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Canada’s National Contact Point Final Statement - Request for Review Oyu Tolgoi Mining Project

May 3, 2011

A Mongolia-based NGO, Oyu Tolgoi Watch (OT Watch), submitted a request for review on April 1, 2010 relating to the Oyu Tolgoi mining development project in Mongolia.

OT Watch stated that it believed that Ivanhoe Mines Ltd. and Rio Tinto International Holdings Limited were not observing the following provisions of the OECD Guidelines for Multinational Enterprises:

• a) Chapter II General Policies, Article 1: "... enterprises should: 1. Contribute to economic, social and environmental progress with a view to achieving sustainable development"; and
• b) Chapter V Environment, Article 3: "... enterprises should: ... 3. Assess, and address in decision-making, the foreseeable environmental, health, and safety-related impacts associated with the processes, goods and services of the enterprise
  over their full life cycle. Where these proposed activities may have significant environmental, health, or safety impacts, and where they are subject to a decision of a competent authority, prepare an appropriate environmental impact assessment".

The initial submission by OT Watch claimed that Ivanhoe Mines Ltd. had failed to carry out a full environmental impact assessment and crucial study of water resources.

On April 15, 2010, OT Watch submitted an email elaborating on its complaint. OT Watch claimed that the Technical and Economic Feasibility Study submitted by Ivanhoe Mines Ltd. failed to demonstrate the availability of water resources necessary for building and operating this mine. OT Watch further claimed that the water resources established and approved for use constitute less than 1/3 of its water needs and in addition are located around a protected area of Galbyn Gobi. OT Watch further claimed that the lack of sufficient water resources and the location of the available water (fossil water) in a protected area should require a full environmental impact assessment; an assessment of water resources in relation to a 30-60-year water-intensive project; and an assessment of the impact of proposed diversion of rivers from other regions for this project.

In a response submitted to the National Contact Point (NCP) on June 11, 2010, Ivanhoe Mines supplied a list of completed and pending Environmental Impact Assessments, and relevant excerpts from the Oyu Tolgoi Project’s Technical and Economic Feasibility Study.  Based on studies to date, the company further stated that adequate water resources do exist in the region to supply the projected needs of the planned mining operation, that such water is not in a protected area and that there is no requirement to divert water from rivers to supply Oyu Tolgoi. The company stated that it has formally committed to maintain water supplies to existing local users.

Following a review of the material received from both parties, the NCP felt it did not have sufficient information upon which to conclude an initial assessment. Accordingly, on July 2, 2010, it sent letters to both parties requesting further information. The questions to OT Watch included a request for greater precision as to the allegations of non-observance of the Guidelines.

In its response to the NCP, dated July 23, 2010, OT Watch reiterated its concerns regarding the availability of water and the requirement for "an appropriate" environmental impact assessment (EIA) over the full mine life of the project, which would conform to international standards.

OT Watch further indicated that the size and the number of mining projects in this region compounds the water problem, turning it into a larger regional macro-economic, social and environmental sustainability issue. OT Watch suggested that an integrated approach to water use that assesses the cumulative effects in the mine planning and approval process is urgently needed.

Ivanhoe Mines Ltd. prepared a series of environmental assessments of aspects of the OT mine, as required by Mongolian law.  The environmental assessments reviewed by the NCP included technical and scientific information that clearly set out the environmental impacts of activities and the monitoring and mitigation measures necessary to reduce or eliminate the said impacts.

The World Bank report (2009) Groundwater Assessment in the Gobi Region, noted that the groundwater investigation and resource assessment study for the OT mine "provides a good example for the approach to determine the impacts of ground water abstraction and to provide the information for decision making on the allowable abstraction".

The NCP found the environmental assessments to be complete and of a high quality.

The governance and management of the water and all other resources and activity in the region is the responsibility of the Government of Mongolia. It is not practical or realistic to expect these extensive and complex matters that involve many parties and entities to be adequately addressed or resolved by dialogue between NGOs and companies on a case-by-case basis. These matters are more appropriately addressed by the national government using a comprehensive governance mechanism with appropriate laws, regulations and enforcement mechanisms.

Officials from the Oyu Tolgoi LLC company, the project owner, met with OT Watch before and after the filing of the request for review.  The company has offered to hold quarterly meetings with the notifiers and a number of meetings have already taken place. The NCP views such developments in a positive light and encourages the parties to continue to hold such meetings with a view to strengthening the process of communication and dialogue. The NCP firmly believes that the successful resolution of issues necessitates the adoption on both sides of a willingness to communicate and to work together. The development of appropriate communication strategies and cooperative tools are key.

The NCP considers this specific instance to be closed.

Although the NCP considers this specific instance to be closed, the NCP believes that on-going dialogue between the parties would be beneficial to address concerns that the parties have and which may arise in the future.  If the parties are interested and willing to engage in a facilitated dialogue, the NCP would be pleased to offer its services and assist in facilitating such a dialogue.  Should both parties agree to seek the NCP’s assistance in that regard, the NCP would be willing to examine opportunities and the most effective manner in which to offer this service outside of the specific instance process.