Hong Kong Exchange must ensure Zijin Mining "comes clean"Published by MAC on 2011-03-08
Source: Statement (2011-03-03)
Groups issue challenge over Rio Blanco mine, Peru
Numerous indictments have been made against the Rio Blanco mine in Peru since it was acquired by British company, Monterrico Metals ,in 2003. See: Peru: Appalling abuses, charged against British company, go to court
Since the company was taken over four years later by China's huge Zijin Mining conglomerate, Monterrico's share ownership has been concentrated on the Hong Kong stock exchange - although the company remains listed in London.
And criticisms of the mine's adverse social and environment impacts have not gone away- far from it.
In theory the Hong Kong stock exchange has state-of-the-art disclosure standards for mining companies which put those of the London Stock Exchange to shame.
The Hong Kong rules require an assessment of the potential impacts of listed companies' activities on the environment and on the rights of Indigenous Peoples.
Now, Friends of the Earth (US), along with several other organisations, is appealing to the Homg Kong stock exchange to ensure that Zijin reveals these "risks".
You can find a video relating to the Rio Blanco mine at: http://www.vimeo.com/19680941
Groups Call on Hong Kong Exchange to Ensure Zijin Mining Comes Clean about Overseas Investment Risks
Groups point to Rio Blanco Mine project in Peru as area of particular concern
Friends of the Earth Press Release
3 March 2011
Several civil society groups today petitioned the Hong Kong Stock Exchange to ensure that Zijin Mining Group (listed as 2899:HK) fully discloses material risks associated with one of its most controversial overseas projects, the Rio Blanco Mine in Peru.
The groups include Friends of the Earth, Peruvian rights organizations CooperAccion and Fundación Ecuménica para el Desarrollo y la Paz (Fedepaz), and Belgian solidarity organization CATAPA.
"Because of the Rio Blanco Mine project, people have lost their lives, and the fragile ecosystem and waterways of the Piura region are being threatened by pollution," said Javier Jahncke of Fedepaz.
"This has not only affected the health and lives of the people, but also economic activities such as eco-tourism, agro-industry and organic farming, which are the main sources of sustainable development in the region. The danger of losing their international organic farming certification is among the gravest risks looming over Piura communities."
The letter raised concerns that Zijin investors are in the dark about the risks posed by the Rio Blanco Mine project, including the company's failure to obtain community authorization before beginning mining activities, as required by Peruvian law, lack of compliance with Peruvian environmental regulations, and torture and killing of local people. Despite these controversies, Chinese media reported in 2010 that Zijin hoped to secure financing to expand the Rio Blanco Mine over the next couple of years.1
"Zijin's mismanagement of social and environmental issues at the Rio Blanco mine may be indicative of a broader governance problem at the company," said Adina Matisoff of Friends of the Earth U.S. Last year, the company's own Supervisory Committee found that the company may have overstated the value of some of its assets because of "problems [arising] from the social and environmental protection in local society, higher political, economic and cultural risk for overseas investments."
However, Zijin's 2009 annual report disclosed neither these risks nor how the company was addressing them.
"The Hong Kong Stock Exchange has issued state-of-the-art disclosure standards for mining companies," Matisoff added, "but standards to protect investors and the public interest are useless if the Exchange does not properly enforce them."
Chinese environmental groups have already urged the Hong Kong Stock Exchange to ensure that Zijin properly reports on the financial implications of its July 2010 Zijinshan spill in Fujian, one of China's worst mining accidents harming the environment in recent history. Since the incident, the company has halted trading on the Exchange numerous times in advance of announcements about fines and penalties associated with the event.
"Increased disclosure gives investors greater confidence and helps with the risk management and transparency of their portfolios," said David St. Maur Sheil, Executive Director of the Association for Sustainable and Responsible Investment in Asia (ASrIA).
"Asria has seen a steady increase in the quantity and quality of environmental, social and governance disclosure by Asian companies in recent years and it is clear that institutional investors increasingly take account of corporate disclosure and engagement standards when making portfolio decisions."
A copy of the letter to the Hong Kong Stock Exchange is available here: http://www.foe.org/sites/default/files/Letter%20to%20HKSE%20re_Zijin.pdf
CooperAcción is a civil, non-profit organization dedicated to promoting development in coastal areas and exploitation of mineral and energy resources in Peru. It aims to contribute to striking the right social and environmental balance between the use of natural resources and sustainable development.
FEDEPAZ is a partnership, nonprofit organisation that promotes an ecumenical perspective, respect for fundamental values in the Peruvian society. In particular, those relating to life, liberty, justice, equity and sustainable human development.
Friends of the Earth U.S. is a member the world's largest federation of environmental organizations, Friends of the Earth International, with groups in 76 countries. For more than 15 years, Friends of the Earth U.S. has promoted sustainability in the financial sector in the U.S. and around the world, including proper disclosure of environmental issues to investors.
CATAPA (Comité Académico Técnico de Asesoramiento a Problemas Ambientales) is an emerging volunteer movement in Belgium active in the fields of globalization (and how to change it) and sustainable development in Latin America. They focus on the mining industry by supporting farming communities endangered by multinational mining corporations.
ASrIA (Association for Sustainable and Responsible Investment in Asia) is a not for profit, membership association dedicated to promoting corporate responsibility and sustainable investment practice in the Asia Pacific region. For the past ten years, ASrIA has encouraged increased disclosure on environmental, social and governance issues in investment. ASrIA's members include investment institutions managing over US$4 trillion in assets; however membership is open to any organization which has an interest in sustainable investment.
1. Capital Week, July 6, 2010, available at http://www.capitalweek.com.cn/article_4253.html