Newmont acquitted on Indonesian pollution charges (April 30, 2007)

Concluding a 21-month trial in an Indonesian court, Newmont Mining (NMC-T, NEM-N) and Richard Ness, the head executive at the company’s Indonesian subsidiary, have been acquitted of charges that a Newmont gold mine, on Sulawesi Island, polluted local waters with arsenic and mercury.

The court ruled that there was insufficient evidence that the Minahasa mine, which operated from 1996-2004, failed to comply with government regulations, or that the waste rock dumped in nearby Buyat Bay caused any health problems for villagers in the area.

The chief judge of the district court went so far as to say that the case never should have made it to trial.

Ness, president director of PT Newmont Minahasa Raya, said he was “thrilled” that his reputation and those of other Newmont employees had been restored.

In a conference call to discuss the case, Newmont chairman and CEO Wayne Murdy said the ruling should not be looked at as a win for investors and a loss for environmentalists, characterizing that stance as a false dichotomy.

“No one genuinely interested in environmental stewardship wants to see an innocent man incarcerated or a company falsely charged and convicted,” Murdy said. “That only serves to set back the cause of protecting the environment by diluting genuine environmental concerns and discouraging responsible environmental practices.”

He added: “This is not a defeat for environmentalists; this is a defeat for people who make wild allegations.”

Indonesian environmentalists appeared to see it differently.

“Newmont was found not guilty because of legal procedure, but not on the substance,” Siti Maemuhah, co-ordinator of the Mining Advocacy Network told The New York Times, which reported that about 1,000 anti-Newmont protesters were gathered outside the court for the decision.

The case was largely based on allegations brought forward by a doctor and some local villagers in 2004 that pollutants from Minahasa had caused a range of illnesses in locals including skin rashes, dizziness and tumours. However, Dr. Jane Pangemanan recanted the charges under oath and testified that she hadn’t found any diseases related to heavy metals in the villagers.

While police evidence found unsafe levels of heavy metals in Buyat Bay, tests by the World Health Organization, Indonesia’s Ministry of the Environment, Australia’s Commonwealth Scientific and Industrial Research Organisation and a Japanese health institute found no threat to villagers in the water.

“The one silver lining to this trial is that it afforded us the opportunity to tell the world, and more importantly, the people of Buyat Bay and Indonesia the waters were clean, the fish were safe to eat, and our operation did not cause harm, but rather operated in accordance with the plan that had previously been approved by Indonesian authorities,” Murdy said.

The prosecution has indicated that it will appeal the verdict.

Last February, Newmont paid US$30 million to settle a civil case against it by the government for pollution in the area, in North Sulawesi province, even though the case — which had sought US$133 million in damages — had already been thrown out of court. Murdy explained the money was not going to the government, but toward environmental monitoring over 10 years and to local communities to continue sustainable development programs.

“We are not walking away from Buyat Bay by any means,” Murdy said.

Murdy said that although the ordeal had taken a tremendous toll on the company and its employees, Newmont remained positive about long-term investment in Indonesia and saw the ruling as a vindication of the country’s courts. Five other Newmont employees were jailed last year for just over a month. The detention was later ruled illegal.

Newmont has a 45% stake in the Batu Hijau copper-gold mine on Indonesia’s Sumbawa Island.

At its annual meeting the day after the ruling, Newmont planned to endorse a proposal put forward by a group of 11 faith-based investor groups to deal with potential community opposition to its projects worldwide. The resolution called for the establishment of an independent committee of board members to review and evaluate the company’s policies to deal with local opposition, to report before Newmont’s annual meeting in 2008.