VZCZCXRO6345
RR RUEHLMC
DE RUEHUM #0400/01 1900831
ZNR UUUUU ZZH
R 090831Z JUL 07
FM AMEMBASSY ULAANBAATAR
TO RUEHC/SECSTATE WASHDC 1280
INFO RUEHBJ/AMEMBASSY BEIJING 5653
RUEHKO/AMEMBASSY TOKYO 2548
RUEHUL/AMEMBASSY SEOUL 2826
RUEHOT/AMEMBASSY OTTAWA 0455
RUEHMO/AMEMBASSY MOSCOW 1814
RUEHBY/AMEMBASSY CANBERRA 0141
RUEHBK/AMEMBASSY BANGKOK 1484
RUEHML/AMEMBASSY MANILA 1398
RUEHLO/AMEMBASSY LONDON 0141
RUCPODC/USDOC WASHDC 1309
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC 0622
RUEKJCS/SECDEF WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 03 ULAANBAATAR 000400 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE PASS EPA, EXIMBANK, OPIC, AND PEACE CORPS 
STATE FOR EAP/CM AND OES 
STATE PASS AID FOR ANE FOR D. WINSTON 
MANILA AND LONDON FOR USEDS TO ADB, EBRD 
 
E.O. 12958: N/A 
TAGS: PGOV EMIN EINV MG
SUBJECT: FOREIGN MINING COMPANY, ENVIRONMENTAL NGO REPS DISCUSS 
"RESPONSIBLE MINING" 
 
SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION. 
 
¶1. (U) SUMMARY: A June 22 Embassy-organized lunch brought together 
environmental and social NGO and mining company representatives 
active in Mongolia to discuss issues of transparency and stakeholder 
engagement.  Participants agreed that responsible mining and 
transparency should be encouraged in Mongolia and that a lack of 
progress in the implementation and enforcement of environmental laws 
is one of the greatest challenges to overcome. END SUMMARY. 
 
¶2. (U) On June 22, the DCM hosted lunch for representatives of 
environmental NGO's and mining companies active in Mongolia to 
discuss issues of mutual concern in an informal, non-confrontational 
environment.  This was the second year that the Embassy has hosted 
such an event as part of efforts aimed at supporting continued 
dialogue between environmental and mining interests. Attendees 
included: Dr. Chimed-Ochir, Mongolian Representative of the World 
Wildlife Fund (WWF); Mr. Batbold, Chairman of the Union of Mongolia 
Environmental NGOs (UMENGO); Mr. Gansukh, Director of the Community 
Conservation and Consulting Network (COCONET); Ms. Sodontogos, 
Advisor to the President of Mongolian National Mining Association 
(MNMA) and Project Manager of Mine Info Consulting; Mr. Munkhbat, 
Legal Advisor to Ivanhoe Mines Mongolia; Mr. Lutaa, Mongolian Chief 
of Public Affairs at BHP Billiton; Mr. Bill Infante of The Asia 
Foundation; and Mr. Enktuvshin, representative of Phelps Dodge. 
Embassy attendees included the DCM, Econ/Coml Chief, EST FSN, and 
E/P's Summer Intern (notetaker). 
 
¶3. (U) To focus the conversation, the topics of discussion were 
limited to two of the eight principles outlined in the "Draft 
Definition of Responsible Mining," signed at a multi-stakeholder 
meeting facilitated by the Asia Foundation in February, those being: 
(1) transparency and openness, and (2) ensuring multi-stakeholder 
engagement. The discussions demonstrated the existence of common 
ground between the mining and environmental concerns on these 
issues, and therefore room for continued cooperation. 
 
Transparency: Everyone's Responsibility 
--------------------------------------- 
 
¶4. (U) A number of participants expressed the view that transparency 
should be achieved through capacity-building among the various 
actors involved in mining policy, including mining companies, local 
environmental activists, civic leaders, and public officials.  Ms. 
Sodontogos noted that that while mining companies are taking the 
issue of transparency seriously, other stakeholders--and 
particularly the GOM--should do more to ensure their own 
transparency.  Mr. Infante cited the need for increased transparency 
within the GOM over how it will disperse profits from its own equity 
stakes in strategic mines. 
 
¶5. (U) The DCM noted that it is crucial to all involved in the 
mining sector that the government operate transparently, but 
wondered how to encourage it as well as mining firms to be more 
transparent and to voluntarily share information as well.  He 
suggested tools such as a Freedom of Information law or increased 
vigilance from the press.  While Ms. Sondontogos agreed that the 
press could play an important role, she worried that journalists 
were too young, under-educated, sometimes corrupt and often biased. 
Mr. Lutaa summed up the feelings of many at the table, noting that 
responsible mining required responsible government and responsible 
media.  Media need to support, he said, not dilute or distract the 
conversation. 
 
