MAC: Mines and Communities

Mongolian herders complain against Rio Tinto over Oyu Tolgoi mines

Published by MAC on 2012-10-23
Source: Statement, UB Post,

For earlier coverage on MAC: World Bank poised to back Rio Tinto's flawed Mongolian mining project

(For a response by Rio Tinto to this statement, please see below).

Complaint Filed Against Destructive Oyu Tolgoi Mine, Being Considered for World Bank Support

Joint press release *

12 October 2012

Tokyo, Japan -- Today, a group of Mongolian herder households filed a complaint demanding just compensation for the impacts of Rio Tinto's Oyu Tolgoi copper and gold mine and its associated facilities ("OT Project"), located in the South Gobi desert.

Despite the OT Project's numerous problems, the World Bank's International Finance Corporation ("IFC") and Multilateral Insurance Guarantee Agency ("MIGA") are considering a financing package of US$900 million in loans and up to US$1 billion in political risk insurance.

The herders' representative Sukhgerel Dugersuren, Executive Director of the Mongolian organization OT Watch, personally delivered the herders' complaint to Meg Taylor, the Vice President of the IFC and MIGA's accountability mechanism, the Compliance Advisor/Ombudsman ("CAO"), at the World Bank's Annual Meetings in Tokyo.

Mongolia's nomadic herders, who have practiced their traditional lifestyle in the South Gobi desert for centuries, are finding their way of life threatened by the OT Project. Herders forced to resettle because of the Project have experienced devastating herd loss.

"The herders were forced to move to inferior locations without adequate time to select spots that would protect their animals from harsh winter storms," explains Sukhgerel. "The minimal assistance provided at the time of resettlement was not sufficient. Since being relocated, at least one household lost all of its animals, and several others had to purchase additional livestock to continue herding."

Herders identify themselves as indigenous to the area, with historical claim to traditional pasture rights and other protections; however, neither Rio Tinto nor the World Bank has recognized them as such.

"The herders were denied the right to free, prior and informed consent regarding the OT Project, a right guaranteed under the IFC's policies on indigenous people," states Jelson Garcia of the Bank Information Center.

"Although true free, prior and informed consent is no longer possible, considering that construction is nearly complete, the World Bank must recognize the herders' rights and should not consider supporting the OT Project until herders are justly compensated for all of their livelihood and cultural losses."

Herders are currently being coerced into accepting low levels of compensation based on their location in proximity to the OT Project, rather than the size of pasture taken away from them. According to Sukhgerel, "Rio Tinto is manipulating herders into signing biased and unfair compensation contracts, telling them that they are the only ones left yet to sign, that they will be left with nothing if they do not accept the terms as is, or even just pressuring them to sign without reading or understanding the contract."

The herders filing the complaint are concerned that the compensation being offered does not take into account the fact that safe and undisturbed access to sufficient water and high quality pasture is essential to maintaining their herding businesses, as well as their traditional culture and way of life.

"We do not need gold or money, but water and land to live," declares L. Battsengel, Director of the herder organization Gobi Soil, which herders formed to fight against the destruction of their way of life by large-scale mining projects and related infrastructure development.

"After many unsuccessful attempts to negotiate directly with Rio Tinto to secure just compensation for all livelihood and cultural losses, the herders have turned to the CAO for assistance," explains Sarah Singh of Accountability Counsel. "The herders hope that the CAO process will lead to a fair compensation contract, as well as long-term solutions for herders who are no longer able to continue their traditional lifestyle."

* For more information, please contact:
Sukhgerel Dugersuren, Executive Director, OT Watch, +976 99 185 828
Jelson Garcia, Bank Information Center, +1 202 624 0622
Sarah McNeal, Bank Information Center, +1 202 624 0622
Richard Harkinson, London Mining Network, +44 7563 238179
Vladlena Martsynkevych, CEE Bankwatch Network, +380 44 353 78 42
Regine Richter, Urgewald, +49 3028482270
Sarah Singh, Accountability Counsel, +1 415 296 6761

Is Rio Tinto managing herders in "Oyu Tolgoi City" in the South Gobi region of Mongolia?

London Mining Network

14 October 2012

Rio Tinto bought in to the Oyu Tolgoi [or Turquoise Hill] copper-gold and coal project at the time when the first herders were moved out of their traditional pastures, with only money compensation offered, with the result that 50% of those evicted effectively had their traditional livelihoods ended.

