Public finance for mining must bring more than a mirage of development benefits in Mongolian desert

Ulan Baatar, Mongolia – Civil society groups are demanding that investments from international financial institutions to extract resources in Mongolia’s Gobi Desert guarantee that livelihoods are protected for those living near the mines and profit windfalls are used as an impetus to social and economic development for the region.

The call follows monitoring visits to the Oyu Tolgoi copper and gold deposit, which both the World Bank’s International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD) are currently assessing, and the Tavan Tolgoi coal deposit, for which the EBRD has signed loans of USD 180 million [1].

Regine Richter of German environmental and human rights group urgewald says, “During a public forum we organised with 50 residents of Khanbogd, the town nearest the Oyu Tolgoi site, local people repeatedly complained of acute water shortages, increases in respiratory problems among children and deaths to livestock caused infrastructure construction for the mine. It is now more apparent after our visit that large-scale mineral development, especially in such harsh desert climates, is not a compatible form of development with traditional pastoralist lifestyles, as these nomads are suffering on the brink of extinction.”

Fidanka McGrath of CEE Bankwatch Network says, “One hundred kilometres away, in Tsogttsetsii near the Tavan Togloi mine, the local deputy governor praised company investments to develop communal services that address the needs of the town’s mushrooming population. At the same time, the local administration is uninformed about the impacts of coal mining on health, and Tsogttsetsii officials and residents have no capacity to independently monitor air and water quality and are forced to rely on pollution data produced and disclosed by the polluter.”

“Considering that the Ukhaa Khudag mine will be followed by more mining developments in the south Gobi, we urge the EBRD to add value by demonstrating how such projects can be implemented in accordance with international best practice and make use of the bank’s own policies to promote transparency, informed public participation in decision-making, sustainable resettlement and social and environmental protection” added McGrath.

CEE Bankwatch Network (central and eastern Europe) * urgewald (Germany) * Bank Information Center (United States) * are organizing a press conference on coal development in Mongolia on June 14, at 11:00 local time, at Channel 25, Ulan Baatar.

For more information, contact:

Fidanka Bacheva-McGrath
Bankwatch EBRD coordinator
+359 899 876 095
fidankab AT bankwatch.org

Notes

[1] In 2009 and 2010, the EBRD signed two loans totalling USD 180 million with Energy Resources LLC, a private Mongolian mining company which owns and operates the Ukhaa Khudag coal mine and was floated on the Hong Kong Stock Exchange in October 2010. The project’s first phase involves mine development and the second, constructions of a coal washing plant to produce coking coal for export to China.

Within the last year, both the IFC and EBRD have begun due diligence on the Oyu Tolgoi project.