Newmont's case hurts Indonesia's image<\/p>\n
JAKARTA (JP): Recent disputes involving foreign investors,
\nincluding the conflict between gold mining company PT Newmont
\nMinahasa Raya and local authorities in North Sulawesi, have
\ntarnished the country's investment image, a minister said on
\nWednesday.<\/p>\n
\"Our image has been greatly tarnished,\" State Minister of
\nInvestment and State Enterprises Development Laksamana Sukardi
\nsaid at the Presidential Palace prior to a Cabinet meeting.<\/p>\n
Laksamana was commenting on the recent ruling issued by the
\nTondano District Court ordering Newmont to close down its gold
\nmine in Ratatotok over a tax dispute between the company and the
\nMinahasa regency administration.<\/p>\n
Laksamana also cited the public's opposition to pulp and paper
\ncompany PT Indorayon Inti Utama in North Sumatra, and the
\ndifficulty faced by Mexican fertilizer company Cemex in acquiring
\na majority stake in state-owned fertilizer firm Semen Padang.<\/p>\n
He warned foreign investors would be hesitant to enter the
\ncountry unless the government took measures to create legal
\ncertainty to protect their businesses.<\/p>\n
\"Why should we place stumbling blocks in front of the
\ninvestors? We don't see such things happen in other countries. In
\nthose countries, all problems can be resolved through talks,\"
\nLaksamana said.<\/p>\n
Separately, Emil Salim, chairman of the National Economic
\nCouncil, also said the Newmont case surely damaged foreign
\ninvestor sentiment on Indonesia.<\/p>\n
The Minahasa regency administration filed a lawsuit against
\nNewmont at the Tondano District Court last year, demanding the
\ncompany pay Rp 62 billion (US$8.2 million) in overdue taxes and
\ncompensation following the company's refusal to pay taxes on its
\noverburden.<\/p>\n
Newmont at first refused to pay the taxes, arguing taxes on
\nthe overburden were not included in its contract of work.<\/p>\n
The company later agreed to pay the administration Rp 552.6
\nbillion, but the regency turned down the offer despite pressure
\nfrom the central government to accept it.<\/p>\n
At the request of the regency administration, the district
\ncourt ordered on Saturday Newmont to temporarily close down its
\nmining operation, giving it until Monday to carry out the order.<\/p>\n
Meanwhile, Antara news agency reported Newmont and the regency
\nadministration were still working to reach a compromise before
\nthe Monday deadline.<\/p>\n
Newmont general manager Paul Lahti said on Wednesday in the
\nNorth Sulawesi provincial capital of Manado the company and the
\nregency held talks on Tuesday evening but no agreement was
\nreached.<\/p>\n
Lahti said the company was offering the regency $2.4 million
\nin \"developmental contributions\", including $1.5 million in an
\nimmediate cash payment and annual installment payments of
\n$300,000 for three years.<\/p>\n
The regency, however, turned down the offer, demanding an
\nimmediate cash payment of $3 million.<\/p>\n
\"There is not yet any agreement on the issue. We are still
\ntalking,\" Lahti said.<\/p>\n
Meanwhile, the Ministry of Mines and Energy again voiced
\nconcerns on Wednesday over the closure order issued by the
\nTondano District Court, saying only the minister of mines and
\nenergy had the right to shut down a mining operation.<\/p>\n
\"The Ministry of Mines and Energy is deeply concerned with the
\ntemporary closure of Newmont's gold mine, particularly given the
\nfact a lot of unsuccessful efforts have been made to resolve the
\ndispute through negotiations,\" the ministry said in a statement.<\/p>\n
Newmont Minahasa Raya is 80 percent owned by Denver-based
\nNewmont Mining Corp. and 20 percent by Tanjung Sarapung, which is
\nowned by local businessman Yusuf Merukh.<\/p>\n
A spokesman for Newmont Mining Corp. was quoted by AP as
\nsaying in Denver on Tuesday the Ratatotok gold mine accounted for
\none-tenth of the company's gold output.<\/p>\n
The spokesman said Newmont was concerned that local officials
\nwere setting a precedent that could discourage further economic
\ndevelopment in the region and ran contrary to 30 years of
\nnational mining law in Indonesia. (jsk)<\/p>",
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