Bougainville Copper loses another $67.9m

Bougainville Copper Ltd (BCL) has reported a stiff loss for the half year to June 30 of K 69.33 million (U 5567.97 million) re flecting the continuing economic haemorrhage caused by the continuing closure of the mine, a result which con trasted to the profit of K 37.77 million reported for the same period last year.

The company warned in its latest report that its mine assets were beginning to deteriorate. BCL said that reliable in formation from Bougainville Island had not been available for several months and there was uncertainty about condi tions at the Panguna mine site.

The Bougainville mine closed in May last year and, despite peace talks with the rebels who control the island, there is no prospect of its re-opening, although the company’s share price on the Australian Stock Exchange has risen on the improved chances for a settle ment. BCL directors indicated they were prepared to be involved in peace talks if a request was made by the Papua New Guinea Government.

Chairman Don Carruthers said it was likely to be some time before conditions would allow mining to resume. “We understand that the mine’s assets are being subject to weathering and the effects of disuse the extent of which is hard to estimate without inspection,” he said. The company still regarded the mine as a going concern for accounting purposes and actual charges against pro fits could vary from the abnormal pro visional costs depending upon future events.

The latest result includes an abnormal provision of K 29.52 million to cover esti mated costs and depreciation for the second half of 1990. Carruthers said it was costing BCL about K 1 million a month to cover leases, landholder com pensation, insurance and payroll costs.

The company has no revenue.

The company has taken another step toward mothballing its operations by re assigning its managing director, Bob Cornelius, to a management study pro ject with parent CRA Ltd. This con tinues the wind-down of the company’s overheads following the closure of the Panguna mine and the subsequent dec

laration of independence by Bougainville

rebels.

Cornelius has become vice president of the staff development project at CRA, which is a study aimed at improving management performance. He will re main a director of BCL. BCL’s affairs will be handled by the managing director

of CRA Minerals (PNG) Pty Ltd, lan Johnson, who is based in Port Moresby and who also oversees the Mt Rare and

Hidden Valey gold projects in Papua

New Guinea. Only 23'people remain on BCL’s payroll, and most will be located in PNG.

Reports from Bougainville indicate that the abandoned copper mine is pow beginning to deteriorate from normal weather exposure, but there has been no news suggesting that any vandalism has taken place. BCL has estimated it will cost between K 75 million (U 5571.37 mil lion) and KlOO million to reopen the Panguna mine.

Its half-year report is expected to

show another substantial loss as some staff redundancy payments will be in cluded in the interim figures. BCL re ported a loss for the year to December 31 of K 20.6 million, compared with a profit for 1988 to K 108.5 million.

Carruthers said it was likely to be “some time” before BCL could resume operations, and that was the reason Cornelius was being reas signed. Carruthers paid tribute to what he termed Cornelius’ leadership and for titude during the crisis on Bougainville Island. “In particular his efforts in mini mising the risks to employees and main taining morale were exemplary,” said Carruthers. □ PNG stake in Kutubu PRIME Minister Rabbie Namaliu has announced that the Papua New Guinea Government will take up a 22.5 per cent carried equity in the nation’s first com mercial oil field, the Kutubu project, centred on the lagifu and Hedinia fields in the Southern Highlands Province.

This seems to make almost certain that the Cabinet will approve development of the project, a decision which is expected

by November.

The field has proven reserves of 170 million barrels and, in the absence of the Bougainville copper mine, will be the na tion’s largest income producer, contri buting K 1.4 billion (billion) to Govern ment revenue over 10 years, and pro duction is expected to begin by early 1993.

The Government will now become the largest single partner in the project as each of the joint venture companies will dilute their own holdings proportionally to provide the state’s share; as it now stands, the shareholders are Chevron 25 per cent, BP 25 per cent, BHP 12.5 per cent, Ampol 21.233 per cent, Oil Search 10.017 per cent and the Japanese-owned Merlin Petroleum 6.25 per cent.

Prime Minister Namaliu said the Gov ernment had decided against appeals from several pressure groups to limit

foreign ownership of the pipeline which

will take the oil across the Southern Highlands and Gulf provinces to an offshore loading facility in the Gulf of

Papua. Chevron had previously

announced a freeze on spending until the pipeline ownership issue was settled.

Namaliu indicated that if, in the future, the pipeline was converted to common carrier status then the Government would consider taking a greater share in the pipeline. □