Kazakhstan: Poisoned Legacy

Published by MAC on 2014-02-21
Source: Al Jazeera

Kazakhstan: Poisoned Legacy

How are British mining companies impacting the Central Asian nation's worsening environmental track record?

People and Power - Al Jazeera

19 February 2014

The Central Asian state of Kazakhstan is one of the most polluted nations in the world, much of it a toxic consequence of years of decrepit Soviet-era heavy industry.

But have the more recent actions of a British-owned mining and minerals company made things worse?

People in Shymkent, a city in the south of the country, certainly seem to think so. People & Power sent filmmakers Richard Pendry and Robin Forestier-Walker to find out why.

Filmmakers' view

Shymkent is a drab and largely unremarkable town, except for one thing - its highly polluted environment. The dust blowing through its streets and the soil beneath the feet of its inhabitants contain such high concentrations of lead and other toxic elements - cadmium, antimony and arsenic - that they'd surely generate a major scare if detected anywhere else.

Here they just cause endemic health problems that the local people are forced to live with. Take lead poisoning, for example, the most obvious ill effect. It is simply rife here - particularly among young children.

The culprit: a decrepit lead smelting plant right in the heart of the city. Built in the 1930s at the height of Soviet industrialisation, it went on to play a crucial role in the USSR's fight against Nazi Germany - making most of the tens of millions of bullets fired by the Red Army during World War II. But while the factory was celebrated in propaganda films during and after the war as a paradigm of socialist achievement, little was ever said about its truly appalling environmental record, not even when Kazakhstan achieved independence in 1991.

Financial pressures forced the smelter's closure in 2008. It was the city's major employer and key to the local economy. When it shut, many locals mourned the loss of their jobs. But few regretted the passing of the dreadful particle-filled black smog that used to belch out of its crumbling chimneys and waste pipes.

However, as some soon discovered, the plant's toxic legacy remained.

Jeff Temple is a British chemical engineer who settled in the area some years ago. In 2008, a few months after the smelter's closure, he volunteered to help build a children's playground at a site about a kilometre away from the plant. To be on the safe side, he first decided to take some soil samples from the plot and get them analysed. The results, he told us, were deeply shocking.

"We had poisons almost that you could mine for. Lead was about 60 times the legal limit; cadmium 40 times and arsenic was 50 times the legal limit of Kazakhstan," he said.

What Jeff had discovered on his own initiative, others were finding out more officially: a 2012 study by the International Turkish Kazakh University revealed that 52 percent of the local children it tested had lead levels far in excess of national (let alone international) permissible levels. And according to further research by the International Task-force for Children's Environmental Health, as many as 100,000 young people in Shymkent may have been adversely affected by lead pollution.

Lead poisoning

There is no acceptable level for lead in the body, according to the World Health Organisation. The heavy metal poisons all developing organs including the brain. Among children especially, it arrests intellectual development, stunts physical growth and affects behaviour. At higher levels it can kill.

Imagine the consternation then, in 2010, when local families switched on their TV sets and learned that the dilapidated plant was to re-open. A company called Kazakhmys, the country's largest copper producer, which is also listed on the London FTSE 250 stock index (formerly it was among the FTSE 100), announced at a ceremony in Shymkent to mark the start of the project that it would be running the operation.

The decision was taken that Kazakhmys will itself take on the operational and financial management of the lead smelter in order to avoid losses and make the maximum possible profit, Kazakhmys executive director of metallurgy, Yerzhan Ospanov, told a local TV crew.

Although the regional authorities were presumably happy about the work this would bring to Shymkent, there were some concerns about the wisdom of this decision. During the same televised opening ceremony, the local governor asked Kazakhmys' executives what they were going to do about the plant's environmental problems. On camera, Eduard Ogay, the CEO of Kazakhmys Copper, replied that they would "work on" the environmental hazards. But then he seemed to row back from that commitment when he said it would be expensive.

It was a real smog ... Black smoke. I didn't understand. My throat started to sting. I quickly went home and closed all the windows.

