Govt set to sign Rio Tinto's contract on La Sampala nickel mine

The government is targeting to conclude negotiations with Rio Tinto to develop an integrated nickel mine in La Sampala, Central Sulawesi before the implementation of the new mining law, which is now being deliberated by the House of Representatives, a minister has said.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said Tuesday that the government hoped Rio Tinto's contract could be signed before March so that the company could immediately begin its mining activities in the area.

"At present, the government and Rio Tinto are finalizing several issues in the contract," Purnomo said.

Rio Tinto plans to invest about US$2 billion in the La Sampala nickel mine. As part of the investment plan, the company would also build a nickel processing facility with a capacity of about 46,000 tons a year.

The government initially planned to sign Rio Tinto's contract of work to develop the La Sampala nickel mine in September. Negotiations have been impeded by several issues including the status of conservation areas in the mining site and unsettled tax facilities.

Rio Tinto Indonesia's director for processing division Charlie Lenegan said that the negotiations could not be concluded as expected because the company had to wait for responses from the ministry of forestry and the ministry of finance about the status of the forest in the mining area and the tax incentives to be given to the company.

Lenegan hoped that the contract could be signed before the implementation of the new mining law because if the contract is issued after the law is passed; all the negotiations should be reviewed. " It will be a major setback," he said.

According to him, the proposed law does not accommodate a large-scale and long-term mining investment plan. He said that the company might delay its investment plan to give its enough time to study the proposed law. (godang)