How a shipment of nickel ore destined for China was diverted to Indonesia and sold there instead.

_{by Charley Piringi}

On the remote shores of East Choiseul, 55,000 metric tonnes of nickel ore worth millions of dollars were loaded into a bulk carrier destined for China in February this year.

Solomon Nickel Mining Company Limited (SNMCL), a firm registered and owned by long-time logger and Filipino businessman Johnny Sy, owned the nickel cargo.

But the bulk carrier MV Ocean Feather V2501 never reached its destination, In-depth Solomons has learned.

Instead, the Singaporean-flagged vessel was diverted to Indonesia due to a “dangerous nickel liquefaction issue”, and had the nickel ore off-loaded and sold there.

The incident had baffled local mining watchers and raised questions about the mining company, the government’s oversight, and the environmental and safety risks associated with the operation at Siruka mine site.

According to mining experts, nickel ore liquefaction is a dangerous phenomenon that occurs when moisture-laden nickel ore transforms into a liquid-like state due to the agitation and vibrations experienced during transportation, particularly on bulk carriers. 

This process, known as dynamic liquefaction, can cause cargo to shift unpredictably, leading to vessel instability, capsizing, and even shipwrecks.

According to maritime experts, it is a well-documented and serious maritime hazard, particularly in regions like the Philippines, Indonesia, and New Caledonia, where large amounts of nickel ore are exported. 

Several ship disasters have been linked to nickel ore liquefaction, making it one of the leading causes of bulk carrier losses in recent decades.

Choiseul Nickel Ore Disaster

In-depth Solomons was reliably informed that the Choiseul nickel ore shipment had a dangerously high moisture content of 40%.

This caused the ore to liquefy, nearly sinking the bulk carrier MV Ocean Feather V2501 while in the waters of Indonesia.

When reached for comment, SNMCL owner Sy confirmed the incident and further stated that his cargo has to be off-loaded in Indonesia to avoid potential losses.

“The cargo during the shipment indeed suffered from high moisture content due to high rainfall conditions during the loading,” Sy told In-depth Solomons.

“Due to the liquefaction issue, we diverted the cargo to the nearest market, which was Indonesia,” he added.

Sy claimed that the ore was sold at the same price as it would have been in China, so there would have been no financial losses to the government or resource owners.

“No, there were no losses on royalties. We paid royalties when we loaded the cargo, which was accepted by the Purukana Land Trustees Association,” he said.

However, concerns remain about the lack of proper nickel storage, fuel storage, wharf for loading, and due diligence work onsite before the export.

Local geologist and former director of mines Nicholas Biliki, described the failed shipment as a “major disaster” that requires urgent investigation.

“Was proper due diligence conducted before approving this investor, who originally ran a logging company?” Biliki questioned.

“Land acquisition process is a compulsory activity that must be done before mining companies are granted licenses,” he added.

In-depth Solomons understands SNMCL’s Siruka mine was one of the projects the last Sogavare government wanted fast-tracked under its “mining fast-tracking” policy, an initiative designed to generate much-needed revenue to boost the government’s drying coffers.

As a result, SNMCL was granted its license without due land acquisition process.

Biliki described the nature of SNMCL’s shipment as “reckless”.

 “If the ore had a moisture content of 40%, it is dangerously high,” Biliki, now a mining consultant, said.

“Scientifically, shipping ore with such a moisture level is reckless and irresponsible because it is prone to liquefaction, potentially causing capsizing,” he added.

“No competent mining company will ever allow such a shipment.”

Despite the severity of this incident, the Ministry of Mines, Energy and Rural Electrification said they were not aware of this incident.

“We are unaware of the diversion or any report on this shipment,” Director of Mines, Krista Tatapu told In-depth Solomons.

Tatapu said the approved market destination for the shipment was China, not Indonesia, adding they have a due diligence team at the loading site.

She said the diversion of the vessel to Indonesia could impact royalties or government taxes if the cargo was sold at a lower rate.

Tatapu urged SNMCL to submit a full report to her department.

Mines minister Bradley Tovosia and his permanent secretary Dr Chris Vehe did not respond to questions sent to them on this issue.

Choiseul Opposes Mining

Landowners in Choiseul have long opposed mining as a mode of economic development in their province.

Around 2016, the Forum Against Mining on Choiseul was formed by landowners to oppose the prospecting activities of a Japanese mining giant Sumitomo Ltd at that time.

While they made some successes, they were unable to stand against SNMLC, which appeared to have the strong backing of the last Sogavare government.

