Potential lawsuits by 22 mining companies, including Freeport-McMoRan Copper & Gold (FCX-N) and Inco (N-T), against the Indonesian government could reach a staggering US$31.5 billion, according to a government official.
“Total estimates of potential litigation by 22 mining companies is $31.5 billion,” says economics minister Dorodjatun Kuntjoro-Jakti in a statement to parliamentary commissions.
The companies argue that forestry legislation ratified in 1999, which eliminates open-pit mining in the country, violates contracts they had before the legislation came into effect.
The law, designed to protect to rapidly depleting tropical forests from illegal logging, has forced some firms to suspend projects. For instance, Nusa Halmahera Minerals, majority owned by Aussie miner Newcrest, recently suspended gold mining activities in the North Moluccas because the forestry law does not allow the area to be mined. And, Indonesia nickel and gold producer PT Aneka Tambang has postponed the development of nickel resources on Gag Island, part of Papua province.
Some other operations affected by the law have been wholly owned Inco subsidiary PT Inco, in the South Sulawesi province, along with Freeport at its Grasberg operations in Papua.
The forestry law is so broad that should it be enforced, it could apply to almost all mining operations in Indonesia.
Indonesia is rich in coal, gold, copper, nickel and tin.
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