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Citigroup limits financing for mines that dump tailings at sea

Jim Tan | Mongabay | 12 June 2018

  • Following pressure from advocates, Citigroup said last month that it will not fund any future mining projects over $50 million that dispose of mine waste in the oceans.
  • Tailings, a fine-grained, often toxic slurry left over after the processing of mined ore, are still disposed of in oceans, lakes and rivers in several countries.
  • Mines in Papua New Guinea, Norway and Chile are proposing to dispose of tailings in the ocean.
  • Local communities are often most affected by pollution from mines and have vocally opposed tailings disposal in the ocean in Norway and Papua New Guinea.

Several mines around the world dispose of potentially toxic mine waste directly into the ocean. Environmentalists have criticized the practice, arguing that the waste smothers ocean habitat and leaches harmful chemicals and heavy metals that can poison marine life. Last month Citigroup, a major shareholder in four mining companies that either actively dispose of mine waste into the ocean or propose to do so, agreed not to finance any new operations that pipe mine waste into the sea.

Citigroup’s move comes after pressure from an international coalition of NGOs that launched a campaign this year to end the disposal of mine waste in natural water bodies. The coalition, led by the Washington, D.C.-based environmental NGO Earthworks, is calling for a global ban on the practice and pressuring financial institutions to stop funding mining operations that engage in it. Earthworks announced Citigroup’s move in a May 2 press release.

“Citi’s decision says loud and clear: ocean dumping is dirty, unnecessary and wrong,” Ellen Moore, who coordinates the Ditch Ocean Dumping campaign for Earthworks, told Mongabay.

There are few signs of life on the bottom of Jøssingfjord in southern Norway 35 years after dumping ceased at the Tellnes titanium mine. Scientists believe it may never recover. Image by Erling Svensen.

Toxic tailings

One of the key problems miners face is how to safely dispose of the huge quantities of waste rock and tailings produced in the mining process. The tailings, a fine-particle slurry left over after the target metal has been extracted from the mined ore, are particularly tricky to handle. Tailings often contain potentially harmful chemicals used to process the ore, like cyanide and petroleum, as well as by-products like sulphuric acid and heavy metals like lead.

Nowadays, the vast majority of the world’s 2,500 industrial-scale mines dispose of their waste on land. But several mines still dump into water bodies, including at least seven into the ocean, in Papua New Guinea (PNG), Indonesia, Turkey and Norway; at least three into rivers, in PNG and Indonesia; and at least five into lakes in the U.S. and Canada, according to a non-exhaustive list from Earthworks. The group calculated that mines dispose of more than 220 million metric tons of waste in water bodies every year — enough, the group says, to fill 55 sports stadiums.

“Although mine waste dumping in water has been phased out in many parts of the world, mining companies still use it, governments still allow it, and the world’s largest banks and investment firms still profit from it,” Moore told Mongabay.

This is partly the result of geography. In Norway, suitable and stable terrestrial locations to store mine tailings are hard to find because of the mountainous terrain. In PNG, mines face a similar problem and must also contend with frequent earthquakes and flooding during the rainy season that can destabilize tailings dams.

Tailings pipes from the Marcopper mine in Marinduque, the Philippines, enter the sea at Calancan Bay. Image by Catherine Coumans/MiningWatch Canada

It is now widely accepted that tailings disposal can have a catastrophic impact on rivers and the creatures that live there. But the effect of tailings disposal in the ocean is somewhat more contentious.

Companies including Oslo-based Nordic Mining, which proposes to pump tailings from a rutile mine into Førdefjord, a fjord in southwestern Norway, suggest that deep-sea tailings disposal can be safe. They argue that, due to the layered nature of the ocean, so long as tailings are piped deep enough, ocean currents will not spread them, and their impact on marine life will be minimal and localized.

Charles Roche, executive director of the Mineral Policy Institute, an Australian NGO that assists communities affected by mining and is a signatory to the campaign, is less convinced. He points to the very limited peer-reviewed literature as evidence of the impact of submarine tailings. Two studies conducted around the Lihir gold mine in PNG found fewer deep-water fish and reduced marine life on the sea floor compared to the surrounding areas.

Part of the problem is that there is very little independent research into the effect of submarine tailings disposal, Roche told Mongabay.

