Newmont cleared in Indonesian pollution case

MANADO, Indonesia (Reuters) - An Indonesian court on Tuesday cleared Newmont Mining Corp. and the American president of its local unit of dumping toxic waste into a bay near a gold mine in North Sulawesi and making people sick.

Colleagues embrace Richard Ness (C), president director of Newmont Mining Corp's Indonesian unit, after his trial in Manado, North Sulawesi, April 24, 2007. REUTERS/Supri

The case had been seen as a key test of attitudes towards foreign firms and environmental protection in the country.

Newmont said last month it might reconsider its investments in Indonesia if its executive was found guilty. Newmont’s operations in Indonesia account for 6 percent of its worldwide gold sales and 8.5 percent of its reserves, according to the company’s Web site.

“Pollution charges against Newmont Minahasa Raya and Richard Ness cannot be proven,” chief judge Ridwan Damanik told the court, referring to the U.S. firm’s local unit and its president.

There were cries of joy in the court as Newmont employees and family members hugged each other after the verdict in a trial that had lasted 20 months.

Ness, wearing a dark jacket with a white business shirt and a dark pink tie, initially remained calm, but later shed tears as he walked out of the court with his two sons Eric and Bryan.

“Evidence that was presented by the prosecutor was weak,” Damanik said. “There were differences between the police investigation and other foreign and domestic research agencies, which concluded that the sea water, human and marine life around the bay has not been contaminated by mercury.”

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Ness later thanked the judges in comments to reporters, but a prosecutor contested the result.

“We are not satisfied with the verdict,” said Purwanta Sudarmadji. “We plan to appeal within 14 days.”

Test results on the bay’s water and Newmont’s tailings by various institutions had come up with different readings.

A team led by Indonesia’s Environment Ministry said in 2004 that arsenic and mercury content in tailings dumped by Newmont in Buyat Bay from its now-defunct gold mine had contaminated sediment and entered the food chain.

But other tests failed to find abnormal pollution levels.

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Some environmental protesters in the court walked out in an orderly fashion after the verdict. Earlier, a group of activists banging drums and holding up banners had protested outside the court, which only held around 80 people.

Analysts had said a defeat for Newmont would have deterred investors from putting their money in the mining sector, which has not seen fresh investment for years.

“This positive resolution will undoubtedly have a beneficial effect on Indonesia and foreign investor confidence,” the U.S. embassy in Jakarta said in a statement.

Simon Sembiring, Indonesia’s director general for mineral resources, also welcomed the verdict, telling reporters in Jakarta that it was positive for the mining investment climate.

But the verdict will be viewed as a defeat for some activists who wanted to send a message that Indonesia is serious about enforcing laws to protect a rapidly degrading environment.

In November, the prosecutor demanded that Ness receive a three-year jail term and a 500 million rupiah ($55,000) fine, and the company fined 1 billion rupiah. The maximum sentence Ness could have faced under Indonesian law was 10 years.

Newmont and Ness denied the charges.

Indonesia has some of the world’s largest deposits of gold, tin, nickel and copper, and some of the world’s top mining firms such as Freeport-McMoran Copper & Gold and PT International Nickel Indonesia have operations in the country.

But the sector has been struggling to attract new foreign money as legal uncertainty, rampant graft and red-tape have steered foreign investors away from Indonesia.

Last year, Newmont, which is based in Denver, settled a civil case without admitting wrongdoing and agreed to pay $30 million to an environmental foundation in North Sulawesi.

The company, which has been mining in Indonesia for more than a decade, has plans to spend $400 million to $500 million to expand its operating mine at Batu Hijau in Sumbawa island.

Robert Gallagher, vice president for Newmont’s Asia-Pacific operations, said the firm now hoped to expand in Indonesia and was looking at resuming exploration at an area near the Batu Hijau mine.

$1 = 9,085 rupiah Additional reporting by Harry Suhartono and Muklis Ali in Jakarta