Tag Archives: Mongolia

The Limits of Corporate Benevolence, from Mongolia to Michigan

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The phrase “human rights” is nowhere to be found in the Oyu Tolgoi Investment Agreement, a document [pdf] that will play a critical role in guiding Mongolia’s development over the next decade. The Agreement sets the terms for the $6.2 billion investment in the Oyu Tolgoi gold and copper mining project, which promises to account for no less than one-third of Mongolia’s GDP by the year 2020. Rio Tinto has a 66 percent stake in the project through its subsidiary, Turquoise Hill Resources Ltd; the Mongolian government owns the rest.

Along with the serious environmental concerns cited by the United States when it abstained, in February of this year, from a World Bank investment scheme in Oyu Tolgoi, there are a host of human rights issues to address — from migrancy to land seizures, rights to the scarce water resources of the Gobi desert region, conditions in Ulaanbaatar’s Ger camps, and the survival of Mongolia’s herder communities. (The Bank Information Center provides an overview of these concerns, here and here.) The Investment Agreement briefly addresses some of these points, but it resorts, in all instances, to what I would call the language of corporate benevolence.

So the Investor agrees to abide by the Extractive Industries Transparency Initiative (a voluntary agreement to publish payments made by the Oyu Tolgoi mine to the government); in another place (section 4.13; but cf. also section 4.6) the Investor consents to “build and maintain productive working relationships, based on principles of transparency, accountability, accuracy, trust, respect and mutual interests, with non-governmental organizations, civic groups, civil councils and other stakeholders.” Beyond this, there is not much else to guide or govern the company’s conduct vis a vis civil society and its responsibility to respect human rights.

Given the high stakes, the scale of Oyu Tolgoi and the involvement of the World Bank and IFC in the project, it is surprising the Agreement does not explicitly incorporate — or reference — the UN Guiding Principles on Business and Human Rights. Instead of creating binding agreements or even practical mechanisms to ensure that Oyu Tolgoi and the government of Mongolia meet their respective human rights obligations as the economy accelerates and the social terrain continues to shift, the Investment Agreement relies on the language of corporate social responsibility to smooth things over.

Part of the trouble with CSR isn’t just that it tends to replace binding agreements and articulated responsibilities with vague sentiments, the language of corporate benevolence, and promises of sustainability and shared prosperity. That’s bound to happen when social responsibility meets public relations. A bigger problem is that the commitments companies voluntarily make to contribute to economic development and social progress — and to respect human rights — will last only as long as the business requires them.

For an example of how abruptly a company can ditch stakeholder communities, what happened in Michigan yesterday with another Rio Tinto project may turn out to be more instructive than what’s happening right now in Mongolia. In the face of serious environmental and human rights challenges to its Eagle Mine project over the last several years, Rio Tinto all along touted its good corporate citizenship, promising to “leave more wood on the woodpile” and to take an active hand in the long term, “sustainable development” of the Upper Peninsula. That is just part of “The Way We Work,” as the title of a Rio Tinto CSR publication would have it — or at least it was the Way We Worked. Yesterday, the company announced that it had sold the Eagle Mine project to Toronto-based Lundin Mining for the tidy sum of $325 million cash — part of CEO Sam Walsh’s strategy to divest from “non-core” assets and protect the single-A credit rating the company currently enjoys. A community of stakeholders whose future Rio Tinto promised to make happy, bright and prosperous became, overnight, a disposable asset.

Impossible or Indigenous in Peru

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QuechuaHighlands

In the post I wrote a couple of weeks ago about the Rio Tinto shareholder meeting, I mentioned a woman who spoke on behalf of the Mongolian herders whose livelihood is threatened by the Oyu Tolgoi mining project. Her name is Sukhgerel Dugersuren, and she is the Executive Director of the Mongolian NGO Oyu Tolgoi Watch. In her remarks, Dugersuren asked the company to recognize the herders as “indigenous” people (as the IFC does). That isn’t just a gesture of recognition or respect, a way of acknowledging that the herders were there first, or that they have a centuries-old claim to the land and the scarce water sources of the Gobi; it means that before moving ahead, the Oyu Tolgoi project would require – to use the language of the UN Declaration on the Rights of Indigenous Peoples (Article 32, paragraph 2) — their free, prior and informed consent.