“Research into submarine tailings is generally done by or for proponents [of submarine tailings disposal],” he said.

Many of the studies are environmental impact assessments conducted on behalf of mining corporations applying for a licence to operate and are rarely publicly available, according to a 2015 article in Oceanography magazine.

The lack of peer-reviewed research on the topic is a problem for Lisa Levin, an oceanographer with the Scripps Institution of Oceanography in California. A 2015 review she co-authored in Marine Pollution Bulletin suggests that a major reason is the high cost of conducting research in the deep sea.

Despite the limited research, Levin is also convinced tailings disposal has a negative impact on the ocean. “It will never be good for marine ecosystems,” she told Mongabay.

Citigroup acts

Citigroup, a multinational investment bank and financial services corporation based in New York, is among the top 20 largest financial institutions in the world, with total assets of $1.84 trillion in 2017.

Citigroup’s business is split into two divisions: consumer banking under the Citibank brand, and investment banking. It was Citigroup’s investments that attracted Earthworks’ attention. Citigroup is the third-largest shareholder in the Australian mining companies Highlands Pacific and St. Barbara Limited, which Earthworks says have together disposed of 54 million tons of toxic tailings in the ocean around PNG. Citigroup also holds shares in Norway-based Nussir ASA and Nordic Mining, which have both proposed disposing of tailings at sea in Norway.

Fishing boat on Repparfjord, Norway, where Norwegian mining company Nussir ASA proposes to dispose of tailings from a copper mine. Image by Kjerstin Uhre.

The campaign wrote an open letter to Michael Corbat, Citigroup’s CEO, in January 2018 asking the bank to sever ties with companies that dispose of waste at sea.

“Citi was immediately responsive after we launched the public campaign,” Moore told Mongabay. “It was clear that the bank did not want to be associated with the harmful and outdated practice.”

Following negotiations, Citigroup revised its Environmental and Social Policy Framework to state:

“Citi will not directly finance new mining projects … that utilize submarine waste disposal.”

The policy will only apply to future projects requiring corporate loans over $50 million, and does not apply to the bank’s brokerage business, which holds shares on behalf of clients.

When asked about the company’s new policy, Citigroup spokesperson Laura London responded:

“Citi has a comprehensive Environmental and Social Risk Management Policy that covers our business with a range of sectors, including the mining sector, and we carefully review any sensitive environmental and social impacts of activities we finance, in line with our global standards and good industry practice.”

London declined to respond to detailed questions, and the bank has not publicly announced the move itself.

Roche welcomed Citigroup’s policy change, but he recommended the bank “extend the policy and prohibit any involvement, including company or nominee shareholdings, of riverine and [marine tailing disposal projects].”

Nevertheless, Moore believes this quick win for her campaign is the first step in the right direction. She said Citigroup also agreed to add companies that dispose of mine waste in lakes, rivers or the ocean to the bank’s internal watchlist and subject them to tighter scrutiny.

Levin agrees that Citigroup’s move is significant.

”[Citigroup’s] policy certainly helps to raise awareness of the negative effects of submarine tailings disposal,” she said. “Because the economic sector drives so much of human behavior I believe it is an important first step to engender change.”

The campaign is also targeting the multinational financial institutions Bank of America, Credit Suisse and J.P. Morgan, contending that they also “have ties” to mines that dispose of waste into water bodies.

Local communities pay the price

View of the Ramu Nickel mine refinery where mine waste is disposed of into the ocean in Papua New Guinea. Image by Christopher McLeod/Sacred Land Film Project.

When mine tailings cause environmental damage, it is often local communities and indigenous groups that pay the highest price. Moore is critical of brokerage businesses, such as Citigroup’s, that hold so-called nominee shares for clients, which can be used to shield the clients’ identities. She said that if affected community groups could identify shareholders and then communicate their concerns directly to them, it would make a difference.

In PNG, tailings from the Tolukuma gold mine resulted in elevated levels of arsenic, lead and mercury in the drinking water and flooded croplands for communities downstream, according to a 2013 report prepared for the International Maritime Organization and the United Nations Environment Programme. The report also notes anecdotal reports from local communities of increased illness and deaths after drinking and bathing in the river where the mine disposed of its tailings.

