Newmont loses in legal battle with local govt

PT Newmont Minahasa Raya, a gold miner in Minahasa, North Sulawesi must close down its mining operation after the high court in Manado rejected its appeal to annul the Tondano court's recent order to stop its mining operation in the regency.

But the mining company, which is 80 percent owned by Newmont Mining Corp of the United States and produces about 340 kilogram of gold annually, defied the court's decision.

Tri Harjono, a spokesman for the company, said the local authority, under the existing contracts, had no legal bases to order the closure of the company's mining operations.

"The order to close the mining operation should come from the ministry of mines and energy on the behalf of the government," he said. But he did not say whether Newmont would again appeal to the Supreme Court over the provincial court's decision.

Minister of Mines and Energy Susilo Bambang Yudhoyono said last week the tax dispute between gold mining company PT Newmont Minahasa Raya and the Minahasa regency in North Sulawesi should be resolved through an out of court settlement.

He called on the regency administration to stop pursing its litigation efforts against the company and solve the dispute out of court.

The regency last year filed a lawsuit against Newmont in the Tondano District Court following Newmont's refusal to pay C-class taxes, levied for the exploitation of industrial minerals and building materials. The regency demanded Rp 61 billion (US$8.4 million) in overdue taxes.

Newmont said the taxes were not included in the contract of work (COW) it had signed with the government. It admitted removing overburden containing sand, gravel and stones, but it did so to access the gold ore beneath and did not make commercial use of the removed material.

The Tondano court issued in January a temporary ruling to bar the company from operating its gold mine until the court completes the hearing of the case. (*)