Mining Giant Was Warned on Pollution in Indonesia

Mining Giant Was Warned on Pollution in Indonesia

By Jane Perlez, New York Times

22nd December 2004

Jakarta, Indonesia - An internal company report warned top executives at the Newmont Mining Corporation, the world's largest gold producer, in 2001 that the company was putting tons of toxic mercury vapors into the air in Indonesia. The document, shown to The New York Times by a person close to Newmont, sheds new light on operations at one of the most troubled mines of a Fortune 500 company based in Denver that has drawn the rising ire of environmental groups and local communities over the impact of its operations.

The report adds fuel to charges from Indonesian officials who say they intend to prosecute the company for pollution, as well as accusations by former employees that Newmont willfully flouted environmental safeguards around the globe. In its public statements, Newmont consistently says that it regards American environmental standards as its measure overseas. In a 90-minute interview this month at Newmont headquarters, two top executives denied that the company acted outside American or Indonesian law and that its operations or the mercury harmed local people. But in a 2001 company memorandum, also seen by The Times, Lawrence T. Kurlander, then a senior vice president and chief administrative officer, admonished his senior colleagues that Newmont had "told the world" it upheld American environmental rules abroad, when in fact it did not. He suggested that because of the failure to live up to Newmont's advertised standards, he and his colleagues should forfeit their annual bonuses. The concern, he said, extended to operations in Peru and Uzbekistan, as well as Indonesia. Villagers at Buyat Bay, near the Newmont mine on the northern island of Sulawesi, sued the company for $543 million in August after complaining about dizziness, difficult breathing, tumors and skin diseases, which they say began soon after Newmont started mining in 1996.

Experts consulted on the emissions said they probably posed greater risk to the mine's workers than to the villagers, but agreed that airborne mercury was one of the mining by-product's most toxic forms. Glenn Miller, a professor of environmental science at the University of Nevada and a specialist in mining and mercury, described the totals as "an outrageous amount of mercury to put into the atmosphere."

The report examined by The Times says that some 33 tons of mercury that Indonesian officials say should have been collected and sent to a legal dump for toxic waste were put into the environment over four years. About 17 tons were sent into the air and 16 more tons released into the bay, the audit says. In the interview, the Newmont executives defended the company's operations but did not dispute the mercury totals and acknowledged that they were aware of the emissions even before the findings of what they called a draft report.

"Today I don't think it is under dispute - that 16 and 17," David H. Francisco, executive vice president for operations, said of the totals. "Is there an impact, is it harmful, is it within the accepted limits we have as an industry, that governments have established? Yeah, I think there was an impact. On the other hand, no, it didn't negatively impact on the bay and the people."

The Indonesian minister of the environment, Rachmat Witolear, said that "Newmont was breaking the law" in Indonesia because it lacked a permit, required under a 1997 statute, to put toxic material into the environment. Newmont maintains that it had the permits it needed, but it did not share the audit's findings with the government. The Newmont audit itself classifies the finding on mercury as "significant," meaning that it could pose an "imminent risk" to human health and the environment or result in a violation that could cause a plant closure or loss of permits. The Newmont executives said those warnings were about "potential issues." But the emissions were enough of a real concern that the company went to the trouble of installing a bulky, nearly $10 million pollution- control device known as a scrubber.

As Newmont sought to "optimize gold recovery," the audit said, the device did not work much of the time it was supposed to. The audit says the company also issued its workers badges designed to detect potentially dangerous levels of mercury in the air. But those did not work either, the document says. The report was part of a round of audits initiated by the company to assess global operations after a subcontractor spilled some 330 pounds of mercury in 2000 along a road near a mine in Peru. Hundreds of villagers say they were made sick by the spill in a lawsuit filed against Newmont. The audit of the Peru mine, Yanacocha, also criticized a range of operations and cited violations that were subject to substantial fines, two former employees familiar with the audits said.

The company was forced to call off plans to expand operations in Peru in November after local people angrily protested. In his memorandum dated Jan. 18, 2001, to Wayne W. Murdy, who had just been appointed Newmont's chief executive, Mr. Kurlander wrote of the Peru mine that in December 2000 "we, the senior management team, learned for the first time we do not operate environmentally by U.S. standards."

"Our environment teams are not the ministers of good news," the letter scolded, "they are the guardians of our most treasured asset: our reputation." Mr. Kurlander, who left the company in 2002, continued, "Moreover, there is concern we are not operating at U.S. standards" in Uzbekistan and Indonesia.

Mr. Murdy said in an e-mail to The Times that he did "not have a specific recollection" of the memo, but that the issues described were being discussed by senior management at the time. Bonuses, he said, saw a "significant deduction" after the Peru spill.

Newmont has become the gold industry's leader since the 1990's by rapidly expanding on five continents. Under increased scrutiny since the controversy at Buyat Bay, the company has defended methods that it says are common practice but that critics say have escaped rigorous regulation, even in the United States. Applying Standards In defending the Indonesian operations, David A. Baker, vice president for environmental affairs who was interviewed with Mr. Francisco, said Newmont applied the same standards on mercury emissions here that it would in Nevada. "Those emissions were within the limits that were identified in the Indonesian permitting process and were well within any standard or requirement," Mr. Baker said.

