Panguna Copper Mine Could Restart Soon

By Anonymous

COPPER In 1989, the Panguna Mine on the island of Bougainville was the third highest producing copper mine in the world. It was shut down that same year after it was attacked by seccessionist rebels during a war that raged there in the 1980s and 1990s.

Now the government of Papua New Guinea and the government of Bougainville are taking steps to lift a moratorium on mining on the semiautonomous island of Bougainville, home to the Panguna copper mine that is majority-owned by Rio Tinto. The government is also seeking control of its mineral and gas resources.

Both governments have signed a 15-step memorandum of understanding to hand over mining powers, lifting a moratorium on mining aimed at helping the impoverished island, according to an official at the office of Papua New Guinea Deputy Prime Minister and Mining Minister Puka Temu.

Temu is reportedly hoping the initiative will be the first step in reopening the Panguna Mine.

The operation shut down in 1989 after being attacked by secessionist rebels. There has been no exploration or mining because site access is still off-limits despite the formation of an autonomous island government.

The mine produced about 180 kt/a (198,000 stpy) of copper and ranked as the world’s third largest copper mine when it was in operation.

The Papua New Guinea government will seek to retain a stake in future profits from the mine and other resource projects.

The next meeting between the two governments is scheduled for June. It is expected to address transfer of power on certain issues.

Rio Tinto owns 53.85 percent of Bougainville Copper, valued at A$401 million, and the Papua New Guinea government another 19.9 percent. The European shareholders of Bougainville Copper, a group of individual private investors, is also pushing for a restart of the mine.

The capital cost to restart the mine is pegged between US$1.2 billion and US$1.5 billion.

Mining accounts for around 50 percent of Papua New Guinea’s exports, and petroleum and gas together for 25 percent. Other companies active in the country include Lihir Gold and Barrick Gold.

Copyright Society for Mining, Metallurgy, and Exploration, Inc. May 2008

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