Welcome to Indonesia

[CSPP note: The claims of mercury poisoning -- apparently paid for by activist NGOs -- does not even fit the known epidemiological profile.  See papers in our mercury library (www.scienceandpolicy.org).]

The Wall Street Journal
COMMENTARY
March 15, 2006

By STEPHEN MOORE and JONATHON BURNS
March 15, 2006; Page A22

In September 2004, police in Indonesia handcuffed and arrested six employees
of the Denver-based Newmont Mining Corporation, throwing them in jail for 32
days next to terrorists who had attacked the Australian embassy. So began a
15-month saga that is expected to reach its climax in the coming weeks.
Newmont is alleged to have polluted the waters around its Indonesian gold
mine -- near Buyat village, on the northern tip of Sulawesi Island -- with
mercury. While the other employees of Newmont are out of legal jeopardy,
Richard Ness, head of the mining operation, is on trial in Jakarta for
criminal negligence in the alleged pollution. He faces a 10-year prison
sentence if convicted.

The Newmont case has received worldwide publicity because it is regarded as
part of an overall indictment by environmental groups against the mining
industry in general. Press coverage has reported Newmont's denials mostly as
an afterthought, if it has reported them at all. A review of the evidence
raises serious questions about the case and the fairness of the legal
proceedings -- as well as the potential impact of this dispute on the
economic future of the world's fourth-most populous country.

The story began in September 2004 with allegations by a group of villagers
in Buyat and various NGOs that Newmont Minahasa Raya, a subsidiary of
Newmont, had polluted nearby Buyat Bay, causing numerous villagers to become
sick with mercury poisoning and one baby girl to die. The mine, having
yielded up its riches, was in the process of closing. Newmont had invested
upwards of $135 million in the mine and related infrastructure, and been
regarded as something of an economic savior in the impoverished region. Yet
overnight, it became a pariah; and publication of the claims in the New York
Times appears to have been a major factor in instigating the criminal
proceedings.

[Newmont]Mining is a messy industrial process, and doubtless there was
run-off from the mine operations that spilled into the waters -- though
pipelines pumped most of it one kilometer out to sea and 85 feet down, deep
enough so that it could not creep back up to the surface. Doubtless, too,
there were sick villagers. However, the major health problems in the
community are the same as other poor and neighboring communities --
influenza and malaria, which occur after heavy rainfall. Testimony in the
court transcripts suggests why some villagers were getting sick: inadequate
sanitation and sewage systems, often leading to urine and defecation in the
rivers and streams, which infect the water used for drinking and bathing.

Most of the villagers from the communities surrounding the mine were, and
still are, staunch supporters of Newmont. Village leaders from three of
these communities spoke to us by phone through translators. Haji Dahlan
Ibrahim, Ronny Suwarno and Salam Ani insisted that the water and food are
generally safe; that the fish catches in the bay have not diminished (but
are more profitable because of the higher population in the surrounding area
due to the mine); and that villagers feel safe allowing their children to
swim in the bay. On weekends the beach remains a tourist draw, with
thousands coming to swim.

According to Mr. Suwarno, villagers were sorry to see the mine close. "We'd
like Newmont to stay and bring even more community development," he said. He
was referring to the company's investment of millions of dollars in improved
sanitation, health clinics, schools and other infrastructure for local
villages, not to mention jobs and job-training.

Villagers Ajin Modeong, Sharif Paputungan and Robert Sasuwuhe also told us
in separate phone interviews that they were offered cash by one NGO in
exchange for speaking out against Newmont. They said that Buyat Bay
Humanitarian Committee (KKTB), a consortium of NGOs, offered money and
relocation to Buyat villagers if they would agree to speak out against the
company. KKTB has been among those leading the charge against Newmont. The
three men jointly told us through a translator that "There was a meeting and
a man from KKTB said that to move, we would get a house and 100 million
Rupiah [$10,880] if we would stay relocated for three months. . . . NGO said
to us that the villagers would have to keep making claims against Newmont in
order to get money from Newmont." KKTB doesn't have an office, but is run by
individuals affiliated with other groups; we tried repeatedly by phone to
contact these individuals for comment, but obtained no response.

