Churchill fights on through the courts to hold its Indonesian coal concessions

With upwards of 2.7 Bt of thermal coal resources in East Kutai Regency in East Kalimantan province, Indonesia, Churchill Mining's shares rose earlier this year on reports that it was in talks with Indian power companies with a view to selling the its concessions. They were also supported by thermal coal prices, which are expected to break their record $125 a tonne peak set in 2008-09.

However, Churchill's shares have more than halved in value over the past 10 days following a decision by an Indonesian regional court to cancel its mining licences, questioning their validity. The decision of the Provincial Administrative Tribunal in Samarinda, East Kalimantan, read out on March 3, relates to the revocation of the four mining licenses that comprise the East Kutai Coal Project, or EKCP.

David Quinlivan, Chairman of Churchill Mining, says the company's Indonesian legal advice is that the Tribunal's decision is not final and binding as a matter of Indonesian law until after all appeal avenues have been exhausted and the EKCP Licences remain valid at this point in time.

He said the validity of the EKCP Licences have been confirmed separately on a number of occasions: by (1) the BPK, an independent state agency acting as an auditing body, (2) the East Kutai police who investigated allegations of forgery in relation to the licences and found there was no case to answer, and (3) during the Administrative Tribunal proceedings themselves when the Minister of Energy and Mineral Resources' Head of Legal and Legislative Affairs gave expert testimony that the Ministry continued to regard the Licences as valid and enforceable. "No cancellation decree has ever been lodged with the Ministry of Energy and Mineral Resources as is required by administrative protocol," he said.

Churchill will appeal to the high court in the national capital. It is expected to take several months after the lodgement of the notice of appeal before the Administrative High Court in Jakarta issues its notification to the parties, which marks the beginning of the formal appeal process.

If the Administrative High Court appeal is unsuccessful, a further appeal can be lodged with the Indonesian Supreme Court. If the Supreme Court appeal is unsuccessful the company can request a Civil Review of the Supreme Court decision. Further legal recourse may be sought under the jurisdiction of the International Centre for Settlement of Investment Disputes.