Mongolia: Oyu Tolgoi-02/Khanbogd
Local herders with support of OT Watch (a national NGO) and Gobi Soil (a local NGO)
Mine impacts on Undai River
$400m A loan & $1b B loan
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 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 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).
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 JFF reports and progress 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 mediation process to an end. In March 2019, after monitoring the parties’ implementation of agreements and upon request by the TPC, CAO held formal case closure events in Mongolia. The parties' decision to conclude the dispute resolution process was documented in a public Joint Statement, which is available via the "View Documents" link below. After the closure events the TPC released a video about their experience in the CAO mediation process, which can be viewed on CAO's YouTube channel https://youtu.be/_yiY6rgdRP0 and from the Documents page linked below. In May 2020, CAO released a Conclusion Report and formally closed the case. The Conclusion Report summarizing the dispute resolution process is available in English and Mongolian under "View Documents" below.
The case was closed in May 2020 after monitoring the implementation of agreements.
Status as of May 12, 2020