MAC: Mines and Communities

Australia warns Indonesia: Pollution suit against U.S. mining firm could undermine investment

Published by MAC on 2005-03-28

Australia warns Indonesia: Pollution suit against U.S. mining firm could undermine investment

The Jakarta Post (AP)

March 28, 2005

Canberra - Indonesian legal action against a U.S. mining company for alleged pollution could undermine foreign investment in the Southeast Asian country, a top official in neighboring Australia said Sunday.

Earlier this month, Indonesia's environment ministry said it was suing a subsidiary of Denver-based Newmont Mining Corp., seeking millions of dollars (euros) in compensation from the company for allegedly polluting a bay off Sulawesi Island with arsenic.

Five company executives - an American, an Australian and three Indonesians -- are also facing criminal charges related to the case, after Indonesia's Supreme Court this month gave the green light for the men to face trial.

The men are accused of corporate crimes in connection with the alleged pollution. If found guilty, they could face up to 15 years in jail.

Australia's Attorney-General Philip Ruddock said he had raised concerns about the lawsuit and criminal charges with five top-level Indonesian government ministers who made an official visit to Canberra earlier this month.

"What we're concerned about -- and I think Indonesia understands this well -- is that if you're going to have investment from abroad in important projects that are going to help with the development of Indonesia, you need to have it occurring in an environment which is conducive to investment," Ruddock told the Nine television network on Sunday.

He did not comment further, but added that businesses wanted certainty in their investments and transparent laws.

Jakarta's determination to press charges against Newmont has cheered green activists, who have long complained that foreign mining operations in Indonesia skirt environmental laws. But the issue risks spooking investors, who complain that Indonesia's legal system is inefficient and corrupt.

Last year, tests on the bay's water produced conflicting results.

The World Health Organization and an initial Ministry of Environment report found the water unpolluted. But a subsequent ministry study found arsenic levels in the seabed were 100 times higher at the waste-dumping site than in other parts of the bay.

Newmont stopped mining two years ago at the Sulawesi site, 2,090 kilometers (1,300 miles) northeast of the capital, Jakarta, after extracting all the gold it could, but kept processing ore there until Aug. 31, when the mine was permanently shut.

Cause of Mystery Ills Splits Indonesian Fishing Village

By JANE PERLEZ, The New York Times

March 27, 2005

BUYAT BAY BEACH, Indonesia - This is a simple village where the fishermen's families live on the sea in wooden shacks lighted by oil lamps and most everyone knows one another. But the people are divided by more than just the sandy track that passes for Main Street.

Nearly all here agree that there is illness: mysterious lumps, skin rashes, dizziness and other ailments. But arguments over whether the cause is pollution from a nearby gold mine and whether the government should relocate the residents has pitted neighbor against neighbor as that intimate suffering is played out on a broader stage.

Today, Buyat Bay is the center of an expanding dispute being fought punch by counterpunch from the courts and government offices of Indonesia to the worn quarters of environmental groups and the lofty Denver base of the mine's operator, the Newmont Mining Corporation, the world's largest gold producer.

That fight now includes criminal and civil cases brought by the government against Newmont, a legal wrangle that has startled Indonesia's foreign investors and placed Newmont in an unwelcome spotlight.

More than that, the cases have sown deep animosity and division here as Newmont and the environmental groups mobilize opposing camps in what is shaping up to be a signal battle for each side.

A government lawsuit seeking $117 million was announced March 9. Most troubling to Newmont, six of its executives, including two Americans, face criminal charges of polluting this tropical bay. The executives, who vigorously deny the accusations, have been prohibited by the court from leaving Indonesia since last October, when five of them were jailed for a month. [In a setback to Newmont, the Supreme Court in Jakarta, the capital, ruled March 17 that the criminal case could go ahead.]

Newmont wholly denies that its operations polluted the area or affected the health of local people. In particular, it disputes a November government report, which forms the basis of the civil suit, that said mercury and arsenic had entered the food chain from some five million tons of mine waste deposited in the bay over several years.

Such denials have not stalled a parade of accusers as health problems continue to arise among local people, who say they have little choice but to eat the fish from their bay and drink the water from their wells despite warnings in the government report that doing so may be unsafe.

In February, residents from Buyat Bay Village, a town of several thousand behind this beach community, added their voices to the health complaints, citing the mysterious death of a child last November and warning in a letter to President Susilo Bambang Yudhoyono that "what is occurring in Buyat Bay Village mirrors the circumstances of Buyat Bay Beach, only on a bigger scale."

Nowhere has the heat of the dispute been felt more sharply than on the little verandas and in the tiny rooms of this beach community. Sharp words, angry glares, sullen expressions and constant worry about health pervade virtually every conversation.

One of the most outspoken is Andi Lensun, the father of Andini, a baby whose death last July set off the charges that the villagers' illnesses were related to heavy metal poisoning.

Adding to the bitterness over the death of his baby, Mr. Lensun - whose porch is decorated with a handmade sign that reads Relocation Yes - said Newmont had fired him from a modest job cleaning the beach. He said he had been told, "We'll hire you back if you are no longer associated with the environmental groups."

The company says that the work was run by a subcontractor and that Newmont had no control over who was employed.

Some neighbors, who favor the mine, dismissed the health complaints.

