A day late, but some interesting quotes anyway:
Dow Jones Business News -- January 18, 1997
Indonesia Seeks Larger National Stake In Busang:
Antara
AP-Dow Jones News Service
JAKARTA -- Indonesia's government is seeking to assist local Indonesian companies
in getting as large a stake possible in the massive Busang gold deposit in East
Kalimantan, Borneo, Indonesian Minister of Mines & Energy Ida Bagus Sudjana said
Friday in Kisaran, Sumatra, according to state-news agency Antara.
'I have sent letters to the two Canadian companies asking them to renegotiate the
shareholding structure with their local Indonesian partners,' Sudjana said. 'I don't
want Indonesia losing out (in the dispute).'
The two Canadian companies Sudjana refers to are Bre-X Minerals Ltd. and Barrick
Gold Corp. who have been locked in a more than two-month long struggle for the
control over Busang.
The two companies submitted in December a joint-ownership proposal for Busang,
whereby Barrick would hold 67.5%, Bre-X 22.5%, and the Indonesian government
10%, which Indonesia's government has yet to accept.
Bre-X currently owns 90% of the three delineated exploration zones of Busang with
three different Indonesian companies owning 10% stakes.
But Bre-X, an exploration company, lacks the financial resources and technology to
develop Busang, and is seeking a joint-venture partner in order to start gold
production.
******* TAKE BREAK *******
The ownership battle for Busang took an unexpected twist Tuesday when it was
confirmed that Indonesian plywood tycoon Mohamad 'Bob' Hasan, had purchased
roughly a 50% stake in PT Askatindo Karya Mineral, the Indonesian company that
owns the 10% stake in the richest of the three Busang zones - Busang II.
Hasan's entrance into the Busang debate, through the investment company PT
Nusantara Ampera Bakti (Nusamba), is seen by industry analysts as a sign that
Indonesian President Suharto, a close friend of Hasan's, wants to increase
Indonesian participation in the project.
Nusamba is 10% owned by Hasan, 10% by Suharto's eldest son Sigit Harjojudanto,
and 80% by three foundations chaired by Suharto.
Sudjana's comments Friday appeared to confirm this speculation of greater
Indonesian involvement.
'The government encourages business people such as Mohamad Hasan to join the
battle for ownership of the Busang gold project,' Antara quoted Sudjana as saying.
Sudjana added that this involvement was not open exclusively to Hasan but any other
Indonesian companies interested in entering.
In addition to Askatindo, PT Amsya Lyna - in which Hasan is also reported to have
taken a 50% stake - and PT Krueng Gasui are the two remaining companies that own
10% stakes in Busang.
Bre-X officials confirmed Thursday that they were being sued for $1.9 billion by the
head of Krueng Gasui, Jusuf Merukh, who owns 10% in the zone called Busang I.
Merukh claims that he is entitled to similar claims in the richest Busang II zone, as
well as Busang III, because the zones are contiguous with Busang I.
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The emergence of Hasan and the need for increased local participation in Busang is
seen as having served as the springboard for another Canadian mining company,
Placer Dome Inc., to enter the fray.
Placer Dome announced Wednesday in Canada that it wanted to acquire Bre-X in a
stock swap valued at $4.5 billion. Placer Dome's bid was seen as being particularly
attractive to the Indonesian government, as it offered to increase Indonesian
participation in the project to 40% from 10%.
This 40% stake is reported to be a combination of government and private stakes.
Sudjana didn't give an extended response to Placer Dome's offer Friday, according to
Antara, but he did say he was preparing to study it.
Industry analysts in Jakarta have noted that the nationalist debate surrounding the
Busang tussle only serves to support bids that include greater Indonesian
involvement in Busang.
Amien Rais, for example, the leader of the 30-million strong Muslim organization
Muhammadiyah, charged Indonesia's government in early January with selling out
Indonesian natural assets to foreign interests.
'When I read newspaper reports that the government wanted to give the two
Canadian firms a 90% controlling stake...my sense of justice was revolted,' Amien
told thousands of reporters in Central Java, according to local newspapers.
'What's the point of us pressing the Canadian firms to solve their conflict quickly so
they can start working immeidatly to deplet our resources?' Amien added.
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The former director general of mining in the Ministry of Mines and Energy, Soetaryo
Sigit, told AP-Dow Jones Wednesday that ``the Placer Dome deal definitely looks
better politically (than Barrick's). The greater the share for the public, the easier it
will be for the government to sell.''
Many now see Busang turning into an open bidding battle where the company that
offers Suharto the greatest offer will get the Busang.
'Behind Hasan is No. 1 (Suharto),' noted Mohammad Sadli, Indonesia's Minister of
Mines & Energy in the 1970's. 'And they are hunting for the best possible yield.'
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