Activist Q&A: Meet Sukhgerel Dugersuren

Sukhgerel Dugersuren is the Executive Director of Oyu Tolgoi Watch, a Mongolian NGO dedicated to monitoring investment in the Oyu Tolgoi copper/gold/silver mine in the South Gobi. A civil society activist since 2006, she is motivated by the violation of human rights for development and by development organizations in developing countries and the alarming pace of environmental degradation caused by development. The following interview outlines some of the major concerns Sukhgerel has with the pending IFC investment in Oyu Tolgoi.

Could you talk a little bit about your work with Oyu Tolgoi Watch? What is the background of the organization?

OT Watch was established to monitor compliance of Oyu Tolgoi mine – the largest foreign investment in Mongolia – with international environmental and human rights standards. It was established after civil society failed to stop an unfair investment agreement it had stalled for 6 years. The agreement was signed by government in October 2009 amidst a hunger strike, conditional acceptance of technical feasibility, and general public disagreement. OT Watch was officially registered in March 2010 and it has spent the past two years establishing links and relations with organizations monitoring mining operations at both the local and international levels. During this time we have also carried out seven field missions and communicated our findings to Oyu Tolgoi LLC, the government and IFIs.

It has been 10 years since the World Bank Group began its Extractive Industries Review to develop best practices for its EI projects. Why is OT Watch concerned about the WBG’s financing in the Extractives Industry?

The World Bank has policies and guidance in place but does not always seem to apply them to the best of its knowledge and ability. For instance, the World Bank has failed to put a country strategy in place for Mongolia, yet it continues to support mining without implementing compliance monitoring mechanisms or impact assessments. The Bank is extending too much credit to Mongolia for mining and support infrastructure without this country strategy. There is no update IMF analysis of Mongolia’s debt condition that takes into consideration all the credit this country is taking to support mining.

We believe that the World Bank leadership pushed too hard for the government to sign the unfair Oyu Tolgoi investment agreement, and this is also an issue that civil society raises in Mongolia. The former World Bank resident representative Arshad Sayed, for example, has been the largest supporter of this OT investment agreement and has made many public statements about this agreement being the model mining investment agreement for Mongolia. He has since moved directly from this position to heading Peabody Energy in Mongolia. Another former World Bank mining advisor is now the head of the Erdenes Mongol mining company. Pro-mining policies will definitely benefit the companies being run by these former World Bank officials.

Specifically, what are your concerns regarding the Oyu Tolgoi mining project? What are the development impacts, if any? What are the potential risks?

This is a mega-size mine with a 30 to 60 year project life located in the Gobi Desert. Documents and statements by the mining company fail to demonstrate the availability of water resources for the life of the project as required by sustainability requirements. Rio Tinto CEO Tom Albanese confirmed at the 2010 Annual General Meeting that there is only enough water available for production for 5 to 10 years. The project is currently using bottled water for its 18,000 strong workforce.

Of primary concern in the region is water. Can you tell us more about it?

Oyu Tolgoi is not the only mine in the region. There is now the famous world’s largest untapped coking coal deposit at Tavan Tolgoi, located only 160km from OT, and the Tsagaan Suvraga copper mine located about 230km north. These mines are large enough to be funded by the EBRD and other private banks. There are also five to six medium-sized mines in the same region within a 500km radius and all face water resource scarcity.

Rio Tinto adamantly rejects the need to take water from the Orkhon-Gobi water diversion project. It claims that it will not use fresh water for mining, but it is silent on the use of this water for its workforce and other needs. The World Bank is funding the technical feasibility study of the Orkhon-Gobi project because OT, TT, Tsagaan Suvraga and other mines which Peabody and a long list of other western companies have expressed interest in need this water.

OT Watch is also concerned with the World Bank funding the technical feasibility for the Shuren Hydropower Station on the Selenge River. The Orkhon River is one of the Selenge River’s key tributaries, and the Selenge River is key to the well-being of Lake Baikal, which is protected under the UN Ramsar Convention. This means that there is a potential transboundary impact on river basins in the region, in addition to the fact that some water experts are skeptical about the Orkhon River surviving such a diversion.

Should the project move forward? If so, under what conditions? If not, why not?

We have raised public awareness around the need for cumulative and aggregate impact of underground water depletion in this waterless ecosystem. The project should not proceed without demonstrating that the cumulative impact will not cause significant negative effects in the environment, human and wildlife populations and without addressing the extent to which the project may add to climate change, desertification, Gobi dust impacts on the region and oceans, etc. The cost of mitigating the possible cumulative negative impact should be factored into calculations of the profit, with additional analysis done on the investment risks and overall impact on Mongolia’s debt.

People talk about alternatives to mining for sustainable development. Is this possible for Mongolia in the context of Oyu Tolgoi?

Mongolia only has a population of 2.8 million, and the poverty statistics were lower before the country embarked on the path of mining. Mongolia had this image of “the end of the world”, “true wilderness”, and “ecologically pure, green agriculture products produced by ancient nomadic herding culture”. The Gobi Desert and dinosaur graves were key tourist attractions, along with the Mongolian nomadic lifestyle. Ecotourism was picking up speed in Mongolia.

Mongolia has the opportunity to develop “organic beef” and other organic livestock products as a means of export growth. The largest chunk of Mongolia’s 38 million head livestock sector is sheep and there are interested markets in the Middle East. Mongolian cashmere was also one of its important exports and was gearing towards penetrating high-end markets prior to shift to mining. Agricultural sector employs 40 percent of Mongolia’s workforce.

If the same amount of credit was made available to developing world standards products and services from these sectors Mongolia could sit on its wealth until there is dire need to disturb the earth. Unfortunately, this does not coincide with the interest of the World Bank to support Western industries to extract and sell minerals to China.

But if mining is the future, the population is 96.0% literate, and it only has to wait five to ten years to develop its own mining technical capacity, especially the monitoring skills, to exploit the mineral wealth at its own pace and need.