APSN Banner

Indonesia: Exploration honey pot for Canadians

Down To Earth 28 - February 1997

As Jakarta opens the doors wider for foreign investment in mining, Canadian mining promoters are getting excited about the prospects for striking gold. At the centre of the action is the world's most notorious mining investor, Canada's Robert Friedland.

Robert Friedland's private Singapore-based company, Indochina Goldfields Ltd. has secured mining leases covering three million hectares in Indonesia, including a concession located about 40kms north of the promising Busang gold project, Kalimantan, which is held by another Canadian company, Bre-X Minerals Ltd.

Bre-X's share price has soared amid speculation that Busang is shaping up to become a so-called 'world-class' gold deposit with reserves that could reach 10 to 15 million ounces. As a result, Bre-X's success has served as a catalyst for dozens of exploration firms, including Friedland's company, which hope to achieve similar success.

Indochina Goldfields has raised about US $18 million to finance exploration on Kalimantan as well as on Java, where the company has many as 18 other projects.

Another Friedland company, privately-owned Ivanhoe Capital Corp, has made a deal with yet another Canadian company, Birch Mountain Resources Ltd. which will explore a concession in western Kalimantan. Indochina retains the right to earn interest on the property. Other Canadian companies involved in exploration in Indonesia include Pacific Amber Wildcat Resources Corp, Gothic Resources Inc, Condor International Resources Ltd and Brett Resources Ltd. Skyline Gold Corp, Goldstake Exploration Inc., amd Scorpion Minerals Inc.

"The brokerage industry smells a big financing wave coming for Indonesian plays," says John Kaiser, a US-based investment letter writer. "Right now there is a lot of manoeuvering going on to get hold of exploration projects in Indonesia..." (Globe and Mail (Toronto) 8/12/95)

What does this mean for the peoples and environment of Kalimantan? Indigenous lands and resources will have been parcelled out by the government in Jakarta, without their knowledge, let alone their consent. Where hopes for striking gold are high, neither the Jakarta-based officials, nor the incoming prospectors are likely to consider the consequences for the people on the ground, or the potential damage to the environment. Friedland's track record in the United States and Guyana, makes him bad news indeed for Indonesia (see box).

Changing the course of the Kelian

Where exploration has proceeded to mining, the story does not improve. The development of the Kelian gold mine in the East Kalimantan interior, for example, has been punctuated by conflict with local communities over issues such including rights, compensation and river pollution. (For more information on this see the DTE/PARTiZANS publication "We only eat dust" Eye witness in Kelian, September 1994)

Last year, RTZ/CRA, who operate the mine, was given the go-ahead to switch the course of the Kelian River in order to exploit new gold deposits. Environment Minister Sarwono said he approved the switch of 1.2 kilometres provided it did not adversely affect the environment. The measure will allow PT Kelian Equatorial Mining (PT KEM) to gain access to gold deposits estimated at 34.5 tons under the river bed. Environmental organisation WALHI has urged the government to make a "serious study of the environmental impact of the project." WALHI said the company had not made its environmental impact statement transparent to the local community and accused the company of reneging on a promise it made in 1990 to allocate management of the Kelian River to the local community.

According to the company, the project will extend the life of the mine by two years and will earn Indonesia US $72 million. (Indonesian Observer 24/7/95)

PT KEM, which started commercial production in 1992, is majority owned by Australian-based CRA which is in turn controlled by British mining giant RTZ. RTZ, which also works with Robert Friedland, is Freeport's new partner in its massive West Papua copper/gold/silver mining operation.

Down to Earth - International Campaign for Ecological Justice in Indonesia, Carolyn Marr (dte@gn.apc.org)