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9 February, 2009
The Norwegian government has announced that its US$300 billion sovereign wealth fund has divested of its stake in Canadian mining company Barrick Gold and US aerospace and weapons maker Textron. The divestments come after Norway’s Council on Ethics determined the companies were not socially responsible.
Textron was dropped because it manufactures cluster bombs, while Barrick Gold’s shares were sold because of severe environmental harm at the 95%-owned Porgera gold mine in Papua New Guinea.
Norway’s Global fund, which includes pension funds derived from oil revenues that it invests in foreign equities, sold its US$174 million stake in Barrick Gold last year. An Ethics Council panel determined that Barrick’s Porgera mine runs serious “risk of accumulation and build-up of heavy metals, especially mercury in the environment. Pollution from the mine will potentially have serious negative consequences for human life and health.”
The ethics panel determined that “the company’s assertions that its operations do not cause long-term and irreversible damage carry little credibility.” Barrick Gold, now the world’s leading gold producer, increased its stake in the Enga Province open-cast and underground gold mining operation in April 2007 when it purchased 20% of Emperor Mines Ltd’s shares. It had earlier, in 2006, gained a 75% stake in Porgera with the takeover of PlacerDome. Porgera produced 542,000 ounces of gold in 2006, and has proven reserves of 9.42 million ounces.
Textron, the corporate owner of Cessna aircraft, was taken off the safe investment list because Norway is signature to the Convention on Cluster Munitions prohibition. The Norwegian government divested US$41 million in Textron shares.
Twenty-seven multinational companies have now been blacklisted from investment by Norwegian public funds due to ethical reasons.
Earlier in 2008, the government sold its US$800 million Rio Tinto holdings because of environment degradation at the Grasberg gold and copper mine in West Papua, Indonesia. Rio Tinto, along with Grasberg partner Freeport McMoRan, had been found discharging 260,000 tonnes of tailings daily into a natural river system. Freeport McMoRan had been expelled from the fund in 2006. Other mining companies that have been excluded from Norway’s investment fund include DRDGold of South Africa and India’s Vedanta Resources.