Supreme Court orders delay in Newmont mine closure
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)