Papua New Guinea and the Autonomous Region of Bougainville (ABG) have locked horns over who should own the copper and gold mine that Rio Tinto donated to both last month.
According to the Australian Broadcasting Corporation, PNG's Prime Minister wants to give islanders a minority stake in Bougainville Copper Limited (ASX:BOC), the former Rio Tinto's subsidiary.
But such move would prevent ABG from having a controlling share in Panguna mine, which was once a major producer and one of the largest open pit mines in the world.
It is estimated that Panguna holds about 5.3 million tonnes of copper and 19.3 million ounces of gold.If that happens, Bougainville's President said he would cancel BOC's exploration licence. The Australian-listed company was the mine operator until local opposition sparked a civil war, forcing its shutdown in 1989.
Before that, Panguna produced copper concentrate for 17 years, which represented 44% of PNG's total export earnings at that time.
Arguments over mine pollution and compensation to locals had been central to the conflict ever since.
It's believed the mine still holds about 5.3 million tonnes of copper and 19.3 million ounces of gold. However, the Bougainville Government estimates it would cost up to A$10 billion to restart production.
Both PNG and Bougainville will hold a referendum in 2019 over the possibility of Bougainville's independence.