The company are negotiating large-scale loan finance from a clutch of banks including the World Bank's IFC, the EBRD and Standard Chartered for an opencast and underground block-cave mine.

After signing an Investment Agreement in 2009 with the Mongolian government, they have finally released the project's Environmental and Social impacts Assessment [ESIA].

With Rio Tinto wanting to begin mining as early as 2013 or when they expect the loan finance to be released, the ESIA is retrospective on mine "construction" - stated to be 97% complete - and deficient on detail on the operational "life" of the mine, with nothing on its closure phase or "legacy".

Herders and local NGOs working with them in the South Gobi fear for immediate loss of seasonal pasture ranges, in a huge area which envelops land taken for surface mining and the ore processing plant and two massive mining toxic waste or "tailings" confinement "facilities" or dams, and other features not included and transparently assessed in the loan negotiation documents: a 450MW coal-burning power plant, an international airport, a water desalination plant, and other components still in negotiation.

In a wider area than in the immediate land-take, herders fear for the loss of their well - and seasonal stream flow - waters, which Rio Tinto have suggested could be over a 160 km2 area but which independent reviewers have said would likely be far larger.

So herders want to know - what is the basis of the company's figures for displacement of their households? Rio Tinto/Oyu Tolgoi are holding a public consultation in Mongolia on their ESIA. Will Rio Tinto commit to making public on their website, the herders' "comments" about the project's impacts?


Project's background:

Rio Tinto profile:

Link to the ESIA:

ESIA criticisms, see press release:
The herders' World Bank CAO complaint:

On EBRD involvement:

Mining and Human Rights in Mongolia: Gobi Herders speak out

By Michelle Tolson

The UB Post

12 October 2012

"No power is vested to the local authorities to protect the local government." These words were spoken by Mr. Chandmani Dagva, the Governor of the Dundgovi at the "Mining and Human Rights in Mongolia" conference this week at the Blue Sky Tower in Ulaanbaatar, which ran from October 10-12.

At the height of the mining license boom, the Dundgovi province had 373 licenses which covered 50 percent of the aimag, according to Mr. Chandmani Dagva.

He worked to reduce the mining licenses and has been somewhat successful, as now the licenses for the area are now down to 259. "From 2007-2012, on 48 areas the local government was against issuing [licenses], but those licenses were issued without involving the local government."

For all his lack of authority over his aimag, he spoke with a powerful sadness. The room -filled with herders, NGO representatives, government officials and parliament members -was quiet and attentive. The governor said license issues are centralized and registered at the capital, not locally. He also noted that there is a problem smuggling licenses from one company to another. "Also, the company changes names but not owners" as a way around the licensing issue. "The power of the local authority needs to increase."

The governor also said that the road issue needs to be addressed. Five-hundred trucks use the roads on a daily basis in the Dundgovi. "We surveyed 1800 families who lived along the road. They moved to other places. We sent a letter to the National Human Rights Commission of Mongolia [about this issue]." The families moved due to ever-present dust and water shortage issues. Pictures displayed by power point showed a haze of dust so thick that you could only see a few feet ahead. "Listening to local voices is very important. From our side, we are ready for cooperation with others."

A representative from the Special Inspection Agency said his agency has inspected the mining sector eight times, but the "methods of accountability are very weak at this moment."

Mr. Ganbold Duvehigdemba, a civil society representative, was also on the panel and spoke with passion and anger about what he observed in the Omnogovi aimag, directly south of the Dundgovi.

He said that ecological security should be incorporated into national security issues. He explained that the rapid pace of development has outrun the laws and government standards which are needed to balance development for the country with the needs of the local people. Mr Ganbold underscored that people who live along the roads live hard lives, explaining that he spent 20 days with them. "They lost their spring which they used for water and have to transport water from far away."

The dust is an issue. Ganbold said "young people do not want to go back home [to Khan Bogd] due to skin irritations" from pollution and the dust.

Then his commentary got feisty. He said he "accuses the local authorities of taking money and hiding companies so they can continue to mine illegally and get money from them." He claimed that even government inspectors have no access to the Oyu Tolgoi site. He concluded that Oyu Tolgoi has not been implementing the laws. "The company has more power than the government."

Though Ganbold did not seem moved by the governor of the Dundgovi's discussion on the problems of regulating mines locally, others were.

