EDITORIAL PAGE — The Busang waiting game

Maybe today, maybe this week, maybe next month. That about sums up the uncertainty that shareholders of Bre-X Minerals must live with as they wait for the Indonesian government to make a decision on the company’s Busang gold deposit in Kalimantan.

For weeks, Bre-X shareholders have been on a roller-coaster ride as the Busang saga plays on, with an ever-increasing cast of characters and more twists and turns than a daytime soap opera.

There are lawsuits, threats of lawsuits, and plenty of political and corporate intrigue. Add to this the Marxist-inspired comments of the Indonesian politician who threatened to take away Busang from Bre-X for the government to manage. (As if this were not almost the case already.) By now, Bre-X shareholders have caught on that the fate of Busang is in the hands of the Indonesian government, which means, in this case, the hands of President Suharto. But what Suharto will do next is anyone’s guess.

Last month, reports from Jakarta suggested that Barrick Gold had Suharto’s ear — and the upper hand — in the battle for this highly prized gold deposit. More recent reports suggest that rival Placer Dome may be in the driver’s seat with its proposal to merge with Bre-X and provide up to 40% of Busang for Indonesian interests. And, at this stage, no one is ruling out dark horse Teck, which still might jump into the fray with a powerful international partner.

At presstime, it appeared that most of these parties were either in or on their way to Indonesia to plead their case with Suharto (or, failing that, one of his family members). At the same time, various individuals in Indonesia are pressing their case for more local involvement.

The problem for all of them — as well as for Bre-X shareholders — is that Suharto appears to be torn in different directions by the competing gold companies, by his family members and friends, and by his political allies and business associates. And it’s no secret that some of those parties have put their own agenda ahead of the national interest.

The Busang incident is garnering international attention, plenty of bad press for Indonesia, and a lot of headaches for other companies exploring in the country. Many of these companies are still waiting for the government to sign their contract of work applications, and shareholders are becoming increasingly concerned about this lack of security of tenure.

In late January, a New York investment firm called for U.S. Senator Alfonse D’Amato to look into “the pending crisis” concerning the Busang gold discovery on behalf of Bre-X’s shareholders, which include many U.S.

institutions. In Canada, a group of Bre-X shareholders has retained a law firm to protect its investments.

As time goes on, and as the plot thickens, the Busang affair gets messier and messier. At this point, we can only hope that Suharto will do the right thing and consider an open and fair bidding process, or, at the very least, allow Bre-X some degree of control over its own destiny.

Indonesia, along with every other country in the world today, is dependent on foreign investment and trade for economic growth. This does not exclude the country from protecting its own interests, as long as this is done openly, fairly and in a non-arbitrary manner.

For the past two years, Indonesia has experienced a mineral exploration boom, largely triggered by Bre-X’s gold discoveries at Busang. But this boom could go bust overnight if foreign mining companies are forced to conclude that their investment dollars are safer and more welcome elsewhere.