Kuntoro says no comment on lost powers

Kuntoro says no comment on lost powers

JAKARTA (JP): Director General of Mines Kuntoro Mangkusubroto
refused to comment yesterday on reports that he had been stripped
of his authority regarding the final mining contracts of work
over a gold mining row between Bre-X Minerals of Canada and its
two Indonesian partners.

"Bapak (Mr.) Kuntoro will not make any statement on that to
the press for at least the next few weeks," one of his staff told
The Jakarta Post yesterday.

Kuntoro is the senior official authorized to grant mining
companies their final contracts of works (COWs) which allow them
to start production.

But the government reportedly took over this authority and
vested it directly with Minister of Mines and Energy I.B. Sudjana
a few weeks ago.

The Business Times of Singapore quoted informed sources as
linking the measure to Kuntoro's decision to delay issuing a COW
to Bre-X, pending the resolution of the Canadian firm's dispute
with PT Krueng Gasui -- one of its two local partners.

The other partner is PT Sungai Atan Perdana (Askatindo).

Bre-X set up a strategic alliance late last month with PT
Panutan -- owned by Sigit Hardjojudanto, the eldest son of
President Soeharto -- allowing it to receive a 10 percent carried
interest in two sections of its Busang gold mine and a monthly
consultants fee of US$1 million for 40 months.

The Canadian company also expects PT Panutan to buy out the
old Indonesian shareholders in a bid to pave the way for Bre-X to
receive the final COW from Director General Kuntoro.

But PT Krueng, which wants a 20 percent carried interest in
two sections of the Busang gold mine -- Busang I and II -- has
refused to sell its stake in the operation and threatened to take
the issue to court.

As a result, Kuntoro delayed issuing the contract to Bre-X.
"We cannot process the applications from Bre-X because of its
dispute with the Indonesian partner," he said recently.

Minister of Mines and Energy I.B. Sudjana and the ministry's
Secretary General Umar Said also refused to comment on the issue
yesterday.

"Bapak Menteri (Sudjana) and Bapak Sekjen (Umar) are very busy
right now. They told me that they cannot give any statement
concerning the mining issue," a public relations official from
the ministry told the Post.

The Singapore business daily reported Thursday that another
theory linked to the issue was that the Bre-X project had
generated tremendous interest worldwide and major international
firms had expressed an interest in participating in the venture.

Sources said that Kuntoro had also met in the last few weeks
with several Indonesian businesses who wanted a stake in the mine
and this had fueled suspicion that the ministry would further
delay issuing the final COW to Bre-X.

The controversy over the Busang gold mine and the stripping of
Kuntoro's decision-making authority is worrying because it might
force the government to delay granting 69 other COWs to private
companies to explore and develop mineral deposits, mostly in
Kalimantan.

Kuntoro said last month he would grant final approval
to 70 applications from foreign companies and joint ventures for
COWs.

He said the applicants for COWs included Bre-X, whose massive
Busang deposit in Kalimantan is believed to be the single largest
deposit in the world with an estimated 46 million ounces of gold
reserves.

According to Kuntoro, there are about 300 COW applications in
the pipeline, both for mineral and coal exploration. (bnt)