Legislators support Newmont in tax dispute

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)