• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Did Paul Lahti, the director of the Minahasa Raya mine, make the correct decision in the closing of Newmont Mining Corporation's Minahasa Raya mine?

Extracts from this document...

Introduction

Scott Reisman 12-18-04 International Business Prof. Milton Newmont Mining Term Paper BACKGROUND: Indonesia is a country full of civil unrest, political reforms, economic struggle, and government turmoil. Paul Lahti, the director of the Minahasa Raya mine for Newmont Mining Corp. choose to do business in this country. After Japanese rule a man by the name of Ahmed Sukarno took power and Indonesia claimed their independence on August 17, 1945. He was the first president and tried getting rid of all the communist presence that was left there by killing them. After a financial crisis in 1997 hit, the economy was sent spiraling out of control, and citizens demanded that Sukarno give up his reign. In 1999, Abdurrahman Wahid was elected president, and was expected to restore an already fragile economy. Newmont Mining faced many new challenges in Indonesia. There was the change of political power, illegal mining, environmental protestors, and declining gold prices. The change in political power directly effected Newmont Mining. Newmont dealt primarily with the central government, rather then dealing with local governments. Newmont was hit hard by the new court system and local protestors fighting against the mining in their region. In the old regime under Sukarno they didn't have to pay taxes to the government. But the local laws that were passed said local companies had to pay taxes. Newmont ended up paying $3 million for taxes and employee programs and community development projects. ...read more.

Middle

As a result Minahasa's government has decided to help Newmont and it will "crack down on rampant illegal gold mining activities in the area due to mercury pollution" (Platt Medals Week 10) Newmont had been taking the blame for the dangerously high levels of mercury pollution and finally received some kind of help from the local government. Local government support was extremely rare during the time the Minahasa Raya mine was open. In 2000, another legal dispute took place over more tax payments. Initially the central government had sided with Newmont, however they changed their minds and together both governments ordered Newmont to close the mine on April 16. This is a prime example of why foreign investors want to get out of Indonesia so badly. As part of Indonesia's transition to democracy, the central government was given more power to provinces and regions to collect tax revenue from companies operating in their areas. Richard Ness, the president director of PT Newmont Minahasa Raya stated, "We regret the decision by the Tondano District Court and are quite frankly outraged at the blatant disregard for the due process if law that the court displayed here." (Times-Picuyane 5) The company still has not chose to take the matter to arbitration before and international court. Reopening the mine may not be worth it simply because there is about 800,000 ounces of gold and only about 2 and a half years of life left. ...read more.

Conclusion

In Batu Hijau they have had lowered exploration expenses on copper and gold mining. They have also an income tax benefit and equity income of $33 million. (Raabe 2) Due to the closing in Minahasa Raya, Newmont has been able to direct their resources and money into the Batu Hijau mine. This has resulted in Newmont becoming the world's largest gold mining companies. CONCLUSION: With all the uncertainty in terms of government, protests, and change in laws Newmont should have never invested their time and money in the gold mine in Indonesia. There is too much risk, which they eventually found out about. And they had to shut down for good in 2003. It was a long run but with all the problems that country has, it is not a good idea to start or run a business in a country with so many problems. Paul Lahti was beginning to pay a lot of money in a situation that seemed to be becomingly less profitable. They took advantage of Minahasa Raya while the opportunity and its profits were at their peak and then they abandoned it before letting their profits turn into losses. Only time will tell whether Indonesia will become a good place for foreign investment. Until then I feel that the best thing was for Newmont was to shut down the Minahasa Raya mine. I also feel that as soon as any problems similar to the Minahasa mine happen in the Batu Hijau mine they should immediately get out. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Politics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Politics essays

  1. Examine the impact that independence had economically, socially, and politically in Indonesia.

    The political system of Indonesia, a vital aspect that affects everybody living in the country, improved greatly once independence was achieved, as it was more representative of the entire population. During the times of Dutch colonialism, the Dutch controlled Indonesia without taking heed to the needs and opinions of the Indonesian people.

  2. Conflict Analysis: Angola

    An amnesty on past corrupt activities, which have been obviously rife, might be the only way to persuade the potentially embarrassed government into bringing about transparency. Furthermore there needs to be more attention to human rights issues in Angola. Even Angolan ministers point out the need for this to be addressed53.

  1. Introduction and Company Background.

    of specialized service that the company's in-house traffic department has offered over the years. The transportation management professional's specialization provides more in terms of customer service. For example, simply having a live person available 24 hours a day to deal with weather delays, production changes, re-routes, and breakdowns means more efficient response to inevitable problems.

  2. INquisitorial Indonesia

    The judges in an Indonesian trial have the power to both call and decline to hear witnesses and can ask questions of anyone. There is no jury in an Indonesian trial, therefore the responsibility of deciding whether the defendant is guilty or not lies solely on the judges.

  1. The Kurds make up about blank% of Turkeys population

    recently called People's Congress of Kurdistan, they are a Marxist-leaning guerrilla movement that has fought the Turkish forces to receive independence. (World) They have killed over 30,000 Turks since 1984, making them the number one terrorist group in the world.

  2. Decentralization and development of modern local government systems in Eastern Europe

    In this model public functions remain the responsibility of the municipality, but influence is restricted in comparison to direct provision. Public opinion is ambiguous to the new private roles in public service provision. From one side it is accepted as a necessary consequence of the decreasing role of the state.

  1. Nationalism as applied to business

    But this is just the top of the iceberg. As a child, I would hear people talking about the United States. In most my toys I could read: �MADE IN USA�. Somehow life brought me up and little by little I had to open my eyes. And although it had forever been my ilussion to go to the country

  2. Using the evidence of Sources 2, 3 and 5, and your own knowledge explain ...

    This is much supported by Source 2, where the offer of the crown was important to Cromwell's "judgement" and "conscience". In Cromwell's speech to the Parliament's commissioners he states the reason as to why he rejects the crown, the principal reason being the "the Providence of God", this was related

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work