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MELBOURNE, Australia (October 17, 2001 – The National)---BHP Billiton Ltd. believes its exit plan from the controversial Ok Tedi copper mine will help protect it from future liabilities.

Under a deal agreed last month, BHP Billiton would put its 52 percent stake in the mine into a trust, with the income stream from the Papua New Guinea operation used to fund short and long-term sustainable development programs.

The plan has the support of the other Ok Tedi Mining Ltd. (OTML) shareholders, with BHP Billiton expected to withdraw from the operation by January next year.

Since going into production in 1981, Ok Tedi had been a financial and environmental nightmare for the company.

"As we will have no future financial benefits coming from the mine’s operations, the agreement will also provide protection for us against future liabilities," BHP Billiton chairman Don Argus told shareholders today.

He later estimated the extent of BHP Billiton’s liability for Ok Tedi would be capped at the write-off it took on the investment earlier this year.

"The amount we have written off -- given that the income stream is sufficient in Ok Tedi- - that should be the extent of our liability," he said in response to a question at the company's annual general meeting today.

Mr. Argus earlier assured shareholders that BHP Billiton was not shirking any environmental responsibilities.

"We will ensure as part of our exit that there are adequate resources available to the (OTML) entity, both in the short and long-term, to meet its share of contingencies such as early mine closure or environmental remediation," he said.

In addition, BHP Billiton would ensure "there is cash provisioning by OTML for normal mine closure."

Mr. Argus also reminded shareholders that the mine development was not bereft of benefits for the people of PNG.

"(Ok Tedi) contributes something like about 10 percent of GDP," he said.

"The mortality rate of children, which was pretty high at one stage, has reduced dramatically; the life expectancy of a male in that area has gone from 32 to 52.

"You just can’t look at the environmental (issues) in isolation. You have got to look at the economic issues. You have got to look at the social issues."

While the Ok Tedi problem was close to resolution, another troubled asset, the Port Hedland hot briquetted iron (HBI) plant, remained on watch for BHP Billiton.

"Technically, the HBI plant is going quite well," Mr. Argus said.

"(But) it is amazing when you get these things up and the market falls apart on you."

Economically you can say -- because the markets are not there -- that it is not producing, as it is ought to.

"At this point it is still under review."

Last year BHP Billiton gave the A$ 2.6 billion operation -- which has had its entire value wiped from the company books -- a second chance to prove its viability.

For additional reports from The National, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/The National (Papua New Guinea).

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