Churchill Mining seeks $2bn in coal dispute with Indonesians

CHURCHILL Mining is heading to an international court of arbitration in May to fight for $2bn (£1.25bn) compensation in a dispute over an Indonesian mine that has one of the world's biggest undeveloped coal reserves.

Last week, Indonesia’s supreme court moved to reject an appeal by Churchill Mining which has been fighting Indonesia’s Nusantara Group for almost four years over the rights to develop coal reserves with a value that the company estimates at $3bn.

“If nothing happens, we would proceed with lodging our application around the end of May,” Churchill’s executive chairman, David Quinlivan said yesterday, when asked whether the matter would go to international arbitration.

“The arbitration would take place in a country that is neutral to Indonesia and Great Britain,” said Quinlivan, whose company will seek 75 per cent of the value of the asset, or about $2bn.

“It will be against the sovereign nation of Indonesia, which allowed our licences to be revoked in what we say is an unfair and improper manner.”

The 350-square-km (135-square-mile) mine site in East Kutai, a district in East Kalimantan province, is estimated to contain 2.8bn tonnes of coal reserves. Indonesia is the world’s top thermal coal exporter, and its fast-growing mining sector accounts for about 12 per cent of its GDP. From late 2007 until early 2008, Churchill bought a 75 per cent stake in Indonesian firm PT Ridlatama, which it says received four mining licences from the East Kutai government, and then spent about $50m on the project.