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Unexpected move yesterday announced by one of the largest mining companies globally. Showing it may be bailing out of a country that used to be one of the world’s go-to minerals destinations.
The firm is BHP Billiton — and the place is Indonesia. With the major saying that it is considering a complete sale and exit from its Indonesian coal operations.
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BHP spokespeople confirmed to Reuters that the company is looking at options for the sale of its IndoMet metallurgical coal division. Which holds seven licenses across Indonesia’s Central and East Kalimantan provinces.
Such a sale would be a substantial about-face for BHP. Which last year appeared to be moving ahead full-steam with its Indonesian coal projects–when the company started up the Haju mine here, and said it was moving forward with commissioning of a second mine across its coal licenses.
At the time, BHP also said it was planning further exploration in Indonesia — to expand on the 1.3 billion tonnes of coal resources already identified on its licenses.
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All those announcements came in September 2015, a little over half a year ago. And it appears that in the months since, BHP’s management has completely changed its mind on these projects.
Some of that may have to do with recent political events in Indonesia. Including a high-profile battle between the government and Freeport-McMoRan over ownership and permitting for the Grasberg copper-gold mine.
And the government may have recently sealed the deal in scaring away major miners like BHP. When spokespeople for President Joko Widodo said last Friday they are imposing a moratorium on new mining licenses across the country.
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The government said the mining ban is likely to take effect this year. And there was no elaboration on how long the moratorium will last — with officials simply saying it will be in place for an “undetermined” amount of time.
It’s conspicuous that the BHP turn-around on its Indonesia assets is coming so soon after this shocking announcement. Watch for more miners exiting Indonesia — and the government response if it becomes clear this mining-dependent economy is losing its investors.
Here’s to pulling the pin
By Dave Forest
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Dave is Managing Geologist of the Pierce Points Daily E-Letter.