UK-Listed Mining Companies

Guy Opperman Excerpts

Wednesday 28th November 2012 Westminster Hall

[Guy Opperman (Hexham) (Con)]

Mining is part of the north-east’s industrial heritage, and in my constituency alone there are more than 100 former mines. Lead, tin and coal mining shaped my local area. The hon. Member for Falkirk (Eric Joyce) made miners abroad the focus of his speech, and I should make it clear that I wholeheartedly back the extractive industries transparency initiative and the Financial Conduct Authority’s proposals. All efforts are being made to ensure that a vital trade is conducted ethically and transparently. It is entirely right to say that we have an obligation to support the poorest states in the world and to help countries in Africa, whether through our international aid commitment or by other means, and that effort should be supported. My focus, though, will be on the actions of UK mining companies in this country.

I want to focus on the more controversial issue of open-cast mining, which is relevant to my constituents for three reasons. I have three of the most significant open-cast sites in the country, including the huge site at Shotton, which is run by Banks. I should make two declarations. As a lawyer, I have previously represented individuals who have sued mining companies. I believe that I have some limited shares in BHP Billiton, a company that is obviously relevant to this debate.

From a constituency MP’s point of view, the way in which mining companies engage with the community is significant, whether they are local, national or international. We all know that people are inherently distrustful of significant change that they cannot control. For example, we resent all our decisions and power being taken away from us by large unitary authorities. Mine is based in Morpeth, which seems more interested in other parts of the county. The issue is particularly significant when we lack a local development plan or a local minerals plan to determine how our county is to approach mining development and management of the green belt.

UK Coal has proposed a significant, large open-cast site in Whittonstall. On Saturday I met the protest group who are campaigning vigorously against the proposal, which would blight their community tremendously. UK Coal has promised a £1.2 million sweetener for the local community if it gets planning permission. All well and good, one might think, but that money is not secured. As is well known, UK Coal, which is the largest miner in this country, had an emergency meeting just last week at which it voted through a range of measures in an attempt to rescue the company. It is already on the verge of closing mines such as Saw Mill and Maltby, and my constituents are worried that the £1.2 million sweetener will not be placed in a secure trust controlled by a third party, so that whatever happened to UK Coal that money would still be available to the community. The comparison between how international communities are treated and how local communities are treated is very relevant.

A development is proposed at Halton Lea Gate, a small village on the Cumbrian border. It has a tradition of mining, but my constituents face three and a half years of open-cast mining as HM Project Developments Ltd attempts to dig out 140,000 tonnes of coal. That open-casting will take place 57 metres from the nearest home. I have persistently campaigned against that, not least because the village is on the edge of the north Pennines area of outstanding natural beauty, and is within sight of the Pennine way.

We held a village hall meeting in August, when we were amazed that the decision of an inspector, who had decided that there was a national need for the mineral in question—coal—clashed with a decision at Bradley, a similar open-cast site in Durham. The latter decision was taken by a different inspector on 23 February 2012. Both decisions are being reviewed by a High Court judge, who must come to a view on the correct way ahead. That is particularly relevant in the context of our energy policy in this country, because we need to decide whether we are focused on gas, renewable, nuclear or shale gas and—with particular relevance to mining organisations—what role coal has in our future energy programme.

The third site that I am concerned about is the Shotton mine run by Banks, which is a traditional north-east company. I accept that companies wishing to get community support, whether internationally or locally, for mining projects must engage the local community. It can be done. By and large, Banks has been very successful with the significant mine at Shotton next to the A1. The company pays good wages; there are many local jobs, and the way in which it engages with the community is excellent. There is also a significant tourism benefit, which I recommend to all Members of the House and to the country, in the form of Northumberlandia, the largest earth sculpture in the country. It could well be the new Angel of the North, even if it is slightly more horizontal. However, Banks has chosen to diversify and move away from a traditional mining environment into property speculation, with proposals to build houses around the village of Ponteland. I cannot express enough my disappointment that a good mining company is attempting to form a cash cow of housing on the green belt. Frankly, it should be ashamed of itself.

Banks is not the only one. A company called Lugano is universally detested for the way that it is buying up huge swathes of land for green-belt development. Lugano is not registered in this country and appears to be owned by a private trust in Guernsey. I have no way of finding out who the real owners are, where the profits go or where it pays its taxes. Sources tell me that the beneficiary of the trust is a Jewish organisation based in Lugano, Switzerland, and clearly, as a result, it would not be liable for any taxation in this country. It certainly has no experience of the sort of development that it is proposing. Furthermore, Lugano seems to be employing former officers of the local county council. Those officers have failed to produce the mineral plans and local development plans that we all require under localism and, having been paid off £500,000 by the local authority, they are now being employed to advise developers how to get round the planning system that they so grievously failed to organise prior to their departure with the pay-off.

