The Gulliver Newmont Mining Corporation Dossier

421 Newmont Mining Corporation

In 1982, an unofficial recommendation was made by a financial adviser to the Greater London Council (GLC) that, if the GLC wanted to avoid controversial investments, it should pull out of RTZ and re-invest in Newmont (1). Little did he know ... ! As a Partizans' rejoinder put it at the time: "Comparing RTZ and Newmont is like comparing Pepsi and Coke: they both rot your guts in the end ... [F]or an authority wanting to dissociate itself from financial support for apartheid, operations in Namibia, or uranium mining on native/Aboriginal land, Newmont would certainly be up there in the top twenty companies to avoid" (2).

As of mid- 1984, Newmont had assets of around US$2 billion, a stock portfolio of US$400M and profitable gold, oil, gas and (through Peabody) coal operations. Its copper operations, except in Peru (Newmont held there 10.74% of the country's biggest copper producer, Southern Peru Copper Corp, which operates the Cuajone mine in the Andes) (4) and at Palabora, were proving unprofitable, especially at Tsumeb in Namibia and O'okiep in Namaqualand, in the north-west of Cape Province. However, in late 1984, Newmont and GFSA bailed out the troubled O'okiep mine by raising a loan from Barclays Bank, which was to be underwritten by the apartheid regime that reportedly didn't want to stop mining "in a remote and security-sensitive area" (5) of the country. GFSA was to increase its holding in O'okiep to between 38% and 45%, while Newmont's would fall to 1% below GFSA's (6).

In Arizona, USA, the Pinto Valley Mining Co (100% owned) cancelled - to its advantage - a high-cost smelting contract in 1983 (7) and, in April the following year, it was decided to reopen the copper operations purchased in 1983 from Cities Services Co (8). This mine is part of the southern Arizona copper belt which was robbed from the Papago Indians during the 1920s by the US Congress (9). Magma Copper, 100% owned by Newmont, used to operate another mine on native land in the region, San Miguel; but this was suspended in 1983 (3). The San Miguel mine is one of the largest nonferrous underground mines in the world (10).

In its 1983 annual report, Newmont indicated it would maintain exploration programmes in the USA, Canada, Peru, Spain, Australia, and the south-west Pacific, but it had terminated a diamond exploration programme in South Africa due to lack of finds. During 1983 the company had been particularly active looking for gold in Nevada, in the mid-continent, and the Appalachians. At the year's end it was managing 17 projects in Australia, the Solomon Islands and Fiji, 14 of these for gold. A new base metals JV had been opened in Huelva, south-western Spain (11).

Gold remains Newmont's draw card. After launching the new gold rush in Nevada in 1965, Newmont's wholly-owned Carlin Gold, together with a few other companies, "pushed Nevada to the lead as the largest source of gold in the USA" (12). The mining involves a traditional counter-current cyanide leaching process and a newer chlorination pre-treatment. At the beginning of 1984 the company also announced that it would proceed with another gold mine close to Carlin (13).

Little wonder, then, that in late 1984 the Mining Journal called Newmont "one of the most profitable of the US non-ferrous mining companies during the recession", crediting this to its "strong, low debt-equity balance" and the success of its "multi-commodity" base (14). The London Financial Times agreed, pointing out that Newmont- though the US's third-largest copper producer - had managed to remain profitable during a depression in copper prices, because it is also the country's third biggest gold producer (15).

Newmont, to a considerable extent, has arrived at its confident, expansive position as a major American "natural resource" conglomerate because of its exploits in South Africa. The company occupied almost unique nexus between British capital generated in South Africa, North (and, to a much lesser extent, South) American penetration, and re-investment at extremely favourable ratios in the apartheid mining economy.

Under a ten-year agreement between the two companies sealed in late 1983, Goldfields of South Africa was able to increase its share in Newmont to a maximum of 33.33% in ten years unless a third party sought to take control over the American company - in which case GFSA could buy as many Newmont shares as it wished to fight a take-over (16).

It is instructive to discover that the founder of the company, William Boyce Thompson, entered the world of mining by buying 25% in the Anglo-American Corp of South Africa in 1917 (17). Thompson's partner in crime was none other than JP Morgan of US Steel. As the London Times put it at the time, this was "the first occasion on which a definite arrangement has been made for employment of American capital on the Rand" (18).

Thompson continued to invest in southern Africa, taking a stake in Rhoanglo (Rhodesian Anglo-American) which was sold, diminished, in 1953 (17). In 1940 Newmont bought the O'okiep copper mine in South Africa and, putting in 9.5% from this subsidiary, joined with Amax, Union Corporation (now part of Gencor), Selection Trust, and the Swaco/South West Africa Co to buy a new copper deposit, seized from the Germans after WW2 (19).