In both PNG and Norway, local community groups have been vocal in their opposition to the disposal of tailings at sea. Landowners in PNG attempted to prevent the Ramu Nickel mine, majority owned by the Metallurgical Corporation of China, from dumping its tailings in the sea through a class action lawsuit, but were unsuccessful. In Norway, Saami indigenous people have frequently voiced their opposition to proposals by Nordic Mining and Nussir ASA to dispose of tailings in Førdefjord and in Repparfjord, in the northern part of the country.

“It is illogical and immoral to sacrifice our traditional, sustainable and profitable fisheries for an uncertain mine project that relies on outdated practices to turn a profit,” said Silje Karine Muotka, a member of the Saami parliament, in Earthworks’ press release.

Nevertheless, both projects appear to be moving forward.

Citations

Brewer, D.T., Milton, D.A., Fry, G.C., Dennis, D.M., Heales, D.S., & Venables, W.N. (2007). Impacts of gold mine waste disposal on deepwater fish in a pristine tropical marine systemMarine Pollution Bulletin 54(3): 309-321.

Hughes, D.J., Shimmield, T.M., Black, K.D., & Howe, J.A. (2015). Ecological impacts of large-scale disposal of mining waste in the deep seaScientific Reports 5:9985.

Ramirez-Llodra, E., et al. (2015). Submarine and deep-sea mine tailing placements: a review of current practices, environmental issues, natural analogs and knowledge gaps in Norway and internationallyMarine Pollution Bulletin 97(1-2):13-35.

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Industry regulator not bothered by liquidation

MRA won’t intervene in Tolukuma mine fiasco

No Cancellation of Licence

Post Courier | February 25, 2018

Mineral Resources Authority managing director Philip Samar says any assumption of the cancellation of the Tolukuma Mine licence following it being put under liquidation is not true.

He said the government and MRA, the industry regulator, have not cancelled anything and the issue is a purely commercial one for the operator of the mine and Singapore-based Asidokona Mining Resources limited and its creditors.

Mr Samar said the liquidation order handed down where MRA and the Government had not caused the liquidation.

“The mine owner, they have been operating the mine they went and took credit for services and now they have not repaid those creditors.”

“So one of the creditors decided to take the company to court and they are entitled to do that. This is where it is and that is exactly what this is about.”

“One of the creditors has taken the company to court because the company has not repaid them, so nothing to do with the government and nothing to do with MRA,” Mr Samar said.

He said as the court has appointed a liquidator, the liquidator has powers to now dispose of the assets of the company to recoup funds to repay the creditors.

“We need to keep the government and the MRA out of this. Every company goes through that process and if you owe somebody something those people will come and take you to court.”

Early this month the National Court ordered the mine to be liquidated after a service provider took Asidokona to court for non-payment of bills totaling more than K715,000.

The court ordered on February 08, 2018, the mine be placed into liquidation under the provisions of the Companies Act. IPI Catering and Pacific Development Contractors submitted in support their statements to the court, as they were also owed K1.6 million and K1.8 million respectively by Tolukuma Gold Mines. Asidokona Mining Resources is a private company that bought Tolukuma gold mine in Central Province in 2015 and they took over from Petromin.

Tolukuma Lies With Financiers

February 25, 2018

Following orders by the National Court to liquidate the assets of Tolukuma Gold Mine to pay off creditors, potential financiers of the debt will have the opportunity to take up stakes in the mine.

Mineral Resources Authority managing director Philip Samar said about the process the mine will have to go through.

“So the court has now appointed a liquidator, which is the administrator, and so the liquidator now has a court appointed process to now say that this mine is available and anybody who wants to offset the credit can come and see me.

“Asidokona is now going through its finances trying to get the money to repay, talking to potential financers to give it the money so that they can repay the creditors and take back the mine for themselves,” Mr Samar said.

He said this also means is that any person with the finances can call up the liquidator and lend some money to help.

Mr Samar said whoever can assist the liquidator sort out the creditors can have the mining lease transferred to them.

“If Asidokona can go and find the money and sort out the liquidators then the mining lease reverts back to them.

“Is somebody else fronts up to the creditor and got funds and are able to offset all of that than the mining lease gets transferred to them,” he said.

Creditors of the company are required to lodge their claims by March 14. From this a real debt figure for the mine will be determined for either the operator or interested financiers to pay.

