Wed, 28 Apr 1999

BHP proceeds with Gag island nickel project

JAKARTA (JP): Nickel company BHP Asia Pacific Nickel Pte Ltd, a subsidiary of Australia's Broken Hill Proprietary (BHP), is proceeding with its plan to develop nickel deposits on Gag Island, Irian Jaya, despite the country's dire economic straits.

BHP Indonesia president Harriet Richards told The Jakarta Post on Monday that the company, in a partnership with publicly listed general mining company PT Aneka Tambang, was exploring for more nickel deposits and carrying out feasibility studies on Gag and adjacent islands.

"The feasibility study include studies of the environment and the social lives of several tribes in the area," she said on the sidelines of the ceremony to award two contracts of work (COW) to the company's subsidiaries for the development of coal deposits in East Kalimantan and Central Kalimantan.

"The study may take two years."

BHP has a 90 percent share in the Gag project, with the remaining shares held by Aneka Tambang.

She said BHP and Aneka Tambang were developing new technology in BHP's research and development office in San Francisco. It was expected to enable them to process nickel ore on the islands at a minimum cost amid growing competition among the world's nickel producers.

She said the company was conducting trials of the technology on the island to determine its capability, as well as its social and environmental impacts on Gag and surrounding areas.

"There are still many technical issues to be studied before we apply the technology."

She added that both firms invested "a huge amount of money" to develop the technology.

Aneka Tambang's president Dedy Aditya Sumanegara said last year Gag and the adjacent islands were believed to contain 190 million tons of nickel, making it the world's third largest nickel deposit, and a significant amount of cobalt.

Aneka Tambang and BHP planned to produce 40,000 tons nickel and 3,600 tons of cobalt per year, he said.

Richards said the results of the exploration carried out by the company showed the islands may contain "larger deposits of nickel than the initial estimation".

Richards said the Gag nickel project may become "a significantly large nickel mine" lasting up to 25 years.

BHP has been operating in Indonesia for 25 years in various sectors, including mining, steel, information technology and transportation.

Its subsidiaries, PT Pari Coal and PT Sumber Barito Coal, were awarded on Monday two COWs for the development of coal deposit on respectively a 98,910-hectare contract area in East Kalimantan and 100,300-hectare contract area in Central Kalimantan. (jsk)