BOUGAINVILLE Copper Limited (BCL) is now a now an independently managed Papua New Guinea company following the recent execution by Rio Tinto of a deed to terminate a Service Agreement between the two companies for the management of the Panguna mine.
The termination follows a June 2016 announcement by Rio Tinto that it was transferring its 53.8% shareholding in Bougainville Copper Limited to an independent trustee.
The trustee firm, Equity Trustees Limited, is contracted to manage the distribution of these shares between the Autonomous Bougainville Government (ABG) for the benefit of all the Panguna landowners and the people of Bougainville, and the Independent State of Papua New Guinea.
Under the trust deed, the ABG has the opportunity to receive 68 per cent of Rio Tinto’s shareholding (which equates to 36.4 per cent of BCL’s shares) from the independent trustee for no consideration and PNG was entitled to the remaining 32 per cent (which equates to 17.4 per cent of BCL’s shares).
Under Rio Tinto’s plan, the ABG and PNG would both hold an equal share in BCL of 36.4 per cent if the transfers are completed.
Rio Tinto said this would ensure both parties are equally involved in any consideration and decision-making around the future of the Panguna mine.
The PNG Government has taken up this additional interest which provided it with a total shareholding of 36.4%.
However, PNG Prime Minister Peter O’Neill has subsequently announced that the PNG Government will transfer the Rio 17.4 per cent interest to the landowners and the people of Bougainville, which, if taken up, would provide the people of Bougainville with ownership of a combined shareholding of 53.8 per cent of BCL.
To date the ABG have not taken up the share entitlement offered by Rio Tinto.
In the meantime, the BCL board says it is still focused on returning to Bougainville and the company has initiated “positive dialogue” with the ABG and PNG governments to develop an understanding of their positions.
Bougainville Copper Limited operated a large open pit mine and processing facility at Panguna mine on Bougainville Island from 1972 until 1989, when operations were suspended.
The mine produced copper concentrate containing significant quantities of gold and silver. However, production was brought to a halt on May 15 1989 by militant activity.
In the 17 years prior to 1989, the mine produced concentrate containing three million tonnes of copper, 306 tonnes of gold and 784 tonnes of silver. The production had a value of K5.2 billion which represented approximately 44 per cent of Papua New Guinea’s exports over that period.