Mongolia: Mining in the South Gobi

Resettled father and daughter because of Oyu Tolgoi mine. Photo by CEE Bankwatch Network

Accountability Counsel works with Oyu Tolgoi Watch (“OT Watch”) and several international partners to support some of the world’s last remaining nomadic herder communities, living in the South Gobi region of Mongolia.  We have assisted communities to raise complaints about large-scale mining ventures affecting their water resources and endangering their livelihoods, specifically the Oyu Tolgoi copper and gold mine (“OT Project”) and the Ukhaa Khudag coal mine.

The OT Project has faced fierce community resistance in Mongolia for years.  One of the biggest concerns is the amount of water, a scarce and valuable resource in the South Gobi desert, that the Project will require.  Traditional nomadic herders, who have lived in the region for centuries, have already experienced problems with wells going dry.  Additionally, the infrastructure and construction related to the Project is degrading and fragmenting herders’ traditional pastures, forcing some of them to abandon their herding lifestyles.  Several herders have already experienced devastating herd loss and other impacts after being forced to resettle because of the OT Project. Furthermore, herders complaint that the company forced them to sign unfair contracts in violation of their rights.  They have found the company largely unresponsive to their concerns.

The $13.2 billion OT Project, operated by Rio Tinto, is the largest foreign investment in Mongolia.  Despite the OT Project’s numerous problems, the project is supported by the World Bank Group’s International Finance Corporation (“IFC”) and Multilateral Insurance Guarantee Agency (“MIGA”), as well as the European Bank for Reconstruction and Development (“EBRD”). The Netherlands Development Finance Company (“FMO”), U.S. Export-Import Bank, Export Development Canada and the Australian Export Finance and Insurance Corporation have also committed financing for the project.

OT Shaft 1 in March 2012. Copyright © 2012 MuthuK

Accountability Counsel has supported two complaints to the Compliance Advisor Ombudsman, the accountability office for the IFC and MIGA, raising concerns about the OT Project’s impacts on local water resources and about the adequacy of resettlement and compensation packages. The CAO has convened a dialogue process to assist the herders to reach an agreement with the project company on these issues. The dialogue process is ongoing and has resulted in the establishment of a Tripartite Council, with herder representatives meeting with local government and company representatives on a monthly bases to work towards resolution of the CAO complaints and future community grievances related to the project.

OT concentrator complex in March 2012. Copyright © 2012 MuthuK.

The Ukhaa Khudag coal mine is located on a section of the world’s largest untapped coking coal and thermal coal deposits, the Tavan Tolgoi. The mine is operated by a Mongolian company, Energy Resources LLC, and is commonly referred to as the “Energy Resources Mine.” Most of its coal product is shipped over land to the Chinese boarder, which has led to the gradual development of a sprawling web of mining roads, ranging from paved roads to informal dirt roads intersecting each other and multiplying by the day. These roads and other project infrastructure have led to severe fragmentation of herders’ pastures, excessive dust and unsafe road conditions which in turn have resulted in fatal traffic accidents and other concerns over herder and animal health. The Energy Resources Mine has received financing from the EBRD.

In 2013, local herders filed a series of complaints to the EBRD’s Project Complaint Mechanism (“PCM”) raising concerns about pasture fragmentation, dust, and other impacts from the growing network of roads and infrastructure associated with both the OT Project and Energy Resources Mine. Accountability Counsel has supported herders throughout the complaint process and a compliance audit is currently underway to investigate allegations of EBRD policy violations.

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