NewMont Mining Corp. is the one of the world’ leading gold company, headquartered in Denver, Colorado. The company employs approximately 15,000 people, the majority of whom work at Newmont's mines sites in the United States, Australia, Peru, Indonesia, Bolivia, New Zealand and Mexico. NewMont Mining Corp. began to operate two mines in Indonesia in 1996, one in Batu Hijau on the island of Sumbawa and Minahasa Raya on the island of Sulawesi. NewMont Mining faced several environmental challenges in operating mines in Indonesia which were political-legal instability, illegal mining, environmental complaint, decreasing gold price and reserve.
Political-Legal Changes in Indonesia
Political-legal environment in Indonesia has been challenging in decades. With Indonesia’s independence on August 17, 1945, Armed Sukarno became the first president and established “Guided Democracy.” In the mid-1960’s general Suharto’s Communist Party (PKI) led “New Order” administration and constructed a strong centralized and military-dominated government. At this period, Indonesia experienced significant economic growth and industrialization, dramatically improving health, education and living standards. After the Asian financial crisis of 1997, Abdurrahman Wahid, the founder of the National Awakening Party (PKB), elected president of Indonesia with the fall of Suharto’s regime. At his presidency, political-legal environment decentralized and government was not able to restore the Indonesia’s economic recession and avoided corruption. It caused political uncertainty among the business and industry sectors. Because of political-legal confusion, foreign firms faced conflicts in operation with local government’s law and policy and deterioration court system. The local Minahasa district demanded $8.2 million in back pay of taxes for waste material which under the central government of Suharto exempted before.