From billion-dollar investments into undeveloped projects to fraudulent geologists faking their deaths, the mining industry has seen a number of significant scandals in recent years. Here are four of the biggest mining scandals.
Bre-X’s fake gold mine
In 1989, Canadian businessmen David Walsh founded the Bre-X mining company, which would find itself at the centre of a scandal so infamous it inspired the 2016 film Gold. In 1993, the company bought land near the Busang River on the Indonesian island of Borneo on the recommendation of geologist John Felderhof, and within a year, the company had struck gold, reporting reserves of around 8 million ounces.
By 1997, Bre-X’s stock price had skyrocketed to around $209 per share, giving the company a market capitalisation of $4.4bn, equal to $6.9bn in 2018, and companies including Barrick Gold were interested in the project. Analysts from JP Morgan encouraged investment in the mine, which was now claiming to have reserves of 200 million ounces.
However, these reserves were a complete fabrication by project manager Michael de Guzman, a struggling geologist who had convinced first Felderhof, and then Walsh, of the potential of the mine.
He mixed the mined ore with gold shavings from his wedding ring to give the impression of deposits rich in gold, and eventually paid local gold panners around $61,000 between 1994 and 1997 to continue the deception after he ran out of gold.
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