Rio drops Papua New Guinea mine
RIO Tinto has given away its stake in the company that owns an abandoned mine in Papua New Guinea with potential copper and gold reserves worth $51bn.
RIO Tinto has given away its stake in the company that owns an abandoned mine in Papua New Guinea with potential copper and gold reserves worth $51bn.
The London-based miner has transferred its 54% holding in Bougainville Copper, owner of the Panguna project, to an independent trustee “for no consideration”, Rio said on Thursday.
The trustee will manage the distribution of shares to national and local governments.
The divestment comes as the world’s secondbiggest miner prepares for a change in leadership, with Jean-Sebastien Jacques to replace Sam Walsh as CEO from July 2.
Panguna, Bougainville Copper’s asset on Bougainville Island, was shut due to local unrest in 1989. The company estimated in its 2014 annual report that reserves stood at 5.3-million metric tonnes of copper and 19.3-million ounces of gold — worth about $51bn at today’s prices.
“The dollar-value sum is not significant, not to Rio Tinto, but it’s quite a symbolic gesture to the people of Bougainville,” Peter O’Connor, a Sydneybased analyst with Shaw and Partners, said. “It has been a 30-year long saga. To draw to a close at some point is inevitable.”
Rio had said it was reviewing its stake in 2014 after the provincial government passed laws that might adversely affect Bougainville Copper’s mining rights. Reopening the mine could cost more than $4bn, Papua New Guinea’s then-prime minister said in 2010.
Rio’s decision would provide “a platform for the autonomous Bougainville government and the Papua New Guinea government to work together on future options for the resource”, Rio’s copper and coal CEO Chris Salisbury said.
Rio will no longer hold any interest in Bougainville Copper. The Papua New Guinea government currently owns 19% of the company and public shareholders the rest. Bougainville’s Sydneylisted shares surged 55% to 31 Australian cents at the close. Rio’s shares were 1.5% higher.
Bougainville Copper said its board of directors was considering the implications of Rio’s action, according to a separate statement.
The company’s chairman and MD Peter Taylor will resign, and Robert Burns has been appointed acting chairman.
“They now have a situation where they can sit back and review, and decide on their journey from here, maybe include another owner,” Shaw and Partners’ O’Connor said.
The chances of the mine restarting were “probably closer to zero, but it’s still a globally significant ore body, which may one day be mined”, he said.