AUDIT REPORT Kelantan's foray into gold mining turned out to be a million ringgit stab in the dark that has not paid off, says the Auditor-General's Report 2012.
The report notes that state mining company Kelstone Sdn Bhd (KSB) accumulated huge losses, even as the amount reportedly shrunk from RM2.7 million to RM1.54 million between 2009 and 2011.
"Most of its annual income is derived from ‘tribute' payments from contract mining companies looking for gold alluvial and feldspar," the report says. Since 2005, KSB has been handed state concessions to mine for gold in about a dozen spots in Tanah Merah and Gua Musang. The company only started mining at two to three spots in 2011-12, but did not find any substantial amount of gold.
The auditor-general's report also questions why Sumber Indah Prima Sdn Bhd (SIPSB) was sub-contracted to explore for gold in the Sokor area (of Tanah Merah) in 2008, but never started on the job.
In response, KSB said it took back the concession from SIPSB in October last year.
KSB only found minor success in mining for Barytes, or barite, a naturally occurring mineral form of barium sulphate, at Chiku in Gua Musang. This job was subcontracted to Kijang Baraite Sdn Bhd (KBSB) and after a four-year delay, KBSB started extracting 4,000-4,500 metric tonnes of Barytes in 2012, with no sales yet.
The mineral is mostly used as a weighing agent for drilling fluids used in oil and gas exploration.
The audit report went on to recommend that KSB mines only in areas with proven mineral deposits that can also attract credible investors and mining companies.
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