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INDONESIA: Report Heightens Pollution Dispute with Newmont Mining

by Jane PerlezNew York Times
November 8th, 2004

A government panel presented a bitterly fought-over report on Monday showing that sediment in the equatorial bay where the world's biggest gold producer, Newmont Mining Corporation, deposited mine waste is polluted with significant levels of arsenic and mercury. But the panel found the water quality met Indonesian standards.

The report, written by more than a dozen technical specialists, found that fish from the bay were laced with enough arsenic to make them dangerous for consumption, particularly for children. It recommended that the Health Ministry "look into arsenic poisoning" by conducting more tests on villagers who have complained of rashes, lumps, breathing difficulties and dizziness. It also said the government should consider moving the villagers from an area it "categorized as possessing high risks for human health."

The findings are the latest of several studies on Buyat Bay, on Sulawesi island, where villagers filed a $543 million lawsuit against Newmont in August, contending that waste, called tailings, from a nearby gold mine had caused serious illnesses, including in the mother of an infant who died, and the ruin of their income from fishing.

Newmont, based in Denver, vigorously denies having polluted the bay and attributes the villagers' illnesses to poor nutrition and sanitation. It disputed many of the report's findings, which were available in draft form last week and were in the document presented Monday to the environment minister, Rachmar Witoelar, and a 12-member steering committee.

The final report, which is expected to be released to the public on Wednesday, was made available to The New York Times by a member of the steering committee.

Asked for comment on the findings, Newmont's vice president for environmental affairs, David A. Baker, issued a statement through a spokesman. "The presence of arsenic in tailings sediment was addressed in the premining environmental impact statement and shown to be of no harm to the environment," it said. "The system has worked as designed, as is confirmed by three previous scientific studies and eight years of monitoring data showing no contamination in the water or fish of Buyat Bay. We believe the scientific data in the government report when released will confirm those facts."

The dispute has created a public furor in Indonesia, resulting in the jailing of five senior Newmont employees, who have since been released. For Newmont, the stakes concern not only the reputation of a mammoth American company with global holdings reported to be larger than England, but also a potential challenge to its operations at a far more valuable gold and copper mine on another Indonesian island, Sumbawa.

Points of Contention

Among the stark disagreements between the findings and Newmont's position was that the arsenic had entered the bottom-feeding organisms, known as benthos, which provide food for fish. The report advised that villagers reduce their consumption of fish from the bay, their primary source of food.

In a telephone interview from Denver on Saturday, Mr. Baker said the arsenic levels were basically irrelevant because the arsenic was a kind that would not dissolve in water and enter the food chain. Newmont said that it disagreed with the way the arsenic and mercury levels in the fish were calculated and that it believed that the benthos were not polluted.

The fish were of a quality "you find any place in the world," Mr. Baker said. "We knew the science and predicted that the tailings would be stable in the environment and will not cause harm to the environment and will not cause harm to humans."

Emil Salim, a former minister of environment who is on the steering committee, disagreed. "This report says 'yes' there is pollution because there is abnormally high arsenic in the sediment, in the benthos, in the fish and in the ground water," he said.

A member of the panel, Hilmi Salim, the coordinator of the center for natural resources at Padjadjaran University, said Newmont was "hiding the dark side and only showing the white side," by emphasizing data that supported its case, particularly on water quality standards, while ignoring data that showed pollution, like those on the sediment.

An independent American hydrogeologist, Robert E. Moran, who advises the mining industry and environmental groups, reviewed the findings at the request of The New York Times. He disputed Mr. Baker's contention that the arsenic was "not biologically available in the food chain."

Bottom-dwellling benthic organisms were capable of consuming contaminants like arsenic even as solid particles, Mr. Moran said.

"By neglecting the sediment, the company chooses to disregard the evidence that potentially toxic concentrations of chemicals, both in solution and as particles, are accumulating on the bottom of Buyat Bay," Mr. Moran said.