Hendrik Pontoh, a leader of the pro-mine faction who said he was working on a project for Newmont planting mangrove trees, said he did not believe that the illnesses were related to the mine, or even that all of them were real.

"People are expecting millions by saying they are sick," Mr. Pontoh said. "The case is blown up because of the nongovernmental organizations. They are the brains behind the action against the mine." The intensity of the feelings was overwhelming, he said. "Now people are going to kill each other over the differences."

This month Mr. Pontoh, other villagers and local officials flew to Jakarta under the banner of a pro-mine group, Communications Forum, for a meeting with Health Minister Siti Fadilah Supari.

Soon afterward, the minister canceled a visit to the bay that would have generated publicity about the poor health conditions. "They told me things were normal and it was unnecessary to come," the minister said in an interview.

The local government doctor, Sandra Rotty, a fierce defender of the mining company that subsidizes her medical center, has become an especially divisive figure. In interviews many local people complained that she was unsympathetic to their needs.

"The doctor told me the skin was normal," complained Halifa Modeong, 18, the mother of a month-old girl, Aryanti, who was born with badly wrinkled skin on her back and forehead, a condition that appeared similar to that of Andini, the baby who died last year.

As treatment, Dr. Rotty gave the young mother a bottle of liquid vitamins. A graduate of the Medical School of Sam Ratulangi University, which is also subsidized by Newmont, Dr. Rotty said in an interview here that she felt no need to warn the community about the government report, issued by the Environment Ministry, which found elevated levels of arsenic and mercury in the fish from the bay.

"There is no information from the Ministry of Health that the fish have high arsenic," she said. "As long as I'm not warned by the Ministry of Health, I don't have to tell people about it."

Newmont says that the fish are no different from those anywhere else in the world and that the area has naturally occurring arsenic that may be picked up by groundwater "in trace amounts" over time.

In a letter to senior Indonesian government officials in January, Robert J. Gallagher, Newmont's vice president for operations in Indonesia, said that the mine's waste disposal method worked as promised when the government granted a permit in 1996 and that the presence of heavy metals in the bay was "not significantly different" now. Newmont has acknowledged putting 37 tons of mercury into the air and the bay. Mining operations finished last August.

After the government issued the November report, the company moved aggressively to improve its position and fend off its challengers.

It filed three defamation suits - against a doctor who said last year that the mine had caused symptoms of heavy metal poisoning, against an environmental group that had brought a class action suit against Newmont, and against an outspoken local scientist. The company settled two of the suits.

The doctor, Jane Pangemanan, was considered exceptionally outspoken because she had broken ranks with a close-knit medical community in northern Sulawesi Province that had provided a solid phalanx of support for the company. Her comments, including those in an interview with The New York Times, set off a national furor.

In an interview at her home in Manado, Dr. Pangemanan said that soon after Newmont filed its suit, she was approached by the company to settle. She did so in February, signing a letter of retraction, which Newmont said she signed without coercion.

But the doctor said she had felt intimidated trying to stare down the world's largest gold mining company.

"I felt I had to sign because of the suit against me," she said. "There was just too much pressure from the outside. My staff told me Newmont has seven layers of lawyers, and how could I fight them?"

She said she had insisted that as part of the accord the company would take responsibility for the health of the community. In fact, the accord says only that the company will "monitor" the public health.

"I am disappointed they haven't done anything about the public health," she said. "That's why I now think I was wrong in signing."

Newmont also settled, last December, with Agency for Health Law, a legal aid group that sought $550 million in damages for the villagers. Iskandar Sitorus, a lawyer with the group, said in a telephone interview that the villagers had agreed to the settlement, although he acknowledged that they were not present in court when the suit was settled.

Radja Siregar, a marine expert with Friends of the Earth Indonesia, said the suit had not been settled with the consent of the villagers or to their benefit. He and others from environmental groups say they are now preparing their own class action suit against Newmont.

One person who has not settled is Rignolda Djamaludin, a lecturer in marine science at Sam Ratulangi University and the director of Kelola, the environmental group in Northern Sulawesi that has organized the villagers.

He acknowledged that the fight over Buyat Bay was bare-knuckle. "We have a strategy for our advocacy; they have an advocacy strategy," he said.

The company, he said, does not want the villagers moved, as the November report recommended. "If you move them, that says to the public something happened here," he said.

Newmont says it would be willing to accept a "simple apology" from Mr. Djamaludin. The lead lawyer for the company, Luhut M. P. Pangaribuan, also said in a telephone interview that Newmont would propose conciliation or arbitration to settle the civil suit announced by the government in March.

For now, the case looks likely to go ahead. In an interview, Environment Minister Rachmat Witoelar said he had the "full support" of President Yudhoyono and the rest of the government to pursue the suit.

Mr. Witoelar visited the bay in February, walking door to door to talk to families. He told them he believed that they should be moved and promised to help organize their departure by the middle of the year. "They are definitely suffering," he said afterward.

But like everything else, leaving Buyat Bay will not be easy, even for those who have decided that it is in their interest. "I would like to stay here, because this is where I was born," said Sudiman Modeong, 46, the grandfather of the baby Aryanti. His family was among the original settlers in the late 1950's.

"But I am thinking of the disease of my grandchild," he said. "I am thinking of the future. We should move."

Muktita Suhartono contributed reporting from Jakarta for this article.

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