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JAKARTA, June 8 (Reuters) - London-listed Churchill Mining and the Indonesian government are holding talks aimedat reaching a settlement over a long-running dispute for one ofthe world's biggest coal reserves, a source familiar with thenegotiations said.
Churchill has been embroiled in an international arbitrationbattle since 2012 with Indonesia over the licensing of the EastKalimantan coal project that is estimated by the firm to contain2.73 billion tonnes of coal reserves.
The protracted battle comes at a time when Indonesia'sgovernment under President Joko Widodo has been trying toencourage more foreign investment to revive slowing growth inSoutheast Asia's biggest economy.
A source familiar with the talks did not give details onnegotiations but said there was an "open channel" between themining firm and the government.
"Based on the talks that we're having, I'd be confident thatthere will be a settlement, but it's a question of whatChurchill shareholders think will be the right amount," said thesource, who declined to be identified because of the sensitivityof the situation.
The case revolves around the disputed ownership of the350-square-km (135-square-mile) mine site in East Kutai, whichthe British miner says is worth around $1.5 billion.
The source said that while talks were ongoing, the legal orarbitration route would continue.
Churchill has spent more than $10 million on its legal bidafter claiming that it had been unfairly stripped of itslicences and accused of fraud.
A verdict in the arbitration case was previously expectedin 2016, but the mining firm's shares have soared by 50 percentafter it issued a statement last week saying Indonesia was nolonger alleging it was involved in fraud.
Indonesia's attorney general's office could not be reachedfor comment on the issue and Churchill's Australian office didnot immediately respond to a request for comment. (Reporting by Michael Taylor; Editing by Ed Davies)
