South Korea’s Kunshan Zhongrong metal plating factory, which supplies vehicle parts, is the most controversial project being constructed, according to a RepRisk report. The study compiles a top ten of risky developments globally by environmental, social and governance (ESG) risks – together representing a rough reputational risk measure.
A massive explosion at the Kunshan Zhongrong factory killed over 70 workers and injured more than 180 others on August 2, 2014. Zhongrong Metal Products, a subsidiary of Formosa International Enterprises, is subcontracted by Citic Dicastal Wheel Manufacturing to supply wheels to General Motors, Volkswagen and Mitsubishi Motors.
Two of the ten most controversial projects (MCPs) are located in South Korea; the other being the tourism and leisure industry’s Mauna Ocean Resort, which ranked fourth on the list. An accident at the resort’s gymnasium on February 17, 2014 killed at least ten people and injured over 100. The roof of the gymnasium crashed down on 560 college students attending a freshmen orientation event.
China was represented in the ranking by its (joint seventh ranked) Qingdao Port, in Shandong province, which in May 2014 found itself at the centre of an alleged metal financing fraud.
Chinese authorities launched an investigation following suspicions that a private metals trading firm, Decheng Mining, a subsidiary of Dezheng Resources Holdings, had used fake receipts to repeatedly mortgage commodities stored at the port, which is operated by Qingdao Port International.
Mexico’s Buenavista del Cobre Mine ranks second on the report, attributed to a spill of 40,000 cubic meters of sulfuric acid into the Rivers Sonara and Bacanuchi on August 6, 2014. The mine, in Brazil’s in Sonora state, also known as the Cananea Mine, is owned by Grupo Mexico through Southern Copper Corporation and is operated by Buenavista del Cobre SA. In September, Grupo Mexico admitted that a defective pipe seal had caused the accident.
Joint third ranked were two projects. The Soma Komur Isletmeleri Mine (Soma Mine) in Turkey suffered an explosion on May 13 2014 that caused 301 deaths. The mine is operated by Soma Komur Isletmeleri AS (Soma Mining) and owned by Soma Holding.
At first it was thought that a transformer had exploded and had subsequently caused a fire in the mine, however, other reports alleged a spontaneous combustion of coal had caused the accident.
“In the immediate aftermath of the accident, up to 274 miners were confirmed dead and a further 120 were trapped underground. The final death toll was put at 301 and the autopsies showed that carbon monoxide poisoning had caused 85 percent of the deaths,” noted the RepRisk report.
The other third ranked project is Australia’s Abbot Point port expansion. Surging energy demand from Asia is driving the construction of liquefied natural gas terminals and coal terminals on Australia’s northeast coast, according to the report.
“The expansion of one such terminal, the North Queensland Bulk Ports terminal at Abbot Point, drew severe criticism in 2014 and has resulted in the Abbot Point Port Expansion being ranked in joint third place in the MCP 2014 Report,” said the study.
“A consortium comprised of Adani Group, North Queensland Bulk Ports and GVK Hancock is overseeing the construction of the project. Reportedly, the project would produce about three million cubic meters of dredged debris, which would be dumped on the seabed near the Great Barrier Reef. The Reef is designated as a World Heritage Site and is home to over 600 types of coral and 1,625 species of fish, as well as other marine animals,” added the report.
The fifth-most controversial project is the one which has perhaps received the most adverse media coverage in Europe: the Qatar’s winning bid to host football’s 2022 World Cup (that’s soccer for Americans). During 2014, the Qatar’s winning bid for the tournament faced widespread criticism around poor working conditions of around 1.4m migrant workers building the facilities for the sports event.
“There were repeated reports of workplace accidents caused by dangerous working conditions and lack of safety equipment, as well as allegations that workers had died from heart failure after being forced to work in temperatures that reached 50 degrees centigrade,” said the study paper.
In May, claims by The Guardian newspaper that workers were dying at the rate of one per day, triggered an official investigation by the Qatari authorities. The investigation showed that 430 Nepalese workers and 567 Indian workers had died between January 2012 and April 2014 on construction sites for the 2022 event,” added the RepRisk report.
The International Trade Union Confederation has estimated that up to 4,000 migrant labourers working on associated infrastructure projects for the tournament could die before the 2022 completion date.
In July, the Qatar Foundation hit back by highlighting the role of corrupt recruitment agencies in the workers’ country of origin, who allegedly charged exorbitant fees, demanded bribes and used unfair practices that exposed workers to debt bondage and forced labour.
“The Foundation warned that some of the labor practices violated the ILO Conventions and Qatari national law. There were also claims that 90 percent of the salaries of the North Korean workers working on Qatar’s World Cup facilities was expropriated by North Korean authorities,” said RepRisk.
Canada’s Mount Polley copper and gold mine is number six on the list. The project, owned by Imperial Metals Corporation (Imperial Metals) in the Cariboo District of British Columbia in Canada, hit the news in summer 2014 when the dam of it tailings pond ruptured.
“The accident, which occurred on August 4, 2014, caused around 17 million cubic liters of water and 8 million cubic meters of mining waste to leak into the lakes of Polley and Quesnel. NGOs claimed that the amount of water released was equivalent to about 2,000 Olympic-sized swimming pools and the accident was described as the worst environmental catastrophe in Canadian mining history,” the report noted.
Ten on the list is Moscow’s Metro rail system, which is undergoing construction work. On July 15 2014, 23 people died and over 160 were seriously injured in a train derailment incident on the Russian capital’s underground railway system, reportedly caused by a power surge. The accident, which the report cites as “one of the worst” metro crashes recorded, struck commuters in the morning rushhour between Moscow’s Slaviansky Boulevard and Victory Park stations.
The table below, taken from the report, ranks the ten projects by an internal RepRisk proprietary risk metric.