For Immediate Release
Groups Call on Hong Kong Exchange to Ensure Zijin Mining Comes Clean about Overseas Investment Risks
WASHINGTON - Several civil society groups today petitioned the Hong Kong Stock Exchange to ensure that Zijin Mining Group (listed as 2899:HK) fully discloses material risks associated with one of its most controversial overseas projects, the Rio Blanco Mine in Peru.
The groups include Friends of the Earth, Peruvian rights organizations CooperAccion and Fundación Ecuménica para el Desarrollo y la Paz (Fedepaz), and Belgian solidarity organization CATAPA.
“Because of the Rio Blanco Mine project, people have lost their lives, and the fragile ecosystem and waterways of the Piura region are being threatened by pollution,” said Javier Jahncke of Fedepaz. “This has not only affected the health and lives of the people, but also economic activities such as eco-tourism, agro-industry and organic farming, which are the main sources of sustainable development in the region. The danger of losing their international organic farming certification is among the gravest risks looming over Piura communities.”
The letter raised concerns that Zijin investors are in the dark about the risks posed by the Rio Blanco Mine project, including the company’s failure to obtain community authorization before beginning mining activities, as required by Peruvian law, lack of compliance with Peruvian environmental regulations, and torture and killing of local people. Despite these controversies, Chinese media reported in 2010 that Zijin hoped to secure financing to expand the Rio Blanco Mine over the next couple of years.1
“Zijin’s mismanagement of social and environmental issues at the Rio Blanco mine may be indicative of a broader governance problem at the company,” said Adina Matisoff of Friends of the Earth U.S. Last year, the company’s own Supervisory Committee found that the company may have overstated the value of some of its assets because of “problems [arising] from the social and environmental protection in local society, higher political, economic and cultural risk for overseas investments.” However, Zijin’s 2009 annual report disclosed neither these risks nor how the company was addressing them.
“The Hong Kong Stock Exchange has issued state-of-the-art disclosure standards for mining companies,” Matisoff added, “but standards to protect investors and the public interest are useless if the Exchange does not properly enforce them.”
Chinese environmental groups have already urged the Hong Kong Stock Exchange to ensure that Zijin properly reports on the financial implications of its July 2010 Zijinshan spill in Fujian, one of China’s worst mining accidents harming the environment in recent history. Since the incident, the company has halted trading on the Exchange numerous times in advance of announcements about fines and penalties associated with the event.
“Increased disclosure gives investors greater confidence and helps with the risk management and transparency of their portfolios,” said David St. Maur Sheil, Executive Director of the Association for Sustainable and Responsible Investment in Asia (ASrIA). “Asria has seen a steady increase in the quantity and quality of environmental, social and governance disclosure by Asian companies in recent years and it is clear that institutional investors increasingly take account of corporate disclosure and engagement standards when making portfolio decisions.”
A copy of the letter to the Hong Kong Stock Exchange is available here: http://www.foe.org/sites/default/files/Letter%20to%20HKSE%20re_Zijin.pdf
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