Recommendation on the exclusion of the company Barrick Gold

Published under: Stoltenberg's 2nd Government

Publisher Ministry of Finance

In accordance with the Ethical Guidelines, point 4.4, the Council has reached the conclusion that there are grounds for recommending that Barrick Gold be excluded from the Government Pension Fund – Global’s investment possibilities, due to an unacceptable risk of contribution to ongoing and future environmental damage.

At a meeting held on 4 October 2005, the Council on Ethics for the Government Pension Fund – Global decided to assess whether investments in the company then known as Placer Dome, currently Barrick Gold Corporation, would imply a risk of the Fund contributing to severe environmental damage under the Ethical Guidelines, point 4.4.

As of 31 December 2007 the Government Pension Fund – Global held shares worth some NOK 1,274 million in the company.

Barrick Gold is a Canadian mining company, which, in several countries, has been accused of causing extensive environmental degradation. The Council has investigated whether riverine tailings disposal from the Porgera mine in Papua New Guinea generates severe environmental damage, and finds it established that the mining operation at Porgera entails considerable pollution. The Council attributes particular importance to the heavy metals contamination, especially from mercury, produced by the tailings. In the Council’s view heavy metals contamination constitutes the biggest threat of severe and long-term environmental damage. The Council also considers it probable that the discharge has a negative impact on the population’s life and health, including both the residents of the actual mining area and the tribal peoples who live along the river downstream of the mine.

The environmental damage that riverine disposal may cause are well known, but the company has not implemented any appreciable measures to prevent or reduce this damage. Neither has the company been willing to present data to underpin its allegations that environmental and health damage does not occur.

The Council started its survey of the Porgera mine in the autumn of 2005. In connection with Barrick Gold’s acquisition of Placer Dome in 2006, the Council chose to defer further investigations in case the company would stop the riverine tailings disposal or implement other measures to reduce the pollution after the take-over of the mine. So far this has not happened, and the Council therefore decided to continue its assessment of the company in the autumn of 2007.

Through Norges Bank, the Council has made two enquiries to the company. In November 2007, the Council contacted the company requesting it to send the 2006 and 2007 environmental reports for the Porgera mine. The company declined the Council’s request in a letter of 30 November 2007 , presenting its viewpoints on the riverine tailings disposal, to which reference has also been made in this recommendation. On 7 April another letter was written to Barrick, giving the company an opportunity to comment on the Council’s draft recommendation, in accordance with the Guidelines, point 4.5. The Council received the company’s reply on 14 May 2008.

In order for there to be a risk that the Pension Fund may contribute to severe environmental damage, there must be a direct connection between the company’s operations and the environmental impact. The Council takes as its point of departure that the damage must be extensive, attributing importance to whether the damage causes irreversible or lasting effects and whether it has a considerable negative impact on human life and health. Moreover, an assessment must be made as to what extent the company’s acts or omissions have caused the environmental damage, including whether the damage is in breach of national legislation or international standards. It is also significant whether the company has failed to act in order to prevent the damage or has neglected to take measures aimed at significantly reducing the scope of the damage. Last but not least, it must be probable that the company’s unacceptable practice will continue in the future. Based on an overall assessment, the Council finds that these conditions have been met in the case at hand.

In accordance with the Ethical Guidelines, point 4.4, the Council has reached the conclusion that there are grounds for recommending that Barrick Gold be excluded from the Government Pension Fund – Global’s investment possibilities, due to an unacceptable risk of contribution to ongoing and future environmental damage.

Read the recommendation here (pdf)