Case story

  • Australia

OECD NCP Australia - Colombian Communities vs. BHP Billiton Xstrata

2007

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Story

Cerrejón Coal, one of the largest open-cut coal mines in the world, is co-owned by BHP-Billiton (Australia), Anglo-American (UK) and Xstrata (Switzerland). According to the complaint, Cerrejón attempted to depopulate an area of the La Guajira peninsula by destroying a 200-year-old township-pueblo, Tabaco, and forcibly expelling the remaining population through a purported expropriation. Five other communities suffered the effects of ‘estrangulación’ (strangulation), actions taken by the company designed to make living unviable in the area and therefore drive the population out. The Complainants alleged that this caused suffering and hardship for the former population of Tabaco and of the other five pueblos.

The Complainant sought revision of the compensation paid to, and improvements to the current living conditions of, former residents of Tabaco. That Complainant also sought to ensure that there was an appropriate process to manage the relocation of the five other communities, including adequate consultation, and that any resettlement occurred in a socially responsible manner.[1]

Procedure

The ANCP contacted both the Complainant and BHP-Billiton. A phone meeting was held between the ANCP and the Complainant on 18 July 2007, and a face-to-face meeting was held between the ANCP and BHP-Billiton in Melbourne on 7 August 2007.

Involvement of other NCPs As the submission also involved companies in the UK and Switzerland, and with the agreement of the Complainant and BHP-Billiton, the ANCP consulted with the UK NCP and the Swiss NCP.[2]

  • The ANCP organised a meeting in London on 9 October 2007 with local Cerrejón Coal management, the Australian and Swiss NCPs, Anglo-American, Xstrata, BHP-Billiton, ASK and the Complainant. Emails were then exchanged, but no further mediation occurred.

  • It was agreed that the issues should be dealt with on an integrated basis rather than as separate complaints in the local jurisdictions and the ANCP agreed to take the lead in consultation with the Swiss and UK NCPs.

  • At that meeting, a proposed Third Party Review initiated by Cerrejón Coal was accepted by the ANCP as a solution to the complaint. The Guidelines case was suspended until the Third Party Review published its report.

Outcome

The independent review, 'Cerrejon Coal and Social Responsibility: An Independent Review of Impacts and Intent', was released in February 2008. The report called for talks between the company and the surrounding communities.

In April 2008, Cerrejon responded to the independent review recommendations which included a commitment to meet with the Tabaco Relocation Community (TRC).

In August 2008, Cerrejon and the TRC sought Dr Harker to serve as facilitator in talks betwee them.

On 12 December 2008, an agreement was reached between the parties, including:

  • Contributions to indemnities totalling US$1.8 million; and,

  • A further US$1.3 million for sustainable projects.

No similar agreement has been reached for the other five affected communities.

On 18 December 2008, the ANCP met with the Complainant and BHP-Billiton to resolve any outstanding issues. The meeting provided a forum for general agreement on a range of issues, including that:

  • The serious legacy issues affecting Tabaco residents had been resolved;

  • A process should be established to provide information relating to air quality and pollution to the local communities;

  • An independent party should be engaged to monitor the consultation process for communities potentially subject to resettlement.

  • On 12 June 2009 the Australian NCP closed the case and issued a Final Statement.

 

The negotiations on the resettlement of the other five communities are ongoing.[3] BHP-Billiton and Xstrata have claimed that local Cerrejón management now has the capacity and the knowledge to conduct a proper resettlement process, and that there is no need for a third party mediation. However, although the resettlement processes was taking place on paper, OECD Watch reports that no mutually agreed negotiation scheme was agreed with the Complainants, nor was the communities’ ability to negotiate improved. The ANCP expresses concern in its Final Statement that in the absence of a mediator the process of resettlement will be complicated and prolonged.

Fact-finding: The Complainants requested that the NCPs conduct fact-finding on the ground in Colombia either in person or through the respective embassies, but the Swiss NCP responded that the NCP did not have the human or financial resources to carry out local fact-finding or mediation, and that doing so would be a violation of national sovereignty. This seems to be at odds with the approaches of the UK and Dutch NCPs. The Swiss NCP further argued that local embassies could not carry out the duties of the NCPs. The Swiss NCP mentioned that this may change after the upcoming review of the Guidelines and Procedural Guidance.

Additional Information:

References

  1. 1. Australian NCP Final Statement

  2. 2. On 4 October 2007, a Swiss NGO, ASK, lodged a complaint with the Swiss NCP regarding Xstrata's relationship with Cerrejon. The text of that complaint is in German and was not made available to the ANCP. However, the Swiss NCP reported that it is materially similar to that lodged by the Complainant in this complaint.

  3. 3. ANCP Final Statement

Contributor(s): This article was modified by Kyle (4), Ejfturnbull (1).