Originally published by Pacific Forum, this article is republished with permission.
An Indian iron ore company, a bilateral agreement between Washington and New Delhi and the Trump administration’s America First policies may hold the key to the final resolution of a long-standing political dispute between the government of Papua New Guinea and a state seeking complete political autonomy.
India’s Lloyds Metals and Energy Limited was endorsed in November 2025 by the PNG Autonomous Bougainville Government’s Executive Council to redevelop the Panguna mine project.
The local firm Bougainville Copper Limited is the lawful exploration license holder of the mine’s redevelopment project, but it lacks the financial and technical capacities to reopen the mine independently.
On January 14, 2026, the Bougainville government officially became the sole majority shareholder of Bougainville Copper, with a 72.9% stake.
Although the local company during bidding proposed engaging the Chinese-based giant miner CMOC Group Limited, the Bougainville government rejected CMOC’s proposal as it included a condition diluting the autonomous government shares to CMOC as part of the partnership.
Contribution, closure and redevelopment
The Bougainville government’s decision to engage Lloyds Metals to reopen Panguna mine came amid consultations between the autonomous government and the central government of PNG over Bougainville’s political independence.
Almost 98% of the estimated population of 300,000 Bougainvilleans had voted in favor of breaking away from PNG and becoming an independent state, in a 2019 referendum that was held in accordance with the Bougainville Peace Agreement reached in 2001.
While the decision to reopen Panguna mine has provided optimism and leverage to the autonomous government and its people regarding determination of Bougainville’s economic future, the region’s political future remains a constitutional matter – to be decided by the government of PNG and its National Parliament, even though the autonomous government has set September 1, 2027 as a de facto deadline for effective political independence.
Panguna is not an ordinary mine. Since it reached full operation in 1972 it greatly contributed to the economic and political development of Papua New Guinea through a period of self-government in 1973 to becoming an independent sovereign state in 1975, and beyond.
During the mine’s 17-year operation between 1972 and 1989, Panguna produced significant quantities of high concentrates of copper, gold and silver. But only 2% of the profits were shared with the mine’s local ownership – despite the mine’s contribution of almost 44% of PNG export earnings, generating approximately 17% of the country’s internal revenue during Panguna’s operation.
The Panguna mine was closed in May 1989 as disgruntled locals, angered by unequal distribution of profits and severe environmental damage caused by toxic waste disposal, demanded justice from the government of PNG and the Rio Tinto Group, the Panguna mine’s then-owner, which was the majority shareholder of Bougainville Copper. This explosive issue led to the outbreak of a decades-long civil war claiming more than 15,000 lives.
As one of the world’s biggest open pit copper and gold mines, Panguna has remained dormant for nearly four decades since its closure. The autonomous government’s decision to reopen the mine comes at an enormous cost in the short term but the move could result in long-term benefits if done properly given the mineral deposits beneath the cratered mine site.
A Bougainville Copper 2021 study indicated that the redevelopment phase would take seven years, with an estimated $6 billion upfront investment, before Panguna mine could fully operationalize.
According to the study the mine holds estimated reserves of 5.3 million tons of copper and 19.3 million ounces of gold – the whole worth a combined projected value of $160 billion at the current market price.
The decision to reopen the mine by the incumbent Bougainville Autonomous Government leadership comes with a challenge raised by its predecessor government: whether resource mobilization is adequate to ensure the mine reaches its production stage under the current redevelopment partnership arrangement.
The redevelopment efforts at Panguna mine comply with the region’s regulatory framework. The redevelopment phase of Panguna mine is explicitly detailed in the Bougainville Copper’s exploration license referring to compliance measures of the 2015 Bougainville Mining Act. The plan entails primarily pre-feasibility and feasibility studies focusing on the identification of land ownership and accessibility; social mapping; and geological, engineering and environmental baselining.
After Lloyds Metals was endorsed by the autonomous government, the Indian miner on April 20 this year incorporated Lloyds Panguna Metals and Energy Ltd as its subsidiary to commence the redevelopment phase in partnership with Bougainville Copper.
The US-India Critical Minerals Framework and Bougainville’s position
The US and India, classified among the largest consumer markets globally after China on critical minerals and rare earths, agreed in May 2026 to strengthen their industrial and manufacturing capacities through the Strategic Critical Minerals Cooperation Framework.
The bilateral framework aims to ensure supply chain resilience and diversification, including collaborative engagement – domestic and international – on mining, processing, recycling and financing of critical minerals and rare earths.
