Mine investment to remain unattractive

Mine investment to remain unattractive

SINGAPORE (Reuters): Mining investment will not come back to
Asia soon, after the scandal surrounding the Busang gold find in
Indonesia, and there is also a need to re-establish confidence in
mining rules here, an analyst said yesterday.

"Given the events of this year in Asia, much of the mining
investment monies from the North American stockmarkets which was
there over the last two to three years has shifted elsewhere,"
John Steele, director of the Prospectors and Developers
Association of Canada, said at a mining conference in Singapore.

Investigators have said the Busang gold find in Indonesia was
a fraud and that sample deposits from the site were salted with
gold found elsewhere to bloat the estimated deposits in the area.

Recent attempts by the Indonesian government to modify the
contract of work agreements covering mining ventures by
monitoring the companies involved "and efforts to retain
sufficient ownership of the country's resources are having very
deleterious effects" on the investment environment, he said.

In the Philippines, industry analysts said the problem lies
with the slow pace in approving mining agreements.

Steele said that in the case of Burma, government insistence
on 50-50 joint ventures is a disincentive although this is being
modified to a 70-30 split on a case-by-case basis.

"Investment will not return to Asia until there is confidence
that the rules will remain fixed," he said.
He said Vietnam, Thailand and Laos are poor bets.

"Property acquisition is very time consuming in these three
countries. Moreover, Vietnam and Thailand restrict foreign
activity in the interest of sovereignty over their mineral
resources," Steele said.

China's approval system, on the other hand, is "multi-leveled
and so time-consuming there has been little market interest"
although that may be changing now, he added.

"The money has now shifted to areas where North Americans have
a longer history, like South America. As well, a significant
portion of the investment has returned to North America itself
where the rules and security are perceived to better known and
defined."