Not only did the Newmont take-over of Tsumeb later contribute enormously to Newmont's ability to expand (20) but it bolstered South Africa's claim to annex Namibia outright (19).

The new income went partly into the Palabora copper-uranium mine (which Newmont and Bechtel designed and engineered, while RTZ managed), but mainly into Canada, Peru, Australia and the mining of copper on Indian land in Arizona, USA. By 1973, though only 12% of Newmont's assets were in Africa, double that percentage came home in the way of profits. The company itself boasted in 1967 that "no mine ... ever returned so large a cash flow for such a relatively small investment as Tsumeb" (19). By the late '60s Tsumeb was the largest employer of labour in Namibia and the largest producer of lead in Africa (19).

Newmont's major uranium interest has been its 51% holding of the Dawn Mining company which operated the Midnite mine and the Ford mine on the Spokane Indian reservation in Washington state, USA. Nearly half a million pounds of uranium oxide was sold from this mine in 1980 (21).

However, by 1982, the Spokane Indians had initiated litigation over royalties against Dawn and the mine was operating on a reduced scale (22). The next year, the mine was inactive with the mill put on a care-and-maintenance basis (23).

In the late '70s, Newmont was also exploring for uranium with Powerco in central Wyoming (24), but no known positive results emerged.

Newmont had a JV with Esso Minerals Canada at Trout Lake, British Columbia, evaluating prospects in 1982 (21).

It had an ongoing JV with Gencor to explore in Namaqualand, South Africa, especially in the Unamaq area east of Gamsburg.

It has a 70% interest in the Telfer gold mine and mill in the Great Sandy Desert of Western Australia (23). It replaced Getty at the Mount Rawdon gold prospect in 1981 (25), then withdrew, to be itself replaced by Placer Exploration (26).

In New Zealand, in 1982, Newmont had at least two major exploration prospects, both on the North Island, and one in the Whangepaua State Forest (27). It is now no longer active in Aorearoa.

Together with US Steel, Newmont joined a nickel-cobalt consortium exploring in East Papua in the late '60s (28). In addition, the company owned 40% of the Lake Paniai Exploration Co set up in 1972 (along with ICI and BHP) to explore the Wissel Lakes. The same year it headed the Baliem Valley Exploration Co (also with ICI as a junior partner) exploring the mountain range east of Ertsberg, near the Freeport copper mine (28).

Until 1981 Newmont held 7% of St Joe Minerals - there was speculation the company might step in to thwart Seagram's bid that year (29). Later that year, however, it sold its St Joe shares to Fluor (thus enabling that company to merge with St Joe) and also exchanged more than 3.5 million shares in Conoco for nearly 6 million shares in Du Pont (30). The previous year it had announced agreement to purchase Du Pont's 20% share in Lacana (31), but there is no information on whether that deal was sealed, or comprised part of the 1981 share exchange.

In 1983, Newmont bought (as part of a consortium) 3.235% of Fluor's share in Peabody Coal, thus increasing its own stake to 30.735% (32).

In 1988 Newmont made some major changes in its investments, when it decided to dispose of "non core" assets. It sold its British Columbia copper operations (33), but not its 75% interest in Newmont Australia Ltd (34), nor its highly lucrative gold interest in Carlin, Nevada, which make it the west's third largest gold producer (34). That year it also sold out all its interests in Palabora, O'okiep Copper, Tsumeb, Gamsberg Zinc Corp, and Highveld Steel and Vanadium Corp (35). The previous year, Newmont had itself been "bought into" by Consolidated Goldfields (49%) in order to protect it from an unwelcome bid by the Texas maverick T Boone Pickens (36) who raised his stake - through Mesa Limited Partnership (37) - to nearly 10%, before a Delaware court allowed CGF to raise its own holding in Newmont to nearly 50% (38) - 49.9% being the limit to which CGF could go in raising its stake in the US company (39). In the meantime, speculation had been rife that Newmont might itself bid for CGF, or that Minorco (see Anglo-American) might take over CGF's stake in Newmont, in return for cancelling its own roughly 30% stake in CGF (40).

The following year Newmont announced that, in order to reduce its large debt, it was selling some 4.15 million shares in Du Pont, and would complete the disposal of Foote Mineral Company (41).

The last three years have seen Newmont hitting the jackpot time after time at Carlin Nevada (42) with the result that it has become the largest gold producer outside South Africa and the USSR (43) and the biggest single US gold producer (44).

