Tag Archives: World Bank

For two global miners, ‘profitable production’ has meant devastation

The Yanacocha gold mine

Ellen Moore | Earthworks  | June 27, 2018

Since 2000, the Batu Hijau copper-gold mine on Sumbawa Island in Indonesia has dumped 720 million tonnes of toxic tailings into the Senunu Bay in the Indian Ocean. Until 2016, the mine was majority owned and operated by the US company, Newmont Mining Corp, which controlled 48.5% of the economic interests. Together with Japan’s Sumitomo Corporation, they held over 70% of shares in the project.

After 16 years of mine waste dumping, both Newmont and Sumitomo sold their ownership stakesin Batu Hijau in November 2016, simply walking away from an environmental disaster of massive proportions. Now Newmont and Sumitomo are teaming up again; this time, at the Yanacocha mine in Cajamarca, Peru.

On June 20th, Newmont announced that Sumitomo had purchased a 5% stake in the controversial Yanaococha mining company for US $48 million. The stake was previously held by International Finance Corporation (IFC), the private sector branch of the World Bank. The IFC announced it had ended its 24 year relationship with Minera Yanacocha in December 2017.

The new arrangement means Newmont continues to hold a 51.35% a majority share in Yanaococha mining, together with Peruvian company, Buenaventura (43.65%) and Sumitomo (5%).

Yanacocha and Batu Hijau: Dominating and Destructive

The massive Yanacocha gold mine in the arid Andean Highlands of Cajamarca, Peru, has contaminated critical water sources in the region and had devastating impacts on local sustainable livelihoods. The mine’s unpopularity has sparked broad based resistance to Newmont’s plans to expand operations, first to Cerro Quilish and later at the proposed Conga project. The mining company and state’s attempts to quell opposition have resulted in allegations of human rights abuses and violence. Subsistence farmer, Máxima Acuña de Chaupe, has refused to cede her land to Newmont for the Conga mine, and has faced nearly a decade of harassment, abuse and legal persecution. Despite the hold on development of the Conga project for now, the addition of Sumitomo suggests Newmont isn’t planning on leaving Cajamarca any time soon.

Like Yanacocha, the Batu Hijau mine is also known for the litany of documented environmental harms starting almost at the outset of operations in 2000. Just over one year into operations, a pipeline that transported mine waste from the production site to the ocean broke, dumping tailings into an area of fragile coral reefs. Indonesian environmental group, WALHI, reported reduced fish populations, water pollution, and impacts on local fisheries and livelihoods. The project has also been criticized for destroying rainforest, protected bird habitat and key biodiversity areas. In May 2011, the local West Sumbawa government appealed to the Indonesian government to not renew the mine’s permit to dump, but they were ignored. That same year, Newmont secured financingfrom a consortium of banks including Goldman Sachs Lending Partners LLC and BNP Paribas SA to expand the polluting mine.

Ocean Dumping

The practice of dumping mine waste into the ocean was outdated when Batu Hijau began operating back in 2000. Today it is one of just seven mines still dumping mine waste into the sea. Earthworks and the Ditch Ocean Dumping coalition is leading a  growing movement demanding the practice be phased out once and for all.  

In its statement announcing the sale, Newmont executive vice president for strategic development, Randy Engle said, “We had a long and productive partnership with Sumitomo at Batu Hijau in Indonesia, and we look forward to working with them and Buenaventura to advance the next generation of profitable production at Yanacocha.” Unfortunately, when it comes to Newmont and Sumitomo, ‘profitable production’ has meant devastating consequences for ecosystems and the people that depend on them. Communities and civil society groups are watching closely to see if Sumitomo and Newmont will finally take responsibility in Peru by respecting human rights and communities’ right to say no to Conga or other mining projects, ending pollution of scarce water supplies, and ensuring fully funded closure and reclamation for the Yanacocha mine.

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Metal Mining Would Be Disastrous for Haiti

Salvadorans protested against mining outside the Legislative Assembly in San Salvador in 2017. El Salvador’s Congress recently approved a law that prohibits mining for metals, on the grounds that it is an industry that creates negative impacts on the environment and on people’s health. Credit: Marvin Recinos/Agence France-Presse — Getty Images

Ellie Happel* | New York Times |  March 29, 2018

After the 2010 earthquake killed more than 200,000 people and displaced more than a million, the government of Haiti identified mining for gold and other metals as necessary to strengthen the economy.

