Busang scandal barely impacts mining investment

Busang scandal barely impacts mining investment

JAKARTA (JP): The scandal over the Busang gold field in East
Kalimantan, which involved Canadian exploration company Bre-X
Minerals, did not have much of an impact on Canadian mining
investment, a Canadian official said yesterday.

Toronto Stock Exchange senior vice president John Carson
admitted that the Busang scandal had made investors in Canada shy
away from financing junior mining companies, but he believed the
effect of the scandal was only temporary.

He believed investors' reluctance to finance mining activities
was also caused by the weak price of gold, which was affecting
the entire precious metal sector.

Once the gold price improved, the mining sector would rebound,
Carson told The Jakarta Post on the sidelines of a seminar on the
Indonesian-Canadian cooperation in the mining sector.

The two-day seminar, which ends today, was co-organized by the
Canadian government, the Association of Indonesian Mining
Professionals (PERHAPI) and the Prospectors and Developers
Association of Canada.

The relationship between Indonesia and Canada has generally
been strong as Indonesia's mining sector has thus far been
dominated by Canadian companies. But the relationship was tainted
by the Busang scandal.

Bre-X claimed late last year it had discovered the world's
largest gold find at Busang, prompting several giant
international mining companies and top Indonesian businesspeople
to vie for a stake, while Bre-X collected profits from the rising
value of its stock.

However, an independent analyst found in May this year that
Bre-X's claim was a hoax, accusing Bre-X of salting the ore taken
from the area to make it look like it had a high gold content.

Carson said although the impact of the Busang scandal was not
as much as expected, the Toronto Stock Exchange, where Bre-X
listed its shares, had taken measures to prevent similar cases
from reoccurring.

He said the Toronto Stock Exchange, with the Ontario
Securities Commission, had set up a task force to tighten rules
for mining and exploration companies on how exploration should be
carried out and how exploration results should be reported and
disclosed to financial markets.

"The task force is expected to complete its work in the first
quarter of next year," he said.

Carson believed the rules by the task force, which would be
applied at the Toronto Stock Exchange, would globally influence
the security of mining companies due to the exchange's position
as the world center of mining. (jsk)