Indonesian Villagers Planning To Sue Newcrest

Indon villagers planning to sue Newcrest

The Age, Melbourne

17th May 2006

Villagers in eastern Indonesia plan to sue Australian gold producer Newcrest Mining, accusing the company of environmental vandalism and failing to deliver on promises to improve their welfare.

Newcrest operates two controversial gold mines on remote Halmahera island, in the Molucca chain, and has clashed with local people and environmental groups amid accusations of heavy-handed security tactics.

In 2004, one protester was shot and killed near the gates of the $US100 million ($A130 million) Toguraci mine during a demonstration over operations in protected forest areas.

Kao villagers said they now planned to sue Newcrest.

They claim the company had violated an agreement struck in 1997 with local people and joint-venture partner Pt Nusa Halmahera Minerals, which owns a small share in the mine.

"We have many times warned them to do what's been agreed with Kao traditional society, but they never pay attention," local elder Ahmad Arifin told Waspada online from the North Maluku capital Ternate.

"They are ignorant."

In Melbourne, a spokesman for Newcrest said the company and senior mine managers on Halmahera were unaware of the looming legal case.

Newcrest was plagued by intermittent protests at the Toguraci site, with local people variously occupying the mine for five weeks in 2003 and staging blockades in 2004.

Villagers accused the mine of operating illegally in a protected forest area until the former government of then President Megawati Sukarnoputri changed the law in 2004.

Activists have previously demanded Newcrest distribute Rp500 billion ($A83 million) in profits from its nearby Gosowong mine, while spending 10 per cent of future profits from Toguraci site on local community projects.

Arifin said the legal case against Newcrest was still being prepared and refused to divulge the details of claims.

He denied the villagers were against development, but said international investors should lead to an improvement in the lives of local people.

"If their presence only brings problems, then we will refuse it," he said.

Newcrest recently announced Rio Tinto executive Ian Smith would take over the helm of the company in August, promising he would improve the operations side of the business,

Higher-than-expected arsenic levels and lower gold grades have caused problems gold and copper mine sites in Western Australia.

The company has advised its net profit for 2005/06 would range between $US125 million ($A163.3 million) and $US135 million ($A176 million), after posting a first half profit $US74.2 million ($A96.94 million).

A legal case in Indonesia could add to Smith's challenges

US-based Newmont Mining Corporation, has been fighting a long-running legal battle in Indonesia after local people claimed tailings from its Minahasa Raya mine polluted Buyat Bay in the North Sulawesi, causing nearby villagers to become seriously ill.

In February, the Indonesian government said it would settle a civil suit with Newmont for $US30 million ($A39 million), including increased scientific monitoring and more community development.