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Water disputes persist as Rio Tinto pushes ahead with second Oyu Tolgoi mine

Prague; Khanbogd Soum, Mongolia – A large new copper mine in Mongolia could cause irreversible damage to terrain and deprive water from some of the world’s last remaining nomadic herding groups, finds a new report released today by Oyu Tolgoi Watch, the Bank Information Center, CEE Bankwatch Network and Accountability Counsel.

DOWNLOAD THE REPORT:
Full report Oyu Tolgoi Phase 2: Plans, Issues and Risks – Download pdf (7 MB)

8-page summary – Download pdf

Developed by Rio Tinto, a global mining giant, the US $6.7 billion Oyu Tolgoi Phase 2 project in the Gobi desert is designed to tap the world’s largest undeveloped copper deposit. Pre-construction works for the underground mine have already commenced, but the company has so far made little if any information on the expected environmental impacts publicly available, according to the report Oyu Tolgoi Phase 2: Plans, Issues and Risks.

Planned as an expansion to existing operations, the Oyu Tolgoi (OT) project includes an open pit mine that has already diminished water access and water quality, reduced pasture area, and made traditional nomadic herding livelihoods in the area all but impossible to maintain.

The project will receive US $4.4 billion in international financing, including from the International Finance Corporation (IFC), the Netherlands Development Finance Company (FMO), and via the largest syndicated loan ever by the European Bank for Reconstruction and Development (EBRD).

The report, compiled by mining and environmental expert Paul Robinson at the Southwest Research and Information Center, summarises the expected impacts from the underground mine. The planned block cave mining method is expected to cause surface land to subside by 65 feet or more across a zone of nearly 5 square miles, leaving the affected land permanently unusable and beyond the scope of any remediation technology.

Publicly available documents do not identify enough water supplies to sustain the 40-year mine life without depleting the water supplies that herders depend on. Meanwhile, a new coal-fired power plant being considered to power the mine would cause further harms that as yet have not been identified by any environmental assessment.

Local people have been engaged in an ongoing dialogue with the project company since 2013 to discuss disputes over water resources, resettlement and compensation related to the existing OT open pit mine. The process still has not led to a final agreement resolving the dispute, yet Rio Tinto is charging ahead with its plans to develop the new underground mine.

Communities who have already experienced severe impacts from the open pit mine now face further harm from the underground expansion, the extent of which remains unclear.

“The herders have not been given up to date project plans, nor have they been properly consulted about the underground mine, even though information disclosure and informed consultation with local people are required by the project’s international financiers,” explained Sukhgerel Dugersuren, Executive Director of OT Watch, who is assisting herders in the complaint process.

The findings of the report and the stark realities of herders who have had to abandon their traditional livelihoods fly in the face of a Project Finance International award given last week, which dubbed the OT project “Mining Deal of the Year in the Asia-Pacific region”.

“OT is accepting accolades for this project while the problems they have caused for local herders remain unresolved,” said Dugersuren. “The mine is touted for its so-called development benefits, but this is meaningless without a strong commitment from Rio Tinto to address impacts of the new expansion and disclose information to the affected herders.”

Notes for editors:

The full report, Oyu Tolgoi Phase 2: Plans, Issues and Risks, is available at:
https://bankwatch.org/sites/default/files/OyuTolgoi-Phase2.pdf

An 8-page summary is also available at:
https://bankwatch.org/sites/default/files/OyuTolgoi-Phase2-summary.pdf.

For more information please contact:

Sukhgerel Dugersuren
Executive Director, Oyu Tolgoi Watch
+976 99185828
otwatch@gmail.com

Fidanka Bacheva-McGrath
EBRD Campaign Coordinator, CEE Bankwatch Network
+359 877303097
fidankab@bankwatch.org

Paul Robinson
Research Director, Southwest Research and Information Center
+1 505 262 1862
sricpaul@earthlink.net

Caitlin Daniel
Acting Director of Strategic Support, Accountability Counsel
+1 415 500 8214
caitlin@accountabilitycounsel.org

Sarah McNeal
Asia Program Associate, Bank Information Center
+1 202 624 0635
smcneal@bankinformationcenter.org

