BHP Billiton Ltd/Plc (BHP.AX) (BLT.L) can buy out its local partner in a Philippine nickel mine if both firms fail to settle a dispute that has stalled the $2 billion venture, a top government official said on Tuesday.

BHP, the world's biggest miner, has been in disagreement with unlisted Asiaticus Management Corp over when to start commercial production at the Pujada nickel site in the southern Mindanao region, a debate that has reached the courts.

It is an option for one of them to buy the other out, Lito Atienza, the minister in charge of the mining sector, told Reuters in a telephone interview.

BHP could buy out Asiaticus' 60 percent stake in the project or Asiaticus, controlled by Filipino businessman Peter Tan, could purchase BHP's 40 percent interest, said Atienza.

But the first option is for both companies to resolve their disagreement.

Both should come on the table with clear and clean intentions, that's what I'm asking from them, said Atienza.

The Philippine group has accused the Anglo-Australian miner of moving too slowly in developing Pujada, estimated to have 200 million tonnes of nickel ore reserves with 1.3 percent nickel.

Asiaticus had cancelled its joint venture agreement with BHP due to the dispute. In May 2008, the local firm obtained a ruling from a Philippine court barring BHP from the Pujada site, prompting the foreign miner to halt exploration activities.

BHP sought help from a Singapore arbitration panel, which in December upheld the validity of the joint venture. The ruling thus voided the restraining order issued by a Philippine court.

Atienza said he had met with Tan after the Singapore court ruling was released and would soon meet with BHP executives to convince both parties to proceed with the project.

BHP has remained silent on the issue while Tan was not immediately available for comment.

Now that Atienza has acknowledged the legitimacy of the binding Singapore arbitration court ruling, it will be interesting to see if the Arroyo administration actually steps up and enforces it, said Peter Troilo, director for business intelligence at risk consultancy Pacific Strategies and Assessments.

There is typically a major disconnect between government proclamations and actions in the Philippines, Trolio said.

BHP has committed to invest up to $2 billion in the mine, including a nickel processing plant, and has spent about $3 million so far on exploration, according to government data. (Reporting by Manolo Serapio Jr.; Editing by Rosemarie Francisco)© Thomson Reuters 2009 All rights reserved