Busang scandal may drop mine financing<\/p>\n
SINGAPORE (Reuter): The Busang gold mine debacle in Indonesia
\nwill probably lead to a sharp reduction in finance for mining
\nprojects, the chief financial official of Canada's Placer Dome
\nInc said yesterday.<\/p>\n
\"In the near-term, people are going to be very cautious,\" Ian
\nAustin told Reuters in an interview on the sidelines of a mining
\nfinance conference in Singapore.<\/p>\n
\"Clearly, it's going to have an effect on the ability of
\njunior companies to raise financing for exploration,\" he said.
\n\"What we are seeing is a number of junior companies coming to
\ntalk again to us for (a possible) partnership.\"<\/p>\n
He said mining companies spent an estimated US$3.5 billion in
\n1996 on mineral exploration, up 40 percent from about $2.5
\nbillion in 1995.<\/p>\n
\"What's interesting to watch is what will happen to that post-
\nBusang,\" Austin said, adding funding for mine exploration may
\nslow down significantly.<\/p>\n
The Busang gold find, which had been touted by Canadian
\nexploration firm Bre-X Minerals Ltd as the biggest discovery of
\nthe century, collapsed two weeks ago after an independent audit
\nsaid it contained no viable gold deposits.<\/p>\n
Bre-X said earlier this year the deposit could contain up to
\n71 million ounces of gold.<\/p>\n
Consultant Strathcona Mineral Services Ltd said data on
\nBusang, in the jungle of Kalimantan in Indonesia, had been
\nfalsified on an unprecedented scale.<\/p>\n
Bre-X, the darling of investors early in 1997, has been
\ndelisted from the Toronto Stock Exchange and has sought court
\nprotection from its creditors.<\/p>\n
Canadian and Indonesian police have opened an investigation
\ninto the debacle, which some analysts have called the biggest
\nmining fraud in history.<\/p>\n
But Austin said he was optimistic things would return to
\nnormal because demand for copper and gold would grow at a steady
\npace. Gold would also continue to prosper despite sales by
\ncentral banks, he added.<\/p>\n
\"My cautious expectation is for a continuation of healthy gold
\nprices during the next 10 years,\" Austin said, adding much of the
\ngrowth in consumption would come from countries like China, India
\nand Southeast Asia.<\/p>\n
In copper, market worries that supply will outstrip demand
\nshould easily be offset by the fact most long-term economic
\nforecasts project global economic growth to average two-three
\npercent over the next 10 years.<\/p>\n
\"A common projection of copper demand growth is up to three
\npercent a year, which would mean that today's consumption of
\nabout 10.6 million tons will rise to about 14 million tons by
\n2007,\" Austin said.<\/p>\n
\"It is well worth remembering that it requires three, 100,000
\nton capacity new mines each year to offset a three percent per
\nyear trend growth in demand, assuming that no existing mines
\nclose,\" he explained.<\/p>\n
Meanwhile, DPA reported from Manila yesterday that
\nthe Geological Society of the Philipppines has launched an
\ninvestigation into the involvement of some Filipino scientists in
\nthe Busang gold fraud in Indonesia.<\/p>\n
The geological society said the independent probe would
\ndetermine the extent of Filipino participation in the hoax
\ninvolving Canada's Bre-X Minerals Ltd. that has been labelled one
\nof the biggest frauds in global mining history.<\/p>\n
Society President Rolando Pena said reports linking Filipino
\ngeologists working for Bre-X to the scam have \"demoralized and
\naffected\" other colleagues.<\/p>\n
\"The problem of salting of samples is something we have to
\nlook into,\" Pena said. \"But we believe our geologists are not
\ncapable of pulling off a scam.\"<\/p>",
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