Newcrest's gold mine operating amid strife

Newcrest's gold mine operating amid strife

MELBOURNE (Dow Jones): Australian gold miner Newcrest Mining Ltd. (A.NEW) is operating its Gosowong gold mine on Indonesia's Halmahera island with a skeleton staff after renewed civil unrest on the tiny island, a company official said Thursday.

A violent dispute between the two villages of Kao and Malifut, about 25 kilometers from the mine, is discouraging some 180 local workers from turning up for work, Newcrest Mining Chairman Ian Johnson said.

Nevertheless, Johnson is confident the dispute will be resolved by the authorities before there is any production loss.

"It will be several more weeks before (Gosowong) faces the slightest problem," Johnson told reporters after addressing a meeting of shareholders.

Gosowong, which is 82.5 percent owned by Newcrest, is of key importance to the company and is expected to contribute about one-third of Newcrest's anticipated net profit in the fiscal year ending June 30, 2000. Production at Gosowong first started in July this year and the mine is expected to produce about 154,000 ounces of gold a year.

The mine is now being operated by 15 Australian staff and some 70 workers drawn from elsewhere in the Indonesian archipelago.

According to Indonesian press reports, three people died Monday when the Kao-Malifut dispute degenerated into a brawl involving up to hundred people armed with machetes, spears and bows. That was despite the presence of 200 Indonesian troops stationed in the area to keep the peace.

In August, similar violence forced Newcrest to shut down the Gosowong mill for five days.

At the center of the dispute is the Malifut villagers' presence on the island. The Malifuti hail from Makian island but were settled on Halmahera in 1975 after the Kie Besi volcano eruption on Makian. It now appears the Kao want them off Halmahera.