PERTH (miningweekly.com) – ASX-listed Terramin Australia has launched an arbitration process against its Algerian partner to resolve development differences for the Tala Hamza project.

The Tala Hamza project is owned by Western Mediterranean Zinc, a joint venture (JV) vehicle between Terramin and Algerian State-owned companies ENOF and ORGM.

As agreed to under the JV arrangement, Terramin, in 2010, completed a definitive feasibility study (DFS) for the project, submitting the results to the project partners for review.

However, the company noted that instead of the one-month review period expected, ENOF instead engaged an independent international consultant to review the DFS.

The year-long review expressed a number of criticisms of the DFS, including that the block caving mining method, which had been recommended by the DFS as being the safest and most economically viable, was unsuitable.

Terramin said on Friday that ENOF had failed to share its own report on the Tala Hamza project to support any of its assertions regarding the DFS.

Since 2010, the ASX-listed Terramin has undertaken what it called “every reasonable effort” to find a way forward to develop Tala Hamza, including agreeing to re-do part or all of the DFS.

To resolve the issue, the company had now turned to the International Chamber of Commerce, in Paris, to bring a resolution to the matter.

“We understand that the Algerian government is very keen to develop the mining industry in partnership with external companies that can bring expertise into Algeria to accelerate the development of this potentially important source of economic development and new employment,” said Terramin MD Nic Clift.

He noted that the company was also aware that the Tala Hamza project would be the first significant new mine for decades, with the company expecting some delays in its development.

“However, the only option available to Terramin is to seek a resolution by an independent third-party arbitrator,” Clift said.

The company noted that a range of outcomes was possible, including that ENOF or the Algerian government would seek to terminate the JV unilaterally. Clift said that, if a termination was sought, Terramin would make a claim for a “very significant” amount of damages.

“The Algerian Ministry of Mines has been working hard to build bridges with the international mining community and has reached out to mining countries, including Australia, for their support in developing the Algerian mining sector.

“Therefore, an adverse outcome for Terramin in this case, despite having met all its obligations, would send a very negative message to international investors in general and mining investors in particular,” Clift warned.