BHP sets out exit from Ok Tedi

Partners in the Ok Tedi copper-gold mine in Papua New Guinea’s Western Province have settled on terms for the project’s Australian operator, BHP Billiton (BHP-N), to withdraw.

BHP, which owns a 52% interest in the project, has been seeking a way out for several years in the face of serious environmental liabilities, which arose from tailings disposal in the Fly River, downstream from the mine. The deal, currently in the form of a heads-of-agreement document, would see BHP hand over its interest to a new company, which would have a mandate, under Papua New Guinean law, to operate the mine for the benefit of the country and the Western Province. After ownership is transferred, the current management of Ok Tedi would continue to run the mine.

The Papua New Guinean government, which owns a 30% interest in the mine, and Toronto-based Inmet Mining (IMN-T), which owns the remaining 18%, have both approved the agreement, though details are still being ironed out.

Legislation to put the deal into effect will require an act of the Papua New Guinean parliament, which would codify new agreements with local landowners and set out new environmental standards.