Chi’chil Bildagoteel also known as Oak Flat is a sacred site for Apache people and many other Native Americans.
Apache Stronghold, San Carlos, Arizona, is a 501(c)3 nonprofit community organization of individuals who come together in unity to battle continued colonization, defend Holy sites and freedom of religion, and are dedicated to building a better community through neighborhood programs and civic engagement. Apache Stronghold works from San Carlos, Arizona connecting Apaches and other Native and non-Native allies from all over the world.
In the Zoom video Sukhgerel’s speech begins at 27:48. To see video conference click here.
Ulaanbaatar, Mongolia – In late November 2020, impacted communities in the Ger district of Ulaanbaatar filed two complaints to the Asian Development Bank (ADB), against the Ulaanbaatar Urban Services and Ger Areas Development Investment Program – Tranche 1 2 and 3.
In the complaints, affected families stated that the road project violated ADB’s social and environmental standards and caused numerous problems, related to inadequate land acquisition, compensation and resettlement plans; property damage; and poor road construction safety standards.
Tserendorj Oyuntugs, Director of 6 Buudal NGO, stated that “[t]he Selbe sub-center project affects peoples’ lives and residents are leaving their homes because of risks caused by cracks in the wall and in the fences.” She also added that “the project was supposed to alleviate poverty, but it is making the affected people even more destitute.”
Initially, the impacted families resettled outside the town were promised 500 sqm of land, but now they are being offered 250 sqm, half of what was promised. Aside from that, they are only provided with a land possession title for five years instead of having their ownership title restored, which is something that is granted to each Mongolian citizen for free. One cannot build a home and livelihood on land with a 5 year permit.
The resettlement plan is also threatening the Mongolian traditional way of living as a “khot ail,” where several generations of families customarily live together and share herding tasks [1]. Instead of giving a land certificate and compensation to each family that is part of the khot ail, ADB issued a land certificate and granted compensation to only one family.
The resettlement sites are located far away from people’s original homes and business places, so their livelihoods are threatened. The Livelihood Restoration Program, which was put in place after complaints were filed in March 2018, is not proving to be effective and is barely covering those identified as poor, but not all economically displaced as a result of the resettlement.
Sukhgerel Dugersuren, Director of OT Watch Mongolia, says: “Because of the COVID-19 restrictions, it is difficult to get a clear picture of how many people are being resettled and why only cash compensation is being offered. It should be land for land or land for apartment with financial support for relocation, transition and livelihood support, where necessary. There appears to be no consistent and reliable information on the resettlement and relocation policy, the Memorandum of Understanding signed in 2018 which should apply to all affected people under this project is not being honored by the project implementers”.
COVID-19 is aggravating an already dreadful situation, with family members stuck outside Mongolia due to the pandemic who were cut from compensation. One resident stated that “ADB continues to use every possible pretext to reduce compensation. My children are not eligible since they have not lived at this address in the last six months, but they are not here because they are stranded elsewhere due to the lockdown”.
Local residents have also been complaining because some parts of the construction site are trespassing into peoples’ property. Families who were denied resettlement are now struggling to live, with a road blocking their doorsteps and construction rigs above their heads. Some families are being forced to flee without any compensation and assistance. Key concerns raised by all complainants is lack of safety and security for all but especially for children.
A local resident, Myagmarsuren Munkhzul, says: “I’ve been living for the past 15 years here, but the project is causing critical problems. The road is built right behind our plot, and since fences fall here, there is no guarantee that a car will not fall in, too.”
The complainants call upon implementers to stop physical and economic displacement during COVID-19; bring the project into compliance with the financiers’ safeguards policies as well as road standards; and honor the 2018 MoU agreements signed by all stakeholders.
[1] Bold, Bat-Ochir. “Socio-Economic Segmentation — ‘Khot-Ail’ in Nomadic Livestock Keeping of Mongolia.” Nomadic Peoples, no. 39, 1996, pp. 69–86. JSTOR, www.jstor.org/stable/43123494. Accessed 1 Dec. 2020.
Oyu Tolgoi Watch (Mongolia) is a CSO that monitors compliance of IFIs financed mining and development projects with the international environmental and human rights standards. OT Watch supports local communities seek redress using international nonjudicial grievance mechanisms. www.minewatch.mn
For more information please contact Sukhgerel Dugesrsuren at otwatch@gmail.com or call 976-99185828.
NGO Forum on ADB is a network of civil society organizations (CSOs) that has been monitoring the projects, programs, and policies of the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB). To know more follow this link.
