Government insists on out of court settlement for Newmont tax dispute

JAKARTA (JP): Minister of Mines and Energy Susilo Bambang Yudhoyono emphasized on Thursday that the tax dispute between gold mining company PT Newmont Minahasa Raya and the Minahasa regency in North Sulawesi should be resolved through an out of court settlement.

He called on the regency administration to stop pursing its litigation efforts against the company and solve the dispute out of court.

Bambang said a coordinating team comprised of officials from the Ministry of Mines and Energy, the Ministry of Home Affairs, the North Sulawesi provincial and the Minahasa regency administrations, as well as from Newmont, were now engaged in discussions in order to resolve their dispute.

"We're taking reconciliatory steps and will honor whatever the results (of the discussions) are," Bambang told reporters following the inauguration of several new directorate generals at his ministry.

The regency last year filed a lawsuit against Newmont in the Tondano District Court following Newmont's refusal to pay C-class taxes, levied for the exploitation of industrial minerals and building materials. The regency demanded Rp 61 billion (US$8.4 million) in overdue taxes.

Newmont said the taxes were not included in the contract of work (COW) it had signed with the government.

It admitted removing overburden containing sand, gravel and stones, but it did so to access the gold ore beneath and did not make commercial use of the removed material.

The Tondano court issued in January a temporary ruling to bar the company from operating its gold mine until the court completes the hearing of the case.

Newmont said Monday during the hearing with the House of Representatives' Commission VIII for mines and energy that the Manado High Court had upheld the suspension ruling, allowing the district court to execute the ruling.

"We can understand the regency's move to file the lawsuit, but if the current negotiations work we will have a new agreement to act on," Bambang said.

He said he could not predict the results of the negotiations, but added Newmont's contract emphasized out of court solutions to to disputes.

He commented that should the negotiations fail both parties could seek litigation.

"This (the litigation process) has to be conducted through an arbitration or a justice institution approved by both sides," he said.

Newmont spokesperson Yonaniko Salim said the coordinating team was at present in Minahasa to assess the C-class mining products extracted by the company.

According to her, the nine-strong team started working in mid- March and would stay in Minahasa for two weeks.

She said the company was waiting for the Tondano District Court officials to temporarily close down its operation following the Manado High Court's recent approval of the decision.

Newmont Minahasa Raya is 80 percent owned by the Denver-based Newmont Mining Corporation and 20 percent by Tanjung Sarapung, which is controlled by local miner Yusuf Merukh. (bkm)