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September 2, 2008

BHP downsizes operations in Philippines
BHP Billiton, the world's biggest miner, has scaled back operations at a nickel project in the Philippines due to a dispute with a local partner, the minister in charge of the mining sector was quoted as telling Reuters Monday.

BHP has been in disagreement with Asiaticus Management Corp since late last year.

The Philippine group has accused the larger company of moving too slowly in developing the project and has been pushing for immediate commercial production at the Pujada site in the southern region of Mindanao.

Pujada is estimated to have 200 million tonnes of nickel ore reserves with 1.3 percent nickel.

"They (BHP) are not pulling out, but scaling down yes, because of their prolonged dispute with the local partner," Lito Atienza, the secretary for environment and natural resources, told Reuters.

"We're still in the process of mediation to reconcile both sides," said Atienza who met with officials of Asiaticus last week and is planning to talk to BHP officials soon.

BHP has committed to invest up to $2 billion in the mine site including a nickel processing plant and has spent nearly $3 million so far for exploration, according to the latest government data.

The Pujada site is BHP's only mining project in the Philippines and an important plank of government efforts to attract $10 billion in mining investments over the next three years.

So far only around $1.7 billion has flowed into the sector since 2004 when the Supreme Court allowed foreign companies 100 percent in local mining projects.

Asiaticus had canceled its joint venture agreement with BHP due to the disagreement, prompting BHP to halt exploration activities in Pujada since May.

BHP's activities in the mine site, for the time being, have been limited to community projects, according to a source familiar with the Australian miner's Philippine operations.

Atienza said the government is hoping to convince BHP to start commercial production immediately on some areas of the site. "BHP is quite receptive on this," he said.

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