MAC: Mines and Communities

Cref Claims Ignorance of Gold Mining Controversies

Published by MAC on 2003-07-26

Cref Claims Ignorance of Gold Mining Controversies

Northwest Corporate Accountability Project Press Release

26 July 2003

The College Retirement Equities Fund (pension fund for college/university faculty and staff), which offers the largest singly managed stock account in the word, notified the Securities and Exchange Commission on July 24, 2003 of its intent to omit a shareholder proposal from its proxy material for the 2003 CREF Annual Meeting.

The proposal requesting a vote of CREF participants on divestment of gold mining investments was submitted by Ann E. Marchand, a CREF participant from Seattle, WA. In its letter to the SEC, CREF claims, "The Company is not aware of any debate, media attention, or legislative or regulatory initiatives regarding gold mining."

However, significant social policy concerns regarding gold mining are not new to CREF. In 1999, Ms. Marchand submitted a shareholder proposal to CREF specifically requesting that CREF divest itself of Freeport McMoRan Copper and Gold Stock because of its environmental and social impacts at its mining site in West Papua, Indonesia.

(see http://www.moles.org/ProjectUnderground/motherlode/freeport/tenrisks.html )

This proposal received 17.3% of the vote at CREF's 1999 Annual Meeting, documenting a significant interest by CREF participants in this issue and far in excess of the vote needed to resubmit the proposal under Rule 14a-8(i)(12). Along with another CREF participant, the proposal was resubmitted to CREF in 2000. This time CREF launched an all out effort to defend Freeport and exclude the proposal. Because the proposal dealt with a single stock, the SEC concurred that the proposal could be omitted. CREF (pub. avail. Sept. 7, 2000).

The proposal submitted to CREF in 2003 included in the supporting statement information concerning Freeport's practices. In CREF's response to the SEC, it referenced Freeport's website as a source of rebuttal information, pointed to the lack of information concerning other companies, and claimed that CREF was unaware of any concerns or controversy regarding gold mining.

As a result, an amended resolution has been submitted to CREF with the same proposal, but documenting problems with other gold mining companies including Newmount Mining; Placer Dome; Rio Tino; and NewCrest Mining. The SEC is currently reviewing the amended resolution and will soon make a decision whether or not CREF must include the resolution in its proxy material.

What you can do:

Write to

William J. Kotapish, Esq. Assistant Director Division of Investment Management Securities and Exchange Commission 450 5th St., N.W. WA D.C. 20054

Strongly urge that the SEC require CREF to include in its 2003 proxy material the gold mining divestment proposal submitted by Ann Marchand. Include any references, websites, or other material concerning environmental and social impacts from gold mining.

Send a copy of your letter to:

Herbert Allison Chairman and CEO CREF 730 Third Ave New York, N.Y. 10017-3206


AMENDED 2003 RESOLUTION TO CREF ON DIVESTMENT FROM GOLD MINING July 2003

For both ethical and financial reasons, participants request CREF:
1) To announce that CREF will make no additional gold mining-related investments, and
2) To begin an orderly divestment of all gold mining investments.

Participant's Supporting Statement

Central banks and international financial institutions hold more than 34,000 tons of gold. This is more than 13 times the annual production of the world's mines; if sold, these reserves could satisfy gold demand for more than 8 years (current demand is approximately 4,000 tons per year). Of this demand, 85% is typically used for jewelry.

Gold mining companies cause environmental and social impacts.

- Newmont Mining: The Indonesia government is sending a team to take tailing samples from gold mining firm Newmont in North Sulawesi following a report that cyanide levels in the tailings exceeded the government limit. (Jakarta Post, Moch N. Kurniawan, June 21, 2003). Newmont has admitted spilling mercury at its mining operations in Peru in 2000. "Newmont CEO Parries Environmental Attacks At Shareholder Meeting", Tom Locke, Dow Jones Newswires, May, 7, 2003)

- Placer Dome: Indigenous Dayak Meratus of Indonesia, submitted a statement at the Placer Dome Annual Shareholder meeting April 30, 2003, stating that Placer Dome's proposed gold mine on their lands threaten their environment and their very existence as indigenous peoples. The Dayak Meratus live in the last remaining native forest in Kalimantan, Indonesia, which has enjoyed protected status since 1928. Placer Dome proposes to build a gold mine in the Meratus Mountain Range Protected Forest, violating Forestry Law 41. The Dayaks have already made unequivocal statements opposing this mine. ("Three Communities Protest at Placer Dome AGM," eport from Miningwatch, Canada, April 30, 2003.)

