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)