BHP Billiton ends feud with local partner, to exit Davao mine

BHP Billiton, the world’s largest miner, has decided to exit the local mining industry to end a feud with its local partner, the Environment chief said late last week. The Australian mining giant will follow the footsteps of British miners Crew Gold Corp. and Avocet Mining Plc, and Canadian Ivanhoe Mines, Ltd., which all withdrew from local mining projects early this year due to financing problems and small profit margin estimates. Early this year, the Environment department brokered talks between BHP Billiton and estranged partner Asiaticus Management Corp. in a bid to move forward their $2-billion Pujada nickel project in Southern Mindanao. "They already have an agreement. BHP Billiton, I understand, will sell out to the local partner," Environment Secretary Jose L. Atienza, Jr. said in an interview. "This is a solution agreeable and satisfying to both parties. I talked to the side of [Asiaticus chief executive] Peter Tan and company. They seem to be happy with it. Obviously, they found it to be a happy compromise," Atienza said. The Cabinet official also said he had a conference with BHP Billiton officials in Australia about two weeks ago. The 16,000-hectare property in Mati, Davao Oriental, which has an estimated 150 million metric tons of nickel reserves, is one of the priority mining projects of the government and could become one of the country’s largest nickel projects at full capacity. A BHP Billiton spokeswoman confirmed Atienza’s statements. "BHP Billiton confirms it has signed a Share and Asset Purchase Agreement with Asiaticus to divest its 40 percent interest in the Hallmark deposit to Asiaticus," Samantha Evans, media relations head of BHP’s Australia office, said in an e-mail yesterday. "BHP Billiton thanks the Philippine government for their efforts in supporting our participation in the project and assisting to resolve the dispute with Asiaticus," the company spokeswoman added. Asiaticus refused to comment on the matter. An official of the company said the local mining firm would issue a disclosure in early 2010. In 2007, Asiaticus rescinded its joint venture partnership with BHP Billiton, after it had grown impatient at the rate of the latter’s exploration activities. Commercial operation at the Pujada nickel mine was supposed to start next year. However, an arbitration panel in Singapore upheld the validity of the joint venture early this year. In May, the Court of Appeals nullified the writ of preliminary injunction issued by a regional court last year, which ordered BHP Billiton to stop exploring the mine. Evans said the financial details of the divestment program were confidential. Atienza said he expects the mining project to finally move forward under Asiaticus. "I am sure [Asiaticus] will now proceed full-blast as they were stymied with the legal issues between the two sides," Atienza said. "I am sure [Asiaticus] will take advantage of the movement of metal prices," he added. Nickel prices have already risen to $7.732 per pound (lb.), up from the average price of $5.64 and $4.75 per lb. in the second and first quarters, respectively, data from the London Metal Exchange showed. Atienza said BHP Billiton would "reinvest somewhere else, in some other sector." "But definitely they are not leaving the Philippines," the Environment chief added. Last month, the publicly listed and state-led upstream oil and gas firm Philippine National Oil Co.-Exploration Corp. farmed out three-fourths of its participating interest in a 14,760-square- kilometer exploration block off Palawan to BHP Billiton Petroleum Pty. Ltd. BHP Billiton Petroleum also holds a 25 percent interest in Service Contract 56 in Sulu Sea, an oil and gas exploration project operated by Exxon Mobil Corp.