Newmont called to account

Down to Earth No 67  November 2005

August 5th saw the opening of the Indonesian government's first ever pollution case against a major mining company. US-based Newmont - the world's biggest gold producer - faces months under the public spotlight as its environmental practices and impacts on the health of local villagers are exposed.


On 15th November the South Jakarta District Court dismissed the Environment Ministry's case against Newmont, stating that the Contract of Work between the government and Newmont meant that the case should be taken to international arbitration. The Environment Ministry has indicated it will appeal the decision, contending that the case did not relate to contractual matters but to a breach of Indonesian Environment Law, which all people and companies are subject to regardless of contracts, a point specifically noted in article 26 of the Contract of Work itself.


Local people have voiced concern over the impacts of Newmont's open pit gold mine since the company started operations at Ratatotok, North Sulawesi, in 1996. In the last two years, the villagers' campaigns, supported by Indonesian civil society organisations, have gained momentum, attracting national and international media attention and putting the Jakarta government under pressure to take action.

Ore extraction at the Newmont Minahasa Raya mine ceased in 2001, but ore-processing, generating around 2000 tonnes of waste per day, continued until August 2004. The company used the notorious Submarine Tailings Disposal (STD) system which involves dumping mine waste into the sea, instead of the industry standard land-based tailings containment method. The impact of this disposal system on Buyat Bay's marine ecosystem, the local fisheries and villagers' health has been at the heart of the acrimonious dispute between the communities and the company.

For nine years the villagers and civil society organisations have sought answers to the ill-health afflicting them and declining fish stocks. They have been met with denials from Newmont that anything is wrong and have been told that that their health problems are due to other causes.

Newmont continues to deny that its mine has posed any danger to local people, despite the evidence piling up. The case against Newmont became official last year, when a government-sponsored investigation found that levels of arsenic and mercury in Buyat Bay fish posed health risks to the local community, especially children. The study found extremely high levels of mercury and arsenic in the seabed sediment and in sea-bed dwelling organisms (benthos) - indicating that toxic substances from the mine's tailings were entering the food chain. Newmont argues that separate tests show that the chemicals are not entering the food chain and that levels found in fish are safe. The government-sponsored investigation team recommended that local people reduce their fish intake, but many have been unable to afford to do so. It also recommended they consider moving, and, according to mining advocacy network, JATAM, around 67 families have done so. (See DTE 63 for more background).

In December last year, evidence emerged of massive pollution at the mine. Internal documents seen by The New York Times revealed how the company failed to report substantial emissions of mercury over several years. Over a four-year period (1997-2001) around 17 tonnes of mercury were released into the air and 16 tonnes more into Buyat Bay, according to an internal audit. Equipment that was supposed to prevent the emissions was only installed after operations were well underway, and did not work properly; nevertheless ore-processing continued, allegedly to cut costs and maximise gold retrieval. The New York Times said the audit classified the findings as 'significant' meaning they could pose an 'imminent risk' to human health and the environment or result in violation that could cause a plant closure or loss of permits. Newmont denied that the emissions had had any negative impact on the bay or local people.

Getting tough

Now, for the first time Indonesia's government is taking concerted action on pollution charges against a major multinational. As part of a police investigation, five company executives were detained for a month in late 2004. The resulting criminal indictment lists Newmont Minahasa Raya and its president director, Richard Ness, as the accused. Ness has been banned from leaving the country and now faces charges which could result in up to 10 years in jail and a $50,000 fine. The company could be faced with costs for cleaning up any environmental damage.

The company is accused of breaching four articles of Indonesia's environment law (No 23/1997), according to Newmont's lawyer Blake Rhodes who says that only one article needs to be proven for the company and Ness to be found guilty. Dow Jones Newswires reported Rhodes as saying that the essence of Newmont's defence is that the company will be able to prove that there wasn't any pollution related to its mining activities in Sulawesi.

Besides the criminal trial underway in North Manado, the civil case lodged by the Department of Environment is back on track. Hearings have recommenced in a Jakarta court after Newmont's attempt to have the case dismissed, and its hopes for a quiet out-of-court settlement to be brokered via the Newmont-sympathetic mining industry heavyweight and economics minister, Aburizal Bakrie, came to nothing.

Political influences

There are various answers to the inevitable questions: 'why now?' and 'why Newmont?' The case proceeded to trial primarily due to the extraordinary level of public interest and media coverage. It was covered for weeks, even months, in newspapers, magazines, radio and, most damaging for Newmont, on TV. One popular comedy/social commentary drama fictionalised the case to produce an episode of prime-time TV, and pop rockers Slank referred to the case in televised concerts and made public appeals for support for the villagers. Newmont compounded its own woes by spending more on TV and print advertisements than it ever spent on community health and other programmes for the Buyat Bay villagers, serving only to increase the profile of the case.

