In Azerbaijan, UK-based gold mine accused of pollution

Six journalists from the independent Azerbaijani investigative website Abzas Media have been under arrest since November 2023. They had previously transmitted elements of their investigations to the Paris-based Forbidden Stories collective, which took over their work in collaboration with 14 European news organisations in the “The Baku Connection” project, including FRANCE 24 and RFI. This article focuses on the tensions surrounding a mine in the west of the country, whose gold ends up in the products of major high-tech brands. 

The anger was visible on their faces as they faced off against squadrons of riot police sent to silence them. On June 20, 2023, residents of the village of Söyüdlü, in western Azerbaijan, demonstrated to reject the construction of a new reservoir to store toxic waste from a gold mine that has been operating in the area since 2012. An initial reservoir had been installed by Anglo Asian Mining, the British company that operates the mine, but it was close to capacity. The villagers believe it had led to soil and river water pollution, and that the fumes escaping from it were causing an increase in respiratory illnesses.

Video of tensions at the Gedabek mine in Azerbaijan published on Facebook by the account Azərbaycan Respublikası on june 21, 2023.


The first reservoir, with a capacity of 6 million cubic metres, is located a few hundred meters from Söyüdlü. To separate the gold from the rock, Anglo Asian Mining uses cyanide, and dumps the sludge generated by the process, which contains toxic products including cyanide and arsenic, into the reservoir, known as a tailings pond.  The company says that the quantities of waste do not threaten the environment or the health of local residents. 

That is not how the residents feel. But their efforts to show their frustration in June 2023 were cut short: images posted on social media show police in riot gear spraying tear gas in the faces of demonstrators, particularly elderly women, and using rubber bullets to disperse the protesters.


‘The police set up roadblocks and turned back journalists who were not under government control’

Interviewed by the Forbidden Stories consortium, freelance journalist Elmaddin Shamilzade recounts: 


There were about 300 policemen. It was far too many. The local administrator came to talk to the people. Then he wanted to take them to some kind of government building. He wanted to have a conversation without journalists and activists. The villagers refused, and got permission for the media to follow the discussions.  

The next day, the police set up roadblocks and turned back journalists who weren’t under government control. They wouldn’t let them into the village. They checked passports, even those of the villagers.


On Shamilzade’s return to Baku, he was arrested for posting on Facebook a photo of two policemen in Söyüdlü. He recounts being beaten, tortured and threatened with rape, which prompted him to give the police his password so that they could delete the photo. He has since left the country.

At least four journalists were arrested on June 22, 2023 for reporting on the Söyüdlü protests. Three were arrested on the spot, including Nargiz Absalamova of Abzas Media. She accuses the police officers who arrested them of violence against her and her colleagues. According to the police, the three people arrested were not wearing “any distinctive signs” identifying them as journalists. The fourth journalist was arrested in Baku on June 23: the director of Abzas Media, Ülvi Hasanli, was detained for distributing photos of the two police officers accused by the journalists of arresting them. He was released after four hours.  

Facebook post by Sevinç Vaqifqizi, editor-in-chief of Abzas Media, for which the site’s director, Ülvi Hasanli, was detained by police for four hours on June 23, 2023.. © FACEBOOK

On-site samples and questions  

In a video filmed by Abzas Media in Söyüdlü, Gadabay district administrator Orkhan Mursalov is seen telling protesters: “The reservoir has been there for more than 11 years. Have there been any complaints about the reservoir in all those years? No! Why did the inhabitants conclude in one day that the lake endangered their lives? It’s likely that people are being misinformed. Who’s misinforming them? Unfortunately, social networks.” 



Read more“Don’t think that they can stop these investigations by arresting us one by one.”

Azerbaijani state media accused first the West, and then Russia, of organizing the protests. Azerbaijani President Ilham Aliyev, in power since 2003, finally reacted to the events on July 11, 2023. He said the demonstrations were the work of “provocateurs… some of whom are hiding in Azerbaijan, others abroad”. He defended the right of the local residents to demonstrate (a way of polishing his image with his people, one activist told us). He accused the country’s minister of ecology of being  “negligent,” adding: “As a result, a foreign investor is poisoning our nature.” The Azerbaijani government had granted the right to operate the mine to Anglo Asian Mining, whose CEO and main shareholder, Iranian-American Reza Vaziri, is said by the company’s CFO Bill Morgan to be a “personal friend of the president”. The Azerbaijani government also shares profits from the mine with the company. (The company lists its second-biggest shareholder as former US governor John Sununu, who did not respond to requests for comment for this report.)