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Government nets next to nothing from Tolukuma mine sale

The government sold the Tolukuma gold mine to a Singapore company, Asidokona, in 2015, for a reported price of K81.35 million. However, Mine Watch can reveal, the government has only ever received K700,000.

Despite Petromin’s claims Asidokona would invest heavily in the mine infrastructure, a new road and restart production, the whole deal looked dodgy from the very start.

Then Mining Minister, Byron Chan, described Asidokona as “reputable, committed” but  Asidokona is not a mining company, it is a front for Singaporean speculator, Philip Soh Sai Kiang     .

In 2016 Mine Watch revealed that Asidokona was trying to offload the mine for US$ 212 million to a Singapore nightclub company, LifeBrandz. That deal fell through.

All the while the government has been trying to convince landowners that mining will soon recommence and they will benefit handsomely from a new royalties deal as well as the 10% shareholding agreed as part of the 2015 sale.

This was tantamount to bare faced lying by the government, as officials must have known all along that Asidokona had no intention of restarting mining and, indeed, has only ever paid a tiny proportion of the sale price.

According to an audited financial report for Kumul Minerals Holdings Limited, the successor to Petromin, the sale of Tolukuma was completed on 30 November 2015, not for the reported price of K81.35 million, but K26 million.

Even worse, only K700,000 has ever been received and the balance of K25.3 million is still outstanding.

Apparently the buyer, Asidokona, was due to pay a further K16 million on before 31 December, 2016, but never paid. A further K2 million was to be settled by 31 December 2017 and K1.4 million by 31 December 2018.

According to the directors of Kumul Minerals “recovery of the outstanding sales proceeds is considered doubtful” and the debt has been written off.

To cap the sorry saga, Tolukuma Gold Mines has now been liquidated for non payment of its debts.

The Tolukuma landowners have every right to feel they have been betrayed and deceived by government authorities.

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Tolukuma mine liquidated

“Asidokona Mining Resources is reputable, committed, has integrity, and capacity” said then Mining Minister, Byron Chan when the government sold the mine in 2015

Who in the Mineral Resource Authority is going to take responsibility for this monumental mess?

SEE ALSO

Tolukuma mine purchased by Asian finance company with no mining experience

More farce over government’s botched sale of Tolukuma mine

Tolukuma future looks bleak, despite MRA spin

Post Courier | February 13, 2018

One of Papua New Guinea’s gold mines, Tolukuma, was liquidated last week after a service provider took them to court for non-payment of bills totaling US$233,844 last year.

The National Court ordered on February 08, 2018, that:

  • Tolukuma Gold Mines Limited is placed into liquidation by this Court under the provisions of the Companies Act on the ground that it just and equitable that the company be placed into liquidation.
  • Andrew Pini of Pini Accountants and Advisors is appointed to act as liquidator of Tolukuma Gold Mines Limited.
  • Tolukuma Gold Mines Limited is to pay Hevi Lift Limited and IPI Catering Limited’s costs of and incidental to the proceeding.
  • The time of the entry of these orders is abridged to the date of settlement by the Registrar which shall take place forthwith.

Liquidator Andrew Pini confirmed yesterday that the National Court last Thursday appointed his accounting firm to take on the liquidation process effective immediately.

Hevi Lift took the matter to court in October 2017 for their outstanding of US$233,844 owing since June last year. Two other companies, IPI Catering and Pacific Development Contractors submitted in support their statements to the court, as they were also owed K1.6 million and K1.8 million respectively by Tolukuma Gold Mines.

“I don’t know exactly how much they owe the creditors or service providers, what I intend to do immediately is make an assessment of the real debt figure and then will put out a report,” Mr Pini said yesterday.

“I will visit the mine to start our process of liquidation, but for now I have come up with directions on how we can immediately start. I have put out public statements to all creditors of the company to come and lodge their claims using the prescribed claim Form 43 of Schedule 1 of the Companies Regulations 1998.

“In accordance with Regulations 21 and 22 creditors of the company are required to lodge their claims by 5pm Wednesday March 14, 2018. After this, then I will ascertain the real debt figure for the mine.”

A Singapore-based Asidokona Mining Resources, a private company, bought the Tolukuma gold mine in Central Province for K81.35 million to recapitalise and eventually restart it. They took over from Petromin in 2015.

