SPACE rather collapsed around me yesterday, so the end of my column was excised.
We were pondering the arrival of PTBumi Resources on our shores. It is an Indonesian company not unrelated to the oligarchs that still run our near-neighbour. And it has delivered a $455 million bid for Herald Resources, a little miner which has found a decent sort of lead-zinc deposit in North Sumatra.
Herald is being restrained from developing the Dairi project by the Indonesian Foresty Department, which has concerns about underground mining in state forests. These are people also not unrelated to the Indonesian oligarchs.
PT Bumi clearly imagines it will have less trouble leaping departmental hurdles than Herald. Given what we know about PT Bumi, that is probably right.
So what I was saying before being so rudely interrupted last night was that, the last time we heard of PT Bumi, it was during the Indonesian Government endorsed, quasi-theft of the Kaltim Prima coal mine from Rio Tinto and BP.
That wonderful process, which repeated a similarly unfair repatriation of the PT Arutnim coal mines from BHP, resulted in arguably the world's best thermal coal mine being sold to PT Bumi for a grand total of $US500 million in 2003.
Now even then, when a resources boom was far from anyone's thoughts as BHP was becoming the world's fourth biggest company, Kaltim Prima was worth at least $US2 billion. And back then, the US dollar was really worth something.
It is not often I would call on the FIRB to knock back foreign investment. But this is one which might properly be sent packing.
Ah, but that might rob the Herald shareholders of an opportunity get out of this whole nasty affair while the going is good. After all, what this bid suggests is that unless an Indonesian company owns at least 50.1 per cent of Herald, then the Dairi ore will stay underground for a good while yet.
The only other hope here, I suppose, is that the decision by PT Bumi to force the issue will force Australia's other lead and zinc players, like the cashed up Zinifex and less-liquid but equally ambitious Perilya, to ponder the hidden value of Herald. Perilya, mind you, needs no introduction to Herald. Only a month ago, it acquired a now very strategic 8 per cent stake in the little business and the 25 per cent surge in the price yesterday is making that punt look pretty good.
HER Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
