Rio Tinto prefers contract of work in developing La Sampala mine

Anglo-Australian miner Rio Tinto Plc has preferred to use contract of work (CoW) as the basis for the development of the company's nickel mine in La Sampala, Central Sulawesi rather than the newly licensing system called a mining permit, Kompas reported Monday.

"We prefer to use a contract of work because this licensing procedure has been used for a long time. We are not sure if the new licensing system will give investment certainty like those provided by the contract of work or (CoW)," Rio Tinto's Spokesman Mike Jolley said in Jakarta in the weekend.

The contract of work for the company's La Sampala nickel mine was initially scheduled for signing in September. The signing of the contract has been delayed because the company needs further clarification about the status of the forests in the mining area and the tax system to be adopted.

Rio Tinto, which is currently processing the closure of its gold mine site in East Kalimantan, hopes that the company will be able to sign the contract of work for the La Sampala nickel mine before the passage of the new mining law.

Under the new mining law, which is now being deliberated by the House of Representatives (DPR), the operation of a mining area should be based on a mining permit issued by provincial administration.

"We will have to see and learn the new regulation first. This may slow down the investment plan," Mike said.

Rio Tinto and the government are currently negotiating a 30-year Contract of Work (CoW) on La Sampala nickel prospect located in the border of South and Central Sulawesi provinces.

Director General of Mineral and Coal Resources Simon Sembiring earlier said that the firm would invest US$2 billion in the project. (*)