Thursday, April 07, 2005

Batu Hijau haunts Newmont

Only few months after criminal charges on its operation in North Sulawesi, Indonesia, Newmont is entering new waves of lawsuits from its most profitable Batu Hijau, West Nusa Tenggara mining operation. The risks are high for the Denver-based company, since Batu Hijau contributed around 80% of Newmont’s consolidated profit last year.

A group, calling itself the People's Lawyers Union, or SPR, has alleged that PT Newmont Nusa Tenggara (NNT) tailings have damaged the environment in the area around its operations. NNT is an Indonesian unit of Denver-Based Newmont Mining Corp. Newmont has 45% shares in the company, which started its commercial production in 1999.

NNT’s total assets are approximately at US$2.1 billion at the end of 2004, the largest of Newmont’s operation worldwide. NNT sales last year were US$1.073 billion, with pre-tax income ofUS$524.6 million. NNT is the single largest contributor for Newmont’s consolidated pre-tax income of US$696 million last year.

Newmont has rejected charges by a local group of damaging the environment, reports the Jakarta Post yesterday.

In a fresh move, some workers reported to Indonesian police what they called the violation of overtime payments by NNT. The workers claimed unpaid overtime during 1999-2004 period reached 400 billion rupiahs or around US$42 million, popular online publication reported yesterday.

But Newmont denied such charges saying there is no proof that the group represents residents of West Sumbawa (Batu Hijau is located here) and workers.

Currently both Indonesian government and local NGOs are in legal battle with Newmont for its operation in North Sulawesi which only has US$100 millions of assets.

The problem for Newmont seems intensified with the latest charges for its West Nusa Tenggara operation.

Last year, NNT produced 379 million equity pound copper and 396000 equity ounces of gold. NNT claimed its reserves of 6.3 billion equity pound of copper in Batu Hijau and 7.2 million equity ounces of gold.

Under the contract of work with Indonesian government, Newmont and other shareholders have to divest up to 51% shares of NNT to Indonesian government or Indonesian nationals starting by 15% by the end of this year and 51% by the end of 2010.




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