EXCLUSIVE: Official says Aurora Gold fate depends on study on Newmont's tailing placement

The fate of the gold project of Australian firm Aurora Gold in North Sulawesi would much depend on the result of the current environmental study on the submarine tailing placement of gold mining company PT Newmont Minahasa Raya in Buyat Bay, a top official of the province said.

The province's head of energy and mineral resources office Washington Tambunan said a joint team authorized by the provincial administration was carrying out the so-called ecological risks assessment (ERA) to end the controversies about the tailing placement

Local people and environmental activists have said Newmont's tailing placement had polluted the bay's water, calling for the closure of the tailing placement, but Newmont insisted the tailing placement was relatively safe to the environment.

Washington told Petromindo.com in an exclusive interview in the provincial capital of Manado that Governor A.J.Sondakh had clearly stated that the ERA result would be used as the basis for the province to asses all mining projects in North Sulawesi.

"In a recent seminar, Governor Sondakh said as far as he was concerned, there was no clear evidence that Newmont's submarine tailing placement had caused significant environmental damage n Buyat bay. Nonetheless he called on all parties to respect whatever the results of the audit," said Washington.

"The result would be an important input for us to assess Aurora Gold's tailing dumping method. Should the audit result say there is no significant risk in Newmont's submarine tailing placement, then I think we would allow Aurora to apply the same (dumping) method," he said.

Aurora Gold's subsidiaries PT Meares Soputan Mining and Tambang Tondano Nusajaya have said they also plan to use the same method of tailing dumping in their future production activities.

The companies halted their activities in North Sulawesi last year due to rampant illegal mining activities in Talawaan, near Manado, which is situated inside their contract area. Aurora said it would not restart activities unless the illegal mining problems was resolved. It deplored the local government's apparent lack of interest in solving the illegal mining problem.

Washington acknowledged the government's lack of interest in solving mining problems in the province, including Aurora's illegal mining problem, citing the low potential income earned by local government from mining operation.

"The revenue the local government received was low. How can one expect its full attention at mining issues?" He said.

Under the existing regulations, most of levies payable by mining companies, including royalty payment and income taxes, must first go to the central government before being distributed to the provinces. But it usually takes months, even years before local governments receive their shares in the mining revenues.

He therefore called for a more equitable income distribution between central and local government and also direct levy payment by mining companies to local governments. (Alex/godang)