SYDNEY--Rio Tinto PLC (RIO) said it's reviewing its options for a copper business in Bougainville, Papua New Guinea in which it holds a controlling stake, after the local government passed new mining laws that stripped the company of the lease on its mothballed mine.

"In light of recent developments in Papua New Guinea, including the new mining legislation passed earlier this month by the Autonomous Bougainville Government, Rio Tinto has decided now is an appropriate time to review all options for its 54% stake in Bougainville Copper Ltd.," the company said in a statement Monday.

Bougainville Copper (BOC.AU)--in which Papua New Guinea's government holds a 19% interest--produced copper, gold and silver at a mine at Panguna, from 1972 until 1989, when operations were suspended due to militant activity, Rio Tinto's website says. Bougainville Copper had been holding talks "for some time" with the Papua New Guinea government, Autonomous Bougainville Government and local landowners "about whether it would participate in a future potential return to mining at Panguna," Rio Tinto said in Monday's statement.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

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