BHP Billiton pulls out of Gag nickel project, West Papua

Down to Earth No.79, November 2008

Following years of opposition from environmental and human rights groups, BHP Billiton has decided not to go ahead with a proposed nickel mining project on Gag Island, West Papua. BHP Billiton has reportedly invested US$75 million in developing this project over the last decade or more.

The decision to pull out of the Gag Island nickel project follows closely two company annual general meetings in the UK and Australia. Here, concerns were expressed about the potential damage that such a large-scale mining project would do to both the environment and to local communities and their livelihoods.

JATAM and WALHI, two prominent Indonesian civil society organisations, issued a call for this project to be halted.1 Down to Earth together with others from the London Mining Network, read out part of their statement at the London AGM, despite repeated interruptions by the BHP Billiton Chairman, Don Argus, who labelled the intervention too 'political'.

Similarly, the BHP chairman resisted answering representations made at the Melbourne AGM which focused on reports that the Australian government had been involved in lobbying the Indonesian government to allow mining on Gag Island, despite the fact that it is located within a proposed UNESCO World Marine Heritage site.

BHP-Billton's nickel mine on Gag Island in West Papua was due to tap into one of the world's richest nickel deposits - bringing profits for shareholders and revenues for the Indonesian and Papuan governments. However, the US$4.5 billion plus plan, which includes a smelter on Halmahera in the neighbouring Moluccas, would have destroyed livelihoods, forests, and the world's richest marine environment.

How far these concerns influenced BHP's decision to pull out is not known. The company itself does not make a connection, although there is much company rhetoric on how sustainability and ethical considerations play an important part of BHP Billiton's policy of "zero harm". The company has said, rather, that decision was related to a failure to secure an additional joint venture agreement with the local Indonesian company PT Antam Tbk in Buli, Halamera Island, by the end of October.2

The Gag project has been highly controversial since exploration work started in the mid-1990s. The company secured a government-issued Contract of Work covering the tiny island (12 km by 8 km) in February 1998, during the turbulent last months of President Suharto's 32-year brutal and corrupt rule.

But Gag was put on hold after the island's forests were classified as 'protection forest' and a 1999 Forestry Law made open-pit mining in such forests illegal. The mining industry launched a high pressure counter-campaign to overturn the ban, and thirteen companies eventually got the go-ahead in 2004 - one of them Gag.

Meanwhile, in 2002, a study by international conservation organisations had revealed that the Raja Ampat Islands, which include Gag, contain the richest coral reefs - 64% of all known coral species - with the highest marine biodiversity in the world.


Proposed World Heritage Site

Raja Ampat is considered so important to protect that it is first on the list of proposed UNESCO marine World Heritage Sites. When Indonesian parliamentarians were deliberating whether or not to permit mining in protected forests, UNESCO wrote to them to point this out. The letter said:

"While media reports of decimated and degraded marine ecosystems in western and central Indonesia are common, this survey shows that there is still a chance to conserve globally significant, high quality island and reef ecosystems in Indonesia and to ensure future sustainable income sources for the local communities."3


Other Raja Ampat mines cause pollution

Local Papuan civil society organisations are today still calling for the sustainable development of eco-tourism and fisheries to improve local people's lives. They want all mining in the area to be stopped immediately.4

BHP Billiton's project was to be a giant among around 16 other nickel project in Raja Ampat, a few of them already in production. According to local reports, mining is already muddying the clear coastal waters of other Raja Ampat islands, leaving islanders with the impacts while the nickel is shipped to Australia and China.

The groups are concerned that this mining will have irreversible impacts both on land, in the forests and in the surrounding waters, ruining prospects of sustainable, marine-based development.

One of the biggest environmental concerns with the BHP Billiton project was the question of what happens to the mining waste. The choices were on-land containment dams, using the waste to fill in mined-out pits, or dumping in the sea. BHP committed to not piping the waste out to sea - the so-called Submarine Tailings Disposal method - and repeated this commitment when questioned at the London AGM. However, it is likely that any method of mining waste disposal in such a precious environment would prove hugely damaging.

Mining in the area remains a serious concern and, for the sake of nickel, it continues to put at risk the world's top-ranking coral reefs and the sustainable futures of surrounding communities.

For more background on BHP and mining in Indonesia see Down to Earth's website at and Mines and Communities' website at

1 JATAM/WALHI press release 23/Oct/08 See, and
3 UNESCO Office, Jakarta letter to Akbar Tandjung, Speaker of Indonesian Parliament, 25 June 2003
4 See