Azerbaijani President Ilham Aliyev and Anglo Asian Mining CEO Mohammad Reza Vaziri at the inauguration of a treatment centre in 2013.
Azerbaijani President Ilham Aliyev and Anglo Asian Mining CEO Mohammad Reza Vaziri at the inauguration of a treatment centre in 2013. © Official website of the Azerbaijan presidency

In mid-July, the Azerbaijani authorities ordered tests to be carried out on the site, and the mine suspended operations while the investigation was carried out. 

On September 28, 2023, Anglo Asian Mining announced the findings in a press release. The statement said that analyses carried out by the British laboratory Micon and the Azerbaijani laboratory Iqlim indicated there was no reason to worry about pollution at the site. “Radiation levels at Gedabek are aligned with natural background conditions for the area,” the statement says. It also states that “no issues of concern were identified with air quality”, that “no cyanide was found in any soil sample above the limits of analytical detection (

On November 7, 2023, the company announced that it had signed an “action plan” with the Azerbaijani government to restart the mine’s operations. The plan called on the company to “improve environmental monitoring of the site” and “establish a community relations department”, without giving further detail.  The company announced that rather than building a new waste reservoir, it would raise the height of the existing reservoir’s dam so that it could continue to receive waste. 

We asked Anglo Asian Mining to provide detailed results of the analyses for this report, as well as details of the dam-raising project. The company referred us to its public press releases, and sent this statement from its CEO, Reza Vaziri: 


Statement from Anglo Asian Mining provided to the Forbidden Stories consortium.  © Anglo Asian Mining
Statement from Anglo Asian Mining provided to the Forbidden Stories consortium. © Anglo Asian Mining © Anglo Asian Mining

‘This toxic water is seeping through the rocks’

Without precise data from the analyses, and without samples to analyse independently, it is impossible to assess the risk of pollution at the Gedabek mine. A member of the Azerbaijani NGO Ecofront had taken water and soil samples around the lake during the June 2023 protests, but he was arrested and his samples were confiscated. The NGO remains convinced that the lake is a source of pollution, and that its contaminated water is seeping into the soil. One of its members, Javid Gara, explains:

In recent years, the lake has been enlarged. Not by structural engineering: it’s trucks digging up the soil to make it bigger. As they dig, they cause more vibrations, more cracks and more leaks. The toxic water seeps through the rocks to the river and springs below the reservoir. The village of Soyüdlü is above the reservoir and therefore not directly affected, but it does have an agricultural life. The villagers take their livestock, cows and sheep, below the reservoir, but they never use the water downstream from the reservoir. That’s because they think it’s contaminated.

Dust, odours, soil infiltration  

Two geologists contacted by our consortium confirm these concerns, noting that the reservoir was dug directly into the rock, raising the possibility that its contents could seep into the soil and groundwater. They sent us this analysis: “You can see from the satellite images that the company dug into the valley floor. This makes it easier to bring the tailings stored in the lake into contact with the deeper layers of soil, and therefore increases the chances of disrupting underground and surface flows.”

This satellite image from 2012 show the location where a waste-containment reservoir known as a tailings pond will later be built at the Gedabek mine in Azerbaijan.
This satellite image from 2012 show the location where a waste-containment reservoir known as a tailings pond will later be built at the Gedabek mine in Azerbaijan. © Satellite image ©2024 Maxar Technologies.

Images taken by Ecofront show that below the tailings dam that contains the reservoir a small complex has been set up to alleviate any potential leaks. “Between the retaining structure and the natural topography, you have heterogeneities, so there’s bound to be leakage,” the geologists told us. Anglo Asian Mining says the filtration complex consists of a “reed bed”, artificially planted reeds that biologically filter potentially polluted water before releasing it back into the river.  

In the absence of data about the reed bed, the geologists said they could not evaluate its effectiveness. But they caution: “A reed bed won’t recover everything, but it will absorb some of the elements. Such systems can at best reduce the concentration of metals in the water, but cannot necessarily produce a drastic reduction that would allow the safe release of the water back into the river”. Ecofront, for its part, is convinced that the complex does not filter the lake water sufficiently, and pollutes the river. 

