Grasberg expansion needs copper demand

Grasberg expansion needs copper demand

MELBOURNE (Dow Jones): A sustainable rise in copper demand is needed for before any expansion of the Grasberg copper and gold mine in Indonesia goes ahead, Rio Tinto PLC's managing director of its Australian operations, Barry Cusack said Wednesday.

"We've always looked at the potential for increasing the output there, and we have increased it, and there is potential for further (increases). The timing of that...will depend on confidence in the long term resurgence in demand for copper," Cusack told reporters after addressing the Asia Society.

The lead time between deciding and completing any expansion is likely to be 18 months to two years, he said.

Rio Tinto holds a 12.5 percent stake in U.S. based Freeport- McMoRan Copper & Gold Inc. that in turn owns 85 percent of the original Grasberg mine.

Indonesian-based interests own the balance of the mine. But Rio Tinto also has a direct 40 percent stake in a now completed expansion of Grasberg, with Freeport owning 60 percent.

Cusack said it remains "difficult to predict" the future of its 53.6 percent-owned Panguna copper and gold mine on the disputed Papua New Guinea island of Bougainville. But he warned it would also be difficult to justify reopening the mine at current copper and gold prices.

Panguna was shut down in 1989 in the wake of a secessionist rebellion on the island, a precarious cease-fire to which was signed last year. Rebels are still denying the company access to the mine.

Rio Tinto estimates the damaged mine would cost around A$1 billion to reopen.