[Bhpbilliton] NGOs Call for a Moratorium on BHP Billiton’s Congo Smelter
Andy Whitmore
comms at piplinks.org
Thu Dec 16 00:46:11 PST 2010
NGOs Call for a Moratorium on BHP Billiton’s Congo Smelter
International Rivers Press Release
16 December 2010
International civil society groups have called on BHP Billiton to halt
its plans for a US$5 billion aluminum smelter and the associated $3.5
billion Inga 3 hydropower scheme in Democratic Republic of Congo, one of
the world’s most corrupt and under-developed countries. The proposed
smelter would consume 2,500 MW of electricity, more than DR Congo’s
entire current power supply.
In a letter to the chairman of BHP Billiton, 14 African and
international organizations urged the corporation to impose a moratorium
on the project until the Congolese government first fulfills its
commitments to bring electricity to its citizens.
An estimated 62 million Congolese people – 94% of the population – do
not have access to electricity. The Congolese government has set an
aggressive goal to increase electrification rates ten-fold within 15
years (to 60% by 2025), but has yet to explain how it intends to achieve
this target. By focusing the Congolese energy sector’s attention on
developing Inga 3, BHP Billiton could derail the country’s efforts
toward achieving its electrification goals – and thus damage its poverty
eradication efforts.
Daily power outages plague those few who are connected to the state’s
dilapidated power grid. Despite available funding, an urgent
rehabilitation of the grid has languished since 2003 with little
explanation.
The letter warns about the project’s misleading economic benefits. The
proposed smelter would create very few jobs relative to the electricity
it would consume. Undisclosed power and investment contracts are
expected to cost the Congolese people by giving undue preference to BHP
Billiton. Examples from elsewhere in Africa are revealing: terms of BHP
Billiton’s long-standing smelter deals in southern Africa sent
shockwaves through the region in April when they were publicly disclosed.
Says Terri Hathaway of International Rivers: “One of the world’s richest
corporations is jumping the development queue ahead of some of the
world’s poorest people. BHP Billiton’s flagrant disregard for the
consequences of this venture is alarming.”
The NGOs’ proposed moratorium would halt BHP Billiton’s involvement in
the Inga 3 hydropower scheme until the rehabilitation of the poorly
performing Inga 1 and Inga 2 dams has been successfully completed and
the government has prepared an action plan to achieve its electricity
access target. It would also call on BHP Billiton to refrain from any
financial agreements for 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.
Read the NGO letter to BHP Billiton:
http://www.internationalrivers.org/en/node/6058
International Rivers is an environmental and human rights organization
with staff in four continents. For over two decades, International
Rivers has been at the heart of the global struggle to protect rivers
and the rights of communities that depend on them.
--30--
Contact:
Terri Hathaway, Africa Program Director
(cell in Cameroon) +237 70 49 14 06
-------------------
*Call for BHP Billiton to Halt Congo Smelter, Inga 3*
View this page in: Francais
<http://www.internationalrivers.org/en/aluminum/appel-pour-bhp-billiton-arr%C3%AAter-la-fonderie-congolais-inga-3>
15 December 2010
Mr. Jac Nasser
Chairman
BHP Billiton Limited and BHP Billiton Plc
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
<http://www.internationalrivers.org/en/node/2878> 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:
* In order to promote the government’s attention to existing power
grid rehabilitation and access targets, we call on BHP Billiton to:
o 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%;
o 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.
* 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,
Jean Claude Katende
ASADHO <http://www.asadho-rdc.net/> - African Association for the
Defense of Human Rights (DRC)
Claude Kabemba
Southern Africa Resource Watch
<http://www.internationalrivers.org/www.sarwatch.org> (South Africa)
Nondo E. Ejano
Women's Global Network for Reproductive Rights <http://www.wgnrr.org/>
(Tanzania/Philippines)
Anabela Lemos
Justiça Ambiental! Friends of the Earth- Mozambique
<http://www.foei.org/en/who-we-are/member-directory/groups-by-region/mozambique>
Bobby Peek
groundWork, <http://www.groundwork.org.za>Friends of the Earth - South
Africa
Natalie Lowrey
Friends of the Earth - Australia <http://www.foe.org.au/>
Geoff Nettleton
Indigenous Peoples Links <http://int.piplinks.org/> (UK)
Anders Lustgarten
CounterBalance <http://www.counterbalance-eib.org/> (EU)
Nick Hildyard
The Corner House UK <http://www.thecornerhouse.org.uk/>
Maurice Carney
Friends of the Congo <http://www.friendsofthecongo.org/> (US)
Jan Cappelle
Capacity for Development <http://www.capacityfordevelopment.org> (Belgium)
Terri Hathaway and Lori Pottinger
*International Rivers* (US)
Richard Solly
London Mining Network <http://londonminingnetwork.org/> (UK)
Knud Vöcking
Urgewald e.V. <http://www.urgewald.de/> (Germany)
Cc
Mr. Ian Wood
Vice President Sustainable Development
BHP Billiton
Dr. Xolani Mkhwanazi
President and Chief Operations Officer, Aluminium South Africa
BHP Billiton
International Rivers www.internationalrivers.org
--
Andy Whitmore (Whit)
Indigenous Peoples Links (PIPLinks)
Communications and Research
Finspace, 225-229 Seven Sisters Road, London, N4 2DA
Ph / fax: + 44 (0)207 263 1002
Email: comms at piplinks.org Web: http://www.piplinks.org
“We are here on earth to do good to others. What the others are here for, I don't know.” – W H Auden
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