More importantly, the Critical Minerals Framework between Washington and New Delhi is also an expansion of the US-led Forum on Geostrategic Engagement (FORGE), a multilateral initiative of 17 like-minded partner nations to coordinate advancement of policy and project-level initiatives through public-private partnership arrangements aimed at securing a resilient supply chain on critical minerals and rare earths.
Since its launch at the inaugural Critical Minerals Ministerial on February 4, FORGE has advanced President Donald Trump’s “America First” diplomacy on critical minerals through bilateral agreements and memoranda of understanding with allied and partner nations, including India.
It has also supported project-level initiatives worth more than $30 billion, both in the US and abroad, in partnership with the private sector through investment mechanisms such as letters of interest and loans on securing the critical minerals supply chain.
Most critical minerals and rare earth initiatives are carried out and funded, both in the US and overseas, by a few selected US federal agencies, including the Export-Import (EXIM) Bank of the United States.
The Autonomous Bougainville Government has options to choose from, given its unique position on Panguna mine’s redevelopment efforts. Since January this year, the govvernment has played two distinct roles on Panguna mine’s reopening process. First is being the majority shareholder of Bougainville Copper, the lawful holder of the license. Second is being regulator of Panguna mine under the 2015 Bougainville Mining Act (including its subsequent amendments).
The engagement of Lloyds Metals as Bougainville Copper’s partner to advance the license for Panguna’s redevelopment already indicates the autonomous government’s full authority over the mine’s future. It took the decision a decision without any intervention from the government of PNG and its mineral regulations.
Regardless of Bougainville’s status as a non-sovereign state, the autonomous government holds a substantial amount of power to determine the Panguna mine’s current and future development trajectories. It could leverage that position to negotiate mutually beneficial deals for Panguna mine’s redevelopment through multilateral financing arrangement should there be a need to do so.
Advancing the current redevelopment partnership efforts of Panguna mine project through the US-India Critical Minerals Framework might be a negotiating platform the autonomous government could rely on. FORGE, as the foundation of the Washington-New Delhi Critical Minerals Framework, not only provides the financing platform but also captures the essential elements of Bougainville Copper’s license on sustainable mining practices with respect to the environment.
If the autonomous government decides to do so, this does not necessarily mean disregarding its current redevelopment partnership deal on the Panguna mine project, but, rather, reinforcing it to ensure additional support in the redevelopment phase to reach production, the ultimate goal that Bougainville’s incumbent executive government so desperately desires.
Panguna’s seven-year duration and an estimated initial $6 billion capital investment for the mine’s redevelopment is probably one of the world’s longest and most costly projects, as suggested by Bougainville Copper.
The non-operational and dormant nature of the mine for almost 40 years requires, in a pragmatic sense, additional financial and technical support to strengthen the mine’s current redevelopment efforts. It’s completely up to Bougainville’s executive government to decide as the majority shareholder and regulator of the Panguna mine project.
At this stage, the autonomous government’s priority – a higher priority than even political independence by September 2027 – should be to ensure that the Panguna mine begins production.
Since 2001, the PNG government has upheld the terms of the Bougainville Peace Agreement through continuous dialogue and consultation with the autonmous government, reducing the urgency of effecting complete autonomy now. The 2019 referendum’s result was the clearest indication of how serious the government of PNG is in honoring the terms of the agreement.
If the PNG National Parliament should decide to grant political independence to Bougainville through ratification in favor of the 2019 referendum results, then the Bougainville government would require $350-$485 million annually to run its own sovereign affairs, as suggested by Harvard’s Growth Lab study published in March 2026.
Since becoming fully autonomous in 2005, the Bougainville government has only generated 5% of its internal revenue while the rest has come from the PNG government and external partners.
The key area the Bougainville government’s executive leadership should prioritize is economic preparedness, which currently is a prerequisite for its political independence efforts. And the only way to achieve that is to ensure that the Panguna mine begins production.
In that sense, leveraging the US-India Critical Minerals Framework is essential for achieving the ABG’s political objectives, even more than independence itself.
Moses Sakai (moses@pacforum.org) is a Fulbright visiting scholar at Pacific Forum and former Resident Lloyd and Lilian Vasey fellow. He previously worked as a research fellow at the Papua New Guinea National Research Institute and was a visiting scholar on US foreign policy at the University of Delaware under the US State Department’s Study of the US Institute (SUSI) for Scholars Program.
The dumb leading the blind down the garden path.