Herald mulls going to international arbitration over Dairi project

Australian mining firm Herald Resources may go to international arbitration to demand for substantial damages from the Indonesian government for the losses caused by the delay in its zinc project in Dairi regency, North Sumatra.

Company chairman Terry Allen said in the company?s annual general meeting in West Perth, Australia on Friday that the firm had lost patience over the government?s slow move to issue necessary permit for the development of its Dairi project.

?Our patience has limited time left to run. While we much prefer to be miners rather than litigators, we reserve the right to take the ultimate sanction of going to International Arbitration for substantial damages, which we are fully entitled to do under our Contract of Work. We are hopeful it will not come to that,? Allen said.

Herald and its partner PT Aneka Tambang Tbk, a state-controlled mining company, have found substantial high-grade zinc resources in Dairi?s forestry area but its plan to develop the deposit has been put on hold for years because the Ministry of Forestry still refuses to issue a permit for the project. The firm has secured all permits for the project, except for the forestry permit.

He said the firm had thus far taken ?softly-softly? approach in its effort to obtain the permit from the Ministry of Forestry given the fact that it had a good relation with the Dairy regency administration and the Ministry of Energy and Mineral Resources.

He admitted that issues relating to permitting were common now in all parts of the world and one of the hazards of the mining business. Big mining firms in Indonesia, such as BHP and PT International Nickel Company (Inco) also face similar problem in acquiring permit from the Ministry of Forestry.

Allen recalled that he recently met with Minister of State Secretariat Hatta Radjasa in Jakarta who advised that he had been appointed by President Susilo Bambang Yudhoyono to resolve issues relating to forestry and mining. The minister expressed the opinion after meeting both relevant ministers that a Presidential Regulation relating to underground mining would soon be signed, which should then remove any impediment to the Minister of Forestry granting our permit.

?The machinations of the Indonesian system, particularly within the Forestry Department are at times incomprehensible,? Allen said. (Denny)