St. LOUIS (ResourceInvestor.com) -- The South Jakarta District Court of Indonesia on Tuesday cleared PT Newmont Minahasa Raya of any environmental wrongdoing at Buyat Bay, dismissing a civil suit launched by the country’s largest non-governmental organization (NGO) Wahana Lingkungan Hidup Indonesia (WALHI). The 5-month trial was the last of a string of lawsuits brought against the company since 2005.
In the decision, the judges ruled that plaintiff WALHI failed to prove its claims of pollution and regulatory violations against defendants PT Newmont, the Ministry of Energy and Mineral Resources of the Republic of Indonesia and the Ministry of Environment of the Republic of Indonesia.
“We hope this second exoneration by yet another Indonesian court will put to rest - once and for all - the hoax that Buyat Bay is polluted,” said Omar Jabara, senior director of communications and media relations for Newmont [NYSE:NEM].
Jabara told RI that it is possible WALHI will appeal the decision but has not yet indicated its next move. He said Newmont would strongly fight any appeal if it came.
The court upheld the previous ruling in the case against President Director Richard Ness, and maintained that Buyat Bay is not polluted and PT Newmont was in compliance with all regulations and permits during its eight years of operations from 1996 to 2004 at the now-defunct Mesel Gold Mine on Sulawesi Island.
On April 24, 2007, the Manado District Court of Indonesia exonerated Ness and PT Newmont from of all criminal charges and regulatory violations, ruling that evidence presented during the 21-month criminal trial proved that tailings dumped into Buyat Bay did not exceed government standards (see RI’s post-ruling interview with Ness). The verdict has since been appealed and is now before the Indonesian Supreme Court.
One month prior to the verdict, on March 22, however, WALHI had launched a civil suit against Newmont over the alleged pollution of Buyat Bay, and included the Environment Ministry and Indonesian Department of Energy and Mineral Resources in the suit for negligence. This was the fourth such litigation against the company.
In late 2005, Indonesia’s South Jakarta District Court threw out the government's $133.7-million lawsuit, filed by the Indonesian Environmental Ministry, saying it must be settled through international arbitration. In early 2006, Newmont [NYSE:NEM] settled a different civil suit by agreeing to pay Indonesia $30 million over 10 years to fund environmental monitoring and community development.
Evidence in the most recent trial again showed that tests by the United Nations' World Health Organization, Indonesia's Ministry of the Environment, Australia's Commonwealth Scientific and Industrial Research Organisation and Japan's National Institute for Minamata Disease concluded that Buyat Bay is not polluted.
“Throughout the trial, WALHI's testimony was inconsistent and not credible” said Luhut M.P. Pangaribuan, PT NMR lead counsel. “It filed the civil lawsuit claiming environmental pollution, but later stated that pollution was never part of its allegation when it challenged the judges' desire to visit Buyat Bay.”
Testimony from a government mine inspector and additional documentation revealed that PT Newmont had all the appropriate operating permits and did not violate any of them. Further testimony from residents of Buyat and Ratatotok showed that the fish population in Buyat Bay remains stable and coral reefs are thriving.
“Buyat is clean; all of us who live here know it, and hopefully now others would know it and believe it as well - enough is enough,” said Robert Sasuwuhe, the head of Buyat Village. “With the verdict, hopefully, the residents are now able to continue with their lives in peace, working and fishing in Buyat Bay.”
The Regional Government tourism office continues to promote Buyat Bay as one of Indonesia's top dive locations because of its pristine waters and abundant marine life.
Newmont said it will continue to support environmental monitoring of Buyat Bay by an independent scientific panel that was formed through a Goodwill Agreement, which will be in effect until 2016.
Currently, the company only has one operating mine in the country: the 45%-owned Batu Hijau, located on the remote island of Sumbawa in the West Sumbawa province.
In 2006, Batu Hijau reported equity copper sales of 230 million equity pounds and gold sales of 230,000 equity ounces last year - a 33% drop in copper and 40% drop in gold from 2005. Equity gold and copper sales at Batu Hijau are expected to remain stable in 2007 at 230,000-250,000 ounces of gold and 210-230 million pounds of copper and remain at these levels through 2009.
Under the current mine plan, the mine life is predicted to last until 2034. But due to geotechnical revisions and higher processing and mining costs last year, Batu Hijau reserves declined by 1.3 million equity ounces. The deposit now stands at 5 million ounces of gold and 3.6 billion pounds of copper.
Earlier this year, Newmont said it has plans to divest a further 7% stake in Batu Hijau to the government for about $325 million based on a value of $4.65 billion for the mine. Newmont (45%) and Sumitomo Metal Mining Co. (35%) are being forced to cut their combined 80% stake in the mine to give the government a 51% interest by 2010.
The company has plans to develop the Dodo (or Elang) copper deposit, 60 kilometres from Batu Hijau. Jabara said the site is still being evaluated for economic feasibility and permitting possibilities.
