MINING FINANCE / INVESTMENT

Norway's sovereign wealth fund drops yet another mining investment; this time it's Barrick

As pension investments are already tightening, the investment arm of the Norwegian Government has adopted pollution criteria, which has prompted the nation to drop its investment in yet another miner.

RENO, NV - 

A dispute over the riverine disposal methods utilized by Barrick's Porgera Mine in Papua New Guinea has prompted Norway's Ministry of Finance to drop Barrick from Norway's Government Pension Fund-Global investments, valued at $188.3 million.

In a recent news release, Minister of Finance Kristin Halvorsen said the Government Pension Fund's Council on Ethics "concluded that Barrick Gold Corporation is causing severe environmental damages as a direct result of its operations. I have therefore decided to follow the Council on Ethics' recommendation on exclusion of Barrick Gold Corporation from the investment universe of the fund."

Due to limited resources, the council restricted its investigation of Barrick to the Porgera mine in PNG.  They concluded:

"In light of the documentation at hand, the Council finds that Barrick's operation of the Porgera mine entails an unacceptable risk of extensive and irreversible damage to the natural environment. According to the Council's assessment, the company's riverine disposal practice is in breach of international norms.

"In the Council's view, the company's assertions that it operations do not cause long-term and irreversible environmental damage carry little credibility," the Council claimed. "This is reinforced by the lack of openness and transparency in the company's environmental reporting."

In their report, the Council noted that Barrick "has capacity and licence to dispose of 210,000 tons of waste rock per day, amounting to nearly 76 million tons per year." They contend that "suspended material is transported downstream over a distance of some 1,000 km before reaching the Gulf of Papua. Along the way the concentration of the discharge is diluted as the distance from the mine increases."

The Council claimed, "The most serious and long-lasting environmental impact seems to the related to the accumulation of arsenic and heavy metals in the sediment in the Lower Strickland River and Lake Murray."

However, the Council also noted that, in a letter to the group, "Barrick claims that the heavy metal content in the sediments does not have any serious negative effects on the river system."

Nevertheless, the council asserted that "all surveys it has had access to show an unambiguous trend of elevated heavy meal concentrations in the sediments. What effects this actually has on the natural environment and on the people who live in the area do not seem to have been examined. The Council therefore does not find Barrick's statements credible."

"Considering the intentions presented by the company with regard to production expansion, the Council finds reason to believe that the company's unacceptable practice will continue in the future," the Council asserted.

In a letter dated September 30, 2008, the Ministry of Finance asked Norges Bank to sell its Barrick shares, which have now all been sold. At the end of July 2008, the Government Pension Fund-Global, estimated at US$356 billion, owned shares in Barrick were worth just under NOK 1.248 million (US418.3 million). Forbes Magazine reported the fund owned a 4.9% stake in Barrick.

Barrick spokesman, Vince Borg responded, "Whether it is the government of New Zealand or Norway, they have a right to decide which investments to make and which ones to hold, or sell-that is their business."

In 2007 the sovereign wealth fund also withdrew its investments from Indian miner Vedanta because of concerns over "severe environmental damages and serious or systemic violations of human rights. Last year, the fund withdrew its investment in Rio Tinto.