[Bhpbilliton] Fwd: DRC: BHP Billiton sign-on letter

[Andy Whitmore]

Just tried to send the letter as an attachment, but it is too big to go 
through unmoderated, so text of the letter is pasted at the bottom & 
hope it gets through...

W

On 02/12/2010 10:27, Andy Whitmore wrote:
> fyi - and in case groups want to sign on. This could become an 
> increasingly important issue with BHP Billiton...
>
> -------- Original Message --------
> Subject: 	DRC: BHP Billiton sign-on letter
> Date: 	Thu, 02 Dec 2010 11:21:45 +0100
> From: 	Terri Hathaway <terri at internationalrivers.org>
> To: 	Andy Whitmore <whit at gn.apc.org>, Lizzie Parsons 
> <LParsons at globalwitness.org>, Claude Kabemba <ClaudeK at sarwatch.org>, 
> "tricia.feeney-raid-uk.org" <tricia.feeney at raid-uk.org>, Maurice 
> Carney <moe at friendsofthecongo.org>, 
> jan.cappelle at capacityfordevelopment.org, Nick Hildyard 
> <nick at fifehead.demon.co.uk>, Bryan Ashe <bryan at earthlife.org.za>, Knud 
> Vöcking <knud at urgewald.de>
>
>
>
> BHP Billiton's interest to build the mega-hydro scheme, Inga 3, and
> power a massive new aluminum smelter in DRC is a purely commercial
> venture which is set to skew DRC's electricity planning and cost the
> Congolese access to electricity, better jobs and real development.
>
> Attached is a letter we will be sending to the Chair of BHP Billiton's
> board to raise our concerns about the adverse impacts of this anti-poor,
> commercial venture.
>
> 1. Please let me know by FRIDAY, DECEMBER 10 if your organization would
> like to sign onto this letter and send me contact details.
>
> 2. Please share this letter with other organizations who may be
> interested to sign onto this action.
>
> 3. We are seeking a volunteer to translate the letter into French in
> order to circulate the letter locally. Is there anyone who can translate
> the letter, or connect us with a volunteer?
>
> 4. We are also seeking any organizations who could help further this
> campaign effort in 2011 by engaging in a global petition, media, and a
> shareholder action in October 2011.
>
> Best wishes, Terri
>

---------------------

December 14, 2010

Mr. Jacques Nasser
Chairman of BHP Billiton Limited and BHP Billiton Plc
BHP Billiton Limited
BHP Billiton Centre
180 Lonsdale Street
Melbourne Victoria 3000
Phone: (61) 1300 55 47 57
Fax: (61 3) 9609 3015

RE: Proposed BHP Billiton smelter and Inga 3 in Democratic Republic of Congo


Dear Mr. Nasser,

We wish to bring your attention to the adverse impacts of BHP Billiton’s 
ongoing negotiations with the government of the Democratic Republic of 
Congo (DRC) for a $5 billion aluminum smelter near the port of Banana on 
the Atlantic Coast to be powered by the proposed Inga 3 hydropower 
scheme. In one of the world’s poorest and most corrupt countries, this 
purely commercial venture is set to reinforce existing poverty. Without 
due action, it will cost the Congolese people electricity, jobs and 
development.

Project History
In February 2006, BHP Billiton signed a Memorandum of Understanding 
(MoU) with the Congolese government to develop a massive aluminum 
smelter, now valued at $5 billion, in Bas Congo Province. The smelter 
would produce 800,000 tonnes of aluminum per year and consume 2,500 MW 
of electricity. Prerequisites for the smelter’s construction include the 
availability of electricity from the $3.5 billion, proposed Inga 3 hydro 
scheme and construction of a $500 million deep sea port. In 2007, BHP 
Billiton agreed to finance a feasibility study for the 4,500 MW Inga 3 
project. The Banana deep sea port may be constructed as part of an 
infrastructure-minerals deal now under discussion between the 
governments of DRC and South Korea.

The MoU between BHP Billiton and the Congolese government conflicted 
with the DRC’s pre-existing Westcor agreement – signed in 2004 - to 
develop and equitably share Inga 3 power with four other African 
countries. It appears that BHP Billiton negotiated the proposed smelter, 
despite the conflict it would cause over electricity supplies. BHP 
Billiton’s interests led to Westcor’s eventual cancelation of the Inga 3 
project, resulting in strained relationships between the Congolese 
government and other Westcor member governments. BHP Billiton’s behavior 
raises concerns that the corporation may advance its interests in Inga 3 
and the aluminum smelter at any cost.

