MAC/20: Mines and Communities

Indonesia files Newmont suit

Published by MAC on 2005-03-11

Indonesia files Newmont suit

By Shawn Donnan, Financial Times

March 11, 2005

Indonesian authorities yesterday filed a US$134m civil lawsuit against Newmont, the world's largest gold miner, seeking compensation for allegedly polluting a bay in the Indonesian island of Sulawesi.

Six Newmont executives were detained in Indonesia last year on charges they contributed to pollution around the Minahasa Raya mine. Villagers near the mine, where processing ended last August, also filed a $543m lawsuit against the company last year, alleging tailings it dumped into the ocean nearby were responsible for health problems.

Doubts about the evidence used against Newmont, which denies any wrongdoing, have surfaced since environmentalists last year accused the company of causing Minamata disease, or acute mercury poisoning, in villagers around the mine. That accusation was subsequently disproven by the World Health Organisation.

Since then, conflicting scientific findings about what, if any, pollution occurred and escalating legal problems for Newmont have turned the case into a high-profile test of Indonesia's treatment of foreign investors.

Indonesia's Supreme Court is considering whether to intervene in the criminal case and two major plaintiffs in the villagers' lawsuit having settled out of court, according to Newmont.

But Indonesian officials said yesterday that they had filed a civil lawsuit against the company in an effort to recoup $117.7m for lost income and environmental damage around the mine and a further $16.3m for damage to the country's reputation.

Isa Karmisa, deputy environment minister, said the government had "accurate data" that Newmont violated Indonesia's environmental laws and was "fairly sure" it could win. Any money collected would be used for environmental rehabilitation around the mine and to relocate villagers, he said.

Luhut Pangaribuan, a lawyer for Newmont, called the lawsuit "baseless" and a "blunder". The company, he said, was "confident" it could win. But it was also considering international arbitration because Indonesia was violating its contract with Newmont by suing.

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