Newmont may re-evaluate Indonesian investment if exec found guilty in Buyat Bay gold trial

Newmont Mining, as well as other overseas mining companies, may need to evaluate future Indonesian investment risks should Newmont executive, Richard Ness be found guilty in Buyat Bay pollution case.
Author: Steve James
Posted: Saturday, 31 Mar 2007

NEW YORK (Reuters)- Gold miner Newmont Mining Corp. might reconsider its investments in Indonesia if one of its executives is found guilty of dumping toxic waste there, the company said on Friday.

"We would have to reevaluate, given the exposure and risk," spokesman Omar Jabara said. "First, we would look at future potential investments."

The implication Newmont could stop further operations in the country came as an Indonesian judge postponed until April 18 the verdict in the high-profile pollution trial of Newmont's Indonesian unit and its American head.

Shares of Newmont, the world's second biggest gold producer, fell 50 cents, or 1.18 percent, to close at $41.99 on the New York Stock Exchange.

PT Newmont Minahasa Raya, which once operated in North Sulawesi province, and its president-director Richard Ness are charged in a criminal case with dumping toxic substances into a bay near its now-defunct gold mine, making villagers sick.

Newmont and Ness deny the charges, pointing to several scientific studies that found no evidence of pollution.

If convicted, Ness could be jailed for three years, as prosecutors have requested, and Newmont would be heavily fined.

The Manado court where the case has been tried since August 2005 initially planned to give its verdict on April 4. But Chief Judge Ridwan Damanik said the judges needed two more weeks to draw up the verdict.

"The case is sensitive because we are trying foreign parties. We don't want to rush things as it could become a problem," Damanik told Reuters in Jakarta by phone on Friday.

There is growing concern that other foreign companies would be less likely to invest in Indonesia if Newmont were convicted.

"Disposition of that case will most definitely have an impact on the foreign investment climate in Indonesia," Tom Donohue, president of the U.S. Chamber of Commerce, recently told the Rocky Mountain News in Denver, Colorado.

Last year, Newmont, which is based in Denver, settled a civil case without admitting wrongdoing and agreed to pay $30 million to an environmental foundation in North Sulawesi.

The company, mining in Indonesia for over a decade, has plans to spend $400 million to $500 million to expand its operating mine at Batu Hijau. It has made another gold discovery in the country that could involve investments of hundreds of millions of dollars.

"We'd have to reconsider our investment if we got an unfavorable decision," Chairman and Chief Executive Wayne Murdy told the Rocky Mountain News in a recent interview.

He stressed he was not making a threat. "But we are being optimistic about everything."

Mining analyst Victor Flores of HSBC Securities said mining companies, especially large ones, are generally reluctant to sell assets. "Indonesia has been reasonably good to them until this blew up. But if you're at Newmont and you feel it is a more hostile place to do business, then maybe you do."

"The culture at Newmont is quite risk-averse, so there is no reason they could not find a ready buyer," said Flores. (Additional reporting by Fitri Wulandari in Jakarata)
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