Ambatovy: a tale of reverse development?

| 23rd November 2017
The Lemur Catta Face Lemur is one of many animals endemic to Madagascar, where over 90% of its wildlife is found nowhere else on Earth.

The Lemur Catta Face Lemur is one of many animals endemic to Madagascar, where over 90% of its wildlife is found nowhere else on Earth. (c) Max Pixel

A planned nickel mine in Madagasca has led to numerous environmental problems, and whilst the mine continues to struggle the environmental concerns surrounding the project continue to grow. LAURENCE SOUSTRAS investigates.

It all started when insecticides were sprayed over the facilities to protect construction workers from malaria

A reddish lake 20 kilometers southwest of the Madagascar city of Tamatave has become the symbol of the Ambatovy mine, a massive operation of eight billion dollars today that's designed to extract nickel and cobalt from the Indian Ocean island’s rich soil.

The project was started in 2007 by a relatively small Canadian mining company, Dynatec, which recieved half of its funding from development institution loans. The EIB granted eight percent of this investment, with a $305 million loan.

But the private sector’s promised development has been slow to materialise and today the project has accumulated environmental flaws. It all started when insecticides were sprayed over the facilities to protect construction workers from malaria. Those living next to the mine were the first to realise that bees were disappearing, pollination had stopped and crops were dying.

Residential areas

Jean-Louis Bérard, a retired French architect who owns 300 hectares of land in Madagascar, remembers: “I had 350 hives and suddenly, starting in September 2007, all the bees died out within three months.” Local farmers within a 25 to 30 km range of the mine were having the same problem and started to suspect that Ambatovy’s insecticides were the reason the bees had disappeared, and crops had not been pollinated.

At that point, the project had been taken over by another company, the Toronto-based Sherritt. But the problems linked to the Ambatovy mine got worse, quickly. One of the reasons was that this massive operation consists of several parts.

The open pit mine 200 kilometres from Tamatave; a 200-kilometre partially-buried pipeline for ore and water slurry that connects the mine to the Tamatave processing plant; a 750-hectare facility outside Tamatave comprising waste lakes and a series of interconnecting dams where leftover “tailing” material is stored. The project also involves expanding the port to allow for imports of raw materials and export of a mixed metal sulphide.

A forest of 2500 ha was directly affected by the project and some households were displaced as a result of controversial compensation agreements that divided the community. The NGO Re:Common has discovered that relocation involved moving rice paddy farmers to less fertile lands that are prone to flooding.

In February 26, 2012, a malfunctioning valve caused a sulphur-dioxide leak, and 50 people in the facility were affected. Three similar incidents followed. In August that same year, the lake in the tailing facility started leaking and repairs had to be commissioned. The inhabitants were also faced with the smell from an ammonia transporting pipeline that cut through residential areas in Tamatave between the port and the factory.

Human health

“Ammonia irritates the eyes and makes our throats dry,” says Rameliarisoa Bako, who lives in the Canada Sud area of Tamatave. “Children complain of mouth infections; old people complain of eye infections. We think this is because of the substances Amabatovy uses.”

The EIB Complaints Mechanism Division in Luxemburg received five complaints. Jean-Louis Bérard who drafted these complaints clearly remembers the day he took EIB staff on a tour of the tailing facility. “Ambatovy had started to stock solid waste two months before. We couldn’t get through because there had been a leak. There was such a strong smell of sulfuric acid that we almost suffocated,” he says.

The EIB Complaints Mechanism experts who came to investigate the problem of the disappearing bees seemed overwhelmed. In their initial report they attributed the reddish color of the waste coming from the plant to the presence of laterite, a reddish clay-like material.

But they didn’t hide the fact that there were reasons to be worried: extreme weather could cause the waste lakes to flood the surrounding environment and leaks in the pipeline between the factory and the tailing facility could cause further pollution.

Today, environmental concerns surrounding the Ambatovy project continue to grow. Tamatave fishermen wonder about the waste dumped into the sea. Inhabitants say that the water of local rivers has been affected, which has consequences for fauna, crops and most of all human health.

Waste lake

“Before Sherritt arrived, we had drinking water,” says Mada, another inhabitant. “But since this dam [on the waste lake] was built, we've suffered from illnesses and bad drinking water. Every day, we feel sick.”

The EIB staff in Luxembourg don't see how this could be the case. According to them, water sample analysis of the rivers in the area shows nothing other than a higher than average level of manganese, a situation that the mine's managers are trying to keep in check but which doesn’t affect human health.

Still, Ambatovy has acknowledged to us in a written reply that a few villages around the waste lake had to be provided with drinking water for a while “before a water distribution network was delivered” to these communities. It stressed that this water distribution “is undertaken to dissipate fears in the population”.

While Ambatovy stresses it is constantly monitoring that water and air quality are in line with international standards and that a grievance mechanism is in place locally, at the end of January 2017 our team of local journalists were able to confirm the strong smell of sulfuric acid mentioned by interviewees.

Now that the insecticide spraying has stopped, the bees are coming back. Still, nobody knows what long-term effects the spraying will have on human health. Above all, everyone is fearful of the next storm: after all the deforestation and earth removal in the project they're worried about a landslide, or a leak from the waste lake.

Private interests

So what is left for people in Madagascar? “Ambatovy has proved to be very disappointing”, says Ramanantsialonina Abel, a local figure, “the company doesn’t hire local employees and those who did get themselves recruited were fired.

Ambatovy has destroyed many things. Erosion has ruined the paddy fields and the forest, the water streams have dried up and the project has had a negative effect on our health”, he says. And worse may be yet to come. The commodities cycle has turned since the 2000s. A free fall of nickel prices has caused massive financial losses for the Ambatovy mining complex.

A blockage in the tailing pipeline and what Sherritt called “plant equipment reliability issues” contributed to sluggish 2016 financial results for Ambatovy. The joint venture had to negotiate with its lenders, including the EIB, to reschedule its debt.

In November, after three years of complex talks between partners and lenders, Sherritt managed an exit. Although it will remain the operator of Ambatovy until 2024. Its stake in the project is to be reduced to 12 percent from 40 percent in exchange for the elimination of over 1 billion dollars of debt owed to the other venture partners, Sumitomo and Kores.

But Sumitomo exposure to Ambatovy is now close to 2 billion dollars and that carries its own high uncertainty potential. In Ambatovy, the marriage of economic development with private interests has only turned into an environmental sword of Damocles.

This Author

Laurence Soustras is a French freelance journalist based in Paris. She has worked for Les Echos, l'Agefi and Radio France International. She primarily, but not exclusively, writes about development and international finance, specifically in Africa.

Additional reporting by Riana Raymonde Randrianarisoa. Randrianarisoa is a Madagascar based freelance videojournalist with 18 years experience who focuses her work on investigative journalism since 2009.