U.S. Concerns At Oyu Tolgoi Mine Likely To Delay Funding, Another Blow For Rio Tinto

The United States released a position paper on Friday indicating that it will abstain from voting on the World Bank's affiliate agencies' proposed $4.5 Billion loan for the expansion of the huge Mongolian mine at Oyu Tolgoi. Rio Tinto (RIO), the world's second largest miner, is the largest corporate stakeholder in the huge and expensive undertaking in the Gobi Desert. The two-page document expresses concerns over elements lacking from the Environmental and Social Impact Assessment (ESIA) after an opening statement acknowledging the many possible benefits of the project.

"This project has the potential to transform Mongolia's economy and advance its economic transition. It is being closely watched as a barometer for the foreign investment climate in Mongolia, with strong potential to attract further investments in the country by high quality companies and to catalyze further private sector participation in the mining sector. It also has the potential to generate substantial government revenues that can be harnessed for poverty reduction country-wide, and to improve the lives of Mongolians by creating broad opportunities for skills transfer and linkages to local small- and medium-sized enterprises. In addition, with leadership from both IFC and EBRD, Oyu Tolgoi under its new ownership is expected to raise the bar substantially for environmental and social standards in Mongolia's mining sector.

The United States believes the ESIA has gaps in critically important information related to mine operations and mine closure. The ESIA does not provide an analysis of cumulative impacts, notably concerning a proposed coal-fired power plant. This plant was not in the original proposals, but was added as the expected electricity from China could not be guaranteed as a reliable source. In addition, environmental concerns are not adequately addressed. These include biodiversity, regional green development, energy reforms and ongoing monitoring programs for compliance of standards. (Reuters Photo)

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