$US2B Indon coal dispute escalates
Mark Mentiplay, 16th Jul 2012
JULY 16 – Churchill Mining’s $US2B lawsuit against the Indonesian Government over the revocation of the UK-listed Australian company’s potentially multi-billion dollar thermal coal mining permits is a big deal for Indonesia and getting bigger.
There’s a lot at stake, not just for Churchill but for President Susilo Bambang Yudhoyono personally, his party and the Indonesian economy as foreign investors look increasingly askance at doing business there. It is a complex case that, mining analysts say, shows the weakness of the country’s regional/state mining policies and now simmers under the heat of vested interests at a time when the country is changing its mining equity laws and looks to play a more prominent role on the global stage.
The importance of Churchill’s ongoing legal stoush with the East Kutai regency authority in East Kalimantan is reflected in the outcomes from a recent presidentially instigated meeting of several Indonesian ministries to deal with Churchill’s escalated action, sparked by the Indonesian Supreme Court’s rejection of a request to overturn the East Kutai Regency’s decision.
What has emerged is a serious team of senior officials from the Energy and Mineral Resources Ministry, the Forestry Ministry, the ATG’s office, the Finance Ministry, the East Kutai administration and the Investment Co-ordinating Board that is now preparing the govt’s response.
Claiming the East Kalimantan provincial govt has seized its assets without proper right or compensation, Churchill has filed a lawsuit against the Indonesian President, East Kutai Regent Isran Noor, the Ministry of Foreign Affairs, Ministry of Energy and the Investment Co-ordinating Board. It has had its application for arbitration at the International Center for Settlement of Investment Disputes in Washington accepted.
President Yudhoyono, first defendant in the case, says his government is ready to face the lawsuit in international arbitration.
Vice director of mining and energy economics research company, ReforMiner Institute Komaidi Notonegoro, says the weakness of Indonesia’s mining policy is primarily down to poorly managed regional administrations that gives rise to disputes, such as overlapping concession areas and unregistered mining activities.
The problem is made worse by the fact that Indonesia does not yet have a clear path on how to develop its minerals and coal mining sector, with the govt as yet unable to create a map for mining areas across the country, as mandated by the 2009 Mining and Coal Law.
“Judging from past experience, several regional administrations cannot be trusted. The right to issue mining permits has to be given back to the central government,” Komaidi says.
The East Kutai Coal Project is a world-class thermal coal deposit, with a JORC mining reserve of 961Mt and a mining resource of 2.73Bt, on which a 2010 feasibility study envisages an initial 25-year operation, with a pre-tax net present value of $1.8B, an internal rate of return of 21% and a 7-year payback.
Pre-tax net cashflow is estimated in excess of $500M pa over the first 20 years production from a 30Mtpa open-pit producing high-quality sub-bituminous coal. Direct capital expenditure is estimated at $1.2B, before indirects, with operating costs of $25.10t FOB, excluding a royalty of $2.32t.
Also in the July 11 - 17, 2012 edition
- AFRICA
- Centamin bounces back
- Energetic junior cites Nigeria iron ore advantages
- ASIA DESK
- Philippines changes welcomed, but not by everyone
- Stock rally may follow Ito win
- EDUCATION
- Research, student numbers boost school’s growth outlook
- ENGINEERING
- Medal recognises process optimisation research
- EUROPE
- Here they go again
- Land ahoy!
