Dollar may become a casualty of U.S. foreign policy

Section:

Mining Giant Was Warned
About Pollution in Indonesia

By Jane Perlez
The New York Times
Wednesday, December 22, 2004

http://www.nytimes.com/2004/12/22/international/asia/22newmont.html

JAKARTA, Indonesia -- An internal company report warned top
executives at the Newmont Mining Corp., the world's largest gold
producer, in 2001 that the company was putting tons of toxic mercury
vapors into the air in Indonesia.

The document, shown to The New York Times by a person close to
Newmont, sheds new light on operations at one of the most troubled
mines of a Fortune 500 company based in Denver that has drawn the
rising ire of environmental groups and local communities over the
impact of its operations.

The report adds fuel to charges from Indonesian officials who say
they intend to prosecute the company for pollution, as well as
accusations by former employees that Newmont willfully flouted
environmental safeguards around the globe.

In its public statements, Newmont consistently says that it regards
American environmental standards as its measure overseas. In a 90-
minute interview this month at Newmont headquarters, two top
executives denied that the company acted outside American or
Indonesian law and that its operations or the mercury harmed local
people.

But in a 2001 company memorandum, also seen by The Times, Lawrence T.
Kurlander, then a senior vice president and chief administrative
officer, admonished his senior colleagues that Newmont had "told the
world" it upheld American environmental rules abroad, when in fact it
did not.

He suggested that because of the failure to live up to Newmont's
advertised standards, he and his colleagues should forfeit their
annual bonuses. The concern, he said, extended to operations in Peru
and Uzbekistan, as well as Indonesia.

Villagers at Buyat Bay, near the Newmont mine on the northern island
of Sulawesi, sued the company for $543 million in August after
complaining about dizziness, difficult breathing, tumors and skin
diseases, which they say began soon after Newmont started mining in
1996.

Experts consulted on the emissions said they probably posed greater
risk to the mine's workers than to the villagers, but agreed that
airborne mercury was one of the mining by-product's most toxic forms.

Glenn Miller, a professor of environmental science at the University
of Nevada and a specialist in mining and mercury, described the
totals as "an outrageous amount of mercury to put into the
atmosphere."

The report examined by The Times says that some 33 tons of mercury
that Indonesian officials say should have been collected and sent to
a legal dump for toxic waste were put into the environment over four
years. About 17 tons were sent into the air and 16 more tons released
into the bay, the audit says.

In the interview, the Newmont executives defended the company's
operations but did not dispute the mercury totals and acknowledged
that they were aware of the emissions even before the findings of
what they called a draft report.

"Today I don't think it is under dispute -- that 16 and 17," David H.
Francisco, executive vice president for operations, said of the
totals. "Is there an impact, is it harmful, is it within the accepted
limits we have as an industry, that governments have established?
Yeah, I think there was an impact. On the other hand, no, it didn't
negatively impact on the bay and the people."

The Indonesian minister of the environment, Rachmat Witolear, said
that "Newmont was breaking the law" in Indonesia because it lacked a
permit, required under a 1997 statute, to put toxic material into the
environment. Newmont maintains that it had the permits it needed, but
it did not share the audit's findings with the government.

The Newmont audit itself classifies the finding on mercury
as "significant," meaning that it could pose an "imminent risk" to
human health and the environment or result in a violation that could
cause a plant closure or loss of permits.

The Newmont executives said those warnings were about "potential
issues." But the emissions were enough of a real concern that the
company went to the trouble of installing a bulky, nearly $10 million
pollution-control device known as a scrubber. As Newmont sought
to "optimize gold recovery," the audit said, the device did not work
much of the time it was supposed to.

The audit says the company also issued its workers badges designed to
detect potentially dangerous levels of mercury in the air. But those
did not work either, the document says.

The report was part of a round of audits initiated by the company to
assess global operations after a subcontractor spilled some 330
pounds of mercury in 2000 along a road near a mine in Peru. Hundreds
of villagers say they were made sick by the spill in a lawsuit filed
against Newmont.

The audit of the Peru mine, Yanacocha, also criticized a range of
operations and cited violations that were subject to substantial
fines, two former employees familiar with the audits said. The
company was forced to call off plans to expand operations in Peru in
November after local people angrily protested.

In his memorandum dated Jan. 18, 2001, to Wayne W. Murdy, who had
just been appointed Newmont's chief executive, Mr. Kurlander wrote of
the Peru mine that in December 2000 "we, the senior management team,
learned for the first time we do not operate environmentally by U.S.
standards."

"Our environment teams are not the ministers of good news," the
letter scolded, "they are the guardians of our most treasured asset:
our reputation." Mr. Kurlander, who left the company in 2002,
continued, "Moreover, there is concern we are not operating at U.S.
standards" in Uzbekistan and Indonesia.

Mr. Murdy said in an e-mail to The Times that he did "not have a
specific recollection" of the memo, but that the issues described
were being discussed by senior management at the time. Bonuses, he
said, saw a "significant deduction" after the Peru spill.

Newmont has become the gold industry's leader since the 1990's by
rapidly expanding on five continents. Under increased scrutiny since
the controversy at Buyat Bay, the company has defended methods that
it says are common practice but that critics say have escaped
rigorous regulation, even in the United States.

In defending the Indonesian operations, David A. Baker, vice
president for environmental affairs who was interviewed with Mr.
Francisco, said Newmont applied the same standards on mercury
emissions here that it would in Nevada.

"Those emissions were within the limits that were identified in the
Indonesian permitting process and were well within any standard or
requirement," Mr. Baker said.