A woman came up to the microphone and expressed appreciation for the limitations that Chandmani Dagva faced. "I did not understand this [the lack of local authority] before. I am ready to work with you." And she suggested that he take his documentation to the courts, to prosecute mining companies that are not complying with the laws.

Next, a herder dressed in a deel came to the microphone. "There are five mines in my soum. With too many mines, there will be no livelihood in my soum. There will be no camels in my soum. I represent 4,000 people. If that fifth mine opens, there will be no more livelihoods in my soum."

His words were few but the room listened in rapt attention to his humble comment and applauded his suggestion that the lives of the locals was not seen as important to a government which was more interested in developing the country, than balancing the needs of the local people.

Many other local representatives, mostly in the Gobi region, came to the microphone to list their grievances which were noted for further discussion on ways to implement changes in rapidly developing area. The first day of the conference was a brainstorming session on the problems residents face.

S. Oyun, the Minster of Environment and Green Development, had opened the session but her commentary framed the issues raised. She stated that the development of the country after the fall of communism had been geared toward survival, not sustainability.

When the issue of mineral wealth was addressed, it was done quickly and without regard to the environment. This is changing, she noted, but the perspective that environmental sustainability and development should benefit the needs of all is behind on the development scale and is not yet incorporated into the legal structure.

She told the room: "Until 2012, the ministry has revisited the laws and tried to reform the laws. Two new laws were adopted and set up with government support to reform the sector. [The ministry] has done their homework but more is needed-80 new procedures need to be adopted."

The UB Post asked Ms. Oyun about the government's feasibility study to divert rivers to be used for mining in the Gobi, according to a press release issued by Bank Information Center ("Oyu Tolgoi Copper/Silver/Gold Mine Project" on and documented by USAID and World Bank.

Minister Oyun requested further time to study the issue before issuing an official comment. Oyu Tolgoi denies any connection to the government's research into diverting river water to use for mining, preferring to tap into a saline aquifer not connected to the local aquifer or the local shallow wells. Yet doubt remains as to the water needs of the mine's workers.

Civil society representative Ganbolt had expressed worry that Oyu Tolgoi cannot meet the water needs of its workers, especially in light of the mine's proximity to Tavan Tolgoi. Herders only use a few liters a day, while Oyu Tolgoi will need 3000 liters per second. Minister Oyun promised to look further into the water issue in the Gobi.

The conference illustrated a lack of communication between Gobi residents and the capital, which sets the laws and approves of the mining licenses. This can also be seen in the stories published about Mongolia's development. "There is a disconnect between investment media and what the locals say-people are really angry," noted researcher Sarah Jackson, who was not present at the conference but spoke to the UB Post by Skype. She is studying the effects that mining has on people in the Gobi.

Herders are indeed angry and hopefully the conference improves the communication pattern between the central government and the local government. It is also worth noting that the main media outlets are based in Ulaanbaatar.


Rio Tinto's response to concerns about Oyu Tolgoi and the recently released Environmental and Social Impact Assessment (ESIA)

9 October 2012

Thank you for the invitation to respond to the press release entitled "World Bank and Others Poised to Invest in Rio Tinto's Flawed Mongolian Mining Project" issued on 24 September by a number of organisations including OT Watch, Bank Information Centre and London Mining Network.

The press release raises a number of concerns about the Oyu Tolgoi project and the recently released Environmental and Social Impact Assessment (ESIA). Rio Tinto would like to address each of these concerns in turn.

1. The press release suggests the ESIA is deficient

Rio Tinto response: The ESIA for Oyu Tolgoi, which was conducted by independent ESIA specialists Citrus Partners, is the most comprehensive ESIA in Mongolian history. It was completed to global standards, including the Performance Standards of the World Bank's International Finance Corporation and the European Bank of Reconstruction and Development's Performance Requirements.

2. The press release states that the World Bank "acknowledges that there is not enough water in the region to support the life of the Project'.

Rio Tinto response: The World Bank report Groundwater Assessment in the Gobi Region (2009) actually complimented Oyu Tolgoi on its groundwater investigation and resource assessment study for the Oyu Tolgoi mine. A previous complaint by OT Watch that Oyu Tolgoi had breached the OECD Guidelines for Multinational Enterprises by failing to carry out a full environmental impact assessment and a crucial study of water resources was dismissed in May 2011 with the OECD National Contact Point citing the positive findings of the World Bank report in its decision to dismiss.

