MAC: Mines and Communities

Long-knives drawn in battle over Bumi

Published by MAC on 2012-11-25
Source: Reuters,

Talk about a thieves' kitchen!

Except, of course, we can't - if we're to avoid falling foul of UK libel laws.

But, how else to describe last week's banding-together of "Toxic Bob" Friedland and the devious Nat Rothschild?

And their joint venture to snatch the coal disaster that's Bumi plc, from the scandal-besmirched hands of the notorious Indonesian Bakries? See: From Burke to Bumi - a UK-Indonesian scandal  & Shaping modern mining: what's at stake?

Actually, one historical analogy does come to mind: the struggle between the bloody Borgias and the murderous Medicis  for mercenary ascendancy in 15th century Italy. 

Meanwhile, out of the public glare, another London-listed mining company intent on mining coal in Indonesia, can't have been pleased at a recent constitutional court ruling. 

[Comment by Nostromo Research, 25 November 2012] 

Robert Friedland backs Rothschild over Bumi - sources


22 November 2012

LONDON - Mining sector entrepreneur Robert Friedland is lending his support to Nat Rothschild's move to keep alive the London-listed Bumi Plc coal-mining venture, sources familiar with the matter said.

Rothschild founded Bumi two years ago with Indonesia's politically connected Bakrie family, which reversed Indonesian operating assets into a shell company set up by Rothschild.

The relationship has soured, and, in October, the Bakries bid $1.4 billion to reacquire operating assets that underpin Bumi, a move that would dismantle the group.

Earlier this month, Bumi said Rothschild had proposed an alternative. Sources familiar with the matter said that proposal would see Bakrie-supporting shareholders bought out, while Bumi would keep some coal assets, namely majority-owned Berau Coal.

Friedland - a billionaire famous for spotting the potential of some of the world's top deposits from Voisey's Bay nickel deposit in Canada to Mongolia's Oyu Tolgoi - has agreed to invest $50 million, one of the sources said on Thursday.

Bumi and Rothschild both declined to comment. Friedland was not available for comment.

Robert Friedland joins Rothschild-Bakrie fight over Indonesia coal mines

Frik Els

22 November 2012

Nat Rothschild ropes in Robert Friedland to take back Bumi, Wresting control of Indonesian coal mines from Sumatra's Bakrie dynasty

It was a billion dollar deal that was supposed to bring two famous business dynasties together - one from the East and the other the West.

Nat Rothschild, descendant of the founder of the two-centuries old banking empire, used his family name to get big players - "and big players only" - to back him in a deal to bring a chunk of the vast business interests of the Bakrie family of Indonesia to the City of London.

Listing the coal and other mining interest in London provided the members of the Sumatran family - one of whom has a good chance of becoming president of the world's fourth most populous nation - a high profile in the West and at the same time gave Nat, 41, the chance to finally transform his popular image from that of a partying rich kid into a financier with true investment chops.

It was not to be.

Barely two years after listing, Bumi plc is collapsing amid bitter recriminations, allegations of financial impropriety and a downturn in the market. Investors - including according to some reports members of the UK royal family - have lost three quarters of their money.

Rothschild quit the board last month, but today, Nat has come up with a new proposal to save the company.

He has raised $270 million to fund a proposal to sever ties between the Bakries and Bumi Plc and told Bloomberg News today that his proposal "appears to be the only workable solution." The Bakries have their own proposal worth $1.2 billion and are believed to be open to discussions.

A number of Bumi's top shareholders including Schroders, Standard Life Investments and Abu Dhabi Investment Co. support Rothschild's proposal, and Nat has also managed to bring on board Robert Friedland, the legendary mining financier, who has agreed to invest $50 million in the venture.

After a string of major successes, Friedland was poised to cap his mining career with the blockbuster $10 billion Oyu Tolgoi copper-gold mine in Mongolia, but he was ousted from his Ivanhoe Mines in April of this year after Rio Tinto took control of the Vancouver-based company.

Friedland bounced back last month raising more than $300 million when he took Ivanplats - an African platinum and copper venture - public in Toronto.

Indonesia's mining rules change yet again

Fergus Jensen


23 November 2012

JAKARTA - Indonesia's constitutional court partially upheld the latest challenge to the country's mining laws on Thursday, in a verdict that sees regional governments gaining more control over the use of land for mining.

This is the fourth challenge to the country's mining law this year, reflecting a growing tussle for resource revenues from the world's top exporter of thermal coal, refined tin and nickel ore.

The case, brought by H. Isran Noor, the head of coal-rich East Kutai regency, sees regional governments gaining more say in the zoning of mining areas, but will not have major impacts on the industry, mining legal experts say.

"The challenge to the provisions of the 2009 Mining Law dealing with mining areas will, most probably, not have much impact as it should not undermine the status of already issued IUPs," licensed foreign advocate Bill Sullivan said, referring to mining permits.

The ruling creates uncertainty over what criteria are used by regional administrations to determine mining areas, Rick Beckmann senior foreign legal counsel at law firm Norton Rose, said, adding that the issue of mining permits for foreign investment companies (PMAs) could also be a grey area.

"It's not like the BPMigas decision, but it certainly will cause some confusion," Beckmann said, referring to the recent constitutional court verdict that dissolved Indonesia's oil and gas regulator.

Indonesia's mining law may face a fifth review in the coming months according to lawyers for Indonesia's second-largest Muslim organization, Muhammadiyah, the same group that filed the case against BPMigas.

East Kutai is home to a site owned by London-listed Churchill Mining that has taken a dispute over its mining permit to international arbitration.

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