SYDNEY, Dec 6 (Reuters) - Papua New Guinea Prime Minister Michael Somare said on Monday efforts could be underway within two years to reopen the Bougainville copper mine as the country looks to boost exports of copper.
"We could see the reopening of Bougainville at a cost of about $4 billion," Somare told an Australian investment conference on mining in Papua New Guinea.
The Panguna copper mine on Bougainville island was closed 20 years ago following secessionist violence, preventing further exploitation of one of the world's largest deposits.
The mine was previously operated by Bougainville Copper, 53.58 percent owned by Rio Tinto .
"PNG is in the throws of becoming a major world supplier of copper," said Somare.
The mine has the potential to operate an annual rate of 200,000 tonnes of copper and 400,000 ounces of gold, making it larger than BHP's Olympic Dam mine in Australia.
Sources familiar with the project said Rio Tinto had applied to the PNG government for a 21-year mining lease over Bougainville's Panguna mine.
A Rio Tinto spokeswoman said Bougainville Copper did not have a timetable for re-opening the Panguna mine.
"There is a formal peace process underway and we are participating in that," she said.
Rio Tinto's website states that Bougainville Copper had welcomed the support expressed by local landowners and would continue to work alongside them.
The company also said it was giving practical assistance to the processes of reconciliation and social stability.
Secessionist violence ended a decade ago after a peace treaty gave the island autonomy, but there has been little economic development since then.
Papua New Guinea is rich in resources but has often struggled to exploit them due to endemic corruption, land ownership issues and poor infrastructure.
The country is ranked 154th in the world in Transparency International's annual corruption index on a par with Congo and below Sierra Leone.