[Jeremy Corbyn]

It sounds a bit unsavoury.

[Guy Opperman]

I would go much further than that, and within the bounds of libel, say that it is outrageous. It is totally wrong and it takes the local community for fools. It will be resisted, and I am assured that the provisions on the green belt—these proposals all concern the green belt, whether they are for open-cast mining or for housing—are greatly supported, for example, by the comments of the Secretary of State for Communities and Local Government:

“The green belt is an important protection against urban sprawl, providing a green lung around towns and cities. The national planning policy framework delivers the coalition’s agreement to safeguard the green belt. Inappropriate development should not be approved in the green belt, and boundaries should be altered only in exceptional circumstances.”—[Official Report, 17 September 2012; Vol. 550, c. 619-620.]

I endorse that entirely.

I finish my brief contribution by assuring my constituents and colleagues that such actions are not what localism is about, nor is it what responsible mining companies are about. This kind of shady operator creates an atmosphere, frankly, of nimbyism, and I do not blame people in the slightest for being against such developments. I, for one, will be doing everything that I can to support them, as well as everything in my power to stop such companies.

--- Later in debate ---

[John McDonnell]

That is one of the important issues, and my hon. Friend has raised it before with regard to the extractive industries transparency initiative. It is important that we have full transparency, particularly with regard to subsidiaries.

Let me cite some examples that relate to my hon. Friend’s point. I shall start with Anglo American. At its AGM this year I met a number of people lobbying there. In particular, the company has come under fire for its involvement in the Cerrejon coal mine in northern Colombia. I met a number of local people who live near the mine and have been forced out of their communities. There has been forced relocation of farming communities, without any adequate compensation. It has taken years of campaigning just to get some dialogue going with the company. It was involved, with Rio Tinto, in the Pebble mine copper and gold project in Alaska, which has threatened vast swathes of the caribou calving grounds, the ecological integrity of Bristol bay, and the fisheries.

The company promised to create 100 jobs, but it has actually destroyed 600. Its Anglo American Platinum division continues to attract heavy criticism from farming communities in South Africa for its handling of community resettlement and for polluting water supplies. AngloGold Ashanti, which is also owned by Anglo American—as my hon. Friend the Member for Islington North (Jeremy Corbyn) said, these companies are subsidiaries—retains a standard listing on the London stock exchange, and it has been accused of profiteering from paramilitary intimidation of mining opponents in Colombia. De Beers, which Anglo American controls, has been criticised for potentially benefiting from the forced removal of indigenous bushmen from their ancestral territory in Botswana.

It goes on. BHP Billiton, in addition to its role in the Cerrejon mine, is in dispute with the Colombian Government over the derisory royalties it has paid at its Cerro Matoso nickel mine. It is under fire for toxic spills and health impacts at its Antamina copper, zinc and molybdenum mine in Peru. It is accused of providing poor conditions for workers at its Escondida mine in Chile, ignoring native American sacred sites at the Resolution Copper project in Arizona, and leaving a toxic legacy at the Ok Tedi mine in Papua New Guinea.

I will not go into Glencore, because my hon. Friend the Member for Falkirk has dealt with it in previous debates, but it is well known for its role, particularly in Africa. Let me come on instead to Global Coal Management Resources plc and its responsibility for the open-cast mine at Phulbari in Bangladesh. According to the Bank Information Centre in Washington, the project is acquiring almost 6,000 hectares of land and displacing anything between 50,000 and 200,000 people. It is destroying ponds, fruit and timber trees, businesses, homes, barns, boundary walls, schools, health facilities, mosques, temples, churches and archaeological sites. This displacement is taking place in one of the most densely populated countries in the world, and it is destroying a critical agricultural region, threatening Bangladesh’s food supply. More than 80% of the land that is being threatened is fertile agricultural land, which cannot be replaced. That leaves farmers and families with few options for employment, and it risks impoverishing a massive number of people, turning hundreds of thousands of farmers into landless wage earners who will be competing for jobs in entirely different sectors.

