Future of BHP coal mines in Indonesia hinging on mining rules revision

Future of BHP coal mines in Indonesia hinging on mining rules revision

Coal mining in Central Kalimantan, Indonesia (Image from archives)

Mining giant BHP Billiton (ASX:BHP) may reconsidering its push into coal mining in Borneo, depending on the what comes out of the Indonesian government ongoing review of the sector’s regulations.

Such revisions, Reuters reports, include mandatory divestment and contract extensions, which could either support or discourage BHP’s future investment decisions in the country.

BHP began mining at the Haju coking coal mine during the September quarter, in the first step toward what is expected to be a wider presence in the region, under the company’s IndoMet Coal project, in the Central Kalimantan province.

The project has already raised concerns among environmentalists, some of which were addressed by BHP executives at the company's annual meeting of shareholders in London earlier this month.

Opponents claim that IndoMet is too close to a significant orangutan population in the Upper Barito Basin. According to World Wild Life (WWF) that population has declined by over 50% in the past 60 years, and its habitat has been halved over the past two decades.

While BHP have said that no orangutans have been found on its leases, it helped relocate 280 orangutans found nearby to other parts of Kalimantan.

Haju will initially produce about 1 million tonnes of coal a year, while the larger IndoMet complex is believed to have potential to produce around 5 million tonnes of coal per year.