A joint communique issued earlier this month by Papua New Guinea’s Prime Minister James Marape and new Bougainville President Ishmael Toroama has committed them to moderated ‘joint consultations’ over the autonomous region’s desired independence. It has again brought focus on the future of the island’s massive Panguna copper and gold mine.

The Panguna mine

Last week, the share price of Bougainville Copper Limited (BOC), a company that has had no mining production since 15 May 1989, doubled in value on the Australian Securities Exchange following increased trading in its shares.

While the company told the ASX it was ‘not aware of any reason’ for the price change, it is noteworthy that the last hike in the company’s share price followed the overwhelmingly pro-independence referendum by the people of Autonomous Region of Bougainville (ARB) in December 2019.

PNG’s James Marape and Bougainville’s Toroama during the presentation of the joint communique. Credit: PM’s Office

BOC’s future remains inextricably linked to the future of the Panguna copper and gold mine that has lain dormant in Bougainville since 1989, and independence for the autonomous region is considered a necessary step if the mine is ever to re-open.

Legally, independence can only be granted to ARB by PNG’s Parliament.

Acknowledging the results of the referendum, the joint communiqué states that ‘upcoming joint consultations will be moderated by an appointed Moderator and will be, but not limited to, addressing the key issues on the future political status of Bougainville, the method of endorsement by the National Parliament and the Documentation of record of the joint consultation.’

Prime Minister Marape also said in his New Year’s message that ‘Bougainville held a referendum under my watch. We now intend to work with the Bougainville Government to fully empower them in between our efforts to find a full political settlement.’

It would therefore seem likely that speculative investors have seen the communiqué as a sign that the ARB’s move towards independence has been restarted and with it, the prospects for the mine’s reopening.

Major asset

The Panguna mine would be the single major asset of an independent Bougainville. It was one of the world’s largest copper mines and at one point it accounted for two-fifths of PNG’s GDP. The asset has been valued at A$75 billion (K204 billion) and represents a high risk, high reward investment. The mine has estimated reserves of one billion tonnes of copper and 12 million ounces of gold, according to Porter Geo Consultancy. It has been estimated that the investment to get the mine production-ready would be about K16.3 billion (AUD$6 billion).

Currently, Bougainville Copper is jointly controlled by the PNG State and the ARB-owned Bougainville Minerals Limited, which both control a 36.4% share in the company. In March 2020, the PNG government reportedly said it would fully transfer its 36.4 per cent share to the ARB, but this has yet to occur.

Indeed, earlier this month, the Chairman of the Panguna Tangku’urang landowners group Vincent Bangki issued a statement demanding that the national government  transfer its share to Bougainville Minerals, noting that ‘financial independence of our country can only come from the re-opening of Panguna’.

Jostling

That is not to say that BOC is guaranteed as the operator of any reopened Panguna mine. Other mining companies have also been jostling for position.

In a separate statement, Vincent Bangki announced Jeff McGlinn, a former Managing Director of ASX-listed NRW Holdings, and Perth-based company Caballus Mining as the landowners’ ‘partner in re-opening the Panguna mine’.

‘The ABG had already chosen Caballus as their partner and were just awaiting for Panguna Tangku’urang Chiefs to perform their own due diligence.’

‘At the recommendation of the ABG [Autonomous Bougainville Government], the Panguna Tangku’urang Chiefs performed our own due diligence on Jeff [McGlinn] and sent our former Chairman, Edwin Moses to Perth to spend three weeks with Jeff in Perth. Whilst in Perth, Jeff arranged for a meet and greet with the Deputy Prime Minister and Attorney General of Australia, Mayor of the Shire of Swan, took him to meet one of Australia’s largest engineering companies, Calibre Group and various other businesses that would in future benefit Bougainville.

‘Edwin returned back to Bougainville and advised the Panguna Tangku’urang Chiefs that he agreed with the ABG, that Jeff and Caballus would indeed make the perfect partner. The ABG had already chosen Caballus as their partner and were just awaiting for Panguna Tangku’urang Chiefs to perform their own due diligence.’

Until ARB’s independence and the future of Panguna are finally resolved, BOC’s share price is likely to continue as one barometer of confidence in the future of both.