Rio Tinto reviews stake in Papua New Guinea mine

AN ABANDONED mine with a potential copper and gold resource worth more than $60bn is in play after Rio Tinto Group said it is reviewing its controlling stake in the company that owns the deposit in Papua New Guinea.

Laws passed this month by the provincial government of Bougainville prompted the review of Rio’s 53.83% stake in Bougainville Copper, the London-based company said yesterday.

Bougainville Copper’s main asset is the Panguna mine, on Bougainville Island, which was shut by local protests in 1989 amid unrest that included attacks on staff and operations, according to company filings.

Reopening the mine may cost more than $4bn, Papua New Guinea’s then- prime minister Michael estimated in December 2010.

The Port Moresby-based company surged 18% in Sydney, giving it a market value of A$188.5m ($176m), the highest in two months. Rio was little changed.

Bougainville Copper last year estimated the resources in the ground at Panguna at 5.3-million metric tons of copper and 19.3-million ounces of gold. That is worth $61.5bn at today’s prices.

Should Rio Tinto opt to sell the stake, the company has shown it is “adamant that it isn’t giving away assets cheaply at the moment,” Adrian Wood, a Sydneybased analyst at Macquarie Group said. “If they don’t get the value here, they are not going to give it away.”

Bougainville’s autonomous parliament said on August 12 that new laws may affect the unit’s mining rights and leases, Bougainville Copper said.

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