Busang - a River of Gold

Challenges for Bre-X Minerals in Indonesia Bre-X Minerals Ltd. face numerous challenges in 1996, largest among them being the authority loss of the majority stake in stead that could commit upwards of 100 million ounces of gold. The Indonesian organization was jeopardise to redistribute ownership of Busang, the mining region in which Bre-X had property rights, due to its fear that Bre-X was a short-term player not serious about extracting the gold or a foresightful term commitment in Indonesia. These fears were justified given Bre-Xs small size (it had a net loss of $Cdn. 366,677 in 1995 compared to a net income of $Cdn. 218 million from Barrick Gold Corp., a latent government-corporate partner) and limited connections within the country (established only in 1993 by exploring in the East Kalimantan rainforest). Another critical challenge faced by Bre-X was the public outcry over a external firm taking advantage of Indonesias wealth of indispensable resources. This mineral exploitation resulted in cries for public action to take up the land and deny Bre-X any compensation. Prominent public figures Dr. Amin Rais and Mr. Hartojo Wignjowinoto were some vocal in these demands.

This is a classic example of the lay on the line an unprepared corporation takes on when operating in a country that is transitioning both politically and economically. Over the first one-half of 1996, analysts predicted increasing success at Busang and as a result, Bre-Xs stock value rose. Indonesia, however, is a mixed economy where the government uses public action to manipulate and influence the private firmament with ease. Bre-Xs failure to collaborate with an influential local company from the beginning of its venture led it to the current crisis. The companys developmental and operational stagnation resulted in increased hug from the worlds largest mining firms, Barrick included, and the Indonesian government. The Sudjana Proposal: Bre-X Minerals & Barrick Gold cod to... If you want to get a full essay, order it on our website: Ordercustompaper.com

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