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RR RUEHAST RUEHDH RUEHHM RUEHLN RUEHMA RUEHPA RUEHPB RUEHPOD RUEHSL
RUEHTRO
DE RUEHAR #0084/01 0281624
ZNR UUUUU ZZH
R 281624Z JAN 10
FM AMEMBASSY ACCRA
TO RUEHC/SECSTATE WASHDC 8840
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHZK/ECOWAS COLLECTIVE
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE

UNCLAS SECTION 01 OF 03 ACCRA 000084 
 
DEPARTMENT FOR AF/W AND OES/PCI 
COMMERCE FOR ANESA/CHRISTIAN REED AND MAC/HOLLY VINEYARD 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: SENV EMIN EIND EINV ECON GH
SUBJECT: NEWMONT TO PAY DEARLY FOR CHEMICAL SPILL 
 
THIS CABLE IS SENSITIVE BUT UNCLASSIFIED.  PLEASE PROTECT 
ACCORDINGLY.  NOT FOR INTERNET DISTRIBUTION. 
 
¶1. (SBU) SUMMARY: U.S. corporation Newmont Mining's Ghanaian 
subsidiary has agreed to pay $5 million in compensation to the 
Government of Ghana (GOG) for a chemical spill that occurred in 
October 2009 at the company's Ahafo gold mine.  The GOG commission 
that investigated the incident determined the amount of the payment 
and concluded that Newmont behaved negligently and initially 
attempted to "cover-up" the spill, because of a two-day delay in 
notifying Ghanaian authorities of the incident.  The huge 
compensation payment for an environmental accident is unprecedented 
by Ghanaian standards and sends a strong deterrent message that the 
GOG expects high safety standards and strong environmental 
compliance from extractive industry participants.  While disputing 
that there was an attempt to conceal the incident from regulators or 
the local community, Newmont executives told us the company does not 
intend to appeal the hefty payment proposed by the commission.  The 
company wants to maintain good relations with the GOG and not 
jeopardize its greater than $500 million investment in Ghana, 
especially with several key permits and licenses currently subject 
to government approval.  END SUMMARY. 
 
-------------------------------------------- 
Mishandled Chemical Spill at Ahafo Gold Mine 
-------------------------------------------- 
 
¶2. (SBU) On October 8, 2009, gold ore processing solution containing 
sodium cyanide spilled out of a processing pond in Newmont's Ahafo 
gold mine.  Initially, Newmont managers at the mine believed that 
the chemical solution had not escaped from Newmont's property, but 
over the next two days, it became clear that the solution had 
migrated from Newmont's site to neighboring properties, probably 
because of heavy rains in the area at that time.  The solution 
entered nearby bodies of water used by about 30 rural Ghanaian 
residents for fishing and for washing laundry.  Several hundred fish 
in these ponds were killed, although it is not clear whether the 
fish died from the cyanide solution or from a bleaching agent that 
Newmont applied to neutralize the original solution (both bleach and 
cyanide are toxic to fish). 
 
¶3. (SBU) In discussions of the incident with GOG officials and with 
Embassy Officers, Newmont's senior executives in Ghana acknowledge 
that the mining managers made a number of blunders in handling and 
responding to the incident.  These missteps included: 
 
-- Using an overflow "event pond" to store cyanide solution while 
the mine was temporarily shut down for three days.  This was an 
inherently unsafe practice that is inconsistent with both Newmont's 
own internal controls and with standard international mining 
practices.  Compounding this error, there was no mineworker assigned 
to monitor the water level in the event pond, and an electronic 
water level sensor malfunctioned and failed to send out an alarm 
signal when the pond overflowed. 
 
-- Mine managers failed to immediately notify Newmont's management 
in Accra, the local community, and the Ghanaian mining and 
environmental regulators of the incident.  Newmont's management in 
Accra only learned of the incident 24 hours later on October 9, and 
no one notified the local community or GOG authorities until nearly 
48 hours later on October 10. 
 
-- The company failed to properly trace and contain the spill after 
it escaped from the event pond.  Mine workers successfully blocked 
one drainage area around the event pool, but failed to block off a 
second catchment area from which the solution ultimately appears to 
have made its way off of Newmont's property and into neighboring 
lands and bodies of water. 
 
¶4. (U) Once Newmont learned about fish being killed in neighboring 
ponds, the company immediately began supplying those households with 
potable water, and has continued to do so ever since, because of the 
local community's lingering concerns about the safety of the water 
supply around the mine.  The company also issued press releases 
apologizing for the incident, assured the public that it would be 
supplying fresh water to affected communities and not jeopardize 
their safety, and that it would cooperate fully with Ghanaian 
authorities in investigating the incident.  Subsequent testing by 
Newmont and GOG authorities has not revealed any trace elements of 
cyanide or bleach that would pose a danger to either humans or 
wildlife in the area. 
 
----------------------------- 
Investigation of the Incident 
----------------------------- 
 
¶5. (SBU) A GOG commission tasked with investigating the incident 
 
ACCRA 00000084  002 OF 003 
 
 
concluded that Newmont behaved negligently in responding to the 
spill.  In addition, given the two-day delay in notifying 
authorities about the incident, the commission concluded that the 
company initially attempted to "cover up" the fact that a spill had 
occurred.  The commission concluded that Newmont should pay 7 
million cedis (equivalent to about $5 million) in compensation for 
the incident, with 45 percent of the proceeds to be used for the 
benefit of local communities living around the mine, 40 percent for 
the Ghana Environmental Protection Agency (EPA), and 15 percent to 
be shared by inspection divisions of the Ghana Minerals Commission 
and the EPA. 
 
