Impacts of the global iron ore sector

This report provides a case study on the Mongolian mining company Altain Khuder in order to identify social and environmental impacts of the iron ore sector. The report is based on a combination of desk research and the results of a fact-finding mission in August 2014 to the communities around the Tayan Nuur mine, which is operated by Altain Khuder and has received funding from the European Bank for Reconstruction and Development (EBRD). It links sector characteristics and corporate strategies with adverse impacts on local communities. This case study illustrates that the extent to which a company conducts meaningful stakeholder engagement and consultation, with respect for stakeholder rights as well as proper mitigation measures to address social and environmental impacts, is not only the result of a company’s good intentions or the sustainable policies of its investors. It can also be explained by business factors such as the need for infrastructure, mine lifespan and production targets. If these business factors come into conflict with meaningful engagement and consultation, the rights of communities and other stakeholders could be deprioritised and their livelihoods could be threatened.

The report concludes that:

• Local communities can be negatively affected by transportation infrastructure associated with the mine.
• One-off monetary payments are an ineffective and counterproductive means of compensation.
• Short mine lifespan and high production targets can reduce the incentive for meaningful stakeholder engagement.
• The involvement of a development finance institution is no safeguard against adverse impacts.