Papua urges stay in Gag nickel mines

Papua urges stay in Gag nickel mines

Irian Jaya or Papua has urged Australia's BHP Billiton to stay in a nickel mine project on the province's Gag Island and asked the government to allow the project, provincial governor Jacob Soloussa said on Thursday.

"We need the Gag island nickel project to be established, because that will give benefits and contributions to the province," Soloussa told reporters after meeting President Megawati Soekarnoputri.

"We want the government to allow the project and to issue the license as soon as possible," he said.

"There are misunderstandings about the forestry mapping about Gag island. There is no (protected) forest there," he added.

"There will be a government team to check the situation."

Falconbridge Ltd said last month it had pulled out of the Gag Island nickel project and would allow a joint venture agreement with BHP Billiton Plc/Ltd to lapse.

BHP Billiton said last month in Melbourne it was reviewing its options for Gag Island. With an estimated 240 million tons of nickel, it had been viewed by the market as one of the company's longer-term sources of growth.

Canadian nickel giant Falconbridge and BHP signed a joint venture in June 2000 to consider developing Gag Island, but moves by Indonesia to protect forests and ban open-pit mining in those areas led to a suspension of the project.

Soloussa also said he asked Megawati to give special treatment to the province by allowing it to export logs.

Soloussa also said: "We asked the President for special treatment to allow the province to export log timber despite forestry ministry rules banning log exports."

The ban had hurt Papua's revenue, he said, adding the provincial government was monitoring activity closely to protect the environment.

Indonesia Forestry Minister Muhammad Prokosa issued a ban on log exports effective in October last year to protect diminishing tropical forests. -- Reuters