Stakeholders Must Work With, Not Against, Each Other 
--------------------------------------------- ------- 
 
¶6. (U) In attempting to define who qualifies as a stakeholder, and 
who has an interest in ensuring the practice of responsible mining, 
the participants agreed that there are a wide variety of 
stakeholders, and that new ones are constantly being identified, 
with varying degrees of interest and activity at different stages of 
the process.  These include, but are not limited to, the government, 
 
ULAANBAATA 00000400  002 OF 003 
 
 
the people of Mongolia, producers and licensers.  The participants 
agreed that building broad stakeholder consensus on mining issues 
was essential.  Ms. Sodontogos stated that responsible mining was a 
way to guarantee the social license that would allow mining to take 
place in Mongolia. 
 
¶7. (U) Many at the table expressed frustration at the central 
government for preventing other concerned parties, such as local 
leaders, from greater involvement in mining policy issues.  In spite 
of last year's revisions to the mining law to provide local 
authorities with a greater role in decision-making, participation of 
local authorities remains limited, in part because they often lack 
the information necessary to make knowledgeable, timely  decisions. 
Dr. Chimed-Ochir opined this was because companies were hesitant to 
share proprietary information with local officials for fear of 
corruption.  He cited the opinion of both mining company reps and 
local authorities that local residents were not informed enough to 
understand the complex questions that were attached to mining.  Ms. 
Sodontogos said this lack of understanding had been exploited by 
nationalists with an anti-mining agenda while simultaneously 
enabling corruption to exist. She suggested a public awareness 
campaign.  The DCM said that he hoped such organizations such as the 
World Bank or the European Bank for Reconstruction and Development 
could offer assistance in this area, as both have extensive 
experience and are not viewed as having vested interests. 
 
¶8. (U) Mr. Munkhbat noted that Ivanhoe's relations with the local 
government were excellent, standing in stark contrast to their 
generally poor relationship with the central government.  Ivanhoe 
had worked hard to cultivate good relations locally by building 
schools and medical clinics and donating money to rebuild a local 
monastery. Mr. Lutaa said that while larger companies had come to 
realize the importance of interacting with local communities, 
exercising social responsibility and developing best practices, 
smaller companies with fewer resources were at a disadvantage. 
 
¶9. (U) While Mr. Infante expressed his view that radical 
environmental groups overlooked the positive benefits of mining, all 
participants appeared to agree that implementation of environmental 
laws was weak or nonexistent, which generates suspicion against the 
government and against mining companies.  Mr.Munkhbat said he had 
noticed more government efforts to crack down on violations.  The 
DCM noted there was a tendency to unfairly tar compliant 
multinational firms adhering to Mongolian as well as their own tough 
environmental standards with the  environmental degradation caused 
by artisanal and small scale mining operations (largely 
Mongolian-owned). 
 
Which Way Forward? 
------------------ 
 
¶10. (U) All sides appeared to concur on the need for responsible 
mining, but the question is how.  Participants agreed that all 
stakeholders must work with, rather than against, each other and 
that each side must act responsibly.  Mining companies must endeavor 
to prevent polluting local water resources and acting in ways that 
could be seen as reckless by local communities.  Ms. Sodontogos 
stressed that mining companies were not against the environment, but 
could come off as such as they chase after profits. 
 
¶11. (U) Mr. Infante believed that citizen groups needed to plan 
better, working with elected officials to make clear their 
expectations of mining companies.  He noted, however, that the 
expense of such planning made it difficult to achieve.  Ms. 
Sodontogos offered the Center for Responsible Mining as a good 
example of an NGO working to educate the general public on mining 
issues.  Mr. Infante thought the World Bank could play a role, but 
that any mechanism ultimately created to bring stakeholders together 
must represent the broad spectrum of stakeholder interests. 
 
¶12. (SBU) COMMENT:  Last year's luncheon put many of the same 
players together but the atmosphere then was one of considerable 
wariness and distrust.  Efforts over the year to put stakeholders 
 
ULAANBAATA 00000400  003 OF 003 
 
 
together have generally helped reduce anxieties and tensions, though 
there are still some ruffled feathers in the mining community (Boroo 
Gold declined to participate this year, for example, over a tiff 
with TAF).  "Mineral populism" has subsided somewhat over the past 
year and there is a growing but tentative and uneven popular 
sentiment that after years of stymied or stalled negotiations and 
reams of print about Mongolia's rich natural resources, it's time to 
"get on with it" and develop the resources and gain benefits from 
them. Finding common ground among potential adversaries and building 
trust is pivotal to this process; more so now that Peabody Energy is 
actively considering investing and has gained USDOC/USG-approved 
advocacy.  END COMMENT. 
 
MINTON