JAKARTA (Reuters) - Indonesia's Papua province, home of the giant Grasberg copper mine operated by the local unit of Freeport McMoRan Inc <FCX.N>, said it has won a court battle in a claim against the company for 2.51 trillion rupiah ($188 million) in outstanding surface water taxes.


According to Papua's local government Indonesia's Tax Court has rejected a lawsuit lodged by PT Freeport Indonesia over the claim for taxes on water the company used from the Aghawagon and Otomona rivers between 2011 and mid-2015.


Freeport, which used the water to suspend its tailings in the Ajkwa River, about 120 kilometers (75 miles) away, had argued that a substantially lower tax rate should be applied, as set out in its contract of work signed in 1991, the administration said.


"The Papua governor's decree on the refusal of Freeport Indonesia's objections and a letter on tax assessment for surface water tax were declared valid and enforceable," it said, referring to a verdict from Indonesia's Tax Court on January 18. []


"This ruling was welcomed by the Papuan government's team of attorneys after a long struggle," it said.


A spokesman for Freeport Indonesia declined to comment on the matter.

Freeport Indonesia is currently in talks with the Indonesian government about changing the terms of its mining rights, under which Indonesia expects it to pay more taxes than under its existing contract.

Freeport is one of Indonesia's biggest taxpayers, with direct contributions of more than $16 billion to Southeast Asia's biggest economy in taxes, royalties, dividends and other payments between 1992 and 2015 according to company data.

Indonesia's Tax Court could not be reached for comment.

(Reporting by Fergus Jensen and Gayatri Suroyo; Editing by Greg Mahlich)