BHP Billiton looks for new partner to develop Gag Island

World?s largest resources company BHP Billiton said on Monday that it was currently trying to find new partner to develop its giant nickel resources in Gag Island, in Papua province after Canadian base metal giant Falconbridge Limited pulled out of the project early this year due to prolonged forestry problem.

?BHP Billiton is quite optimistic that the forestry issue in Gag Island would be resolved soon and we are already looking for another partner to replace Falconbridge to develop the project,? Andrew Wilson, president of BHP Billiton Indonesia told Petromindo.Com in an interview Monday.

He did not name the potential joint venture partners the company had approached. He however, did not rule out the possibility of talking back to Falconbridge.

?Falconbridge had been a very loyal partner. They signed an agreement and extend it several times. It?s rational for them to quit the project because they were sick of waiting for the forestry problem to be solved and they have opportunity to invest their money somewhere else,? he said.

He said that once the forestry problem issue was resolved, it would be much easier for BHP Billiton to find joint venture partner.

BHP Billiton and Aneka Tambang through subsidiary PT Gag Nikel was granted Contract of Work in 1998. At that time the status of Gag Island was limited production forest. However, in September 1999 the government enacted Law No 41 which banned open pit mining on protected forest and one month later, ministry of forestry changed the island status to protected forest.

Since then, PT Gag Nikel had tried to lobby the government to change the island?s protected forest status into another form of land status that permits open mining.

In 2000 BHP Billiton clinched agreement with Falconbridge, allowing the latter to acquire 37.5 shares owned by BHP in PT Gag Nikel. But early this year, Falconbridge dropped decided to withdraw from the project due to unresolved the forestry problem.

Early this month government gave signal that Gag nickel project could continue.

BHP Billiton had 75 percent stake in PT Gag Nikel, while state miner Aneka Tambang holds the remaining of 25 percent.

Gag island has a nickel resource of 216 million tons and estimated investment needed to develop the project is US$ 1.2 billion. (alex)