- EXPLORATION
- Horseshoe investors look for more Fotios luck
- FROM THE CAPITAL
- Please, don’t just blame the Greeks
- GOLD
- Rubianna set to get on the map in De Grussa country
- INTERCEPTS
- 28 escape NZ mine fire
- 5BT birthday present for Vale
- A1 maiden JORC resource in 1400 Zone
- ABG moves into Kenya
- Alacer postpones South Kalgoorlie expansion
- Alecto builds its African landholdings
- Andina closer to 300,000oz pa Chile gold project
- Anglo unveils new South African leadership team
- Aquarius hails Kroondal performance
- Arian milling dispute takes toll
- Ashmont opens bids for Colombian mines
- Atlanta accepts $US2M fine over mine water discharge
- AuRico cuts Ocampo mine forecast
- Australian arbitrator to hear seafloor mining dispute
- Avenue widens Brazilian tin exploration
- Azumah weighs stand-alone Ghana mine
- Bannerman gains Namibian uranium approval
- Benton edges closer to spin out
- BHP seeks a Mount Nimba buyer: report
- Big gold production jump for St Barbara
- Big Russian shuts S African steel/vanadium mills
- Big upgrade for Rosemount copper project
- Blackthorn raises $40M for African projects
- Blackwater gold resource upgrade
- Blowout no deterrent to FMG
- Burma goes looking for resource investment
- Cameron gold production closer
- Canberra clears Chinese coal bid
- Carrick exceeds 1Moz gold resources
- CEO stays on for Harmony restructure
- CICP produces first Shanba gold
- Colombian coal project wins approval
- Commodities price crunch stops Fox deal
- Community agreement secured for Picha
- Congress supports US permit changes
- Copper Fox wins funds for Schaft Creek study
- County Coal increases US coal holdings
- DeGrussa copper reserve revealed, production next year
- Development works slow GRC’s Mexican gold output
- Didipio gold/copper project costs up $35M
- Diploma wins Rio Tinto housing contract
- Drilling brings good news for MetroCoal
- Eastplats sticks with CRM revamp plan
- Egyptian group wins La Mancha auction
- Ema settles Mulga Rock litigation
- Endeavour to outline plans for new mines
- Excellon responds to disclosure breach allegations
- Exco gears itself for a royalty battle
- Falling sales, prices hit Freeport-McMoRan profits
- Fatality halts Unisel mine
- Final tick for Grange’s Southdown project
- First Majestic boosts Mexican silver production
- First silver poured at Wonawinta
- First Uranium tailings recovery project sold
- Forbes lifts profit on strong demand
- Foreign business alarm at permit delays
- Fortuna on track for a big year
- Glencore-Viterra tie up gets Canadian approval
- Glory granted approval for Sapes PEIS
- Gold Fields takes 100% of Talas project
- Golden Camel set for the toll way
- Good half underpins Rio confidence
- Grange works around pit slip
- HK investor backs Universal Coal
- Iron ore leads BHP to new records
- Jupiter cashes up for expansion
- Lincoln setback on Gum Flat mine plans
- London ramps up Marampa mine production
- Macarthur hit with shareholder law suit
- Magnesium co-products to add revenue at Wynard
- Maiden resource secures Segue’s 30% of Emang
- Matilda moves to Keysbrook design
- Meekatharra gold contracts executed
- Mixed bag for Anglo American quarter
- MMK opens giant Russian steel plant
- More resources on way for ZYL
- New Argentine laws cut silver production
- New MD to lead Philippines exploration
- New study underpins Latin’s Peruvian project
- Newcrest promotes projects leader
- Nord Gold going for the rest of High River
- Norseman ups capital raising to $25M
- Northern Star set for more Paulsens growth
- NovaGold/Barrick’s Donlin gold monster closer
- Ord River cuts costs with Xstrata deal
- PanTerra lines up Lagunas funding
- Perseus downgrades current half gold production
- Petmin set to expand Somkhele operations
- PhosAgro and Acron settle phosphate fight
- Pike River sale completed
- Placement funds Talga’s Swedish drilling
- Rambler makes first Ming copper sales
- RCR lifts profit forecast again
- REG tightens hold on Chinese rare earths plant
- Rio launches driverless truck fleet
- Rio layoffs at Clermont coal mine
- Rockdale remains on diamond expansion target
- Sandfire seals first copper concentrate sales deal
- Shaft damage to cut Palabora production
- Shaw seeks funds for Namibia project
- Silver Mines eyes Albion technology
- Sylvania drops PGM production guidance
- Tanami’s Groundrush shaping as 1.3Moz deposit
- Teck moves on Connemara prospects
- The battle to stop Congo blood minerals
- THEMAC study finds true value
- Thiess extends Lake Vermont tenure
- Tinkler back for another Whitehaven bid
- TNG goes hi-tech in copper search
- Vector wins Chinese backing for WA mine
- Wescoal gets Intibane colliery permit
- Western Areas reveals new nickel discovery
- Xstrata Alloy chief retires
- ISSUES
- Helping mining families
- MINING INTELLIGENCE
- Is there really a shortage of people?
- MINING IT
- Engineer fishes for answers to contrasting FMS use
- FMS deployment on the rise
- IT notebook: Micromine, Leica/Guardvant, MIPAC, ABB, Trolex
- PEOPLE
- People on the move: CSA Global, IMX Resources, BC Iron, MetroCoal
- Re-think required
- SOUTH AMERICA
- Twist in the plot takes junior deeper into Chile
- TECHNOLOGY
- CRCMining switches research focus to power
- Dust control expertise spreads to Asia, Africa
- VIEW FROM THE WEST END
- Taxing times
