The largest investor in Sub-Saharan Africa

The article was originally published in the Rising Africa magazine, in Fall 2012. 

Coins, cell phones, cars and air- crafts and thousands other everyday items contain nickel and cobalt. Where do those materials come from and what does it take to get those materials out of ground? CCAfrica talked to Toronto-based Canadian company Sherritt International Corp. to find out.

Sherritt International Corp. has initiated and operates a massive nickel and cobalt mining enterprise in Ambatovy, Madagascar in collaboration with SNC-Lavalin, and Japanese and Korean investors. At a construction cost of approximately half of the GDP of Madagascar (measured in current US dollars), the 5.5 billion dollar project employing over 6,000 people at various stages of project is naturally the largest-ever foreign investment in the country. It is one of the biggest investments in sub-Saharan Africa and the Indian Ocean region, too.

Not only is the project very expensive but as the map on the next page shows, it is also located in multiple places in eastern Madagascar. Considering the massive volume of the project, both its value in dollars and the area it occupies, it is natural that project will have an impact on the surrounding land and its people. Designed to operate for at least 29 years, Ambatovy’s goal is to create lasting prosperity for all stakeholders and contribute significantly to sustainable development in Madagascar.

To contribute to local communities long term, for example, choice to refine nickel and cobalt in Madagascar was made, a rare decision in Sub-Saharan Africa. This way, the value added to economy is ensured, as the project will generate additional 1,000 high quality, well-remunerated jobs. Nickel will become Madagascar’s first export item, which in return will generate foreign ex- change for the country. Over its lifecycle, Ambatovy will contribute hundreds of millions of dollars to the Government of Madagascar in taxes, royalties, duties, and other payments.

To construct the Tailings Management Facility and the Plant site, Ambatovy worked for many years in collaboration with local stakeholders: government, civil society, media, local communities, and workforce and contractors to gain their trust, inputs and acceptance. While resettling people affected by project to appropriate, yet nearby, parcels of land, Ambatovy ensured that relocation was fair, transparent, and participatory, respecting local cultures and traditions according to Malagasy laws and international social performance standards, namely, IFC PS5.

To ensure its goal – lasting prosperity and sustainable development - Sherritt has employed a large corporate social responsibility unit employing 120 people to work together with the local people and helping to preserve the natural environment surrounding the construction and mining sites.

“In consultation with our archeology team, for example, it was discovered that a cellular tower at the Mine site was planned on a sacred hill. We removed the tower and facilitated a traditional ceremony to bless the site.”

Consisting of four divisions, Ambatovy’s CSR department deals with community relations, programs, projects, and support services. Sherritt makes every reasonable effort to ensure that the total impact on local communities is positive. Ambatovy’s communication manager Lalaina Randrianarivelo told Rising Africa: “Respecting human rights is a daily task that is undertaken by all our employees. In consultation with our archeology team, we made several important operation decisions in order to respect the traditional beliefs and culture of com- munities around our sites. For example, it was discovered that a cellular tower at the Mine site was planned on a sacred hill. As a result, we removed the tower and facilitated a traditional ceremony to bless the site.”

In the words of local people, Sherritt takes the corporate social responsibility seriously.

“Ambatovy has indeed shown some strong commitments towards transparency by complying with Extractive Industry Transparency Initiative principles, which encourages mining and gas companies that are investing in Madagascar, the

Malagasy government and other government-linked entities to disclose various in- formation; namely payments made by the extractive industries to the government,” says Mbola Andrianady, a Madagascar- native master student in international development who specializes in CSR in the mining industry.

Ambatovy is obliged to adhere to national and international standards. Ambatovy’s performance is monitored by Madagascar’s National Environment Office under the Investment and Environment Compatibility Act to ensure its compliance with environmental regulations set for in- vestments. With the support and assistance of the World Bank, Madagascar accepted a Large Mining Investment Law, under which Ambatovy project was certified in 2007.

