Busang still draws investors, says minister

Busang still draws investors, says minister

JAKARTA (JP): Many foreign investors are reportedly interested
in the scandal-plagued Busang mine in East Kalimantan despite a
definitive study stating it is devoid of commercial gold
deposits.

Minister of Mines and Energy Kuntoro Mangkusubroto said
yesterday gold prospectors were requesting government permits to
explore the area, but added there would be no issuance since the
legal investigation into the former holder of the contract area,
Bre-X Minerals Ltd of Canada, was ongoing.

"We are waiting for a report (from the Canadian police) that
the investigation is complete so that we can reopen the area,"
Kuntoro told reporters in a weekly media conference.

Kuntoro said the ministry had given a deadline to the Canadian
police to finish the probe but he did not specify the date.

Bre-X announced in 1996 that it had discovered just under 71
million ounces of gold in the Busang area, making it the largest
gold discovery of the century and one of the greatest in history.

The announcement set off a spiral of dramatic events,
including the astronomical rise of Bre-X's shares on the Toronto
Stock Exchange and a fight pitting several giant mining companies
for a stake in Busang.

Indonesian political and business elites, including the family
of former president Soeharto, also squared off in the fray.

Suspicions the estimate was grossly exaggerated were fanned
after Bre-X's Filipino project manager was killed after falling
from a helicopter in March last year.

Canadian independent consultant Stratchona Minerals Ltd
announced the following May there was no commercial gold in
Busang, and suspected that Bre-X had salted the ore to support
its claim of a large gold reserve.

Bre-X's shareholders in Canada subsequently filed a lawsuit
against the company, and the Indonesian government froze Bre-X's
contracts in the country.

Kuntoro, who served as the director general of mining when the
Busang saga surfaced, said yesterday he believed there was gold
at Busang.

"It's mysterious. Busang must contain gold in view of the fact
that (many) people (make a living by) traditional panning for
gold there. The question is, can the area's gold reserve make an
economic mining operation?" Kuntoro said.

Kuntoro said the Busang scandal had exerted an impact on the
country's mining industry.

Exploration activities in Indonesia by junior mining
companies, mostly from Canada, subsequently decreased due the
tighter rules set by the Canadian Stock Exchange for them to
raise funds.

But operations of big mining companies, who do not rely on
funds from stock exchanges, remain unaffected, Kuntoro said.

Kuntoro said the scandal caused Indonesia to drop from its
sixth in 1996 to the eighth last year among the world's favored
destinations for mineral investments, according to Australia's
Mining Monthly.

Ranked above it, in descending order, are the United States,
Canada, Chile, Australia, Argentina, Malaysia and Brazil.

Following Indonesia are Mexico, Zimbabwe, Peru, Ghana, South
Africa, Tanzania, China, the Philippines, Vietnam, Russia, India
and Papua New Guinea. (jsk)