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RENNELL ISLAND – RESOURCE CURSE BAUXITE CREATED BY THE STATE
BY DOUGLAS ETE- Marau Town
I write with the objective to clear some air on the questions and answers on the floor of parliament recently regarding the ‘’zero duty’’ or 100% exemption on the export of bauxite ore (dry metric ton) on Rennell island- A very sad scenario created by state institutions.
I have condensed this article to focus precisely on successive governments political decisions and policies in the mining sector and determine whether governments actions can be termed as proactively protecting the nations dwindling resources or whether governments attitude towards the ‘’do nothing syndrome’’ in reforming key sectors (extractive) has had a destructive impact on the economy at large.
On this backdrop, I will be discussing in some detail the facts on the Rennell mining saga for the period between 2014 and 2025.
I will open the Rennell island bauxite issue with some detail to assist the people of Rennell ascertain what actually had taken place between 2014 and 2025 fiscal years despite the fact that APID’s license was cancelled in June of 2021 and the legal battled has only recently been settled in April of 2025 when the court of Appeal dismissed APIDs application on the decision of government to cancel its lease.
The truth was that the Gordon Darcy Lilo led government in 2014 granted the license for APID and TP Mega Bingtang Mining Ltd against the Mineral Mines decision not to grant Mineral license to these companies. An issue the Minister later defended even when he erred.
His government knowing full well the doom it will bring to a struggling nation refused to create a policy framework for a proper legal platform on the exports of bauxite and nickel ore in the country. This renders Solomon Islands the only nation in the world that places a 100 percent exemption on the exports of bauxite and nickel.
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Only a good-sense government will deliver policies that will protect the people and their resources. A half-sense government does not care about it and will turn a blind eye to this important policy matter.
That in effect contributed to the declining fiscal position and real GDP growth of Solomon Islands as an economy in recent years. And this attitude explains why there was sluggish and slow growth in the last decade.
ASIA PACIFIC INVESTMENT DEVELOPMENT LTD (APID) MINING ON RENNELL ISLAND
On the 5th September 2014, few days before the dissolution of the 9th parliament, the then Minister of Mines struck an agreement with APID Ltd for the west Rennell tenement area of approximately 12.5 million dry metric ton and an indicative 14 million ton reserve over a 560km square area and granted a Mining License ML1/14 for 25 years.
This was against the decision of the Mineral and Mines Board of 30 April 2014 coupled with several other MMB’s decision not to grant APID a lease.
The following were the directors of APID (i) Ray set Fah Chu 90% and (ii) Rachael Fasi Fera 10%.
A Surface Agreement was signed between APID and the land-owning group for the west Rennell tenement areas on 10th April 2014 in accordance with sect 32(4), (5) of the MM Act 1990 (cap 42). Stipulated in the agreement, APID was obliged to the following: –
(i) pay SBD $3,000 per square km to landowners on every tenement pockets.
(ii) Pay a one-off payment of Good -will payment of $1.0 million SBD to landowners upon the granting of the Mining license. This I suppose was already being settled.
(III) APID to pay $2.0 million dollars as development grant to 14 specific villages annually for the duration of the lease (25 years);
(iv) Assist in sports facilities and building of churches through donations or cash.
(v) Logs from the tenement areas would be cut vide the Minister of Forests discretion under sect 4 of the Forest and TU Act for the logs to be exported and proceeds returned to the landowners.
(vii) Royalty payments- The SI government will pay the landowners royalty from the total amount payable by APID to SIG and it will be on dry metric ton.
In this regard, a trust Fund for West Rennell tenement area was to be created, and the government was then responsible to pay the landowners royalties due to them in due course.
The Surface Agreement was for access rights, rental, and compensation for damages for the west Rennell tenement sites in accordance with section 32(4) (5) of the Mineral and Mines Act 1990.
I suppose the agreement was widely canvassed to the people of 14 villages, but I do not know whether the people understood the contents of the agreement and its implications before putting their claws on the paper. I believe most of them did not.
