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 to account, and for how corporations can settle conflicts to address projects’ social and environmental impacts.

    Battsengel Lkhamdoorov and his family have been herding cashmere goats and camels in Mongolia’s South Gobi Desert for generations. Their community of nomadic herders in the South Gobi Desert has a rich history, dating back to the time of Genghis Khan, and their traditions are a part of Mongolian identity. The expansion plan for Rio Tinto OT mine posed serious threats to the way of life for Battsengel and his entire community. Families already faced water issues like wells going dry, and the mine was going to require significant amounts of the valuable and finite resource. The animals that the families relied on for food and livelihood were falling into ditches and dying on roads that were part of mining construction. Traditional nomadic paths the herders and their ancestors have always used were disrupted by mine activity.

    Mongolian herder leads his camel through traditional grazing lands of the South Gobi Desert.

    To combat these harmful impacts on the community, a local watchdog group, OT Watch, began to organize the herders and reached out to Accountability Counsel. Together, OT Watch, an Elected Herder Team, including Battsengel, and Accountability Counsel compiled a complaint to the International Finance Corporation’s Compliance Advisor/Ombudsman (CAO).

    When this process began, herders faced a significant power imbalance. The CAO began a dialogue process where affected herders had a voice and were able to speak to their government and the mining company in more equal conditions. Accountability Counsel provided intensive training and technical support to help ensure that the herders had the expert advice needed to demand justice effectively – in their own voice, on their own behalf.

    In May 2017, after more than four years of voluntary negotiations, the herders successfully reached a series of agreements with Rio Tinto and the local government. These agreements set the path for increased compensation for lost pasture land and livelihoods and the resolution of water issues, so the herders and their families can continue the traditional practices of their ancestors. Accountability Counsel is continuing to support herders to ensure that the agreements are implemented.

    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 Complaint

    Located in the middle of the traditional grazing lands of nomadic Mongolian herders, the Oyu Tolgoi gold and copper mine 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. Once the expansion is complete, Oyu Tolgoi will be one of the largest copper mines in the world.

    The mine expansion hindered the traditional practices and way of life for the herding communities in the South Gobi Desert, including putting additional stress on water use, obstructing generations-old nomadic pathways, and killing livestock. Furthermore, herders complained that the company forced them to sign unfair contracts in violation of their rights.

    In early 2013, Accountability Counsel and OT Watch supported local herders in submitting a complaint to the Compliance Advisor/Ombudsman (CAO), the accountability office for the IFC and MIGA, raising concerns about the adequacy of the resettlement packages offered to herders displaced by the mining project and its impact on local water resources. Sukhgerel Dugersuren, Executive Director of OT Watch, personally delivered the herders’ first complaint to the CAO at the World Bank’s 2013 Annual Meetings in Tokyo.

    The Process

    In response to the complaints, the CAO convened a dialogue process to assist the herders to reach an agreement with the 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 monthly basis to work towards resolution of the CAO complaints and future community grievances related to the project.

    To address the core concerns of the community, especially pasture land, water supplies, and the protection of their traditional way of life, the parties agreed to jointly select and hire independent experts to conduct research and produce reports addressing key questions raised by the herders’ complaints. The reports confirmed many of the herders’ claims regarding the mine’s impacts on their livelihoods, called attention to longstanding problems with monitoring practices, and provided recommendations to address the issues they identified. These findings and recommendations fed directly into the Tripartite Council’s process to negotiate a resolution to the herders’ complaints.

    In May 2017, after more than four years of negotiations, the parties reached agreements through the Tripartite Council process to resolve the herders’ complaints. The agreements contain more than 40 individual commitments by the mine and the local government, including addressing water and pasture issues, improving monitoring for environmental impacts, and establishing a sustainable livelihood program. Read more about the details of the commitments here.

    The Outcome

    With the agreements signed, the parties have begun implementation of their many commitments. The agreements provide that herders, the mine, and the local government will collaborate closely during the implementation phase to ensure that each commitment is enacted effectively to achieve its intended purpose.The CAO has formally moved the herders’ complaint to their monitoring phase, during which they will continue to monitor implementation of the agreements for at least one year from the date of signing. Accountability Counsel continues to support the herders as they participate in this process.

    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.

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

  • The Case
    • Jun 2011

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

    • 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.

    • 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

    • Oct 2012

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

    • Dec 2012

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

    • 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.

    • 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.

    • 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.

    • Mar 2013

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

    • 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.

    • May 2013

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

    • 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.

    • Aug 2013

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

    • Nov 2013

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

    • 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.

    • 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.

    • 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).

    • Sep 2014

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

    • 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.

    • 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.

    • 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.

    • 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.

    • May 2015

      The parties released a 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.

    • 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.

    • Jul 2015

      The Tripartite Council held its first meeting.

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

    • 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.

    • Sep 2015

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

    • Dec 2015

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

    • 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.

    • 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.

    • Feb 2016

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

    • May 2016

      A coalition of NGOs authored comments on the September 2015 Independent Audit Report for the OT project, which were submitted to international lenders of the OT project. 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.

    • Jun 2016

      OT project lenders issued a response to NGO comments on the September 2015 audit 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 and water supplies – and on their ability to maintain 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.

    • 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.

    • 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.

    • Jun 2017

      The parties released a Joint Statement announcing that they have 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.

  • Impact

    Members of the Global Communities Team with the herders.

    Since 2012, our team has worked tirelessly to ensure that nomadic herders in Mongolia have the resources and training to demand justice for harm from a massive Rio Tinto mining project that posed threats to their culture and livelihoods. With our support, the herders 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).

    Throughout the compliance review process and dispute resolution negotiations, our Global Communities team followed the herders’ lead, assisting with technical challenges and sharing best practice. The community was instrumental in establishing the Tripartite Council, a forum in which to raise concerns with the government of Mongolia and the company. Our collaborative research and hands on training with this community was so effective that the herders were able to engage critically, independent of assistance, through many stages of the case.

    Global Communities Attorney Caitlin Daniel during her time in Mongolia

    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.

    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 more than 40 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.

  • Case Media