Bre-X and Barrick battle for Busang gold

JAKARTA (JP): The battle to acquire control of the world's largest gold deposits in West Kalimantan has accelerated, pitting a Canadian company against an American competitor, each backed by a politically powerful local partner.

"The Indonesian government may appoint Barrick Gold Corp. of the United States as the final mining contractor, instead of Canada's Bre-X Minerals who initially discovered the huge gold deposits," the Kontan business weekly newspaper said yesterday.

The weekly, quoting informed sources, said Mrs. Siti Hardiyanti Rukmana (Tutut) -- President Soeharto's eldest daughter and Barrick's local partner -- met Minister of Mines and Energy I.B. Sudjana for 90 minutes on Wednesday apparently to discuss contracts for the Busang gold mines.

"A few hours later officials met successively with three Canadian executives and two American businessmen at the headquarters of the ministry of mines and energy," the weekly said.

"The three Canadians emerged out of the meeting with sour faces while the Americans came out cheerfully," it said, indicating that the American company had a better chance to control the Busang gold mines.

Late last month, when Bre-X signed a cooperation agreement with Sigit Hardjojudanto -- Tutut's younger brother -- most analysts immediately predicted that the Canadian mining company would soon get the final contracts of work for the two gold mines in Busang.

Under the agreement, Sigit's company, PT Panutan Duta, would get US$1 million in monthly consulting fees for 40 months and receive a 10 percent carried interest in the two mines.

Most analysts reckoned that Bre-X's alliance with Sigit aimed to help Bre-X obtain the final contracts of work for the two gold mines, claimed to contain 44 million ounces of gold.

Kontan quoted mining officials as predicting that the Barrick- Tutut consortium would most likely acquire 75 percent of the gold mining concessions while the Bre-X-Panutan consortium would have to be content with the remaining 25 percent.

But analysts foresaw international repercussions if the contracts were awarded to the U.S. company because Bre-X holds a provisional license for the gold mines.

"Awarding the Busang gold concessions to Barrick may set off a chain of international protests and law suits because it was the Canadian firm which initially made the gold discovery under its provisional license," the analysts were quoted as warning.

The analysts also reckoned that if Bre-X failed to get the final contracts, Sigit's Panutan might also lose its lucrative deal with the Canadian company. (vin)