Unless PNG sees reason, it won’t mine in Bougainville, says Momis
19 July 2016
KEITH JACKSON
A SPECIAL week-long session of the Autonomous Bougainville Government (ABG) sits from today to discuss the shock decision of Rio Tinto to divest all of its shares in Bougainville Copper Ltd.
Three weeks ago Rio Tinto decided to quit its controlling equity in Bougainville Copper Ltd and split it so that both Papua New Guinea and Bougainville governments have an equal share.
This would give each government 36.4% percent of BCL despite Bougainville's determination to secure a majority stake.
Bougainville's President John Momis remains confident he can persuade the PNG government to allow Bougainvilleans a controlling stake.
He says the best way to re-open the Panguna copper and gold mine – shut down as Bougainville moved into a civil war in 1989 - is for his government to get a majority shareholding.
"Even if Rio Tinto walks away, BCL could go ahead with the Bel Kol (reconciliation) and we can have the mine re-open," Dr Momis told Radio New Zealand.
"Outside of that [there is a] lose/lose situation where the national government and BCL might have the majority shareholding but they will not have the right to operate in Bougainville," he said.
Under the Bougainville Mining Act, if 25% or more of shares in a company holding an exploration licence are transferred, the ABG must initiate action to terminate the lease.
The transfer of more than half the shares by Rio Tinto to a trust means that the termination process must now begin.
Is Rio Tinto selling or giving away its shares in BCL, if it is selling, then who is providing the finance for the buyer?
These things should made known to the media, because the public has a right to know.
Further, the mine is no longer the hugely profitable venture it once was, otherwise RT would not be divesting its shareholding.
That said, all of the shares should go to Bougainville, not just a majority, with a significantly large parcel going to the landowners including Loloho, Jaba river and the road to the mine.
Nothing to the PNG government, because ever since the initial establishment of the mine, both pre and post independence, it (the government) has done and/or condoned more than enough damage to the area and its people.
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Rio Tinto is relinquishing its equity - giving it away. There have been many comprehensive articles on this matter in PNG Attitude and other media over the last month. I suggest you read them - KJ
Posted by: Hanns Wetzel | 19 July 2016 at 09:13 PM
I met Paul a couple of times and he indeed was a straight shooter who kept to his word. It's a pity he's gone.
I'm not sure everyone on Bougainville trusts BCL though but I guess if Momis does it's good enough. It seems like a tenuous reason to invite them back.
Perhaps it will work itself out if O'Neill goes. I wonder if Momis has been talking to the Opposition.
Posted by: Philip Fitzpatrick | 19 July 2016 at 12:00 PM
Thanks Keith. Is there a current mining lease over Panguna and, if so, who holds it?
I presume it's been cancelled or somehow transferred somewhere else under the new Bougainville Mining Act.
If BCL don't hold the lease and have no ELs elsewhere they can't have many assets beyond that $A92m. In which case why would the ABG want them to come back?
Without Rio they are just another tinpot mining company who will have to raise funds to re-open the mine - no doubt from China.
It's all a can of worms.
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There is no current exploration or mining lease anywhere in Bougainville. BCL's lease lapsed last year when new legislation was passed through the ABG. Why does the ABG want BCL back? The company is trusted, a position largely built up over many years by the late Paul Coleman, who sadly died last year, and continued by his successors - KJ
Posted by: Philip Fitzpatrick | 19 July 2016 at 11:39 AM
This is getting very confusing.
What exactly are the shares in - BCL or the Panguna mine?
And how much are they worth?
If the lease is terminated and the shares are in the mine presumably they become worthless.
If the shares are in BCL, which loses its reason for being what happens then?
It will a bit like a company set up to mine on the moon, completely pointless.
What are the plans for its future sans Panguna?
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Rio's shares (now in trust pending re-allocation) were in BCL.
The most recent market cap of BCL is a bit over $A92 million.
BCL currently holds no exploration or mining licence in Bougainville, although the ABG has indicated it would prefer BCL to any other company.
The ABG, probably sometime in the next 12 months, will seek tenders for an exploration licence or licences.
Whether BCL will be a going concern or not depends very much on its ownership structure.
If the PNG government insists on an equal share with the ABG, the company may well end up being worth nothing as the ABG imposes the conditions of its Bougainville Mining Act.
Meanwhile BCL has pretty much wound down most of its activities pending the clarification of its new ownership structure and decisions that will be made by its new board.
- KJ
Posted by: Philip Fitzpatrick | 19 July 2016 at 08:33 AM