Rio held 53.8% of the company, which has been working towards the resumption of mining of the giant Panguna copper deposit in Papua New Guinea after the mine was closed in 1989 following civil war.
The stake is worth around $A45 million at current market prices.
New owner Equity Trustees will manage the distribution of the shares between the Autonomous Bougainville Government (ABG) for the benefit of all the Panguna landowners and the people of Bougainville and PNG.
Under the trust deed, the ABG has the opportunity to receive 68% of Rio’s shareholding (which equates to 36.4% of Bougainville shares) from the independent trustee for no consideration and PNG is entitled to the remaining 32% (which equates to 17.4% of Bougainville shares).
The ABG and PNG will both hold an equal share in BCL of 36.4% if the transfers are completed.
Rio placed its stake in Bougainville under review in August 2014 after the Bougainville Mining (Transitional Arrangements) Act 2014 was passed by Bougainville’s Parliament.
It gave Bougainville an exploration licence for the area where a mining lease was previously held.
Rio Copper & Coal CEO Chris Salisbury said the review looked at a broad range of options, but the distribution of shares gave locals a greater say in the future of the mine.
“The ultimate distribution of our shares also provides a platform for the ABG and PNG government to work together on future options for the resource,” he said.
Bougainville chairman Peter Taylor, a representative of Rio, will resign from the board.
Shares in Bougainville rose by 5% to 21c, while Rio shares gained 2.5% to $45.94.