What is interesting is that the company is one of those that have been promoted by this Government, as it was by the previous Government. Despite receiving a series of freedom of information requests recently, the Government have refused to provide information about their relationship with the company and about the support they have given it and its operation in Bangladesh. In its response, the Foreign and Commonwealth Office explains it will not provide the information

“because we consider that the disclosure of this information would be likely to prejudice relations between the United Kingdom and Bangladesh”

and because it would

“prejudice the UK Government's internal relations with the Bangladesh Government”.

In other words, the Government would be ashamed of the support they have given this company if it came to light, and the Bangladeshi Government would be furious—understandably so, from the sound of the work that has been undertaken to promote the devastation of the region.

Monterrico Metals was originally linked to the Phulbari project through the company’s previous chairman. Monterrico has also received help from the British Government. In fact, the former British ambassador to Peru, Richard Ralph, spent part of his ambassadorial time talking up the advantages of Monterrico’s Rio Blanco copper project in the Andes. He tried to reassure local organic farmers, most of whom are vehemently opposed to the project, which threatens their livelihoods, that the production of large amounts of toxic waste and the pollution of local water supplies would be good for them. What an extraordinary coincidence it is that when the ambassador retired, he became chairman of Monterrico Metals. Later, he was prosecuted as a result of insider trading. Again, a huge majority of local people rejected the company’s proposals for the Rio Blanco mining project, and there were protests, during which people were killed.

Rio Tinto is also listed on the London stock exchange. It has been the subject of one of the longest running anti-corporate campaigns in the world by Partisans—People Against Rio Tinto and Subsidiaries. It is accused of anti-union activities and of ignoring aboriginal rights in Australia. Its nickel-copper mine on the Yellow Dog plains near Lake Superior has been criticised. I have met representatives from Mongolian organisations concerned about the Oyu Tolgoi copper and gold mine in the Gobi desert.

[Guy Opperman]

The hon. Gentleman mentioned the individual who was monitoring and then went to work as the chairman. I used the example of someone who worked for the local authority and turned from gamekeeper into poacher straightaway thereafter. Does the hon. Gentleman agree that, just as we require Members of the House not to do business connected to matters they have dealt with as a Minister, we should encourage companies set up in this country to ensure, through the shareholders’ action, that such persons, with whom the companies have dealt, are not then immediately hired on to their boards?

[John McDonnell]

I fully agree, but it needs more than shareholder action. I think it is the responsibility of the Financial Conduct Authority, under the auspices of the Bank of England, to introduce specific regulation to prevent some of these things from taking place. That will give confidence to those who want to invest in these companies and who want to look on London as a place where companies operate properly, legally, with probity and with a commitment to ethical corporate behaviour.

Let me give two last examples. I protested at the Vedanta annual general meeting this year because I was so angry about the company’s behaviour. Vedanta has been criticised for its behaviour in Armenia and Zambia, but it is in India where it has come in for the heaviest criticism, for the manner in which it ignored environmental legislation and literally bulldozed its way into tribal land in Orissa, in the hope of constructing a huge bauxite mine on land sacred to the Dongria Kondh people to feed its illegally constructed alumina refinery.

I have also been dealing with the company in Goa. I met representatives of the Save Goa Campaign recently. I congratulate the Indian Government on setting up the Shah commission, which ruled in September that all the mines in Goa were operating illegally because they were not abiding by environmental standards. All the mines were shut overnight, and a court case is going on this week to see which ones can reopen if they have abided by basic environmental standards. Vedanta and others have undermined the agricultural base of the Goan economy, polluted the water and threatened the tourism industry. I commend the Save Goa Campaign: local people and the Goan diaspora have exposed what has gone on. I also commend the Indian Government for taking decisive action. However, Vedanta, as the main company involved, has made fortunes from exploiting the Indian subcontinent.

Finally, there is Xstrata. It is involved with the Cerrejon mine in Colombia; it is involved in the hugely controversial Tintaya mine in Peru, which has been a focus of fierce conflict over the years as a result of the pollution; and it is involved in the Philippines, where its Tampakan project is strongly opposed by indigenous people. The Argentine federal appeals court has also upheld criminal charges against Xstrata general managers in the past.

My view is straightforward. I have read out that list of examples because they are shocking. These companies are all listed on the London stock exchange. We need to take responsibility in this country, and I wish this had been more decisively dealt with when the Financial Services Act 2012 was before us. If these companies wish to be listed on the London stock exchange, they must first show complete openness and transparency; they must ensure that there is financial probity; and, above all else, they must be prevented from doing London reputational damage. We will achieve that by making sure that they abide by corporate ethical standards, and that means ensuring that the FCA and the Bank of England have a role, including in delisting companies, if necessary, because of their behaviour in the developing world.