The following were those that signed the Surface Agreement: –
13th April 2014- Baigau/Magae villages Tingoa Village
(i) Mr. Arial Topue (i) Hon. John Teno
(ii) Robert Tangimoana (ii) George Taikona
(ii) Godfrey Segeika (iii) Patson Teikagei
(iv) Eddie Tepai (iv) Christian Tangaibasa
(v) Hardrick Hautaha
Hatagua/Babae village Gogona Village
(i) Jimmy Tinohutu (i) Walter Tepeau
(ii) Casidy Seuika (ii) Seth Taupongi
(iii) Wallex Taiaki (iii) Ajilon Nasiu
(iv) Andrew Tuhaika
(v) Paul Tuhenua
Kagua Village Tepongima village
(i) Lawson Amote (i) Alice Tepuke
(ii) Philip Sao (ii) Raymond Naomasahu
(iii) Eliot Tepai
(iv) William Tino
(v) Tiki Oea
Tahanuku village 12th April 2014 Kanaba Village
(i) Paa Saueha (i) Brian Saoba
(ii) Stewart Puia (ii) Johnson Ngatoga
(iii) Barnabas Tema (iii) Adam Teika
(iv) John Pugeva (iv) Rexly Telaghubi
(v) Lesly Maui (v) Erastus Tekion
Teabamagu village Baitupu village
(i) Silvanus Kaipua (i) Job Tegoka
(ii) Don hatiuhi (ii) Jeros Kaipua
(iii0 Kaipua Saueha (iii) Alex kaituu
(iv) Davis Saueha (iv) John Sao
(v) Atkin Temoa (v) Johnston Peseika
West Languva village East Languva village
(i) Apach Panio (i) Joseph Taupongi
(ii) Moses Tahua (ii) Rosemary Tenaha
(iii) Eddie Teika (iii) Paul Neil Pongi
(iv) David Tago (iv) Tom satai
(v) Obed Saueha (v) Regina maitake
(vi) Jimmy Puia
Abatai/ Matamoana villages
(i) Jocab Nika
(ii) Jeffery Sauniu
(iii) Derek pongi
(iv) Amos Tuhaika
(v) Josuah Tingiia
APID obtained approval from the Ministry of Environment on 9th May 2014 under sect 22 of the Environment Act a week after it made application to the Director of Environment.
On 28 January 2015, APID entered into a Technical Agreement with Supreme Resources Ltd to fell trees on the tenement area. In the agreement the log proceeds appeared in this manner: –
(i) The contractor Supreme resources Ltd will scop up 60% of the proceeds
(ii) Landowners of Rennell 15% and.
(iii) SIG 25%
Out from the 60%, the contractor will pay APID USD $6.0 per cubic meter and the landowners will get their 15% plus the duty exemption under Section 4 of the Forest and Timber Utilization Act to which the Minister of Forest will grant within 14 days of the export shipment date- 2 days before the Bill of lading (BOL) is received, the monies with be disposed to a nominated bank. This was only for the logs felled on the tenement areas.
In this arrangement, APID will not pay royalties directly to the landowners but to the government and subsequently the government will pay the landowners. The understanding was that SIG and the landowners would open a trust account at a nominated bank which will accommodate all the payments from government. This arrangement was supported by governments obligation to the people of west Rennell under the 5th September 2014 agreement between SIG and APID.
NACRA AND DCCG GOVERNMENTS PART IN THE BAUXITE SAGA
When NCRA 2 government led by Gordon Darcy Lilo left office in November of 2014, the shape of the economy was not looking good. Government revenue declined by 1.2 % ($3.183 billion) because of the closure of Gold Ridge Mine (GRM). inflation was rampaging at 6% (revised down to 5.3%) and the Flash flood of April 2024 impinged on the economy. Growth was sluggish from an average of 4% revised to ‘’Zero”’ percent; fiscal position of government was telling with a budget deficit of 202.0 Million by the 3th quarter of 2014; A surplus of $148.5 by the end of 2014 because of a cap of 35% embargo placed on other charges. This was against a projected deficit of $378. 4 Million for 2014; There was a balance of payment deficit in the international trade of around $450.0 million in 2013 and increase by 9.5% in the 2014 FY. National debt ratio to GDP stood at 15%. Donor support for 2014 declined by 25% as opposed to the same period in 2013.
