Bougainville mining expectations rise amid peaceful referendum (updated)

Bougainville Copper

26/11/2019 05:58

* Two companies claim rights to mine Panguna
    * Copper demand is expected to exceed supply in next few
years
    * Some landowners don't want BCL to develop Panguna

 (Adds updated share price, copper analysis)
    By Jonathan Barrett
    SYDNEY, Nov 26 (Reuters) - An independence referendum in
Bougainville has reignited interest in copper mining in the
South Pacific island, causing a surge in the shares of the
former operator of the mine that sparked the region's war to
secede from Papua New Guinea. 
    Shares in Bougainville Copper Ltd (BCL)  BOC.AX , the former
operator of the giant Panguna gold and copper mine, have more
than tripled since early last week to trade at above A$0.40 late
on Tuesday. This coincides with the start of a non-binding
independence referendum in Papua New Guinea's region of
Bougainville that has begun peacefully and will run until Dec.
7.  urn:newsml:reuters.com:*:nL8N28300G
    The vote is a key part of a peace agreement reached in the
aftermath of a decade-long war between Bougainville's rebel
fighters and Papua New Guinea forces that ended in 1998 and
killed 20,000.
    The fighting was triggered by disputes over land royalties
and pollution in rivers near the now shuttered Panguna project.
    BCL's general manager Mark Hitchcock said in a statement to
Reuters he believed the investor interest in the company
reflected increased levels of confidence in Bougainville's
future.
    Formerly controlled by Rio Tinto  RIO.AX , BCL now counts
the PNG government and Autonomous Bougainville Government as
major shareholders. 
    It is one of at least two companies, alongside a group
including explorer RTG  RTG.TO   RTG.AX , that claims the rights
to develop Panguna, with the dispute currently being tested in
the PNG courts.
    Another Australian company, Kalia  KLH.AX , is exploring for
gold and copper on land located northwest of Panguna.
    The desire to exploit the region's resources to fund
Bougainville's potential independence comes amid expectations
demand for the base metal will exceed supply in the next few
years.
    Analysts at J.P. Morgan urged investors in a Nov. 22 note to
buy copper through early 2020 because the metal's "tighter
supply dynamic" will cause prices to rise on "bullishness" in
the overall global economy next year. 
    The result of the referendum, which offers voters the choice
of independence or more autonomy, will go before the PNG
parliament in its capital, Port Moresby, and will be subject to
negotiation.
    How Bougainville would sustain its independence is likely to
dominate those negotiations, two PNG ministers told Reuters
earlier, given the region is reliant on funds from Port Moresby.
 urn:newsml:reuters.com:*:nL3N2810S7
    The desire to exploit Bougainville's mineral riches will be
tempered by the complexities of re-building a mining sector in a
region that descended into civil war over minerals, said Paul
Barker, executive director of Port Moresby-based think tank the
Institute of National Affairs. 
    "The one thing they don't want to do is stir up antipathies,
and at the same time the government will be desperate to get
revenue in," Barker said.
    Attempts by some members of the Bougainville government to
amend the region's mining laws to give greater authority to the
state ahead of the referendum were widely criticised by
landowners, and the plans were put on hold.
    One group of Panguna landowners, the Special Mining Lease
Osikaiyang Landowner Association, has also declared that BCL
should "never again" be allowed to develop Panguna, echoing the
words of the late Francis Ona, the former BCL mine surveyor who
became leader of the resistance.     

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Bougainville Copper shares surge 350% on referendum breakthrough
hopes    https://tmsnrt.rs/2KUTysk
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 (Reporting by Jonathan Barrett in SYDNEY; Editing by Richard
Pullin and Christian Schmollinger)
 ((Jonathan.Barrett@thomsonreuters.com;))