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Mining company excluded from the investment universe of the Norwegian Government Pension Fund - Global

The Ministry of Finance has excluded the South-African company DRD Gold Limited (DRD Gold) from the investment universe of the Norwegian Government Pension Fund – Global, based on a recommendation from the Council on Ethics for the Fund. According to the Council on Ethics the Fund runs an unacceptable risk of contributing to severe environmental damages by continuing to invest in the company.

The Ministry of Finance has excluded the South-African company DRD Gold Limited (DRD Gold) from the investment universe of the Norwegian Government Pension Fund – Global, based on a recommendation from the Council on Ethics for the Fund. According to the Council on Ethics the Fund runs an unacceptable risk of contributing to severe environmental damages by continuing to invest in the company.

- This is the second time that the Council on Ethics advices the Ministry of Finance to exclude a company which activities entail an unacceptable risk of the Fund contributing to severe environmental damages under the Ethical Guidelines. Excluding a company from the Fund is an expression of not wanting to contribute to grossly unethical practices. DRD Gold causes severe environmental damages as a direct consequence of their mining operation at Tolokuma on Papua Ny Guinea. We cannot hold shares in such a company, says Minister of Finance Kristin Halvorsen.

DRD Gold currently owns 78, 8 per cent of Emperor Mines Limited, which runs the Tolukuma gold mine on Papua Ny Guinea. Every day the Tolukuma mine disposes of 430 tonnes tailings into a natural river system. Tailings and drainage from deposit sites generate a significant supply of heavy metals to the environment, in particular mercury, cadmium, chromium, arsenic, nickel and lead.

The Council on Ethics for the Government Pension Fund – Global has considered allegations that the Tolukuma mine through its riverine tailings disposal causes serious and extensive damages to the environment and adversely affects local people’s lives and health.

According to the Council’s assessment “the company’s practice of riverine disposal is in breach of international norms, and the question may be raised whether the company violates national environmental regulations as well. The Council finds that the company for many years has been aware of the serious health and environmental damage its operations have caused, but despite this the company has failed to put any measures into effect aimed at reducing the damage. Considering the plans presented by the company regarding investments and production expansion, there is reason to believe that the company’s unacceptable practice will continue in the future.”

Based on an overall assessment, the Council on Ethics concludes that the Government Pension Fund – Global runs an unacceptable risk of contributing to severe environmental damages by investing in the company. Against this background the Ministry of Finance has decided to exclude DRD Gold from the Fund’s investment universe under the Fund’s Ethical Guidelines.

The Ministry of Finance asked Norges Bank by letter of 29 January to divest from DRD Gold by the end of March 2007. The divestment process is now concluded. As of 31 December 2006 the Government Pension Fund – Global held shares in DRD Gold valued at about NOK 4 million. The publication of the decision has been deferred to ensure an appropriate divestment process.

The recommendation of the Council on Ethics is posted on the Ministry of Finance’s homepage.

Read more about the Council on Ethics for the Government Pension Fund – Global at www.etikkradet.no/english.