Freeport tipped to grab stake in Busang mining

Freeport tipped to grab stake in Busang mining

JAKARTA (JP): Bre-X Minerals and Barrick Gold Corp. have
failed to agree with their Indonesian partners on terms to
develop the huge Busang gold mine in Kalimantan, an informed
source said yesterday amid rumors Bre-X had struck a deal with
U.S. firm Freeport McMoran.

The American source, who requested anonymity, has been closely
monitoring negotiations between the two Canadian companies since
last month.

He said he had heard of a preliminary agreement between Bre-X,
the Indonesian government and Freeport.

"But I have yet to verify the rumors about the unexpected deal
between Bre-X and Freeport. For sure, though, I know the two
Canadian companies have failed to reach agreement with their
local partners," the executive said.

None of Freeport's executives here were available for comment
last night.

The secretary of PT Freeport Indonesia's president Louis
Clinton said her boss was out of town until Feb. 17.

Reports said Bre-X would own 45 percent of the joint venture,
Indonesian shareholders, including the government, 40 percent and
Freeport 15 percent.

Meanwhile, the Toronto Globe and Mail quoted Thursday unnamed
sources in Toronto as saying Bre-X had reached a deal with its
partners.

The sources were uncertain whether Barrick would wind up as
Bre-X's partner or if rival Placer Dome Inc. would get access to
Busang through its merger proposal with Bre-X.

But Sudjana said Placer Dome Inc. did not count in the current
negotiations between Bre-X and Barrick.

Rumors of Freeport's surprising deal surfaced immediately
after Minister of Mines and Energy I.B. Sudjana met President
Soeharto.

But Sudjana did not say anything about Freeport's entry into
the battle when he met reporters after talking with the
President.

Instead, he said the government might put the right to develop
the Busang sight up for international tender if the two Canadian
companies failed to reach an agreement with their local partners.

Until Monday

"They have until Monday to settle with their Indonesian
partners before we decide the next move," Sudjana said.

He said an international tender was one option being mulled
over in case the two companies failed to settle with their
Indonesian partners.

The minister said the government had given the two Canadian
companies, Bre-X Minerals Ltd. and Barrick Gold Corp. until
Monday to conclude negotiations with their local partners.

"I told them in my letter last month that if they fail to
settle with their local partners by the deadline (Feb. 17) all
things which have been discussed with the Ministry of Mines and
Energy will become null and void," Sudjana said.

Bre-X which found the estimated 57 million ounce gold deposit
in the Busang area last year initially agreed to a joint venture.
Bre-X was to own 22.50 percent, Barrick 67.50 percent and the
Indonesian government 10 percent.

But the two companies have yet to agree with their local
partners on a shareholding structure.

The local partners are the Panutan Group which is controlled
by President Soeharto's son Sigit Harjojudanto, the Citra
Lamtorogung Group which is controlled by Sigit's sister Mrs. Siti
Hardijanti Rukmana, the Nusamba Group which is controlled by
three foundations chaired by President Soeharto and another
private company, PT Krueng Gasui, which is controlled by Yusuf
Merukh.

Two other potential players have also entered the contest.
They are State-owned mining companies PT Aneka Tambang and PT
Tambang Timah.

It will reportedly cost US$1.5 billion to develop the Busang
mine. (vin)