Newmont Mining in Indonesia: Six employees held over pollution allegations

When Indonesia's new President Susilo Bambang Yudhoyono meets with Prime Minister Howard and other government officials next week, the case of Australian Phil Turner and his six Newmont Mining company colleagues is likely to get an airing.

Mr Turner and his colleagues have been incarcerated by the Indonesian authorities over allegations that Newmont has polluted water in Buyat Bay, on Sulawesi Island, with mercury and arsenic waste from a nearby gold mine.

And while the Australian Government and business community is right to be concerned about the legitimacy and fairness of the legal process currently being applied to Mr Turner and his colleagues, and its ramifications for further Australian investment in Indonesia, Newmont has done itself no favours in the way in which it has obfuscated over what has been occurring at its Indonesian operations.

The Buyat Bay mine, which closed in 2001, was a strong performer for Newmont, particularly in its last three years. Newmont pumped its mine waste into the waters of Buyat Bay and according to a hydro-geologist Robert Moran, interviewed by the New York Times last year, “because the waters in Buyat Bay are tropical, the toxic compounds in the mine waste like arsenic and cyanide compounds often became ‘more mobile and more accessible to the food chain than in temperate waters’”.

In fact it has been the New York Times which has done much to uncover the Buyat Bay story. On September 8 last year the Times ran a front page story that would have sent Newmont’s PR division at the company’s headquarters in Denver, into a tailspin.

The Times report revealed a March 2002 letter written by Isa Karnisa Ardiputra, a senior official in the Indonesian Environment Department. In this letter Mr Ardiputra challenged Newmont over the “toxicity” of the mine waste it was dumping into Buyat Bay and demanded immediate action. Yet when the Times showed Richard Ness - Newmont’s man in charge of its Indonesian operations - the letter, he reckoned that he had never seen it.

Newmont has lined up an impressive array of scientific evidence to support its claim that its executives did not pollute the waters of Buyat Bay and therefore endanger the health of those who live in the area. This expertise includes that of the CSIRO which concluded last year “that Buyat Bay waters suffer no pollution of heavy metals and that the fish tissue metal concentrations are at normal levels,” according to a Newmont announcement of October 22 last year. That announcement went on to note, “When the CSIRO report is combined with the results of the (World Health Organisation and Japan based) Minamata Institute Report and the recently released Indonesian Government Integrated Team report, the data provides an extensive picture of the environment and irrefutable scientific evidence that there is no pollution in Buyat Bay waters”.

But Newmont’s seemingly strong defence was undermined by a further article in the New York Times three days before Christmas last year. It revealed an internal Newmont memorandum written by Lawrence Kurlander, the company’s chief administrative officer on January 18, 2001. Mr Kurlander admonished his colleagues for their failure to uphold environmental standards at Newmont’s operations in Peru and Indonesia. As the Times reported, in a memorandum dated January 18, 2001, to Newmont’s Chief Executive, Wayne W. Murdy, Mr Kurlander indicated that in his view “there is concern we are not operating at US standards in Uzbekistan and Indonesia”.

Newmont, it should be noted, adamantly denies the charges made by the New York Times.  It says that it has sent the Times an extensive and detailed statement rebutting the vast majority of the Times' allegations against it.  Newmont also points out that three Buyat Bay villagers dropped a US$543 million law suit against the company prior to Christmas last year.
 
But on March 10 this year Indonesian Environment Minister Rachmat Witoelar announced that Indonesia will seek US$100 million in damages from Newmont for alleged pollution in the Buyat Bay area.

On Channel 9’s Business Sunday last weekend, Noke Kiroyan, president of the Australia Indonesia Business Council, observed “the fact that executives of a mining company are detained by the police and even jailed for some time is very disconcerting to say the least". And, according to Mr Kiroyan, the treatment of the Newmont executives is “not something that would promote investment because if it can happen to Newmont it can happen to anyone”.

Mr Kiroyan is ignoring two key facts in this case. First, there appear to be some facts which support a case of causing harm to the environment and community around Buyat Bay. And second, Newmont’s defence of its executive and their actions is being undermined by at least one internal critic of the company’s environmental practices and that the company might have ignored the Indonesian Environment Ministry’s concerns as far back as March 2002.

This is not a simple case of a capricious developing world government gunning for a foreign company. It’s much more complex than that. Something that the Howard Government may want to keep in mind when it meets with President Yudhoyono.