A Newmont spokesman, Kasan Mulyono, noted that Indonesia had no guidelines for heavy metals in sediment, therefore "Newmont's focus is not on that subject."

"Newmont has followed the regulations by measuring metals in water," Mr. Mulyono said.

Mr. Salim, the steering committee member, said the specialists who presented the report to the steering committee showed photographs of people from the village, Buyat Pante, with heavy rashes and lumps, and described the symptoms as resembling those from exposure to arsenic.

Residents said an infant from the village died in July, six months after being born covered with lumps and wrinkled skin. The mother was among three villagers who sued Newmont seeking damages with the help of a local legal aid group, Agency for Health Law. The cause of the baby's death remains uncertain, and no autopsy was performed. A doctor who had examined the baby before her death diagnosed her condition as a skin ailment and malnutrition.

Agus Pasaribu, a lawyer with the legal aid group that brought the case on behalf of the villagers, said the two sides were in "mediation" and discussing compensation and treatment for the villagers. A Newmont spokesman confirmed that the two sides were in mediation but, he said, compensation was not being discussed.

A Longstanding Concern

Mr. Witolear, the environment minister, acknowledged he was in a difficult position. "I'd like to maintain my objectivity," he said. "I don't want to be part of throwing investors out of Indonesia, and yet you have to give protection to the victims."

He added that the results of the government panel's study would be handed to prosecutors in Manado, the provincial capital that is home to the mine. Prosecutors there have been determining whether to bring a criminal case against the company.

A prominent human rights lawyer, Mulia Lubis, said in an interview on Friday that he had been retained by Newmont as a legal adviser. He said he had told Richard Ness, the president of Newmont, in Indonesia, to be prepared for a legal fight to clear its name.

Even before the suit was brought, the Indonesian Environment Ministry had been concerned about the levels of arsenic.

In 2000, four years after the Minahasa Raya mine opened, the ministry wrote in an internal memorandum that the arsenic levels in bay fish were "found to be alarming." After drawn out discussions with the company, the ministry demanded in a letter in 2002 that Newmont take immediate steps to improve waste treatment.

A number of documents, including letters and requests from the Environment Ministry to Newmont asking the company to meet standards for a permit to deposit the waste, were released with the report on Monday. Newmont says that it operated with all the permits it needed.

Environmentalists point to the case as an example of the weakness in regulating big multinational companies in a nation that has traditionally welcomed foreign companies to exploit its abundant resources. The report recommended that "the government tighten monitoring of future mining activities."

The findings come on the heels of an announcement on Friday by Newmont. which posted a 12 percent jump in third-quarter profits, that it would not go ahead with the expansion of its gold mine in Peru, saying it had misunderstood the depth of local opposition.

In Indonesia, the mine above Buyat Bay stopped production, as scheduled, in August. But the company's far richer Sumbawa mine, which opened in 1999, is expected to operate for another 15 years, according to company projections.

In a 1997 interview in Forbes magazine, Ronald C. Cambre, then Newmont's chief executive officer, said the mine had the potential to generate $90 million a year in free cash flow for 20 years, based on a gold price of $350 an ounce. Gold prices averaged $403.78 in the third quarter.

According to Newmont's estimates before the Sumbawa mine opened, the company pumps tens of thousands of tons more a day of treated mine waste into the ocean there than it did at Buyat Bay, though farther out to sea and at a greater depth. Both sites use the same system, known as submarine tailing disposal.

According to William Riley, regional director of the Environmental Protection Agency in Seattle, who has written opinions on the system, submarine tailing disposal is effectively banned in the United States under the Clean Water Act.

Newmont maintains that the system is safe and could be used in the United States, under proper conditions and with exemptions from the law, though none have ever been granted. The report presented Monday recommended that Indonesia's government "refrain from issuing licenses for similar activities."

It also found that Newmont had deposited the tailings waste in waters shallower and warmer than it had pledged in its initial environmental impact assessment.

Before opening the mine, Newmont said the waste would be deposited at 82 meters, where, it said, the waste would not move around or be consumed by marine organisms. Newmont says the waste remained in a stable position.

