Interview: G.Sugar “Oyu Tolgoi supports sustainable local development”

G.Sugar is Community Relations and Sustainable Development senior manager at Oyu Tolgoi.

Oyu Tolgoi is the largest mining project in Mongolia. In relation to this, does it support local development? Can you describe these activities?
Oyu Tolgoi is engaged in many activities such as the improvement of the water supply in the Umnugobi and the provision of electricity to rural soums as well as training and development of local suppliers, support of small-medium size businesses, job creation, protection of cultural heritage sites and the overall health of local residents.

The mine is committed to building the capacity of local residents and improving their market competitiveness. For example, Oyu Tolgoi is implementing vocational training, the largest in Mongolian history, valued at 110 billion MNT. Under this programme, the company is training 3,300 vocational specialists, building 2 new vocational centres and upgrading 4 existing vocational centres. In addition to this, we are training 1,200 vocational teachers and providing scholarships for 200 students to study in domestic and international universities.

Oyu Tolgoi is building a vocational training school with capacity to train 150 people annually in the center of Khanbogd soum in the Umnugobi. The construction is expected to be completed by second quarter of this year. The mine also has provided university scholarships for 33 students from the Umnugobi. In addition to that, Oyu Tolgoi is responsible for university tuition fees for 25 children from herder households around Khanbogd.

Local businesses and markets expand in relation to the demand of mining companies. How does Oyu Tolgoi supports local businesses?
If possible, it is appropriate for rural business entrepreneurs to develop a non-dependent relationship with the mining sector and to develop a non-mining market in addition to supplying goods and services to the mining sector. Therefore, Oyu Tolgoi is committed to the development of non-mining business expansion. In 2011 alone, about 200 local suppliers in the Umnugobi supplied 3 billion MNT of products and services for the Oyu Tolgoi project. About 50 business entrepreneurs, in the livestock and processing sector, obtained loans totaling 380 million MNT for the development of local small-medium sized businesses. Using these soft loans from the mine, the local small-medium entrepreneurs are growing their businesses.

What activities are in place to protect local cultural heritage and social development and infrastructure?
Oyu Tolgoi is committed to the preservation, protection and development of local cultural heritage. The Archeological Institute, Paleontological Institute and Historical Institute under the Mongolian Academy of Sciences are working together with Oyu Tolgoi to conduct archeological, paleontological and ethnic research and preservation for cultural heritage sites. In 2011, Oyu Tolgoi implemented a comprehensive programme to register and protect Umnugobi cultural heritage sites in partnership with leading scientists and researchers. This programme set the standard for other Mongolian mining companies to work with government organisations in cultural heritage related matters. Recommendations were developed as a result of the programme and are expected to be implemented in partnership with the local government of Umnugobi.

In 2011, Oyu Tolgoi conducted water exploration in Dalanzadgad, for a total of 185 million MNT, and determined a large water reserve to provide a sustainable drinking water supply and handed over a detailed report to local government. Also in 2010 – 2011, we conducted water exploration and drilling works in and around Khanbogd and determined a preliminary drinking water reserve for residents. Khanbogd, Bayan-Ovoo and Manlai are not connected to the centralised power grid and currently use diesel generators as a power supply. Oyu Tolgoi donated these diesel generators in 2009.

Early this year, we signed a contract with 2 Mongolian businesses and launched construction of a 35KV power transmission line from the project site to Khanbogd soum, this project had a 6 billion MNT budget. Mongolian companies 'Bodi International' and 'Ilch Khangai' are undertaking this work and are expected to finish by September.

What mining impacts have residents and herders of the Umnugobi experienced?
Oyu Tolgoi is a world-class mine. Construction and production of the mine inevitably brings positive and negative impacts on the local community. According to international standards, mining companies have to regulate these impacts and improve living standards in the local community. This is part of the corporate and social responsibility of a mining company. Since Oyu Tolgoi is a world-class mine, always in compliance with Mongolian laws and regulations, we are committed to operating with international standards. Currently, Oyu Tolgoi is in the construction phase and developing the open pit and underground mines.

Infrastructure projects include a new airport, water pipeline from the Gunii Hooloi deep water aquifer, 150 km hard paved road to Gashuun Sukhait and overhead power transmission lines. Most of these projects take place in a 10 thousand hectare area of Khanbogd soum. Herder households make up 60 per cent of the soum population. Livestock herding depends on a constant and dependable water supply. We consider these needs when building infrastructure in the area, it affects the livelihood and economic standards of residents.

How have you mitigated these impacts on herder families?
Oyu Tolgoi launched a programme to reimburse and support the livelihood of local herders and residents. For development of the programme, Oyu Tolgoi briefed the local residents about the project. Conducted a series of focus group discussions in order to identify impacts of the construction and what the opinions are of local residents. We listened to the local residents and considered their opinions in the programme. During this process international experts monitored our work. International experts conducted several audits and gave recommendations when we developed this programme. Therefore, it can be said that this programme is very broad and includes recommendations of international experts and opinions of local residents. A total of 84 households are eligible to receive the reimbursements laid out in the programme. Only households that meet certain criteria and are affected by the impacts are eligible to receive the reimbursement.

So does this mean the impacts will be grouped and categorised? What are the criteria for grouping the impacts? There is a general perception that the impacts will lead to the herders ending up with no pastureland or water wells?
This is not true. The impacts are divided into 8 – 9 groups. For instance, households who have a winter camp within a 5 km radius of Khanbumbat airport are included in a group categorised as high impact. We consider that pastureland of such households has been reduced and light and noise impacts are also present. Therefore, we are providing support by creating jobs and providing educational scholarship opportunities. Also, we have worked on improvement of pastureland management and have enrolled herders in short-term professional skills courses. Receiving such assistance, these local residents will have an increased household income in the long run.

Mining companies often need to relocate local residents. How is Oyu Tolgoi solving this issue?
In 2003, we organised physical relocation. At that time, 11 households were relocated. Now we are working only on economic displacement. For this, we comply with international standards and the standards of Rio Tinto, the company managing the Oyu Tolgoi project. For herder households, there are several specifics. We understand it is very complicated and difficult to estimate economic loss for nomadic residents.

L.Batbold “The Oyu Tolgoi reimbursement programme provides livelihood support for herder households”.

84 households in Khanbogd soum are enrolled in the Oyu Tolgoi reimbursement programme. One such herder is L.Batbold.
When discussing the programme, he said “Oyu Tolgoi has provided jobs for herder households and this is a huge support for our livelihood. I’m working part time now as a road maintenance specialist. Since I began working, our household has regular income every month. Also, Oyu Tolgoi provides 215 thousand MNT per child for our 4 children to help them prepare for the school year. On top of that, Oyu Tolgoi is providing university tuition fees for students in the area. Our family is engaged in raising camel herds and improving breeding quality. We have enrolled in the business support programme and have purchased 24 camels. This reimbursement programme is really supporting the livelihood of our household”.