Britain’s Churchill Mining said Wednesday it would seek international arbitration after an Indonesian court indicated it would dismiss its claim to one of the world’s biggest coking coal reserves.
The court published the rejection as a notation on its website, but is yet to officially enforce the decision.
Churchill chair David Quinlivan said: “It’s disappointing to see this notation on the case register. We are determined to continue to seek a legitimate remedy for our shareholders and protect our rights as a foreign investor in Indonesia.”
In a statement Churchill said “it will now move its attention to preparing and filing a claim” against Indonesia – with the International Centre for Settlement of Investment Disputes in Washington DC – for direct breaches of its own investment laws and obligations under global investment treaties.
It said it would file for arbitration “as soon as a few weeks from now”.
Churchill and a local partner obtained permits on 35,000 hectares (86,500 acres) of land on Borneo, expecting to find 100 million tonnes of the coking coal that is in high demand in India and China to drive their huge economies.
Instead, they found 2.8 billion tonnes, which Churchill said could bring in up to $1 billion a year for the next 25 years. They made the finding public in 2008.
However the permits were revoked by the district head in East Kutai and returned to the former concession holder, the Nusantara Group, which has declined to comment on the case.
Nusantara is owned by one of Indonesia’s wealthiest men, Prabowo Subianto, the former head of the notorious Kopassus special forces unit who is accused of human rights abuses during Indonesia’s 1975-1999 occupation of East Timor.
Churchill’s shares plunged more than 15 percent to 10.12 pence (15 US cents) in London trade on Tuesday, after the court decision was made public.
Since 2010, Churchill’s shares have plummeted over the row, from above 130 pence.
The Indonesian court’s decision follows a raft of government regulations on mining seen as unfriendly to foreign investors, including a law that obliges foreigners to divest 51 percent of their shares in Indonesian mining assets.