Update 1: Antam, BHP Billiton gets license to convert KP into CoW

(Adds explanation about KP and CoW on the second and third paragraphs)

JSX-listed state miner PT Aneka Tambang (Antam) and Anglo-Australian resources company BHP Billiton have secured a principal permit from East Halmahera regency of North Maluku province to obtain a contract of work (CoW) to develop nickel resources in the regency.

Currently, Antam has a Mining Contract (KP) to develop the concession but it wanted to change the KP into CoW following an agreement with BHP to jointly develop the nickel mine. The permit from the regent is a prerequisite for the conversion of the KP into CoW.

Foreign investors prefer CoW over KP because the former is considered as lex specialis (special law). Since it is considered as equal to a law, the contract needs approval from the House of Representatives and the government has to ask approval from the House in case it wants to change it. This type of contract is considered to be able to give security for investors.

?We want to create a greater certainty for this big investment. That?s why we are proposing a CoW,? Antam?s President Director Dedi Aditya Sumanegara said in Jakarta on Tuesday.

The amount of funds to be invested by BHP Billiton as Antam's partner in the project is quite considerable, according to Dedi.

"Early estimates showed that US$1billion would be needed to develop the ferronickel project, while another $2-3 billion would be needed to develop hydrometallurgical processing,? Antam?s Corporate Secretary Bimo Budi Satriyo said in October 2007.

The project might be able to produce 30,000 tons per annum of nickel contained in ferronickel and 60,000 TPA of nickel metal, according to Antam

Both companies signed a heads of agreement (HoA) to jointly develop the project last February. (Bernard)