Share

Rio gives away stake with $51bn reserves

Singapore - Rio Tinto Group has given away its stake in the company that owns an abandoned mine in Papua New Guinea with potential copper and gold reserves worth $51bn.

The London-based miner has transferred its 54% holding in Bougainville Copper, owner of the Panguna project, to an independent trustee "for no consideration," Rio said in a statement on Thursday. The trustee will manage the distribution of shares to national and local governments.

The divestment comes as the world’s second-biggest miner prepares for a change in leadership, with Jean-Sebastien Jacques to replace Sam Walsh as chief executive officer from July 2.

Panguna, Bougainville Copper’s asset on Bougainville Island, was shut due to local unrest in 1989. The company estimated in its 2014 annual report that reserves stood at 5.3 million metric tons of copper and 19.3 million ounces of gold.

That would be worth about $51bn at today’s prices.

"The dollar-value sum is not significant, not to Rio Tinto, but it’s quite a symbolic gesture to the people of Bougainville," Peter O’Connor, a Sydney-based analyst with Shaw and Partners, said by phone.

"It’s been a 30-year long saga. To draw to a close at some point is inevitable."

Future options

Rio had said it was reviewing its stake in 2014 after the provincial government passed laws that might adversely affect Bougainville Copper’s mining rights. Reopening the mine could cost more than $4bn, PNG’s then-Prime Minister said in 2010.

Rio’s decision will provide "a platform for the ABG and PNG Government to work together on future options for the resource," Rio’s copper & coal chief executive Chris Salisbury said in the statement, referring to the Autonomous Bougainville Government.

Rio will no longer hold any interest in Bougainville Copper. The PNG government currently owns 19% of the company and public shareholders the rest. Bougainville’s Sydney-listed shares rose 40% to 28 Australian cents as of 2:01 p.m. Rio’s shares were 1.4% higher.

Bougainville Copper said its board of directors is considering the implications of Rio’s action, according to a separate statement.

The company’s chairperson and Managing Director Peter Taylor will resign, and Robert Burns has been appointed acting chairman.

"They now have a situation where they can sit back and review, and decide on their journey from here, maybe include another owner," Shaw and Partners’ O’Connor said.

The chances of the mine restarting are "probably closer to zero, but it’s still a globally significant ore body, which may one day be mined."

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
19.00
-0.3%
Rand - Pound
24.08
+0.1%
Rand - Euro
20.59
-0.0%
Rand - Aus dollar
12.36
+0.5%
Rand - Yen
0.13
+0.7%
Platinum
902.95
+0.1%
Palladium
998.75
-0.7%
Gold
2,152.67
-0.4%
Silver
24.90
-0.6%
Brent Crude
86.89
+1.8%
Top 40
65,873
-0.6%
All Share
72,094
-0.5%
Resource 10
53,208
-0.2%
Industrial 25
99,450
-1.0%
Financial 15
16,627
+0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders