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Rio Tinto's Madagascar mining project
24 October 2007
A controversial mining development on the island of Madagascar, billed as a model for future mining projects, is damaging the local economy, exacerbating poverty and threatening unique biodiversity, a new report published today (Wednesday) has revealed .
Research carried out independently for Friends of the Earth showed that the Rio Tinto project was threatening unique forest resources and leaving local people struggling to survive in the area affected by the mine, despite commitments to provide adequate compensation and alternative jobs and to mitigate negative environmental impacts .
Rio Tinto started work on the controversial dredge mine in the coastal forest of Madagascar - home to thousands of unique species of wildlife - in 2006. The project has the backing of the World Bank, which claims that the development will boost Madagascar's impoverished economy .
Mining companies are under increasing scrutiny for their environmental and social impacts . Rio Tinto has said the Madagascar project is a "model" for future projects in Africa and the developing world  - but Friends of the Earth says the company is failing on its commitments to deliver environmentally and socially responsible mining and that urgent action is needed to mitigate the project's damaging effects.
Communities who mainly rely on farming and forest resources to survive are being removed from their land to make way for a port, infrastructure and artificial lakes for the mine. These lakes will be dredged to extract the valuable ilmenite - a mineral used as a whitener in products such as paint and toothpaste - and then drained and restored.
Friends of the Earth's Corporate Campaigner Sarah-Jayne Clifton said:
"Rio Tinto claims that the Madagascar mine development is whiter than white, designed to benefit local people and preserve the unique natural environment. But the new research tells a very different story. The reality on the ground is a murky shade of grey, with local people losing their land and livelihoods whilst receiving negligible benefits from the project in return".
Local people told researchers they had been unfairly treated by the mining company, with traditional land rights unrecognised, and the value of the forest resources such as fruit underestimated. Some said the compensation payments were not enough to buy replacement land locally - and some were leaving the area because of rising prices. People were also angry that promises of employment and training had not materialised.
An influx of workers to the area has pushed up prices, distorting the local economy, and causing problems for the poorest families, who say they can no longer afford to pay local rents.
The research also highlights the threat the mine poses to the preservation of remaining tracts of Madagascar's coastal forest with its unique biodiversity, and brings into question the value of the development to Madagascar's wider economy.
Sarah-Jayne Clifton said: "This is yet another example of why we cannot rely on voluntary action by companies to operate in a responsible manner overseas. Stronger, binding rules are needed to guarantee that companies adhere to basic minimum standards concerning environmental protection and accountability to affected communities".
"Questions must also surely be asked of the World Bank's role in this. The Bank has provided funding for this project and is responsible for overseeing the compensation scheme. Yet the evidence suggests that the project is breaching many principles of good practice. The only real beneficiary appears to be Rio Tinto itself."
The Malagasy Government has an option of becoming a partner in the mining project, and has borrowed money from the World Bank to invest in infrastructure for the scheme. But the researchers found that the Government's share of the profits was unlikely to generate much income for the country once the costs of an additional loan had been paid .
Although efforts are being made to conserve areas of forest, there are concerns about the impacts on the island's unique wildlife. Madagascar is home to some 200,000 known species of animals and plants, many of which, like the lemur, are not found anywhere else in the wild.
Experts warn that the conservation areas may not be big enough to support the level of wildlife and there are concerns that plans for forest restoration will include the use of exotic species which will alter the local ecology and water systems.
Friends of the Earth urged Rio Tinto to investigate practice on the ground in Madagascar and called on the company to live up to the social and environmental commitments and best practice guidelines laid out in company documents.
It urged the World Bank to act to ensure standards were being implemented on the ground in Madagascar and urged the Bank to call a halt on investment in future mining projects as evidence shows that they are failing to deliver sustainable development.
 Concerned by reports about the negative impacts of the mine on local forest-dwelling communities in Madagascar, Friends of the Earth commissioned independent research by the development agency Panos London. Friends of the Earth's media briefing on the project draws on the evidence gathered by Panos London in interviews with some of the mine's key stakeholders in Madagascar. It compares the reality on the ground with Rio Tinto's commitments in their best practice document "The way we work" and in the latest Social & Environmental Impact Assessment (SEIA) for the project. See:
 Rio Tinto (September 2005), The way we work: our statement of business practice
corpPub_BusPract_English.pdf (PDF† )
 Communities affected by mining companies joined workers and other civil society organisations from fourteen countries in London for the international gathering of the Mines & Communities network:
 If the Government decides to buy the 20 per cent share it has been offered in the Rio Tinto subsidiary that runs the mine on the ground it will require a further loan, the servicing of which will leave it with as little as 3 per cent of the total profits from the project.
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Published by Friends of the Earth Trust
Last modified: Jul 2008