeable investment, $5-6b, to reopen Panguna and is currently reliant on support from the central government in PNG and foreign aid. It will need external partners to fund the re-opening of the mine and get it operational.
The history of violence and environmental damage means that locals are unlikely to look kindly on any incarnation of Rio Tinto or BCL. The Hawke government in Australia (which provided substantial financial assistance) supported PNG’s attempts to prevent Bougainvillean independence and encouraged a military response.
China has been expanding its interest in the region and Bougainville is a natural target for a Chinese charm campaign, as evidenced by its recent involvement in the Solomon Islands. The Solomon Islands are Bougainville’s closest neighbor, both geographically and culturally.
In 2019, the Solomon Islands began to recognize the PRC instead of Taiwan. This followed a nearly 15 year “peacekeeping” mission led by Australian soldiers and police. In 2021, Australian peacekeepers temporarily returned after fanning anti-Chinese sentiments in Malaita. In April 2022, the Solomon Islands and China signed an agreement allowing the former to request security assistance and the latter to make ship visits.
The response from the Australian state at realizing it didn’t have hegemonic control over every surrounding nation was predictably unhinged, with then PM Scott Morrison laying down vague and entirely unenforceable ‘red lines’. Australian media have continued to fearmonger over the relationship between the Solomon Islands and China, and US Deputy Secretary of State Wendy Sherman warned that the US was watching the relationship carefully, but China has continued to strengthen its ties and presence there.
As China looks to secure future supplies of copper and expand its diplomatic recognition and presence in the Pacific, Bougainville is an attractive prospect. For Bougainville, in need of foreign investment to materialize its independence, Chinese engagement could well be more appealing than another Western mining company. In any case, the increasing importance of Bougainville’s copper deposits during the renewable energy transformation and its emergence as a new country in the Pacific will place it at the center of the strategic struggle between China and the Western powers in the coming decades.
