BHP puts RI investment on hold due to mining issues

BHP puts RI investment on hold due to mining issues

MELBOURNE (Dow Jones): Australia's Broken Hill Proprietary Co. Ltd. (BHP), a minerals, energy and steel company, is putting on hold any new major investment in Indonesia, preferring to wait out an end to uncertainty over mining issues in the archipelago.

"We are taking a bit of a wait and see (approach) before we jump in with a lot more investment there," BHP Chief Executive Paul Anderson told analysts and media at a presentation on the company's 1999-00 profit result.

"I think like all major players right now we have put our plans on hold to see how events unfold there," he said,

He said there were "a lot of problems" in Indonesia with regard to illegal mining as well as the enforcement of operating agreements, both regionally and federally.

In addition to coal operations, BHP is exploring the feasibility of developing a nickel mine on Indonesia's Gag Island. BHP's potential partner in the project, Canada's Falconbridge Ltd., is undertaking to fund the feasibility study, planning to spend US$75 million over the next two years.

The partners in the project are currently trying to clarify with Indonesian authorities the classification of forestry on Gag Island.

Since 1990, when BHP and its other partner in the project, Indonesia State mining company PT Aneka Tambang, were first granted a so-called Contract of Work for Gag Island, the classification of forestry on the island has changed to prevent the open pit mining that would be needed to develop the deposit. BHP and is now working with various Indonesian authorities to have that changed.