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A stockpile of phosphate on Nauru


The Nauru Phosphate Corporation (NPC) was a government-owned company controlling phosphate mining in Nauru, now known as the Republic of Nauru Phosphate, or RONPhos. The economy of Nauru has been almost wholly dependent on phosphate, which has led to environmental catastrophe on the island, with 80% of the nation’s surface having been strip-mined. The island's phosphate deposits were virtually depleted by 2000 although some small-scale mining is still in progress.

First discovery of phosphate

In 1896, a cargo officer for the Pacific Islands Company on the Lady M, Henry Denson, found a unique looking rock on Nauru during a brief stop on the island. He originally believed it to be a piece of petrified wood. Denson, according to legend, had planned on making children's marbles from it but fate would have it end up as a door stop in the company's Sydney office.

In 1899, Albert Ellis, a management official of the Phosphate division of the Pacific Islands Company was transferred to the Sydney office to "analyse rock samples coming from the pacific islands." Ellis noticed the rock and suspected it to be phosphate (similar looking to the phosphate coming from Baker Islandmarker), but was rebuffed by Denson and told that it was only wood. Three months later, Ellis decided to test his hunch and tested the rock for phosphate. It turned out to be phosphate ore of the richest quality.

It turned out that Banaba (Ocean Island), Nauru's neighbour to the east, shared Nauru's geological luck and also had significant reserves of phosphate.

History

Ellis' discovery of Phosphate excited the executives of the Pacific Islands Company and they decided to pursue rights and access to Nauru's lucrative resource. The negotiations to pursue rights to the phosphate involved four parties: The British and German governments, the newly reorganized Pacific Phosphate Company, and Jaluit-Gesellschaft (a German mining company that had been exploiting phosphates on Nauru since the late 19th century). In 1906, an agreement was established whereby Jaluit-Gasellschaft's rights were transferred to the Pacific Phosphate Company for "a cash payment of 2,000 pounds sterling (British), 12,500 pounds sterling (British) worth of shares in the Pacific Phosphate Company, and royalty payments for every ton of phosphate exported."

In the first year of mining alone, 11,000 pounds of phosphate were shipped to Australia. After World War I Nauru was given in trust to Britainmarker, Australia and New Zealandmarker. They established the British Phosphate Commissioners, who took over the rights to the phosphates.

In 1968, Nauru became a sovereign, independent nation. In 1970, the newly formed government purchased the full rights to the phosphate business from Australia for AU$21 million. This purchase brought an economic boost to the Republic, as revenues from the mining operations are estimated to have been AU$100-120 million annually since independence through virtual resource exhaustion in the early 1990s. Gross production of phosphate from 1968 through exhaustion has been 43 million tons, respectively.

A number of prominent Nauruans, notably René Harris, who have headed the Nauru Phosphate Corporation, have gone on to serve as President of Nauru.

Investments and finances

The government puts profits from the mining into a trust for the islanders. This trust reached a peak of AU$1 billion, returning approximately 14% annually. Poor investments and corruption have left the trust fund nearly empty and therefore Nauru with little money.

In the year 1948, revenues from phosphate mining, respectively, was AU$745,000. A minuscule 2% (AU$14,900) was being returned to the Nauruans, while 1% was being charged for "administration." In the 1960 future president Hammer DeRoburt negotiated royalties of profit to the Nauruans to be 22% while administration would increase to 14%.

One apparently successful development project was in 1988, whereby the Royalty Trust purchased of vacant, residentially zoned land near Portland, Oregonmarker. Called Forest Heights, it was controlled by the Nauru trust until 75% of the allotments were sold, when the homeowners association took over.

Failed investments

In the early years of the Nauru Phosphate Royalties Development Trust, construction of two of five hi-rise luxury condos in Hawaii, on the island of Oahu have been built. The five towers (two completed as of 10/05) are located on prime Honolulu real estate with ocean views, and represent a benchmark in Honolulu luxury high-rises. Other investments included Nauru Housemarker in Melbournemarker and Hawaiki Tower in Honolulumarker. These luxury properties were only part of an international real estate portfolio that stretched into countries including Australia, the Philippines, Fiji, Guam, Samoa, the United States of America, New Zealand, and the United Kingdom.

Financial mismanagement and extravagant government spending (i.e.: investing AU$4 million in a London play, Leonardo, about Leonardo DaVinci's love life which "flopped" after weeks of bad reviews) led to increased spending, and increased loans, which were levied upon the real estate holdings of the Nauru Phosphate Royalties Trust. One loan, of AU$236 million from General Electric, which was used as a loan to pay off all other loans, could not be paid by the government. This led to G.E. seizing Nauru's international real estate developments, including the trademark Nauru House in Australia.

RONPhos

Following the collapse of phosphate mining in 2002 due to virtual exhaustion of minable resources, repatriation of many foreign workers began. From 2004 to 2005, the foreign workers were reduced from 1,478 to 470. Most of the workers were from Kiribatimarker and Tuvalumarker.

On 1 July 2005, during a managerial restructuring, the Nauru Phosphate Corporation formally changed its name to the Republic of Nauru Phosphate Corporation to signal change. Today, RONPhos currently employs 20.4% of the working population of the Republic of Nauru.

Although the initial layer of phosphate has been mined out (approximately 100 million tones), a secondary level of phosphate is believed to exist, holding nearly 20 million tones of minable reources. RONPhos is begininng to develop plans for their economical extraction.

See also



References

  • Paradise for Sale. (Book) Authored by Carl N. McDaniel & John M. Gowdy (Univ. of California Press; 2000). Information regarding current state of RONPhos. Retrieved 20 August 2008.
  1. http://www.usp.ac.fj/fileadmin/files/schools/ssed/economics/conferences/igilmpic2006/country_papers/nauru/ONASIS_-_TUES_CP_FINAL.pdf


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