COMMISSIONER OF STATE REVENUE -v- OZ MINERALS LTD [2013] WASCA 239 (17 October 2013)

COMMISSIONER OF STATE REVENUE -v- OZ MINERALS LTD [2013] WASCA 239 (17 October 2013) - WASCA 2013 case summary — Zoe

[131]

The Feasibility Study Period for any part of the Contract Area shall commence on the date the Company submits a written application as hereinabove provided to the Department in relation to its decision to proceed with the evaluation and shall end upon the commencement of the Construction Period therefor as hereinafter provided.
As soon as the Company has submitted written application, the Company shall commence studies to determine the feasibility of commercially developing the deposit or deposits in question ...
At any time during the Feasibility Studies [sic] Period the Company may submit a written application to the Department that it desires to proceed with the construction of a mine and facilities to be used by the Company in its operation. If the Department does not object, in writing, to such application, its approval shall be received by the Company within three (3) months of receipt of such application. Upon approval of that application, the Company shall commence and, with reasonable diligence, execute to completion the design of the facilities and subject to completion of the design of the facilities shall supply the same for the approval of the Department, together with an estimate of the cost of such facilities and a time schedule for the construction thereof which time schedule shall, to the extent economically and practically feasible, provide for completing the construction of such facilities within thirty six (36) months after the approval of the plans and designs and time schedule for construction of such facilities. Within three (3) months after submission the Department shall notify the Company of its approval (which will not be unreasonably withheld) or disapproval of the mining plan, design and time schedule for construction, subject to paragraph 2 of Article 16. In the event of disapproval, the Company shall be notified by the Department of the cause for disapproval and the Department and the Company shall consult in a [sic] good faith to attempt to remove the cause for such disapproval. If, after a period of three (3) months from the notification of such disapproval, there has been no resolution of the matter then either party may proceed to resolve the matter in accordance with Article 21 paragraph 1.

[146]

Subject to laws and regulations which may from time to time be in force in Indonesia, and subject also to the provisions of paragraph 2 of Article 25 and paragraph 2 of article 16, the Company may at any time file with the Department a plan or plans and may thereafter file additional or amended plans covering:

(i) the Mining Area or Areas in which the Company proposes to construct facilities related to production;

(ii) all other areas in which the Company proposes to construct any other facilities necessary for the Enterprise and the location of all such rights in and over land including easements, rights of way and rights to lay or pass on, over or under land, any roads, railways, pipes, pipelines, sewers, drains, wires, lines or similar facilities as may be necessary for the Enterprise; and

(iii) all other areas in which the Company shall have the right to construct such additional facilities as the Company deems necessary or convenient for the Enterprise.

The Government shall thereupon make arrangements for the Company to utilize and remain within all such areas and such land covered by such plans (or such comparable areas as may be agreed between the Government and the Company) and to exercise the other rights specified above with respect to each such area. The use and occupancy of any areas covered by such plans shall not be subject to payment by the Company of any charges or fees other than those specified elsewhere in this Agreement. The plans filed pursuant to this paragraph shall, to the extent practicable, give description in sufficient detail to permit precise identification of the designated areas. The Government shall assist the Company in arrangements for any necessary resettlement of local inhabitants whose resettlement from any part of the Contract Area or the Project Areas is necessary and the Company shall pay for the resettlement and give reasonable compensation for any dwelling, privately owned lands (including such land ownership based on any Indonesian customs or customary laws, generally or locally applicable) privately owned crops and flora or other improvements in existence on any such parts which are taken or damaged by the Company in connection with its activities under this Agreement.

[191]

This is reflected in recital A to the [Martabe Contract of Work], which states that all mineral resources contained in the territories of the Republic of Indonesia are the national wealth of the Indonesian nation.
Consistent with minerals being controlled by the State as part of the national wealth of the Indonesian people, the Government of Indonesia is in a position to enter into contracts such as the [Martabe Contract of Work] under which it is agreed that the contracting party will have certain rights to explore for and mine minerals in consideration for the contracting party agreeing to perform certain work and undertake a number of obligations (article 2(1) of the [Martabe Contract of Work]).
However, while the Government of Indonesia was in a position to agree under the [Martabe Contract of Work] that PTAR would have certain rights to minerals in the Contract Area referred to in the [Martabe Contract of Work], the [Martabe Contract of Work] did not confer any interest or rights in the land itself. The [Martabe Contract of Work] does not grant any title to land or any leasehold or other interest in land or any rights in relation to land (see paragraph 66 of my Original Statement).
As at 31 March 2007, I understand that PTAR had identified approximately 530 plots of land within the Contract Area referred to in the [Martabe Contract of Work]. Of these, a process of identifying local landowners and confirming land boundaries had been completed with respect to approximately 330 plots of land. It was legally impossible for the Government of Indonesia to purport to confer upon PTAR any interest or rights with respect to that land, nor does the [Martabe Contract of Work] seek to do so (see paragraph 66 of my Original Statement).
In order to gain access to and the right to enter the land within the Contract Area for the purpose of carrying out mining activities, PTAR had to negotiate and reach agreement with the local land owners who owned the land. This is something that PTAR sought to do from the time the [Martabe Contract of Work] was entered into in 1997. As at 31 March 2007, a number of agreements for access to the land for mining purposes had been entered into between PTAR and local land owners in relation to some of the approximately 330 plots of land, and others were in the process of being negotiated ...
Any rights that PTAR had to come on to the land, have access to the land or to occupy the land were derived from agreements entered into with the local land owners ...
No right to enter or occupy the land was conferred by the [Martabe Contract of Work], nor did the Government of Indonesia have the legal ability to grant any such right under the [Martabe Contract of Work].

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Judgment (522 paragraphs)

COMMISSIONER OF STATE REVENUE -v- OZ MINERALS LTD [2013] WASCA 239 (17 October 2013)

Legislation Cited (9)

Cases Cited (29)