Rio Tinto subsidiary takes legal advice after being stripped of Bougainville mining licences

Jemima Garrett | Radio Australia 

With its wealth of precious metals underground, Bougainville is a treasure island. (Credit: ABC)

Rio Tinto subsidiary Bougainville Copper Ltd (BCL) is taking legal advice after Papua New Guinea’s autonomous region of Bougainville stripped the company of its exploration licences and the lease on its mine.

The company’s Panguna copper mine used to be one of the biggest in the world but it was closed in 1989 after it became the spark which ignited a civil war.

A new Mining Act passed by the Bougainville parliament on Friday devolved power to regulate mining to Bougainville.

It also stripped BCL of its seven exploration licences and its special mining lease over the Panguna mine site.

“I can’t say I am very pleased,” said BCL Chairman and Managing Director Peter Taylor, speaking to Radio Australia’s Pacific Beat program from Port Moresby

“It is not the way I would have preferred to have progressed the possibility of re-opening the mine,” he said.

The company is left with just one exploration licence, over the mine site itself.

There are other areas like the port and the access road that are not covered by the licence.

“What we have been delivered, I am told, is an exploration licence over a part of the former land that we had for mining purposes,” Mr Taylor said

“I am not sure that is enough.

“Whatever people’s view of the project’s value is, and it definitely has a pretty high value, this essentially puts an end to that value.

“At this stage there is no decision being made to take legal action but the company BCL is obviously taking advice.

“I wouldn’t dismiss (it) although it is not my preferred way of moving forward, my preferred way of moving forward is to negotiate an outcome,” he said.

Landowner negotiations

Bougainville’s President, John Momis, said landowners would not let the BCL back to Bougainville without the legislation.

The BCL Managing Director says the move pre-empts talks already underway with landowners.

“The way we have been proceeding is through negotiations,” he said.

“We have a body that has been set up and it has met at least ten times to discuss the future of the mine and that was proceeding rather well, I thought.”

The talks include landowning groups, the PNG government, the Autonomous Government of Bougainville, and BCL.

“The progress that we were making at the joint meeting suggested to me that the majority of landowners did want the company back as the operator, that they did want the mine re-opened,” Mr Taylor said.

Some landowner groups still believe BCL has too much power.

“This mining Bill will likely lay the foundations for another Bougainville crisis,” the Panguna Veteran’s Association said in a statement shortly before the new Mining Act was passed.

“Rio Tinto/BCL owned and controlled our minerals before and it led to the war. Under this Bill, Rio Tinto/BCL owns and will control our minerals.

“Why would the result be any different this time?’ the statement asked.

An Order of Magnitude Study (OMS) completed by BCL in 2012 found the resource at Panguna still contains over five million tonnes of copper and 19 million ounces of gold.

The capital cost of getting the mine running was put at $US5.2 billion.