(A) COMPLIANCE REVIEW REPORT
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OYU TOLGOI REQUEST NUMBER: 2013/01 (a) COMPLIANCE REVIEW REPORT – February 2017 The Project Complaint Mechanism (PCM) is the independent accountability mechanism of the EBRD. PCM provides an opportunity for an independent review of complaints from one or more individual(s) or organisation(s) concerning an EBRD project, which allegedly has caused, or is likely to cause harm. PCM may address Complaints through two functions: Compliance Review, which seeks to determine whether or not the EBRD has complied with its Environmental and Social Policy and/or the project-specific provisions of the Public Information Policy; and Problem-solving, which has the objective of restoring a dialogue between the Complainant and the Client to resolve the issue(s) underlying a Complaint without attributing blame or fault. Affected parties can request one or both of these functions. For more information about PCM, contact us or visit www.ebrd.com. Contact information Inquiries should be addressed to: The Project Complaint Mechanism (PCM) European Bank for Reconstruction and Development One Exchange Square London EC2A 2JN Telephone: +44 (0)20 7338 6000 Fax: +44 (0)20 7338 7633 Email: [email protected] http://www.ebrd.com/work-with-us/project-finance/project-complaint-mechanism.html How to submit a complaint to the PCM Complaints about the environmental and social performance of the EBRD can be submitted by email, telephone or in writing at the above address, or via the online form at: http://www.ebrd.com/work-with-us/project-finance/project-complaint-mechanism/submit-a- complaint.html Contents Executive summary ......................................................................................................................... Introduction .................................................................................................................................... 2 Factual Background to Project and Complaint ......................................................................... 2 Positions of Relevant Parties ...................................................................................................... 3 Steps Taken in Conducting Compliance Review ...................................................................... 4 Relevant EBRD policy obligations ............................................................................................... 6 Applicable EBRD Policy ................................................................................................................ 6 Implications of Relevant Policy Provisions ................................................................................ 6 PR 1: Environmental and Social Appraisal and Management ............................................... 7 PR 5: Land Acquisition, Involuntary Resettlement and Economic Displacement .............. 9 PR 7: Indigenous Peoples ......................................................................................................... 11 PR 8: Cultural Heritage .............................................................................................................. 16 PR 10: Information Disclosure and Stakeholder Engagement ........................................... 18 Analysis of Compliance Issues ................................................................................................. 22 PR 1: Environmental and Social Appraisal and Management ............................................ 22 PR 5: Land Acquisition, Involuntary Resettlement and Economic Displacement ........... 55 PR 8: Cultural Heritage .............................................................................................................. 58 PR 10: Information Disclosure and Stakeholder Engagement ........................................... 61 Conclusion ................................................................................................................................... 65 NOTE: Unless otherwise defined, capitalised terms used in this Compliance Review Report refer to terms as defined in the PCM Rules of Procedure. EXECUTIVE SUMMARY The present Complaint alleges non-compliance on the part of EBRD with a number of performance requirements arising under the 2008 Environmental and Social Policy (ESP), due to an alleged failure on the part of the Bank to ensure the identification and avoidance or mitigation of a range of adverse impacts upon herders’ health, livelihoods and cultural heritage resulting from a proliferation of roads, road traffic and road-related dust associated with the Oyu Tolgoi Project. Having examined the Project Environmental and Social Impact Assessment (ESIA) in detail, along with a wide range of supporting documents, the Compliance Review Expert has concluded