Newmont's operation continues despite ban

PT Newmont Minahasa Raya, a gold mining company based in the Minahasa regency, North Sulawesi still continues its operation despite the local court's decision to temporarily halt its mining operation.

The company's public relations manager Yonaniko Salim said here on Monday that the local court's decision to temporarily stop the company's operation was illogical because the company did nothing wrong with its activities.

"If the company abides by the court decision and pays the tax for the overburden, it could become a bad precedent to other mining operations in the country," Yonaniko told reporters at the sideline of the company's hearing with the House of Representatives commission VIII in charge of mines and energy.

The Minahasa administration filed suit against the company late last year for not paying taxes for the materials it digged out to access its gold deposits and demanded the company to pay the overdue tax payment. The local government won the case but Newmont opposed the court's decision saying that the overburden or the materials it digged out during the exploration activities had no commercial value and that they were not subject to tax payment.

According to the local regulation, the overburden is part of the Category C mineral materials such as sand, which are subject to tax payment. But the company insisted that the materials it digged were just an overburden, which had no commercial value because they were not used for sale but for covering old mining sites.

Newmont then appealed to the higher court but the district court of Tondano issued a decision to temporarily close the company's operation operations pending the higher court's verdict. The company is asked to pay a fine of Rp 100 million a day if the company continues its operation.

Inspection team

Richard B. Ness, the president of other Newmonth's Indonesian subsidiary PT Newmont Pasific Nusantara, said that the local government in the Minahasa regency, the ministry of mines and energy and Newmont had recently established a joint team to study the materials digged out by the company in its exploration activities.

Speaking during the hearing, Ness said that if the team found some of the materials were used for other purposes rather than for covering old mine sites, the company was ready to pay the disputed tax.

But he warned that if the higher court ruled in favor of the regency administration it would send a wrong signal to foreign investors. Such a decision would certainly send a wrong signal to foreign investors, as the ruling would breach the terms of contract signed by the company with the government, he added.

A number of House members gave a support to Newmont during the hearing, saying the Minahasa administration's suit against the mining company was a bad example of how the local government should treat investors.

"The local government's decision to sue Newmont reflects their arrogance," legislator Pramono Agung said, adding that he also suspected that the move was taken because Newmont management could not accommodate vested interests of the local authority.

Some other legislators said that the suit would certainly damage investors' confidence as it reflected the inconsistency in the country's investment policies. (*)