However, there may also be political influences at work. As Indonesia's first directly elected president, Susilo Bambang Yudhoyono (SBY) may want to establish his credentials as a 'pro-people' leader, showing his willingness to stand up to powerful corporate players. The case may also be linked to the fact that SBY is believed to owe his environment minister, Rachmat Witoelar, a political favour or two. Newmont's status as an American company may also be relevant: legal action against a US company could be considered a crowd-pleasing move aimed at opponents who accuse the government of appeasing US demands for action against muslim extremists as well as those wishing to challenge the US' dominant economic role.

However, aside from this particular case, the same president is continuing along his predecessors' path of prioritising the needs of big business over communities. In the overall picture, the 'pro-people' message rings hollow. It is likely to be drowned out by the impacts of pro-business policies - such as planning a huge new oil palm investment in Kalimantan's border area with Malaysia (see DTE 66) - and legislation - such as Perpres 36/2005 on compulsory land purchase, a piece of legislation judged more repressive than the Suharto-era regulation it replaces (seeDTE 66). Other large mining companies such as Freeport, Rio Tinto and Inco, whose human rights and environmental records warrant proper investigation by the authorities, are permitted to continue their operations as normal. As is Newmont's Batu Hijau copper-gold mine in Sumbawa, which also uses STD and has a much greater production than the Ratatotok operation.

This general context, combined with heavy international business pressure on SBY not to damage further the investment climate, reduce the likelihood that the prosecution of Newmont will be successful. The next few months will be a severe test for Indonesia's judiciary and the SBY government. But even if Newmont does escape formal punishment, the very fact that this powerful company has been held to account as far as this, is a positive outcome in itself. After this experience, Newmont and other mining multinationals may think twice about cutting costs and pay more attention to community concerns.


Newmont sues activist for US$750,000 damages

Newmont's actions to defend its reputation, by targeting individuals who have spoken out against them, will do nothing to repair its gravely damaged public image in Indonesia.

Dr Rignolda Djamaluddin, chair of the environmental group, the Kelola Foundation in Manado, was ordered to pay PT Newmont Minahasa Raya US$250,000 in non-material damages. The August ruling was made by Manado District Court in favour of Newmont in its defamation suit. Rignolda, who is also a lecturer in marine science at Sam Ratulangi University in North Sulawesi and member of a peer review team for the Indonesian environment ministry investigation into Buyat Bay pollution, was told to pay Rp 5 million (US$500) for each day he failed to pay the damages.

Dr Rignolda has been an outspoken critic of Newmont and its impact on Buyat Bay and had reported the results of a seminar which noted that local people displayed symptoms which were similar to Minamata disease.

He has also been ordered to run apologies to the company in local and national electronic media for three consecutive days as well as to place a quarter-page advertisement in several Indonesian dailies for three days, the Jakarta Post reported. Rignolda said he would appeal.

The company filed defamation suits against two others, but they settled out of court. One, Jane Pangemanan, a doctor, signed a letter of retraction for comments she made last year linking the mine to heavy metals poisoning. "I felt I had to sign because of the suit against me," she told The New York Times in August. "My staff told me that Newmont has seven layers of lawyers, and how could I fight them?" Dr Pangemanan said she thought she was wrong to sign, as she felt the company had not fulfilled promises on public health which were part of the agreement.

A US$550 million lawsuit filed on behalf of Buyat Bay villagers by a local NGO, Agency for Health Law, also settled with Newmont. However, environment NGO, WALHI, is critical of the settlement, and says this was done without the consent of the villagers.

(New York Times 4/Aug/05; Jakarta Post 10/Aug/05; JATAM intellectual oppression alert 25/Jul/05)


Scientist's appeal to help Buyat Bay people

A clinical medical toxicologist, Dr E. Blaurock-Busch, is appealing for funds to help the people of Buyat Bay recover from their health problems. Dr Blaurock-Busch spoke at a seminar on mining, environment and sustainable development, part-funded by Newmont, which was held in North Sulawesi's Sam Ratulangi University in May this year. The scientist, who is on the International Board of Clinical Medical Toxicology, calculates that a 6 month treatment course would cost 760 Euros per person. Dr Busch-Bauer makes it clear that the objective is not to accuse anybody, but simply to help the Buyat Bay people.


