Mongolia: South Gobi Mining

  • Overview

    Accountability Counsel works with OT Watch to support South Gobi herders whose traditional culture and livelihoods are affected by Rio Tinto’s Oyu Tolgoi (OT) Mine, one of the world’s largest gold and copper mines. The historic agreements reached in this case serve as a model for how marginalized communities can hold companies and their institutional investors accountable and, further, for how corporations can settle conflicts to address projects’ social and environmental impacts.

    Since 2012, we have supported South Gobi herders on two complaints about harm caused by the International Finance Corporation’s (IFC) investment in the OT Mine. The complaints to the IFC’s Compliance Advisor/Ombudsman (CAO) initiated an intensive dialogue process. For over 4 years, herder representatives met with mining company representatives regularly to work towards resolution of the complaints.

    Like so many of the communities we support, herders faced a significant power imbalance in the dialogue. Accountability Counsel provided training and technical support throughout the process to help ensure that the herders had the expert advice needed to demand justice effectively – in their own voice, on their own behalf.

    In 2015, the herders and the company joined together with the local government to form a Tripartite Council – a freestanding body, with equal representation by each party, to resolve any disputes that arise between herders and the mine during the life of the project.

    In May 2017, after over four years of voluntary negotiations, the herders successfully reached agreements with the mining company and the local government to resolve their original complaints. These agreements set the path for more complete compensation, improved access to water and organization of pasture resources, and represent an important step towards allowing local herders to continue the traditional practices of their ancestors. Accountability Counsel is continuing our support to ensure that these agreements are implemented well.

    Read more about the CAO

    “These agreements represent a huge amount of hard work and progress in our four years of negotiations. We will continue to be vigilant and make sure what has been agreed to is actually accomplished, but today we feel that our complaints about the negative impact of this mine on local herders are starting to be addressed in a serious way.” — Battsengel Lkhamdoorov, a member of the Elected Herder Team that negotiated with Oyu Tolgoi and the local government

  • The Story

    The $13.2 billion Oyu Tolgoi (OT) Mining Project, operated by Rio Tinto, is the largest foreign investment in Mongolia. OT secured $4.4 billion from 20 banks and financial institutions, including the World Bank Group’s International Finance Corporation (IFC) and Multilateral Insurance Guarantee Agency (MIGA), to fund an underground mine expansion. The planned expansion included excavation of more than 125 miles of tunnels that would extend almost a mile deep and would be expected to create surface subsidence approximately five square miles in size, with cliffs in excess of 65 feet tall. After this expansion, OT would be one of the largest copper mines in the world.

    The OT Mine has faced fierce community resistance in Mongolia for years. One of the biggest concerns is the project’s water requirement, as water is a scarce and valuable resource in the South Gobi desert. 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 have degraded and fragmented 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 have complained that the company forced them to sign unfair contracts in violation of their rights.

    In late 2012 and early 2013, Accountability Counsel supported OT Watch and local herders in submitting two complaints to the Compliance Advisor/Ombudsman (CAO), the accountability office for the IFC and MIGA. The first complaint raised concerns about the inadequacy of the resettlement packages offered to herders displaced by the OT Project, and the second complaint discussed the project’s impact on local water resources due to the diversion of the Undai River. Sukhgerel Dugersuren, the Executive Director of OT Watch, personally delivered the herders’ first complaint to the CAO at the World Bank’s Annual Meetings in Tokyo.

    The Dialogue

    Herder representative Namsrai at the edge of the mine license area

    In response to the complaints, the CAO convened a dialogue process to assist the herders in reaching an agreement with the project company on these issues. The dialogue process resulted in the establishment of a Tripartite Council, with herder representatives meeting with local government and Rio Tinto representatives on a bimonthly basis to work towards resolution of the CAO complaints and future community grievances related to the project.

    At the heart of the mediation process were questions about OT’s impacts on the surrounding environment, especially on herders’ pastureland, water supplies, and ability to maintain their traditional herding livelihoods. To answer these questions, the parties agreed to jointly select and hire independent experts to conduct, research, and produce reports addressing key questions raised by the herders’ complaints. These reports confirmed many of the herders’ claims regarding OT’s impacts on their livelihoods, called attention to longstanding problems with OT’s monitoring practices, and provided recommendations to address the issues they identified. These findings and recommendations directly informed the Tripartite Council’s process of negotiating a resolution to the herders’ complaints.

