Trading Bougainville Copper (ADRs) 867948

www.radionz.co.nz/international/...over-bougainville-share-row
3:12 pm today

The Papua New Guinea Prime Minister Peter O'Neill has warned Bougainville's John Momis not to play politics over Bougainville Copper Limited shares.

Mr O'Neill sparked fury in President Momis last week by handing the national government's shares in BCL to landowners on Bougainville rather than to the Autonomous Bougainville Government.

Mr Momis said this threatened the peace process and he said his government could well pull BCL's exploration licence, which would make the shares worthless.

Mr O'Neill said Mr Momis was trying to manipulate the peace process for political gain.
Papua New Guinea Prime Minister, Peter O'Neill (left) and the Bougainville President, John Momis (right)

Papua New Guinea Prime Minister, Peter O'Neill (left) and the Bougainville President, John Momis (right) Photo: AFP/RNZI

He said the ABG was very welcome to participate in the consultation process with the landowners, but the shares would go to the people who had a direct stake in the mine.

Mr O'Neill said the views of the National Executive Council were final.

He said the government was committed to advancing the peace process, and not play petty politics that could only undermine peace.

Mr O'Neill said he gave the shares to the landowners so that the ABG could not have outright control of the mine.

He said this was better for transparency, and ensured that shares were in the hands of the traditional people to whom they belonged.

He tells Business Advantage PNG this became an issue after Rio Tinto walked away in June, dividing its shareholding in Bougainville Copper Ltd (BCL) equally between the ABG and the national government.

This week, Prime Minister Peter O’Neill reportedly said the government would give its shares to landowners, drawing the ire of Momis, who believes the ABG should be given those shares, giving it a majority shareholding.

   ‘I think in general the landowners support the ABG’s option that the shares should be given to the ABG to be distributed to the landowners under our own mining law,’ he says.

O’Neill has not yet said which of the nine landowner groups would be given the national government’s 17 per cent shares in BCL, nor how those shares would be distributed.

Share dilution

Momis says while the majority of Bougainville landowners support the ABG being given the 17 per cent shareholding, a minority support O’Neill. Momis says they are being ‘misled’.

   ‘When we invite a new developer, they will come with technology and capital and, of course, they will also want [a high level of] shareholding which means the current shareholders will have their shares diluted very much.’

Momis says the amount of shareholding an operator would have is ‘something we would have to negotiate with them.’

   ‘But what we do know is that they will want equity and not just a small amount because they will be very powerful and the current shareholders will have their share diluted—particularly the 17 per cent if it goes to landowners.

   ‘The landowners may end up with nothing.

   ‘Under our proposal, our mining law says—it is a legal requirement—that the landowners (receive) five per cent free carry in a fully developed mine.’

   ‘If the mine starts, it might expand and extend its operations into other areas, which would entail having more landowners. If the ABG held the shareholding it would take care of new landowners.’

Investment vehicle

Last month, the ABG issued a ‘show cause’ notice to BCL, as to why its exploration licence over Panguna should not be rescinded, after Rio ended its management agreement with BCL. Momis says the ABG has ‘not decided yet’ whether to rescind the licence.

At the moment, BCL’s major asset is its mining data, which Momis agrees would be ‘useless if we took away the exploration licence’.

   ‘If we don’t have majority (ownership) then it would put us in a situation where we could not agree on access to the data and that doesn’t help us.

   ‘That’s why we are saying a win-win deal would be to accept our proposal and then allow BCL to unblock and make use of the data.’

Rehabilitation

Momis estimates it would take ‘something like K20 billion to reopen the mine.’ The process could take five years. An incoming mine operator may need to factor in this rehabilitation cost should proposed legal action against Rio to force it to pay for a clean up fail.

Momis says the legal action is the result of Rio refusing ‘to accept any responsibility for the legacy issues, such as environmental damage and the social disruption, health consequences’.
ramunickel | August 25, 2016 at 12:51 pm | Tags: ABG, Bougainville, Environmental damage, John Momis, Landholders, Panguna, Papua New Guinea, Peter O'Neill, Rio Tinto | Categories: Financial returns, Mine construction, Papua New Guinea | URL: wp.me/pMvf7-4VG