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."