Rio Tinto wants Indonesia nickel mine under old law

Rio Tinto wants Indonesia nickel mine under old law

A nickel project on Indonesia’s Sulawesi island involving Rio Tinto Ltd/Plc should be agreed under existing mining laws to ensure it is attractive, the CEO of the mining firm said on Monday.

The comments by Tom Albanese highlight concern among mining firms over a draft mining law currently being debated by Indonesia’s parliament which includes plans to replace the use of working contracts with a mining licence.

The nickel project on the border of Central Sulawesi and Southeast Sulawesi provinces is estimated to have a capacity to produce 46,000 tonnes of low concentrate nickel ore a year.

“I think there’s several important factors why it’s important for this to be seen as a contract-to-work which we feel is the only mechanism that would make a project like this attractive,” said Albanese after meeting Indonesian Vice-President Jusuf Kalla.

“This is the first big new project and the first significant mining foreign direct investment (FDI) in Indonesia for over 10 years,” Albanese said, putting the value of the project at between $1 billion and $2 billion.

Mining firms have said mining licences have a less solid legal ground as they can be altered at any time and are valid for a shorter period.

The new mining law is expected to be approved by parliament in June and it aims to clear up legal uncertainty in the key mining sector.

Albanese said negotiations had made “good progress although (they are) not yet complete”.

Rio Tinto is one of several major global mining players in resource-rich Indonesia, which has been struggling to attract foreign investment in the mining sector.

The project also will need approval from Indonesia’s parliament.

Other global mining firms such as Newmont Mining Corp. , Freeport-McMoRan Copper & Gold Inc. and PT International Nickel Indonesia also have operations in Southeast Asia’s biggest economy.

Indonesia mines around 150,000 tonnes of nickel annually, about 10 percent of global production.

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