Video filmed by the NGO Ecofront below the tailings dam at the Gedabek mine in Azerbaijan. The NGO believes the facility does not sufficiently filter water from the dam before it flows into the local river.

Residents also complain about odours emitted by the reservoir, says Ecofront’s Gara.

When it’s hot, all this liquid starts to evaporate. This vapour on hot summer days is unbearable. Humans shouldn’t live in these conditions. This kind of reservoir should not be near a residential area.


In videos filmed by Abzas Media and other independent media in June, residents complain of respiratory illnesses. Some report an increase in cancer cases since the reservoir was built. But the repression of the protests in June has apparently had an effect: no resident of Söyüdlü dared to speak directly to our consortium, and we were unable to obtain any medical reports from local doctors and hospitals. 

The same applies to the nearby town of Gadabay, which adjoins the mine site. Geologists and toxicologists we consulted all told us the town’s immediate proximity to the mine without any doubt exposes its inhabitants to dust from the mine, carried by wind or rainwater.  

Map showing the Gedabek mine, the town of Gadabay, the village of Söyüdlü and the mine's tailing pond.
Map showing the Gedabek mine, the town of Gadabay, the village of Söyüdlü and the mine’s tailing pond. © Upian

From Swiss refineries to cell phones

Where does Gedabek’s gold end up? According to Anglo Asian Mining’s 2022 annual report, two Swiss refineries buy from the company. The first, Argor-Heraeus, told us it had terminated its relationship with Anglo Asian: “As part of our Know Your Customer update process started in 2022, Anglo Asian Mining did not provide all the required information” explains the refinery, which states that it “blocked the company in May 2023”, before the crackdown on protests. 

The other refinery, MKS Pamp, told us that on the basis of the analyses carried out in the summer of 2023 they would “continue to engage with Anglo Asian Mining.” Among the refinery’s customers are the major hi-tech brands: Apple, Samsung, Tesla, HP… none of whom responded to our questions. Microsoft was the only major brand to respond, stating that it “requires its suppliers (…) to comply with all applicable laws and regulations regarding labor, ethics, occupational health and safety and environmental protection”, without commenting on its gold purchases from this refinery.

‘Refineries are not asked to carry out scientific analyses of water quality and air pollution near mines’

Marc Ummel, head of the raw materials sector at the NGO Swissaid, says there’s a problem with the “due diligence” Swiss refineries are required to conduct before entering into a contract with a mining company:



The problem with refineries’ due diligence is that it is still based far too often on simply requesting documents from their suppliers or mining groups, but not on any real control or inspection of mining sites.

They carry out on-site inspections, but often don’t realize what the problem is, because they don’t talk to the local communities suffering the negative effects of the mine. In the end, the requirement for refineries’ due diligence are quite basic. They are not asked to carry out scientific analyses of water quality or air pollution at the mines they source from. They are simply asked to carry out checks to identify risks, prevent them and mitigate their negative impact. 

When a government shuts down a mine because of pollution problems or human rights violations, the situation is very concerning. A state has no interest in suspending the activities of a mine, as it will generally lose revenue. 

The six Abzas Media journalists face up to eight years’ imprisonment. As well as investigating the Gedabek mine, they had been looking into the corruption and torture used by the Azerbaijani government. The six face charges of “foreign currency trafficking”.

Producing around 1,200 kilos of gold a year, the Gedabek mine remains a relatively modest operation compared with other gold mines around the world. But in this remote region of Azerbaijan, it had raised hopes. A decade after it opened, hope has given way to fear and suspicion, fueled by the violent repression of 100 protesters in June 2023 and the effective blocking of journalists’ efforts to investigate allegations of pollution. The site is now cordoned off by Azerbaijani police, inaccessible to journalists or activists. While it is not possible to say for sure whether the pollution is real, the case seems to make the Azerbaijani authorities uncomfortable, to say the least, and raises questions in a country that claims to make the environment a priority – and will host the COP 29 climate change conference in December 2024. 

Article written in collaboration with Léa Perruchon, Leyla Mustafayeva, Lamiya Adilgizi, Sofía Alvarez Jurado (Forbidden Stories), Virginie Pironon (Radio France) and François Rüchti (RTS).

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The contentious path to a cleaner future

This article is from The Spark, MIT Technology Review’s weekly climate newsletter. To receive it in your inbox every Wednesday, sign up here.

