Newmont not put off by Indonesia attacks

Newmont Mining Corp. (NEM) said an attack on one of its projects in Indonesia and an ongoing criminal case against the U.S.-based giant hasn't dampened its enthusiasm for developing gold mines in the country, the Dow Jones Newswires reported on Wednesday from Sydney.

"I am confident things are improving in Indonesia; if the deposits can bring the return on investment we need, we'll build mines," said Robert Gallagher, Newmont's recently appointed head of Indonesia and Australian operations.

Around 50 people from nearby villages torched Newmont's remote Elang camp on Indonesia's Sumbawa Island Sunday, forcing the company to cease exploration activities.

The incident follows a series of violent protests against the giant Grasberg mine in Indonesia's Papua province, owned by U.S.-based Freeport-McMoRan Copper & Gold Inc. (FCX) and Anglo Australian Rio Tinto PLC (RTP).

At the same time Newmont, one of the world's largest gold miners, is preparing its defense in criminal charges of dumping mercury and arsenic from its Minahasa Raya mine into Buyat Bay, on the northern tip of Sulawesi, making local villagers sick.

Country manager, Richard Ness, faces up to 10 years in jail if found guilty.

Speaking to Dow Jones Newswires Tuesday from the company's Denver headquarters, Gallagher said Sunday's torching of the Elang camp has forced the company to "pause and reassess (its) position."

However, he said the string of recent attacks against western resource interests in Indonesia won't necessarily have an impact on the company's decision making on Elang's development or other opportunities in the country.

Elang is envisaged as a US$1 billion-plus large scale, low grade copper-gold mine, much like Newmont's operating Batu Hijau open cut, 60 kilometers away on the same island.

"We're at a stage now where we're doing a scoping study on the results to date; based on those results we will determine whether we go forward or not on the project," said Gallagher, adding the recent conflicts should be seen in the context of risk versus return.

The company is confident of beating the criminal charges, he said, while describing resolution of a dispute between Exxon Mobil and state-owned Pertamina over operation of the $2.6 billion Cepu oil field as a positive sign.

"There are a number of issues the government is working hard to get through, there's a long way to go but operations like Batu Hijau and exploration projects like Elang are huge long-life projects," Gallagher said.

Meanwhile drilling results at the Matarbe project in northern Sumatra indicate potential for about 3.5 million ounces of gold disseminated over several deposits, which means it is likely too small for Newmont.

"It's a good size deposit for most companies but when you're mining 8-9 million ounces a year..it's pretty small to divert a lot of resources to put into development," he said.

"So we're assessing the market for that at this time" with a view to selling.

Gallagher will formally take charge as the vice president for Indonesia and Australia in April when current Australia Country Manager Paul Dowd retires. With that change, Newmont is also regionalizing its global management. (*)