Govt, Rio Tinto agree on royalty for La Samphala nickel project

The government of Indonesia and Anglo-Australian mining giant Rio Tinto have reached an agreement on the royalty for the company's future nickel mine in La Samphala, Central Sulawesi, Bisnis Indonesia reported on Thursday.

 

The deal was clinched  in Jakarta Tuesday in a meeting between director general of mineral, coal and geothermal at the energy and mineral resources ministry Simon Felix Sembiring and Rio Tinto’s new president director Tom Albanese.

 

Under the contract of work to be signed by the company, Rio Tinto will pay a royalty amounting to 1.5 percent of its production at the London Metal Exchange (LME) price for intermediate products and 0.75 percent of its output at LME price for ready products. Initially, Rio offered to pay 1 percent in royalty for internediate products, 05 percent for ready products.

 

In order to provide a legal basis for the agreement, the government would revise the government regulation No. 45/2003 on the Tariff on State Non-Tax Revenue from energy and mineral resource, Simon said.

 

The government regulation only regulates mines with a nickel content of above 2 percent, whereas the mine which Rio Tinto will develop has a nickel content of only 0.5 percent.

 

Rio Tinto Indonesia’s community relations and external affairs manager Budi Irianto confirmed that the company and the government had reached an agreement on royalty.

 

He said that as a follow-up, Rio Tinto would continue our negotiation on tax issue with the ministry of finance. “We have also made a progress in negotiation with the finance ministry,” he said. (*)