Despite all of these, Gordon Darcy Lilo led government made some head-on reforms by instituting fiscal discipline measures on the financial management of the governments expenditures to cushion the already sluggish cash position of government.
His government neglected to reform the most important areas in the mining sector. His government neglected to fix the issues raised on the floor of parliament recently. Instead GDL led government increased log harvesting from 1.9 million cubic meters in 2013 to 2.16 million cubic meters in 2014 to cube the declining revenue capture.
His government (Nov 2011- Nov 2014) was not vigilant enough in seeing that a reasonable policy framework to govern the mining industry was instituted. No did any Prime Ministers after 2014 had taken the courage to stand against political pressures from his cabinet to rectify this prevailing problem that lasted for over a decade.
The GDL (NCRA) and Sogavare (DCCG) led governments had the audacity to fix this simple but important matter making way for dispute after dispute in the high court by land owning groups. It’s sad but true. On this note, I wish to thank the previous MPA of the Renbell provincial government Mr. Angiki Peseika Baiabe and his team for standing up for the beloved people of the province in the HCC case Angiki Baiabe vs Regina (crown).
I remember the issue was discussed by the then Sogavare led government in around 2015 when Mr. Snyder Rini then was Finance Minister. The government imposed a 20% export tax on the value per dry metric ton as agreed by cabinet on a stockpile that was sitting in East and Central Rennell which was mined by PT Mega Bintang Mining Ltd and was left for nearly a year.
In May of 2015 DCCG inflicted an early ministerial reshuffle in cabinet and the Minister for mines was one of them. Mr. D.D Patcha was advised in a letter that he would be assuming the duties of the Minister of Mines replacing Mr. Maneka ‘’in the interest of effective implementation of DCCG ‘s policies.’’
This was after Mr. Samson Maneka the then Minister of Mines in around January of 2015 rightly terminated PT Mega Bingtang Mining Ltd mining lease citing the company was in breach of the Mineral Boards decision not to grant the company a ML in West and Central Rennell.
It was also alleged that PT Mega Bingtang Ltd was also in breach of sect 20 (5) (c ) Mines and Minerals amendment Act 2008 because of the fact the directors were holding more than 3 prospecting licenses in a number of companies ( High Land Mining Ltd on Nendo Island, Temotu, Grand Peak Solomon Ltd on Rendova island, Richmond Mining Ltd in East Malaita and Golden Solomon Resources Ltd in Marau sound) outside of the realm of sect 20 and that in itself warrants a disqualification for a mineral lease. Mr. Maneka acted on the MMB decision of 23 Dec 2014 and went ahead to cancel the lease granted by the caretaker minister of Mines.
However, the government did not even consider reforming the Mineral and Mines Act as a priority with the ministerial reshuffle.
That was one of the many issues Cabinet Ministers resigned from the Sogavare led government in 2015 coupled with the promise to reforms the forestry sector and that culminated in the change of government in 2017 by a vote of no confidence( VONC).
When his government left office the state of the economy was not looking good. His government of 2017 employed a fiscal expansionary policy to inflate spending in the economy and injected a Reserve funds held at the CBSI of $400.0 million with a donor support of $871.3 million and a government revenue capture of $2. 86 billion totaling to a $4.1 billion dollars because of the closure of Gold Ridge Mine resulting in a dwindling revenue base.
Government debt to GDP ratio threshold of was sitting 13% by August of that year. The fiscal position of 2017 was in moderate shape but very weak. Government accumulated a trade surplus of $218.0 million against a budget deficit balance of $265.2 million. Inflation was around 6% and the capital and financial cover depleted to a 2 months cover on imports in the 3rd quarter. The fiscal position of government was weak so to speak, government debt USD $ 86.0 million plus $15.0 million for Tina Hydro draw down , Undersea cable $150.00 (AUD Grant by the Australian government $270.0 million) and other debt financing stood at $3.8 billion ) and that was the outlook in 2017 before the government left office.
The Sogavare led government then could have insisted on a sensible formular to be imputed to effect a string of reforms to the Customs and Excise Act (as amended), Tax amendment Act or the Minerals and Mines Act 1990 (cap 42) or any subsidiary legislations to make sure all minerals especially Bauxite and Nickel are taxed according to the current global market value so that these resources could be sold for its nearest international market price as opposed to the current ‘’zero tax’’ policy on alleged under valued mineral pricings- An insane public policy in its entirety.
