PACIFIC ISLANDS REPORT

Pacific Islands Development Program/East-West Center
With Support From Center for Pacific Islands Studies/University of Hawai‘i

By Alfred Sasako

A decade or so ago, Guadalcanal, the largest island in the Solomon Islands archipelago, was drawing international attention for the wrong reason.

It was here in 1998 that a civil uprising known locally as the "ethnic tension" had begun, drawing young men largely from Guadalcanal and Malaita to engage in a long drawn all-out war, resulting in the loss of many innocent lives, destruction of hundreds of properties and countless businesses.

Many companies folded.

Among these was the Solomon Islands Plantation Ltd [SIPL], with job losses in the thousands. SIPL, which operated the country’s only large-scale palm oil development on the Guadalcanal Plains just east of the capital, Honiara, lost everything, and with it, about a 17 per cent in tax revenue loss to the government. [The company has since been taken over by Guadalcanal Palm Oil Ltd [GPOL], a subsidiary of the Malaysian conglomerate operating in neighboring Papua New Guinea’s West New Britain Province].

Nearby, the Gold Ridge Mining Company, operated by Ross Mining was also forced to shut down after only two years of production. Thousands of workers were also forced out of their jobs. [Like SIPL, Gold Ridge has been taken over by Australia Solomons Gold]. The new outfit is now trying to raise US$140 million to restart production.

In the aftermath of the "ethnic tension" thousands of skilled, semi-skilled and unskilled workers have been left without jobs today particularly on Malaita where an estimated 20,000 former workers from different industries have been resettled.

Appeals for international help at the height of the uprising went unanswered. Australia, for instance, said at the time that it was an internal matter for the people of Solomon Islands to resolve themselves. They didn’t.

The ethnic tension had all but torn the nation apart.

[Australia finally relented five and a half years later. It put together a regional coalition of the willing by sending troops and police under the banner, Regional Assistance Mission to Solomon Islands [RAMSI]]. It now shares a billion dollar a year budget with New Zealand to rebuild Solomon Islands.

Now Guadalcanal, the island where it all began more than 10 years ago, is again drawing international attention – this time it appears – for all the right reasons.

In more ways than one, the island itself is a floating gold mine.

At just about every section of the island, shaped like a sea cucumber, there are mineral deposits of some sort.

Gold, copper and even oil traces are found in just about everywhere. Satellite images are said to have indicated traces of the black gold in the Tangarare area on west Guadalcanal.

At Koloula on the island’s Weathercoast region, the hub for militant activities during the ethnic tension, a huge copper deposit reportedly three times the size of Bougainville copper, the world’s largest open-cut mine, abandoned during the Bougainville uprising in the 80s, has been identified.

Closer to the capital, Honiara, it is gold, gold and more gold. It seems to be confirming the first sighting of gold made some 441 years ago when Spanish explorer, Alvaro de Mendana, sailed into Point Cruz in 1568.

Mendana’s find was on the riverbed of Mataniko River that divided Honiara into halve, this time around gold is found in every spot imaginable – on the seabed, in the riverbed and in hard rocks in the mountains.

Located just 30km or so east from the heart of Honiara itself is Gold Ridge, a rich, sizable mine abandoned during the uprising after only two years of production. In that period, some 210,000 ounces of gold were extracted and exported.

Proven reserves from the three deposits there stand at two million ounces of gold. More are being discovered in nearby ridges as prospecting work continues. Australia Solomons Gold, the company that has taken over the mine, is fighting to stay afloat. It needs capital injection of around USD140 million to get the mine in full production.

Just eight short kilometres to the east is a place called Sutakama along the upper Balasuna River. In July last year, a relatively unknown New Zealand businessman was granted a prospecting licence for a 50 sq km concession there.

Kelvyn Alp, little known in the mining industry, is the Managing Director of CARATAPA Group of Companies. A subsidiary of his company, Phoenix International [SI] Ltd was granted a full mining licence in March this year – just seven and a half months after he deployed local geologists in favor of foreign ones to ascertain gold deposit in the Sutakama area.

Alp is a lucky man.

Initial prospecting results on just two-thirds of the company’s 50sq km concession at Sutakama suggest the deposit could hold as much as 42 million ounces of alluvial gold or approximately 1.33 million kilograms of the metal.

Proven reserve right now is 1,104,501 ounces, a probable reserve of 11,503,215 ounces and a possible reserve (pending further exploration in the southern end of the prospect), of 42,757,235 ounces.

Results gleaned from several targeted six metre excavated depths geologists sunk at the Sutakama site in the three months to March this year, showed that the deeper the hole, the higher the grade and the larger the quantity of the metal, first discovered some five thousand years ago.

By comparison, the Sutakama find is potentially 28 times more than the proven reserves at the three Gold Ridge deposits nearby. There, the combined reserves is said to be only 2.0 million ounces of gold (62,200 kilograms) with an estimated mining lifespan of 10 years.

Production on the Sutakama alluvial mining operation is expected in about July/August this year at the initial cost of USD10 million.

Little did Mr. Alp know that his involvement in Solomon Islands’ mining industry is igniting a revolution of its own.

It is not so much his involvement that has thrown the spanner in the works so to speak. His business model does.