One day we will depend on the developing world for a whole range of relationships and for the distribution of a whole range of raw materials and national assets, which will benefit the whole globe. We are alienating people now we will want to co-operate with in the future, because we are not controlling these mining companies, which are doing so much damage to our reputation abroad. In addition, we are doing long-term damage to our economy. That is why I urge the Government to act.

In conclusion, it should not take freedom of information requests to this Government or any Government to get real information about the relationship between the Government, their Departments and individual companies. Even when freedom of information requests come back, they are heavily redacted to keep secret the malevolent role that Governments have played over the years in supporting these companies.

--- Later in debate ---

[Mr Wright]

I agree with my hon. Friend. A balance needs to be struck, with the UK being the centre of the world’s financial operations through the City of London, between moving unilaterally and providing for a multilateral approach to ensure that we can adopt my hon. Friend’s suggestion.

My hon. Friend the Member for Falkirk mentioned something in which I am particularly interested: ensuring that valuable resources such as rare earths, or minerals in general, are not sold for a fraction of their real market value. There is an argument, as we heard, that if developing nations received the fair market share for those important and valuable resources, the international aid budget could be reduced, because those mineral and resource-rich nations could develop their own economies and societies, and make progress along the value-added chain.

When dealing with reporting and regulatory requirements, critics often say that any additional requirements would be too onerous and would impose additional costs. It is often argued that it would be wrong to increase costs for mining companies at a time when the long-term global boom in commodities is coming to an end. However, an interesting article in The Economist earlier in the year stated that, in 2011, Angola awarded several new deep-water oil concessions to firms covered by the Dodd-Frank requirements with no apparent difficulty. It said that no oil company had cited increased openness as a material risk in its Securities and Exchange Commission filings.

My hon. Friend the Member for Falkirk talked about how hedge funds want improved transparency and reporting requirements because they want, to use his vivid phrase, to know where the money is going. Paul Bugala, a senior analyst for extractive industries at Calvert Instruments, which manages a $13 billion fund, states that such improved disclosure and reporting requirements would help him and the market better to assess political and regulatory risk, and would therefore allow for better investment and stock selection, improving share prices in the sector in the long term.

Companies already collect such data for internal use, so there is a strong argument that such a process would merely make the data public. The additional costs that are often cited would therefore be minimal, if not non-existent. If all companies had to fulfil this additional requirement, no competitive advantage would be lost. The article in The Economist concluded by saying:

“'The expense has been minimal for the few, such as America’s Newmont Mining, that already provide country-level reporting.”

In July 2011, in a speech in Nigeria, the Prime Minister said:

“It is not enough to import labour, extract Africa’s resources and move on. It’s vital that when foreign companies invest in a country, the benefits of that investment reach the African people, so they become less reliant on aid.”

The Prime Minister complimented the United States for introducing legally binding measures to require oil, gas and mining companies to publish key financial information for each country and project they work on. He said in the same speech:

“I'm calling on Europe to do the same. We want to disclose the payments our companies make to your Governments so you can hold your Governments to account for the money they receive.”

Although the Prime Minister made that speech and that pledge 16 months ago, there has been slow progress at a domestic or European level. One of the first replies that the Minister gave in her new job, with her shiny red box, was to state in mid-October that the Government are engaged in EU-level negotiations on transparency laws. She added that the European presidency would soon begin discussions with the European Parliament and the Commission to try to achieve some agreement on improved transparency in the payments that extractive industries make to foreign Governments. I will support her in that.

I appreciate that the Minister is relatively new to her post and her response was made only six weeks ago. However, there had been some movement in the month prior to her appointment. I am not suggesting for one moment that the Minister’s appointment has stalled progress—I hope she will not take offence; it genuinely was not intended—but a Committee of the European Parliament passed a vote in September requiring a European version of the US system through which oil, gas, mining and timber companies should publish their payments to foreign Governments. Will the Minister outline any progress that has been made in the six weeks or so since she answered that parliamentary question, together with any time scales that she is pressing on her European counterparts to reach European-wide agreement?

It seemed to me that the Prime Minister’s speech in Nigeria suggested that he wanted country-by-country reporting. The Minister’s parliamentary answer of six weeks ago seemed to confirm that stance. When the International Development Committee investigated tax in developing countries, it recommended:

“The Government should enact legislation requiring each UK-based multinational corporation to report its financial information on a country-by-country basis.”