In the telephone interview, Mr. Baker of Newmont said the waste had risen to 70 meters, a variation that he said had been predicted in the premining assessment.

This latest report was used as ammunition by both sides, as have earlier studies of the condition of the bay, including one paid for by Newmont and conducted by the Commonwealth Scientific and Industrial Research Organization of Australia, a government body known as Csiro.

This latest study was considered to be the most comprehensive and independent, however. The findings came from a broad range of tests on the bay waters, sediment on the bay floor and samples from a variety of fish and the benthos, the bottom-dwelling marine organisms.

The government panel included a Newmont representative along with members of environmental groups, university scientists, and members of the ministries of the environment and mineral resources.

An incomplete version of the study was released last month by the departing Environment Minister, Nabile Makirim. Newmont praised that early version, saying that it represented a "complete vindication" and confirmed that "Newmont has told the truth."

When he released the report, Mr. Makirim said, "If there is no pollution, then there is no polluting."

Masnellyarti Hilman, the chairwoman of the panel and a senior official at the Environment Ministry who has been involved with overseeing Newmont's activities since the 1990's, said Mr. Makirim released the incomplete report without the permission of the panel.

Then, as now, the company focused its statements on the bay waters, rather than the contamination of the sediment. The results of the latest report showed that arsenic levels in the sediment ranged from as low as 2.3 to as high as 666 parts per million. The average was 338 parts per million.

It compared the levels to the standards for other nations in the Association of Southeast Asian Nations, which define arsenic pollution as 50 to 300 parts per million. For mercury, it said that tests in the "disposal zone also yielded polluted sediment" under Asean standards.

The Newmont-financed Csiro study found arsenic levels in the sediment at two areas near where the mine waste was discharged of 466 and 678 parts per million, said Mr. Moran, the American specialist, after reviewing that report.

Another study, which Newmont said exonerated the company, was conducted under the auspices of the World Health Organization, with the expertise of the Minimata Institute in Japan. A W.H.O. technical adviser, Jan Speets, said the study was mostly intended to see if villagers suffered Minimata disease, which is caused by acute methylmercury poisoning. It found none.

A toxicologist, John Paulus, from Sam Ratulangi University in North Sulawesi, who was a member of the government panel said Monday in an interview that he was dissenting from the latest findings. Mr. Paulus, who was interviewed at the request of Newmont, said that he believed that the point of the study was to deal with Minamata disease and that it had already been discounted.

"There is a clear result from the World Health Organization and the Minimata Institute that the bay is not polluted and that the heavy metals are under the dangerous level," he said.

In a previous interview, Dr. Speets called the survey a "very limited spot check" and "not a scientific way" to determine what was causing the illnesses in the village or whether the bay was polluted. He said that a bigger study was required.

This latest government report addressed that need.

Newmont's Defense

In anticipation of the findings, Newmont undertook a public relations blitz to defend its position, professing its innocence in full page advertisements in Indonesian newspapers. The report recommended that the government ask Newmont to "remove all misleading advertisements in the print and electronic media concerning the quality of the environment around Buyat Bay."

Last week, Newmont told the Security and Exchange Commission that the various studies "all confirm that PTNMR has not polluted the Buyat Bay environment and therefore has not adversely affected the fish in the bay or the health of nearby residents."

Newmont also called a briefing last week for Indonesian journalists to challenge the latest findings. Afterward, an Indonesian employee of The New York Times found an envelope with the Newmont Minahasa logo tucked into her packet of briefing papers with five 50,000 rupiah notes, about $30.

The money, a sizable sum in a city where the average minimum monthly wage is $75, was returned the next day.

Asked what was the purpose of the money, Doug Hock, the director of public affairs for Newmont in Denver said, "We provided transportation reimbursement to national reporters as is customary in Indonesia." In a later e-mail message, he added, "We will refrain from providing it going forward in order to avoid any future misunderstandings."



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