Further, some of Ambatovy’s financing institutions are members of Equator Principles Financial Institutions, which pledge to take into account social and environmental criteria in the large-scale projects they finance. Equator Principles advise the institutions not to finance loans where the borrowers are not willing or able to comply with these criteria. As a result, Ambatovy’s financing agreements require that the Ambatovy nickel and cobalt mine uphold these principles.

With a view to achieving superior safety, environmental and social results, Ambatovy is also committed to the following voluntary measures that go beyond its legal obligations: Business and Biodiversity Offsets Program, International Council on Mining and Metals Principles, International Standard ISO 9001, and the EITI, as mentioned above.

Ambatovy aligns its reporting procedures with those of the Global Re- porting Initiative framework, one of the world’s most prevalent standards for sustainability reporting. Ambatovy also publishes sustainability reports, which provide an overview of how Sherritt manages different sustainability issues in this mining site. These publicly available reports discuss why health and safety, training, biodiversity and reclamation, stakeholder engagement, and community investment are important to the business.

Further, Ambatovy provided training to its security personnel on human rights related to security practice. Respecting the human rights of the employees through sound policies on collective bar- gaining and non-discrimination, in 2011 progress was made on the collective bar- gaining agreement. While not all aspects were finalized, parties were able to complete and sign 6 of the 15 sections. Additionally, Ambatovy also makes sure its employees and local communities are aware of Ambatovy’s zero tolerance policy on child sexual exploitation. Ambatovy continued to educate both local communities and our own employees in this matter.

Ambatovy project clearly states its values publicly. When CCAfrica asks whether this is a unique approach in mining industry, Ms. Randrianarivelo responds: “This approach is often shared by companies with a responsible approach. The only difference in Ambatovy is that we take the culture of the host country also into consideration. In Madagascar, for example, the spirit called “Fihavanana” which translates a set of solidarity, tolerance and brotherhood is very active in the community. Ambatovy considers himself a full-fledged member of the community that hosts them.”

As part of its social investments and partnerships Ambatovy’s Local Business Initiative makes sure that people have a capacity to provide goods or services to the project. Training and audits have been implemented so that the quality can meet the requirements of the mining project. In 2010, 500 companies and corporations have benefited from contracts and markets with Ambatovy.

Central agency for agricultural produce (the Central d’Achat de Madagascar) is a Malagasy-run agency that serves the Toamasina area to provide a central point for farmers to sell their agricultural produce outside their villages and to help supply the Ambatovy project food requirements. The agency has been successful, prompting the establishment of a second center in Moramanga, near the mine site.

The Ambatovy has also set up agricultural training center in the Toamasina area not far from the Ambatovy refinery site. This training center is focused on pro- viding skills to workers who are completing their contracts but it is also available to others from communities that have been affected by the project. Note that nearly 18,500 employees worked for the construction of Ambatovy and at the end, Ambatovy assisted its employees and its subcontractors to move to new generating potential opportunities. This program is not only completely new in Madagascar, but also unique in a sense that no other private company has implemented such a program before.

As the species-rich location sets additional constraints on operation, Ambatovy adheres to stringent environmental standards. Considering that local people are dependent on natural resources for their livelihood, Sherritt has initiated many conservation programs, which aim to en- sure no net loss, and preferably a net gain, of biodiversity while ensuring socioeconomic benefits for local populations.

Ambatovy’s social investments include sponsorships, charitable donations, educational and health programs, vocational training and professional development, and a wide variety of other sustain- able development projects. Ambatovy built 296 new houses, a health center, schools and water facilities and sanitation projects for the people impacted by the project. Villagers were able to select their preferred housing model and each household received a parcel of land for agriculture and grazing. Social development program aims the autonomy of those villages. The objective is to ensure a better quality of life than before.

On the surprising side, the construction work opened the door to archaeological discoveries. Investigations led to the collection of 4,851 objects such as pottery, ceramics, tumblers, stones, metals, bones, plastics and botanies, writes Africa Review. It adds that archaeological discoveries are expected to promote Malagasy culture and scientific knowledge.