Through Newmont Australia it has expanded exploration in the Pacific (in Papua New Guinea at Mount Cameron) (45), in rare earths exploration in Western Australia, and in potential phosphates exploitation in Tahiti (where it is in a JV with BRGM, 26%, and Cominco, 24.5%). Here, it has claims - willingly granted by the president of the French Polynesian Legislative Assembly, Alexandre Leontieff - on an atoll called Mataiva, which was being described in late 1990 as a "suitable replacement for Nauru." The reference is to the island devastated by British, Australian and New Zealand interests during most of the current century (46).

In July 1989, Hanson plc succeeded in a L3.5M bid for Consolidated Goldfields (CGF). With CGF came a 49.7% holding in Newmont, and through Newmont, almost a half share in Peabody Coal (47).

Hanson had secured all of Peabody by mid-1990, as a result of buying out the portion which Newmont did not own. This was also partly to secure a cheap, plentiful, supply of coal for Hanson's own purposes - especially for enhanced cash-flow. In the event, the ploy only partly succeeded: no-one wanted Newmont at the price on offer (49) at that time - just two years before, Newmont had been unable to sell 25% of its own majority holding in Newmont Australia (50).

The following year, however, Hanson did an asset-swap with James Goldsmith. Britain's two most notorious corporate raiders exchanged gold-for-forests in a deal of breathtaking audacity, and deceptive simplicity. Hanson secured Goldsmith's 85% stake in Cavenham Forest Industries, with its profitable timber and pulp, mainly in Oregon, Washington State, Mississippi and Louisiana, and not so profitable oil and gas assets, while Goldsmith got 49% of Newmont (51) . (Or rather, Goldsmith got 42% and Lord Rothschild, a partner in Goldsmith's Hoylake company, took the rest) (52). To cap it all, Goldsmith claimed that his surrender of forestry interests signalled his recruitment to the "green" movement (although he had, for some years, been an avid opponent of nuclear power) (53).

Anthony Sampson in The Independent asked at the time "will the supreme predator change his spots?" (54). Apart from passing doubts as to whether Sampson was referring to Hanson or Goldsmith, the latter's unwillingness to surrender his stake in Newmont in the year since, must certainly cast doubts on his "conversion" to the forces of ecology and renewability.

It is true that Newmont's chair, Gordon Parker, in late 1989 delivered himself of the opinion that the mining industry should do its best to "more than meet every federal and state [environmental] standard. We have undertaken reclamation where it is not required" (55). But, even as Parker was making this statement, Newmont was abandoning a road and drill site in the Lost Lake Peatland region of Minnesota, leaving behind a waste dump, six-foot high piles of plant debris, and scarred vegetation. Paul Glaser of the University of Minnesota, in a report on Newmont's impacts, concluded that: "There seems to be little hope for natural regeneration of trees within the impacted areas ... over the next hundred years" (56).

In Australia, Newmont was involved in a conflict with Aboriginal custodians of the Coronation Hill minesite which became the country's most important single lands rights issue by early 1991 (57). The Jawoyn people had, for some years, tried to prevent mining at the Bula Bula Dreaming site. Initially they contended only with BHP. Then, in late 1990, BHP and Newmont Australia merged their gold interests, partly to offset a takeover bid from Robert Champion de Crespigny's Poseidon Gold (58). Meanwhile, Newmont Corp had been reducing its own interest in its Australian offspring from 43% in early 1989 (59) to 14% by the beginning of 1991 (60).

BHP Gold (56% owned by BHP), and Newmont Australia, set up a new company, Newcrest, and it was Newcrest which exerted all its best efforts to open up the Coronation Hill mine. In the end, Aboriginal and environmentalists won the battle, and the mine was stepped by the federal Australian government. Although Newmont had commissioned a study by the Australian Centre for Advanced Risk and Reliability (sic) (ACARRE) (a joint partnership between Sydney University and the Australian Nuclear and Technology Organisation - see AAEC) which concluded that there was only a "slight threat" to the environment from the use of cyanide (61). This was a conclusion largely endorsed by the Northern Territory Power and Water Authority (62). However the government's Resources Assessment Commission strongly advised against the mine going ahead, in view of Aboriginal opposition (63).

Contact: Namibia Support Committee, POB 16, London NW5 2LW U.K.

SOURCE: "The Gulliver File - Mines, people and land: a global battleground" by Roger Moody.

Published in 1992 by Minewatch, 218 Liverpool Road, London Nl ILE, UK, and WISE-Glen Aplin, Po Box 87, Glen Aplin Q 4381, Australia.

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