To that end, the government and the World Bank worked to revise the country’s mining law to attract foreign investment. Their draft law, which was presented to Parliament last July and is awaiting consideration, did not include input from Haitian environmental and human rights organizations.

The lack of transparency surrounding the proposed new mining law raises significant concerns about whose interests would be represented under the revamped legal framework. Canadian and American companies have already been granted permits to explore for gold, copper and other metals in the northern hills of Haiti. Although the full extent of Haiti’s mineral resources is unknown, some estimate that there is $20 billion worth of precious metals in the soil. If passed, the law would pave the way for country’s first commercial metal mine.

The experiences of poor but resource-rich countries around the world provide a stark reminder that translating natural resources into public wealth is a very risky business — one that often fails. Even in developed countries, industrial-scale mining has contaminated water, increased security threats, forced thousands of people from their homes, and damaged ecosystems for generations. In poor countries like Haiti, the record is even worse. Given the unique vulnerabilities it faces, mining could deal the country’s environment and economy a blow from which it would never recover.

Haiti is arguably the most environmentally damaged country in the Western Hemisphere. This damage is a consequence of environmental mismanagement, counterproductive foreign investment and anemic public institutions. The government has shown that it is unable to either prepare for or repair the destruction wrought by hurricanes, droughts and earthquakes. In fact, it has been unable to provide basic services to its citizens even in the absence of natural disasters: More than half of rural residents do not have access to safe drinking water.

In this densely populated country where both housing and land for farming are scarce, a majority of Haitians live in crowded cities, or in rural areas far from schools, hospitals and other services. Opening a mine would displace hundreds, if not thousands of families from their homes in the areas where the mines are expected to be built.

The government lacks the resources and the will to defend the interests of ordinary citizens. Officials from the Office of Mines and Energy told me that they visit communities where companies have explored for gold only when provided a ride in a company vehicle. Without regulation, international companies have shown that they have little incentive to think beyond their profits.

This country has long been plagued by corruption. Last year, a Haitian Senate report accused former government officials of embezzling more than $2 billion from PetroCaribe, a Venezuelan oil fund. Transparency International ranks Haiti as the second most highly corrupt country in the Americas. The divide between the rich and the poor in Haiti is extreme, and the poor majority struggles to hold the government accountable. More than 90 percent of schools are privately run.

El Salvador may provide a path forward. A year ago, the legislature there voted overwhelmingly to prohibit metal mining. The residents of areas rich in metals argued that their country was too densely populated and already too environmentally degraded to absorb the damage that would result from mining. El Salvador is the first country in the world to impose a ban on metal mining.

This precedent set by El Salvador should encourage other nations to hold inclusive debates about the costs and benefits of metal mining before allowing their nonrenewable resources to be dug up to the detriment of the many for the benefit of the few. In Haiti, a coalition of social movement organizations, the Kolektif Jistis Min (Justice in Mining Collective), is calling for just that: a national debate about the effects of mining before any mines are built. The collective, with which I have collaborated for more than five years, has taken a vocal position against metal mining, and is calling for the legislature to reject the draft mining law that it appears poised to pass.

Metal mining in Haiti will bring profits to the few and more misery for the masses. Haitian legislators should heed the example of El Salvador and listen to the voices of their own people who are cautioning against mining and demanding less destructive and more inclusive development.

*Ellie Happel is the Haiti Project director for the Global Justice Clinic of New York University School of Law.

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Fiji: No plans for deep sea mining

Felix Chaudhary | The Fiji Times |  June 28, 2017

SEABED deep sea mineral mining will not be conducted in waters around Fiji in the near future, says Ministry of Lands and Mineral Resources permanent secretary Malakai Finau.

“The costs involved are absolutely huge,” he said.

“Current exploration interest is in its very early or preliminary stages, we haven’t even reached the advanced stages as yet.

“Seabed resource exploration requires a lot of resources. One of the biggest costs is the need to engage a state-of-the-art marine research vessel.