His government chose not to do what was right and left a hole much longer than the ‘’Suez canal’’ in the Mining sector that allowed investors to manipulate the system until he was removed from office in a VONC in 2017.
My opinion on the issue is that APID, Bintan Mining Co. Ltd, PT Mega Bingtang co. Ltd are all investors and I do not see why they should be heavily criticized. Their mandate falls within the jurisdictions of the Minerals and Mines Act 1990 (Cap 42) and compliance to the Mines and Minerals Board’s decisions from time to time.
The problem falls squarely at the feet of the Government and its policies and legislations that govern the sector. If government refuses to fix a simple problem as this the blame must fall entirely on the feet of the Prime Minister and his cabinet. In this case previous governments must carry the blame for swearing to honor the National Constitution but failed the people of SI and the Almighty God in Heaven.
ROYALTIES BY THE GOVERNMENT
In terms of whether the people of Rennel will be extended the benefits of any Royalty from 2014- 2025, my take on this important matter is they will never be extended the benefits of any Royalties.
Why am I saying this? It is because if you scavenge through the clauses of the Agreement of 5thSeptember 2014- SIG- APID Ltd, you will find virtually no royalties rates or even a jolt that spells out the percentage on royalty for the people of Rennell. On the same token there is an absence of a clause specifying the rate of tax to be imposed on a metric ton of dry ore to be paid to the state.
This is obviously sad but that is what it is. The agreement was an empty piece of paper that was never meant to protect the resource owners of Rennel. Unless a government with the heart and spirit to build strong legislations that is fair and equitable, with political will to reform the sector, I do not think this country will be truly an independent country but will always remain a resource curse and dependent nation for as long as our attitude towards private interests takes priority over nation- building.
The unholy democratic compromises of coalition governments over the many years and the fear of reprisal and withdrawal of political support by functions of the coalition governments had led Prime Ministers to be reluctant to bring amendments to the Minerals and Mines Act and the Forest Act over time. Hence, no governments since independence has had the political will to put straight the concern legislations with the objective of protecting the countries dwindling resources for the benefit the citizens.
The constant refusal to make good laws for the citizens and the protection of their resources has cost the country and its economy dearly. What they have done was opened a can of worms for bribery and corruption within government apparatus. Public servants and politician alike had used this leeway towards draining state wealth.
With the exception of Rick Hounipuela the then Prime Minister who brough 13 bills to parliament in 13 months from 2017 to September 2018 including the Anti-corruption Bill 2017 ( withdrawn from parliament in 2016) and the Whistle Blowers Bill 2017 amidst massive political pressure and this alone I give him the credit where it is due. Strengthening government institutions through reforming the political and civil machinery is something of no small measure and I salute him for tabling these important bills- now Acts of parliament of 2018.
In 2019 the Sogavare led government came into office but his plans were dramatically hindered by the global pandemic in 2020 to July of 2022 when it was lifted. His government had done exceptionally well protecting the lives of the citizens. Compounded with the 2023 Pacific Games had compressed the policies of government to focus on bringing the negative growth ( -7.5%) of the economy to around 1.2 % and later revised to (1.7%) GDP growth rate in 2023 fiscal year. This was his opportunity to fix the impasse on Renell bauxite taxation regime, but he refused to sort the issue out on the footing we just came out from the global illness with a slim revenue capture base. What a pity.
However, reforming the mineral sector (Minerals and Mines Act (cap 42)) would drastically be beneficial to the country at large. Firstly, on the international front, the export itself at the international market value of the dry ore per ton would cushion the balance of payment on international trade accounting for a stabilize and healthy foreign reserve as a buffer for SI imports. Secondly, on the domestic front, revenue capture of government will surely be improved against a deficit budget.
Any rationale government will sort this mess out rather than applying the ‘’do nothing syndrome ‘’ which is destructive and harmful to the economy of the country. If a government is thus rationale enough by instituting correct policies in the sector, I believe it will not only expand the revenue base of government in the short term but would create hundreds of jobs and simultaneously bring some sectors of the community out from the poverty ditch.
