South Kalimantan's mayor threatens to confiscate Galuh Cempaka's assets

The Banjarbaru mayoralty in South Kalimantan is threatening to confiscate the assets belonging to diamond mining firm PT Galuh Cempaka, which is partly owned by Anglo-Australian mining giant Rio Tinto, if the company keeps refusing to pay royalties to the mayoralty, according to local daily Banjarmasin Post.

Banjarbaru's mayor Rudy Resnawan said recently that Galuh Cempaka owed the mayoralty Rp 3 billion (US$1=Rp 11,208) in royalties. This amount does not include royalties the company has to pay to the South Kalimantan province and the central government.

Rudy said the mayoralty was not worried about the possibility that Galuh Cempaka would leave the area without paying the royalties, citing that the assets owned by the company in the area were valued much than the royalties demanded by the mayoralty.

He said one of the assets was a dredging vessel worth tens of billions of rupiah.

Galuh Cempaka's deputy manager Prawito earlier said the company was likely to stop its diamond operation in the area because diamond resources found in the area was lower than expected.

Rio Tinto, which owns 48 percent of the company, was now offering its shares to interested buyers, he said, adding that the company would quit the area if Rio Tinto found no buyers by September this year.

The mayoralty demanded Rp 3 billion royalties for 3,000 carats of diamond which the company had reportedly taken from the area to Jakarta. (*)