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November 30, 2018

How to implement environmental and social standards as large-scale business in Laos and Mozambique

It can be quite challenging to do business in a developing country. Entrepreneurs often come across multiple issues, especially where environmental and social impacts are concerned. This is certainly the case for two of FMO’s large-scale clients: the Theun Hinboun Power Company (THPC), a 520 MW hydropower project in Laos and Kenmare Resources, a titanium mine based in Topuito Mozambique.

Between July and October 2018, four staff members focussed on environmental, social/community issues from THPC and Kenmare took part in an exchange programme organised by FMO’s Energy and Capacity Development team, to learn more about best practice community engagement and to exchange experience on managing their environmental and social risks in the mining and hydropower sectors.

Kenmare Resources

Kenmare Resources is an Irish incorporated mining company that runs the Moma Mine, a titanium oxide mine located on the northern coast of Mozambique. Given the nature of Kenmare’s mine of being in constant movement, Kenmare’s main challenges are around resettlement, land rehabilitation and waste management. Being part of FMO’s portfolio since 2009, Kenmare has developed several strategies to mitigate the impacts of its mining activities (i.a. resettling a village and farm lands from neighbouring villages). Over time, the company has implemented a proactive and sustainable approach to all its activities.

In addition, given the remote rural context of the mine with scarce sources of formal economy for communities, and few other players, Kenmare undertakes a multitude of activities for the local communities with the aim of long-term sustainable self-sustenance. In addition to creating jobs with a priority for local and national Mozambicans, it creates jobs and attracts other economic activities and provides technical assistance on a wide range of subjects, including sustainable farming training, waste reduction and campaigns on Malaria and HIV/Aids prevention.

Agricultural training for local farmers supported by Kenmare’s community support

Theun Hinboun Power Company

Theun Hinboun Power Company is a 520MW run of the river, reservoir dam hydropower project based in Laos. Like Kenmare’s mining operations, this development of the THPC project caused large-scale resettlement and had numerous environmental implications to the surrounding villages and downstream of the project. The scale of activities and intensity of the resettlement program undertaken by the company to protect and ensure sustainable livelihoods of project affected families has been immense. Dedicated resources, time, and effort have demonstrated that after 10 years, the project area of impact has been able to rebound, providing project affected people with improved livelihoods and more than 2,500 families with full land titles for their homes and gardens, and is in the process of issuing land titles for agricultural land in resettlement villages.

Visit to the THPC hydropower plant

The challenges of a sustainable, large-scale business in a least developed country

The main challenge faced by both Kenmare and THPC was the sheer scale of their impact. Kenmare’s operations centre around a moving mine, while THPC covers a vast territory of close to 200km and 14 villages. The implementation of their programs has not gone without failure and has even at times attracted attention from local and international NGOs. However, both are committed to ensuring the end goal, where communities are not worse off but better off from their activities good outcomes as well as, ongoing implementation and community engagement, in close cooperation with the local government.

Community meeting in village, relocated by THPC

Lessons learned

The exchange confirmed that working with communities is challenging in any region. Indeed, similarities between rural Mozambique and rural Laos quickly became apparent during the visits. For example, both companies have been deeply involved with their local communities on a scale that goes beyond the construction of housing and compensation packages, including battling environment issues such as water pollution and soil degradation caused by monoculture or climate change.

As one of Kenmare’s staff put it: "Kenmare is the only player in this remote and rural area, creating jobs and engaging with the local community. Being the only player  makes both the government and NGOs hesitant to work in this part of the country. They expect Kenmare to solve any challenges or grievances the communities have, including those that are not related to the mining activities.”

THPC has had a similar experience in Laos. This is why -according to THPC- actively engaging the communities in all of the company’s activities is of utmost importance. They learned to look beyond the implementation requirements of lenders or government and continue towork with the needs voiced by the communities.

The opportunity to share experiences face-to-face on how to deal with the challenges of resettlement and relocation, but also the challenges of working in a rural area and managing relationships with the (local) government proved highly valuable for both parties. As the companies parted ways, they were able to take on board new ways of working as they both shift into the next phase of their “collaborations” with local communities.

Visit to local businesses supported through training by THPC

About the FMOxChange Program

At FMO, we think it is important that clients can leverage on our knowledge and network, so they can build their businesses in the most sustainable way. Often, the most innovative ideas or solutions do not come from us or our consultants, but from other clients who face similar issues, irrelevant of sector, as the exchange with Kenmare and THPC has demonstrated. The value of such insight can be incredible, creating new networks, friendships and providing opportunities to build on and evolve best practice. That is why FMOxChange facilitates knowledge sharing between clients in different sectors and regions through onsite visits. The FMOxChange program supports the cost of two return flights, allowing clients to fly across the world for an onsite visit to exchange knowledge and ideas.

Want to know more about this program? Visit

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