Rio Tinto weighs stake in closed Papua New Guinea copper mine
Mining giant Rio Tinto (LON, ASX:RIO) said Monday it is studying whether to return to Papua New Guinea following last week’s passage of a new mining law on the island of Bougainville, where the company abandoned its Panguna copper and gold mine 25 years ago.
Rio’s grip on its closed Bougainville copper mine — one of the world's biggest deposits of the metal — remained firm in the 1990s throughout bloody independence conflicts in PNG.
The civil war, which came about in part due to a demand from Bougainville rebels for higher mine royalties, and their anger at alleged environmental destruction, resulted in an estimated 10,000 to 15,000 deaths.
Now that the mine edges toward restarting and copper prices are on their way up, the company may be heading for the exit. This as the new bill means for Rio’s subsidiary Bougainville Copper (ASX:BOC) to lose seven exploration licences as well as its mining lease for Panguna, which has a potential gold and copper resource worth over $60 billion.
"In light of recent developments in Papua New Guinea, including the new mining legislation passed earlier this month by the Autonomous Bougainville Government (ABG), Rio Tinto has decided now is an appropriate time to review all options for its 53.83 per cent stake in Bougainville Copper Limited (BCL)," was all the company in today’s statement.
The company declined to comment on what was the most likely outcome of its review or how soon a decision would be made. But analysts are questioning the viability of the mine if Rio were to walk away since 27% of Bougainville Copper is owned by private shareholders.