NGOs urge the European Investment Bank not to finance the Southern Gas Corridor

A group of 27 NGOs sent an open letter to the President of the European Investment Bank (EIB) today urging the Bank not to finance the Southern Gas Corridor, a 3500 kilometres-long chain of gas pipelines from Azerbaijan to Europe. As the EIB considers granting the biggest loan of its history to the Consortium in charge of developing the western section of the project, the Trans-Adriatic Pipeline (TAP), a group of NGOs warns about its most controversial aspects:

  • Supporting this project would not be coherent with the bank’s commitment to fight climate change announced during the COP21 in Paris. Pumping more gas through the Southern Gas Corridor would hinder the accomplishment of the EU’s climate objectives and longer-term decarbonisation goals.
  • Demand for gas in Europe is actually dropping, as the European Commission’s own projections for the next 35 years show. The Southern Gas Corridor therefore risks not being used to full capacity and turning into a stranded asset which will ultimately be paid for by taxpayers, gas consumers and those living along the route of the pipeline.
  • Azerbaijan is one of the most undesirable partners the EU could tie itself to. The Aliyev regime is known for its appalling human rights record and repression of political opposition. Concluding a business partnership with Azerbaijan would thus stand in contradiction to the EU Charter of Fundamental Rights, which binds the EIB not to finance projects that would encourage or support human rights violations. This is underlined in the European Parliament’s September 2015 resolution calling for the suspension of EU funding to the Azeri government.
  • The fiscal accountability of the project is quite opaque, as the consortium of companies that promote TAP is registered in the Swiss city of Baar, a renowned tax haven.
  • The authorisation process of the Italian section of TAP raised many issues and led to large protests by residents and local authorities of the province of Lecce, where the pipeline will enter the Italian soil. The population’s apprehensions particularly concerned the lack of transparency in the procedures that led to the full approval of the project by the Italian government as well as the still unfulfilled prescriptions needing to be complied with from the Environmental Impact Assessment of the project.

The signatories claim that “the Southern Gas Corridor is one of the biggest and most controversial infrastructure projects that have ever seen the light of day in Europe. This massive financial investment entails serious environmental and geopolitical risks. Therefore, we call for no public money to go to the Southern Gas Corridor”.

“As an EU institution, the EIB is morally and legally obliged to guarantee that all its projects respect the human rights and climate principles it is committed to. As President of the EU bank, Mr Hoyer should take on full responsibility and recognize all the implications attached to the loan”, they conclude.

Contacts:

Xavier Sol, Director Counter Balance
xavier.sol@counter-balance.org
+32 2 893 08 61

Anna Roggenbuck, EIB Campaign Coordinator Bankwatch
annar@bankwatch.org
+48 918803872

Report finds development banks fail people harmed by their projects


Civil society calls on banks to strengthen their complaint mechanisms to provide remedy.

A new report launched today documents the hurdles communities and workers face in obtaining remedy from development banks whose projects cause them harm. The 11 civil society organizations that authored the report, Glass Half Full? The State of Accountability in Development Finance, call on development banks and the governments that run them to strengthen their systems for providing remedy to those harmed by the activities financed by the banks.

As a result of pressure from civil society, many development banks have established independent accountability mechanisms—also called complaint mechanisms—that receive complaints from communities and workers adversely affected by bank-financed activities. While the structure and procedures of these mechanisms vary between banks, they can offer to convene the complainants and the borrower (the bank’s client) to resolve the conflict, conduct an investigation to determine if the bank’s environmental and social policies have been violated, or both.

The complaint mechanisms are often the only available recourse for communities harmed by development projects and currently represent the only avenue to hold development banks accountable to their environmental and social commitments.

Since the 1994 creation of the World Bank’s Inspection Panel—the first independent accountability mechanism, there have been 758 complaints filed to the mechanisms at 11 development banks. Glass Half Full? assesses the extent to which the development banks and their complaint mechanisms are equipped to handle complaints from affected people.

Findings

What the report finds is that even though complainants are undoubtedly better off than they would be in the absence of any complaint procedure, the outcome rarely provides adequate remedy for the harms experienced by people and communities. This is largely due to the development banks themselves, which undermine the effectiveness of their own complaint mechanisms by limiting their mandate and failing to uphold their own responsibilities in the complaint process. The banks impede the accessibility and effectiveness of the complaint mechanisms from the very beginning by failing to require their borrowers to tell project-affected people about their existence. Even more critically, the banks have limited the mandates of the mechanisms so that they cannot issue binding decisions. Rather, the outcome of complaints depends primarily on the good will of the banks or their borrowers: unless governments and companies voluntarily agree to resolve the conflict through dialogue, or the bank voluntarily agrees to address violations of its policies exposed through an investigation conducted by the mechanism, complainants are left without a solution.

