BUVAT BAY, Indonesia - Mention Newmont Mining Corp. in this impoverished seaside community and villagers angrily recount how pollution from its gold mine has killed the fish and sickened residents with headaches, nausea and tremors.

But local leaders praise Denver-based Newmont for providing hundreds of jobs and buildings schools and clinics. Complaining villagers, they say, are just looking for a quick payout.

The world's largest gold miner is again at the center of a controversy over the environmental impact of its operations. Newmont stands accused of dumping 5.5 million tons of mercury- and arsenic-laced waste into Buyat Bay from 1996 until the mine ceased operations Aug. 31.

The charges have landed Newmont in legal trouble. Police investigating the alleged pollution in September detained five Newmont executives, including one American, for a month. And villagers have filed a $543 million civil lawsuit against the company.

"We can feel there is something wrong in our bodies," said Jemi Bawole, a 36-year-old villager who is part of the lawsuit. "Newmont has to be held responsible."

Newmont denies the allegations that the waste it dumped was contaminated and pointed to tests by the World Health Organization and the country's Environment Ministry that show water from the bay isn't polluted. But other ministry tests do show that sediment from the bottom of the bay contained high levels of heavy metals, raising concern about the long-term impact to villagers.

The company contends that illegal miners -- thousands of whom operate openly around its mine -- caused the pollution, dumping tons of mercury into nearby rivers. Newmont says it does not use mercury in its processing.

Newmont's troubles in Indonesia are the latest in a string of accusations growing out of the company's operations on five continents.

Opponents in Peru have sued Newmont over a mercury spill near its Yanacocha mine that allegedly sickened 1,100. The company says it has spent $16 million to clean up the site and is in talks to settle the lawsuit.

In Turkey, the company's Ovacik mine was shut down in August over concerns about the use of cyanide to processing the ore. Newmont is also battling environmentalists in Nevada who say its proposed Phoenix mine expansion will cause groundwater contamination -- something the company denies.

In Indonesia, civic groups filed dozens of lawsuits unsuccessfully accusing Newmont of stealing land from villagers to build a $180 million compound overlooking the bay that includes an open pit mine, a processing plant and a housing complex for 700 employees.

Environmentalists then turned their attention to the waste the company dumped into the bay, claiming it sickened 80 percent of the 300 villagers in the coastal community of Buyat Pantai. One of the poorest village in the isolated region, it has a single dirt road running through it and no electricity or running water.

"Before Newmont came, we only got colds and malaria," said Nurbaya Patenda, 27. "Now, we suffer weird diseases. Even the doctors are confused."

The accusations have divided residents. Villagers were accused of faking illness and the only clinic in the area said their symptoms were due to poor hygiene and diet. Local officials also supported the company.

"Activists from outside have come into our community and provoked people into challenging Newmont to get money," said Frans Rolos, who oversees the district including the mine, on the island of Sulawesi about 1,304 miles northeast of Indonesia's capital, Jakarta.

"They've tricked these people into believing that Newmont has polluted the water," he said. "Now people won't buy our fish because they think they are poisoned."

But critics have counter-attacked, accusing Newmont supporters of currying favor with the company to receive money from its $2.7 million community development program or to get assets -- including bungalows overlooking the bay -- it plans to leave behind now that mining in the area has ceased.

The controversy increased this summer after a local doctor alleged that the villagers were suffering from Minamata disease, first identified in the 1950s when more than 1,400 people died after eating mercury-tainted fish caught in Japan's Minamata Bay. Local media ran pictures of crying villagers with tennis ball-sized lumps on their necks and rumors -- widely reported but proven untrue by WHO test results -- that 30 villagers had died from the disease.

Police then called the Newmont executives in for questioning and locked them up. The five men were kept in rat-infested cells, slept on concrete slabs and were forced to share a cell block with terror suspects in the Sept. 9 bombing of the Australian Embassy.

"I can't tell you how bizarre this is," said Newmont vice president Tom Enos. "We're being accused of causing Minamata disease, of heavy metal poisoning. All the time, we knew there was no pollution."

But the mixed test results will likely intensify the debate over whether Newmont polluted the bay and raise further questions about the process of dumping waste in the ocean.

Known as submarine tailings disposal, the method used by Newmont is not allowed in the United States or Canada because it would violate clean water standards. It has also divided the mining industry with the world's largest mining group, BHP Billiton Ltd., saying earlier this year it would not use the method because "the circumstances in which the technology could be considered acceptable are rare."

Newmont says the method is safe and defends using it at the company's two mines in Indonesia because they are prone to earthquakes which would make land-based disposal dangerous.

But P. Raja Siregar of Friends of the Earth Indonesia, countered that "dumping tons of mine waste into the ocean, such is done by Newmont, is irresponsible, outdated, and unsustainable."

The controversy could spill over to Newmont's other larger, gold mine on the island of Sumbawa, where villagers earlier held demonstrations over demands for jobs and compensation for lost land.

The Sumbawa mine is expected to dispose of about a half billion tons of tailings in the ocean over the next decade and environmentalists have accused it of pollution. But Newmont said the to government investigated the complaints 18 months ago and dismissed them.

While earlier WHO and environment ministry results showed that levels of heavy metals in the water, fish and Buyat Bay villagers' bodies are within safe standards, other ministry findings showed arsenic in the sediment near Newmont's waste site was 100 times higher than in other parts of the bay, which is about two-thirds of a mile across. Mercury in seabed organisms like worms was 10 times higher at the waste site than in other parts of the bay, the study found.

Newmont says the results show the mine waste has not reached the food chain.

But police -- who say their own results show the bay is polluted -- have refused to drop their investigation into Newmont and banned the five executives from leaving the country. Environmentalist have seized on the sediment results to call the prosecution of Newmont executives for pollution and the government to move the villagers. They have also demanded the government ban the disposal of mine waste at sea.

Source: Associated Press