Indonesia to ban mines' disputed waste disposal method

Indonesia to ban mines' disputed waste disposal method

By Shawn Donnan in Jakarta, Financial Times

December 2 2004

Indonesia plans to impose a de facto ban on a controversial method of waste disposal at the centre of pollution allegations levelled at the world's largest gold producer, the environment minister said yesterday.

In the latest of a string of high profile legal disputes involving foreign investors in Indonesia, six executives from Newmont, the mining company based in Denver, could face criminal charges over allegations of pollution caused by one of the company's mines.

The allegations, which surfaced earlier this year before the planned closure of Newmont's Minahasa Raya mine in North Sulawesi province, resulted from its disposal of treated waste in a bay nearby.

The disposal technique, known as submarine tailings, is the subject of a worldwide dispute between the mining industry and environmentalists. The latter claim it is used only in developing countries where regulations are less stringent than the US or Europe.

In the case of its Indonesian mine, Newmont claims the waste is innocuous and that independent experts have determined that no pollution has occurred. But environmentalists have blamed what they say are elevated levels of arsenic and mercury in the waste for health problems reported by local villagers.

In an interview with the Financial Times, Rachmat Witoelar, the environment minister, said Jakarta planned to file a separate lawsuit against Newmont so that the dispute could be resolved by the courts.

He also said Indonesia would "follow the wisdom" of countries in North America and Europe and in effect ban miners from using submarine tailings. "Are we going to prohibit it? Not in the direct sense," the minister said. But Indonesia would impose "very hard, difficult conditions on doing [submarine] tailings so it becomes impossible". The conditions, he said, could include allowing tailings only in very deep water far from the shore, or "on Mars". Mr Witoelar said the move was unlikely to have an impact on existing projects unless they were "proven to be detrimental".

He said the decision would not affect Newmont's largest mine in Indonesia, Batu Hijau, a gold and copper mine that uses submarine tailings but disposes the waste in deeper water than was at Minahasa Raya. "I am not pushing the Newmont case there. I am not chasing Newmont. They are a very good company."

Mr Witoelar said he planned to be "very careful" in pursuing cases against other existing operations and did not want to open a Pandora's box. But he warned the government planned to crack down on polluters and impose more stringent environmental standards on investments.

Mr Witoelar took office in October as part of the new government of President Susilo Bambang Yudhoyono, who has promised to fight corruption and improve the business climate.

* New trade and inflation numbers yesterday provided additional evidence of an improving macroeconomic picture in Indonesia, writes Shawn Donnan. Exports surged 46 per cent in October from the same month last year. Imports rose during the month but were outpaced by exports, causing the country's trade surplus to grow to $2.95bn. Indonesia's inflation slowed to 6.2 per cent in November.