Nevada, the center of American gold mining, has more mercury emissions than any other state and also the most relaxed standards for mercury in the country, said Professor Miller, the mercury specialist. In a lawsuit against the company, two former employees who were dismissed by Newmont leveled similar accusations of disregard for environmental rules at operations in Nevada in 2001. Neither the state nor the Environmental Protection Agency regulates mercury emissions at Nevada mines, except as water pollutants, Professor Miller said. Newmont's Indonesia mine averaged more than four tons of mercury in the air annually, about equal to the largest similar emission at an American mine in Nevada in the late 1990's, he said. But one former Newmont employee familiar with the Indonesian mine's operations said that in 1998, when the mine was at the height of production and the mercury scrubber was often not working, the emissions into the air could have been as much as eight tons or more. Since 2001, Professor Miller said, the E.P.A. has cut emissions at Nevada mines by 40 percent, but he noted that it had done so by relying on voluntary agreements. "Newmont is a good actor in Nevada on mercury," he said. "What they have done in Nevada and what they have done in Indonesia is a world apart."

An American toxicologist, Joe Rodricks, whom Newmont recommended as a mercury specialist, said he had been told by the company that when the scrubber was in operation, emissions at the Indonesian mine met the standards for airborne mercury in Nevada. "My understanding is that the times when they didn't meet the standards was when the scrubber was not working," he said. But he said he did not think the airborne mercury would have harmed local people.

An E.P.A. official who specializes in mercury and who spoke on the condition of anonymity said that if as much as 17 tons of mercury was put in the air over four years by a mine in the United States, the agency would investigate to see what the health effects had been. The hazards of mercury, which are drawing increasing attention in the United States, can range from neurological damage and learning disabilities to skin irritations, and are particularly threatening to children and fetal development. Indonesian officials said they decided to prosecute Newmont based on the findings of a recent government-sponsored study. It found significant levels of mercury and arsenic in the sediment and bottom-feeding organisms at Buyat Bay, indicating that the pollutants had entered the food chain as Newmont deposited some five million tons of mine waste about a half mile off shore over the life of the mine. The villagers at Buyat Bay filed their lawsuit after the death of a baby born with what they described as "deformities."

No autopsy was done on the child, and the cause of the villagers' ailments has not been definitively determined. Newmont vigorously contests the way the samples were analyzed for the government study and says the disposal system it used met American standards. An E.P.A. official said that system was effectively banned in the United States. Charges and Defenses Since the controversy at the bay, the company has been on the defensive. The Denver Post, one of Newmont's hometown newspapers, devoted two days of coverage this month to what it said were "significant environmental failures at Newmont's mines across the globe," including mercury emissions in Indonesia and other breaches in Nevada, Peru and Turkey. After an initial article on the dispute at Buyat Bay appeared in The New York Times in September, Mr. Murdy, the chief executive, called the allegations of pollution "a blatant lie."

This month, he flew to Indonesia but failed to stave off the criminal charges, which involve senior employees. Mr. Witolear, the environment minister, said the police and the prosecutor's office were finalizing the case. It is expected to go to court early next year, he said. Regarding Indonesia, Mr. Francisco, the executive vice president for operations, described the decision to install a mercury scrubber as "an example of Newmont trying to do the right thing." But, the audit said, in 1997 the company processed ore with high mercury content by "roasting" it at high temperatures on 84 days before the scrubber arrived. After it arrived, the audit said, the scrubber did not function on 213 of 310 days in 1998. A major reason for the breakdown, according to the audit, was that the mine operators had increased the heat during the roasting

in order to maximize the recovery of gold. "The mercury scrubber facility does not have the physical ability to handle the entire volume of gases now emitted from the roaster," the Newmont document warned. Pictures with the audit showed filters from the device torn out of the machine and strewn on the ground. Mr. Baker said that the scrubber was operated at the designed temperature, but had been clogged by dust. The company responded to the audit, he said, by fixing the scrubber in mid-2001. That was just weeks before Newmont finished mining. He declined to say who had made the decision to continue operations while the scrubber was not working. "I'm just going to answer it like this," he said, "What we've done at that site was protective of human health and the environment."

Assessing the Costs Two former employees said the decision was made at Denver headquarters to cut costs and maximize gold retrieval at a time when Newmont was saddled with debt and gold prices had reached a nearly 20-year low.

"Decisions come downwards," said one former executive who was intimately familiar with operations at the site. "It's always about cost." Ellen Silbergeld, a professor at Johns Hopkins Bloomberg School of Public Health, and who is directing a mercury study in Latin America, said airborne mercury was particularly dangerous in tropical climates, like that in Indonesia, because it changes more quickly into a form that can enter the food chain. "All forms of mercury are toxic, and mercury vapors are extremely toxic," she said. Newmont executives emphasize that recent tests overseen by the World Health Organization show the villagers do not have Minamata disease, an acute form of methylmercury poisoning named for the fishing village in Japan that suffered one of history's most prominent industrial disasters from mercury waste. But Professor Silbergeld noted: "The criteria for mercury poisoning is not Minamata disease. That's like saying the criteria for heart disease is death."

The specialist from the Minamata Institute, Mineshi Sakamoto, who conducted the tests for the W.H.O., said that while he did not find Minamata disease, he was convinced that the bay was polluted from the mine waste. Newmont finished operations in August. "The environment is completely destroyed, and the people became sick," Mr. Sakamoto said. "But it is very difficult to know the cause of the sicknesses."