Newmont Mining

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Newmont Mining Corporation NYSE: NEM, based in Denver, Colorado, USA, is the world's second-largest producer of gold, with active mines in Canada, Bolivia, Australia, Indonesia, New Zealand, Turkey, Peru and Uzbekistan. Holdings include Battle Mountain Gold, Normandy Mining, and Franco-Nevada Corp. Newmont is in a joint venture project with Southwestern Resources Corporation for exploration and extraction of many precious metals. Subsidiary operations include Yunnan Porphyry Copper and Gold Project in China, and the Liam Gold-Silver Project in Peru. Newmont produces about 7.5 million troy ounces (233,000 kg) of gold annually and holds reserves of about 90 million troy ounces (2,800,000 kg) of gold. Production in the Americas accounts for about 70% of the company's production, but even so Newmont is the lead gold mining operation in Australia. The Company is advancing two exploration projects in Ghana, which combined represented 16.0 million ounces of reserves at year-end 2004 and is expected to become the next core operating district. Newmont employs approximately 28,000 people worldwide and Newmont says it is committed to the highest standards for environmental management, health and safety for its employees and neighboring communities. Other metals that the company mines include copper, silver, and zinc.

1 History
2 Controversies
3 See also
4 References
5 External links

[edit] History

[edit] Early years

Newmont Mining Corporation was founded in 1921 in New York by Colonel William Boyce Thompson as a holding company to invest in worldwide mineral, oil, and relations companies. The name Newmont was chosen by Thompson as a contraction of New York, and Montana, because, as one biographer put it, "he grew up in the latter and made his money in the former."

In 1929, Newmont became a mining company with its first gold production by acquiring California's Empire Star Mine. By 1939, Newmont was operating 12 gold mines in North America. The following year, O'okiep Copper Company came into full production in South Africa. O'okiep formed the base for Newmont to eventually become the world's third largest copper producer, with interests in eight copper operations worldwide.

Beginning in 1925 Newmont acquired interests in a Texas oil field. Eventually, Newmont's oil interests included more than 70 blocks in the Louisiana Gulf area and oil and gas production in the North Sea.

[edit] Gold at Carlin

Newmont discovered disseminated gold at Carlin, Nevada in 1962 and began operating its first mill there in 1965 under the name Carlin Gold Mining Company. The "Carlin Trend" is the largest gold discovery in North America in this century. In 1971, Newmont began using the heap leaching technology on sub-mill grade ores at Carlin. It was one of the first in the gold industry to use heap leaching. In 1986, the company's name was changed to Newmont Gold Company, and five million shares were sold publicly for US$47.5 million. Newmont Mining held a 90 percent interest.

In 1977, Newmont was instrumental in organizing the consortium that purchased Peabody Holding Company, Inc., the largest coal producer in the nation. Newmont held a 50 percent interest in Peabody following the purchase.

A decade later, Newmont's assets were over US$1.9 billion and income from continuing operations reached US$338 million. In August 1987, Newmont became the target of an unsolicited tender offer for control and dismemberment of the company.

[edit] Major restructuring

As a result, the company undertook a major restructuring. This included the payment of a US$33 per share dividend to all shareholders for a total of US$2.2 billion, of which US$1.75 billion was borrowed. To reduce this debt the company undertook a divestment program involving all of its copper, oil, gas, and coal interests.

As a further step in the restructuring, the company moved its headquarters from New York City to Denver in February 1989. On January 1, 1994, Newmont Mining Corporation and Newmont Gold Company, combined assets to form a unified worldwide gold company. Shareholders of both companies had identical interests in the reserves, production, and earnings of Newmont Gold's operations.

Newmont merged with Santa Fe Pacific Gold Corporation to form North America's largest gold producer. And, in October of 1998, Newmont Mining and Newmont Gold merged, with Newmont Mining acquiring the remaining shares of Newmont Gold that were outstanding at that time. On June 21, 2000, Newmont announced a merger with Battle Mountain Gold Company. The merger was completed in January 2001.

In February 2002, Newmont completed the acquisition of Normandy Mining Limited and Franco-Nevada Mining Corporation Limited, making it the world's largest gold producer.

In December 2004, government officials in Thunder Bay, Ontario, Canada, anticipate the closure of Newmont Canada's Golden Giant mine in about one year. [1]

[edit] Bankruptcy in Uzbekistan

An Uzbek court declared Zarafshan-Newmont, a joint venture co-owned by Newmont Mining and the Government of Uzbekistan since 1995, bankrupt and gave three months for liquidation on 29 September 2006. In the summer of 2005 an Uzbek law was changed to end tax benefits for some foreign companies. The Uzbek Government demanded Newmont Mining pay back taxes from 2002-2005 amounting to USD $49 million. Newmont announced its intentions to take the dispute to an international arbitration court, arguing that the new tax regulations should not be applied retroactively. Zarafshan-Newmont sold 122,700 ounces of gold in 2005. The Muruntau mine, previously mined by Zarafshan-Newmont, has reserves estimated at 1.7 million gold ounces. NMC says the Uzbek Government has made over USD $500 million.^[1] See also: Kyzyl Kum

[edit] Controversies

[edit] Twin Creeks mine

The Twin Creeks mine in Golconda, NV is ranked as of 2002 by the EPA as the second highest environmental polluter in the United States.[2]

[edit] Lone Tree mine

The Lone Tree mine in Valmy, NV is ranked as of 2002 by the EPA as the sixth highest environmental polluter in the United States. [3]

[edit] Carlin South Area mine

The Carlin South Area mine in Carlin, NV is ranked as of 2002 as the seventh highest environmental polluter in the United States. [4]

[edit] Yanacocha mine

The Yanacocha gold mine in central Peru is considered one of the largest and most profitable in the world, producing over US$7 billion worth of gold to date. Before 1994 the mine was co-owned by Newmont, Buenaventura (a Peruvian mining company), and Bureau de Recherches Géologiques et Minières (BRGM), a French government-owned company. This partnership collapsed in 1994 after BRGM tried to sell part of its shares in the company to an Australian company which was a rival of Newmont. Newmont and Buenaventura would both go to court to challenge the trade.