The world is building solar panels, wind turbines, electric vehicles, and other crucial climate technologies faster than ever. As the pace picks up, though, a challenge is looming: we need a whole lot of materials to build it all. 

From cement and steel to nickel and lithium, the ingredient list for the clean energy transition is a long one. And in some cases, getting our hands on all those materials won’t be simple, and the trade-offs are starting to become abundantly clear. 

My colleague James Temple, senior editor for energy here at MIT Technology Review, has spent over a year digging into the building tensions around mining for critical minerals. In a new story published this week, James highlights one community in rural Minnesota and the conflicts over a mining project planned for the nearby area. 

If you haven’t already, I highly recommend you check out that article. In the meantime, I got to sit down with James to ask him a few questions about the process of reporting and writing this feature and chat about critical minerals and the energy transition. Here’s some of what we talked about. 

So, what’s the big deal with critical minerals?

To address climate change, “we just need to build an enormous amount of stuff,” James says. And building all of it means a whole lot of demand for materials. 

We might need nearly 20 times more nickel in 2040 than the annual supply in 2020, according to the International Energy Agency. That multiple is 25 times for graphite, and for lithium it’s over 40 times the current figure. 

Even if people agree in the abstract that we need to extract and process the materials needed to build the stuff to address climate change, figuring out where it all should come from is easier said than done. “We came to realize that mining proposals were creating community tensions basically anywhere they appeared in the US,” James says. 

There’s pushback to all sorts of different climate tech projects—we’ve seen very vocal opposition to proposed wind farms, for example. But there seems to be an additional layer to the concerns around mining, James says. Among other reasons, it’s a legacy industry with a particularly checkered past in terms of environmental impact. 

Even as communities raise concerns over new mining projects, “you also saw the companies proposing them stressing the potential benefits to cleantech and climate goals,” James says. This combination of clear potential climate benefits with community concerns was worth exploring, he tells me. 

What does a proposed nickel mine near a small town in Minnesota tell us about conflict over critical minerals?  

The town of Tamarack, Minnesota, has a population of around 70. 

Despite its small size, Tamarack could soon be key to a crucial landmark for climate technology, because Talon Metals wants to build a huge mine outside the town that could dig up as much as 725,000 metric tons of raw ore each year. The primary target is nickel, a metal that’s crucial to building high-performance EV batteries. 

Talon has been very explicit in claiming that this mine would have benefits for the planet, going as far as applying to trademark the term “Green Nickel.” That’s one of the reasons this particular site piqued James’s interest, he says. 

At the same time, local concerns are growing. Drilling could release 2.6 million gallons of water into the mine every day, which Talon plans to pump out and treat before it’s released into nearby wetlands. This part of the plan has caused some of the greatest unease, since local fresh water is crucial to the community’s economy and identity. 

The central tension was abundantly clear on a nearly weeklong trip to Tamarack and the surrounding communities, James tells me. He went to Rice Lake National Wildlife Refuge and learned about native wild rice that grows there and its importance to Indigenous groups. He went to see samples of the ore that Talon dug up and spoke to a geologist about the resources in the region. He also attended community meetings that got a little heated, and even had to contend with some local bees. 

“We’re talking about a story of two different, very precious resources that have created a really difficult-to-address conflict,” he says. “It’s a tension that’s ultimately going to be very hard to resolve.”

There are rarely easy answers when it comes to the massive task of addressing climate change. If you’re interested in getting a better understanding of this complicated web of trade-offs, take the time to read James’s story. You’ll get all the details about why this particular deposit is such a big deal, and hear more about where things are likely to go from here.

And the story doesn’t stop there. James also has another big project out this week, in which he worked to understand how this one mine could unlock billions of dollars in government subsidies. Dig into that here.  

Related reading

Yes, we have enough materials to power the world with clean energy. Mining and processing it all might prove tricky, though.

Here’s how China hopes to secure its supply chain for critical minerals. 

Some companies are looking deep in the ocean for new sources of nickel and other metals crucial to the energy transition. Deep-sea rocks that look like potatoes could hold the key.

