Release: Rio Tinto negotiation development of CoW at Sulawesi nickel project

(22 May 2007) -- Rio Tinto is finalizing the last elements of the Contract of Work (CoW) with the Indonesian government for a planned nickel mining project in Sulawesi. The project involves the mining and processing to metal of a low grade ore that is currently treated as waste by other nickel producers.

 

If it proceeds, the project will be the first to produce nickel metal in Indonesia, and will bring much needed investment to this remote region. It will involve an initial investment of up to $2 billion and will create up to 5000 jobs.

 

1 May 2007 the parties settled the matter of the royalties that will apply to the project. This marked a major milestone in the negotiations for the project, which officially started in 1998.

 

Rio Tinto is pleased with this development, which took place shortly after His Excellency Vice President Jusuf Kalla warmly received our recently appointed CEO Tom Albanese in Jakarta on 30 April 2007. We are extremely grateful for Mr. Kalla’s initiative in coordinating the many different agencies in the government to enable progress to be made. This includes a meeting of Ministers on the 22^nd February 2007, following which statements by the Government confirmed that a Contract of Work would be concluded with Rio Tinto.

 

The major remaining issues to be discussed with the government relate to tax and fiscal matters. Rio Tinto wishes that the best solution for both parties over these areas will be reached as soon as possible, and therefore we are continuing to communicate with all relevant government officials. We also would like to reiterate that our tax and fiscal proposals are economically competitive and in line with industry practice, as similar terms have been extended to other mining projects in Indonesia.

 

Rio Tinto has informed the President, His Excellency Susilo Bambang Yudhoyono of its proposal, which will meet the Government of Indonesian’s objectives in terms of promoting major foreign investment to accelerate development of remote regions.

 

Concepts of sustainable development and corporate social responsibility will underpin the project. When the tax and other fiscal provisions are settled, Rio Tinto will discuss with the provincial and regional governments the regional and community development provisions to be included in the CoW. Rio Tinto earnestly looks forward to working with the people of Sulawesi and contributing the social, economic and technological development that a project such as this will bring. (end of release)