Rio Tinto says committed to Indonesia nickel project
JAKARTA, Feb 24 (Reuters) - The Indonesian unit of Rio Tinto Ltd/Plc (RIO.AX)(RIO.L) remains committed to a $2 billion nickel project in Indonesia's Sulawesi island, although is waiting for more clarity under a new mining law, an executive said on Tuesday.<br /><br />Many global resource firms have been reviewing investment decisions due to a dive in mineral prices, while Rio Tinto has been looking to sell assets in a number of countries to cut its heavy debt load.<br /><br />"At this stage, we have no intention of pulling out of the project," Mark Hunter, executive manager of projects at PT Rio Tinto Indonesia, told reporters.<br /><br />"Once we see the implementing regulation, we will then review the project," he said.<br /><br />Indonesia passed a new mining law in December last year under which the current licensing via a contract of work, favoured by major mining firms, has been replaced by mining permits running for shorter periods.<br /><br />Rito Tinto previously applied for a contract of work, but under the new law, along with other firms with applications underway, can continue the project with a mining permit.<br /><br />The firm also does not have to go through a tender process, although the government is currently drafting new regulations and has said new permits would not be approved until this was done.<br /><br />Rio Tinto has said it plans to spend up to $2 billion on the Central Sulawesi project, which is estimated to have a capacity to produce 46,000 tonnes of nickel metal a year.<br /><br />Hunter said the firm still felt the project was a feasible long-term investment despite falling nickel prices. <br /><br /> Nickel prices MNI3 have slumped more than 80 percent to about $9,450 a tonne since hitting a record high of $51,800 in May 2007, as output cuts by miners have failed to keep pace with the drop in demand from stainless steel producers.<br /><br />Another global resource firm, BHP Billiton Ltd (BLT.L), late last year scrapped a study into developing a nickel project in eastern Indonesia, after failing to get a contract in time.<br /><br />Initially a resource at Gag Island was being evaluated and then a second resource at Buli in Halmahera was included, following a conditional agreement to form a joint venture with state mining firm PT Antam Tbk (ANTM.JK).<br /><br />The agreement with Antam was conditional on obtaining government work permission for the Buli resource by Oct. 31, which was not achieved, BHP said.<br /><br />Indonesia has some of the world's largest deposit of gold, nickel, tin coal and copper with international mining firms, including Freeport-McMoran Copper&Gold (FCX.N) and Newmont Mining Corp. (NEM.N), already having operations in the country.<br /><br />The Indonesian Mining Association has said mining investment in Indonesia may drop below $1 billion this year and there may be no fresh projects as metal prices fall and miners await details from the new mining bill.<br /><br />But the government is more optimistic and expects mining and geothermal investment to reach more than $2 billion this year up from $1.65 billion in 2008.<br /><br />(Reporting by Fitri Wulandari; Editing by Ed Davies)