Size of stake not key factor in Busang mining

Size of stake not key factor in Busang mining

By Benget Simbolon Tnb.

ELKO, Nevada (JP): The size of the government's stake in the
Busang gold mine would not guarantee that the mine will give the
best benefits to the people, said a Barrick's executive.

Vincent Borg, vice president of Barrick Gold Corporation for
Communication, said here over the weekend that the huge Busang
development should be seen from all aspects if the government
wanted it to contribute the most benefit to the Indonesian
people.

"It doesn't make any sense if a contractor can only offer a
bigger stake to you but it has no plan to pursue a community
development program and to deal with the environmental issue,"
Borg told a group of Indonesian journalists invited by his
company to see its mining activities in Nevada.

Borg was commenting on calls by a number of Indonesian experts
that the government should only award the contract to exploit the
Busang mine to the foreign company which offers Indonesia a
bigger stake.

The Busang gold mine is estimated to contain 57 million ounces
of gold, one of the largest gold deposits in the world.

Recently, Placer Dome, also a Canadian company, offered
Indonesia -- government or private firms -- a 40 percent stake in
the Busang gold mine.

Seemingly, a number of Indonesian analysts saw that Placer
Dome's offer of 40 percent to Indonesia was better than
Barrick's.

Commenting on the issue, Borg asked, "Wait, wait, 40 percent
of what? Does it mean in real terms? You have to see the whole
issue first and not partly," adding that the 10 percent stake to
the government would not be Barrick's only offer to Indonesia.

Barrick is currently engaged in intensive negotiations with
Bre-X , the founder of the Busang gold deposits, to form a joint
venture for the exploitation of the mine. The two offer a 10
percent stake to the Indonesian government. Barrick will owns
67.5 percent while Bre-X and its Indonesian partners, in the
joint venture which will develop the mine, will own the remaining
22.5 percent.

"But we don't know yet the percentage of our local partners'
share. We're still pursuing negotiations with all of them,
including the government," he told The Jakarta Post.

Asked whether Barrick will provide more than a 40 percent
share to Indonesia, he said, "I don't think we can do that. But
as I told you, there are aspects of the Busang development
project that should be considered to benefit the Indonesian
people," he said, adding that Barrick had presented to the
government an integrated proposal that he claimed, as a whole,
was better than the others. He did not elaborate.

He said that Barrick had the experience in community
development around mining operations and in dealing with
environmental problems. Such projects cost a lot of money, he
said.

Mining analysts in Indonesia had urged the government to award
the Busang contract to a foreign mining company that has
experience in community development and in dealing with
environmental problem.

"Other than that, we have the financial and technological
capability to develop the gold mine," Borg said, adding that his
company had mining projects outside of Canada, including in the
U.S., and in South American countries, such as in Chile and Peru.

Its Goldstrike gold mine in Elko, Nevada, the U.S., is the
largest open-pit mine in the world, producing about two million
ounces of gold per year.

The two Canadian firms, Barrick and Bre-X -- which discovered
the huge gold mine in Busang, East Kalimantan -- were given one
month by the government, until Feb. 15 (not Feb. 17 as reported
by local media, because the government's letters to the two firms
concerning the deadline were dated Feb. 15) to reach a final
agreement between them to develop the Busang gold mine.

If they fail, the government will take over the mining project
and find other foreign investors. There is a possibility that the
government will arrange an open tender to decide the contractor
for the gold mine.

As the deadline is getting near, the competition between
Barrick and Placer Dome to become a partner of Bre-X is also
getting tougher.

Minister of Mines and Energy I.B. Sudjana said early this
month that the government would study Placer Dome's proposal. He
confirmed that there is still a chance for the company.

The statement has led to uncertainty over which company will
win the contract for Busang.

Asked about the chance of Barrick, Borg said, "I don't know
yet. We're pursuing negotiations with Bre-X. But we'll know it
after the Feb. 15 deadline," he told the Post.

He said it was not true that Barrick only started negotiating
with Bre-X last November. "In fact we have been pursuing
negotiations with the firm since last July not November," he
said. (bnt)