Govt urged to be wise in tackling Busang gold mine
Govt urged to be wise in tackling Busang gold mine
JAKARTA (JP): The government should tackle the problem of the
gold mine in Busang, East Kalimantan, soon and wisely if it wants
to maintain foreign investors' confidence in Indonesia, analysts
said over the weekend.
"A quick and wise solution to the Busang problem would
certainly support the government's efforts to attract foreign
direct investment which is badly needed by the country," Hartojo
Wignjowijoto, an Asia-Pacific economic consultant, was reported
by the Kompas daily as saying.
He said that amid the current account deficit increase and its
shrinking chances of getting soft loans, Indonesia needed more
foreign direct investment.
Hartojo was commenting on the protracted problem of the Busang
mine which involves several local companies and two Canadian
mining companies: Barrick Gold Corp. and Bre-X Minerals Ltd.
The problem arose after the government's decision to choose
Barrick as the partner of Bre-X, which discovered the 57 million
ounces gold deposit in Busang last year, to develop the mine.
The government had agreed to a 10 percent stake in the project
with Barrick having 67.5 percent and Bre-X 22.5 percent.
Several times the government gave deadlines for the two
Canadian companies to solve their dispute over terms for
developing mine. The latest deadline is Feb.17.
If they fail to agree, the government will take over the
project and find other foreign investors.
Before the deadline, Placer Dome Inc., another Canadian mining
company, intensified its efforts to win the competition to become
Bre-X's partner.
It offered to merge with Bre-X and promised Indonesia a 40
percent stake if it won the contract.
Minister of Mines and Energy I.B. Sudjana said early last
month there was still a chance for other foreign investors,
including Placer Dome, to develop the mine.
Analysts said the minister's statement added to confusion
among foreign investors.
Mining analyst Soebroto, who is a former minister of mines and
energy, said that traditionally a mining company which discovered
a deposit would get government approval to start the project.
"This is a procedure that has been traditionally practiced and
seen as the right and fair one," he said.
He said that traditionally a company like Bre-X, which
discovered the huge gold deposit, was allowed to choose its
partners and distribute shares.
Conflict
He also said that traditionally the government did not
intervene in a conflict between investors.
"This is a new approach and I think foreign investors were
surprised to learn that," he told Bisnis Indonesia. over the
weekend.
"Foreign investors are now waiting for the government's
solution to the problem. It will determine whether they will
invest in Indonesia or not," he said.
Hartojo said the basic problem was not limited to certain
business groups. He said it also had to do with a serious
corruption problem and political instability in Indonesia.
He said because Indonesia was rich in minerals, particularly
gold, the government should form a strategy to develop
Indonesia's natural resources. (bnt)