In their response to that recommendation, the Government dismissed the idea of unilateral positioning on this matter, stating that they merely support mandatory reporting requirements at the EU level. I can understand that approach but, as I said in response to an intervention from my hon. Friend the Member for Islington North, what is the correct balance between moving in a unilateral fashion—given our financial importance in the world with the City of London—and moving at a European level? Is there anything that the UK and the Minister can do outside the EU? I would be interested to hear her opinion of the appropriate policy balance.

One of the areas of today’s debate has been the extractive industries transparency initiative, about which my hon. Friend the Member for Falkirk and the hon. Member for Worcester spoke particularly eloquently. As we have heard, the EITI was established a decade ago by the UK Government with the clear and specific aim of addressing corruption in the extractive industries. As the hon. Member for Worcester said, the UK has never signed up to EITI, despite being at the forefront of founding the organisation, so that seems to be a mismatch.

When the then Under-Secretary of State for International Development, the hon. Member for Eddisbury (Mr O'Brien), gave evidence to the International Development Committee investigation that I mentioned, he said that the UK’s reason for not signing up to the EITI was that we as a country are not “resource-rich”. I have looked at statistics from the Office for National Statistics, and disregarding the City of London’s position in terms of UK-listed mining companies, 16.4% of the UK total economic production constitutes mining and quarrying. That seems fairly resource-rich to me, given that we also have North sea oil. Will the Minister comment on that? Does she agree with the then DFID Minister? Does she not agree with the suggestion made today that the UK, as the founder of EITI, should lead by example? Does she agree that the UK’s joining would encourage other countries to join? Does she also agree that as this country is the world’s acknowledged centre for financial services and accountancy standards, and at the forefront of world-class corporate governance, and given that the City of London is the headquarters for so many multinational mining corporations, the UK should and could send out a powerful message by joining the EITI?

In response to the investigation, the Government said that they welcomed the strategy review of the EITI, which is looking at developing a broader standard for consideration by the EITI board, with a view to possible introduction in 2014. Has the Minister any thoughts on the criteria that would need to be met as part of the strategy review that would satisfy her enough to recommend to her DFID counterparts that EITI membership should be sought?

My hon. Friend the Member for Hayes and Harlington mentioned the London Mining Network. Has the Minister seen the network’s report on UK-listed mining companies and the case for stricter oversight? It is incredibly interesting reading. Will she comment on whether the Government would be amenable to the eight recommendations put forward in the report on such matters as the reporting of non-compliance with IFC and OECD standards, as well as ensuring—we have heard about this many times in the debate—that the FCA has powers to enforce section 172 of the Companies Act 2006 with regard to corporate reporting requirements relating to environmental and social impacts?

That report also raises interesting points about the reporting requirements of companies listed on the alternative investment market. I fully accept the differing reporting and regulatory requirements between AIM-listed companies and those listed on the FTSE 100, but it would be interesting to hear the Minister’s thoughts on the Government’s policy on whether AIM requirements for mining companies should be changed.

The hon. Member for Hexham talked about open-cast mining in his constituency and made the important point that the north-east was at the centre of mining. It has a rich heritage and helped the industrial revolution to come about. He mentioned two important points that I hope the Minister will address, including about individuals who want to sue mining companies because of what might be happening in their communities. Is the Minister concerned about the effect of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, which makes it virtually impossible for any UK citizen to seek redress in such a respect?

The hon. Gentleman also mentioned planning and, quite rightly, the importance of the green belt in the planning system, and he cited what the Secretary of State for Communities and Local Government said in a speech in September. Will the Minister address the comments made by the Under-Secretary of State for Communities and Local Government, the hon. Member for Grantham and Stamford (Nick Boles), in the past 24 hours, when he said—I paraphrase—“Let’s just build over the green belt”?

[Guy Opperman]

I assure the hon. Gentleman that the planning Minister did not say, “Let’s build over the green belt.” He specifically said that we should not build on the green belt, but look at other land, which is a perfectly reasonable proposal.

May I briefly ask about one of the hon. Gentleman’s points? The legal aid changes would not have affected the several cases that I brought as a lawyer against such planning applications. Such action would still be available and, because of what we did, there is now a protective costs order to protect litigants bringing such actions. Does the hon. Gentleman accept that successive Governments have allowed applications for developments to be made by companies that are UK-based, but ultimately hiding behind a parent company? That cannot be right.