Global Policy Forum

Jane Perlez and Evelyn Rusli

First the fish began to disappear. Then villagers began developing strange rashes and bumps. Finally in January, Masna Stirman, aided by a $1.50 wet nurse, gave birth to a tiny, shriveled girl with small lumps and wrinkled skin.

"The nurse said: 'Ma'am, the baby has deformities,' " Mrs. Stirman, 39, recalled in an interview. Unable to get any meaningful medical help in this remote fishing village of about 300 people, she watched as her fourth child suffered for months and then died in July.

The infant's death came after years of complaints by local fishermen about waste dumped in the ocean by the owner of a nearby gold mine, the Newmont Mining Corporation, the world's biggest gold producer, based in Denver. It also kicked up a political brawl pitting Indonesia's feisty environmental groups against the American mining giant, which has been trailed by allegations of pollution on four continents. The fight has aroused intense interest in mining circles and among environmental groups for the fresh concerns it raises about how rich multinational companies - especially those that extract resources like coal, copper and gold as well as oil and natural gas - conduct themselves in poor nations.

For Newmont, the battle is only the latest round of troubles as the company, concerned by the more stringent rules for mining permits in the United States, seeks greater growth from operations overseas, where environmental groups and, increasingly, government officials charge that it employs practices not tolerated at home.

No definitive cause has been found for the illnesses among the villagers. Company executives, Newmont said in a statement, were "convinced that we are not polluting the waters of Buyat Bay or adversely affecting the health of the people in that area." But on Aug. 31, an Indonesian government panel announced that Newmont "had illegally disposed" of waste containing arsenic and mercury in the ocean near the mine site, and had failed to get the required permits from the Ministry of Environment since 1996. The environment minister, Nabiel Makarim, said the company might face criminal charges.

The findings came a week after a local legal aid group filed a suit on behalf of three villagers, including the baby's mother, in a district court in South Jakarta, alleging that they and the baby had been made sick by the mine waste. They are seeking $543 million in damages. The company denied the charges and said in its statement that it "operates in full compliance with Indonesian and U.S. environmental standards."

Newmont has run into trouble before, even at home. But some of the gravest allegations of polluting mining practices have come from its operations in developing nations, from Indonesia to Peru to Turkey. Here, the fight with Newmont has fueled a growing popular impression that mining and energy companies hold a tight grip over Indonesia's weak regulatory system. Many blame the corruption, cronyism and unevolved legal structure inherited from General Suharto, the dictator whose rule ended in 1998 and who, for a price, eagerly opened the doors to foreign investors.

When Newmont first came looking for gold in Indonesia in the 1980's, it dealt with the Suharto government. Since then, a handful of officials knowledgeable about the environment have said they wanted to stand up to Newmont and other companies, but lost the battles. In Newmont's case, correspondence shows that from 2000 to 2002 the Ministry of Environment challenged Newmont about the toxicity of the mine waste it was dumping at Buyat Bay. In a letter to Newmont in March 2002, a senior ministry official, Isa Karnisa Ardiputra, listed seven points of concern and asked for "immediate action."

In an interview at Newmont's Jakarta headquarters on Aug. 27, the president of Newmont in Indonesia, Richard B. Ness, and other company officials said they were not aware of the letter. Emil Salim, a minister of the environment during the Suharto era, who is overseeing the panel that found Newmont had acted illegally, reflected the anger of many Indonesians over the dumping of waste that was allowed to go on for years despite such challenges from parts of the government.

"We are weak in governance in mining," he said. Using the mine industry's word to describe the waste, Mr. Salim said he had told the company: "I am not against you. But please don't put your tailings in our ocean."

Some sense a potential turning point in the outrage stirred by the death of Mrs. Stirman's baby. The mother was told by a doctor, Sandra Rotty, an Indonesian who works at the Newmont financed health center at nearby Ratatok, that the child had a common skin disease. After examining the baby in April, Dr. Rotty wrote to a local environmental group, Kelola, that the baby's skin "disorder" was "caused by malnutrition." "Now, the baby's condition is already better," she added. When the child showed no improvement, however, the group asked a team of public health doctors to visit Buyat Bay.

About 120 villagers were waiting to be examined in June in the ad hoc clinic set up in three local homes. Thirty of the villagers had tumor-like growths, said one of the doctors, Jane Pangemanan. "I was shocked by what I saw," she said in an interview. Of the 60 people she examined, about 80 percent showed symptoms of poisoning by mercury and arsenic, she said. On a recent visit to the community, and judging from the villagers who came to the Jakarta courthouse for the opening of the case on Aug. 27, the health problems were evident at almost every turn. One of the babies had a cyst the size of a small pea on the end of her tongue. A mother had two lumps on her breasts the size of golf balls. One woman had a large lump down her left side that made her look half pregnant.

A lawyer for Newmont, Palmer Situmorang, said the lumps and skin diseases that the villagers complained about were the result of "poor sanitation and poor nutrition." "They are liars because their orientation is to just get money," he said.

But an environmental scientist, Evan Edinger, who is an assistant professor at the University of Newfoundland in Canada and who is working with the Indonesian environmental group Friends of the Earth, said he believed that arsenic in the mine waste was the main cause of the illnesses. In laboratory tests in Canada, he found that about 30 percent of the arsenic in the sediment from Buyat Bay was soluble in weak acid environments, like the digestive tracts of worms, he said in an interview. "Our hypothesis is that if you have sediment-feeding organisms and bottom-dwelling fish eat them, then that could be the pathway to contamination from arsenic," Mr. Edinger said.