- Rio Tinto: Rio Tinto operates over 60 mines and processing plants in 40 countries. Rio Tinto owns 90% of the Kelian gold mine in Kalimantan, Borneo, Indonesia. Prior to Rio Tinto's arrival to Kalimantan, small-scale gold mining was performed by the local population. Around 1989, paramilitary police forced the local miners out of the mines. In 1990, Rio Tinto acquired more land, evicting more people who had to live in shanties. A total of 440 families were displaced from their homes. Some ompensation was paid, but it was not adequate to cover losses. (Asia-Pacific Human Rights Network, Corporate Watch, Human Rights Features, July 16, 2001.)

- NewCrest Mining: The conflict between forest protection laws and mining leases issued in protected areas has created a political storm in Indonesia. Indonesian Ministers and officials fear international legal action if mining is excluded from protected areas. Media reports have linked Indonesian government fears of costly international arbitration to Australian owned projects such as Newcrest's PT. ("Protected areas international arbitration threat to Indonesia", Koran Tempo, 3 April 2002 [translation].)

It is unclear how much environmental liability, cleanup responsibility, and remediation costs may exist, and no existing audit contains information on any environmental liability.

Should CREF financially co-sponsor the manufacture and promotion of such mining activities? If not, vote for orderly divestment.

Submitted by Ann E. Marchand, Seattle


Original Resolution

CREF RESOLUTION ON DIVESTMENT FROM GOLD MINING - May 2003

For both ethical and financial reasons, participants request CREF:
1) To announce that CREF will make no additional gold mining-related investments, and
2) To begin an orderly divestment of all gold mining investments.

Participant's Supporting Statement

Central banks and international financial institutions hold more than 34,000 tons of gold. This is more than 13 times the annual production of the world's mines; if sold, these reserves could satisfy gold demand for more than 8 years (current demand is approximately 4,000 tons per year). Of this demand, 85% is typically used for jewelry.

Gold mining companies cause environmental and social impacts. For example, Louisiana-based Freeport-McMoran Copper & Gold recently disclosed in a report to the Security Exchange Commission that it paid the Indonesian national military, Tentara Nasional Indonesia (TNI) an estimated US$5.6 million in 2002 for security purposes at its mine in West Papua, Indonesia.

"It is clear from a number of incidents that the states' security forces and the transnationals stand shoulder to shoulder in committing violence and human rights abuses. Still worse, such payments only promote current practices by the state apparatus with very harmful consequences for the people," reads a joint statement put out by a coalition of twelve human rights groups active in Indonesia.

Since 1967, PT Freeport Indonesia Company (PT-FI) an operating unit of Freeport McMoRan Copper and Gold, Inc. (FCX) has been operating on lands traditionally inhabited by indigenous people, especially the Amungme and Komoro. In May 2000, just days after an environmental audit praised Freeport's mining practices, a landslide at its Wanagon Lake waste dump cost the lives of four Freeport workers.

PT-FI has discharged over 110,000 tons of tailings per day into local Irian Jaya rivers and has expanded its milling operations to exceed 190,000 cubic tons per day. In 1995, prior to a settlement with PT-FI, the Overseas Private Investment Corporation, a U.S. government agency which provided political risk insurance to this operation stated that the mine "created and continues to pose unreasonable or major environmental, health, or safety hazards with respect to the rivers that are being impacted by the tailings, the surrounding terrestrial ecosystem and the local inhabitants."

PT-FI has attempted to ameliorate the social and environmental damages by proposing the "one Percent Trust Fund Offer" and the establishment of an Amungme Foundation, but the Amungme Tribal Council (LEMASA), an organization representing one of the indigenous communities affected by PT-FI's operations in Irian Jaya, issued a resolution "unconditionally and absolutely" rejecting these two proposals. It is unclear how much environmental liability, cleanup responsibility, and remediation costs may exist, and no existing audit contains information on any actual environmental liability;

Should TIAA-CREF financially co-sponsor the manufacture and promotion of such mining activities? If not, vote for orderly divestment.

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