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May 03, 2013

U.S. Export-Import Bank's Shady Coal Scheme in Mongolia

Housing for workers to build coal plant in the background (1)

Once again, U.S. Export-Import Bank (Exim) Chairman Fred Hochberg is using our taxpayer dollars to finance a dangerous fossil fuel project. This time it’s Rio Tinto’s Oyu Tolgoi gold and copper mine and the associated coal-fired power plant in Mongolia. What’s even more galling is that Hochberg and the Exim board of directors approved the project in April despite what amounted to a vote of no confidence in the very same project by the U.S. Treasury, which abstained from a decision on funding from World Bank Group’s International Financial Corporation (IFC).

When explaining their abstention, Treasury officials stated, "The ESIA does not provide a sufficiently detailed analysis of associated facilities and cumulative impacts, notably concerning a coal-fired power plant that will likely be needed to provide reliable power for the project." Clearly these were trivial matters for Mr. Hochberg and Exim that should not come between them and a new destructive coal plant.

The sad part is we now know that the situation is much worse. At the time of the World Bank vote, Rio Tinto was telling officials that a final decision had not been made on whether or not they would construct a coal-fired power plant. But in Mongolia, they were already making preparations on the ground for the plant. In other words, Rio Tinto was lying in order to get funding from the IFC and the U.S. Government -- and it worked because neither the World Bank nor Exim did the necessary due diligence to check Rio Tinto’s claims. Did I mention this is your tax payer dollars at work?

Our partners at Accountability Counsel did check, and it wasn’t that hard. They traveled to Mongolia and took a tour of the mine with a Rio Tinto official. Not only did he tell Accountability Counsel that he had not heard any talk of reconsidering the decision to build the coal-fired power plant, he pointed out where the worker housing was already under construction. It is the white line in the distance of the above photo.

Of course, Hochberg has a long history of supporting controversial coal projects backed by unscrupulous companies, so we’re hardly be surprised. But we can’t let him, or the US Government off the hook for decisions like these. It’s clear that abstention votes are not enough. Going forward Exim and Treasury must vote “no” on fossil fuel projects, especially dirty coal projects. It’s way past time for the World Bank and the U.S. Export-Import Bank to get out of the coal business.

(Photo: Accountability Counsel)

-- Nicole Ghio, Sierra Club's International Campaign

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