    Final Agreements

    In May 2017, after over four years of negotiations, the parties reached two agreements through the Tripartite Council’s process to resolve the herders’ complaints (Complaint Resolution Agreement #1 and Complaint Resolution Agreement #2). The agreements contain 60 individual commitments by OT and the local government, including commitments to:

    • Address water issues, including a hydrogeological study to build knowledge of local water resources in the area and programs to build new wells for herders and to help maintain existing wells. The well building and maintenance programs also provide paid jobs to herders.
    • Address pasture issues, including development of a pasture management plan to help address conflicts between herders for limited pasture resources.
    • Improve programs for monitoring the environmental impacts of OT’s operations, which include herders’ participation to make sure the results are credible to the broader community, while also providing paid jobs to herders.
    • Review past compensation provided by OT to ensure all herders who were physically or economically displaced by the project receive appropriate compensation packages.  A Compensation Claims Committee will receive and review claims from herders who believe that they should have been eligible for compensation under prior compensation programs. The agreement also expands eligibility requirements to include some herders who were unfairly excluded in the past.

    Additionally, the agreements establish a 10-part Sustainable Livelihood Program to support local herders to achieve greater economic stability while continuing their traditional nomadic livelihoods. Developed based on the herders’ own suggestions, the program consists of practical initiatives to address livelihoods difficulties in the short and long term. It includes:

    • Construction of a local market and supply chain for animal products
    • Construction of a slaughterhouse
    • Improved health services for herders
    • A fodder planting program
    • Renewable energy (wind and solar) connections for herder wells
    • Creation of a Herders’ Children Scholarship Program to help address the need for options to diversify livelihoods as well as support to continue herding practices.

    The Tripartite Council poses for a picture on the day of agreement signing

    With the agreements signed, the parties have begun implementing many of their commitments. The agreements provide that herders, OT, and the local government will collaborate closely during the implementation phase to ensure that each commitment is enacted effectively to achieve its intended purpose. Accountability Counsel continues to support the herders as they participate in this process. The CAO has formally moved the herders’ complaint to their Monitoring Phase and continues to monitor implementation of the agreements.

    Case Partners

    Bank Information Center partners with civil society to promote social and economic justice and ecological sustainability in developing countries.

    CEE Bankwatch Network monitors the activities of international financial institutions in Central and Eastern Europe.

    The London Mining Network is an alliance of human rights, development and environmental groups that pledge to expose the role of companies in unacceptable mining projects.

    Oyu Tolgoi Watch is a Mongolian NGO that monitors compliance with national and international laws on behalf of the Oyu Tolgoi investment agreement.

    The Southwest Research and Information Center works to promote the health of people and communities, protect natural resources, ensure citizen participation, and secure environmental and social justice now and for future generations.

    Urgewald is a German NGO that advocates for environmental and human rights by campaigning against the financial sector.

  • The Case
    • Jun 2017

      The parties released a Joint Statement announcing that they reached agreement to resolve the herders’ complaints. The Joint Statement includes the agreement in principle, with the exact language to be drafted and signed in the coming weeks.

    • May 2017

      The parties signed two final agreements to resolve the herders’ complaints regarding the diversion of the Undai River and regarding livelihoods impacts, compensation, and other issues. The parties also released a Joint Statement announcing the signing of these agreements.

    • Feb 2017

      The parties released a Joint Statement reporting that in an initial discussion, the parties unanimously agreed to implement 18 of 28 recommendations made in the MDT/IEP Report.

    • Jan 2017

      Oyu Tolgoi LLC, the herders, and the local government jointly commissioned an Independent Report to answer questions about the OT project’s impacts on the surrounding environment, especially on herders’ pastureland, water supplies, and ability to maintain their traditional herding livelihoods despite the many changes brought on by the OT Project.

      The reports confirmed many of the herders’ claims regarding OT’s impacts on their livelihoods, called attention to longstanding problems with OT’s monitoring practices, and provided recommendations to address the issues they identified.

    • Jun 2016

      OT project lenders issued a response to NGO comments on the September 2015 audit report

    • May 2016

      A coalition of NGOs authored comments on the September 2015 Independent Audit Report for the OT Project, which were submitted to the project’s international lenders. Note that these comments are based on the publicly disclosed audit report summary, available on OT’s website. The full audit report is available in the Reports section below.

    • Feb 2016

      The parties released a joint statement updating on a recent Tripartite Council meeting.

