"The sea water is polluted by neither mercury nor arsenic," Kompas newspaper quoted Environment Minister Nabiel Makarim as saying.

He said however that another government team would study locals' health problems and determine whether they had anything to do with the operations of Newmont Minahasa Raya, a subsidiary of US gold mining giant Newmont Mining Corp.

"What's obvious to the eye is that this isn't Minamata," Makarim said, referring to the symptoms of a number of villagers who believe they have Minamata disease, caused by eating mercury-contaminated fish.

Makarim said he was waiting for the results of blood tests to prove it was not the disease.

Last week, residents of the Minahasa area of North Sulawesi province reported Newmont to police, complaining that the company had polluted Buyat Bay and caused health problems including Minamata disease.

Newmont has denied the pollution accusations and has said it has found no signs of such disease among locals.

The company has ceased mining operations and will end its reclamation work at the site in October.

TERRA.WIRE