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Political Problems for Newmont Mining Corp. in Indonesia

April 13, 2017 • admin

The political problems faced by Newmont Mining Corp. operating in Indonesia is a classic example of the problems faced by foreign firms operating in other countries when there are any alterations in political regimes thus requiring the firm to adapt a new and/ or different political strategy. Since the political and legal landscape in Indonesia has been very inconsistent where it went from having a centralized government to a decentralized one, it was naturally not easy for Newmont, as they used to work directly with the central government rather than deal with the different local governments. With the legal system of Indonesia taking an unfavorable turn for Newmont with the change in the political system, it is fair enough to say there was little that Mr Lahiti could do to help the company retrieve itself from the mess. The fact that Newmont was charged 8,2 million dollars in back pay of taxes for waste materials is not justified itself as their contract exempted them from paying any tax on mining waste materials during the time of their establishment. However, the hefty amount of money Newmont paid for establishment of employee programs and community development projects was a worthy move as such programs can escalate the positive image of a company in the society. In spite of such steps taken by Newmont, it is very unfortunate that local groups wanted more from them. However, as Newmont faced unfavorable environmental environmental concerns due to their operations, I believe that there was much more they could have done to resolve such problems. Much of the damage caused to the environment by Newmont were inevitable as they were operating in the mining industry. However , Mr Lahiti could have helped Mother Nature in other ways, possibly by planting trees in the cities, sponsor other environmental campaigns etc and more importantly, excessively promote such operations so as to gain a favorable image in the public eye. As far as the illegal mining is concerned, the steps taken by Mr. Lahiti was a worthy one, however he also could have taken an alternative step whwre he could have joined forces with the government to strengthen the law and establish more strict and severe measures against illegal mining in the company.

Categories: General

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