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Newmont trial begins in Indonesia

August 5, 2005

MANADO, Indonesia (Reuters) – The world’s top gold miner
went on trial in Indonesia on Friday, defending charges it
spilled toxic waste into a bay, in a case being eyed closely by
potential investors in the world’s fourth most populous
country.

In a makeshift court in the capital of North Sulawesi,
prosecutors accused the local unit of U.S.-based Newmont Mining
Corp. and its American chief executive of causing pollution
that made locals living around Buyat Bay sick.

A ruling against Denver-based Newmont would send a chilling
signal to miners worried about corruption and legal uncertainty
in Southeast Asia’s biggest economy, home to some of the
world’s largest deposits of copper, tin, nickel and gold.

But environmental activists say miners have for too long
been allowed a free hand in Indonesia.

Prosecutor Robert Ilat read from the indictment that waste
from Newmont’s unit “has polluted the seawater at Buyat Bay
with arsenic and mercury … and caused itchiness among
villagers.”

Newmont strenuously denies the charges. “There is no
pollution. I am very confident about what the evidence shows.
We will be exonerated,” Richard Ness, president director of PT
Newmont Minahasa Raya, said on Tuesday.

If found guilty, 55-year-old Ness could face a jail term of
up to 10 years, and his firm could be fined. The trial was
later adjourned until Aug. 19.

Foreign investment has begun to revive in Indonesia, partly
on promises by President Susilo Bambang Yudhoyono, who took
power last October, to make the vast archipelago an easier
place to do business.

Indonesia’s president wants to achieve economic growth of
6.0 percent to 6.5 percent next year, from a target of 6.0
percent this year and 5.1 percent in 2004.

Mining contributed 2.7 percent of Indonesia’s GDP in 2003,
a study by PricewaterhouseCoopers in January said. But another
survey by Canada’s Fraser Institute ranked the country behind
only the Philippines in Asia in terms of investment conditions.

Mining investors are attracted by copper prices that have
risen a quarter in the last year to reach record highs, while
other metals are enjoying their best prices in years.

TIGHT SECURITY

Security was tight at the trial, held at a local government
office in Manado due to concerns over protests and the presence
of dozens of Buyat villagers.

The mine near Buyat Bay, 2,200 km (1,400 miles) northeast
of Jakarta, opened in 1996 and closed last August due to
depleted reserves. The charges relate to when the mine was
operational.

A government-commissioned probe and a police study have
concluded the bay was polluted, but several other studies,
including one by the World Health Organization and the
Indonesian health ministry, did not support that charge.

Newmont says its disposal processes at the bay were
properly approved by the government. Prosecutors earlier
dropped plans to file charges against five other employees –
another American, an Australian and three Indonesians — in
addition to Ness.

The government has called for an out-of-court settlement
over a multi-million dollar civil suit against Newmont earlier
this year by the environment ministry.

The miner received a lift this week when judges in North
Sulawesi instructed an academic and local environmental
activist, Rignolda Jamaluddin, to pay $750,000 in damages for
defamation.

Newmont’s operations in Indonesia accounted for 6 percent
of its global sales in 2004, ranking fourth out of the
company’s operations on five continents.

A guilty verdict would harm the firm’s image in a nation
where it still has ambitious plans since arriving 17 years ago.
The company operates Asia’s second-largest copper mine, Batu
Hijau, on Sumbawa island, which produced 718 million pounds of
copper and 719,000 ounces of gold last year.

Asia’s biggest copper mine is also in Indonesia, in the
rugged eastern province of Papua, and is owned by another U.S.
firm, Freeport McMoRan Copper and Gold Inc.




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