When contacted, Choiseul Provincial Premier Harrison Pitakaka said the current mining in his province had “many unresolved issues” and urged the government to suspend or put the operation on hold.

“They don’t comply with Standard Mining Practices. It’s a mess to our environment,” Pitakaka told In-depth Solomons.

“There’s an issue between us, the National Government, and SNMLC,” he added.

“The government and SNMCL did not want to sign the Provincial Implementation Agreement. 

“We came up with this agreement to ensure the province gets maximum benefit from the operation. But they don’t want to sign so I am a bit hesitant to grant them a full Provincial Business Licence. We only gave them a one-year license.”

Pitakaka said the current situation with regard to the diversion of the shipment would be a huge loss for the government, the province, and resource owners.

“This is an operation happening in my province, unfortunately, the government and the company failed to provide updates or reports about its operation. 

“It’s a real mess.”

They lacked Expertise

Transparency Solomon Islands (TSI) said it’s not surprised by this shipping incident.

While condemning it, TSI’s chief executive officer Ruth Liloqula said the mining company lacked the expertise required to do mining and has called for the cancellation of its Mining Lease.

“This is just the tip of the iceberg. It’s a mess!” Liloqula told In-depth Solomons.

“This company is a logging firm that recently turned to mining. They have no expertise, and this disaster was entirely preventable,” she added.

TSI’s latest survey—soon to be released—suggests that SNMCL should never have been granted a mining lease.

“The company never conducted a proper environmental assessment,” Liloqula added. 

“No prospecting or land acquisition was done, according to our interviews with landowners for our survey. They only use prospecting reports from Sumitomo done years ago.”

Lands Commissioner Allan McNeil confirmed these claims.

“The answer to all your questions is NO land acquisition was done,” McNeil said in an email reply to questions In-depth Solomons sent him.

But Sy said it’s the government’s responsibility to carry out the compulsory land acquisitions. 

“Under the Mines and Minerals Act of 1990 (MMA of 1990) and terms and conditions of the Mining Lease, land acquisition in mining areas is the responsibility of the national government, more specifically the Commission of Land is tasked to execute the land acquisition process,” Sy said.

“Our company has done its job by submitting our application/request through the Director of Mines to initiate and expedite the land acquisition process on 16 July 2024. Land Acquisition is to protect the investor, and not a requirement under the law.

“We have done mining prospecting in 2018.”

However, Biliki said Sy’s claim was not true because SNMCL basically used the prospecting report done previously by Sumitomo.

TSI has also questioned why a government officer on-side allowed the cargo to be loaded when it’s obvious it has dangerously high moisture content.

A Serious Issue

Former prime minister Gordon Darcy Lilo said incidents like this would have been avoided had successive governments maintained the Extractive Industries Transparency Initiative (EITI), introduced by his then government.

“Not following legal processes during application for a mining lease is serious and illegal,” Lilo, an economist by training, said.

“The result is what we see now, the problem of liquefaction. Something that should have been avoided. It could be a huge economic loss for the country,” the Central Honiara MP said.

Who is Responsible?

Company Haus records show Solomon Nickel Mining Company Limited was registered on 23 March 2023.

Sy, who is also president of Solomon Forest Association (SFA), the peak body for the logging industry, is one of the directors. The other directors are Chinese nationals Chia Yu Yao, Yihong Lin and Jianyang He.

In Honiara, Solomon Nickel Mining Company Limited is renting Finance minister Manasseh Sogavare’s family property at Lungga for its office – an arrangement viewed with skepticism by many.

Sogavare was also the MP for East Choiseul, where Siruka mining operation is. Sogavare has not responded to questions In-depth Solomons sent him.

But Sy says there’s nothing wrong with his mining company renting Sogavare’s property.

“What’s to do with renting Sogavare’s house, anything wrong with that? Please try not to politicise things,” he said.

Besides Solomon Nickel Mining Company Limited, Sy is a director/shareholder of several companies.

These include:

• Bulacana Integrated Woods Industry (SI) Co. Ltd
• Solomon Islands Mining Company Ltd – Director 
• South Pacific Mining Company Ltd- Director/Shareholder  
• Filsol Shipping Company Ltd – Shareholder/Director
• Sea Links Agency Ltd – Director 
• Best Food Manufacturing (SI) Company Ltd- Director 
• Solomon Sawmill United Ltd – Director 
• Winlex Trading (SI) Ltd -Director/Shareholder 
• Best Foods Manufacturing (SI) Company Ltd – Director/Shareholder
• Winlex International (SI) Company Ltd -Director/Shareholder