Future of Panguna unclear

 By GYNNIE KERO

NEW mining legislation by the Autonomous Bougainville Government has created uncertainty about Bougainville Copper Ltd’s rights to mining and exploration licences, BCL chairman Peter Taylor (pictured) says.

BCL is a subsidiary of Rio Tinto which holds a 54 per cent stake in the Panguna copper gold project before it ceased operation in 1989. 

In the 17 years before 1989, the Panguna mine produced concentrate containing 3 million tonnes of copper, 306 tonnes of gold and 784 tonnes of silver.

The production had a value of K5.2 billion representing about 44 per cent of Papua New Guinea’s exports over that period.

A total of K1.08 billion or 62 per cent of the net cash generated by the Panguna mine between 1972 and 1989 was contributed to the National Government.  

Taylor said: “The Bougainville Mining Act 2015 passed on April 1, substantially mirrors the clauses of the Interim Mining Act, which has re classed the existing Special Mining Lease as an Exploration Licence. 

“There remains uncertainty over the seven leases for mining purposes.”

He said the company made applications for new licences and to affirm rights which appear to have been impacted by the interim ABG mining legislation. 

“These applications have been declined. The final Bougainville Mining Act 2015 prevents the Mining Registrar from accepting or registering applications for tenements before Oct 1, 2015,” Taylor said.

“In light of recent developments in Papua New Guinea, including the new mining legislation passed earlier this month by the Autonomous Bougainville Government, Rio Tinto has decided now is an appropriate time to review all options for its 53.83 per cent stake in Bougainville Copper Ltd.”

He added that a BCL study indicated that there would be a very high production level when opening a new mine at Panguna.

“The Order of Magnitude Study describes a new mine at Panguna processing between 60 million and 90 million tonnes of ore per annum, over a mine life of 24 years, with an estimated capital cost of US$5.2 billion (K14.08bn), as estimated in 2013,” Taylor said.

“More detailed studies are required to confidently determine the potential economic viability of re-opening the mine.”