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A looming global shortage of copper is refocusing attention on whether to reopen one of the world’s most contentious mines: a vast deposit in the Pacific that three decades ago was at the heart of a civil war.
The Panguna mine in Bougainville, an autonomous region of Papua New Guinea, closed in 1989 after pollution sparked a local rebellion. As many as 20,000 people, close to 10 per cent of the island’s population, died in the civil war that followed.
Once controlled by Anglo-Australian miner Rio Tinto, Panguna has been the subject of intense interest from speculators and smaller companies for more than two decades, but only in recent months has resuming copper and gold mining looked achievable.
The Autonomous Bougainville Government sees the revival of the project as critical to the island’s economic destiny following a referendum in 2019 that almost unanimously backed independence from PNG. It has tried to resolve a legal dispute over who has the rights to mine Panguna. Bougainville Copper Limited, the Australian-listed historic operator of the mine that is now majority owned by the island’s government, is confident it will be issued a new exploration licence next year.
The island’s President Ishmael Toroama also appointed himself as mining minister in September. Advisers say he is determined to set Panguna on the path towards reopening ahead of elections set to take place in 2025 in order to show progress is being made towards independence.
Melchior Togolo, chair of BCL, told the Financial Times that after years of legal disputes and wrangling over mining rights his company had achieved a breakthrough with the Bougainville government. “The project could provide financial self-reliance for the island. It is good we have worked together for the advancement of the project. It’s different to the past,” he said.
Panguna has also come back into focus because of concerns global copper supplies will struggle to keep pace with demand, which is set to rise because the metal plays an important part in clean-energy projects. Copper demand is expected to double to 50mn tonnes a year by 2035 compared with 2021, according to energy consultancy Wood Mackenzie.
Togolo said the global need for copper had increased the impetus to get moving on Panguna, which is estimated to contain 5.3mn tonnes of copper and 19.3mn ounces of gold. “Copper is the transition metal. The green energy metal,” he said.
BCL surged 50 per cent on the Australian stock exchange last month as prospects rose that a new exploration licence would be granted.
Reopening Panguna is seen as critical to making Bougainville economically independent as the island pushes to secede. The island’s vote for independence four years ago, part of a peace process agreed in 2001, was non-binding and must be ratified by the PNG parliament.
James Marape, prime minister of PNG, told a Lowy Institute event in Sydney this month that ratification was “at the doorsteps”, but stressed he would not pre-empt the parliamentary process.
Meg Keen, director of Lowy’s Pacific programme, said Panguna’s complicated history meant a reopening was not imminent.
“It is a Pandora’s Box,” she said, citing issues including revenue sharing and land rights alongside a review of the cost of cleaning the site that is being funded by Rio Tinto and is due to be published in 2024.
The mine’s toxic legacy has been highlighted by Melbourne-based Human Rights Law Centre, which has filed a complaint on behalf of Bougainville communities against Rio Tinto. When rivers choked by mine tailings overflowed this year villages were flooded.
Keren Adams, HRLC legal director, said the mine caused “massive environmental and social devastation” that communities still live with 35 years later.
“Irrespective of what the people of Bougainville decide about the future of mining at Panguna, Rio Tinto must take responsibility for addressing this disastrous legacy. Communities around Panguna need to be able to live in safety and security on their own land,” she said.
Rio Tinto declined to comment.
BCL said it would require a larger partner to develop the site. Australian, US and Chinese mining companies are all active in PNG and Togolo said he would not rule out working with any partners.
“Geopolitics is a factor not just in Bougainville but in PNG and the Pacific,” he said. “For us it is about working with someone who will share the benefits with us all.”
PNG signed a bilateral security agreement with Australia this month, which followed a security pact with the US earlier in the year. Bougainville lies between PNG’s mainland and the Solomon Islands, which has forged closer ties with China in the past two years including a security agreement.
Toroama, who wants to achieve secession by 2027, travelled to Washington in November when he met politicians and business leaders in what advisers said was a sign the government favours a North American or Australian partner for Panguna.
For Togolo, a long path lies ahead for Panguna to reopen and heal the wounds of its history. “There is still a long way to go. We have to be realistic,” he said.
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