I was reminded of Dugersuren and the case of the herders when I read yesterday morning that the Humala government in Peru now intends to exclude the Quechua people of the Peruvian highlands from “prior consultation” on mining projects.

President Ollanta Humala campaigned in 2011 on the idea of “social inclusion” and specifically on giving indigenous communities a voice in the consultation period before big mining projects begin. Prior consultation — the first law Humala signed upon taking office — codified into Peruvian law the idea of free, prior and informed consent. But only two years later, with $50 billion in mining projects over the next five years at stake, and with Canadian mining giant Newmont scaling back its investments and announcing a delay in its controversial Minas Conga project, it looks as if Humala wishes he could take it all back.

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Apparently Mines and Energy Minister Jorge Merino has prevailed; Deputy Minister of Culture Ivan Lanegra, who was in charge of administering the prior consultation law, is now making noises about resigning.

I haven’t yet seen anything like an official statement on the matter, but Humala and other Peruvian officials have already started offering reasons – if they can be called that — for excluding the Quechua from prior consultation. They read like a bizarre exercise in bad anthropology.

Attempting to legitimize its betrayal of the Quechua, the government resorts to revisionist history, crude caricatures and discredited ideas. So, we are told, the Quechua-speaking people of the Andes can’t be indigenous, because over the centuries, they mixed with Spanish colonizers (whose abuses the law of prior consultation was supposed to help remedy). To be indigenous would seem to require a weird exemption from history – to be at once the victim of colonial abuse in need of redress and yet to live in complete isolation or perpetual flight, and never to have had any contact with the Spanish.

The people of the Andes can’t be indigenous: they practice agriculture, we are told, which makes them not indigenous people but campesinos. “In the highlands,” said Humala, parsing the difference, “there are mostly agrarian communities … indigenous communities are mostly in the jungle.” The indigenous are not farmers, but jungle dwellers, presumably hunters and gatherers who have never cultivated the land. If they till the soil or produce, it seems, they must give up all claims to their heritage, or at least their legal status.

A third and final absurdity: the people of the Andes can’t be indigenous, because they “meet in public assembly” or, as Humala has noted elsewhere, they have “mayors” who represent them, and so they are not without a “voice.” To be indigenous is to be without representation, then — silent. It goes even deeper than that: it is to be without politics, or at least without the plaza or the public square. We are, I suppose, to imagine the indigenous living in an archaic and pre-political world, where assembly is unnecessary or the public world unknown.

You can see where all this is heading. It is virtually impossible to be indigenous, unless you live in a small foraging band of jungle dwellers without any political power, or even any idea of politics. Placing these restrictions on the law of prior consultation in Peru makes a travesty of free, prior and informed consent, which requires that states deal “in good faith with the indigenous peoples concerned through their own representative institutions”; the very existence of such institutions would appear to be grounds for exclusion from the law.

Even with a law in place and gestures of good will at the start, the “indigenous” in Peru now risk being defined out of existence, or of having their right to consent sacrificed for the sake of big mining and continued growth. That is why it was especially curious and telling, in ways that are not yet wholly apparent to me, when I read this morning that just yesterday Peruvian ambassador Gonzalo Gutierrez Reinel and the Mongolian Minister of Foreign Affairs L. Bold “met to exchange views on mutual partnerships, particular[ly] in the sectors of culture and mining”: it is not at all clear that “culture” will survive the incursion of big mining in either country.

Rio Tinto and the Rhetoric of Respect – Notes from the 2013 AGM

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“Your mining is not unproblematic.” That understatement nicely summed up the Rio Tinto Annual General Meeting held yesterday morning in London. But by the time a representative from the London Mining Network had uttered it near the end of the question period, Rio Tinto Chairman Jan du Plessis appeared to have stopped listening.

Up to that point it had been a lively and contentious meeting. Shareholders were miffed about the company’s blunders in Mozambique and the Alcan write off and confused by the executive compensation scheme. Some wanted to know why Tom Albanese wasn’t there to answer for the company’s troubles in 2012, when he was still CEO; another said it was time to stop scapegoating Albanese, and hold the board accountable: “every few years,” he said, we have “a resounding chaotic blunder…What has the board done?”

