New Study Clears Newmont on Indonesia Charges

An independent report released on May 22 by a panel of experts in Jakarta has confirmed that US-based mining giant Newmont Mining Corp's Minahasa Raya subsidiary did not pollute the environment by dumping mine tailings into Buyat Bay in Northern Sulawesi.

Newmont was sued for US$133 million in 2004 in a South Jakarta court on charges of polluting the bay in a long-running case that caught international attention and threatened Richard Ness, the company's local president director, with being sent to jail for up to 10 years and fines up to US$160,000 on criminal pollution charges. The charges against Ness sent shock waves through the expatriate business community and raised concerns that they would affect the country's investment climate, especially in mining and minerals.

Newmont dumped 2,000 tons of mining tailings per day into the waters at the Buyat Bay site beginning in 1996, but actually stopped mining in 2002 and closed the mine permanently in 2004 after extracting all the gold it could find.

The pollution charges were the subject of a series of stories in the New York Times that alleged that the tailings had contaminated fish stocks with arsenic and mercury and seriously sickened those who lived in nearby villages. Newmont denied the charges, saying the illnesses stemmed from poverty and poor hygiene. During the trial, witnesses were unable to show anything much more than that they were seriously itching.

Despite that, eventually in 2006 Newmont agreed to a US$30 million out-of-court settlement with the Indonesian Ministry of Environment to compensate the villagers. Ultimately, Ness's criminal trial, one of the longest in Indonesia's history, ended in a not-guilty verdict and a finding that the local subsidiary was in compliance with all environmental regulations as hundreds of protesters appeared outside the courtroom, carrying signs that said "Jail Newmont." Ness immediately announced he would seek US$65 million in damages in a Jakarta court from the New York Times and demanded that the paper print a front-page retraction of the articles, saying the articles were inaccurate, unfair and had contributed to the criminal charges. There is no indication of the disposition of the suit.

Wayne Murdy, Newmont's chief executive, told reporters in a conference call at the time of the not guilty verdict that the case cost Newmont "tens of millions of dollars," including the cost of the goodwill agreement the company signed with the Indonesian government for the US$30 million in compensation.

The World Health Organization, Indonesian government agencies and several independent groups found that pollutants were well within normal limits. Nonetheless, the not-guilty verdict for the company has been under fire by environmentalists ever since it was announced because of the notorious malleability of Indonesia's court system.

"This story is a classic example of a common tragedy, usually occurring in the developing world, in which it is largely impossible to render an unbiased verdict because most of the technical data are collected by the interested company or their paid consultants; in which the local environmental oversight and legal systems are incapable of reaching an informed ruling," wrote Robert Moran, Amanda Reichelt-Brushett, and Roy Young in the March /April 2009 edition of WorldWatch Magazine, "especially where so much outside money and political influence easily control the processes; and in which all sides therefore mistrust the actions of the officials and the companies."

The independent scientific panel that announced its findings Saturday is comprised of experts from Manado State University, Sam Ratulangi University, the University of Indonesia and foreign scientists from Australia and the United States. The report determined that arsenic and mercury levels did not exceed national or international standards.

"We also compared fish captured within 10 kilometers of the area with those captured in other coastal areas, and their heavy metal contents were also very low," Amin Soebandrio, a scientist from the University of Indonesia, told reporters.

Environmentalists continued to cast doubt on the report, however.

"We proposed for them to check on the impact on fish by breeding them on site. We also asked them to examine cells on the algae, but not one of our considerations was included," said Rignolda Djamaluddin, director of Manado-based Kelola Foundation, who has participated in the Buyat research since the beginning. "They also did not include the impact on the ground, whether the pollution had reached people's wells to cause so many diseases."

However, Soebandrio said the panel's task was only to test the condition of the water around the tailings and not to deal with ground contamination.

"There has been an assumption from the Ministry of Health that there are increased levels of arsenic and mercury in the wells, but it's not in our authority to make that connection," he said.

"But if we have already discovered no arsenic or mercury in the seawater, then there is no reason to check the groundwater, especially considering that people's wells are far away from the ocean."

With reporting from Jakarta Globe