Lloyds Metals allowed to ready restart of giant Papua New Guinea copper mine

An Indian iron ore producer was authorized to work toward restarting a giant Papua New Guinea copper mine that’s been closed for almost 40 years and was once a flash point in a brutal civil war.

Lloyds Metals & Energy Ltd. was given permission on Aug. 7 to carry out “an approved programme of preparatory works and feasibility activities” to “properly assess and plan the future redevelopment of the Panguna mine,” the Autonomous Bougainville Government said in a statement. 

While the mining lease containing the shuttered mine belongs to a government-owned firm called Bougainville Minerals Ltd., Lloyds is the “approved development partner” of that company, according to the statement.

The project is part of a global dash for copper as the trend toward electrification is expected to boost demand for the wiring metal in the years ahead. The efforts to revive the dormant asset also reflect the desire for economic development in Bougainville – impoverished islands that are currently an autonomous region within Papua New Guinea but seeking independence.

Lloyds has a fast-growing iron ore business in India and recently invested in two copper mining companies in the Democratic Republic of Congo. The firm, which is little-known outside its home country, managed to beat off competition from one of the world’s largest copper producers, China’s CMOC Group Ltd., to emerge as the Bougainville government’s favored partner for the ambitious — and likely costly — venture.

Panguna’s remaining reserves are estimated at 5.3 million tons of copper and 19.3 million ounces of gold, which would be worth about $160 billion at today’s prices. However, the mine was closed down in 1989 under the ownership of Rio Tinto Group due to local protests over environmental damage and revenue distribution, which degenerated into a civil conflict that killed as many as 20,000 people. A decade ago, Rio gave away its majority interest in the firm which then held the license.

Lloyds intends to revalidate the resource base, according to a presentation published by the company on Aug. 10.

Bougainville Minerals – via Lloyds – isn’t yet permitted to begin construction or production, according to the statement. Those phases will require separate approvals and the “redevelopment of Panguna will proceed one step at a time,” it said.

The Panguna project represents a “very positive moment for the company” but is “still under study,” Lloyds Managing Director Rajesh Gupta said on an earnings call on Tuesday. Providing forecasts about probable time frames and expenditure “at this stage is impossible,” he said.

Lloyds didn’t respond to a request for further comment.  

The 25-year mining lease was granted to Bougainville Minerals in June after the government revoked an exploration license covering the same area from Australia-listed Bougainville Copper Ltd. The government already controlled almost 74% of Bougainville Copper, with half of that stake held by Bougainville Minerals.