MAC: Mines and Communities

BHP Billiton isn't putting another nickel in

Published by MAC on 2010-01-11
Source: Reuters

Recently there's been some speculation that BHP Billiton - the world's biggest mining company - may be about to exit from nickel production.

In 2008, it pulled out of the Gag Island project in West Papua. See:

The following year, the company also sold a major nickel refinery in Australia. See:

Then, last month, BHP Billiton withdrew from a controversial nickel joint venture in the Philippines.

BHP sells out of Philippine nickel project


22 December 2009

MANILA/SYDNEY - Global miner BHP Billiton Ltd/Plc  has pulled out of a $2 billion nickel project in the southern Philippines after selling its 40% stake to a local partner.

The project was BHP's only mining venture in the Southeast Asian country and the move could be part of the miner's plan to exit the nickel business as early as next year after selling two major nickel divisions in four months.

In a statement e-mailed to Reuters, BHP said it signed a sales agreement for the stake with Asiaticus Management Corp of the Philippines, which is controlled by Filipino businessman Peter Tan and already owns 60 percent of the undeveloped nickel mining and processing project in the southern Mindanao region.

BHP and Asiaticus had been at odds over when to start commercial production. Asiaticus pushed to begin as soon as possible, while BHP wanted to wait until 2015 at the earliest, Environment and Natural Resources Secretary Lito Atienza told Reuters in a telephone interview.

In 2007, the Philippine government announced that BHP would invest up to $2 billion in the country.

The mine is estimated to have 200 million tonnes of nickel ore reserves with 1.3 percent nickel.

BHP had spent about $3 million on exploration, according to government data.

"The BHP people have assured us, though, that they are definitely going to stay in the Philippines and continue their interest of developing some of the natural resources we have," Atienza added.

BHP declined to give commercial details of the sale.

BHP last month signed a joint venture agreement with state-run PNOC-Exploration Corp to develop the West Balabac offshore oil in the Palawan Basin, with BHP taking a 75 percent interest.

The Philippines is targeting its mining sector, one of the world's largest and most profitable in the early 1970s, to attract up to $14.5 billion in investments by 2013.

But only around $2.4 billion has flowed in since 2004 due to communist insurgencies, disputes with local communities and partners and opposition from the Catholic Church.

Since backing out of its Gag Island nickel joint venture with Indonesia's PT Antam Tbk 13 months ago, BHP has sent mixed signals about nickel.

The company still produces around a tenth of the world's nickel each year from operations in Australia and Colombia, but earlier this month it agreed to sell its Ravensthorpe laterite nickel project to First Quantum Minerals (FM.TO: Quote) for $340, and in July it sold its Australian Yabulu refinery to a local mining magnate, signalling that nickel, bought by stainless steel producers for alloying, has less-favoured status in BHP. (Reporting by Manolo Serapio Jr in MANILA and James Regan in SYDNEY, Editing by Ian Geoghegan)

BHP Billiton pulls out of Philippine nickel mining project but CAFOD continues call for new consent process

CAFOD Press Release

7 January 2010

Anglo-Australian mining giant BHP Billiton has cut ties with a controversial nickel mining project on a Philippine island community. The project funded and operated by BHP Billiton and worth US$22.7 billion, came under heavy criticism from a CAFOD report over allegations of bribery by BHP Billiton's local joint venture partner AMCOR. BHP Billiton has sold its stake in the project to AMCOR.

But CAFOD is reiterating its call for a new, independently monitored community consent process to be carried out before any mining goes ahead in Macambol.

CAFOD's extractives policy analyst Sonya Maldar said: "Despite BHP Billiton's withdrawal from the Hallmark project, it looks like the company's former partners will proceed with the nickel mine. Given the serious flaws in the official consent process, AMCOR and any future partners in the project cannot use this to push ahead with mining in the area. There must be a new consent process that is genuinely free and fair before any mining can proceed at Macambol."

"The community should be given sufficient information about any new project and all its potential impacts so they can make an informed decision about whether it should go ahead or not."

BHP Billiton's withdrawal from the project follows a series of disputes with former partner company AMCOR and a dip in nickel prices.

CAFOD's 2008 report 'Kept in the Dark' documented instances of bribery by AMCOR and government officials of local people to back the mine project. Also highlighted were flaws in the consent process, lack of transparency and the potential impact on the environment.

Lilia Paglinawan of the Interfaith Movement for Peace Empowerment and Development (IMPEDE) in the Philippines said: "We fear the impact of this huge mining project on the environment and the livelihoods of the farmers and fishermen in Macambol and beyond. Before the government approves AMCOR's activities, there must be an independent study of the impacts of this project on the nearby Pujada Bay and Mount Hamiguitan protected areas. This information must be made available to those who stand to be affected by the project."

Sonya Maldar added: "BHP Billiton's distancing of itself from this project is not the end of the story. The people and environment of the Philippines are still at risk from poor practices within the mining industry. Despite claiming to be an industry leader, BHP Billiton's management failed to ensure that the company and its partners met the highest standards at the Hallmark project and this impacted on its licence to operate in Macambol. These issues, which are often seen as more marginal to a good business model, can develop into serious business risks if left unaddressed, leading to loss of investment to shareholders."

Notes to editors:
For more information contact Pascale Palmer +44 7785 950 585

To download CAFOD's Kept in the Dark report:

Pascale Palmer
Advocacy Media Officer


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