Keeping up with climate  

Some truck drivers are falling in love with EVs. Electric trucks are still limited in range, and they make up a small fraction of the trucks on the road, but drivers are starting to see the upside, even as critics say the move to electric is going too fast. (Washington Post)

Gas prices are down in the US, but charging up an EV is still way cheaper. Here’s how cheap gas has to get in every state to compete with EV charging. (Yale Climate Connections)

Old cell phones might provide a much-needed source of rare earth metals. These metals are crucial for motors, including the ones in electric vehicles and wind turbines, and recycling could meet as much as 40% of US demand by 2050. (New York Times)

→ Old personal devices can be a source for other metals, like lithium and cobalt, as I wrote in this story on battery recycling from last year. (MIT Technology Review)

Nobody knows when the next nuclear plant will come online in the US. The former front-runner was a NuScale modular reactor array, but the future of that project is uncertain now. (Canary Media)

Local bans can eliminate nearly 300 single-use plastic bags per person per year, according to a new report. Bottom line: the policies work. (Grist)

→ Think that your plastic is being recycled? Think again. (MIT Technology Review)

Europe will need 34,000 miles (54,000 kilometers) of additional transmission lines to handle the growth in offshore wind power. It could be Europe’s third-biggest energy source by 2050, if infrastructure can keep up. (Bloomberg)

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Silver’s window of opportunity is closing, with prices poised for an ‘explosive move’ in 2024

Silver prices could be headed for an “explosive” rise in 2024 if global supplies continue to fall short of demand, and the Federal Reserve makes good on its plans to pivot to interest rate cuts in the coming months, according to metal-markets analysts.

While silver this year has underperformed gold, which saw prices touch record highs this year, the opportunity to snap up silver at bargain prices may be brief.

“The window for buying silver in the low- to mid-$20s is ending,” said Peter Spina, president of silver news and information provider

It is likely that silver prices next year will be pushing up toward the major $30-an-ounce technical resistance, he told MarketWatch, adding that he “fully” believes that the price barrier will fall. 

On Thursday, the most-active March contract for silver futures


settled at $24.39 an ounce on Comex, with prices up 6.4% for the session to erase what had been a loss for the year. It traded 1.4% higher year to date, according to Dow Jones Market Data.

Gold futures

on the other hand, settled at $2.044.90 Thursday, up 2.4% for the session, up 12% for the year so far, and trading close to its record finish of $2,089.70 from Dec. 1.

Silver’s underperformance

Generally, silver moves with gold much more than with other commodities such as copper or oil, and silver’s moves tend to be bigger than gold’s as a percentage, said Keith Weiner, chief executive officer of Monetary Metals.

That’s what happened with silver’s recent move lower, he said. Silver, on Wednesday, tallied an eighth consecutive session loss, marking the longest streak of losses in just over a year and a half.

Both gold and silver had experienced similar trends in terms of “lack of investment demand” due to rising interest rates, said Chris Mancini, research analyst at Gabelli Funds. This has primarily manifested in outflows from both gold- and silver-backed exchange-traded funds, he said.

The iShares Silver Trust
which holds 441.47 million ounces of silver, has seen a year-to-date net asset value return of negative 0.3% as of Thursday.

Gold, however, has benefited from a surge in demand this year from central banks, which are buying gold to “diversify out of the U.S. dollar,” said Mancini.

Read: Global central-bank gold purchases reach a record high for the first 9 months of the year

Also see: Gold just hit a record high. Is it too late for investors to add it to portfolios?

Solid economic performance this year around the world, and specifically in the U.S., led to higher short-term rates from the Fed and other central banks, and the “subsequent decline in investor demand for gold and silver,” Mancini said.

Global physical investment demand for silver is forecast at 263 million ounces this year, down 21% from 333 million ounces in 2022, the Silver Institute reported in mid-November, citing data from Metals Focus.

Change of course

Silver prices rallied by late Wednesday afternoon, after the Federal Reserve penciled in three interest-rate cuts in 2024, instead of the two that were projected in September. 

That marked quite a change, as prices for silver had been trading lower for the year before that rally.

Prospects for an end to the Fed’s rate-hiking cycle weakened the U.S. dollar and Treasury yields, providing support for dollar-denominated gold prices — and silver along with them.

Read: Gold futures leap closer to record highs in one fell swoop

The Fed decision “put a reversal on industrial demand fears,” so the temporary pressure brought on by those fears has been removed, said Spina.

Fed Chairman Jerome Powell on Wednesday had said officials from the central bank were starting to discuss when to cut interest rates.

