28.12.2010
Source: The Australian

Miners hope to restart Bougainville gold and copper mine
by Rowan Callick

TALKS are under way on reopening one of the world's biggest copper and gold
mines, on Australia's doorstep -- the Bougainville mine that last produced ore
22 years ago and was widely believed to have closed forever.
The seemingly unstoppable China-driven commodities boom has pushed up prices, so
the reserves in the Bougainville pit are now worth about $50 billion.
Its port, its access road up 30km of rugged terrain and its 200 million tonnes
of pre-stripped ore are ready and waiting.
Crucially, leaders on Bougainville -- including former combatants and elected
politicians -- are all calling for the mine to reopen, although they have yet to
agree on the conditions they require.

"The key to the door," Bougainville Copper chairman and managing director Peter
Taylor said, "is the landowners."
Nothing could happen "until they say to BCL, as a united group, 'We want the
mine and we want you to run it' ".
"Then I'll focus on the process that would follow."
Veteran politician and former Catholic priest John Momis, the recently elected
President of Bougainville -- an autonomous region of Papua New Guinea -- said:
"We are keen to reopen the mine and we are holding talks with the landowners."
BCL's share price has doubled since August and trebled since May, as canny
investors have watched vital and promising talks begin.
Bougainville Copper, which is 53.58 per cent-owned by Rio, 19.06 per cent by the
Papua New Guinea government and 27.36 per cent by other shareholders, estimates
it will cost about $3bn to reopen the mine, whose production was suspended on
May 15, 1989.
The trucks and the electricity pylons may have been blown up, rusted or
cannibalized, but the resources in the mine have not been damaged or diminished
over the past 21 years. It contains 3.5 million tonnes of copper, today worth
about $32.4bn, and 12.7 million ounces of gold, worth today about $17.8bn.
There are more reserves beyond the pit but still in the mine lease area.
The mine as presently configured is capable of producing up to 170,000 tonnes of
copper and 500,000 ounces of gold annually.
The copper price has quadrupled since the mine closed, the gold price seven
times.
The values of the two metals have usually run counter-cyclically, but this year
they have peaked together.
But the cost of capital is also high, and is likely to come at a premium given
the tumultuous history of the mine.
Former Australian prime minister Bob Hawke, who has close Chinese commercial
connections, in late November visited Port Moresby, where he talked with Prime
Minister Michael Somare and Mr Momis.
The discussions included plans to reopen the Bougainville mine.
After leading a Bougainville delegation of 34 on a visit to China, where he was
once the PNG ambassador, Mr Momis said: "The Chinese have expressed an interest
in the mine, but we are keeping all our options open."
The overwhelming focus of 40 years ago on the mine as a national economy maker
or breaker is no longer present.
It would remain the crucial income earner for Bougainville itself, but for PNG
the spotlight has shifted to the $16.5bn ExxonMobil-led venture piping gas from
the Southern Highlands to Port Moresby, where it will be liquefied for export to
Asia. This is by far the biggest project ever conceived in the Pacific islands.
In this context, Port Moresby might more readily contemplate transferring its 19
per cent ownership of Bougainville Copper to the island itself -- where
preliminary discussions have contemplated the autonomous government retaining 60
per cent, and the landowners taking 40 per cent.
On a pro rata basis, the owners of PNG's 19 per cent share would have to raise
$570 million towards the mine's reopening.
It is possible Chinese entities, eager to obtain reliable sources of resources,
may be prepared to help fund it, either in return for equity, or for future
copper output.

Axel,

Comments

[wellbutrin and weightloss]

Good stuff … Your post is very interesting and informative. Thanks for sharing these information!

I will wait for your another knowledgeable comment.
Thanks,
John

[Dr Uwe Gremmler]

Mining is also possible wthout poisening the environment. Biut this costs a lot af money. Take care that a good part of the income is spend for the preservation of your environment and take another part (taxes) for the development of your Island and the preservation of your identity.

Dr. Uwe Gremmler Germany

[Maria Buka Meri]

But the damage created by the mine is far more that just a big ugly hole in the ground. Due to its grand scale, opencast style mining produces substantial and long lasting damage. When ore is exposed to water and air it oxidizes and turns into sulfuric acid. During the course of mining operations, over one billion tons of waste rock, called tailings, was poured in slurry form over a 100 meter retaining wall into a tributary of the Jaba River. These tailings were a mixture of rock, sand, copper ore and other minerals such as sulphur, arsenic, zinc, cadmium and mercury, all of which promptly leeched into the water shed. This lethal mineral cocktail turned the Jaba River a bright chemical blue and the tropical ocean at the mouth of the river dead brown. By 1986, the entire river system and its flood plain no longer supported life. The land of 800 local residents was poisoned and rendered uninhabitable. However, the vast amount of tailings dumped into the Jaba River were not poisonous, much of it was merely rock and sand. But one billion tons of rock and sand is significant and was enough to fill the Jaba River to a depth of 30 meters and create a 1000 hectare delta at the river mouth. The Panguna Mine was killing the island of Bougainville (Miriori 1996; Regan 2005: 269).

[Francis Tauria]

I see no solution in the end by letting BCL back to mine that Panguna mine again.The history of crises will repeat itself unless the ownership comes down to the people of bougainville and to the government of Bougainville.Get the biggest loan ever on earth and start the mine by ourselves and import the latest technology skills in from overseas.what so hard about mining.Why give nearly more than half of our resource money to a company from overseas.I belive thats the only way to do it to improve our standard of living.

[Paulinus Evia]

Bougainville leaders, land owners and others who want the Panguna mine to be reopened. Please take note!
The company and outsiders do not care about our environment, the land and the people. All they wish for is to Waste our land and to get rich out of it while we struggle to survive.We have received so little from the mine. Can't we learn from the past experiences? If the mine should be reopened, there must be a clear understanding between the Company, Government and the people of Bougainville. We already had enough loss of lives.

[joachim]

I believe those in decision-making positions will be more wiser now having learned from our recent experience. Reopening the mine and the excitements being caused by the market value of the minerals is no problem.The market is always as good as it can be. The region needs a good overall development plan like what Fr. John Koran was talking about when he was reflecting on his trip to China. I argue that whatever development that will be developed in due course must be people-oriented, i.e. focussed on having impact on the citizens' standard of living. It may be argued that the region must be developed through the pursuit of scientific advancement. No one should argue about this in today's world but science is a means to an end. Good science is needed to better serve citizens or humanity. I do not know whether a development plan is already in place or not. The new administrative structure is not a development plan but it is something that can become a biggest consumer of the region's resources leaving less for rural development activities.

jlummani

[Bubu Meri]

$USD50 Billion!...and this whops the PNG LNG Project by a huge mile which is only $42 Billion of which PNG gets to get only about $USD500 Million from. Those who were doubting the riches of the Black Island of Bougainville, kisim this one na kaikaim nau. And this is just one part of it. Wait til the gas, oil, Limestone, Uranium, and more copper, gold, nickel and others are ready to go...

[Maria Buka Meri]

And some have sailed from a distant shore
And the company takes what the company wants
And nothing's as precious, as a hole in the ground...

Midnight Oil (Blue Sky Mining)