"My business model is of course a fair and just one. I supply finances, equipment and expertise and the landowners supply access to their land and resources as well as settle all of their own disputes and a 50/50 profit sharing in the business takes place," Mr. Alp who has drawn a large following, said.

"The Company also identifies immediate things required by the people and attempts to address those while the business navigates all of the legal requirements to successfully operate.

"The landowners via their trustees appoint an oversight committee for the company operations and have access to all of the books related to the operations on their land," he said.

As well as that, locals from that area are employed and community packages are created to stimulate that local economy.

Mr. Alp’s team of local geologists consists of three people, including the team leader, Cromwell Qopoto. A former Director for the Environment [Moses Biliki] was also deployed by Mr. Alp to assess the impact of the alluvial mining operations within the area.

Since Pheonix International [SI] Ltd had celebrated the granting of the mining licence, Mr. Qopoto, a former Director of Mines in the Department of Mines and Energy, has been fielding calls from landowners drawn by Mr. Alp’s business model on mining.

"We want that man to come and do business with us. We have minerals in our land," they told Qopoto.

"Man, they come from all over Solomon Islands. They want to see that their resources are shared equally as Mr. Alp has done with the Hokola Landowners Association," Mr. Qopoto told me.

Others simply congratulated Mr. Qopoto’s team for doing what has been perceived as a reserve for foreign geologists.

Mines, Energy and Rural Electrification Minister, Edward Huniehu, acknowledged in a recent interview that Mr. Alp’s business model had the potential to revolutionize the future of the mining industry in Solomon Islands.

"His business model, particularly his introduction of the profits being shared on a 50/50 basis with landowners, is going to be very difficult, if not impossible to match," Mr. Huniehu said.

"I must admit it is the sort of thing our people want. Our people really want to see tangible results [from their resources] with their own eyes. In the case of Mr. Alp, they see money in their own hands".

Mr. Alp’s approach has filled a vacuum left by RAMSI’s work. While RAMSI has addressed law and order, it has not fully focused on the economic dilemma of rural Solomon Islands where 85 per cent of the country’s population lives.

This is where Mr. Alp comes in.

But while the all round support has been strong; there are some dissenting voices as well.

For example, Solomon Islands National Union of Workers’ [SINUW] Tony Kagovai issued a public call, urging the government to investigate Mr. Alp’s business background, a call the union boss now appears to be regretting.

In his outburst, Mr. Kagovai described the New Zealand businessman as a ‘conman" and that his business dealing was "shady" – descriptions vehemently rejected by Mr. Alp himself as well as Hokola Landowners Association of Sutakama.

Association Chairman, Simon Tonavi rejected the characterization that Mr. Alp was a "conman".

"Kelvyn is a man of his word. When he says he will pay he pays. When he says he will do this he does it. May be it is his straight forward honesty that causes discomfort to those who are now defaming his character," Mr. Tonavi said.

"Kelvyn is a simple, approachable man.

"He comes to see us and we go to see him anytime we need to. He even brought his family to see us in the villages. He talks to us about the progress of things like a true friend.

"Kelvyn is an organiser. Pheonix International (SI) Limited would not be where it is now if it is not for Kelvyn’s strategic planning and organising abilities. He helped to organize and facilitate our landowners association into a bargaining body then negotiated with us through the association.

"Kelvyn pays fairly and justly but only after you have completed the job to specification and acceptable standard. To the best of our knowledge he does not bribe.

"For sure, Kelvyn does not entertain incompetent and lazy people. In this attitude we learned quite a lot from him. Kelvyn follow regulations to the best of his ability. "He does not take short cuts. If he is fast it is because he does not entertain delays and delaying tactics.

"He used to remind us that doing business honestly and justly can also pay handsomely.

"A person does not have to engage in dirty dealings to make good profit. One other advice he usually gives is common sense is a good guide in life.

"In our association and dealings with him we found that he uses this simple common sense principle successfully.

"Kelvyn trusts and believes in the raw ability of people. One of his common sayings goes like this, "I don’t come to tell you what you don’t already know, I only come to remind you of it".

Discoveries of gold-bearing ores are not confined to Guadalcanal.

Strategically located on the famous ring-of-fire arc, indications are that Solomon Islands are shaping to be one hell of a pot of gold. New discoveries are being made in other islands from the Shortland Islands in the northern tip of the country to various island groups in Western, Choiseul and Isabel Provinces.

Isabel in particular has a proven reserve of more than 52 million tonnes of nickel, according to the Kaiser Engineers’ Report on the prospect in 1993. It is widely known that more deposits have been discovered since then.

There are also indications of potential mineral deposits of diamond, platinum, gold and copper on Malaita, the only island in the archipelago that remain a virgin in terms of commercial mineral prospecting.

Kelvyn Alp may be a relative newcomer in the mining industry in Solomon Islands.

But he sure had set the cats among the pigeons – all it seems for the betterment of Solomon Islands’ resource owners – in recognition of the plight of resources owners in Solomon Islands.

"All I want to do is to stop the slave wages resource owners receive for their resources at the hands of foreigners," he said.

While Kelvyn Alp is leading the revolution in resource sharing in Solomon Islands, Guadalcanal is definitely leading what can only be termed as the regional gold rush of the century.