    • Feb 2016

      A report on the phase 2 underground mine, “Oyu Tolgoi Phase 2: Plans, Issues and Risks,” was released by a coalition of NGOs including Accountability Counsel.

    • Jan 2016

      The parties released a report on Pre-Tripartite Council Activities in 2014 – 2015 and a summary of Tripartite Council Activities in 2015.

      The parties released a joint statement reporting on progress made in the CAO process from July 2013 through July 2015.

    • Dec 2015

      The parties released a joint statement with updates on the Tripartite Council process.

    • Sep 2015

      The parties released a joint statement announcing OT’s development of an Animal Husbandry Development Action Plan for 2016 – 2025 in Khanbogd soum. The statement also announced the commencement of a tendering process for a multi-disciplinary team to undertake the socioeconomic study of herder households.

    • Sep 2015

      Independent auditors conducted a field visit to the OT project site and produced an independent audit report. While all previous audit reports are publicly disclosed on the OT website, OT discontinued public disclosure of full audit reports starting with the September 2015 report. We are therefore disclosing this report on our website.

    • Jul 2015

      The Tripartite Council held its first meeting.

      The parties released a joint statement with updates from this first meeting. The statement discusses progress on an Independent Expert Study to assess impacts to herders’ water resources stemming from the OT project.

    • Jun 2015

      The parties released a Memorandum of Understanding Establishing the Tripartite Council, a forum to address herder concerns with the OT project  made up of herders’ representatives, OT’s representatives, and the local government.

      The parties released a joint statement announcing progress towards establishing a Tripartite Council.

    • May 2015

      The parties released protocols on Temporary Grazing and Temporary Water Delivery.

      The parties released a joint statement regarding progress on the planned establishment of a Tripartite Council and approved protocols for grazing and water delivery. The statement also explained that OT presented herders with an apology for the company’s lacking consultation with local herders about the planned river diversion.

    • Apr 2015

      OT released an Invitation for Expressions of Interest for a socioeconomic study of herder households, announcing a search for an experienced researcher to analyze changes in herders’ livelihoods and assets as a result of the OT project and to review OT’s compensation program.

    • Feb 2015

      The parties released a joint statement discussing the planned relocation of the Bor Ovoo spring and planning for the establishment of a Tripartite Council, made up of representatives from the local government, herders, and Oyu Tolgoi, to serve as a forum to address herder concerns with the OT project.

    • Jan 2015

      The parties released the Executive Summary and Recommendations sections of an independent report assessing the impacts that the OT project’s diversion of a major river had on herders’ access to water and ability to maintain their pastoral livelihoods. The report was prepared through a joint process involving both herders and OT, but only the Executive Summary and Recommendations sections have been released publicly.

    • Nov 2014

      The parties released a joint statement following a two-day meeting during which the herders’ representatives saw OT mining operations and met the mining management team, discussed the multidisciplinary team’s Terms of Reference, and requested that the CAO facilitate a regular joint meeting between stakeholders.

    • Sep 2014

      The parties released a joint statement following a meeting to discuss herders’ winter water supply and other issues.

    • Aug 2014

      The parties released a joint statement with updates on the CAO process, including plans for an artificial spring to be developed to mimic the benefits of the Bor Ovoo spring (which was destroyed by OT’s diversion of a major river).

    • Feb 2014

      The parties released a joint statement between the Elected Herders Team and Oyu Tolgoi with updates on the progress of the CAO process.

    • Dec 2013

      A Work Plan and Methodology and Terms of Reference for a joint fact finding process to be led by an Independent Expert Panel (IEP) on the Undai River diversion were produced through the CAO process.

    • Nov 2013

      An international coalition of organizations, including Accountability Counsel, published a critique of the April 2013 Oyu Tolgoi Audit and Operational Management Plans.

    • Aug 2013

      The parties released an information flyer updating on the negotiation meetings between herder representatives and OT.

    • Jul 2013

      The CAO issued an Assessment Report regarding the Undai River complaint.

      The IFC and MIGA issued a letter in response to the July 2013 CAO Assessment Report.

    • May 2013

      The IFC and MIGA issued a letter responding to the April 2013 CAO Assessment Report.

    • Apr 2013

      Accountability Counsel staff traveled to Mongolia to provide negotiation training to support the herders as they prepared to enter into a mediation process with the mining company, Oyu Tolgoi LLC, to challenge the impacts of the OT Project.

    • Apr 2013

      The CAO issued an Assessment Report for the complaint regarding resettlement compensation issues, stating its intention to convene a dispute resolution process.

