Indonesia investors eye BHP Billiton coal project

JAKARTA, June 26 (Reuters) - About four Indonesian investors are interested in taking over a coal project owned by BHP Billiton Ltd (BHP.AX), a senior government mining official said.

BHP Billiton said on June 9 month that it had decided not to go ahead with the Haju trial coal mine in Central Kalimantan province on Borneo island because it did not fit with its long-term investment strategy.

"There are about four companies that are interested. We asked them to negotiate directly with BHP Billiton," Bambang Setiawan, director general of mining, coal and geothermal at the energy ministry, said late on Thursday.

Setiawan did not name the firms but said they were local investors.

Haju was stage one of the Maruwai coal project, the 100 percent BHP Billiton owned metallurgical coal deposit, in Central Kalimantan which was expected to produce 1 million tonnes of metallurgical coal -- used for steel-making -- per year.

In June last year, the firm announced it would invest $100 million to develop the project which was expected to start producing in the middle of this year.

The firm has said it will gradually lay off 450 workers and 250 contractors involved in the project.

The firm was still assesing commercial options for the project, Indra Diannanjaya, president director of PT Lahai Coal which is part of BHP's Maruwai coal project, said.

The move is another blow to Indonesia's mining sector which has struggled to attract new investment from major global mining players in recent years, partly due to issues such as uncertainty over mining regulations and disputes with local government.

In November last year, BHP decided also to scrap a study into developing an integrated nickel project in easter Indonesia which was under a conditional agreement with Indonesian state miner PT Aneka Tambang Tbk (ANTM.JK).

"We are not worry about investment because there are many who are willing to replace BHP," Setiawan said.

Indonesia expects investment in mining and geothermal investment this year to reach about $2.24 billion. In the first quarter, mining and geothermal investment stood at $251.43 million.

(Reporting by Fitri Wulandari; Editing by Ed Davies)