Case studies

The case studies in the report illustrate how the existing system at development banks falls short:

  • One case investigated by the Compliance Advisor Ombudsman (CAO)—the complaint mechanism of the International Finance Corporation (IFC)— found that the IFC failed to address its client’s disregard for workers’ rights to freedom of association, but the issues that led to the complaint remain. “The company’s practices that were documented when the complaint was submitted, continue today and workers’ rights are still not being respected,” says Peter Bakvis, one of the complainants in the case.
  • Complainants who brought a case to the Independent Complaints Mechanism (ICM) of the Dutch and German development banks were similarly disappointed with the response they received from the banks. While satisfied with the ICM’s investigation report of the risks posed by the Barro Blanco hydroelectric dam in Panama, Manolo Miranda, one of the complainants’ representatives, notes: “Nothing has changed… the banks and the company have done nothing to prevent the impacts on our culture, territory and religion.”
  • In the Bujagali complaint, also handled by the CAO, the complainants attribute the company’s willingness to negotiate with them to the involvement of the CAO, but ultimately they were unsatisfied with the result of the negotiations. Recognizing that the CAO did not have the mandate to compel the company to provide fair compensation to affected community members, the complainants felt they had no choice but to agree to the terms offered by the company.

Recommendations

The report includes a number of best practice recommendations that should be adopted at all development banks. However, it concludes that meaningful remedy for complainants and prevention of future harms will require more than best practices. A new accountability system must be established as a matter of urgency, with complaint mechanisms empowered to make binding decisions on banks and their borrowers, and an end to immunity for development banks in national courts.

Download

Download the full report >> (pdf)
Find its annexes here >>

NEW REPORT: Misguided spending by enfants terribles is undermining Europe’s transition to a fossil-free future


Brussels/Prague – EU billions destined to transform the carbon-intensive, inefficient energy systems of central and eastern Europe are being misspent, finds a new report today by CEE Bankwatch Network and Friends of the Earth Europe. Bad spending plans and a lack of climate commitments from nine central and eastern European governments is hampering Europe’s transition away from fossil fuels, the groups say [1].

The full report can be downloaded here: https://bankwatch.org/sites/default/files/enfants-terribles.pdf

Summaries, graphs and more are at: https://bankwatch.org/enfants-terribles

The new research reveals that in CEE countries only 7 per cent of the 178 billion euros in European Regional Development and Cohesion Funds will be invested into renewables, energy efficiency and SMART grids, and that the integration of climate considerations into all plans and projects – as required under EU law – remains superficial.

Markus Trilling, EU funds campaigner for CEE Bankwatch Network and Friends of the Earth Europe said: “Whatever happened at the climate talks in Paris, Poland is still all about coal. We’re seeing EU funds being spent across Central and Eastern Europe for coal, gas and dated transport systems – locking countries into fossil-fuel dependency, at the expense of renewables and energy efficiency.”

The European Commission asked member states to concentrate EU funding on climate action and climate mainstreaming within the EU’s seven year, one trillion euro budget for 2014 to 2020 [2].

The report lays the blame squarely on the insufficient spending plans and absent climate commitments of the countries receiving the funding. For example, both Poland and the Czech Republic will offer financial support for the replacement of ‘old coal boilers’ with ‘modern coal boilers’ under the heading of environmental protection.

Estonia will retain carbon-intensive oil shale as its major energy source; Croatia and Estonia have received support for airport extensions – usually excluded from EU funds. In Romania, a third of all the money received will be spent on the transport sector, without any integral climate considerations [3].

Markus Trilling continued: “This is really ‘close your eyes and drive’ spending. CEE countries are prioritising energy intensive transport and fossil fuels over solutions to climate change. Energy efficiency goals have been reduced to footnotes, and the potential for citizens to shape the energy sector – through innovative community-owned and managed renewables – has been side-lined.”