“Getting exploratory work done on land is very expensive, so you can imagine what it’s like when you are attempting to do this out at sea.”

Meanwhile, a report by the World Bank released in April last year titled “Precautionary Management of Deep Sea Mining Potential”, called on Pacific Island countries to be extra vigilant and cautious over any plans for seabed mining.

The report said any Pacific country supporting or considering deep sea mining activities must proceed with a high degree of caution to avoid irreversible damage to ecosystems.

The World Bank report also emphasised the need for strong governance measures to ensure that appropriate social and environmental safeguards were in place.

Pacific Island countries that have granted permits for deep sea mining exploration include Papua New Guinea, Fiji, Tonga, Vanuatu and Solomon Islands. The Cook Islands has advanced its efforts and done a minerals exploration tender process.

Mr Finau is chairing the Science Technology and Resources (STAR) Network’s 2017 conference at the Tanoa International Hotel in Nadi.

The conference is supported by the Geoscience Division of the Pacific Community and sponsored by Standard Concrete Industries (Fiji), XINFA Mines (Fiji) and the UNDP neglected development minerals project with support also from the Circum-Pacific Council.

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Huge gaps in Papua New Guinea’s 2014 EITI Report

eiti-2014

There are huge gaps in Papua New Guinea’s draft 2014 Extractive Industry Transparency Report that has been very quietly released over the New Year holiday – PNG EITI Report 2014 [pdf file 4 MB]

Despite the fact this is PNG’s 2nd EITI report the document contains very limited information from government departments including almost no information from the Department of Petroleum and Energy or the Mineral Resource Development Company. The tax information also has huge gaps.

This, again, throws into question the PNG government’s commitment to the EITI standard and the World Bank conceived, sponsored and run process to get PNG to join.

According to the international consultants, Ernst and Young, who prepared the 2014 report, they “experienced varied levels of cooperation from reporting entities” and the report contains “significant gaps”. 

In particular, Ernst and Young say, while “nearly all companies have complied fully or partially”, State Owned Entities only answered questions about non-financial information and

“Some government departments were challenging to engage with. Some did not respond to any communications; some met with us and shared some non-financial information”

The incomplete draft report has been published to ‘comply’ with international EITI requirements, though it rather undermines the credibility of the EITI standards if such a limited report as PNG has produced can be deemed ‘compliant’.

PNG applied for EITI candidacy in 2013. In March 2014, the country was accepted as a candidate country, and in early 2016 it published its first EITI report, on the calendar year 2013.

See also:

The Extractive Industry Transparency Initiative in Papua New Guinea: Just more corporate greenwashing?

International research shows World Bank sponsored EITI a waste of time

History of the World Bank’s EITI project in PNG

2014 EITI report exposes PNG’s total lack of commitment to transparency standard

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LOs want to see benefits says leader

solwara_1_map

Simon Keslep | Post Courier | May 9, 2016

THE Multi-million kina Solwara 1 project within the coastal region of New Ireland and East New Britain needs to be reviewed in terms of landowner benefits.

Former president of Central New Ireland local level government Toligai Soka said last Friday with the 2018 locked in by Canadian Miner Nautilus that there were still a few issues that needed to be ironed out.

Top of the list Mr Soka said were the equity share benefits for landowners within the projected Solwara 1 tenements and also the environmental aspects pertaining to the deep sea mine.

“Mineral Resource Authority (MRA) and Nautilus need to explain also the shift of project location (tenements 154) and what benefits will Namatanai wards of one, two, three and four gain.”

Mr Soka added that procurement studies should also be carried out in terms of the project’s environmental and social aspects of development for coastal communities located within the project extraction zones.

He had claimed due process had not been followed in the issuance of the licence to the developer.

“Seabed mining is a totally different ball game and we understand the the Land Mining Act was adopted and used in the issuance of the liscence. This is whilst awaiting collation of draft policies.

“It is really a slap in the face when landowners are denied their share of benefits and even being left neglected in terms of basic service deliveries like education, health and other socio-economic developments,” said Mr Soka.

