Business Ethics Analysis

Topics: Ethics, Sumbawa, Sociology Pages: 20 (4858 words) Published: October 13, 2010

1.1. The Description and Outline of Newmont Nusa Tenggara’s Case Study

Newmont Mining Corporation is an American company, which is the second largest gold and copper producer in the world. It started mining in Indonesia at Sumbawa Island, West Nusa Tenggara and Minahasa Raya, Sulawesi. In 1999, Newmont Nusa Tenggara (NNT) was established with 45% share Newmont Mining Corporation, 35% share Sumitomo Corporation from Japan, and 20% share Pukuafu Indah from Indonesia.

NNT’s business in Indonesia is based on established management principles, well-established systems and procedures, and strong financial capital. Even though they were well prepared, they still failed to apply certain ethical standards. There has been conflict between the company, the local community, and non-government organizations (NGOs). The conflicts arose because of evidence of environmental destruction and community harassment by Newmont Nusa Tenggara.

This case study is comprised of 3 parts: case presentation and stakeholder analysis; ethical audit; and policy recommendation. Firstly, the facts of NNT’s operations will be analyzed, research based on the ethical literature will be presented, and the main stakeholders involved in this case study will be assessed. Secondly, the case study will include a stakeholder, decide model, and policy model analysis. Finally, this report will provide recommendations on the problems.

1.2. Main Point of Conclusion Reached from The Ethical Audit

NNT acted unethically in West Nusa Tenggara. Due in large part to poor environmental controls in the area, there have been human rights abuses and destruction of their areas natural resources and assets.


2.1. The Analysis of The Facts and Problems

The facts surrounding this case have sometimes been difficult to verify. Where possible we have sought to check the accuracy of information. In an online site titled “STD Toolkit: Indonesian Case Studies - Newmont Nusa Tenggara Batu Hijau, Sumbawa”, it was reported that Newmont Nusa Tenggara (NNT) was originally granted a mining license for an area that constituted 50% of the West Nusa Tenggara province. It produced approximately 280 thousand ounces of gold and 495 million pounds of copper in 2001. Down to Earth also reported that NNT paid royalties to Indonesian Government US$ 3.9 million which US$ 3.57 million of the payment were royalties for copper concentrate and US$ 0.33 million for gold and silver. In total, NNT has paid US$ 31.39 million in royalties to the government since 1999.

Since the business was a big project, NNT has already made a well preparation in order to have good relationship with Indonesia. It was proved by well-prepared procedures like environmental policy and social development policy. However, the process was not as good as the procedures prepared.

The most important source of information regarding the facts of this case study comes from the NGO-JATAM. Tracy Glynn argues on one side, the environmental policy seems ideal, but the application was far from ideal in local community’s view. In NNT’s operations, two third of the rock processed are waste rock. This fact made NNT to do dumping, called submarine of tailings disposal. Referred to Tempo Interactive, the NNT mine dumped around 110,000 tones of tailings each day on the seabed at a depth of about 100 meters. NNT claimed that the tailings are not dangerous. Furthermore, it held a seminar to promote the use of this waste disposal method in Sumbawa in May 2001. It can be seen that NNT did dishonest public relation through this promotion in order to gain acceptability on its submarine tailings disposal. In fact, its waste disposal is sixty times more than what Newmont Minahasa Raya is dumping.

In addition, Glynn also asserts that local people caught less fish than before they came which insufficient for local need since NNT...

Bibliography: • Doyle T. & McEachern, D., 1998, “Environment and Politics”, Routledge, London.
• Guerrrier Y. et al (Ed), 1995, “Values and the Environment”, Bookcraft Ltd, Great Britain.
• Solomon R.C., 1994, “Above The Bottom Line – An Introduction to Business Ethics, (Second Edition)”, Harcourt Brace, Florida.
• Sternberg E., 1994, “Just Business”, Warner Books, London.
• Velasquez, M.G., 1992, “Business Ethics Concepts and Cases, (Third Edition)”, Prentice-Hall, Inc, New Jersey.
• Down to Earth, 2001, “Indonesia Receives US$3.9 MLN in Royalties From US Mining Firm” (Online). Available from: (26 August 2002).
• Down to Earth, 2000, “Newmont under siege” (Online). Available from: (31 August 2002).
• Newmont The Gold Company “Social Development” (Online). Available from: (28 August 2002).
• Parmar, C., 2002, “Towards an integrated management system - environmental, economic, social and ethical” (Online). Available: (5 October 2002).
• PT Newmont Pacific Nusantara, “Newmont Nusa Tenggara” (Online). Available: (31 August 2002).
• Western Australian Public Sector, “Code of Ethics”, (Online) Available:  (24 October 2002).
• Glynn T, 2002, “STD Toolkit: Indonesian Case Studies - Newmont Nusa Tenggara Batu Hijau, Sumbawa” (Online)
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