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."