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Cablegate: Newmont Trial Update; Visit to Buyat Bay

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PP RUEHWEB

DE RUEHJA #0597/01 0610409
ZNR UUUUU ZZH
P 020409Z MAR 07
FM AMEMBASSY JAKARTA
TO SECSTATE WASHDC PRIORITY 3587

UNCLAS JAKARTA 000597

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DEPT FOR EAP/MTS AND EB/ESC/IEC

SENSITIVE
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E.O. 12958: N/A
TAGS: ECON EINV EINV PGOV ID
SUBJECT: Newmont Trial Update; Visit to Buyat Bay


1. (SBU) Summary: The Newmont trial continues to inch towards a
conclusion within the next two months. The prosecution's February
23 response to the defense's final arguments yielded no significant
new twists or surprises. After the court proceedings, we visited
and dived on Buyat Bay and found it teeming with coral and sea life.
During visits to the Buyat beach village, allegedly polluted by
Newmont, as well as to the company's former mine, we saw scenes that
appear to the untrained eye to contradict the charges against the
American mining firm. End Summary.

Prosecution Responds to Newmont's Closing Statement
--------------------------------------------- ------

2. (SBU) Government prosecutors on February 23 read aloud their
37-page response to PT Newmont Minahasa Raya's (Newmont) closing
statement in the ongoing case involving criminal charges against
Newmont and its former President Director Richard Ness. The
prosecution began by apologizing for having to request a
postponement of the proceedings from February 9 to February 23,
noting that the defense's closing presentation was thick and
difficult to digest. Prosecutors asked the judges not to be swayed
by the slick appearance of the defense's documents, but to
concentrate instead on the substance of the case. The prosecution
argued that defense's closing arguments had not in any way
undermined the credibility of the Government of Indonesia's (GOI)
charges against the company. In fact, the prosecution repeatedly
asserted that of the defense's 46 witnesses, 28 expert witnesses and
207 items of documentary evidence, the prosecutor considered
pertinent only 21 witnesses, 9 expert witnesses and 7 items of
documentary evidence.

3. (SBU) The prosecution presented its response to the defense's
closing arguments in 31 points -- each time restating the defense's
arguments, in some detail, followed by the prosecution's rebuttals
(at times flimsy). A few prosecution responses appeared to
contradict others. For instance, the prosecution stated that certain
defense statements were inadmissible and irrelevant since they were
sourced from local newspapers. Later, however, the prosecution used
as a key piece of evidence an Indonesian newspaper article stating
that Newmont had released 33 tons of mercury into the air and sea.
The prosecution subsequently challenged the defense's assertion that
heavy metal sediments would remain stable on the bottom of the Buyat
Bay by citing another recent news article stating that ocean
currents at 2,000 meters could shift the 6-kilogram "black box" and
debris from the January 1, 2007 Adam Air Flight 574 crash.

4. (SBY) The day's court proceedings lasted a little over two
hours. There was at least one stretch when the head judge appeared
to doze off. At the close of the prosecution's reading of its
statement, the judges asked defense attorneys if they would like to
respond on behalf of Newmont or Mr. Ness. The defense asked for two
weeks to prepare a response. The proceedings are now tentatively
scheduled to resume on March 9, but defense attorneys may request an
extension. No protests took place during the proceedings, and there
appeared to be only a limited number domestic press in attendance.

Visit to Buyat Bay
------------------

5. (SBU) The day after the February 23 court session, Econ Officer
accompanied Richard Ness to Buyat Bay to view the situation there
first-hand. Two scuba dives in the relatively small bay revealed
beautiful, diverse, and thriving coral reefs and a bounty of small-
and medium-sized tropical fish that one would expect in shallower
tropical waters and reefs. Underwater photos of these reefs are
currently featured in a Garuda Airlines in-flight magazine article,
which quotes Newmont staff who apparently guided the authors of the
piece, and touts the Bay as one of Indonesia's well-kept diving
secrets. Newmont has worked with the villagers to create and

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submerge as many as 3,000 coral balls to revive the reefs. Ness
said that in 2002, Newmont's Buyat Bay effort was the largest
private sector reef ball project in the world.

6. (SBU) Newmont has cleared o*t signs of its former mining
operations off the hillide where they occurred, and most of the
area isnow grown-over with recently planted trees and othr
vegetation. The mine's main pit contains a smal lake. A large,
flat field below the lake (in eistence since the mine started
operations) apparntly acts as a natural filter to absorb heavy
meals that run off and leech away from the mine. Accrding to Ness,
Newmont has met its target of comlying with the toughest of both
U.S. and Indonesi waste standards in the Buyat Bay.

Illegal Mines Using Mercury
----------------------------

. (SBU) Meanwhile, an estimated 3,000 independentlocal miners
continue to truck in rocks dug fromthe mountainside above the
former Newmont mine. he rocks are crushed with small-scale
pulverizin equipment and ball mills. Ness explained that th
miners extract gold fro*m the resulting sedimentby combing it with
mercury and burning the resulting gold/mercury amalgamates in the
open air. We visited one such operation and saw roughly a dozen
empty mercury bottles that once contained roughly 3 kilograms of
mercury each sitting open in a cardboard box. Local miners told us
they use roughly a dozen bottles of mercury over the course of a
week.

8. (SBU) According to Ness, three or four of such bottles would
contained a quantity of mercury equivalent to the entire amount of
mercury contained in the tailings Newmont disposed in Buyat Bay
during the period of the mine's operation. Based on tests of its
samples taken every two hours throughout the duration of the mine's
operation, Ness said Newmont's monthly reports to the GOI indicate a
total of 5.9 kilograms of mercury were loaded with tailings into
Buyat Bay during its 2000-2004 permit period, and a total of 9.7
kilograms loaded into the Bay over the entire duration of the mine's
operation. This works out to an average of 3.6 grams per day of
mercury loaded into 66 million cubic tons of water, flushed twice
daily by local tides.

9. (SBU) Today, with no protective environmental measures in place,
Ness explained that waste from the local independent mining
operations naturally drains into a second bay adjacent to Buyat,
along the coast of which exists one of the area's largest villages.
Ness said that Newmont and independent tests have shown no
significant levels of mercury in either of the bays, and nothing
close to allowable limits under U.S. or Indonesian environmental
regulations.

Fish Plant to Replace Mine
--------------------------

10. (SBU) At one end of Buyat Bay, Newmont has almost completed
construction of a large modern fish processing factory and cold
storage facility to provide employment for the mine's former
employees. Ness said the factory will draw power from the former
mine's 16-megawatt generator, which the company donated to the local
government. At a small port nearby, we viewed local fishing vessels
returning with tons of fish caught in deeper waters beyond Buyat Bay
and the neighboring shoreline. One ship owner told us that, in the
near future, these local boats will dock alongside and unload their
catches at the Newmont-built factory.

HEFFERN

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