Berau Thermal Coal Project

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The Berau Thermal Coal Project is a small proposed coal mine located in 40 kilometres south-west of Tanjungredeb in East Kalimantan, Indonesia. An Australian company, Strike Resources, states on its website that it "holds 100% of the rights to mine a coal concession (IUP), subject to paying a royalty to the IUP owner." The company states that it is aiming to establish "a mine producing up to 3Mt [million tonnes] of thermal coal per year."

The company states that theconcession area covers 5,000 hectares but does not name the concession owner. Strike Resources states that the project has a resource of 27.7 million tonnes "of thermal coal with medium calorific value ([5,600] kcal/kg gross as received) with low sulphur, ash and moisture" with "substantial further exploration potential."

Strike Resources states that "the operation will involve mining and transporting run of mine coal by truck approximately 30 km along a proposed road to a barge port to be constructed on the Segah River, where it will crushed directly on to barges. Barges will then transport the coal approximately 90km to the coast and then on to a trans-shipment point 30km offshore, where it will be offloaded to ships for delivery to customers."

Dispute over concession

In its quarterly report for the period to June 30, 2011, Strike Resources states that it "is in dispute with the concession owner and dispute resolution proceedings are likely." The company stated that in the quarter the company "continued negotiations to restructure the Berau Project co-operation agreement to address issues raised by Indonesia’s 2009 Mining Law. As previously announced, the position adopted by the Company’s partner has raised uncertainty about whether negotiations will succeed and dispute resolution proceedings are now likely."

In November 2010 Strike stated that the new Indonesian Forests law "and supplementary regulations issued over the following year created uncertainty with respect to Strike’s obligations to carry out certain aspects of mining operations and make payments to the Berau concession owner under the Co-operation Agreement between the owner and Strike. The Cooperation Agreement requires Strike and the concession owner to enter good-faith negotiations to amend the agreement to ensure consistency with the new Law, whilst preserving the economic substance of the original agreement. In performance of that requirement Strike has put a number of proposals to the concession owner in good-faith. Strike has devoted considerable efforts to these negotiations over the past year. The position adopted by the concession owner in negotiations makes further progress uncertain at this time. Consequently Strike is considering all options, including dispute resolution proceedings."

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