Newmont mine closure overruled

Down to Earth No. 45, May 2000

The fate of Newmont's Sulawesi gold mine has drawn attention to contracts in the context of moves towards regional autonomy.

PT Newmont Minahasa Raya, 80% owned by Newmont Mining Corp. of the US, operates the mine at Ratatotok, which produces 340 kg of gold a year.

Last year the local authority in Minahasa district accused the company of failing to pay taxes on "C Grade material" (sand, gravel etc.) excavated at its mine site. It secured a temporary closure order in February through the district court. Newmont appealed but North Sulawesi's provincial court in Manado confirmed the decision. On April 12 the Supreme Court suspended the closure order. The district authority dropped its charges and in exchange Newmont agreed to pay between $400,000 and $500,000 in taxes on overburden removed from the mine. One report states that the company also agreed to pay $1.5 million to a welfare foundation, plus another $1 million per year for three years for community development programmes.



While some of these funds might trickle down to local communities, neither the settlement nor the whole legal wrangle that preceded it deal with the mine's damaging impact on the surrounding environment. Indonesian NGOs have criticised the Supreme Court's ruling, saying that the district court action should have been used to disclose the environmental damage done by the mine. The main complaint that local people make against Newmont is not about taxes, but about the water pollution which affects the livelihoods of local fishing villages. NGOs investigating declining fish stocks have blamed the tailings disposal method used by the company, which dumps waste on the sea bed - a practice banned in North America and Europe.

WALHI and the mining network JATAM have accused Newmont and the government of keeping secret the results of an official investigation into the environmental impacts of the mine carried out in June last year. The investigation found that Newmont's tailing disposal system should be re-evaluated because toxic elements at the disposal site in Buyat Bay had reached an intolerable level. Significant levels of mercury, lead, arsenic, copper, and cadmium were found in the waters. The investigation also found there was no thermocline - or temperature gradient below which the colder denser water is supposed to ensure that the tailings are not widely dispersed. Newmont has argued that it is safe to discharge waste into Buyat Bay because it would be piped below the thermocline (see also DTE 32:6). NGOs accused the government of being concerned only about protecting foreign investors' interests and ignoring people's health.

(Manado Post 21/Mar/00, Dow Jones Newswires 20/Mar/00; Jakarta Post 21&25/Mar/00, 15&24/Apr/00. See also DTE 44 for more background.)


Weda Bay

Another company planning to use the same subsea tailings disposal method as Newmont is proceeding with plans to develop its US $900 million nickel and cobalt mine on Halmahera island, Maluku. Louis Clinton, president of the Canada-based Weda Bay Minerals, worked for Freeport McMoran Copper and Gold for 30 years before setting up the Weda Bay development. The company's partner is US-based nickel and cobalt producer OM Group Inc. The project is currently in the feasibility study stage. It plans to produce concentrate by 2004 and build a refinery turning out finished metal in 2007. (Dow Jones 9/Mar/00 via INCL email list)