Nevada, the center of American gold mining, has more mercury
emissions than any other state and also the most relaxed standards
for mercury in the country, said Professor Miller, the mercury
specialist. In a lawsuit against the company, two former employees
who were dismissed by Newmont leveled similar accusations of
disregard for environmental rules at operations in Nevada in 2001.

Neither the state nor the Environmental Protection Agency regulates
mercury emissions at Nevada mines, except as water pollutants,
Professor Miller said. Newmont's Indonesia mine averaged more than
four tons of mercury in the air annually, about equal to the largest
similar emission at an American mine in Nevada in the late 1990's, he
said.

But one former Newmont employee familiar with the Indonesian mine's
operations said that in 1998, when the mine was at the height of
production and the mercury scrubber was often not working, the
emissions into the air could have been as much as eight tons or more.

Since 2001, Professor Miller said, the EPA has cut emissions at
Nevada mines by 40 percent, but he noted that it had done so by
relying on voluntary agreements. "Newmont is a good actor in Nevada
on mercury," he said. "What they have done in Nevada and what they
have done in Indonesia is a world apart."

An American toxicologist, Joe Rodricks, whom Newmont recommended as a
mercury specialist, said he had been told by the company that when
the scrubber was in operation, emissions at the Indonesian mine met
the standards for airborne mercury in Nevada.

"My understanding is that the times when they didn't meet the
standards was when the scrubber was not working," he said. But he
said he did not think the airborne mercury would have harmed local
people.

An EPA official who specializes in mercury and who spoke on the
condition of anonymity said that if as much as 17 tons of mercury was
put in the air over four years by a mine in the United States, the
agency would investigate to see what the health effects had been.

The hazards of mercury, which are drawing increasing attention in the
United States, can range from neurological damage and learning
disabilities to skin irritations, and are particularly threatening to
children and fetal development.

Indonesian officials said they decided to prosecute Newmont based on
the findings of a recent government-sponsored study. It found
significant levels of mercury and arsenic in the sediment and bottom-
feeding organisms at Buyat Bay, indicating that the pollutants had
entered the food chain as Newmont deposited some five million tons of
mine waste about a half mile off shore over the life of the mine.

The villagers at Buyat Bay filed their lawsuit after the death of a
baby born with what they described as "deformities."

No autopsy was done on the child, and the cause of the villagers'
ailments has not been definitively determined. Newmont vigorously
contests the way the samples were analyzed for the government study
and says the disposal system it used met American standards. An EPA
official said that system was effectively banned in the United
States.

Since the controversy at the bay, the company has been on the
defensive. The Denver Post, one of Newmont's hometown newspapers,
devoted two days of coverage this month to what it said
were "significant environmental failures at Newmont's mines across
the globe," including mercury emissions in Indonesia and other
breaches in Nevada, Peru and Turkey.

After an initial article on the dispute at Buyat Bay appeared in The
New York Times in September, Mr. Murdy, the chief executive, called
the allegations of pollution "a blatant lie." This month, he flew to
Indonesia but failed to stave off the criminal charges, which involve
senior employees.

Mr. Witolear, the environment minister, said the police and the
prosecutor's office were finalizing the case. It is expected to go to
court early next year, he said.

Regarding Indonesia, Mr. Francisco, the executive vice president for
operations, described the decision to install a mercury scrubber
as "an example of Newmont trying to do the right thing."

But, the audit said, in 1997 the company processed ore with high
mercury content by "roasting" it at high temperatures on 84 days
before the scrubber arrived. After it arrived, the audit said, the
scrubber did not function on 213 of 310 days in 1998.

A major reason for the breakdown, according to the audit, was that
the mine operators had increased the heat during the roasting in
order to maximize the recovery of gold.

"The mercury scrubber facility does not have the physical ability to
handle the entire volume of gases now emitted from the roaster," the
Newmont document warned. Pictures with the audit showed filters from
the device torn out of the machine and strewn on the ground.

Mr. Baker said that the scrubber was operated at the designed
temperature, but had been clogged by dust. The company responded to
the audit, he said, by fixing the scrubber in mid-2001. That was just
weeks before Newmont finished mining.

He declined to say who had made the decision to continue operations
while the scrubber was not working. "I'm just going to answer it like
this," he said, "What we've done at that site was protective of human
health and the environment."

Two former employees said the decision was made at Denver
headquarters to cut costs and maximize gold retrieval at a time when
Newmont was saddled with debt and gold prices had reached a nearly 20-
year low. "Decisions come downwards," said one former executive who
was intimately familiar with operations at the site. "It's always
about cost."

Ellen Silbergeld, a professor at Johns Hopkins Bloomberg School of
Public Health, and who is directing a mercury study in Latin America,
said airborne mercury was particularly dangerous in tropical
climates, like that in Indonesia, because it changes more quickly
into a form that can enter the food chain.

"All forms of mercury are toxic, and mercury vapors are extremely
toxic," she said.

Newmont executives emphasize that recent tests overseen by the World
Health Organization show the villagers do not have Minamata disease,
an acute form of methylmercury poisoning named for the fishing
village in Japan that suffered one of history's most prominent
industrial disasters from mercury waste.

But Professor Silbergeld noted: "The criteria for mercury poisoning
is not Minamata disease. That's like saying the criteria for heart
disease is death."

The specialist from the Minamata Institute, Mineshi Sakamoto, who
conducted the tests for the WHO, said that while he did not find
Minamata disease, he was convinced that the bay was polluted from the
mine waste. Newmont finished operations in August.

"The environment is completely destroyed, and the people became
sick," Mr. Sakamoto said. "But it is very difficult to know the cause
of the sicknesses."

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