Local resident

Either way, nothing seems to have been done by Kazakhmys. Despite the smelter's appalling track record as a major cause of health-threatening pollution, no advance environmental assessment of the consequences of re-opening was carried out - even though under both UK and Kazakhstan law this was a crucial legal requirement. Nor, it seems, was anything done to alleviate the pre-existing problems. Retrofitting new filters to the plant could have massively reduced emissions. But that never happened. Instead, from 2010 until 2012, the plant worked on meeting the Kazakhmys order - regardless of the fact that the local sanitation department, responsible for environmental matters, had refused to give it permission to operate.

Before too long, local people were once again feeling the effects of the smelter's pollution. "It was a real smog," said one resident after an especially bad day. "Black smoke. I didn't understand. My throat started to sting. I quickly went home and closed all the windows."

We asked the company to explain the lack of an environmental assessment and what, if anything, its shareholders (which include a number of major UK pension funds) knew about its involvement with the smelter? Why did the plant continue to operate without a licence from the sanitation department? In light of the plant's well-known track record as a source of health damaging emissions and pollutants, we also wanted to know whether Kazakhmys' shareholders were ever warned of any potential liabilities that might arise from processing its waste there.

It seemed important to ask these and other questions because when we started looking at the circumstances surrounding Kazakhmys' involvement with the Shymkent smelter, we found that connections between the two actually seemed to stem back to 2007, when the plant had previously been open. Kazakhmys' own public documents stated the firm was sending toxic dust from its copper smelting operations. Managers later claimed in local media interviews that the aim was to recover lead and precious metals such as rhenium and gold.

Yet in 2011 Vladimir Kim, the President of Kazakhmys Corporation and the company's top shareholder, said in public: "The only connection between Kazakhmys and this plant [is] that we are delivering lead dust ... That plant should be closed."

This struck us as curious because of that very unequivocal statement made on local TV back in 2010 when the plant re-opened - when Ospanov said that "Kazakhmys will itself take on the operational and financial management of the lead smelter in order to avoid losses and make the maximum possible profit".

Contradictory statements

So which was correct? What lay behind these contradictory announcements?

The company declined to answer most of our questions and refused to grant us an interview. It would only give us a brief statement.

It said: "Kazakhmys has never owned or operated the plant, but we have supplied material to it for relatively brief periods. The supply was partly at government request in order support employment. We have not sent any material there since mid-2012 and we believe the plant has now closed."

The company claims that the plant had actually been run by a completely separate and unconnected Kazakhstan company called A Mega Trading.

Yet when our investigations took us to A Mega Trading's offices in Almaty, Kazakhstan commercial capital, we found that links do appear to exist. We discovered, for example, that a Mr Vladimir Jumanbayev, the commercial director of Kazakhmys PLC, owns a company called Vertex - and interestingly, A Mega Trading's offices are in the same building as those of Vertex offices, as are the offices of various Kazakhmys internal departments.

We found out that A Mega Trading's 'financial supervisor' had previously worked for the aforesaid Mr Jumanbayev at Vertex. We also discovered that A Mega Trading's manager at the smelter was a senior Kazakhmys engineer, and that its deputy director was the brother of Ospanov.

Mere coincidences? Perhaps, but it seems unlikely. Nonetheless, the company was unwilling to explain what lay behind these connections. Instead it continued to maintain that it had had no role in the lead smelter's financing and operation.

The Shymkent plant did eventually close in late 2012, and the people of the city may have been saved from more lead poisoning, although the legacy of pollution remains and it could continue to harm the local children for years to come.

Residents are understandably concerned that those problems might have been exacerbated when the plant spluttered back into life for Kazakhmys in 2010 - especially if little heed was paid to environmental problems. They want to know who profited, who was responsible and what compensation may be due. International human rights organisations such as Global Witness have also taken up their cause and are calling for the City of London's financial regulators to investigate.

As our film makes clear, there can be serious consequences for directors of UK-listed companies that fail to take account of the environmental impact of their operations and which fail to disclose earnings and potential liabilities to shareholders. In some cases such failures can lead to criminal charges and even prison sentences. Whether or not any such penalties can be applied in relation to the Shymkent lead smelter may now be up to the UK authorities to decide.