INTERVIEW: Bougainville Copper More Positive On Panguna
MELBOURNE (Dow Jones)--Flagging partnerships with other miners, Australia\'s Bougainville Copper Ltd. (BOC.AU) said Tuesday it was more optimistic than it has been about restarting its massive Panguna copper and gold mine on the war-scarred Bougainville Island, Papua New Guinea.
A government review of mining and exploration on the island prompted the subsidiary of Rio Tinto PLC (RTP) to commission a report on possible exploration targets, Chairman Peter Taylor said.
The review, record copper and gold prices and encouraging statements from the island\'s autonomous government mean prospects for the troubled mine, which was closed in 1989 amid attacks by secessionist rebels, are more positive than they have been previously, Taylor told Dow Jones Newswires.
"It\'s more positive economically, it\'s more positive politically and you are even getting landowners saying it\'s about time we got back to an economic base like mining and exploration but we\'ve got a long way to go," Taylor said.
"This will be a long, slow process, it\'s taken 15 years to get this far and I hope it doesn\'t take that long again but it won\'t happen overnight," he said.
Panguna, which in its time ranked as the world\'s third-largest copper mine, remains closed despite a cease-fire in 1998 and the formation of an autonomous island government.
Bougainville Copper, or BCL, has kept ownership of the mine and is the only company with exploration permits on the island.
The national government has selected Graeme Hancock, the World Bank\'s Papua New Guinea mining sector project director, to conduct the review, Taylor said. Hancock wasn\'t available for comment.
Papua New Guinea is reviewing both the mining agreement for Panguna, which hasn\'t been changed since the mine was going, and lifting an exploration ban on the island, Taylor said, adding any outside investment is likely to be dependent on the study.
"Anybody interested in going into partnership with BCL or taking equity in BCL will want to know what the rules are and at this stage we don\'t know what the rules are," Taylor said.
Bougainville Copper is the only miner with ground on the island and holds about a third of the land as exploration tenements. Taylor said he isn\'t yet sure whether the review will canvas opening new exploration ground.
Prospects for mining again on Bougainville rose in July when rebel leader Francis Ona, a former mine worker, died. Taylor said high commodities prices may also encourage more interest in exploration on Bougainville.
"Demand for copper and gold remains strong so if Bougainville does decide there is a place in its economy for exploration and mining now is a good time to attract investment," he said in the company\'s annual report released Tuesday.
Papua New Guinea Mining Minister Sam Akoitai told Dow Jones Newswires earlier this month that he wants the review into mining finished quickly amid interest from big mining companies keen to exploit the province\'s resources.
Akoitai wouldn\'t give a timeframe or name interested companies.
"It\'s unlikely that anybody would commit to any exploration expenditure until this moratorium question is sorted out and until the Bougainville Copper agreement is finished," Taylor said.
"I\'d like to see the process get a long way this year but the reality may be that it\'s not finished this year."
The Panguna mine has been completely dismantled and any decision on mining it is likely to cost close to US$1 billion.
"Any cost estimate is purely a guess, but if you look at a mine of the size it used to be, you can say you\'re in the US$1 billion ballpark," Taylor said. The mine produced about 180,000 metric tons of copper a year.
Panguna sparked a decade-long war for independence after locals claimed the mine was damaging their environment and that they were seeing little financial gain, meaning restarting the mine is likely to be a complex process.
Taylor said he is encouraged by the attitude of Bougainville President Joseph Kabui, who has said he wants the moratorium lifted and has flagged a referendum on mining the island.
Analysts say restarting the mine would cost more than US$1 billion and take up to five years.
The sovereign risk for miners heading to Bougainville was highlighted this month when the island\'s autonomous government said it was concerned fugitive businessman Noah Musingku is planning an uprising with former Fijian soldiers training a security force for Musingku
BOC Price at posting:
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