Newmont's own laboratory results also show high levels of arsenic in the sediment. But the company contends that the arsenic remains inert and nonsoluble in the ocean. In a paper released to the news media, Newmont said that "collectively, there is no scientific evidence to suggest that mining activity at Minahasa has resulted in arsenic contamination of Buyat Bay biological ecosystem."

The national police chief in Indonesia, Gen. Da'i Bachtiar, released the police's own laboratory results in August that showed mercury contamination of the sea. The company disputed the results, saying the police did not measure dissolved mercury. But General Da'i's chief investigator in the case, Sulistiandriatmoko, retorted: "We are not that stupid. We measured the dissolved mercury, not the total mercury. I think they are just trying to distort the case."

The Newmont mine above Buyat Bay is on the northern tip of Sulawesi in Minahasa, a region where fishermen in handmade wooden boats have been trawling for hundreds of years. Where small vanilla, clove and coconut plantations once prospered, Newmont carved five pits into the brown earth. With its relatively low costs and high-grade gold that was easy to get at, it was a "little model of a mine," said Ali Sahami, a geologist who works as one of Newmont's environmental advisers. At the height of production from 1998 to 2000, the mine was producing nearly 25 percent of the company's international output.

Newmont finished mining in 2001 and has since been processing mined ore, work it was scheduled to complete on Aug. 31. Villagers say the fish off their beach were once so plentiful they would start a fire for grilling before setting off to catch the evening meal. But almost immediately after mining operations started, the fish stocks dropped dramatically.

Rasit Rahman, a squat man with a thick tangle of black hair, who had a lump removed from the back of his neck recently, was one of the plaintiffs who appeared in court on Aug. 27. "My catch dwindled so fast after the mine came, I could no longer afford to send my youngest son to school," he said. Before the mine company came to the area in 1996, he said, he could earn $30 a day, a substantial amount in a village without electricity and running water. "We had to look for another place to catch fish," he said. "It was so much harder, and we were getting so little."

At issue is Newmont's use of a waste disposal method, effectively banned in the United States under the Clean Water Act, that is called submarine tailing disposal. It involves piping treated mine waste into the ocean.Newmont uses the method not only at the mine near Buyat Bay, but also at its far bigger copper and gold mine on the island of Sumbawa.

The legal aid group, Agency for Health Law, which has brought the suit on behalf of the villagers, charges that the system polluted the warm equatorial waters around the village, where people depend almost exclusively on fish for food as well as for their livelihoods. In the interview at the company's headquarters, Mr. Ness, the Newmont president in Indonesia, defended the use of the waste system. He also made that case before an Indonesian parliamentary committee in August.He said it was more "responsible" to put the waste in the sea than store it on land that could be subject to earthquakes. Furthermore, he said, "Tailings are nothing more than ground-up rock."

Others disagree. Environmental groups vociferously oppose the sea disposal of waste. Some mining companies, like the Australian giant BHP Billiton, say they would not use such a method in current projects, even though it is cheaper than land-based waste storage.

Robert E. Moran, a hydrogeologist who advises mining companies and environmental groups, said in a telephone interview from Colorado that "clearly tailings are much more complex chemically than crushed rock - or else they would not require detoxification treatment prior to disposal."The waste from the mine being released into the sea amounted to a potentially "toxic soup," he said.

Mr. Moran, who reviewed partial analyses from the plant made available by Newmont, said he was confident that the waste consisted of metal-like elements like arsenic and antimony and metals like mercury, cadmium, lead, copper and zinc. Those substances in the rock where the gold is found, he said, are treated with sodium cyanide, and the subsequent mixture is treated again with other chemicals in an attempt to reduce the concentration of cyanides. In all likelihood, Mr. Moran said, some amount of cyanide compounds and other organic chemicals remained in the waste that was released into the ocean less than a half mile off shore at a relatively shallow depth of about 82 meters. In tropical waters like those around Buyat Bay, the toxic compounds often became "more mobile and more accessible to the food chain than in temperate waters," Mr. Moran said.

Washington's political risk insurance agency, the Overseas Private Investment Corporation, does not like the submarine tailing disposal system, either. In the late 1990's, the agency refused to give insurance to a mine operated by Rio Tinto in Papua New Guinea on the grounds that the mine's submarine tailing system would violate United States domestic regulations.

Newmont will essentially leave the site near Buyat Bay early next year, although a small skeleton staff will be on hand for three years to complete reclamation and oversee some community development projects, Newmont officials said. To its critics, Newmont says its mine closure plan will leave a community better off than when the company arrived. The plan shows photographs of a new school and groups of happy children splashing in clean water.

But the villagers at the beach say they are uninterested. They are no longer able to sell their fish in the local markets. In addition to the illnesses that many now suffer, their livelihoods are shattered, said Anwar Stirman, the brother of Mrs. Stirman. "We can no longer make money from the fish," Mr. Stirman said. "We're talking to the provincial officials about our future. The whole village is waiting to be moved to another location."

In any event, Newmont contends that the sea at Buyat Bay is in fine shape. The company ran color advertisements saying so in 10 Indonesian newspapers at the end of August. "We find the water is in excellent condition," said Robert Humberson, general manager for external relations. "I dive there myself. It's fabulous."