Newmont under fire

Down to Earth No. 44, February 2000

It is no coincidence that JATAM's November meeting was held at the northern tip of Sulawesi. Here, PT Newmont Minahasa Raya, operator of a gold mine in Minahasa district, has once again been accused of polluting the environment and destroying the livelihoods of local communities.

JATAM has written to President Wahid, calling for all mining activities at PT Newmont Minahasa Raya's gold operation to be suspended until the company complies with 'zero emission requirements'. If it fails to do so, its contract of work should be revoked. The letter also calls for the same treatment for Newmont's newly opened Batu Hijau mine on Sumbawa Island (see box).

The 2.1 million oz mine in Minahasa district, North Sulawesi, began commercial production in 1996 and uses the 'sub-sea tailings disposal' method. This means dumping waste on the sea-bed, which is banned in northern countries. It has been blamed for fish kills and damage to the marine ecosystem near the Sulawesi mine. Local groups and national NGOs have called for the mine to be closed down.

Marine exploration minister Sarwono Kusumaatmadja visited North Sulawesi in December and promised to carry out 'objective' and 'accurate' investigations into the pollution claims. Sarwono was environment minister during the last years of Suharto's rule but was more outspoken than most of his colleagues. His new cabinet post in the Wahid government gives him responsibility for the marine environment, but, as he was swift to point out during his December visit, deciding whether or not to close the mine, is not part of his job.

Local organisations used the minister's visit to draw attention to the mine's pollution problems. Fuji Halim, co-ordinator of JAPS, a local NGO, said that withdrawing the mine's licence was not a significant problem compared to the negative impact of dumping mercury-contaminated waste. He said the mining was destroying the natural wealth of the area and depriving the North Sulawesi economy of a source of income.

The company, controlled by US-based Newmont Mining Corp., the world's number two gold producer, owns 80% of the mine. It has denied responsibility for environmental damage. Newmont plans to close the mine in 2003 or 2004, six years earlier than originally planned, if it fails to find a mineable deposit in two other sites under exploration in Bolaangmongondow district. The company says it will reclaim the mine site or turn it into a mine study centre.


Batu Hijau mine start-up

Newmont's other main interest in Indonesia, the Batu Hijau copper and gold mine on Sumbawa island, Nusa Tenggara, has started production. The mine contains proven and probable reserves of 11.8 million oz of gold and 4.8 million tonnes of copper.

The first 30,000 tonnes of concentrates from the mine was shipped to Japan in December last year, with future shipments from the 700,000 tonnes annual production bound for South Korea, Australia and Europe as well as Japan.

Newmont owns 45% of the project, with Japanese companies Sumitomo Corp.(26%); Sumitomo Metal Mining Co.(2.5%); Furukawa Co.Ltd, (1.5%) and Indonesian company PT Pukuafu Indah (Jusuf Merukh) (20%).

This project uses the same sub-sea dumping method and has already caused concern in the local community over dust pollution, loss of agricultural land and low compensation payments.

(Source: Mining Journal 17/Dec/99; Jakarta Post11/Dec/99; NGO information)

Sued by local government

Newmont in Sulawesi has also come under fire from the Minahasa district government which has accused the company of failing to pay taxes. The authority is suing Newmont for Rp 26.5 billion ($3.6 million)* and wants to take over the 20% stake in the company currently held by Indonesian businessman Jusuf Merukh through PT Tanjung Serapung. In December the Indonesian language newspaper, Media, quoted Minahasa district head Dolfie Tanor as saying he wanted the mine to be closed temporarily, because of the pollution and tax problems.

In late January the local court ruled that the company had not paid all taxes due. President-director Rick Ness said the central government was sympathetic to Newmont and the court's decision would probably be overruled on appeal. Newmont denies any wrongdoing and claims that the local authorities have misunderstood the terms of its contract as regards the tax situation.

The company employs around 700 people, of which 45% are from local villages. According to official data, the government received around Rp 470 billion (US $62 million) a year in revenues from the mine from 1994 to 1999, but there are doubts over how far, if at all, this was shared between central, provincial and district governments.

* Jakarta Post puts the figure at Rp 61 billion

(Source: JATAM letter to President signed by 39 NGOs, 25/Nov/99; Far Eastern Economic Review 14/Dec/99; Media 16/Dec/99; Jakarta Post 22/Dec/99 & 7/Sep/99; Manado Post, 30/Dec/99, Financial Times 26/Jan/2000)