GOVERNANCE

Compliance

As the largest foreign investment in Madagascar, Ambatovy is committed to complying with the laws and frameworks that regulate mining activities both in country and around the world. Ambatovy’s policies ensure that its safety, social, environmental, and production standards exceed legal requirements.

Some of the major national and international regulatory standards that Ambatovy complies with include:

Madagascar’s Large Mining Investment Act

Madagascar’s Large Mining Investment Act (LGIM, in French) was developed with the support and assistance of the World Bank and endorsed by the Government of Madagascar in 2002. The LGIM defines the framework for developing and operating large-scale mining projects in Madagascar and provides for legal stability and financial incentives.

Based on the LGIM framework, Ambatovy expects to pay well over US$ 4.5 billion1 to the Government of Madagascar in royalties, taxes, duties, and other fees over a period of approximately 30 years. The exact amount depends on multiple variables including the market price of nickel and cobalt, the cost of input commodities (such as coal, limestone, and sulphur), inflation, and other factors.

International Finance Corporation Performance Standards

The International Finance Corporation helps companies and financial institutions in emerging markets create jobs, generate tax revenues, improve corporate governance and environmental performance, and contribute to local communities. The IFC’s main objective is to improve lives, especially for the people who most need the benefits of growth.

Ambatovy’s US$2.1 billion lending agreement with a consortium of international development banks, export credit agencies, and commercial banks stipulates that Ambatovy must adhere to the IFC Performance Standards. Ambatovy’s compliance is audited regularly by independent third-party experts who represent the lenders.

Equator Principles

The Equator Principles are voluntary standards obliging signatory banking institutions to take into account social and environmental criteria in the large-scale projects they finance. Presented in June 2003, these principles respect the standards promoted by the World Bank/IFC and form the basis of responsible financing.

The Equator Principles require an evaluation of environmental impacts of high-risk projects and, in certain cases, a management plan that addresses socioeconomic impacts, environmental protection, human rights, and working standards, among other issues. Ambatovy’s project financing agreement with a group of lending institutions requires that it adhere to the Equator Principles. The independent engineers representing the lenders regularly evaluate the company’s performance in doing so.

Mise en Compatibilité des Investissements avec l’Environnement

Mise en Compatibilité des Investissements avec l’Environnement (MECIE) is a national decree concerning environmental compliance for investment projects in Madagascar.

This decree, available only in French and Malagasy, describes the environmental obligations of mining projects and the responsibilities of supervisory government agencies.

Ambatovy received its environmental permit in December 2006, six months after the environmental and social impact assessment was filed.

Environmental Management and Social Development Plan

Ambatovy is committed to upholding stringent environment and social standards and complies with a comprehensive set of policies. Ambatovy’s environmental management and social development plan (PGEDS, in French) provides the framework to ensure that all issues identified during the environmental management and social impact assessment are addressed through appropriate mitigation and follow-up. The PGEDS consists of three key components:

  • The Environmental Management Plan, which ensures that Ambatovy’s activities minimize any residual impacts on the environment. The Plan also includes the establishment of conservation areas and participation in other environmental programs;

  • The Social Management Plan, which guides Ambatovy’s relationship with local communities. The Plan strives to minimize Ambatovy’s impact on Malagasy society while maximizing benefits for the local citizenry;

  • The Health and Safety Management Plan, which defines the conditions and manner in which work must be carried out so that potential risks to the health and welfare of Ambatovy personnel are minimized.

Voluntary Compliance

Ambatovy has taken additional voluntary measures that go beyond any legal mandates. They will make superior safety, environmental and social results possible and include, but are not limited to:

Extractive Industries Transparency Initiative

In 2008, Ambatovy joined forces with the Government of Madagascar in its effort to become a compliant country in the Extractive Industries Transparency Initiative (EITI). EITI encourages companies, governments, and civil society groups to work toward the transparent disclosure of payments made by extractive industries to governments. EITI compliance also requires that governments disclose receipt of all such payments. Madagascar registered to become an EITI country in 2008.

Business and Biodiversity Offsets Program

The Ambatovy biodiversity offsets program has been designed and implemented in conjunction with the Business and Biodiversity Offsets Program (BBOP), a partnership between companies, governments, and conservation experts to explore biodiversity offsets. There are currently a number of BBOP pilot projects across the world ranging in both scale of operation and industry sector, from oil and gas, to mining, tourism, and real estate. Ambatovy’s offsets program is scrutinized and monitored by the BBOP Offsets Advisory Committee, composed of scientists, bankers, industry representatives, and leading conservation non-governmental organizations interested in promoting offsets activities in investment projects.

International Council on Mining and Metals Principles

The International Council on Mining and Metals (ICMM) is an organization that was established in 2001 to act as a catalyst for performance improvement in the mining and metals industry. The ICMM brings together 18 mining and metals companies as well as 30 national and regional mining associations and global commodity associations. Ambatovy is not a signatory, but endeavors to apply the ICMM principles as a responsible practice.

The Voluntary Principles on Security and Human Rights

The Voluntary Principles on Security and Human Rights offers practical guidance to companies on maintaining the safety and security of their operations within an operating framework that ensures respect for human rights and fundamental freedoms.

Ambatovy formalized its commitment to the Voluntary Principles in 2012, initiating a Security and Human Rights based Risk Assessment covering its operations in Madagascar, with the resultant recommendations providing the framework for the implementation of the guidance.

Ambatovy has incorporated the Voluntary Principles on Security and Human Rights into its Security Policy and has developed a comprehensive program of initiatives to promote the Voluntary Principles, forming partnerships with the UN and International Committee of the Red Cross to facilitate sensitization and awareness to Human Rights issues as they relate to Public and Private Security.

Ambatovy commitment to the Voluntary Principles was finalized in 2014 with the acceptance of its operator, Sherritt, into the VPSHR association.

1 Estimated as of January 2014