Rio Tinto Walks Away From Closed Bougainville Copper Mine
June 29 2016 - 10:19PM
Dow Jones News
By Rhiannon Hoyle
SYDNEY--Rio Tinto PLC (RIO.AU) said it is walking away from a
closed copper mine on the South Pacific island of Bougainville that
was at the center of a decadelong civil war, transferring its
controlling stake to an independent trustee.
The Panguna copper operation in an autonomous region of Papua
New Guinea has been shuttered since 1989, when militants,
frustrated the local community wasn't benefiting from revenues and
angry about environmental damage, forced the mine to shut down. A
secessionist rebellion that led to thousands of deaths ended with a
cease-fire in 1998 but the mine has remained closed.
Rio Tinto announced in 2014 it was reviewing options for its
controlling stake in the company that controls the deposit, as the
Bougainville government passed interim mining laws that replaced
its mining lease with an exploration license.
On Thursday, the Anglo-Australian miner said it has transferred
its almost-54% holding in Bougainville Copper Ltd. (BOC.AU) to
Melbourne-based Equity Trustees Ltd., which will distribute the
shares between Papua New Guinea and Bougainville. Rio Tinto said
the deed entitles Bougainville to 68% of its stake in Bougainville
Copper and Papua New Guinea to the rest.
Following the transfer, the governments of Bougainville and
Papua New Guinea--which already holds 19% of the company--will each
own 36%, said Rio Tinto. Public shareholders own the remaining
holdings.
"The ultimate distribution of our shares provides a platform for
the autonomous Bougainville government and Papua New Guinea
government to work together on future options for the resource,"
Rio Tinto copper and coal chief executive Chris Salisbury said in a
statement.
A 2012 study forecast that it could costs US$5.2 billion to get
the site back into operation. The study estimated there was at
least another five million metric tons of copper and 19 million
troy ounces of gold to be mined at the site, which was producing
around 166,000 metric tons of copper and 450,000 troy ounces of
gold a year before it closed.
Some landowners oppose reopening the mine, however, and had
demanded more compensation for past environmental damage along the
nearby Jaba River.
In a statement earlier this month, Bougainville Copper said it
had reached an agreement to settle some long-standing claims and
that it was committed to "return to active exploration and
profitable, sustainable mining" at the site.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
(END) Dow Jones Newswires
June 29, 2016 22:04 ET (02:04 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Rio Tinto (NYSE:RIO)
Historical Stock Chart
From Apr 2024 to May 2024
Rio Tinto (NYSE:RIO)
Historical Stock Chart
From May 2023 to May 2024