Newmont problems deepen in Indonesia
By Jane Perlez The New York Times
Thursday, December 23, 2004
Memo adds fuel to accusations of foul play at mine
JAKARTA An internal company report warned top executives at Newmont Mining, the world's largest gold producer, in 2001 that the company was putting tons of toxic mercury vapors into the air in Indonesia.
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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 company that has drawn the rising ire of environmental groups and local communities over the impact of its operations, which started at the Indonesia site in 1996. Newmont finished mining in 2001 and processed mined ore until August, when it halted operations there.
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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. Newmont, based in Denver, is a Fortune 500 company.
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In a 2001 company memorandum, also seen by The Times, Lawrence Kurlander, then a senior vice president and chief administrative officer, admonished his senior colleagues that Newmont had not upheld U.S. environmental rules abroad even though it had "told the world" it was doing so.
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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.
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In its public statements, Newmont consistently says that it regards U.S. 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 U.S. or Indonesian law and that its operations or the mercury harmed local people.
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Villagers at Buyat Bay near the Newmont mine on Sulawesi, a northern Indonesian island, sued the company for $543 million in August after complaining about dizziness, difficulty breathing, tumors and skin diseases, which they say began soon after Newmont started mining.
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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.
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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 byproduct's most toxic forms. Glenn Miller, a professor of environmental science at the University of Nevada and a specialist in mining and mercury, described it as "an outrageous amount of mercury to put into the atmosphere."
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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.
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"Today I don't think it is under dispute, that 16 and 17," David 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."
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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.
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The Newmont audit 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.
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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 scrubber, a bulky pollution-control device costing nearly $10 million. As Newmont sought to "optimize gold recovery," the audit said, the scrubber did not work much of the time it was supposed to.
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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 about 135 kilograms of mercury, or 330 pounds, along a road near a mine in Peru in 2000. Hundreds of villagers say they were made sick by the spill in a lawsuit filed against Newmont.
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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.
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In his memorandum Jan. 18, 2001, to Wayne Murdy, who had just been appointed Newmont's chief executive, Kurlander, then a senior vice president and chief administrative officer, 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."
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"Our environment teams are not the ministers of good news," the letter said, "they are the guardians of our most treasured asset: our reputation." Kurlander, who left the company in 2002, continued, "Moreover, there is concern we are not operating at U.S. standards" in Uzbekistan and Indonesia.
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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.
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Newmont has become the gold industry's leader since the 1990s 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.
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In defending the Indonesian operations, David Baker, vice president for environmental affairs, who was interviewed with Francisco, said Newmont applied the same standards on mercury emissions here that it would in Nevada.
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"Those emissions were within the limits that were identified in the Indonesian permitting process and were well within any standard or requirement," Baker said.
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Nevada, the center of U.S. gold mining, has more mercury emissions than any other state and also the most relaxed standards for mercury in the United States, said 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.
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Neither the state nor the U.S. Environmental Protection Agency regulates mercury emissions at Nevada mines, except as water pollutants, 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 a U.S. mine in Nevada in the late 1990s, he said.
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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 scrubber was often not working, the emissions into the air could have been as much as eight tons or more.
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Since 2001, Miller said, the Environmental Protection Agency 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."
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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.
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"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.
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An Environmental Protection Agency official who specializes in mercury and who spoke on the condition of anonymity said that if as much as 17 tons of mercury were 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.
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The hazards of mercury, which are drawing increasing attention in the United States, can range from skin irritations to learning disabilities and neurological damage, and are particularly threatening to children and fetuses.
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Indonesian officials said they had 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 800 meters, or half a mile, offshore over the life of the mine.
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Newmont vigorously contests the way the samples were analyzed for the government study and says the disposal system it used met U.S. standards. An Environmental Protection Agency official said, however, that the system was effectively banned in the United States.
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Witolear, the environment minister, said the police and the prosecutor's office were readying the case to go to court early next year.
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Regarding Indonesia, 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."
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The audit said, however, that 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.
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A major reason for the breakdown, according to the audit, was that the mine operators had increased the heat during the roasting to maximize the recovery of gold.
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"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 said. Pictures with the audit showed filters from the device torn out of the machine and strewn on the ground.
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Baker, vice president for environmental affairs at the company, said the scrubber was operated at the intended 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.
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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."
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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 fallen. "Decisions come downward," said one former executive who was intimately familiar with operations at the site. "It's always about cost."
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Ellen Silbergeld, a professor at Johns Hopkins Bloomberg School of Public Health, 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.
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"All forms of mercury are toxic, and mercury vapors are extremely toxic," she said.
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