More

Climate's enfants terribles. How new Member States' misguided use of EU funds is holding back Europe's clean energy transition

Country chapters, graphs & more

The report includes a comprehensive set of recommendations for ensuring that EU funds contribute to Europe’s energy transition in a meaningful way. This includes the use of the upcoming EU budget midterm review as an opportunity to align funding in CEE countries with European efforts to tackle climate change.

For more information please contact:

Markus Trilling
EU funds campaigner for CEE Bankwatch Network and Friends of the Earth Europe
Email: markus@bankwatch.org
Tel: +32 (0) 484 056 636

Sam Fleet
Communications officer for Friends of the Earth Europe
Email: samuel.fleet@foeeurope.org
Tel: +32 (0) 470 072 049

Notes

[1] The report “Climate’s enfants terribles: how new Member States’ misguided use of EU funds is holding back Europe’s clean energy transition” is available at
https://bankwatch.org/sites/default/files/enfants-terribles.pdf

[2] Article 8 of Regulation (EU) no 1303/2013 of the European Parliament and of the Council (Common Provision Regulations for ESIF):

‘The objectives of the ESI Funds shall be pursued in line with the principle of sustainable development and with the Union’s promotion of the aim of preserving, protecting and improving the quality of the environment, as set out in Article 11 and Article 191(1) TFEU, taking into account the polluter pays principle. […]

The Member States and the Commission shall ensure that environmental protection requirements, resource efficiency, climate change mitigation and adaptation, biodiversity, disaster resilience, and risk prevention and management are promoted in the preparation and implementation of Partnership Agreements and programmes.’

[3] https://bankwatch.org/sites/default/files/enfants-terribles.pdf

Romanian court rejects environmental permit, halting destruction of 159 hectares of forests and putting breaks on coal mining expansion


Bucharest – A Bucharest court yesterday annulled the environment permit for the felling of another 159 hectares of forest in Gorj country, effectively preventing the expansion of the Roșia lignite mine. [1]

Ruling on a case brought by Bankwatch Romania and Greenpeace Romania, the Bucharest Tribunal overturned the permit because it was granted only for deforestation works that would not otherwise be necessary if the Oltenia Energy Complex did not intend to expand its facilities at the Roșia lignite quarry.

The permit was also said to ignore provisions of the Romania Forestry Code, which mandates that forested lands may only be removed from the National Forests Register if compensation works are undertaken.

“Cutting huge chunks of forest in an area where millions of tonnes of coal are burned every year just to dig up even more coal is absurdity at its best. Expanding the quarry in this region would mean more pollution, more dust and more noise, all problems for which locals need to bear the brunt,” said Alexandru Mustață, Bankwatch Romania campaigner.

“Evaluating the environmental impacts of such a project is essential. Climate change is the biggest threat to humanity, and for the environment permit to omit such an assessment is unacceptable,” said Ionut Cepraga of Greenpeace Romania.

Permitting issues have long plagued the Oltenia Energy Complex, where several lignite extraction projects are located. Yesterday’s annulment is the most recent in a series of similar decisions, including two from earlier in the year related to the expansion of the Pinoasa lignite quarry, a ruling that saved 210 hectares of forest.[2] [3]

As defendants, the Gorj Environmental Protection Agency and the Oltenia Energy Complex can appeal the court decision within fifteen days. The court’s decision was not yet formally communicated to the parties.

For more information contact

Alexandru Mustață, campaigner
Bankwatch Romania
alexandru.mustata@bankwatch.org

Cătălina Rădulescu, lawyer
catalina.radulescu@gmail.com

Notes for editors

[1] http://portal.just.ro/3/SitePages/Dosar.aspx?id_dosar=300000000635602&id_inst=3

[2] http://faracarbune.ro/oprirea-defrisarilor-in-gorj-cotinua-bankwatch-si-greenpeace-opresc-in-instanta-defrisarea-a-inca-130-hectare-de-padure/

[3] http://faracarbune.ro/padure-de-80-de-hectare-salvata-de-la-defrisare-in-judetul-gorj/

New Bankwatch study: European “green energy” funding for hydropower threatens pristine Balkan rivers

Radolfzell, Vienna, Prague – A wave of hydropower development fuelled by European public funding and EU companies is endangering pristine river environments in the Balkans, finds a new study by CEE Bankwatch Network released today.

The extensive analysis [1] shows that multilateral development banks [2] are playing a key role. The European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), and the World Bank’s International Finance Corporation (IFC) have extended loans totalling EUR 818 million to no less than 75 hydropower projects, including 30 directly affecting protected areas like national parks, Natura 2000 sites, and Ramsar sites.

