Supreme Court orders delay in Newmont mine closure
JAKARTA (JP): The Supreme Court has ordered the Tondano District Court in Minahasa, North Sulawesi, to delay the execution of its order shutting down PT Newmont Minahasa Raya's gold mine.
Richard Ness, the president of the company, said on Thursday the Supreme Court's decision was a victory for the people and economy of Minahasa regency.
"This is a victory for the 2,800 Minahasa residents who depend on our operation for their livelihood and would have been put out of work by the Minahasa regent's determination to close the mine," he said in a statement.
Supreme Court Chief Justice Sarwata issued the order to the head of the Tondano District Court last Tuesday, after the district court had ruled that Newmont must shut down its mine by Sunday.
"You are also required to explain to the Supreme Court the matters regarding the closure ruling," Sarwata told the Tondano District Court head in his letter.
The district court issued a ruling last Saturday ordering the temporary closure of Newmont's mine over a tax dispute between Minahasa regency and the company.
The Supreme Court's intervention follows protests from almost all levels of the government, economic observers and legislators over the district court's closure order.
"Our image has been greatly tarnished," State Minister of Investment and State Enterprises Development Laksamana Sukardi said when commenting on the closure order.
He said the district court's ruling would frighten off foreign investors. "Why should we place stumbling blocks in front of the investors? We don't see such things happen in other countries. In those countries, all problems can be resolved through talks."
Sarwata said the Supreme Court issued the order after studying documents related to the case provided by the Ministry of Mines and Energy.
The ministry's secretary-general, Djoko Darmono, said the Supreme Court's intervention would help the government ensure legal certainty in the mining sector.
"We're delighted with the Supreme Court's letter," Djoko said. He added that the regency's lawsuit against Newmont had damaged the image of the country's mining sector.
He said that based on information from the ministry, the Supreme Court had made its own judgment on the case. "We don't meddle with the legal aspects of the case."
Djoko said the government would now wait to see the response to the Supreme Court's order, adding that this was an internal matter between the two courts.
Newmont Minahasa, which is 80 percent owned by the Denver- based Newmont Corporation, produced 344,000 troy ounces of gold in 1999. The company expects to increase its gold production to 350,000 troy ounces this year.
Ness said the Supreme Court's move showed a sincere effort to apply the rule of law in Newmont's case.
"Clearly the Supreme Court has recognized the irregular nature of the closure order," Ness said.
The Minahasa regency sued Newmont for a total of Rp 19 billion (US$2.4 million) in taxes on the overburden it extracted from 1995 to 1998.
Newmont refused to pay, saying the taxes were not included in its contract of work and that it had extracted the overburden to access the gold deposit underneath.
Under local tax regulations, mining companies are obliged to pay taxes on gravel, sand and stone extracted and commercially used. The regency believes Newmont commercially used the overburden it extracted.
The district court's order was issued after a joint verification team comprising local officials, officials from the Ministry of Mines and Energy and Newmont executives failed to reach an out-of-court settlement.
The verification team found that Newmont had used only a small portion of the overburden for construction purposes, and ruled the company was only required to pay Rp 550 million in taxes.
Newmont agreed to pay this amount and also to donate $2.4 million for community development programs. The regency, however, demanded an immediate cash payment of $3 million, which Newmont rejected. (bkm)