Indonesia: Newmont Mining cleared in pollution trial

The following account makes it sound like the the litigants were whining and frivolous, just looking for a cynical buck. But a photo caption accompanying the story in the Denver Post read: “Protesters display a photo of a sick child whose disease believed to have been caused by pollution from the Newmont mining during a demonstration against the mining company outside a court in Manado, 24 April 2007.” From the AP, April 24:

Manado, Indonesia – Newmont Mining Corp. and one of its executives were acquitted Tuesday of charges that the world’s biggest gold producer dumped dangerous amounts of toxic waste into a bay off of Indonesia’s Sulawesi Island.

The trial of Richard Ness and Denver-based Newmont was closely watched by foreign investors in Indonesia, which has some of the world’s largest precious metal deposits but is also considered among the world’s most corrupt countries.

During Tuesday’s hearing, nearly 1,000 protesters g athered outside the courthouse, some holding banners saying “Sentence Newmont!” and “Improve Indonesia’s environmental laws!” Ness could have faced up to 10 years in prison and, with Newmont, a $160,000 fine.

But the judge said documents and testimony presented during the 21-month criminal trial proved waste rock dumped into Buyat Bay by the company’s now-defunct mine did not exceed government standards.

“There also is not enough evidence that people suffered from health problems,” said the judge, Ridwan Damanik, referring to claims that villagers living near Buyat Bay were suffering from skin disease, unexplained lumps, breathing difficulties and dizziness.

Newmont’s supporters in the packed, sweltering court cheered and defense lawyers and family members threw their arms around the smiling Ness, who heads Newmont’s local subsidiary. Prosecutors said they would appeal the verdict.

Ness said he hoped communities around the bay could now be confident “the waters are clean, the fish are safe for consumption, and that their health has not been affected by our operations.” Wayne Murdy, chief executive of Newmont, said Tuesday it would be wrong to think of the ruling as good news for investors but bad for environmentalists because the case was based on “wild allegations.” “No one genuinely interested in environmental stewardship wants to see an innocent man incarcerated or a company falsely charged and convicted,” Murdy said during a conference call with reporters.

Murdy said the verdict “is not a defeat for environmentalists.

This is a defeat for people who make wild allegations.” He said the case cost Newmont “tens of millions of dollars,” including the cost of a goodwill agreement the company signed with the Indonesian government last year.

Murdy, who said he has eaten fish from Buyat Bay, acknowledged the mining industry suffers from a legacy of poor environmental performance but said Newmont wants to be a leader in stewardship.

He said Newmont management backs a shareholder proposal that an independent group of directors report on relations with communities.

Indonesia’s government expects mining investment in the country to rise to $1.13 billion this year from $880 million in 2006.

“We’re very grateful, a guilty verdict of course would have affected the investment climate,” said Witoro Soelarno of Indonesia’s energy and mineral resources department.

HSBC Global Research analyst Victor Flores said the acquittal will allow Newmont’s management to focus on business.

“It puts an end to what’s been a rather ugly saga for them in Indonesia and allows them to move on,” he said. “It’s obviously very stressful for the people involved and takes up a lot of management time and it’s not productive.” He said declined to predict how the ruling would affect other mining companies in Indonesia. “It’s really up to each company to decide how to run its business and where it wants to take its chances,” Flores said.

Only a few alleged victims were presented during court proceedings, complaining mostly of itchiness.

A police report showed mercury and arsenic levels in Buyat Bay, which is about 1,300 miles northeast of Jakarta, were well beyond government standards. But tests by the World Health Organization, Indonesian government agencies and several independent groups found that pollutants were well within normal limits.

“The police evidence doesn’t stand up,” said the judge, adding that the prosecution was in contempt of court when it refused to order a resampling for further tests. He also said the case should never have been in a criminal court.

Newmont began operations in Sulawesi in 1996 and stopped mining in 2002 after extracting all the gold it could. It continued processing ore until Aug. 31, 2004, when the mine was permanently shut.

Last year, the company reached a $30 million settlement with Indonesia’s government to end a separate civil suit over alleged pollution in the bay – money that will go in part toward community development in the area for the next 10 years.

Under the agreement, Newmont also will fund scientific monitoring to make sure there is no pollution “now or in the future,” said Robert Gallagher, Newmont’s vice president for operations in the region.

He said the acquittal meant his company would consider expanding its copper and gold output at its Batu Hijau mine on Sumbawa Island by up to 40 percent.

Newmont shares slipped 18 cents to close at $43.72 on the New York Stock Exchange. They have traded in a 52-week range of $39.84 to $59.70.

So the “alleged victims” we just complaining of “itchiness”? Get back to them in ten years…

See our last posts on Indonesia, Sulawesi, and the Newmont case.