For more information please contact Jen, jen@forum-adb.org, mobile +639175088841.
LARKSPUR, Calif.–(BUSINESS WIRE)–SailingStone Capital Partners (“SailingStone”), a large, long-time owner of Turquoise Hill Resources Ltd. (“Turquoise Hill,” “TRQ” or the “Company”) (TSX:TRQ) (NYSE:TRQ), has written the attached letter to the Turquoise Hill Board of Directors:
Dear Members of the Board of Turquoise Hill Resources Ltd.,
As a large, long-time shareholder of Turquoise Hill, SailingStone Capital Partners would like to commend Turquoise Hill and the Government of Mongolia (the “Government”) for the recent collective efforts to increase transparency, improve alignment, and reduce uncertainty related to the development and financing of Oyu Tolgoi’s (“OT”) immense underground copper and gold reserves. It is in the interest of all stakeholders to bring this world-class mine into production as safely and expeditiously as possible.
Trust, proper corporate governance, and a clear understanding of roles and responsibilities sit at the core of any partnership. Since there appears to be some confusion about the relationship between TRQ, the Government of Mongolia and Rio Tinto (“Rio”), please indulge our effort to set the record straight. Turquoise Hill owns 66% of Oyu Tolgoi, with the remaining 34% held by the Government of Mongolia. Turquoise Hill has agreed to fund the Government’s equity stake and pro-rata share of development capital which is to be repaid from future cash flows once the underground mine is commissioned. Rio Tinto has been hired to operate and develop the mine. In addition, Rio has provided completion guarantees as a means to facilitate a project finance facility which efficiently allocates risk based on capabilities. Sovereign risk is absorbed by the international lending syndicate while Rio Tinto, a self-proclaimed “leading global mining group,” accepts the risk of mine development. To be clear, Rio is compensated for their completion guarantee in the form of incremental support fees above and beyond the $850 million in cost recoveries and management services payments received since 2011. Rio Tinto is also the majority shareholder of Turquoise Hill, having paid approximately $6.3 billion for its 51% ownership stake.
Over the last decade, Rio has received more than $1.5 billion in compensation for its work at Oyu Tolgoi and related financings. While that sum may seem de minimis for a global mining conglomerate, it is important to note that ex-iron ore and Oyu Tolgoi, Rio has generated approximately $15 billion in negative free cash flow over the same time frame. 1 Turquoise Hill, meanwhile, has invested just over $10 billion into the project2, while OT paid the Government approximately $2.6 billion in taxes and royalties between 2010 and 2019, directly employs almost 8,200 Mongolian nationals and worked with more than 560 Mongolian businesses in 2019.3 By some estimates, Oyu Tolgoi will represent more than 30% of Mongolian GDP when the underground is at full capacity and clearly is the most important proxy for foreign direct investment into Mongolia.
While the roles and responsibilities of the OT partnership are relatively straightforward, proper corporate governance and trust have been in short supply. Thus, we are encouraged by two recent events which we believe are important first steps in creating the alignment and governance standards necessary to complete a project as complex and important as Oyu Tolgoi.
First, we applaud the decision of the OT board to move forward with a fully independent review of the cost overrun and delays associated with Shaft 2, which we have been requesting since the initial announcement last July. Since Rio Tinto is responsible for the project, is being paid for its efforts, and apparently has shareholders who are concerned about the associated risks, an independent post mortem “in a public manner in the interest of transparency, accountability and integrity” would indeed be “appropriate and fair” for all stakeholders. Of course, any effort to impede these efforts could only be cause for serious concern on behalf of Oyu Tolgoi’s owners and inevitably would lead to a further degradation of trust. Building a multibillion-dollar block cave is no mean feat, and all participants understand that there are risks involved. However, having the party responsible for mine construction be the sole beneficiary of a capital overrun and multi-year delay runs counter to the concept of “partnership.” The mere commencement of this review process, supported by all stakeholders, is a seminal step in the history of Oyu Tolgoi. We surely are not alone in our eager anticipation of the Special Committee’s findings.
Second, we believe that the decision to commence arbitration proceedings to clarify Rio’s role and obligations in supporting Turquoise Hill’s attempt to obtain the lowest cost sources of financing to meet the incremental funding requirements, caused in no small part by Rio’s own mismanagement, is not only appropriate but the only available option. Basic principles of corporate governance require that board members and management teams put the interest of their shareholders, in this case the shareholders of TRQ, ahead of their own. Rio Tinto’s cost of capital is totally irrelevant in any decision regarding Turquoise Hill. To suggest otherwise is to explicitly acknowledge an abrogation of the collective Board’s fiduciary obligations. There is no alternative interpretation. Fortunately, in this situation there are attractive financing options available – the rare occasion when doing the right thing is actually possible.