    • Mar 2013

      The CAO convened the first information sharing meeting as part of its dispute resolution function.

    • Feb 2013

      U.S. representatives on the World Bank and European Bank for Reconstruction and Development (EBRD) Boards of Directors released the U.S. Position statement on the OT Mine, explaining their decision to abstain from voting for the project and citing concerns that the ESIA is inadequate.

    • Feb 2013

      A coalition of NGOs sent a joint letter to World Bank Group President Jim Yong Kim expressing ongoing concerns and recommendations regarding the OT project.

      The IFC sent a response to the joint NGO letter.

      A coalition of NGOs sent a second letter in response to the IFC and OT LLC detailing primary concerns with the project’s ESIA assessment.

    • Feb 2013

      Gobi Soil submitted a second complaint to the CAO regarding the OT Project.  The complaint focused on the impacts of the diversion of the Undai River by the project’s operator, Rio Tinto.

      The CAO found this complaint to be eligible as well.

    • Dec 2012

      Accountability Counsel, along with OT Watch, Urgewald, CEE Bankwatch, London Mining Network, and Bank Information Center, released a critique of the OT Project Environmental and Social Impact Assessment (ESIA) entitled A Useless Sham.

    • Dec 2012

      The CAO found the complaint to be eligible and conducted its first site visit.

    • Oct 2012

      Accountability Counsel released a joint press release with OT Watch and other partners about the herders’ complaint to the CAO.

    • Oct 2012

      Local NGO Gobi Soil submitted a complaint to the International Finance Corporation’s (IFC) Compliance Advisor/Ombudsman (CAO) raising concerns regarding the unfair practices used to coerce herders into signing inadequate and biased compensation contracts.  Sukhgerel Dugersuren, Executive Director of Oyu Tolgoi Watch (OT Watch) and representative of Gobi Soil, personally delivered the herders’ complaint to the CAO at the World Bank’s Annual Meetings in Tokyo

    • Jan 2012

      Bank Information Center published a report on World Bank investments in Mongolia, entitled A Golden Opportunity?: Unpacking the relationship between Mongolia and the World Bank, which highlighted the OT project.

    • Jun 2011

      U.S. Agency for International Development (USAID) released a Trip Report documenting environmental and social problems with the OT Project.

  • Impact

    Members of the Global Communities Team with the herders.

    Accountability Counsel supported South Gobi herders whose traditional culture and livelihoods are affected by Rio Tinto’s Oyu Tolgoi (OT) mine, one of the world’s largest gold and copper mines. The historic agreements reached in this case serve as a model for how marginalized communities can hold companies and their institutional investors to account, and for how corporations can settle conflicts to address projects’ social and environmental impacts.

    With our support, the herder community and their elected representatives overcame a significant power imbalance and effectively represented themselves at the negotiation table with Rio Tinto and their government. The negotiation is serving as a global model for addressing these types of complex community-company disputes. The results are groundbreaking and historic.

    Working with other local advocates, the herders reached out to Accountability Counsel, and we conducted research on the mine’s international financing. We also assisted the herders in documenting violations of policy, engaging independent experts to analyze environmental conditions, and crafting a detailed complaint. This early stage support to the community resulted in the herders submitting two complaints to the IFC’s accountability office, the Compliance Advisor/Ombudsman (CAO).

    In early 2017, Global Communities Attorney Caitlin Daniel traveled to Mongolia for three months to assist the herders in the final stages of negotiations with the Tripartite Council. While on the ground in Mongolia, she provided intensive support to herders, held consultations with the larger herder community, helped craft arguments and develop a sound strategy for the final push to reach agreement.

    Global Communities Attorney Caitlin Daniel during her time in Mongolia

    Using this preparation, and drawing on years of our trainings and technical support, the herders spoke on their own behalf to reach a series of agreements in May 2017 to begin to remedy the harm. The historic agreements contain 60 individual commitments by the mining company and local government, including commitments to compensate the herders collectively and individually and to hire water experts to drill new wells. Our intensive, in-person support during a key moment in the dispute resolution process helped community representatives build a successful negotiating strategy, enabling them to come to an agreement about issues that seemed intractable at the beginning of the process.

    The agreements represent a significant step forward for the herders, and Accountability Counsel will be assisting the herders in monitoring the agreement and ensuring that all commitments are met. Furthermore, our policy advocacy following this case resulted in a U.S. government’s statement questioning the project’s social and environmental planning.

     

     

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