that EBRD was compliant with the ESP PR 1 and related performance requirements. Specifically, the Compliance Review Expert has found that the ESIA was adequate in terms of the timing of its completion and disclosure, its designation of the Project area of influence, the arrangements set out therein for stakeholder identification and consultation, the manner in which it addressed road-related dust impacts, its mitigation of potential road safety impacts and the manner in which it identifies and addresses the needs of vulnerable people. In addition, the Compliance Review Expert has determined that EBRD has complied fully with the requirements of ESP PR 5 on Land Acquisition, Involuntary Resettlement and Economic Displacement, PR 8 on Cultural Heritage, and PR 10 on Information Disclosure and Stakeholder Engagement. Therefore, the Compliance Review Expert concludes that the Bank was in compliance with the Relevant EBRD Policy. INTRODUCTION Factual Background to Project and Complaint1 1. On 26 February 2013, EBRD approved financing of the Oyu Tolgoi copper and gold mine project (OT), providing a loan of up to US$400 million, together with further financing of up to US$1 billion, to be syndicated to international commercial banks. The loans are part of a larger financing package that includes an assortment of international financial institutions and commercial banks. Oyu Tolgoi is a Category A Project, which defines the EBRD requirements under the 2008 Environmental and Social Policy (ESP) and sets the standard by which the appraisal is assessed. OT is a joint venture between Turquoise Hill Resources (66 per cent) and Erdenes Oyu Tolgoi (34 per cent), a company wholly owned by the Government of Mongolia. Rio Tinto (RT) is a major shareholder in Turquoise Hill Resources and since 2010 is formally managing the Project on behalf of all shareholders. 2. On 2 July 2013, fourteen Mongolian herders from Javkhlant bagh submitted a Complaint dated 1 July 2013, to the European Bank for Reconstruction and Development (EBRD) Project Complaint Mechanism (PCM), regarding the Oyu Tolgoi Project (as well as the Ukhaa Khudag (UHG) coal mine, operated by Energy Resources and financed by EBRD). Two Mongolian civil society organizations (CSOs), OT Watch and Shuteen Gaviluut, joined as Co-Complainants. On 6 September 2013 via electronic mail, PCM received related Complaints (dated 5 August 2013) from five herders residing in Manlai soum, and four individual herders from Javkhlant bagh (one dated 28 July 2013 and three dated 9 August 2013). On 1 April 2014, OT Watch submitted a letter to the PCM that supplements the previous complaints and provides additional information related to the request for a Compliance Review. As requested by the Complainants, these submissions were assessed for eligibility collectively, according to the 2009 PCM Rules of Procedure (RP). The Complaint alleges risks and impacts from both projects on herders’ livelihoods, health and cultural heritage due to a proliferation of roads, road traffic and road-related dust, primarily due to the extensive network of paved and unpaved roads being utilised by the Project. The Complainants requested a Problem- solving Initiative (PSI) and a Compliance Review (CR) for each Project. 3. The Eligibility Assessment Report (EAR) was published on 22 December 2014 and found that the Complaint satisfied the PCM criteria for a Compliance Review and, consistent with the 2009 PCM Rules of Procedure, included Terms of Reference (ToRs) for two separate Compliance Reviews. On 26 January 2015 PCM Expert Prof Owen McIntyre was appointed as the Compliance Review Expert for the Compliance Review concerning the Oyu Tolgoi Project. 1 A more detailed account of the respective positions of the Relevant Parties is provided in the Eligibility Assessment Report: Project Complaints Mechanism, Eligibility Assessment Report – Request No. 2013/01, Energy Resources Phase II & Oyu Tolgoi (22 December 2014), at 11-36, available at http://www.ebrd.com/cs/Satellite?c=Content&cid=1395241816445&d=&pagename=EBRD%2FContent%2FDownloa dDocument 2 Positions of Relevant Parties2 Complainants 4. The Complainants allege adverse impacts and increased risks of such impacts from the Project on herders’ health, livelihoods and cultural heritage, principally due to the proliferation of roads, road traffic and road-related dust arising from the extensive network of paved and unpaved roads utilised by the Project. Specifically, the Complainants allege that the environmental and social appraisal conducted under EBRD’s 2008 Environmental and Social Policy (ESP) failed adequately to evaluate the full set of Project impacts on local herders from road transportation or to develop appropriate avoidance and mitigation measures in accordance with EBRD policy. In addition, they