Mining giant Rio Tinto (LON, ASX:RIO) has given away a 54% stake in a Papua New Guinean copper and gold mine, which has reserves estimated to be worth $51 billion.
The decision to hand back the shares in its subsidiary Bougainville Copper Limited (ASX:BOC) to an independent trustee, follows a company review of the asset that was triggered by the Bouganville government's pressure to restart mining at Panguna or give it up.
Decision follows a company review of the asset that was triggered by the Bouganville government's pressure to restart mining at Panguna or give it up."Our review looked at a broad range of options and by distributing our shares in this way we aim to provide landowners, those closest to the mine, and the people of Bouganville a greater say in the future of Panguna," Chris Salisbury, Rio's copper and coal chief executive said in a statement.
The trustee, noted Rio, will manage the distribution of its shares between the autonomous Bouganville government and the PNG government, providing them with a platform to work together on options for the resource.
In a separate statement, Bougainville Copper said its board of directors is considering the implications of Rio's move. The company's Chairman and Managing Director Peter Taylor will resign, and Robert Burns has been appointed acting chairman.
The Panguna mine was once a major producer and one of the largest open pit mines in the world. It's believed to still hold about 5.3 million tonnes of copper and 19.3 million ounces of gold. However, it could cost up to A$10 billion to restart production, The Australian reports (subs. required).
Bougainville was the mine operator until local opposition sparked a civil war and forced it to shutdown in 1989.
Rio's decision on Panguna echoes a similar move two years ago, when the company decided to give away its 19.1% stake in Northern Dynasty Minerals (TSX:NDM) (NYSE:MKT), a company leading the controversial Pebble Mine copper and gold project in the Bristol Bay region of Alaska.