MAC: Mines and Communities

BHP retains ownership of destructive coal project in Kalimantan

Published by MAC on 2010-01-31
Source: Reuters, New Scientist (2010-01-27)

Last year, the world's biggest mining company announced it would sell out of a major coal project in the rainforests of Indonesian Kalimantan.

Don't for a moment think that BHP Billiton was influenced by criticisms of its role in boosting global greenhouse gas emissions, or the destruction that the mine would inevitably wreak.

The decision was largely due to the fall in market prices of the black stuff during the first half of 2009.

Now the company seems to have decided to hang on to this highly dubious venture, albeit selling a minority stake.

That's not at all good news for a community of orang-utans whose habitat now looks like being destroyed by the mine if it goes ahead as originally planned.

[Comment by Nostromo Research: As reported in a curiously inane story in  New Scientist last July, BHP Billiton had agreed to airlift the orang-utans out of their forest dwellings to a newly-created reserve.

Twenty years ago Rio Tinto collaborated with WWF in a similar scheme - when the world's biggest "conservation" organisation got the right to operate a national park in East Kalimantan, in exchange for not opposing the UK company's plans to open its own massive coal mine, Kaltim Prima, right on the edge of the park.

Compared with BHP Billiton, Rio Tinto is the master of the "nature for mining" swap - as evidenced by its proposals for a new mine in Arizona. See: http://www.minesandcommunities.org/article.php?a=9780]

BHP to sell stake in Maruwai coal

The global miner says it is looking to sell a 20 to 25% stake in the coal project in Indonesia's Kalimantan

Fitri Wulandari, Reuters

27 January 2010

JAKARTA -Mining group BHP Billiton wants to sell a 20 to 25 percent stake in its Maruwai coal project in Indonesia's Kalimantan on Borneo island, the head of one of the group's local units said on Wednesday.

The decision to keep a majority stake, after BHP last year signalled it would not develop the project in the world's top thermal coal exporting country, may show bids for the whole project were too low or that BHP sees better coal fundamentals.

"We want to keep a majority stake in the Maruwai coal project. So we are looking at selling a 20 to 25 percent stake," said Indra Diannanjaya, president director of PT Juloi Coal, one of seven coal miners in the BHP Maruwai project.

"But if a business deal fails to take place, BHP would retain 100 percent. We are financially capable of developing the project," he said.

Sources told Reuters last year Indonesian coal miners PT Bumi Resources, PT Adaro Energy and PT Indika Energy were among the bidders for the Maruwai coal project.

One said the world's largest miner had received bids both for 100 percent of the project -- valued at roughly $500 million -- and also for 25 percent stakes.

Diannanjaya did not say why BHP was keeping a majority stake, but said no decision has been made on a winning bid.

Local Indonesian media have reported Adaro is the likely winner, but Adaro declined to comment. "We always look at every opportunity for acquisitions," Andre Mamuaya, Adaro's corporate secretary, told reporters.

The Maruwai coal project is expected to start commercial production in 2014 and output is then seen reaching 6 million tonnes of both thermal and coking coal within five years, Diannanjaya said.

The project will need between $500 million and $1 billion to produce 6 million tonnes, he said. BHP plans to build a railway connecting the mine to the nearest barge-loading ports to help expand production, Diannanjaya said.

BHP Billiton said in June last year it would not go ahead with the first stage of the project because it did not fit with the company's long-term investment strategy, but government officials said subsequently it was opting to sell a stake.

BHP hired UBS (UBSN.VX: Quote) to run the sale, sources have said.

Cold spells sweeping across the globe have brightened the prospects for producers of thermal coal, used for power generation, after demand for the fuel had only been expected to pick up by 2011 following the financial crisis.

Indonesia's coal mining association forecasts 2010 output at 280 million tonnes, up from about 260 million in 2009. (Writing by Neil Chatterjee; Editing by David Holmes)

© Thomson Reuters 2010 All rights reserved


Mining company abandons orang-utan airlift

New Scientist

30 July 2009

SOMETIMES you just can't win. Anglo-Australian mining giant BHP Billiton was accused of hypocrisy when it announced plans to airlift 48 orang-utans into a new wildlife reserve in Indonesian Borneo, as it was simultaneously preparing to destroy the apes' habitat not far away with its Maruwai coal-mining project.

Now, two years on, it is coming under fire again in stories carrying headlines along the lines of "Hope of freedom for orang-utans dashed". True, BHP is abandoning the airlift - but that's because it is pulling out of the mining project too, citing a dramatic fall in world coal prices in the past year.

Whether that is good news for the orang-utans remains an open question. The fear among environmental groups is that loggers, palm oil farmers and possibly other mining companies will move in on the forest vacated by BHP. Without the alternative accommodation previously offered by BHP, the orang-utans will once more be vulnerable.

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