Saboteurs hurt big copper firm

Press, 26 June 1989, Page 28

Saboteurs hurt big copper firm

By Mary-Ellen Barker of AAP (through NZPA) Melbourne Bougainville Copper, Ltd, has dug up 1.21 billion tonnes of ore, earned sAustl.s2 billion (SNZ2.O2 billion) and paid out sAustl.22 billion in dividends in its 18 year existence, now it is losing sAust3 million a week. Sabotage by rebel landowners forced the mine to close on May 15, and last week the company began to lay off 300 of its 3600 employees. The Government of Papua New Guinea has announced a state of emergency in Bougainville from this week. Company executives said the mine would not reopen until workers’ safety could be guarenteed, and those in the industry say this may not happen for several months. One of the world’s 10 largest copper mines, located 1000 km east of Port Moresby, Bougainville was a landmark for the resources industry when it was established in 1972. "What’s happened now is a disaster,” an analyst said. “The agreement with Port New Guinea when the mine was started was a model of its kind for a very long time, standing as an example of what developments could be done in the Third World — so the fact that it has fallen in a hole is very worrying,” the analyst said. Mr Peter Richardson, an analyst with ANZ McCaughan, said the major impact of Bougainville was yet to come. “If they declare force majeure on their July and August shipments it will really have an effect,” he said. (Force majeure is an unforeseeable course of events excusing from fulfilment of contract.) The company’s output of about 570,000 tonnes a year of concentrates accounts for about 2.6 per cent of annual world copper production. Analysts estimate every USIOc increase in price of copper lifts Bougainville Copper’s revenue by sAust43.2M a year.' That would be good news under normal circumstances, but without mining there is no revenue — just the mounting costs of paying idle workers. The rising copper price has lifted share prices and earnings estimates for other copper producers, such as MIM Holdings, Ltd. The prospect of severe damage to Bougainville Copper’s earnings has also put pressure on the share price of CRA, which earned 16 per cent of its $449M profit last year from Bougainville. “It’s a crying shame. Bougainville is a very well run organisation from a financial point of view, and operationally it performs well too — when it runs,” one metals analyst said.