They were not the only ones to talk about blunders and bad decisions that put the company at risk. Activists, environmentalists and indigenous leaders who attended the meeting testified to the destructive effects of Rio Tinto’s large-scale industrial mining operations on the land, local communities, and traditional ways of life. These speakers all said they and the groups they represent would continue to oppose the company. In fact, their opposition is only growing; a couple even suggested that Rio Tinto could start cutting costs (a big priority for the mining giant right now) by abandoning or divesting from places where mining operations are not welcome. The message to shareholders was clear: protests, lawsuits and continued local opposition will put projects at risk, disrupt schedules and cost money.

Did the board get the message? Not likely. When an Alaskan Yupik elder spoke in opposition to the Pebble Mine project and urged the company to divest, Rio Tinto CEO Sam Walsh thanked him for his “sincerity” and both du Plessis and Walsh complimented the elder on how “articulate” he was. It was a patronizing gesture, a pat on the head, not serious engagement. There were some further comments shouted from the audience but du Plessis shut the discussion down and moved to the next question.

Du Plessis repeated a talking point about how much he respects those who had to travel long distances to attend the meeting, but (as I saw it) this was an effort to recover from a stumble. Only minutes earlier he had impatiently dismissed a question about the Eagle Mine – citing “shoddy environmental protections,” poor design work, “fraudulently issued permits,” and the fact that the mine desecrates ground sacred to the Keweenaw Bay Ojibwe — as “not particularly new.” He was having none of it.

There was lots of talk at the meeting about respect, and I’m afraid “respect” is becoming a word corporate boards use to deflect criticism and politely dismiss human rights, environmental and ethical issues. (Whether this is the unfortunate rhetorical fallout of the Ruggie Protect-Respect-Remedy human rights framework is a question for another day.)

For example, when asked what Rio Tinto has done to improve the lot of miners in South Africa, du Plessis responded that the company has developed “very healthy, respectful relationships not just with employees but with the community” in its South African operations. But what sorts of real commitments do those relationships entail? While the company is “not anti-union” –Walsh rejected that characterization — it nevertheless wants a free hand to “maintain direct contact with all our employees” for the sake of safety, efficiency, and (Walsh iced the cake with this) “value.”

One participant said that he couldn’t see how Rio Tinto reconciled its “corporate rhetoric” with its “actions on the ground.” At Oak Flat in Arizona, he went on to explain, Rio Tinto is trying to gain control of public lands sacred to the Apache. The reply was (again): “we will be respectful.” The company would like to “open up direct dialogue” on the Oak Flat project; the trouble is, dialogue can only be direct and truly respectful if the other party actually has an opportunity to be heard and – this is important — heeded.

Dialogue, community engagement, respect, responsibility – all these were floated at the meeting as remedies to the many problems communities face when Rio Tinto moves in. But what doesn’t get taken into account is that the company and these communities are not on equal footing. Nowhere near it. Rio Tinto has enormous influence and power, billions to invest, and – it should not be forgotten – shareholders who want a return on their investment.

So, during the question period, a woman representing Mongolian herders who will be displaced and deprived of water by Rio Tinto’s Oyu Tolgoi project spoke eloquently about a looming “catastrophe.” She had a soft voice that trembled a little as she spoke. Walsh listened, thanked her for traveling all that way to speak, and then replied that in Mongolia (as in Michigan and elsewhere) the company has “developed a participatory environmental water monitoring program.” If you see something, say something, I guess.

Never mind that she had just finished telling him about the threat of toxic leaks, environmental damage, pollution and river diversion. The IFC and “the people of Mongolia,” Walsh said, will hold Rio Tinto to account. He can’t really believe they will. The community of herders has little recourse and not even a fraction of the power Rio Tinto has; and Oyu Tolgoi, when completed, will account for 36 percent of Mongolia’s GDP. The scales are hopelessly tipped in Rio Tinto’s favor.

Maybe the question period of a shareholders meeting is not the place to have constructive dialogue on serious issues. Maybe those conversations have to happen after the meeting is over, or even behind closed doors. But if and when they do happen, will Rio Tinto really be listening?