UPDATE - BHP Billiton nears Ok Tedi mine exit
Date: 13-Dec-01
Country: AUSTRALIA
Author: James Regan
BHP Billiton had sought to close the Western Province mine rather than face further environmental litigation over mine waste polluting nearby rivers, but was opposed by minority partners Inmet Corp. of Canada and the Papua New Guinea government.
BHP Billiton's withdrawal was expected on Dec. 13, but could be delayed, Inmet said in a statement from Toronto.
Regarded as a national asset by Papua New Guinea's Prime Minister Sir Mekere Morauta, the government feared closing the mine would devastate the national economy and ruin communities in the province bordering the Indonesian province of Irian Jaya.
The mine accounts for 10 percent of the impoverished South Pacific nation's gross nation product and 20 percent of total exports.
Under the plan, approved 58-2 in a parliamentary vote in Papua New Guinea late this week, BHP Billiton will transfer its 52 percent stake to a newly created Singapore-based company called PNG Sustainable Development Programme next year.
Inmet said it was pleased with the new arrangement. It retains its 18 percent interest, while the PNG government has a 30 percent stake in the mine.
"We believe that this agreement will ensure the long-term continuation of Ok Tedi's operations," said Richard Ross, Inmet's president and chief executive.
Outlining the main elements of the agreement, Inmet said the new company had clearly defined corporate rules for decision-making, distribution of funds and public reporting. BHP Billiton would give financial support to the new company for three years, it added.
It said many senior management staff will be retained at Ok Tedi for the transition to an independently run company. Its board will include a director from each of the SDPC, the government and Inmet, and three independent directors with international mining backgrounds.
Inmet said Ok Tedi had concluded a three-year $120 million facility to fund working capital, while BHP would provide a facility to pre-purchase concentrates in the event of a drought.
Mine continuation agreements had been signed with all of the communities affected by the mine, in which Ok Tedi and its shareholders were released from all demands and claims associated with future environmental impacts.
The mine is one of the richest in the southern hemisphere, yielding some 600,000 tonnes of high-grade copper concentrate a year and 15 tonnes of gold, with a loyal customer base in Asia and Europe. Reserves are sufficient to run the mine for at least another decade.
However, BHP Billiton wrote the mine off its books in the 2000-01 fiscal year and no longer includes the output in its production figures.
In 1996, the operating company of Ok Tedi, Ok Tedi Mining Ltd. (OTML) paid 150 million kina ($39 million) in compensation for damages to villagers whose livelihood relies on fishing the waters of the Ok Tedi and Fly rivers.
"One of the most important developments arising from these negotiations is that upon the exit of BHP Billiton, its shares in OTML would be transferred to a program company that is to be established to promote sustainable development for the benefit of the people of Western Province," Papua New Guinea's minister for mining, Chris Haivetta told the parliament.