In theory, Rio Tinto should be aligned with Turquoise Hill minority shareholders and the Government of Mongolia to maximize the value of Turquoise Hill’s share price. After all, Rio paid more than $6 billion for their equity stake in the Company and Oyu Tolgoi’s success has significant positive implications for the Government and people of Mongolia. Over the past several years, however, Rio has left itself open to accusations of intentionally depressing the share price, a conclusion made all the more pointed when comparing Rio Tinto’s stock returns to TRQ’s. Supporting Turquoise Hill’s efforts to identify the lowest cost source of financing as a means to either eliminate or mitigate the amount of equity raised is consistent with first principles of corporate finance and proper corporate governance.
Similar to the independent review discussed above, the refusal to seek out the most efficient means of financing OT results in a prim facie conclusion that Rio is intentionally suppressing the stock price. This conclusion only makes sense if Rio is attempting to harm the minorities ahead of a planned take-out or to undercut the Government of Mongolia in any negotiations related to a debt for equity swap in conjunction with a tax and royalty agreement. Since yet another corporate governance failure cannot be high on Rio’s list of priorities at the moment, securing non-equity financing seems like a unique opportunity to level-set the partnership and advance the development of what everyone acknowledges is one of the most important mining assets in the world. We expect that recent events have helped Rio’s board and interim management suite better understand the significance of these decisions as well.
In summary, we are encouraged by recent events and believe that your actions will serve to further de-risk the project by enhancing governance at OT and TRQ, and by increasing the level of trust across the partnership. We thank you for your efforts on behalf of Turquoise Hill shareholders, and for working with the Government of Mongolia and other stakeholders to usher in a new era of cooperation at Oyu Tolgoi.
Best regards,
SailingStone Capital Partners LLC
About SailingStone Capital Partners LLC
SailingStone Capital Partners LLC is an employee-owned investment advisory firm focused exclusively on providing investment solutions in the global natural resource space with a specific focus on the commodities and services which are key enablers of the energy transition. Based in the San Francisco Bay Area, SailingStone manages concentrated, long-only equity portfolios for institutional investors.
1 Sellside model from a firm which has requested anonymity 2 Turquoise Hill financial statements 3 Turquoise Hill OTTR 2020 presentation, updated for current employment levels
Click here for source. For translation in Mongolian click here.
NAPLES, Fla.–(BUSINESS WIRE)–Pentwater Capital Management LP (“Pentwater“), the largest minority shareholder of Turquoise Hill Resources Ltd. (“Turquoise Hill“) (TSX:TRQ) (NYSE:TRQ), has written the attached letter to the Rio Tinto plc (“Rio Tinto” or “Rio”) (LSE:RIO) Board of Directors:
Dear Members of the Board of Directors of Rio Tinto plc:
I am disappointed with the need to write this letter to you. Just three short days ago I wrote to you listing a litany of inappropriate actions that Rio Tinto has unlawfully taken against Turquoise Hill. My intention was to open the eyes of the Board to the unacceptable behavior of Rio’s management team. I naively believed that no responsible Board could ever condone the reprehensible breaches of corporate governance that Rio has imposed upon Turquoise Hill over the years, and that you would certainly take a stand against such behavior. It appears that your actions this week have proven me wrong.
Within 24 hours of my original letter, the world learned that Rio voted against allowing the owners of the Oyu Tolgoi mine from conducting an independent investigation into the $1.5 billion cost overrun and two-year schedule delay suffered during Rio’s construction of the mine. There is no logical explanation for why Rio would oppose an independent investigation into the massive cost overruns and delays, especially when the owners of the mine support such an investigation, and one of the owners is a sovereign nation and important partner for decades to come. I should say that there is no logical explanation other than that Rio has something to hide.