MOU BETWEEN SIG-APID AND BINTAN MINING COMPANY LTD AS SUB-CONTRACTOR
Following the inception of Bintan Mining company (SI) Ltd on 28th February 2014, SIG entered into another MOU relating to the development of West Rennell bauxite deposit with APID and Bintan Mining Co. Ltd. Directors of the company are: (i) Chi Kim Leung of the IBMC group, Hong Kong and (ii) Patrick Man Kam Wong of Indo Bauxite mining Corp, Hong Kong, china.
Patrick Wong had been embroiled over the RIPEL- Levers issue with the government and the creation of Bintan Mining Co. Ltd raises eyebrows. We are dealing with the same owners of RIPEL re-baptized after the provisional liquidation of RIPEL No 1 by the High Court of Solomon Islands in 2002. And later in a Deed of Settlement of 26th August 2011 between SIG and RIPEL and Lever Solomons LTD and Pacific Finance LTD and Cross Pacific Trading Ltd when Danny Philip was the Prime Minister.
This trigged the downfall of NCRA Danny Philip led government in a VONC in November of 2011 when he was alleged to have allocated a $50.0 million in to ICSI ( investment corporation SI) under the 2011 budget development estimates to pay off the shares of Central province and other investors in RIPEL 2.
The company came to invest under the investment Act and its core business was to resurrect the cattle industry of Solomon islands after the Livestock Development Authority was liquidated in 1996, and bring the key commodities- coca and copra to life but the venture in RIPEL No.1 was busted and RIPEL No. 2 was created on 23 Oct 2002 by the High Court of SI ( on negotiated terms between parties) and now they are venturing in to logging operations and mining on Rennell island.
PT MEGA BINGTANG BORNEO CO LTD SIGNED AND AGREEMENT WITH SI GOVERNMENT FOR EAST AND CENTRAL RENNELL
A ML No. 2/14 was granted to PT Bingtan Borneo co Ltd for East and Central Rennell and SIG entered into an Agreement with the company on 9 September 2014 (Mining Agreement) by a former Minister of Mines. The Directors were, (i) Sudi Anto 25% and Eric Saniputra 75%.
As said previously, PT Mega Bingtang Borneo Mining Ltd and Bintang Mining Ltd and APID do not have a problem when it comes to the mining of bauxite, Gold or nickel (saprolite and limonite).
The blame lies square on the Prime Minister and his cabinet. Constant refusal to bring an amendment to parliament in the last 10 years by former Prime Ministers and former Minister of Mines has caused the country to loss millions of dollars in revenue that should have been capture in more than 100 shipments on Rennell and Ysabel (Kolosori nickel deposit) – approximately 5 site (tenements) and in North Choiseul ( Suri land tenements-Sinagi tribal lands) and Wagina tenement sites.
What was expressed on the floor of parliament recently by the Leader of Opposition and the chair of Public Accounts Committee (PAC) was spot on. If the Prime Minister would take on board their advice and bring an amendment quickly, the SI fiscal position would be stabilized and addressed in both the international trade balance (BOP) and the 2025 fiscal budget itself.
Any projections of a balanced budget and a foreign reserves surplus would seem realistic as opposed to a budget deficit of $1.5 billion dollars for 2025 FY announced by the GG in the opening of parliament recently.
In other words, a budget deficit cannot be erased but will reappear in the 2026 fiscal year budget. In simple terms the 2025 deficit of $1.5 billion (if not funded by donors or any other budget support or by floating of bonds through CBSI- debt financing) will certainly dent the 2026 fiscal estimates.
COMMISSION OF INQUIRY (COI) BY THE NEW MINISTER FOR MINES
The new Minister for Mines Mr. Manuari must be applauded in his first days in office with the announcement of establishing a commission of inquiry into the matter.
COI under the Commission of Inquiry Act is not new to Solomon Islands, In 2011 a Commission of Inquiry in the Land Dealings on Guadalcanal was established to look in to all the purchased lands by different people apart from Guadalcanales but was Relinquished in 2015 by the Sogavare led government.
