Rio Tinto looks to review stake in closed mine
A MINE in Papua New Guinea owned by Rio Tinto that has been closed for a quarter of a century following a violent uprising in the country is under review, as the massive mining company considers its options for the site with the possibility of a sale.
The review into Bougainville Copper Limited (BCL), the company in which Rio Tinto has a 53.83 per cent stake and which owns the Panguna mine, follows the passage of a law last week by the Autonomous Bougainville Government (ABG), which stripped the operating company of its mining and exploration licences, .
The Panguna mine opened in 1972 and produced more than nine million tonnes of copper and around three million tonnes of gold during its years of operation.
It closed in 1989 as a civil war that killed thousands over a decade broke out between Papua New Guinea and Bougainville independence fighters, with the mine remaining shut after the conflict ended.
While Rio Tinto had been in discussions through BLC with authorities on potentially reopening the mine, the mining giant has been pursuing a strategy of cutting costs and under-performing assets since chief executive Sam Walsh took the helm.
Analysts at Numis commenied: “Rio does have the first right of refusal, but now has to come to an mutually acceptable agreement with the ABG. It may be hard for Rio to go back to Bougainville after the mine’s history. We doubt it is a challenge Sam Walsh would be up for but could offer an opportunity for someone else.”