Supreme Court urged to intervene in Newmont row

JAKARTA (JP): The Ministry of Mining and Energy will urge the Supreme Court to provide fair treatment on the tax dispute between PT Newmont Minahasa Raya and the Minahasa regency in North Sulawesi.

Secretary-General of the Ministry of Mines and Energy Djoko Darmono said here on Friday he would meet one of the Attorney General's deputies on Tuesday to ensure a fair and objective court decision on the case.

"We can't allow investors to think there is no legal certainty," Djoko said.

The North Sulawesi Tondano District Court issued a ruling last Saturday barring Newmont, a unit of American gold mining company Newmont Mining Corp., from temporarily conducting mining activities until a hearing of the regency's suit against the company was completed.

The ruling followed charges by the Minahasa administration accusing the gold mining company of violating the regency's regulations on tax payments.

The Minahasa regency accused Newmont of refusing to pay C- class taxes, levied for the exploitation of industrial, mining and building materials.

Newmont, which later appealed to the higher court, admitted it extracted C-class materials such as sand, gravel and stones but it did so to access the gold ore underground, not for commercial purposes.

"In our view, Newmont has not made commercial gains from the materials and the company is not subject to such taxes," Djoko said.

He said Newmont had asked the Supreme Court to direct the higher court toward an objective decision.

"We don't interfere with court proceedings, nor do we lobby the Supreme Court, we just provide it with information," he said.

Djoko, however, warned that closing down Newmont would exempt the gold mining company from the obligation of paying high reclamation costs after the gold reserves had been depleted.

"Newmont's gold reserves will last for only about two to three more years; they may not even care if we close down their mining site," he said.

Nevertheless, the company's president, Rick Ness, said on Monday he was appalled by the court's decision, citing the ruling as "clearly outside of any reasonable interpretation."

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

Minahasa Regent Dolfi Tanor filed the suit against Newmont last year in a local court.

Under the existing law, the right to license the exploitation of the C-class materials lies with the local administration, with tax proceeds going to the region's coffer.

Newmont Minahasa Raya is 80 percent owned by the Denver-based Newmont Mining Corporation and 20 percent owned by Tanjung Sarapung and local businessman Yusuf Merukh. (03)