Consequences to the Power Sector
Just 6% of Congolese people have access to electricity, representing one 
of the world’s lowest access rates. The Congolese government has set a 
goal to increase access to electricity to 60% of its population by 2025. 
But development of Inga 3 does not actively support this goal, and would 
likely derail any progress toward that goal. Capital investments 
required for Inga 3 would reduce government resources for smaller, 
hydropower dams in areas currently not electrified. Excess power from 
Inga 3 may be delivered to Kinshasa, Katanga’s mining industry or even 
to South Africa, but it won’t improve DRC’s access rate. Without a clear 
government plan for reaching DRC’s access to energy target (60% by 
2025), BHP Billiton’s negotiations will adversely influence the 
much-needed expansion of national power distribution.

Current efforts to rehabilitate the Congolese power grid, namely the 
Inga 1 and Inga 2 dams adjacent to the proposed Inga 3 site, have 
stalled. The situation is likely the result of limited government 
interest to effectively execute the rehabilitation for the public good. 
Corrupt systems within government are also expected to be causing delays 
and concerns about financial accountability. By continuing to advance 
the Inga 3 project in spite of the Congolese government’s poor track 
record to rehabilitate the national power supply, BHP Billiton is 
demonstrating its own disregard for the Congolese people.


Consequences to Development
Aluminum smelters create some of the most energy-intensive jobs in the 
world. BHP Billiton suggests that the new smelter would create 1,200 
permanent jobs and require 1,600 sub-contractors, representing an 
astounding 4,286 MWh of consumed electricity per job/sub-contract.  
While these jobs and local sub-contracts are important, they come at the 
opportunity cost of similar investments which could create more jobs and 
local development. Attracting a variety of manufacturing and processing 
industries to the region could create far more jobs, spurring the local 
economy while consuming the same amount of, or even less, electricity.

Aluminum smelters also pay some of the world’s lowest electricity 
tariffs. Other electricity consumers, especially Congolese households, 
are at risk of paying higher power tariffs to offset the 
disproportionately low tariffs BHP Billiton is expected to negotiate.

In order to justify low power tariffs and energy-intensive job creation 
in a country with such low energy access rates and high unemployment, 
other economic and financial benefits are expected to offset the 
opportunity cost. However, investment contracts commonly reduce tax 
burdens and royalty rates paid to the state. Indirect economic benefits, 
such as indirect job creation, can also be misleading as they would 
likely accompany investments in other new industries as well.

Without transparency in investment and power sales contracts between BHP 
Billiton and the Congolese government, these contracts are expected to 
provide preferential terms to BHP Billiton, at a cost to the Congolese 
people through unearned state revenues and subsequent state development 
projects.


Recommendations
Given these factors, we fear that BHP Billiton’s commercial plans to 
develop its massive Congolese aluminum smelter using Inga 3 power will 
come at an unacceptably high cost to Congolese citizens. We ask BHP 
Billiton to work in partnership for the development of the Congolese 
people by taking the following steps:

1.    In order to promote the government’s attention to existing power 
grid rehabilitation and access targets, we call on BHP Billiton to:
·    Agree to a moratorium on promotion and planning of Inga 3 until the 
rehabilitation of Inga 1 and Inga 2 is successfully completed and the 
government has prepared an action plan to achieve its 2025 electricity 
access target of 60%;
·    Make no financial agreements for the development of Inga 3 or the 
proposed aluminum smelter until the Congolese power sector has 
demonstrated at least two years of successful, post-rehabilitation 
financial and technical operation of its Inga 1 and Inga 2 dams.

2.    In order to ensure that the projects will provide fair economic 
benefits for the people of DRC, we call on BHP Billiton to:
·    Release the terms of its MoU with the Congolese government and 
agree to the transparency of the terms of all future contracts related 
to the development of Inga 3 and the nearby aluminum smelter.

We understand that BHP Billiton takes its commitment to sustainable 
development very seriously. We ask that you take these outlined actions 
in the spirit of those commitments. Without these actions, profits made 
by BHP Billiton from these investments would undermine the development 
of Congolese people. We look forward to your response.

Sincerely,

Signatories…


Cc

Mr. Ian Wood
Vice President Sustainable Development
BHP Billiton

Dr. Xolani Mkhwanazi
President and Chief Operations Officer, Aluminium South Africa
BHP Billiton
6 Hollard Street
Johannesburg 2001
Republic of South Africa
Phone: (27 11) 376 9111
Fax: (27 11) 838 4716

investor.relations at bhpbilliton.com
hsec at bhpbilliton.com



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