$1 MILLION NEEDED TO OPEN BOUGAINVILLE COPPER MINE

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PORT MORESBY, Papua New Guinea (April 20, 2000 – Post Courier)---Rio Tinto Ltd's Bougainville copper operations would require more than $1 billion to be reignited, says Managing Director Barry Cusack.

Mr. Cusack said Rio was still unable to gain access to the mine site, which is under the control of rebel forces.

"Representatives from the revolutionary army have stated they do not wish to see any resumption of mining,'' Mr. Cusack said.

He added aside from the political issues, the economics have shifted against the Bougainville operations since their heyday.

"It has about 500 million tons of ore of which about half is pre-stripped, but Bougainville was running at a time before a lot of Chilean copper came on the market and shifted the cost curve. To restart the Bougainville operations, you would have to put in well north of $1 billion and if you'd like to put a check with that sort of number into that part of the world, you'd be pretty brave," Mr. Cusack said.

He said it would only be in the long term that somebody would see the Bougainville ore body and exploration prospects as an attractive proposition.

"It would require the full endorsement of who ends up being the representative government of Bougainville," he said.

Commenting on Rio's Indonesian operations, Mr. Cusack said no production time was lost during last year's political upheaval there. Since last year, the situation had "settled down" but still posed significant challenges.

"One of the things changing in Indonesia is a evolvement of power from the center back to the provincial and local levels.

"That is creating some questions over the regulatory regime and approvals processes. I think that is putting a question mark over new investment."

Mr. Cusack said Rio's 20 per cent owned Lihir Gold Ltd was "fundamentally on a much sounder footing than it was before" following recent changes.

Lihir on Tuesday forecast gold production for 2000 of 600,000 ounces and terminated its mining contract with The Thiess-Roche joint venture. He said that with the recovery in Asia and continued growth in emerging countries, including China, the overall picture for producers of minerals and energy was positive.

For additional reports from The Post-Courier, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/The Post-Courier (Papua New Guinea).

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