Oyu Tolgoi has been given permission by Mongolia's Ministry of Nature, Environment and Tourism and the Mongolian Water Authority to use approximately 20% of the water from Gunnii Hooloi over 40 years, so the aquifer can never be exhausted. The aquifer is separate from the shallow water sources used by households and animals.

3. The press release claims that "Rio Tinto, the Project manager, has not disclosed any plans for how it will manage the severe environmental impacts of the OT project's operations".

Rio Tinto response: The ESIA includes an impact assessment and mitigation plans, as well as environmental and social management plans. The impact assessment and mitigation plan assesses the nature and significance of the project's probable environmental and social impacts.

The Environmental and Social Management Plan describes how Oyu Tolgoi will manage its operations across a range of environmental and social areas, and where possible, have a positive impact in areas such as air quality, noise, topsoil, petroleum fuels, biodiversity, water, closure and reclamation.

While the management plans in the existing ESIA only cover the construction phase, these will be updated later to incorporate OT operations management plans and systems.

4. The press release claims that Rio Tinto has not organized meaningful, participatory, and culturally appropriate public consultations with the affected herders and prefers one-on-one meetings which herders find intimidating.

Rio Tinto response: Extensive consultations were held over a period of almost one year between 30 June 2010 and 10 June 2011, including one-to-one and group consultations involving a minimum of 5 to a maximum 250 people at one time, covering a wide range of topics. Oyu Tolgoi offices in the local soums are open to the public all day.

Everyone in Mongolia has a chance to respond to the ESIA. The full report is on the Oyu Tolgoi website. One-to-one consultation with herders is culturally accepted and a normal procedure given the sparsely populated nature of Mongolia.

5. The press release states that "several herders have already experienced devastating herd loss and other impacts after being forced to resettle because of the OT project".

Rio Tinto response: No herders have been forced to resettle. Oyu Tolgoi is committed to investigating all project-related animal deaths thoroughly. There are 10 herder families living in areas close to the mine and between 2003 and 2011 roughly 555 animal losses have been registered from a total of 3,296 head of livestock. To date, animal losses are due to severe cold and shortage of pasture in the winter which are classified as natural causes.

6. The press release claims that the ESIA does not address impact on pastureland, the diversion of the Undai River, the location of the international airport, or the power station.

Rio Tinto response: The ESIA covers all of these topics except the power station. We have always been transparent that the power station will have a supplemental ESIA.

The comprehensive ESIA and its non-technical summary are available in both English and Mongolian on Rio Tinto and Oyu Tolgoi actively encourage interest in the Oyu Tolgoi project from all stakeholders and welcome stakeholder comments on the ESIA.


 Turquoise Hill selling off after Mongolia officially says it wants more of Oyu Tolgoi

Frik Els

15 October 2012

Turquoise Hill Resources fell 6% in afternoon trade on Monday after the company said it received a letter from Mongolia's mines minister asking to renegotiate a deal signed in October 2009 that gave the country 34% ownership of the massive Oyu Tolgoi mine.

Kay Priestly, CEO of Turquoise Hill (formerly Ivanhoe Mines) which is majority owned by Rio Tinto rejected the request saying the Vancouver-based company has invested nearly $6 billion in the project in the south of the country, created thousands of jobs and is "on the verge of production based on the Investment Agreement, which provides a stable legal framework and is a legally-binding document."

This agreement - which was "re-affirmed" by the Mongolian government a year ago when politicians also floated the idea of taking majority control of the project - "has been fundamental in building Mongolia's reputation as an increasingly reliable and secure destination for foreign investment," said Priestly.

Following elections a month ago a group of influential Mongolian parliamentary backbenchers in a petition also called for the enforcement of a parliamentary resolution that gives the Mongolian government majority ownership of Oyu Tolgoi.

Turquoise Hill's stock losses over the past month now stands at 15% as political concerns and worries about a electricity deal between Mongolia and China for Oyu Tolgoi - one of the richest copper and gold mines in the world - continue to mount.

Turquoise Hill - a favourite of resource investors - is now valued at $8 billion and has been been on a wild ride since hitting an all time high above $28 in January last year affording it a peak market cap of $20 billion.

Rio is in the process of putting together a finance package of an additional $3.5 billion - $4 billion on top of the $6 billion already spent to take Oyu Tolgoi to full production status, but a research report leaked earlier this year indicated final overall costs could come in at as much as $13 billion.

The mine is set to produce more than 1.2 billion pounds of copper, 650,000 ounces of gold and 3 million ounces of silver each year.

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