CAO Cases

Arne Hoel, The World Bank

East Asia & the Pacific

Mongolia / Oyu Tolgoi-01/Southern Gobi

Complainant
Local herders with support of OT Watch (a national NGO) and Gobi Soil (a local NGO)
Date Filed
October 12, 2012
Concerns
Impacts to land and water, Indigenous culture and livelihoods, compensation and relocation, project due diligence
Case Status
Open - Ombudsman
 

Synopsis

Complaint

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 an 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 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. 

 

CAO Action
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 agreed to work with CAO's Dispute Resolution function to try to resolve the issues raised in the complaint using a collaborative approach.  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).

 

As part of the dispute resolution process, several interim agreements were reached on topics such as access to information, tours/inspections of the mine site for herders, joint fact-finding related to the Undai river diversion, and access to grazing land inside the OT project site. The parties also initiated a second joint fact finding (JFF) process, which includes 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. The studies were conducted by independent experts jointly selected by the parties. The final reports of both JFF processes were submitted to the parties in January 2017 and formed the basis for further discussion.  The reports are available via the "View Documents" link below.

 

After several joint meetings, the parties reached comprehensive agreements on the issues raised in the complaints, and developed detailed action plans for implementation.  The agreements were formalized and signed by the parties in May 2017 bringing the dispute resolution process to a close.  CAO will continue to assist the parties in monitoring implementation of the agreements.

 

Status
The dispute resolution process has concluded following agreement by the parties.  CAO is monitoring implementation of the agreements.

 

Status as of June 5, 2017

Project information

Institution
IFC & MIGA
Project Name & Number
Oyu Tolgoi LLC 29007
Department
Oil, Gas, Mining, & Chemicals
Company
OT LLC
Sector
Mining
Region
East Asia & the Pacific
Country
Mongolia
Environmental Category
A
Commitment
$400m A loan & $1b B loan

Case Tracker

Ombudsman

  • Eligible: Completed
  • Assessment Period: Completed
  • Facilitating Settlement: Completed
  • Monitoring/Close-out: In Process

Compliance

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