Newmont may rethink Indonesia investment plan
Newmont may rethink Indonesia investment plan
Frederic Tomesco, Bloomberg, Montreal
Newmont Mining Corp. President Pierre Lassonde said the miner, the world's biggest gold producer, will reconsider whether to invest as much as US$500 million in Indonesia after police jailed company officials amid allegations of pollution.
Indonesian police on Friday detained six Newmont officials for questioning about allegations that the company's Minahasa mine polluted seawater with mercury and arsenic. Richard Ness, who runs the company's PT Newmont Minahasa Raya unit, was released on medical grounds. The other five employees are still in detention.
"Any mining company looking at major new investment will see this and ask itself how safe its people in Indonesia are if the Newmont employees can be put in jail without any charges," Lassonde said in an interview after a speech in Montreal.
"We ourselves are looking at more investment in Indonesia and we'll have to take a step back and ask ourselves what we want to do."
Villagers near the company's gold mine on the Indonesian island of Sulawesi have complained to police about health problems they claimed were caused by mercury from the mine. Denver-based Newmont denied polluting and said illegal mining may be responsible for any contamination.
"We took split samples from the police when they took water samples in the bay, we sent them to third-party laboratories and they all came out saying everything meets U.S. and world standards," Lassonde said. "There was absolutely nothing there, yet they put our people in prison."
Newmont produces gold and copper in Indonesia, where it has operated for more than 17 years. Newmont last month closed the Minahasa gold mine after eight years because of falling output.
Lassonde said the company has been considering expanding its other facilities in the Asian country at a preliminary cost of $180 million to $500 million. Newmont has a market value of about $19 billion.
"We've evaluated different options but we haven't made any decision as to the size of the investment and whether or not we're going to do it," he said. A decision "is maybe six months away," he said.
Developing countries such as Indonesia and Peru now account for about one-third of Newmont's reserves and production. Lassonde said the figure could rise to about 50 percent within a decade as Newmont opens mines in Ghana and elsewhere. The company will decide within two years whether to develop projects in Suriname and Mexico, he said.
"Right now, we're heavily weighted in Peru and Indonesia but we would like to increase the number of developing countries where we operate to reduce the political risk," he said. "That way we would have a much better risk profile."