BankWatch in Mongolia?

Mar 6 • Economy, Finance, Mining, News, Politics • 9813 Views • No Comments on BankWatch in Mongolia?

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Despite the refusal by the Mongolian government on supporting Oyu Tolgoi Phase-II project finance process, World Bank’s “legally separate” IFC board has approved the loan of USD200-300 million. It proved that Rio Tinto is more convincing than the Mongolian government on how would the future events will unfold. The signal was clear, the government will not support the project financing from 3rd parties prior resolving the outstanding issues that has been reiterated throughout every possible media channels.

As a member and shareholder of IFC, Mongolia holds around 0.34% of its’ shares. Therefore, there is no way we have an exclusive board member. As end of 2012 IFC’s investment portfolio in Mongolia was around USD150 million. According to the current plan a single project, Oyu Tolgoi, will add another USD300 million. As an international financial institution it perceives a single mine development is going to contribute to the development and reduce the poverty that much.

In October, 2011 BankWatch had released a report titled ‘Spirited away – Mongolia’s mining boom and the poeple that development left behind’. It mentioned that mines that use large amount of water are advancing rapidly despite having not done sufficient scientific studies on water resources in the Gobi region. Especially regarding the usage of deep saline aquifers. In China, deep aquifers are prohibited to be used in industrial purposes. The effect on using the Gobi deep aquifers is not clear today.

Recently, BankWatch has written a letter to EBRD questioning its’ role in Oyu Tolgoi’s development. It mentioned that ESIA’s scope was limited, violated EBRD Performance Requirements, and asked EBRD to take measures on transparency of the company’s reporting of ESIA.

It is very unusual that the IFC and other development banks and financial institutions are willing to lend to mines that the social and environmental impact assessment (ESIA) is not satisfactory for the government and other international non-governmental organizations. Perhaps Mongolia needs its’ own Watch for the development agencies and organizations.

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