“It is now becoming a common trend of establishing ghost created landowner groups in major economical townships which directly contributes to inadequate distribution of royalty payments for traditional landowners.” he had added.

Meanwhile Mr. Soka gave reference to the three main economic projects within New Ireland province which includes Simberi, Lihir and now Nautilus.

“There should be establishment community consultative organisations to deal with landowners’ economic, social and environmental issues relating to the project,” added Mr. Soka

Mr Soka’s concerns is also in reference to a recent World Bank Report on immediate cautions in Deep Sea Mining in the Pacific region in which PNG has already granted a license for ocean floor mining through the Solwara 1 project.

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Pacific urged to be cautious over seabed mining

nautilus machine cutter

Radio New Zealand | 28 April 2016

A new report by the World Bank says Pacific Island countries should be cautious over any plans for mining of the seabed.

Released today, the ‘Precautionary Management of Deep Sea Mining Potential’ report recommends that Pacific countries supporting or considering deep sea mining activities proceed with a high degree of caution to avoid irreversible damage to their ecosystems.

It also stresses the need for strong governance arrangements to ensure that appropriate social and environmental safeguards are in place.  

The World Bank’s country director for the Pacific, Franz Drees-Gross spoke with Koroi Hawkins about the reports recommendations.

FRANZ-DREES GROSS: What we are seeing is whether countries adopt Deep Sea Mining as their development strategies or not That is a decision for National government we would just encourage them to use a precautionary approach if they do exploit those resources. So develop the institutional capacity to mange any financial flows as a result of those activities to make sure they really benefit communities. Make sure we fully understand the ecological impacts especially in sensitive ecosystems and also make sure that any social safe-guards are well managed.

KOROI HAWKINS: Is this of crucial importance given the close proximity of the Solwara 1 project coming into being in Papua New Guinea?

FDG: I think what is very clear about sea bed mining and we are not the first to have worked in this area. SPC’s geoscience division supported by the European Union has been working on it for a number of years. But I think everybody that has been near it agrees that it is a very new sector with a lot of knowns and a lot of unknowns for example and in a number of areas. So very little is known about the resource endowments in the first place. So what minerals are in which economic zones of countries. And then even if you knew the value of those resources very little is known about how commercial (viable) it is actually to extract them. Is it profitable at all? I mean Solwara 1 is the first exploration license that will basically get underway in 2018. So even then you will have only a very small experience on I think a tenth of a square kilometre to even test whether it is commercially viable to basically dredge minerals on the sea bed and transport them up in a slurry to a support vessel on the surface. So this is very new and what we are saying is since it is new and since there are so many unknowns around the resource it’s commercial viability, its potential ecological impacts. Just proceed with caution make sure you have good monitoring regimes. Make sure that you have got good ways to manage the resources but also the environmental impacts.

KH: Would you say that you are comfortable with the level of all of the measures recommended in your report that pacific island countries are at in terms of going into sea bed mining and exploration.

FDG: I think different countries are at different stages right, but what we are seeing right now is that already globally there is about 1.5 million square kilometres of the ocean floor both under national jurisdictions and under the jurisdiction of the International Seabed Authority that already have exploration licenses. So with or without us or without anybody else’s help right now the status quo is there are 1.5 million square kilometres under exploration. So this has happened it has slowed a little bit because of the end of the mining super cycle that lasted from 2005 to 2013 and so there is a little bit of a breathing space right now. And what we are encouraging governments to do is use that breathing space to get ahead of the curve. So put in place the legislative and regulatory frameworks put in place good environmental and social monitoring frameworks and think about regional co-operation on deep sea mining. It is a new area, it requires a lot of specialised expertise. It is very unlikely that one small country will have all of the skills necessary to sit across the table from an international company on these issues. So can countries work together under a regional approach to improve the quality of that oversight. So we see this as a good time to prepare for what we think might in the future be more interest in actual exploitation activities.

KH: There’s a lot of unknowns, that is for sure with seabed mining one interesting factor I notice in the report is that while there is a lot of focus on the environmental impacts social impacts and the like, there is also little know about the fiscal regimes as you put it and whether the whole practice will be actually beneficial to countries or the companies involved.

