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NEWS UPDATES 11 June 2009

Mining giant to cut 450 jobs at Indonesian project

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BHP Billiton Ltd will lay off all 450 workers at its Indonesian coal project after deciding not to go ahead with the project, Reuters quoted the mining firm as saying Wednesday.

The global financial crisis and sharp falls in metals as well as coal prices have forced some companies to abandon or put on hold their plans to bring new mines on stream.

The world's largest miner announced in January this year it would cut 6,000 jobs and close the Ravensthorpe nickel mine in Australia while reviewing other projects due to falls in metal prices.

On Tuesday, BHP Billiton said it would not go ahead with the Haju trial coal mine in Central Kalimantan on Borneo island because it did not fit with its long-term investment strategy.

"We will focus on completing our obligation to the government, employees and shareholders," Indra Diannanjaya, president director of PT Lahai Coal, which is part of BHP's Maruwai coal project.

Haju was stage one of the Maruwai coal project, the 100 percent BHP Billiton owned metallurgical coal deposit, in Central Kalimantan which was expected to produce 1 million tonnes of metallurgical coal -- used for steel-making -- per year.

"All 450 workers will be laid off gradually. We are working to find the best commercial options to our coal contracts," Diannanjaya said, without elaborating.

In June last year, the firm announced it would invest $100 million to develop the project which was expected to start producing in the middle of this year.

Some 250 contractors would also lose their jobs in the project, BHP Billiton said in a separate statement.

BHP Billiton said on Wednesday it has agreed to take a 58 percent price cut for the coal it sells to major steel-makers, in line with market expectations and a sharp downturn in the global steel industry.

In November last year BHP decided also decided to scrap a study into developing an integrated nickel project in eastern Indonesia which was under a conditional agreement with Indonesian state miner PT Antam Tbk.

Separately, the government said it has not yet received official report from BHP Billiton on its Indonesian coal project.

"We haven't received any formal notice," Bambang Gatot Ariyono, director of coal and mineral enterprise at Indonesia's energy and mines ministry.

"But they have to report to us whether they are going to pull out of the project or ask other investors to take over the project," he said.

The move is another blow to Indonesia's mining sector which has struggled to attract new investment from major global mining players in recent years, partly due to issues such as uncertainty over mining regulations and disputes with local governments.


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