Boston, MA 08/20/2014 (wallstreetpr) – Rio Tinto plc (ADR) (NYSE:RIO) is reviewing its stake in Bougainville Copper Ltd. It is the same firm that owns the rich deposit in Papua New Guinea. The provincial government of Bougainville passed laws this month which has encouraged Rio to review the 53.83% stake in Bougainville Copper Ltd. The clearance of laws has brought the abandoned mine in play. It is said to contain ample gold and copper resource worth more than $60 billion.
The main asset of the firm Bougainville Copper is the Panguna mine. It is located on Bougainville Island. The mine was shut down during the local protests in 1989. There was an unstable situation due to the attacks on the operations and staff. In December 2010, the cost of reopening the mine was estimated to be around $4 billion. Bougainville Copper estimated the resources at Panguna mine to be around 19.3 million ounces of gold and 5.3 million metric tons of copper. It values the worth of the mine around $61.5 billion calculated at the present rates.
The prospects of sale
Rio Tinto plc (ADR) (NYSE:RIO) can consider selling a stake in the company only if it gets the right value of the mine. If it fails to get it, it will continue to hold a stake in Bougainville Copper Ltd. Rio didn’t sell its diamond business last year as it was not satisfied with the offer price of the unit. It also didn’t opt for the initial public offering of the business unit. The sale consideration of its New Zealand and Australian aluminum unit also didn’t materialize last year.
The future ahead
The autonomous parliament of Bougainville stated in its letter that the new laws will have an impact in the mining rights and leases. Rio Tinto plc (ADR) (NYSE:RIO) has to wait and watch as Bougainville Copper Ltd. is in talks with the Bougainville government and Papua New Guinea on the matter of reopening of mine.