The COI report by the Truth and Reconciliation Commission took nearly 20 years to complete and submitted to parliament. A condensed report was only debated in 2023- ‘’From the Ashes,’’
A half report on the 2006 Riots in Honiara was published in 2007 and it was shelfed with all the proposed recommendations.
Although I am happy with the announcement, I predict the outcome report will not be available after 24 months and by then the 12th Parliament will be out for campaigns in 2028 hence I suggest the Minister should take a bill to amend the current Minerals and Mines Act 1990 (Cap 42) in conjunction with the Taxation laws and factor an approved (Cabinet) formular and to cub the current 100 % exemption ( zero tax) on export for bauxite and nickel dry ore.
This amendment should run concurrent to the COI announced by the Minister of Mines recently.
RECOMMENDATIONS
I make the following recommendation as an alternative to what has been happening in last 10 years. Let me say they are not new suggestions: –
(i) This was raised in the Minerals and mines Board meeting of 2nd June 2014 to which I believe holds more water in this discussion. The MMB raised the idea of instead of ‘’shipping the dry ore to China (with various other minerals ie phosphate), a framework for the establishment of a smelting and processing plant in the Solomon Islands would be the way forward.’’ This should be the focus of any government policy for Nickel, bauxite, gold, and any other precious metals in the country.
(ii) Reform the mining sector by instituting legislations for a Mineral and Mines Commission sanctioned under the National Constitution with powers to regulate the mining industry.
(iii) Bring a quick amendment for the imposition of export tax on all minerals exported and establish a revenue sharing formular for the payment of royalties and other benefits to landowners other than let the landowners negotiate the terms through an agreement with the investor.
(iv) A proper amendment to the Minerals and Mines Act 1990 (cap 42) can come in 2026 or even before the fall of 2025 fiscal year to take care of the entire government policy on mining.
(v) Review the process of awarding a prospecting license, Mining lease, Surface access agreements, acquisition of the tenement areas and so forth.
(vi) Review and improve the way MOU are written with the objective to protect resource owners.
(vi) Create an Import Export bank to regulate all financial transactions on international trade of Logs, Minerals, and other commodities (EXIM BANK of Solomon Islands).
(vii) As a matter of fact, the provincial government, and the landowners of Rennell should sue the government for the payment of royalties in court. Negotiations will not work.
(viii) Alternately the new Minister for Mines should humbly develop a framework to determine the number of shipments and bring a cabinet paper on how to compensate the good people of Rennell their forgone royalties and other benefits not paid by APID since 2014, not only as a good gesture but its legal obligation to the people of Rennell.
(ix) Bring a Bill to parliament for the amend,ment of the Minerals and Mines Act 1990 (Cap 42) that should run concurrent with the COI announce by the Minister for Mines Mr. Manuari
I hope the Prime Minister will not repeat the same promises made by his former Minister when he promised the amendments to the Minerals and Mines Act 1990 would be tabled in 2019. The nation had waited for the reform for now seven years. Without a reform to the current laws, Solomon Islands would be a resource curse nation no doubt where politics is used as a tool to advance illicit wealth for a few.
With the recent political impasse behind us let us focus on doing the right thing going forward.
I have always trusted the Prime Minister Hon. Jeremiah Manele both from a working relationship standpoint in the public service and as a Member of Parliament. This man is an astute and straightforward man that I believe can fix the owes and woes of Solomon Islands given proper political advice to some of the hardest political questions that has ever been asked since we gained statehood in 1978. One of which was the reform to the Minerals and Mines act that governs our mineral resources and the customary land tenure system not captured in any laws.
Finally, let me point out that the aim of the article is not to point figures at anyone including our elected leaders but is meant to share information and to put facts right to assist policy makers make good and credible legislations and furthermore to avoid being labeled a resource curse nation and a failed state as was coined during the eschewed violence of 2000. I hope the new appointed Minister for Mines will give priority to this call and give this nation something to remember the Manele led GNUT government. I say this in the spirit of a true Solomon Islander. God bless our beloved nation Solomon Islands.
#Ete was a former MP for East Honiara and also a former minister, minister and deputy prime minister.
–Disclaimer: The views in the article are solely that of the author and are in no way represent that of SBM-Online
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