Legal action against Newmont may backfire: Official

Director General of Geology and Natural Resources Simon F. Sembiring said he feared the move of the office of the state minister of environment to take a legal action against North Sulawesi-based gold mining company Newmont Minahasa Raya (NMR) may backfire, Neraca daily reported on Tuesday.

"It is quite possible that Newmont will take the Indonesian to an international arbitration panel because the company has carried out its mining in accordance with its contract of works," he was quoted as saying.

Simon said that the legal action against the subsidiary of the United States-based Newmont Corporation would also further worsen the investment climate in the country's mining sector.

"Our hard efforts to lure foreign investors to invest in the mining sector will be meaningless, if other government institutions do not support our programs," he said referring to the legal action against Newmont.

The office of the state minister of environment will file its legal suit against NMR at the South Jakarta district court this week for causing a serious environmental problem, and will demand US$117 million in damages from the mining company.

The office of the state minister of environment said Newmont's undersea mining waste disposal in the Buyat bay, North Sulawesi had not only caused a serious damage in the environment but also seriously affected the health and the economy of the people living near the Buyat bay.(*)