by Ednal Palmer
Central Bank of Solomon Islands (CBSI) Governor Dr. Luke Forau has raised concerns about the country’s emerging mining sector, warning that many operators entering the industry are former logging companies with limited financial capacity and a track record that offers little reassurance.
Speaking before the Public Accounts Committee (PAC) in Parliament, Dr. Forau noted that the behaviour of companies transitioning from logging to mining appears worryingly familiar.
“If we look at the logging sector, the history was not really good in terms of returns to the country—both to the government and resource owners,” he said.
“What we observe is that the former loggers are the same ones moving into the mining sector, and it appears that similar practices from logging are being repeated.”
Dr. Forau said the country must be cautious about how widely it opens the sector.
“In my view, we should not open up too much for the mining sector. We should only give a few mining licenses—that will be enough. Opening it up too much might end up similar to the logging sector. Our record of managing our resources is an issue, and it could also happen to us in mining.”
PAC Chairman and Central Honiara MP Gordon Darcy Lilo questioned whether the mining industry is delivering genuine capital investment, given the government’s growing emphasis on the sector despite declining export receipts.
Dr. Forau confirmed that while there are numerous mining applications, only four licenses have been granted so far—and many applicants do not demonstrate the financial strength required for long-term operations.
“Most of these applicants don’t come with huge money,” he said.
“When we ask for their financials, they provide only what is enough to do prospecting. But when we ask for audited financial statements for the past three years, they cannot provide them. So we don’t know if these companies are just coming in to do the prospecting bits and then go.”
He added that CBSI’s monitoring of export proceeds has uncovered further concerns about compliance in the sector and on exports in general.
“We notice that most proceeds never come back into the country. Export proceeds should return after 90 days. We have tightened this up, and it has affected some exporters. We have stopped approving some until they provide evidence that proceeds have come back.”
PAC Chairman Lilo said it was “interesting and concerning” that despite the mining sector showing limited real investment, the Ministry of Finance continues to place heavy reliance on it for revenue projections.