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Billiton shelves bauxite mine

BHP Billiton and Mitsubishi Corp have pulled out of a bauxite-mining concession in Mondulkiri province following exploratory drilling and have cancelled plans to build an aluminium refinery in the region, officials said this week.

The companies have informed the Ministry of Industry, Mines and Energy that they will not use their exclusive right to mine the area under the terms of a 2006 mineral-exploration agreement signed with the Cambodian government, a source inside the ministry said.

"They have filed the document officially, but it's not done yet because it needs to be sent to the Council of Ministers," the source said, speaking on condition of anonymity.

Council of Ministers spokesman Phay Siphan said he was unaware of the issue.

Poor returns
The source said a feasibility study, which cost US$10 million and covered 400 hectares of the company's 996-hectare concession, failed to find bauxite in sufficient quantities to make extraction profitable and justify the construction of the aluminium refinery.

Bauxite ore is the unrefined component of aluminium.

A spokesman for BHP Billiton said by email from Australia late Thursday: "We completed our exploration field work in the Mondulkiri province and are in the process of sharing our evaluation with the Royal Government of Cambodia. As such, we have reduced our presence in Phnom Penh."

However, the spokesman refused to give further details, saying only that "we do not comment publicly about the results of our exploration activities".

BHP Billiton was no longer in its Norodom Boulevard offices Thursday when the Post visited, and its project and risk manager, Dave McCracken, could not be reached on his mobile phone.

The general manager of Mitsubishi Corp's Phnom Penh representative office, Morihiko Kondo, refused to comment when approached by the Post on Thursday, saying only that inquiries should be directed to the joint-venture partner.

Kong Piseth, the chief of the Department of Industry, Mines and Energy in Mondulkiri province, said the joint venture had wound up its operations.

"The company has withdrawn from the site in Mondulkiri and even asked us to cut off the electricity," he said Thursday.
"I have the licence they asked for to continue the second phase, but I haven't seen them go back to work yet."

His deputy, Um Saran, said the company suspended its activities in February or March this year. "They have explored for nearly three years and drilled more than 1,000 holes," he said.

'Billions of dollars'
Australia's BHP, the world's largest mining company, and Japan's Mitsubishi, one of the world's largest diversified trading and investment companies, signed a mineral-exploration agreement with the government in September 2006, according to documents on BHP's Web site.

Exploration operations began in May 2007 and were due to conclude this year. No projections were made as to the likely quantity of bauxite reserves in the province, but Deputy Prime Minister Sok An told an investment conference in November 2007 that bauxite in Mondulkiri could result in an investment worth "billions of US dollars".

No estimate was ever publicised concerning the potential value to the province of the proposed aluminium refinery.

Cambodia's mining sector has long been wracked by controversy, with international NGO Global Witness slamming a "total lack" of transparency in the sector in a 70-page report released in February this year.

In Country for Sale, the London-based NGO said the government had granted more than 100 mining concessions - including 21 in 2008 - to companies controlled by "elite regime figures", with little environmental oversight.

It also singled out a 2007 comment by Lim Kean Hor, minister of water resources and meteorology, where he described a $2.5 million BHP Billiton-Mitsubishi social development fund as "tea money".

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