CAO Cases

Arne Hoel, The World Bank

East Asia & the Pacific

Mongolia / Oyu Tolgoi-02/Southern Gobi

Complainant
Local community members with support of OT Watch (a national NGO) and Gobi Soil (a local NGO)
Date Filed
February 11, 2013
Concerns
Mine impacts on Undai River
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 percent) 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 percent.  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 February 2013, a complaint was filed by a local nomadic herders and community members who reside and conduct livelihood activities close to the project site. The complainants’ main concern is the Undai River diversion component of the project.  The complainants contend that the river diversion jeopardizes their traditional nomadic lifestyle and livelihood. They are specifically worried that the diversion will lead to several water systems drying up, deteriorated pastureland yields, diminished water supply to forests and a cultural impact to what they view as a sacred river.

 

CAO Action

CAO found the complaint eligible for further assessment in 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). 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 have 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 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.

 

Status

The parties to the CAO-led mediation have released the final joint fact finding report on the socio-economic study of herder households and the Phase 2 study of the impacts of the Undai River diversion conducted by independent experts at the request of the parties.  The report will form the basis for further discussion and implementation of agreed actions between the company and herder representatives to resolve the issues presented in the complaints.  CAO’s Dispute Resolution process is ongoing.

 

Status as of January 17, 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: In Process

Compliance

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