Anglo-Australian miner BHP Billiton will pull out of most of its remaining investments in Indonesia, ending its 25-year local presence in mining, transport and in other fields, the company announced on Tuesday.
Company officials said Indonesian projects were no longer strategic to BHP’s future.
“Our strategy going forward is to concentrate on our Bowen Basin assets in Queensland,” said Samantha Evans, BHP Billiton’s media relations manager said from Melbourne, Australia, adding that the company would continue to maintain a Jakarta office.
“All Indonesia projects are in the process of being halted,” said Indra Diannanjaya, president director of PT Lahai Coal, one of BHP Billiton’s fully owned subsidiaries in the country.
“It was the results of a review from our headquarters that, although output is expected to be high-grade coal, it doesn’t suit the company’s long-term plan.”
About 450 jobs will be lost across the country, mostly from the Lahai operations in the Haju field in Murung Raya district, Central Kalimantan, stage one of the large Maruwai project, which had seven planned mines spanning Eastern and Central Kalimantan.
BHP Billiton and other big mining companies have faced considerable pressure over the last several months, as commodity prices plunged in line with slowing Chinese demand. BHP earlier announced plans to slash 6,000 jobs worldwide, about 6 percent of its global workforce, because of the financial crisis.
Profit for the six months to Dec. 31 fell 56 percent to $2.62 billion from $6 billion the year before, with BHP booking substantial losses on its Ravensthorpe nickel mine.
Mahendra Siregar, the Coordinating Ministry for the Economy’s deputy for international cooperation, said that global trends were running against the big miners, making it difficult for investors.
“If we look at the condition of global mining companies, all of them are having a hard time due to low commodity prices,” Mahendra said. “I think it’s part of their consolidation plan. If they could hold on for two or three years, things will improve.”
BHP was expected to invest $100 million in the Haju field, estimated to contain 5.4 million tons of coal reserves. It was set to start producing an initial 200,000 tons of coal in November, reaching an eventual peak of 2 million tons a year. Other projects in the Maruwai area were expected to produce 25,000 tons of coking coal, used to make steel, starting in 2013.
Bambang Gatot Ariyono, the director of coal and minerals at the Ministry of Energy and Mineral Resources, said the government had been told about BHP’s decision.
“We will review it before we reach any decision on whether we will transfer the contract to another party,” he said, without revealing further details.