¶6. (SBU) The acting director of the EPA's Mining Section shared his 
views of the incident in a meeting with embassy officers on January 
¶21.  He stated that Newmont should have notified the EPA immediately 
of the incident, instead of nearly two days after the spill had 
occurred, which would have allowed company and regulatory officials 
to conduct joint monitoring of the spill.  Prior to this incident, 
he noted that Newmont had always notified the EPA of significant 
environmental accidents the same day that they occurred.  Thus, it 
was difficult to comprehend why the company had behaved "so 
unprofessionally" and delayed notifying the regulator in this case. 
He also noted that the company had poor internal safety controls in 
place at the mine at the time of the incident, and had not 
effectively disseminated information about the spill within the 
company itself, or communicated with the local community about the 
potential danger. 
 
¶7. (SBU) The EPA official noted that Ghana does not currently have a 
regulatory framework governing the scale of fines and compensation 
in the event of environmental accidents at mines, and the commission 
had recommended that the government establish a detailed regulatory 
framework to cover future accidents.  He stated that EPA, mining and 
environmental officials would be working in the coming months to 
establish specific fines and compensation in consultation with 
industry participants and other stakeholders, before submitting a 
proposal to the government and legislature. 
 
¶8. (SBU) The lack of specific regulations meant that the Commission 
was free to take any reasonable action in determining remedial 
action and compensation for the spill.  He explained that it had 
been difficult to assign any precise monetary figures regarding the 
amount of environmental damage, the extent of the spill, and the 
potential loss of biodiversity in the region, largely because of 
Newmont's delay in notifying the regulator of the incident.  He was 
at pains to stress that the $5 million award was not a "fine," but 
rather "compensation" for the incident, considering all of the 
government manpower and resources that had been deployed to respond 
to the incident and conduct a lengthy investigation. 
¶9. (SBU) In his public comments on the incident, Deputy Minister of 
Environment, Science and Technology Edward Omane Boamah, who served 
as chairman of the investigatory commission, said that the proceeds 
of the compensation award against Newmont would be used to improve 
infrastructure in local communities around the Ahafo mine, and to 
strengthen the capacity and expertise of the institutions charged 
with regulating the mining industry.  (NOTE: Newmont Ghana 
executives told us that many senior officials in the Ministry of 
Environment, Science and Technology feel that the EPA has 
historically been "soft" on the mining industry.  In Newmont's view, 
the hefty compensation award may reflect a new desire within the GOG 
to implement a tougher environmental enforcement policy at the EPA. 
Newmont representatives also told us that the Deputy Minister has 
close ties to WACAM, a Western Ghanaian association of communities 
affected by mining that has been a vocal opponent of many 
international gold mining operations in Ghana.  END NOTE) 
 
------------------------------ 
Newmont's View of the Incident 
------------------------------ 
 
¶10. (SBU) Newmont's Ghana executives do not dispute that there was 
negligence in this instance, or that the mine operators bungled the 
response to the chemical spill.  They do, however, object to the 
commission's finding that the company appeared to have engaged in a 
"cover-up."  Instead, they argue that the delay in notifying the 
local community and regulators resulted from a mistaken but honest 
initial belief that the spillage had not escaped from Newmont's 
property. 
 
¶11. (SBU) In its discussions with GOG regulators, Newmont had 
proposed paying compensation in the amount of $1 million.  They 
thought that the much higher $5 million compensation award that the 
GOG commission determined was meant to serve as a deterrent for 
Newmont and other mining companies.  (NOTE:  Regulators do not 
disagree with this assessment, and the head of the EPA's Mining 
Section also told us that the size of the fine would have a 
deterrent effect on industry participants and lead to safer mining 
 
ACCRA 00000084  003 OF 003 
 
 
practices from both Newmont and other gold producers.  END NOTE.) 
Newmont executives also noted that the hefty fine would help shore 
up the government's budget deficit. 
 
¶12. (SBU) Newmont executives told us that the company would not be 
appealing the $5 million penalty determined by the commission, even 
though it was five times higher than the compensation package that 
the company had proposed.  Senior managers explained that the 
company wants to maintain good relations with the GOG and not 
jeopardize its greater than $500 million investment in Ghana, 
especially with several key permits and licenses currently subject 
to government approval.  They also stated that that they are more 
concerned about the damage to the company's reputation in Ghana from 
the way the incident was handled -- and the allegations of a 
"cover-up" -- than they are about the hefty fine. 
 
¶13. (SBU) Based on discussions with GOG regulators and the 
commission findings, Newmont is taking several corrective actions to 
prevent a similar accident from occurring in the future at its Ghana 
mines, including improving the safety controls at event pools and 
flood control dams, improving and speeding up communications to 
relevant stakeholders after environmental incidents (including both 
regulators and local communities), and implementing enhanced safety 
procedures and protocols at mine sites. 
 
------- 
COMMENT 
------- 
 
¶14. (SBU) Despite the initially bungled response to the chemical 
spill, it is clear that Newmont is now taking prompt action to 
improve the safety of its operations in Ghana and restore its 
damaged reputation.  Moreover, the company is clearly concerned 
about good corporate citizenship in its local operations, and 
Newmont Ghana's chief management officer in Ghana sits on the AmCham 
Board.  We believe that the hefty monetary penalty levied in this 
case will not only serve to chastise Newmont, but also send a strong 
message to other extractive industry participants that the GOG is 
getting tough on environmental issues.  That said, the size of the 
fine in this case also raises the possibility that the GOG may begin 
looking for other opportunities to extract the maximum amount of 
revenue from well-heeled foreign firms when they violate domestic 
regulations.  It is also far from clear that the GOG will be as 
tough on domestic firms on environmental and safety issues -- for 
instance, the Tema Oil Refinery's recent deadly fire (to be reported 
septel) -- as it will be on the wealthy foreign companies doing 
business in Ghana. 
 
TEITELBAUM