The conduct of Indonesia's legal system during the case has also been
disturbing. During the police investigation, for example, Mr. Ness and
Newmont were denied their legal right to present evidence. In December 2004,
a Jakarta district court ruled in favor of Newmont's habeas corpus appeal
and declared the police investigation to be illegal. The police appealed the
habeas corpus decision and the Supreme Court accepted the appeal, in spite
of a law which clearly states that habeas corpus decisions cannot be
appealed. "Sometimes we should take action from [the] legal aspect only but
at other times we can also take action by considering the social aspect,"
Chief Justice Bagir Manan was quoted in Koran Tempo, a national newspaper.

Most importantly, the scientific evidence does not support the core
allegation against Newmont. A number of reputed groups -- including the
World Health Organization, the Commonwealth Scientific and Industrial
Research Organization of Australia and the Minamata Institute of Japan --
have investigated the waters of Buyat Bay and found no mercury or arsenic
contamination. WHO's report of September 2004 notes that small traces of
mercury in the nearby estuaries are attributable to artisanal (native)
mining efforts, not to Newmont. In any case, according to WHO, "Health
effects due to methylmercury exposure were not observed among the Buyat Bay
villagers." Dr. Mineshi Sakamoto of the Minamata Institute and author of the
WHO report confirmed to us that villagers did not display toxic levels of
arsenic and mercury. According to him, "They were not poisoned."

The only evidence remotely suggesting poisoning has come from a study
conducted by the Indonesian National Police. Lacking proper equipment to
draw samples, the police needed to request assistance from Newmont in
obtaining the first samples from the bay. The police later returned on their
own and took samples without using proper equipment or following proper
protocols. Their results do not match that of any of the other groups,
including the Indonesian Ministry of Health, which has declared that the bay
is clean, the fish safe and the villagers devoid of mercury poisoning. In
August 2005, Newmont was granted its second Green Award from the Indonesian
Ministry of the Environment for the exemplary practices at Newmont's other
mine at Batu Hijau, on the island of Sumbawa, which opened in 2000.

The original uproar against Newmont arose out of emotionally compelling
allegations by a local doctor, Jane Pangemanan, that an infant had died from
mercury poisoning. Statements from local NGOs and others also portrayed the
company as an exploiter, and in September 2004 Dr. Pangemanan filed a formal
complaint with authorities alleging that Newmont was negligent and causing
death. She was quoted in the New York Times as saying that 80% of the
villagers she examined showed signs of mercury poison. On Feb. 14, 2005, she
publicly acknowledged there was never any valid evidence to support the
allegations. And on the witness stand in the trial against Mr. Ness in
October 2005, she admitted that she had no way of knowing whether any
villagers were poisoned by mercury, having no training to make such a
conclusion. Yet despite the collapse of the prosecution's case, the trial
marches on.

Mr. Ness, for his part, continues to deny that his company engaged in any
wrongdoing, and a civil suit was settled last month with a goodwill
agreement between Newmont and Indonesia. But the stakes are high, and not
just for Mr. Ness. With a per capita income one-tenth of the U.S., Indonesia
badly needs the economic growth that foreign investment can bring. The
country has tried to attract such investment and foster growth, but an
unstable legal and investment climate and a notorious reputation for
corruption hold progress back. Marc Upcroft, a mining analyst with
PricewaterhouseCoopers in Indonesia, told us that the Newmont trial has
already had economic consequences. "From an industry perspective, it's
disappointing to see the matter still going on without resolution," he says.
"It really is continuing to have a negative impact on mineral investment
spending in Indonesia, which is unfortunate since we're in the middle of a
global minerals boom."

So, paradoxically, even as prices of gold and other minerals hit new highs,
investment in Indonesian mines has tumbled from $2.6 billion several years
ago to $177 million now. Unless the Newmont case is resolved fairly, the
development process in Indonesia could be stymied for years to come.