Copper

Bougainville Copper expands

Bougainville Copper, which is planning a multi-million kina ex pansion programme, has been hav ing talks with the Japanese over the five-year copper treatment agree ment under which the Japanese smelters treat Bougainville copper.

The talks have ended in an agree ment over a formula which will determine treatment charges and in cludes indexation machinery. The Japanese, whose smelters are having to cope with a depressed world market, believe that there will be no significant rise in copper prices until 1980 at the earliest.

Bougainville, which recently re ported a profit drop for 1976 from K 42.8 million to K 41.3 million, faces a large loan repayment in the first quarter of 1978 of US$7O and a capital expansion programme of around K4O million a year. Its fleet of 100 tonne trucks will be replaced with 170 tonne vehicles and Kl 2 million will be spent on a drainage tunnel which will cut the present electrical pumping costs.

One big question facing Bougain ville Copper and the PNG Govern ment is whether Papua New Guinea should have its own smelter. The company, which has already com pleted a feasibility study of the pro ject, believes that a smelter would not be a viable proposition, especially with depressed copper prices and rising operation costs.

The PNG Government, however, with OK Tedi and Frieda River in mind, sees itself as one of the world’s biggest potential copper producers. It is also looking at the possibility of building a hydro electric power station on Bougain ville, a development which would be more attractive if a smelter became one of the customers.

Bougainville Copper is optimistic about the future. Its labour relations are now considered to be excellent; it has established machinery for maintaining good community rela tions and PNG is now regarded by the World Bank as a stable nation and a “good risk”.