Rio sues Indonesian officials over nickel prospect

Rio Tinto’s Indonesian division has mounted a legal challenge to a regional government in Central Sulawesi, after it issued a mining permit to local miners.

The company has been negotiating a licence to develop La Sampala nickel deposit in Central Sulawesi and claims it was close to finalising an agreement, when local officials appear to have had a change of heart.

According to Rio, matters relating to taxation and compensation were yet to be resolved but negotiations had not broken down.

The miner has now issued a lawsuit against Morowali regency.

La Sampala is estimated to have the capacity to produce 46,000 tonnes of nickel a year and Rio Tinto has plans to spend up to $US2 billion on the project.

Under existing Indonesian law, mining companies need to obtain a contract of works from the country’s central government.

However, changes to regional autonomy that date from 1999 created legal uncertainties for foreign miners by allow regional governments to issue mining permits.

Indonesia is keen to attract foreign mining investment and it is understood that the country’s home affairs minister is looking into the difficulties that have arisen for Rio.