5.2 billion

RIO Tinto says the expected costs of restarting the Panguna copper mine on Papua New Guinea's Bougainville Island, where a civil war halted mining in 1989, have jumped by up to 150 per cent to $US5.2 billion.

The new cost estimate comes after upbeat commentary last month about the potential to restart the project from the mine leaseholder, Rio subsidiary Bougainville Copper.

Despite the cost jump from a previous estimate of between $US2bn and $US4bn, Bougainville Copper says the mine remains economic.

Rio reported the latest capital estimate at Panguna in its annual report, saying it had come after Bougainville Copper did a fresh "order of magnitude study" on the mine.

The previous assessment was done in 2008.

The estimate is based on the assumption that all site infrastructure needs rebuilding.

"Safe access by company employees has not been possible since 1989 and an accurate assessment of the conditions cannot therefore be made," said Rio, which owns 53.8 per cent of Bougainville Copper.

"Considerable funding would be required to recommence operations."

Bougainville Copper has not revealed the capital cost that emerged from the study but has been positive about both the sentiment of locals and the economic prospects.

"The emerging results of this study broadly indicate that it would be economically viable to redevelop the Panguna mine," the company said in its full-year results release on February 28.

The company said a January visit to previous no-go areas on Bougainville by Prime Minister Peter O'Neill was the first by a serving PM in 15 years and it had generated a wave of conciliatory sentiment among previously hostile stakeholders.

"Bougainville Copper is encouraged by this new spirit of engagement," the company said.

It said it planned to open an office in the Bougainville town of Arawa this year to assess "bio-remediation needs, community development programs, social mapping, asset revaluation and de-risking".

But the company stressed it would not undertake major studies until there was broad support from governments, landowners and other stakeholders.

In a report last month following Mr O'Neill's visit, Oxford Business Group said sentiment was improving but reopening the mine would not be straightforward. "Hostility is expected from landowners, while feelings still run high among those who suffered during the war," the group said.