Newmont agrees to pay taxes to Minahasa regency

JAKARTA (JP): Gold mining company PT Newmont Minahasa Raya said on Friday it was ready to pay Rp 550 million (US$71,000) in overdue taxes on building material to the Minahasa regency in North Sulawesi, much less than the amount demanded by the regency.

"We've simply miscalculated our tax payments and are willing to pay the remaining sum," company spokesperson Yonaniko Salim told The Jakarta Post.

The regency demanded the company pay Rp 19.357 billion in overdue tax on the C-class mining products extracted by the company at its gold mine in the Ratatotok area from July 1995 to September 1998.

C-class mining products is a term used by the Indonesian mining law to denote building materials (including gravel, stone, sand) and industrial minerals (including kaolin, zeolith and others).

The regency said the company was subject to the C-class taxes.

The regency filed a lawsuit last year in the Tondano District Court, following Newmont's refusal to pay the amount.

Newmont said the C-class taxes were not included in the obligations set in the contract of work (COW) it had signed with the government in 1986.

It further said that it had extracted the overburden to access the gold ore beneath, without making commercial use of the removed materials.

A joint verification team comprising officials from Ministry of Mines and Energy, the regency and the company was later formed at the request of Minister of Mines and Energy Susilo Bambang Yudhoyono to settle the dispute out of court.

Most members of the team said Newmont had used 379,000 tons of the overburden to make aggregates for its construction needs.

They said Newmont was only obliged to pay taxes on the used overburden.

"Newmont is satisfied with the result of the team's research," Yonaniko added.

However, the team's members representing the Minahasa regency reportedly still insisted the company had to pay taxes on all the overburden.

The Tondano District Court has yet to complete the examination of the dispute.

The district court has thus far made several decisions in favor of the regency, including that it had issued a provisional ruling to temporarily suspend Newmont's operation while the hearing process was afoot.

The Provincial High Court has approved the suspension ruling but the District Court had yet to execute it. (bkm)