ASIA!

Newmont Minahasa Raya, or NMR, was the first mine in Indonesia to use a submarine tailings disposal system, a method of waste disposal that has been banned in many countries because of its harmful environmental and health impacts.

According to non-government organisations, NMR pipes its mining waste approximately ten kilometres from the open-pit and discharges it into Buyat Bay at a depth of 82 meters. Since it opened in 1996, the mine has allegedly dumped more than 4 million tonnes of mine waste into the bay.

Just weeks ago, NMR was acquitted of criminal charges of polluting Buyat Bay in Indonesia’s North Sulawesi province with toxic waste. The battle had been going on for nearly two and a half years. International news reports cite exclamations of relief from Newmont executives.

Owing to a lack of baseline data, it is difficult if not impossible to assess if the depletion of coral reefs in the bay and the health problems of local villagers was indeed a result of waste discharge from the Newmont mine. Although a laboratory test in 2004 confirmed water consumed by residents living near Buyat Bay contained higher mercury levels than normal, the tests had nothing to say about the sources of mercury.

Mining companies invest in Indonesia because its “geographical location provides the country with a vast supply of mineral resources relatively close to the surface in relatively accessible areas,” according to Patrick Guntensperger, a Jakarta-based risk analyst and political commentator. “It is also a developing nation with high levels of unemployment, particularly in the outlying regions, offering a large pool of unskilled, cheap labour…just what the mining industry needs.”

And investors like NMR are just what Indonesia needs as well, Guntensperger adds. “The extraction industry, being labour-intensive, can provide employment in impoverished areas and high levels of tax revenues to the country. Properly managed, the extraction industry can also bring social development, health care, education, and environmental improvement to the areas in which they operate.”

But what is Indonesia willing to sacrifice in order to meet its gains? Though all the legal mine sites in Indonesia have a combined area of less than 0.5% of the national territory, the impact on the environment can nonetheless be very damaging.

In gold mining, mercury is commonly used to process the gold. Although the miners may try to conserve and reuse the mercury to save costs, some of the metal inevitably makes its ways into rivers where from it could enter people’s bodies, contaminate water sources, and decimate coral reefs, affecting the industries that rely on them such as fisheries and tourism.

According to a report by the International Crisis Group, mining companies in the Suharto era—many controlled by Western investors—had a poor record on the environment and relations with local people. Although mining companies are major tax and royalty generators, the bulk of their profits flow overseas or to Jakarta, and fail to be reinvested in mining regions. It’s common in both the private and public sectors that savings from resource-saving production methods are often lost to taxes, giving very little incentive to adopt more efficient methods.

Though Indonesia has installed several policies in an attempt to regulate environmental damage, “the problem isn’t a lack of relevant legislation; the problem is a complete lack of compliance,” says Guntensperger.

“Traditionally in Indonesia, if a law is inconvenient, one simply bribes someone and disregards it. There is never a shortage of officials standing around with their hands out and prepared to overlook a law in exchange for a price. Most public officials actually believe that such activities are their main job responsibilities; that certainly is their main source of income.”

So it appears that before environmental issues can be addressed, social and economic hurdles must first be cleared.

No one knows for sure if the apparent health problems suffered by residents of Buyat Bay and their loss of fish and coral reefs were related to the Newmont mine. Villagers in Buyat Bay were dying from malnutrition even before Newmont put its foot into the area. That’s not to say they didn’t suffer any ill effects from the mining operation, but could NMR have reinvested in natural capital to restore and sustain the land and its people?

That’s a new business model propagated by everyone from former Vice President Al Gore to Harvard Business School Professor Michael Porter. For years, the goals of business and the environment had seemed hopelessly irreconcilable—help the environment and you’ll hurt your business. But corporations are starting to realise that eco-friendly and socially responsible practices can actually help a company's bottom line. For instance, in a closed-loop production system every output is either returned harmless to the ecosystem as a nutrient, like compost, or becomes an input for manufacturing another product. Such systems can often be designed to eliminate the use of toxic materials that hamper nature’s ability to reprocess materials.

If countries such as Indonesia are not capable of enforcing their regulations, why don’t companies owned by Western investors adopt these methods into their environmental strategies? It’s probably because such win-win opportunities become insignificant in the near-term face of the enormous expenditures that won’t, for a long time yet, generate a positive financial return. Before a mining company profits from their reserves, millions of dollars are spent to erect the infrastructure necessary for extracting them.

But the economy, after all, is embedded in the environment. Economic growth and environmental protection are inextricably linked. Scottish scholar John Stuart Blackie wrote: “What's mine is mine to bear; of good or ill, as God may will, I take my portion'd share.” If companies could adopt that dogma of responsibility, perhaps cultural barriers can be overcome and real profits be extracted from the environment.