MAC: Mines and Communities

Newmont Mining accused of multiple failures by shareholders

Published by MAC on 2012-05-01
Source: Statement (2012-04-24)

Critical shareholders took the world's second biggest dedicated gold producer to task at its annual general meeting last week.

They claimed the company had not implemented various promises to be "socially responsible".

Moreover, its failure to obtain the free, prior and informed consent of affected communities in Peru and elsewhere, had "turned into a reputational and financial liability for the company".

For previous MAC posting on Conga project: Peru's Highest Court Sides With Central Government In Conga Case

For latest posting on Newmont's activities in Indonesia: Indonesian groups condemn court ruling over Newmont's waste disposal

For RepRisk's evaluation of Newmont's liabilities: Which are the world's "most controversial" mining companies?

ENGLISH

Shareholders, NGOs, raise questions about Newmont Mining's social and environmental risks at company's Annual General Meeting

Earthworks Press Release

24 April 2012

Wilmington, DE: Shareholders and NGOs at the Newmont Mining annual meeting in Wilmington, DE today questioned company senior management and the Board of Directors about the operational and reputational risks Newmont faces in Peru, and emphasized the need for the Free, Prior and Informed Consent (FPIC) of local communities where Newmont operates.

In addition, the group strongly encouraged additional disclosure by the company on its environmental and social guidelines and practices, including Board oversight of these issues.

In 2007, in response to a shareholder proposal filed by members of The Interfaith Center on Corporate Responsibility (ICCR), Newmont agreed to conduct a global review of its policies and practices related to community opposition in its mining operations.

At this year's annual shareholder meeting, the lead proponent of that proposal, Julie Tanner, Assistant Director of Socially Responsible Investing at Christian Brothers Investment Services (CBIS), expressed frustration over Newmont's lack of disclosure on the implementation its Community Relations Review (CRR).

"The issue of accountability to stakeholders is critical and one which drove shareholders to request the evaluation of community relationships, including aspects of potential conflict and opposition. We ask the Newmont Board to publicly disclose to stakeholders, including shareholders, how it is overseeing implementation of the CRR, and the goals, benchmarks and indicators used to assess progress," said Tanner.

In May 2009, the "Community Relationships Summary Report" was released that included an extensive review of recommendations to improve Newmont's policies and practices relating to its relationships with local communities. According to the company's website, the findings revealed that Newmont "must improve its relationships with local communities; build its capacity to resolve conflict and address grievances; and develop global policies, standards and programs that better guide its behaviors."

"Three years ago, shareholders commended Newmont for its commitment to address the root causes of community conflict through review of its policies and practices regarding relationships in the communities in which it operates," said Cathy Rowan, Corporate Responsibility Coordinator for the Maryknoll Sisters.

"Until now, we do not know if implementation of the CRR has made any difference. Is the company able to demonstrate that community opposition has been reduced? In fact, given the situation the company faces today with the Conga Mine in Peru, we wonder if community conflicts are 'the new normal' for Newmont, and are concerned about Newmont's ability to maintain a social license in Peru, and other countries where it has operations' currently or in the future."

The shareholders addressed Newmont's Board regarding how the company intends to ensure the long-term viability of its operations in Peru. At Newmont's proposed Minas Conga mine in the northern Cajamarca region of Peru, community groups have voiced opposition to the project due to the quantity of water used and the potential for water pollution in the fragile watershed area.

Construction has been halted since November 2011 after protests culminated in a shooting incident by the Peruvian National Police. A state of emergency was declared by the National Government in four districts within the Cajamarca Department on December 5th 2011 and was lifted on December 15th.

Nick Magel of the environmental group Earthworks, representing the Missionary Oblates of Mary Immaculate, said: " Newmont has an opportunity to demonstrate real social and environmental leadership by adopting a free, prior and informed consent (FPIC) process that is implemented through independent and credible means. Newmont's failure to obtain the free, prior and informed consent of affected communities in Peru and elsewhere has turned into a reputational and financial liability for the company."

By Newmont's own estimates at the time the project was suspended in November 2011, project delays cost the company $2 million per day, which the company has attempted to reduce.

This is not the first time that issues regarding community consent and water use and quality have surfaced at Newmont's gold mining operations in Peru.

In 2004, Newmont suspended plans to develop a gold mine at Cerro Quilish following weeks of protests and opposition by local communities. At the time, Newmont issued a statement in Peruvian newspapers stating, "We wish to express our willingness to always listen to the feelings of the people of Cajamarca, acknowledge our mistakes and promote positive change in our behavior to reconstruct our relationship with the population."

Last month, the investor research firm ECPI  conferred an "F" grade to Newmont, as it has every year since 2007, due to serious social and governance concerns, writing:

"In the last decade, community protests occurred in the Newmont Mining sites in Indonesia, Ghana and Peru because of severe environmental pollution caused by the mine tailings and waste disposal contaminating community water sources, as well as poor health and safety labor conditions. These severe impacts have prompted communities' demonstrations and complaints against land grabbing and poor compensation for the damages caused by the mine operations."

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Earthworks is a nonprofit organization dedicated to protecting communities and the environment from the impacts of irresponsible mineral and energy development while seeking sustainable solutions.

Contacts:
Julie Tanner, Christian Bros Investment Srvcs, 917-723-7702
Cathy Rowan, Maryknoll Sisters, 718-822-0820
Nick Magel, Earthworks, 419-283-2728
Payal Sampat, Earthworks, 202-247-1180

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