Larry Kurlander, then a senior executive at Newmont, claimed the French President Jacques Chirac had sent a letter to then Peruvian President Alberto Fujimori asking him to intervene in the court case in favor of the French owned company. Kurlander had been sent by Newmont to Peru in order to try and get a favorable outcome for Newmont in the dispute. The legal battle would eventually make it all the way up to the Peruvian Supreme Court.

During this period Kurlander acknowledges having met with Vladimiro Montesinos, the Peruvian intelligence chief who has since been found guilty of embezzlement, illegally assuming his post as intelligence chief, abuse of power, influence peddling and bribing TV stations. [5] [6] However, Kurlander claims that he did nothing illegal and that the French government were taking similar steps in trying to contact Montesinos. The French ambassador to Peru Antoine Blanca denies this, pointing to the fact that Montesinos was on the CIA payroll and thus would naturally side with the U.S-based company.

After the fall of Fujimori in 2000 a number of videos Montesinos had taped of himself meeting with several domestic and foreign leaders and offering bribes and accepting them had emerged. In October 2005 Frontline in co-production with The New York Times found a February 1998 recording of a telephone conversation between Montesinos and Kurlander. The following is an excerpt from the tape:

Kurlander:...we have a very serious problem in Peru with our company (Newmont) and Minera Buenaventura so I have enlisted the support of some of my friends from a variety of intelligence communities. I need it especially because the other side (the French government) has been acting quite strangely.

Montesinos (to interpreter): Tell him that I am perfectly aware of the problem he has and the people he represents have with the French, as well as the problem he has with the judiciary.

Kurlander: So now you have a friend for life. I want a friend for life.

Montesinos (to interpreter): I thank you very much for what you have just told me and well you already have a friend. Tell him I'm going to help him with the voting. I would like to know the tricky practices of the French. The French Connection!

Kurlander: The French Connection!

(laughter) [7]

Along with this telephone conversation, Frontline and The New York Times also re-broadcast three other videos. One was filmed in April 1998 and shows Montesinos talking to "Don Arabian", the CIA station chief in Peru, in an attempt to get CIA to pressure the U.S to back Newmont in the case. In the video Montesinos claims to have found e-mails from Paris to Peru of French officials trying to influence the court to get a decision favorable to France.

Another video recorded in May 1998 shows Montesinos meeting with Peruvian Supreme Court Justice, and former classmate, Jaime Beltran Quiroga. In it Montesinos states that state interests are at stake in the case between Newmont and BRGM. He tells Quiroga that if the decision goes to Newmont that the United States will back Peru in its boarder dispute with Ecuador which had a few years ago exploded into the Cenepa War. He also tells Quiroga to deny any connection with him to the press. Quiroga would later play a crucial role in the case, his vote would be the deciding vote in the Newmont victory. After the video was first broadcast in Peru in 2001, on a Peruvian local television station the French Ambassador Antoine Blanca was quoted as saying "Now I know why Newmont won".

In the final July 1999 video, Montesinos is again seen with the now departing CIA station chief "Don Arabian" giving him a gift and thanking him for the help he has given Peru stating "[W]e hope that when you're back their [in Washington] you'll remember your friends".

[edit] Pollution at Buyat Bay

In August 2004, the Indonesian Ministry of Environment filed a US$133.6 million civil lawsuit against Newmont, claiming tailings from the company's Minahasa Raya mine polluted Buyat Bay in the North Sulawesi province, causing nearby villagers to become seriously ill and contaminating local fish stocks. Newmont denied the allegations, arguing that the illnesses had more to do with poor hygiene and poverty. On November 15, 2005, a South Jakarta court dismissed the suit on technical grounds, saying the government had breached the terms of its contract with Newmont when it took legal action before seeking arbitration. Environmentalists urged for the suit to be appealed, but on December 1, 2005, Environment Minister Rachmat Witoelar said the government expected to reach an out-of-court settlement with Newmont's local subsidiary. "By negotiating a settlement, we hope to be able to quickly compensate people living near the mine," he said. The government negotiating team was led by chief Economics Minister Aburizal Bakrie. On February 16, 2006, the Indonesian government announced it would settle the civil suit for US$30 million to be paid over the next 10 years. The agreement also includes increased scientific monitoring and enhanced community development programs for the North Sulawesi province. Newmont, with a market value of US$25 billion, is expected to make US$5 billion in revenues for 2006.

Though the civil suit was dismissed, there is still pending a criminal suit against Newmont's top U.S. executive in Indonesia, Richard Ness, on charges stemming from the same allegations. His trial began in August 2005— if convicted, Ness faces up to 10 years in prison. Prosecutors have recommended financial penalties of US$110,000 for Newmont and US$55,000 for Ness.^[2]

Newmont Mining Corp. objected to a documentary entitled "Bye Bye Buyat" being nominated for Indonesia's top film award, FFI's Citra Award 2006. The company says it interferes with the controversial Richard Ness pollution trial, according to local newspapers.^[3]