(Source: We can help the Buyat Bay people, via email listserve, 24/Sep/05)


STD leak at Batu Hijau mine

Newmont's Minahasa Raya 2.1 million oz gold mine was a relatively small operation, producing 99,300 oz in its final full year of production, 2003. It generated tailings of of 2000 tonnes per day, which were disposed of into the sea. Newmont's Batu Hijau copper and gold mine, on Sumbawa Island in Nusa Tenggara Timur province, is a different story. Newmont boasts that the mine is "one of the lowest-cost and largest copper producers in the world" (Annual Report, 2004). The mine has reserves of 7.2 million oz and 6.3 billion pounds of copper. In 2004 Batu Hijau produced 719,000 oz of gold plus 718 million pounds of copper. The mine generates at least 110,000 tonnes of waste per day, which is piped into the sea - over 50 times as much as in Buyat Bay.

In August, Batu Hijau received a "green level" rating from the environment ministry, indicating that the company had successfully implemented pollution or environmental degradation control programmes as required by Indonesian law.

So when news came in of a leak in the STD waste pipeline on 11 September 2005, this undermined yet again Newmont's claims that STD is harmless.

According to a report by Indonesian mining advocacy network, JATAM, the leak was at a depth of 75 metres below sea level in Senunu Bay, causing thousands of tonnes of tailings to pollute waters at a shallower depth. JATAM says there has been a decrease in in local fisherfolk's catch as a result. The group said neither the company nor the authorities informed local people living around the bay about the incident or the risks to them. JATAM notes previous leaks in October and November 2000 and in January 2001.

JATAM criticised the government's decision to approve Batu Hijau's application to extend its STD permit, without any preliminary scientific evaluation and is calling on Jakarta to revoke Newmont's license to dump waste into the sea.

(Source: New York Times 22/Dec/04, 5/Aug/05, 27/Mar/05; Jakarta Post 23/Dec/04; Dow Jones Newswires 9/Aug/05; Antara 9/Aug/05; Newmont website and other related pages including "Now and Beyond" reports 2003 (Minahasa Raya) and 2004 (Batu Hijau). For an in-depth report on Newmont globally, see Denver Post articles, December 12 & 13 2004 at


Undermining claims of corporate responsibility

Evidence of Newmont's actions in Indonesia clash with its claims of social responsibility. On Newmont’s website, company policy states:

"Newmont's future is dependent on its ability to develop, operate and close mines consistent with our commitment to sustainable development, protection of human life, health, the environment, and to adding value to the communities in which we operate."

It also claims: "wherever appropriate and feasible, we set operating standards that exceed the requirements of local law".

The company explains this as follows:

"Newmont recognizes that laws differ greatly from country to country, and that the laws in some countries governing the environment, health and safety and similar issues are less rigorous than others. Because we believe that social expectations should be a key driver in the setting of standards, we endeavour wherever we can to set standards governing our operations that are the highest attainable even where they exceed what local laws require."

The fact that the company stands accused of breaching Indonesia law as well as using mining practices effectively banned in many northern countries, highlights the yawning gap between policy and practice. Comments by a senior company manager, exposed in the New York Times, also point to the realities behind Newmont's claims to apply US standards. A 2001 company memorandum by Lawrence Kurlander, then a senior vice president and chief administrative officer, said Newmont had "told the world" it upheld US environmental standards abroad, when in reality it failed to do this. He said the concern applied to operations in Peru and Uzbekistan as well as Indonesia.

This gap between policy and practice in the mining operations of Newmont, and many other companies, has severely undermined the credibility of 'corporate social responsibility' (CSR) - the voluntary commitment to and attainment of standards which are supposed to ensure a socially responsible way of working. The problem lies with the voluntary nature of the commitments: under the CSR system, if a company fails to abide by the environmental or human rights standards it has set itself, it faces no sanction other than bad press. Clearly, in Newmont's case this is not enough of a deterrent in itself.

The failure of CSR bolsters the campaign for a legally enforceable set of international standards to hold companies to account. NGOs pushing for legally enforceable 'corporate accountability' - as opposed to the weaker, self-regulated 'corporate responsibility' - argue that this would be more effective in bringing an end to environmental and human rights offences in the corporate world. Not surprisingly, the move has been strongly resisted by the companies themselves.

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It remains to be seen whether the Indonesian government attempt to hold Newmont legally accountable for polluting the North Sulawesi environment will be successful.

For most companies, whose investments are welcomed with open arms by the governments of deeply indebted, cash-strapped countries like Indonesia, legal action remains a comfortably remote possibility. Lax enforcement of environmental regulations has been the norm in Indonesia and is associated with a long and often violent history of community protests over negative environmental and social impacts.