Rio Tinto may sign nickel CoW next month

Anglo-Australian mining giant Rio Tinto will sign nickel contract of work (CoW) next month after a meeting led by Vice President Jusuf Kalla on Thursday agreed to clear hurdles that had kept the CoW signing delayed for months.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said the main hurdles including taxation, royalty and forestry issues had been cleared during the meeting.

Rio Tinto is applying for CoW for La Samphala nickel project, which is located in the Central Sulawesi. Bloomberg quoted a company executive on June as saying that the project may produce as much as 46,000 metric tons of nickel a year and the investment to develop the mine could reach US$1 billion.

Talks on the proposed project have dragged on for months because of problems related to mining activities in forested areas, and taxes, Purnomo said.

``These issues have been settled today,'' he said.

Separately, Director General of Mineral and Coal at the Ministry of energy and Mineral Resources Simon Sembiring said that House of Representatives? approval is needed to sanction the CoW.

The government is currently drafting the mine law that would abolish CoW system and would be replaced by less-favorable licensing system issued by regional governments. Industry sources said that Rio Tinto is pushing to sign the CoW to avoid the new mining law. (godang)