FDG: I think the point is everybody on the development side ourselves as a development institution of course our focus is the countries how can any mining regime or extractive industries regime on land or on the sea floor how can that be made beneficial for countries and for communities. That is the reason we exist because we want to ask that question. The issue is to do good fiscal regimes for any kind of a mining regime seabed or otherwise you have to have a good understanding of the economics of the business. So what is the value of a resource in a certain area how economical is it, how cost-effective is it to bring it to the surface and then once you have a handle on that and then you can advise countries on what their appropriate take should be so if there is an upside potential there is potential for the earnings by mining company to be large you want the government to be in a position to reap those windfall profits or to cash in on those windfall profits as well. So the IMF has done some work in the Pacific with countries on deep sea mining legislation to craft a fiscal regime. It think that work is really good I think it will be informed and and further refined going forward as people learn more about the commercial viability of the resource. But I think there is a way to do it well in terms of the resource management. Timor Leste is a relatively good example on managing an extractive industry resource well. As you know they have a petroleum fund where all resources that are earned on royalties are ploughed into one single fund. It is internationally invested, it is audited by a third party that information is given to parliament and then parliament decides how much they want to draw down from that fund every year. So there are good examples of how to manage the fiscal flows from this well.   

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International research shows World Bank sponsored EITI a waste of time

eiti logo

Highlights

  • Study explores the efficacy of the Extractive Industries Transparency Initiative (EITI).
  • Analyses the performance of the first 16 countries to attain EITI Compliance Status.
  • In most metrics EITI countries do not perform better during EITI compliance than before it.
  • EITI countries do not outperform other countries.
  • EITI is not a panacea for good resource governance or sustainable development.

By Chris Armes, Queen’s Gazette

Queen’s researcher explores efforts to improve transparency in resource-rich countries.

Nathan Andrews, a Banting Post-Doctoral Fellow in the Department of Political Studies, has co-authored a paper with researchers in the UK, Germany, Belgium and Denmark, on the effectiveness of the Extractive Industries Transparency Initiative (EITI). 

Dr. Nathan Andrews (Political Studies) has co-authored a report on the effectiveness of the Extractive Industries Transparency Initiative (EITI) in improving transparency surrounding resourse extraction in countries suffering from the "resource curse."

Dr. Andrews has co-authored a report on the effectiveness of the Extractive Industries Transparency Initiative (EITI) in improving transparency surrounding resource extraction in countries suffering from the “resource curse.”

Started in 2002, the EITI was created with an aim to improve transparency and domestic government in resource rich countries, namely those suffering from the “resource curse.”

“It’s a great initiative to begin with because it brings some of these opaque practices (around) taxes and royalty payments into the public domain,” says Dr. Andrews. “We felt that it’s not just about having the initiative. We needed to test, over the long-term, how it has impacted the countries that have signed on and to what extent. The reports disclose these huge sums of money, trillions of dollars in tax and royalty payments, but does that disclosure have any impact?”

Since the 1950s, researchers have noticed, paradoxically, that countries with an abundance of natural resources, specifically non-renewable resources like minerals and fuels, tend to struggle to achieve economic growth, transparency and democratic rule. Programs such as the EITI were launched to bring transparency to the royalty payments countries receive in exchange for resource extraction, with the goal of reversing the resource curse.

Dr. Andrews and his colleagues looked at the first 16 countries that achieved EITI compliance as of 2012 to determine if meeting the requirements of disclosure correlated with improved accountability for local governments, per capita GDP growth and improved standard of living for residents.

Interestingly, the researchers found that EITI countries did not perform better under the scheme and did not perform better than other resource rich countries such as Canada that were not signatories to EITI. Dr. Andrews and his team speculate that the limited scope of the initiative, its voluntary nature and the lack of a strong, independent media in most of the nations profiled prevented the initiative from being as effective as it could have been.

“Even within the framework, one of the challenging aspects is that participation and disclosure are voluntary,” he says. “The countries that really are part of the initiatives are not better off in terms of accountability.”

The full study, titled Energy Governance, Transnational Rules and the Resource Curse: Exploring the Effectiveness of the Extractive Industries Transparency Initiative (EITI), has been published as an open source piece in the journal World Development, and is available online.

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