BHP Billiton suspends Davao mining operations

Australian mining giant BHP Billiton has laid off its Manila staff for its joint venture mining firm Amkor and has suspended operations in its mining exploration site in Mati, Davao, following its protracted dispute with businessman Peter Tan.

BHP Billiton’s decision, mining industry sources told The STAR, bodes ill for a favorable resolution of its dispute with Tan which Environment and Natural Resources Secretary Jose L. Atienza has been trying to mediate and salvage.

During Atienza’s weekly press conference last Thursday, the DENR Secretary admitted that Amkor had still not submitted a proposal on which mining tenements it could already proceed operations on apart from its other long-gestating projects with BHP Billiton.

Atienza, as of last week, was still hopeful that he could negotiate an amicable settlement with the two warring parties.

Unfortunately, while Atienza remains hopeful, BHP Billiton last month decided to lay off its direct hire Manila staff and is now relying on a contracting agency.

BHP Billiton has also reportedly suspended its exploration activities in its Mati, Davao site.

BHP Billiton’s action, sources said, indicates its increasing frustration in pursuing its investment in the Philippines.

BHP’s action also sends a strong negative signal to other potential foreign investors especially since the Australian mining firm is considered a global market mover.

Atienza last May had mediated a meeting in Singapore between Tan and BHP representative Chris Campbell whereby it was acknowledged that there is a need to provide some immediate cash flow for the Filipino partners while at the same time preserving the long-term investment outlook of BHP.

The deal would supposedly involve the operation of some mining areas which would  be determined by both parties.

The compromise deal would allow BHP Billiton to continue its investments in the country, while at the same time addressing the need to provide immediate cash flow for the group of Tan.

Atienza had previously told The STAR  that in his talks with BHP Billiton officials “they remain very bullish about the Philippines and are here to stay for the long-term.”

According to Atienza, “I am doing everything to help them settle it. I want them to succeed and put in more money.”

BHP Billiton Ltd., Atienza pointed out is the world’s largest resource company and its continued presence and investment in the Philippines would attest to the attractiveness of the country as an investment site.

The company is a producer of energy-related products, such as energy coal, oil, gas, liquefied natural gas and uranium.

Its customer sector groups (CSG) are organized into nine business units: petroleum, aluminium, base metals, diamonds and specialty products, stainless steel materials, iron ore, manganese, metallurgical coal and energy coal.

Tan holds seven Mineral Production Sharing Agreements (MPSAs) in various parts of the country.

Tan had been complaining about the slow pace of the joint venture with BHP which continue to remain at the exploratory stage  at a time when world mineral prices are peaking.

Tan wants BHP Billiton to fast-track the joint venture and start production.

Out of frustration, Tan decided to rescind his joint venture contract with BHP and the dispute has now landed in court.