BHP Billiton ends study to develop Gag and Buli nickel project

Australian resources giant BHP Billiton said on Thursday it had decided to end a study into integrated nickel development in Gag Island, Papua and Buli in Halmahera, North Maluku.

The study has not been able to identify a business case which would support an investment in this opportunity, the company said.

Initially a resource at Gag Island in eastern Indonesia was being evaluated and then a second resource at Buli in Halmahera was included following a conditional agreement to form a joint venture alliance with PT Antam Tbk, a publicly listed Indonesian mining company, it said.

The agreement with PT Antam Tbk was conditional on obtaining a Contract of Work (CoW) for the Buli resource by 31 October 2008 which has not been achieved. BHP Billiton has therefore decided to terminate the agreement with PT Antam Tbk. As a consequence of terminating the integrated study, BHP Billiton will not pursue a stand alone development at Gag Island, the company said.

It is not immediately clear if BHP would return its Contract of Work right on Gag Island to Indonesian government.

BHP have been under fire over its plan to develop the nickel resource at the island as environmentalists said the project?s location is within Raja Ampat Marine Park, which is declared by UNESCO as World Heritage.

BHP had 75 percent stake in Gag nickel project, with Antam holds the remaining of 25 percent.(alex)