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Context

The Oyu Tolgoi Project, a $13.2 billion copper and gold mining project operated by Rio Tinto in the South Gobi region of Mongolia, was the largest foreign investment in Mongolia. Oyu Tolgoi secured $4.4 billion from banks, including $1.2 billion in loans from the IFC and a guarantee of $1 billion from MIGA to fund an underground mine expansion.

Filing a complaint with the CAO

In October 2012, a group of 37 herders living near the Oyu Tolgoi mine site filed a complaint with the CAO, with support from local, national and international civil society organizations. This complaint addressed the inadequate resettlement packages for displaced herders in 2004 and 2011. The complainants also expressed doubt about sustainable and effective use of water at the project site, where water is scarce.

In February 2013, seven herders filed a second complaint that raised concerns about the project’s impact on local water resources. The Undai River diversion, which was part of the Oyu Tolgoi project, jeopardized their traditional nomadic lifestyle and livelihoods. There were also fears that the diversion would lead to water systems drying up, deteriorate pastureland yields, diminish water supply to forests, and have a cultural impact on the sacred river.

Stages of the complaint

Stage 1: Choice of Dispute Resolution

The community sought out a mediation process, facilitated by the CAO as part of its dispute resolution process. This mediation would involve community members, the client, and local government officials so that the community could directly participate in the design of solutions to their concerns.

Stage 2: Eligibility & Dispute Resolution

The complaints were found eligible, then the CAO conducted field trips to Mongolia between November 2012 and March 2013 to assess the complaints. Based on stakeholder discussions during the assessment, both groups of complainants and the company agreed to engage in a collaborative dispute resolution process facilitated by the CAO. The herders democratically elected a team to represent them in the process.

The dialogue process began in March 2013, and agreed to engage an independent expert panel to investigate key issues related to the project’s impact on the environment and herders’ livelihoods. The parties met in multiple rounds of dialogue, and after over four years of negotiations they reached formal, signed agreements in May 2017.

Stage 3: Agreements

The two final agreements included 60 individual commitments by Oyu Tolgoi and the local government, addressing water and pasture issues, environmental monitoring, compensation and sustainable livelihood programs for herders.

These commitments encompassed measures such as:

hydrogeological studies to build knowledge of local water resources and a well-building program to build new wells and maintain existing wells,
pasture management plans to address conflicts related to limited pasture resources,
enhanced environmental monitoring of the mine’s operations with herder participation,
compensation review to ensure all herders who were physically or economically displaced received appropriate compensation packages, and
a sustainable livelihood program supporting economic stability and traditional nomadic livelihoods, by constructing a local market and slaughterhouse, amongst other services and programs.

Stage 4: Monitoring Plan

Following the close of the dispute resolution in May 2017, CAO started monitoring the implementation of the agreements. In March 2019, the CAO held a case closure event. The case was closed in May 2020, although implementation of commitments continues and remains a challenge.

Conclusion

While implementation remains challenging, this case is a good example of communities using a dispute resolution process to directly participate in the design of solutions to their concerns.

Oyu Tolgoi, Mongolia

Context

Filing a complaint with the CAO

Stages of the complaint

Conclusion

Issues and sectors

Issues

Sectors

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