Government drops appeal against Newmont

Tb. Arie Rukmantara, The Jakarta Post/Jakarta

The government has decided not to appeal against a recent court ruling in favor of PT Newmont Minahasa Raya (NMR) arising out of a pollution case in North Sulawesi, saying the two sides were currently working on an amicable settlement.

State Minister for the Environment Rachmat Witoelar announced the government's decision here on Thursday when he met people from North Minahasa and NGO activists at his office.

"The government has decided not to appeal. We initially chose to go to international arbitration as urged by the court. But, since negotiations between the government and Newmont have almost reached a successful conclusion, it looks likely that there will be an out-of-court settlement," the minister said.

In the middle of last month, the South Jakarta District Court rejected the government's US$133 million civil suit against NMR, whose operations are located at Buyat Bay in South Minahasa regency, North Sulawesi.

The civil action was taken after the government accused NMR, a local subsidiary of the world's largest gold producer, Newmont Mining Corp., of polluting Buyat Bay through its waste disposal processes, which environmentalists claimed had released mercury and arsenic into the waters of the bay, which had affected the health of local villagers.

A criminal case against the company is being heard separately in Manado District Court.

Rachmat said the decision had been made in order to immediately help the villagers of Buyat Bay and rehabilitate the area.

"If we appeal, it could take months or even years for a verdict to be handed down. By negotiating, we are seeking an agreement so that we will be able to quickly compensate the people and rehabilitate the mining area," he said.

The government negotiating team is led by chief economics minister Aburizal Bakrie.

His deputy Mahendra Siregar told The Jakarta Post that all the basic principles of the deal had been agreed and currently both sides were discussing how to put it into effect.

"We are working very hard to close the deal soon. The deal includes a community development program in the mining area," Mahendra said.

A source closed to the negotiations said the two sides would almost certainly agree on a US$30 million community development fund to help the Buyat villagers.

NMR lawyer Luhut M. Pangaribuan welcomed the decision, saying it proved that the government was sincere in honoring the sanctity of contract.

"The contract states that should there be a dispute between the government and the company, it should be settled through international arbitration or negotiations. I'm glad that the government has chosen the latter," he told the Post.