Jakarta court orders seizure of Australian miner's assets
Jakarta court orders seizure of Australian miner's assets
Dow Jones, Jakarta
A Jakarta district court has issued an order to freeze US$30 million worth of assets belonging to PT Thiess Contractors Indonesia, a unit of Australia's Leighton Holdings Ltd., to cover claims from workers fired last year in an industrial dispute.
The South Jakarta District Court recently issued the order, which bars Thiess from selling equipment at the Kideco coal mine in East Kalimantan province, which Thiess operates under contract, Peter Irwin, a commercial manager for the Australian company, told Dow Jones Newswires Tuesday.
SaMtan Co.Ltd. of South Korea owns the mine through local company PT Kideco Jaya Agung. The mine produced around 10.38 million tons of coal last year, making it one of the country's largest producers.
In a statement to the Australian Stock Exchange Tuesday, Leighton said the court hasn't yet seized any assets, and operations were continuing normally. The company said it hoped to reverse the decision through an appeal to the Indonesian courts in the next few months.
"Thiess is confident that the dispute will be resolved by the relevant Indonesian courts within the next month or two and will have no material effect on its operations," the statement said.
Leighton's problems in Indonesia date back to July last year when a dispute at the mine led to the company firing 170 workers. The company agreed to pay $70,000 to the workers to end their employment, according to the stock exchange filing.
The Australian company continues to employ around 800 people at the mine, mainly Indonesians, according to Irwin.
The fired workers have disputed the settlement and are demanding $300,000 through a local union, a sum which Leighton has refused to pay.
The dispute highlights growing problems with labor in Indonesia, which is pushing many foreign companies based here to consider moving operations elsewhere, including Vietnam and China.
At the core of the problem is the explosion of unions since the fall of president Soeharto in 1998. Under Soeharto, who ruled Indonesia with an iron fist for 32 years, one state-sponsored union kept worker disputes to a minimum. Now, constant strikes and increasing minimum wages are hurting the investment climate here, business people say.
Concerns over Indonesia's legal system are also deterring investment here, they add. Leighton said in its filing it was willing to honor the original ruling by an industrial court to pay compensation to the workers of $70,000.
Officials from the South Jakarta District Court weren't available Tuesday to explain the decision to freeze assets.