Tue, 25 Jan 2000

PT Newmont regrets court closure order

JAKARTA (JP): PT Newmont Minahasa Raya, a unit of American gold mining company Newmont Mining Corp., regretted on Monday the injunction issued by a district court in North Sulawesi to temporarily suspend its operations as long as its dispute with the Minahasa regency remained in the courtroom.

"We are absolutely appalled by the court's decision," company president Rick Ness said in a statement.

"At a time when Indonesia's international credibility is under intense scrutiny, that a court would issue an order against a foreign company investor clearly outside of any reasonable interpretation of the law is simply mind-boggling. Obviously, there are other considerations at work in this case," Ness added, describing the court's decision as "spurious."

The Tondano court issued a temporary ruling on Saturday to bar the company from pursuing its mining activities in Ratatok, Minahasa, until the court completed the hearing of the suit filed by the Minahasa regency against the company.

Regent Dolfie Tanor filed the suit last year in local court against Newmont for the latter's refusal to pay C-class taxes to the regency administration.

The C-class tax is levied for the exploitation of industrial minerals and building materials, which are in the C category according to the country's mining law.

The building materials and industrial minerals include stone, gravel, sand, kaolin and zeolite.

Under the existing law, the right to license the development of the commodities lies with the local administration and tax proceeds go to the local administrations.

The regency argued that Newmont had violated the law by refusing to pay the C-class taxes.

Newmont admitted that it extracted the C-class mining materials, but it did so to enable it to access the gold ore underground. The removed top soil is termed "overburden" in the mining industry.

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 them.

Ness noted the Minister of Mines and Energy in a letter dated Dec. 17, 1999, to Minister of Home Affairs Surjadi Soedirdja confirming that Newmont's position was correct.

Ness warned that the court's temporary ruling would have an impact on the local economy as thousands of workers would lose their jobs if the court's temporary ruling was approved by the higher court.

He said Newmont would vigorously pursue all legal efforts to prevent the provisional ruling from taking effect.

He said his company appealed the ruling, noting that the ruling could not take effect if it was not approved by the higher court.

"We'll go the Supreme Court if we have to," Ness said. "This decision is clearly without legal basis, erodes the rule of law and will constitute another blow to international confidence in Indonesia."

Newmont Minahasa Raya is 80 percent owned by Denver-based Newmont Mining Corporation and 20 percent owned by Tanjung Sarapung and local businessman Yusuf Merukh. (jsk)