A mining operation in Solomon Islands owes millions in unpaid taxes and royalties, according to a former senior government figure, with a report showing that the mining companies had not paid taxes or royalties on one-third of their exports over the last five years.

According to a summary of a royalty payments report into mining on West Rennell Island from the Central Bank of Solomon Islands, seen by the Guardian, the Asia Pacific Investment Development (APID) company and its subcontractor Bintan Mining Solomon Islands Ltd (BMSI) have paid royalties for only 67 of the 100 shipments of bauxite ore exported during their operation.

The reports executive summary noted that APID and BMSI had been exporting bauxite ore, which is used in the production of aluminium, from West Rennell since 2015. In that time, 100 shipments of bauxite have been exported overseas.

With regards to the royalty share payments, only sixty-seven (67) shipments have been paid to the Central Bank of Solomon Islands (CBSI). The remaining 33 shipments were still outstanding and yet to be paid to the CBSI before it can be distributed to the rightful recipients, said the report summary.

Former director of mines, Nicholas Biliki, estimates the unpaid ore shipments leave roughly SBD80m (AU$13.4m) owing to landowners on Rennell Island, for royalties, community development assistance and landowner payments, as well as around SBD10m (AU$1.65m) owed in taxes and roughly SBD10m owed in payments to rehabilitate the island.

Biliki said the alleged failure to pay royalties on one-third of the shipments was a massive loss to Solomon Islands government and resources owners.

APID and its sub-contractor, BMC, [the parent company of BMSI] miserably failed to live up to their obligations. The company [APID] has lots of agreements with the landowners and lots of money has been owed to them. Also, the government has lost taxes from these 33 shipments, Biliki alleged.

As well as issues with missed payments, Biliki claimed that the companies had also failed to rehabilitate areas affected by mining.

I understand more than a half of the areas mined have never been fully rehabilitated, he said.

APID and BMSI have been embroiled in court cases for years that contest which company is responsible for paying royalties and rehabilitating the environment.

APIDs mining lease was cancelled in mid-October 2020 when Biliki was director of mines. APID has brought legal proceedings against the Solomon Islands government disputing this cancellation.

Though we cancelled the operation, the company has a legal obligation to clean up its mess before leaving, he said.

One of the Rennell landowners, Jimmy Festus, said some resources owners were still waiting for their dues.

Our waiting seemed to have no end The sad reality we are currently facing is that we have no place for gardening, he said.

Another landowner, Steward Baiabe, told the Guardian that he had seen records of their bauxite shipments at the ministry of mines.

I was in Honiara last month following up with the company for our shipments. Unfortunately, they have no offices in Honiara, so I went to the ministry of mines to enquire about the shipments. I was told by a mines officer that we have 33 shipments yet to be paid to the government and landowners.

Baiabe called on the government to get the company to pay what they are alleged to owe.

The government must be serious on addressing this issue.

In response to questions put to BMSI by the Guardian, a lawyer representing the company said: We are unable to comment due to pending proceedings before the high court of Solomon Islands. The most we can say is that the informations and allegations supplied may not be accurate and may contain misleading or misstated informations.

The lawyer did respond to requests by the Guardian to clarify which information or allegations he was referring to.

Chris Vehe, permanent secretary of the ministry of mines, energy and rural electrification, confirmed there were inconsistencies in the money received for this mining operation and the number of shipments that took place.

There are inconsistencies with reporting and a good number of shipments have not been kept track [of]. Mines officials were the ones responsible for record keeping and tracking of the shipments. Only the director of mines like Mr Biliki and the Central Bank of Solomon Islands would definitely know of the details of the shipments. But yes, my office is aware of these inconsistencies.

Vehe said the government would investigate the matter if they were to get hold of all the records of shipments, adding that the operation was a complicated one.

Its been messed up from its very beginning.

The governor of Solomon Islands central bank has previously said that while exempt from paying export taxes, Bintan Mining Company have made some payments to the government, contributing SBD$142m (US$17.8m) in foreign exchange in 2020 and $131m (US$16.4m) in 2019. The governor did not respond to requests for comment for this story.

Bauxite mining on Rennell Island has been controversial since it first began, with landowners and some officials estimating that since 2014 up to 50% of the bauxite-rich soil in West Rennell has been exported.

In February 2019, Rennell Island was the site of a huge oil spill when a bulk carrier, hired by BMSI, that had been attempting to load bauxite from a nearby mine on the island ran aground on a reef. It spilled 300 tonnes of oil into the pristine bay.

The oil spill turned the water black, contaminated fresh water sources, killed marine life, and children reported skin and eye infections in the wake of the disaster.

The owner of the vessel, King Trader, and its South Korean insurer, P&I Club, apologised for the spill in March 2019, describing the situation as totally unacceptable. In a statement the companies said although matters of liability are yet to be determined [we] have expressed deep remorse. The statement said they were acutely aware of environmental damage and were working as quickly as possible to bring the spill under control.

According to a report given to the Solomon Islands government in 2019 and leaked to the ABC, the oil spill caused the direct loss of more than 10,000 square metres of reef and more than 4,000 square metres of lagoon habitat, and economic losses of up to AU$50m. The report said the site could take up to 130 years to recover.

APID did not respond to questions put to them by the Guardian.

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Mining operation allegedly owes millions in taxes and royalties in Solomon Islands - The Guardian