Let me refresh your memory on the Oyu Tolgoi mine. Once constructed, it will be the third largest copper and gold mine in the world. It is projected to produce multiple billions of dollars of free cash flow per year once in full operation. It has a mine life of many decades with the potential to be a hundred year mine. Rio does not actually own the mine. The mine is 66% owned by Turquoise Hill and 34% owned by the Government of Mongolia. Rio is the operator of the mine and is responsible for the construction of the underground portion of the mine. Rio owns 51% of Turquoise Hill and has hand-picked every single management employee and board member at Turquoise Hill since it secured control of the company. Almost every Turquoise Hill staffer since the beginning of Rio’s regime has either been a Rio employee while working for Turquoise Hill or came to Turquoise Hill directly from Rio Tinto
Earlier this week, Oyu Tolgoi LLC voted to conduct an independent investigation regarding Rio Tinto’s cost overruns and timing delays at the mine. An independent investigation serves as clearly good business practice as well as proper governmental accountability to the citizens of Mongolia. The Government of Mongolia and Turquoise Hill were in accord with this common-sense decision. However, Rio Tinto apparently voted against the investigation. To wit, the Australian Financial Review has just reported — in an article entitled “Mongolian partners revolt, force Rio into Oyu Tolgoi review (dated December 1, 2020) — that “[m]ultiple sources have suggested that Rio was opposed to the creation of the committee and the independent review.”
The attempt to block an independent investigation into the undeniably material cost and time overrun is unfortunately a confirmation that such an investigation is warranted. Voting against the proposal to form a special committee is devoid of any justification from a corporate governance perspective. Further, it is impossible to explain to Turquoise Hill minority shareholders or the people of Mongolia that you want to block such an investigation if you truly have nothing to hide. We are left amazed yet again at the utter audacity of Rio Tinto in disregarding the legitimate oversight functions of the owners of the mine.
Unfortunately, there are multiple sources who suggest that you do have facts to hide. When a whistleblower claimed that you knew of cost overruns a year before you disclosed them, you entered into a confidential settlement with him the day before he was set to testify in open Court, and he is now effectively silenced. Your own ethics coach resigned due to unethical behavior by Rio executives and a lack of appropriate corrective response by leadership. The SEC is investigating your lack of disclosure of the cost overruns and delays. A class action lawsuit has been filed against you. And if all this wasn’t enough, you have abused your hand-picked board and management team at Turquoise Hill to the point that even they have begun an arbitration proceeding against you because you refuse to allow Turquoise Hill to finance your cost overruns in the most economically efficient way. Let me repeat that: your handpicked Board and management team is taking you to arbitration.
Good hiring and robust oversight are the hallmarks of effective operations and good governance. With Rio CEO Jacques soon departing “by mutual agreement,” is it your goal as a Board to hire a new CEO who can continue acting unethically and illegally toward Turquoise Hill, or do you aspire to hire someone who stands for good corporate governance? If the latter, perhaps you should start anew and reverse your vote on the independent investigation and allow Turquoise Hill to finance the mine in the most economically efficient way.
However, given your actions over the past eight years, I am skeptical that you will make the correct choice. As such, I respectfully request that Rio Tinto take affirmative steps to preserve both all paper documents and all electronically stored information that are in its custody or control that are relevant to the issue of Turquoise Hill’s and Oyu Tolgoi LLC’s independent investigations of the Oyu Tolgoi cost overruns and time delays as well as to the Turquoise Hill arbitration proceeding and negotiations leading up to such. We request that Rio Tinto preserve all paper records and electronically stored information, including email, electronic calendars, financial spreadsheets, phone records, word documents and other information created and/or stored at or by Rio Tinto and its subsidiaries.
It is important for the Board of Rio Tinto to recognize that the company is at a crossroads. With the imminent departure of Mr. Jacques, the Board right now has a chance to embrace good governance. But time for Rio Tinto to do the right thing is running short.
Regards,
Matthew C. Halbower Chief Executive Officer Pentwater Capital Management
Contacts:
David Zirin- Chief Operating Officer Pentwater Capital Management 312-589-6401
Click here for source. Click here for PDF version translated in Mongolian.
Human rights and local communities are not on the agenda of the Finance in Common summit. Let’s make sure they hear we won’t stand for it.
Today, join our twitterstorm (9-12 November), using the official hashtag (#FinanceInCommon2020) and our slogan #HumanRightsInCommon to occupy their virtual space with the voices of those excluded by the Summit.
Many many thanks to all of you for signing on to the Open Letter calling for debt cancellation and debt justice!
We are sending here the PDF version of the letter in 3 languages (English, French and Spanish) with all the signatories as of two hours ago. We sent the letter to governments, International institutions and lenders last October 14 evening and October 15 morning Manila time – with more than 550 signatory organizations from 93 countries that had signed as of October 14.
Please circulate and send out to your own contacts in government offices, parliamentarians, financial institutions, and media.
Please also help in media and communications efforts.
