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)