East Asia & the Pacific
Mongolia / Oyu Tolgoi-01/Southern Gobi
The Oyu Tolgoi project is a $12 billion investment to develop a copper and gold mine at Oyu Tolgoi in the Southern Gobi region, Mongolia. Oyu Tolgoi LLC's majority owner (66%) is Turquoise Hills Resources, a Canadian public company listed on the Toronto Stock Exchange. Erdenes Oyu Tolgoi, LLC, a Mongolian state-owned holding company, owns the remaining 34%. Turquoise Hills Resources majority shareholder is international mining major Rio Tinto Plc. IFC’s proposed investment is a A Loan for IFC's account of up to US$400 million together with a B Loan of up to $1 billion to be syndicated to international commercial banks, as part of a proposed $4.5 billion project debt financing. In addition to the proposed IFC financing, MIGA is providing a guarantee against the risks of expropriation, war and civil disturbance, and breach of contract. for a parallel debt tranche of up to US$1 billion.
In October 2012, a complaint was filed by nomadic herders, with the support of OT Watch, a national NGO, and Gobi Soil, a local NGO, on behalf of nomadic herders who reside and/or raise livestock close to the project site. The complainants’ main concern is the project’s use of land and water, which they claim disrupts their nomadic way of life, and puts in jeopardy their indigenous culture and livelihood. The complainants contend they have not been compensated or relocated appropriately, and question the project’s due diligence, particularly around the issue of sustainable use of water in an arid area.
The CAO found the complaint eligible for further assessment in October 2012 and conducted multiple field trips to Mongolia between November 2012 and February 2013. Based on stakeholder discussions conducted as part of the CAO Assessment, the complainants and company have agreed to work with CAO's Dispute Resolution function to try to resolve the issues raised in the complaint using a collaborative approach. The assessment process is documented in CAO's Assessment Report, which is available, along with IFC's response, under "View Documents" below.
Given a second complaint was filed in relation to the project, the local herders elected a team to represent them in a single CAO dispute resolution process for both CAO Oyu Tolgoi complaints (01 & 02). Several interim agreements have been reached on topics such as access to information, tours/inspections of the mine site for herders, joint fact-finding related to project impacts, and access to grazing land inside the OT project site. The parties are currently preparing to begin a second joint fact finding (JFF) process, which will include a socio-economic study of herder households intended to independently map changes in livelihoods and socio-economic conditions over the last decade, and a study which will complete the assessment of project impacts on the main tributary of the Undai River (see OT-02 via link below). The studies are being conducted by independent experts jointly selected by the local parties. Details on agreements and joint statements from the parties on the progress of the process so far can be found via "View Documents" link below. CAO's Dispute Resolution process is ongoing.
Status as of March 28, 2016
- IFC & MIGA
- Project Name & Number
- Oyu Tolgoi LLC 29007
- Oil, Gas, Mining, & Chemicals
- OT LLC
- East Asia & the Pacific
- Environmental Category
- $400m A loan & $1b B loan
- Eligible: Completed
- Assessment Period: Completed
- Facilitating Settlement: In Process