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Indian mining co. sues Indonesia for $581 million
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The Energy and Mineral Resources Minister announced on Wednesday that the India Metals & Ferro Alloys Ltd. (IMFA) had filed a Rp 7.7 trillion (US$581 million) claim against the Indonesian government in an international court over a mining operating dispute.
Heriyanto, the head of legal section directorate general of minerals and coal at the ministry, said the lawsuit had been filed at the Permanent Court of Arbitration in The Hague, the Netherlands, with IMFA claiming that overlapping mining permits in Kalimantan had disrupted their operations.
'The government is being sued because [IMFA] was unable to carry out its operations,' Heriyanto told reporters.
According to Heriyanto, IMFA holds mining business permits but cannot use them because they overlap with seven other permits across East Barito, Tabalong and South Barito.
"Its mining business license [IUP] has actually been issued by the East Barito regency in Central Kalimantan," he said.
The international court is scheduled to hear the case in Singapore on Dec. 6. IMFA officials were not immediately available for comment.
According to Heriyanto, IMFA bought an IUP from PT Sri Rahayu Induk (SRI) for $8.7 million in 2010. However, he explained, the purchase was made without due diligence, with the buyer not realizing that SRI's business permit was apparently of 'non-clean and clear' status (non-CNC), and overlapped with other IUPs.
'The government plans to conduct an initial investigation into whether there has been a violation by the regent leading to potentially huge state losses," he said, adding that the case created a bad look for foreign investment security in Indonesia.
Heriyanto said that out of the total 10,364 business permits, 6,404 of them were clean and clear (CNC) and the rest non-CNC.
According to Heriyanto, to get CNC status, an IUP holder must meet the administrative requirement that states that a mining area must not overlap with other IUP holder areas and that documentation must be published in accordance with laws and regulations.
In addition, he said, IUP holders had to meet certain technical requirements, such as submitting exploration reports, feasibility studies and environmental documentation, as well as fulfilling payment obligations relating to fixed fees and royalties.
Land disputes and overlapping permits for plantations and mining operations are a common problem in Indonesia as various government agencies use different maps and data. (dan)