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Court reinstates case of Tolukuma mine spill

Christopher Yowat | The National aka The Loggers Times | February 13, 2018

THE Supreme Court has reinstated a case filed against the Tolukuma Gold Mine Limited over the alleged spillage of sodium cyanide into rivers in Golilala district, Central, 18 years ago.

The case was filed by James Gabe and others in 2006. it claims that more than K1 million in damages from the mining company was dismissed by the National Court in April, 2014. Gabe then applied to the Supreme Court to review the decision by Justice Sir Bernard Sakora.

The three-man Supreme Court bench of judges David Cannings, Ere Kariko and Jeffery Shepherd, granted the orders sought by Gabe – that the dismissal of the case by the National Court on April 9, 2014, be quashed and that the matter be reinstated.

Justice Sir Bernard had dismissed the proceedings after he had been satisfied that Gabe and the other plaintiffs were guilty of an inordinate delay in prosecuting the case and that there had been no proper explanation for it.

Gabe argued that the decision to dismiss the case was made on an “erroneous factual basis”.

Justice Cannings, on behalf of the Supreme Court panel, said:

“We consider, with respect, that if his honour had closely analysed the events that took place in the six-month period between the failed mediation (in April 2013) and the filing of the respondent’s motion for dismissal (in October 2013), his honour would have formed a different view as to the satisfactoriness of the applicant’s explanation for the delay.”

See also: Disgraced judge Bernard Sakora resigns in latest move to avoid justice

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MP Samb defends Asidokona failure

Samb clears air on mining delay

The National aka The Loggers Times | November 15, 2017 

THE operator of the Tolukuma Gold Mine Limited in Central has been delaying operations for the past two years because a business partner was pulling out, according to Goilala MP William Samb.
He said the Asidokona Mining Resources Pty Limited was to have restarted the mine which Central was a shareholder in.
In a statement, Samb said the delay had caused inconvenience to the company management in settling outstanding salaries of employees and resuming the operations at the mine.
The Tolukuma Gold Mine Limited is under care maintenance.
This was revealed during a recent meeting Samb had with Asidokona’s executive director Vincent Siow who confirmed the challenges.
Samb said a stakeholders’ meeting to be held this month will be to revise the agreement. They will discuss the production phase, scale of the mine, construction of the road from Doa to Tolukuma, establishment of the infrastructure development committee, and proper landowner business plans.
“Siow has assured that Asidokona is here to stay and continue with operation of the mine despite the few challenges,” Samb said.
“One of those will be to build a road linking Tolukuma to Port Moresby so it can cut back on the high operational costs.”

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Locals threaten to shut down Tolukuma mine

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Cedric Patjole | PNG Loop | November 11, 2017

Landowners of the Tolukuma Mine in Goilala District, Central Province, have issued an ultimatum to the Government to withdraw the mining lease from operators, Asidokona, or they will shut down the mine.

Chairman of the Yulai Landowner Group, George Gusi, announced on his Facebook profile yesterday that a seven-day ultimatum was given, which lapses on Monday, November 20.

Gusi stated that the current operator was not capable of operating the mine and called for its withdrawal and for another operator to invest in the mine.

“I have given 7 days’ ultimatum for the government to withdraw the mining licence from Asidokona Mining Resources Ltd.

“The rationale behind this? Asidokona has no capacity to operate a mine.” He alleges the operator lacks financial capacity as well as expertise.

“I am taking this bold action to rescue my suffering landowners to make way for a potential investor to come in and invest on our land,” said Gusi.

“MRA and other concerned authorities must come out clear and provide clear explanation on this issue. “I have already woken up from my long sleep now so I will continue to pursue until I achieve what I want.

“My appeal to all those relevant authorities to be patriotic to our country, our people and take our people’s issues/concerns at heart in ensuring that any decisions made are there to serve the best interest of our people,” he added.

When contacted by Loop PNG, Gusi claims formal notices have been issued to the Mineral Resources Authority (MRA), Mining Minister Johnston Tuke and other stakeholders.

He said if a favourable response is not received by the due date, they will shut down the mine.

In June this year Gusi snubbed the signing of the Tolukuma Mine memorandum of agreement (MOA), citing unmet outstanding issues.

Despite Asidokona being granted the mining licence, return to production has been problematic. Last month the MRA stated that tenement, regulatory and funding issues have stalled production.

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