Kasus Churchill : Asset Seizure


Ini kasus seperti dibiarkan oleh pemerintahan SBY seakan menunggu meledak. Jika hal ini meledak kemungkinan besar akan berdampak pada iklim investasi di Indonesia.. Segera bertindaklah jangan hanya menunggu !

British Mining Firm Sues Indonesia for Asset Seizure

Yusuf Ahmad/Reuters
Churchill Mining has explored for coal in East Kalimantan, Indonesia, despite the political risks.
By SARA SCHONHARDT
Published: June 6, 2012
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JAKARTA, Indonesia — When David F. Quinlivan visits Indonesia, he carries stacks of documents and a well-worn map of a mining concession in East Kalimantan province marked with a dizzying array of timelines and arrows. They are his weapons in a two-year battle with Indonesia’s judicial system.

Since 2010, Mr. Quinlivan, the chairman of Churchill Mining, has been fighting over rights to a $1.8 billion coal project in the Indonesian portion of Borneo, an island laden with valuable mineral deposits.

On May 22, the British company’s lawyers filed for arbitration at the International Center for Settlement of Investment Disputes in Washington, which was established to settle international disputes. Churchill is seeking $2 billion from the Indonesian government, claiming that the regional government in East Kalimantan seized its assets without proper compensation.

“This is another phase of the legal process,” Mr. Quinlivan said.

Churchill’s troubles have attracted the attention of other mining companies and highlighted the uncertainties of investing in Indonesia.

Analysts say that new regulations for the mining industry could sharply increase the costs of doing business. Among the new rules is one that would require foreign companies to divest themselves of majority control of their mining projects within 10 years of starting production.

Another would impose a 20 percent tax on exports of 65 unprocessed minerals and metals, including nickel, tin and gold.

The mines and energy minister, Jero Wacik, said the ministry was contemplating a tax on exports of certain types of coal in which many Indonesian mining companies have invested. At a conference this week in Bali, he said the country needed to conserve its resources for domestic use.

The regulations already in effect aim to add value to the industry by requiring mining companies to refine metal ores in Indonesia; in 2014, all unprocessed exports will be banned, officials say. The tax would also increase the government revenue from the mining sector, which already contributes 12 percent, or nearly $85 billion a year, to the country’s gross domestic product.

Julian Hill, a mining adviser at Deloitte Touche Tohmatsu in Jakarta, said the tax obligation would not be a killer, but would stunt the growth of the industry and the country’s economy.

Analysts say Indonesia’s new rules are part of a trend in resource nationalism and will benefit special interests at the expense of foreign investors.

“What you’re talking about is a lack of certainty — business certainty and contract certainty,” said Keith Loveard, an analyst at Concord Consulting, an advisory and consulting firm based in Jakarta. “You don’t have either here.”

It has always been difficult for foreign investors in Indonesia, particularly in areas of national interest like coal and oil, of which there are large, untapped reserves. Rising resentment from local communities that bear the environmental brunt of mining projects has also fueled opposition.

Bill Sullivan, a legal adviser for many large mining operations at the Jakarta law office Christian Teo Purwono, said the new regulations were the government’s way of striking at the mining industry before general elections in 2014.

“What we’re seeing is the government trying to garner votes in the forthcoming presidential election by showing that it’s taking a tough line with the mining industry and an even tougher line with foreign investors in the mining industry,” Mr. Sullivan said.

Other factors are also at work. Some officials question the need for foreign investment in a sector that, unlike oil and natural gas, does not need huge amounts of capital or technical expertise to exploit. Indonesia’s murky regulatory environment compounds the situation, according to Concord Consulting. And there are always accusations of opportunism.

“Indonesian businesspeople have seen the huge amount of money foreign owners of mining projects have made and stand to make in the future, and they’d like to take it away from them,” Mr. Sullivan said. “I think that’s exactly what happened in Churchill’s case.”

Despite those hurdles, Mr. Sullivan said the new rules governing ownership and taxation were unlikely to have a “catastrophic impact” on the mining industry. Foreign mining companies that are heavily invested in Indonesia probably will not walk away, because doing so would mean losing the millions of dollars they have already spent. And, many smaller companies say they are willing to bear the risks in anticipation of future paydays, he said.

But the rules could harm a country that is just starting to receive foreign investment, thanks to recent ratings upgrades by Moody’s Investors Service and Fitch Ratings.

Standard & Poor’s Ratings Services has been more cautious, saying in April that the country’s rating would remain at junk level, in part because of uncertainty in the mining sector.

Mr. Quinlivan of Churchill said his company understood the risks but had been prepared to invest in the East Kalimantan concession because it believed it had the certainty of title and it needed to begin exploring.

Now, “there are a lot of people out in the wider mining community saying, ‘We told you so,’ ” he said in an interview in February, soon before submitting a letter to Indonesia’s president outlining the company’s predicament.

Churchill started exploring for coal in East Kalimantan in 2008, shortly after acquiring a 75 percent stake in four licenses awarded to the Ridlatama Group, an Indonesian company Churchill had worked with in exploring for thermal coal, the kind sought by India and China.

Churchill had not expected to strike it rich, but in May 2008 it disclosed that it was sitting on a “significant” resource of thermal coal — 2.73 billion tons of it, making the site the seventh-largest undeveloped coal mining asset in the world, with the potential to generate $700 million to $1 billion annually for 20 years.

Churchill’s licenses covered an area in the East Kutai district once controlled by several companies affiliated with the Nusantara Group, a politically connected Indonesian conglomerate that the district government said had allowed its licenses to expire.

Soon after Churchill disclosed its discovery, Isran Noor, the same district head who had awarded Churchill’s local partner its licenses, extended the expired ones held by Nusantara.

During a meeting in February, Robert Gelbard, a former United States ambassador to Indonesia now working as an adviser for Churchill and others, said the situation facing Churchill smacked of a political power play at the regional level.

A big Nusantara shareholder, Prabowo Subianto, a former head of the Kopassus special forces under the autocrat Suharto, is one of the probable favorites in the 2014 presidential election.

Nusantara could not be reached for comment, but Mr. Noor, chief of East Kutai, told Tempo Magazine in March that his friendship with Mr. Subianto was not the reason he had revoked Churchill’s licenses.

He said Churchill was arrogant and had not developed a good working relationship with the local government.

“They are Englishmen. They should obey regulations, not violate them when they come here,” Mr. Noor told Tempo.

When Mr. Noor revoked the Churchill-Ridlatama licenses in May 2010, he said the company had conducted illegal logging activities in a forestry area. He later accused Churchill of forging its mining licenses and holding licenses that overlapped with those previously issued to Nusantara.

Mr. Quinlivan said he thought the overlapping licenses were engineered as part of a “high-value asset grab,” and his company had been appealing the decision in local courts ever since.

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