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)