President delays contract of work for Busang mine
President delays contract of work for Busang mine
JAKARTA (JP): President Soeharto has delayed the issue of the
contracts of work (COW) for Bre-X and its partners to develop its
Busang gold mine in Kalimantan, the minister of mines and energy,
I.B. Sudjana, said yesterday.
Sudjana said the President would not make a decision on Bre-
X's applications until an independent team assessing the Busang's
gold reserves had finished.
Bre-X is one of several foreign and local companies applying
for the sixth generation of COWs to develop mineral deposits in
Indonesia.
There are 70 applications for the COWs. Two are from Bre-X and
its partners in Busang II and III.
Sudjana said the President approved all applications, except
those from Bre-X, two weeks a ago.
The House of Representatives and the Investment Coordinating
Board have approved all the applications but the President has to
give the final approval.
Bre-X has formed a joint venture with Askatindo and Freeport
Indonesia, the subsidiary of U.S. mining giant Freeport McMoran-
Copper and Gold Inc to develop Busang II and III.
The Busang gold fields first made headlines last year after
several giant mining companies -- including Canadian firms
Barrick Gold Corp and Placer Dome Inc -- and several prominent
Indonesians battled for a stake in the exploration and
development of the mine.
But Bre-X and Askatindo chose Freeport as a partner.
The Busang gold mine made headlines again last month because
of conflicting reports about how much gold was there.
Bre-X had said Busang contained 70.9 million ounces of gold
but Freeport later said the gold reserves were insignificant.
An independent team in Australia is now assessing how much
gold is in Busang.
"If the results show good deposits, Bre-X's applications will
probably be included in the sixth generation of contracts of
work. If not, let's just see," Sudjana said.
The sixth generation of COWs were sent to the President about
six months but president delayed approving them because of
Busang.
The delay has upset COW applicants, especially Canadian
investors who make up 80 percent of them.
The Canadian government has expressed its concern over the
delay to the minister of industry and trade, Tunky Ariwibowo,
during a visit to Indonesia.
Sudjana said all 68 COWs would be presented simultaneously in
a ceremony but did not say when this would happen.
He said the governors of provinces where mining projects were
would be invited to the ceremony so governors and investors could
meet.
"In the past, there was no such ceremony where governors and
investors could meet each other before they started developing
the projects," the minister said.
Sudjana has so far received 176 applications the seventh
generation of COWs.
Meanwhile, stockbroker Williams de Broe said in its latest
North American Miner that the Busang property in Kalimantan,
Indonesia, probably had some gold, but might not warrant the
development of a mine.
If there was a deposit, it was doubtful whether it would
command a market valuation much higher than the current C$700
million, Williams de Broe added, as quoted by Reuter in London
yesterday.
According to the ministry of mines and energy, foreign firms
and joint ventures have submitted 176 applications for seventh
generation of COWs.
"The applications are ready to be discussed with the House of
Representatives and the Investment Coordinating Board," Simon F.
Sembiring, an official of the ministry said over the weekend.
He said most of the applications were for gold mining
projects.
Between 70-80 percent of the investors are from Canada,
including the giant mining company Barrick Gold Corp. and Placer
Dome Inc. (jsk)