Tue, 21 Mar 2000

Legislators support Newmont in tax dispute

JAKARTA (JP): Some members of the House of Representatives Commission VIII for mines and energy have given their support to gold mining firm PT Newmont Minahasa Raya on the latter's dispute with the Minahasa regency in North Sulawesi over alleged unpaid taxes.

Pramono Anung of the Indonesian Democratic Party for Struggle (PDI-P) faction said on Monday the mining company had become the scapegoat of the regency's frustration against the central government's strong hold on its natural resources.

"It is in line with the reform trend but unfortunately they have done it arrogantly," he told a hearing between PT Newmont Pacific Nusantara and members of Commission VIII.

Djamaludin Sahidu of the Golkar Party said the Minahasa regency in North Sulawesi had given other local governments a bad example by suing the big foreign company for refusing to pay something that was not written in the official contract.

"What the Minahasa regency has done is not right," Djamaludin said.

The Minahasa regency filed suit against Newmont Minahasa last year, accusing the firm of refusing to pay C-class taxes, levied for the exploitation of industrial, mining and building materials.

The regency demanded the company pay Rp 61 billion (US$8.4 million) in overdue taxes and asked the local district court to close down the company's mine if it failed to pay.

The North Sulawesi Tondano District Court issued a ruling in mid-January this year in favor of the regency and barred Newmont, a unit of American gold mining company Newmont Mining Corp., from temporarily conducting mining activities in Ratatotok, Minahasa.

Newmont, then appealed to the higher court, admitting it extracted C-class materials such as sand, gravel and stones but it did so to access the gold ore beneath.

The company said it by no means used or sold the overburden for commercial purposes. As such, it is not obliged to pay taxes on it.

At the hearing, the President of Newmont Pacific Nusantara Richard Ness said the firm had agreed to form a team with representatives the Ministry of Mines and Energy and local government to examine if the C-class materials excavated by Newmont had any commercial value.

Ness said his company regretted the court's ruling, saying it had reflected the local government's low respect of the official work contract to which both the central government and the company had agreed.

He noted the Minister of Mines and Energy in a letter dated Dec. 17, 1999, to Minister of Home Affairs Surjadi Soedirdja confirmed that Newmont's position was correct.

"The terms of the contract and commitments are now being easily disclaimed by others, while the Indonesian government has so far not shown optimum effort to defend what has been agreed in the contract," he told legislators during the meeting.

"If this continues, international investors will stay away from Indonesia," Ness added.

Arifin Panigoro, deputy chairman of the commission and member of PDIP, said in order to solve the problem faster Newmont should take a friendly approach to the local government in addition to the legal steps it had undertaken.

"Newmont should continue with the court procedure. However, since it will likely be hard for Newmont to win in the local court due to the very strong local interest, I suggest Newmont make a more friendly approach to the local government. Try to find exactly what they want," he said.

Newmont Minahasa Raya reported total gold production of 925,000 troy ounces during the 1996-1999 period, with total sales reaching $345.3 million.

The company is 80 percent owned by Denver-based Newmont Mining Corporation and 20 percent owned by Tanjung Sarapung and local businessman Yusuf Merukh. (cst)