The EBRD is the biggest investor in hydropower in the Balkans. The bank has supported a total of 51 plants with EUR 240 million, 21 of them inside protected areas, of which the vast majority are in Macedonia.

Most notably, the controversial Boskov Most project in Macedonia’s Mavrovo National Park has secured an EBRD loan of EUR 65 million, despite the threat it poses to the only remaining habitat of the critically endangered Balkan lynx.

“Our analysis clearly shows that especially for the EBRD, but also the World Bank Group, financing hydropower projects in protected areas is the norm, not an exception. They need to finally start taking their internal safeguard policies seriously”, says Pippa Gallop, Bankwatch’s Research Co-ordinator and co-author of the study.

”The EBRD Board of Directors will be meeting in London on 16 December, and we expect them to discuss how to stop the bank from bending its own policies,” added Klara Sikorova, Bankwatch’s Senior Researcher and study co-author.

Of other public banks and funds, most active has been Germany’s KfW and its subsidiary Deutsche Investitions- und Entwicklungsgesellschaft mbH (DEG), with 8 hydropower plants, of which 4 are in protected areas in Macedonia and in Bosnia and Herzegovina.

Most projects are carried out by domestic companies, but of the projects involving foreign investment, Austria stands out: Austria’s companies are involved in more than 40 dam projects, of which at least 20 are based in protected areas: Energy Eastern Europe Hydro Power GmbH (co-owner: Wien Energie) is involved in no less than 27 projects, of which 11 are in protected areas. Another Austrian company, the Kelag group, is involved in 13 projects, of which 9 are in protected areas, including the Medna Sana plant in Bosnia and Herzegovina, which is strongly opposed by local people.

“It’s unacceptable that companies from Austria or other western countries are building hydropower plants in the Balkans, that they would not consider in their home countries”, says Ulrich Eichelmann of Riverwatch.

“The good news is that the majority of the projects we identified are still on the drawing board and we will try to save as many of these beautiful Balkan rivers as possible,” says Gabriel Schwaderer, Executive Director of the EuroNatur Foundation.

The study and the accompanying database can be found at
https://bankwatch.org/publications/financing-hydropower-protected-areas-southeast-europe

The study was commissioned as part of the campaign “Save the Blue Heart of Europe”

For more information contact:

Pippa Gallop
Research Co-ordinator
CEE Bankwatch Network
pippa.gallop@bankwatch.org
+385 99 755 9787

Klara Sikorova
Senior Researcher
CEE Bankwatch Network
klara.sikorova@bankwatch.org
+ 420 274 822 150, Ext. 27

Ulrich Eichelmann
CEO, Riverwatch
ulrich.eichelmann@riverwatch.eu
+43 676 6621512

Gabriel Schwaderer
EuroNatur
Executive Director
gabriel.schwaderer@euronatur.org
+49 7732 927210

Notes to editors:

[1] The study covers Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the Vjosa/Aoos part of Greece, Kosovo, Macedonia, Montenegro, Serbia and Slovenia. It examines hydropower plants which have either been built in the last ten years or are now being planned.

A total of 1355 hydropower plants were identified as being planned now or having entered operation since 2005. Most of the plants are only in the planning stage so most likely do not have financing arranged yet, while others are financed by commercial bank loans which cannot usually be traced.

‘Financing sources’ include loans, guarantees, grants for project preparation/advisory services.

‘Plants’ refers to each separate hydropower facility, so one loan or guarantee may cover several plants but still be classed as a single ‘project’ by a financier.

[2] The EBRD, European Investment Bank and the World Bank group institutions (International Financial Corporation, International Bank for Reconstruction and Development, International Development Agency and Multilateral Investment Guarantee Agency).

Save the Blue Heart of Europe campaign:

About 2700 new dams are currently projected between Slovenia and Albania. In order to counteract this spate of destruction, ‘EuroNatur’ and ‘RiverWatch’ have launched the “Save the Blue Heart of Europe” campaign in cooperation with local partner in the respective Balkan counties. Find out more here: http://www.balkanrivers.net

Image: The controversial Medna Sana project built by Austria’s Kelag group near the Sana springs in Bosnia and Herzegovina. (c) Za vode Podgorice