Rio Tinto asked to share disputed Sulawesi nickel concession area

Anglo-Australian mining giant Rio Tinto and Bintangdelapan Group may share the Lasamphala nickel concession in Central Sulawesi and Southeast Sulawesi provinces as the solution to end their dispute over the 72,000-hectare concession area, Bisnis Indonesia reported on Thursday.

Director for mineral and coal mine development at the Ministry of Energy and Mineral Resources, Mangantar S. Marpaung, said in Jakarta on Wednesday that the ministry had established an inter-governmental team to settle the dispute between Rio Tinto and Bintangdelapan over the concession area.

Marpaung said that the team which comprises representatives from the Ministry of Energy and Mineral Resources, the Ministry of Home Affairs, the Investment Coordinating Board (BKPM) and South and Southeast Sulawesi administrations were seeking amicable solution to settle the dispute.

He said that the legal litigation in dealing with the dispute had been temporarily stopped while the team was seeking amicable solution to solve the problem.

He said that the team would possibly ask Rio Tinto and Bintangdelapan to share the disputed concession area given the fact that the area would be too large to be developed by a single company.

Marpaung, however, said that the larger part of the concession area would be given to Rio Tinto which had promised to spend up to US$2 billion on the nickel mining project.

Under the existing mining law, mining investors should obtain contract of works from the central government. But since regional autonomy rules were introduced in 1999, regional governments can also issue mining permits. This has caused problems because the KP (Mining Conract) contracts issued by the local government often overlap with the contract of works issued by the central government

Rio Tinto recently sued the Central Sulawesi administration for issuing mining permits to Bintangdelapan, while the world?s mining giant was still negotiating with the central government over the concession area.

The Morowali regency has issued KP over areas that are part of the Lasamphala concession to five companies affiliated to local firm Bintangdelapan Group and is processing applications from three other companies. Meanwhile, the Konawe regency has received seven applications for contracts over areas overlapping with the Lasamphala concession from companies affiliated with Bintangdelapan, including PT Panca Metta, PT Meltapratama Perkasa, PT Bintangdelapan Wahana and PT Bintangdelapan Mineral. (*)