zinc producer dont miss, page-9

re: see i was right dont touch indonesia z have a read of this article.

this might explain the risks of doing business in indonesia. for your sake i hope you don't have a lot of capital invested as those forestry approvals may not eventuate.

SE Corporate Focus
HD Rio's Sulawesi nickel project tangled in red tape
BY Morgan Mellish JAKARTA
WC 588 words
PD 24 November 2006
SN Australian Financial Review
SC AFNR
ED First
PG 70
LA English
CY © 2006 Copyright John Fairfax Holdings Limited. www.afr.com Not available for re-distribution.
LP
Rio Tinto's negotiations with the Indonesian government over a proposed $US1 billion ($1.3 billion) nickel project in Sulawesi have become bogged down in tax and forestry issues and are running months behind schedule.

Indonesian officials had hoped a contract of work for the huge La Sampala project would be completed in September but it is now not expected to be finished until next year.

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The chairman of Indonesia's Investment Co-ordinating Board, Muhammad Lutfi, said the talks had hit several problems but various government departments were working hard to sort them out.

"There are two stumbling blocks - tax issues and also forestry issues," Mr Lutfi told The Australian Financial Review. "Other than that, we're almost finished.

"The co-ordinating board is right now working with all the institutions to get an understanding of [these issues]. The Ministry of Finance and the director-general of taxation are working 24/7."

A contract of work stipulates the conditions under which a mining company is expected to operate.

It includes any provisions to sell down ownership to local interests, applicable royalty and tax schemes and environmental obligations.

If the mine goes ahead, it would be one of the biggest foreign investments in Indonesia in recent years.

One industry source said Indonesian President Susilo Bambang Yudhoyono had planned to fly to London this year for a ceremonial signing but that had been shelved for the time being because of the delays.

The site, in central Sulawesi, contains two laterite nickel deposits covering more than 60 square kilometres.

Rio Tinto, one of the world's largest mining companies, said it would produce about 50,000 tonnes of nickel a year for more than 40 years and employ more than 5000 workers.

It has been compared with Canadian miner Inco's $US2 billion Goro nickel laterite project in New Caledonia.

However, Mr Lutfi, a senior bureaucrat who reports directly to President Yudhoyono, said the type of nickel to be mined was not identified under current laws so there was uncertainty as to the rate of tax.

"We need to make sure we don't tax it too much so it is not competitive but not too little so it looks like a free thing," he said. "The commitment is very strong [to getting this investment under way]."

The senior bureaucrat also said that Rio Tinto was concerned that, under the contract of work, approval to operate in forested areas had to be renewed every five years.

The company wanted those approvals to last the length of the contract.

"We're trying to find a wording so the certainty for the duration of the contract is there but, at the same time, the government can see all the terms and conditions are being met," Mr Lutfi said.

A spokesman for Rio confirmed the contract would not be ready until next year, saying the company now hoped production would begin in about 2015.

Analysts said nickel was an obvious gap in Rio Tinto's portfolio, which was generally short on base-metal investments and heavily weighted to iron ore.

Indonesia supplies about 16 per cent of the world's nickel, which is used for making stainless steel.

As well as La Sampala, Rio Tinto has the Eagle nickel exploration project in the United States and a joint venture with Norilsk Nickel to explore for nickel and other commodities in Russia.


CO
rtzcra : Rio Tinto Group
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HD Rio Tinto threatens to cancel US$2 bln Indonesian mining project
WC 134 words
PD 22 November 2006
SN Asia in Focus
SC ASIFOC
LA English
CY (c) 2006 Asia Pulse Pty Limited. Asia Pulse gives no warranty or guarantee as to the accuracy of the information, Asia Pulse shall not be liable for errors or omissions in, or delays or interruptions to or cessation of delivery of, the data through its negligence or otherwise.
LP
JAKARTA, Nov 22 Asia in Focus - Failure is looming over a US$2 billion nickel mining project of RIO TINTO (ASX:RIO) in Lasamphala, Central Sulawesi. Government sources told the newspaper Bisnis Indonesia that Rio Tinto will not sign a contract document if a new mineral and coal mining bill has been passed into law.

* The government does not appear serious about issuing a new regulation on low content nickel royalties as proposed by Rio Tinto, the source said.

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* In addition, four regional administrations demanded a payment of US$5 million each before the contractor starts producing, he said.