The minister, Rachmat Witoelar, said the government was close to an out-of-court settlement with Newmont Minahasa Raya, the Denver-based company's Indonesian subsidiary, following negotiations.

"We will not appeal the ruling because we are looking for an out-of-court settlement. The negotiation is almost complete," Witoelar told AFP.

He said pursuing the process in the courts would be time-consuming.

Witoelar filed a 1.24 trillion rupiah (124 million dollar) suit eight months after residents near Newmont's now-closed gold mine in North Sulawesi province complained that the company's waste had caused health problems in residents.

He did not say what terms the government was seeking in the negotiations.

A Jakarta court last month rejected the lawsuit and ruled the case should be settled by arbitration.

The government's decision not to appeal is likely to anger environmentalists, who said the court "ignored incriminating evidence" of pollution allegedly carried out by Newmont.

Witoelar refused to comment on a report carried by The Jakarta Post on Friday, citing an anonymous source saying that Newmont would likely agree to spend 30 million dollars on a community development program to help villagers.

Prosecutors accused Newmont of illegally and intentionally causing pollution and are alleging in a separate case that its President Richard Ness did nothing to stop it. Ness could face up to 10 years in jail if convicted.

Newmont has consistently denied the charges.

A World Health Organisation-backed report found no evidence of pollution but Indonesian government tests showed high levels of toxins in the area.

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