New York Federal Reserve President John Williams appeared to walk back on those comments, telling CNBC Friday that Fed officials weren’t really talking about cutting rates right now.

At some point, the Fed is going to have to reverse course on interest rates, said Monetary Metals’ Weiner.

“When they do, it will be a catalyst for higher gold and silver prices, “perhaps much higher,” he said. “We are in a secular bull market now — this is not the bear market of 2012-2018.”

Bullish fundamentals

Global supply of silver, meanwhile, is expected to fall short of demand this year, for a third year in a row.

The “fundamentals for the silver market are extremely bullish,” Spina said, particularly with a structural deficit continuing for silver.

The report from the Silver Institute showed that global industrial demand for silver is expected to grow by 8% to a record 632 million ounces this year, buoyed by investment in photovoltaics — used in solar technology — power grid and 5G networks, growth in consumer electronics, and rising vehicle output.

The report showed 2023 global silver supply estimated at about 1 billion ounces, while total demand is seen at a larger 1.143 billion ounces. Metals Focus said it believes the deficit will “persist in the silver market for the foreseeable future.”

“The only last big driver missing for silver prices to explode is investor interest,” said Spina.

Keep in mind that silver is a “precious green metal,” he said. It benefits from strong growth in mandated green energy demand, which will continue to “push industrial demand to fresh records.”

Meanwhile, silver inventory stocks are being “drained,” as a structural deficit for physical silver competes for remaining inventories, said Spina.

“If the gold price is moving to record price highs in the coming weeks, silver is in the perfect set-up to test $30, with a likely breakout to $50…coming in 2024.”

— Peter Spina,

He expects silver prices to “re-challenge” $30 an ounce within the coming months, “if not sooner.”

Watch gold prices for the initial direction, he said. “If the gold price is moving to record price highs in the coming weeks, silver is in the perfect set-up to test $30, with a likely breakout to $50 [and ounce] coming in 2024.”

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Indonesia: Rare video of indigenous tribe facing down bulldozer shows ‘uncontacted peoples do exist’

On the Indonesian island of Halmahera, two members of an “uncontacted” indigenous tribe were filmed facing down a logging company’s bulldozer. The rare encounter caught on camera testifies to the growing threat that industrial activities – particularly nickel mining managed in part by a French company – pose to indigenous tribes. For members of an indigenous rights NGO, the video serves as a reminder to the government and companies that uncontacted populations exist.

Issued on:

5 min

On October 26, an employee of a forest company on the island of Halmahera, Indonesia shared an incredibly rare series of videos on Facebook showing an encounter with members of an indigenous tribe. The encounter, filmed from a bulldozer, is only the third known record since 2016 that documents Indonesia’s “uncontacted” indigenous population.

“Uncontacted” peoples are indigenous communities with little to no sustained contact with their neighbours or the outside world.

From across a stream, we see two men approaching, shouting and waving their arms. They appear to be armed with bows and machetes. In one of the videos, one of the men steps into the stream and briefly appears to aim at the bulldozer. When the vehicle’s engine roars violently – presumably to scare him off – he lowers his weapon and retreats.

One of four videos posted on Facebook by an employee of the Indonesian logging company Wana Kencana Sejati on October 26.

The videos went viral on Indonesian social networks, especially after being shared by the Indonesian indigenous rights NGO Jatam and the British NGO Survival International. While the person who posted the videos characterised the incident as “an attack”, others saw it as a gesture of legitimate resistance by tribesmen protecting their land.  

The videos were picked up by the Indonesian indigenous rights group Jatam.

The two men in the videos are members of the Hongana Manyawa tribe, one of the last nomadic hunter-gatherer tribes in Indonesia. There are around 3,000 of them, most of whom are in contact with the outside world, but between 300 to 500 choose to remain uncontacted.

‘It’s very traumatic for indigenous people who have no idea what’s happening’

Callum Russell, who works for Survival International on the case of the Hongana Manyawa in Halmahera, found the images a cause for concern.

What the worker was saying was like “We were attacked by a violent tribe who kills people and attacks people”, a message full of stereotypes. And that they survived thanks to their engines and machinery, something like that.

They were not attacked at all actually. What happened is that the logging companies have bulldozers in their forest, so the Hongana Manyawa are basically having their forest attacked. You can see them in the video shouting and throwing weapons at them. At one point, one of the men is crossing the river and aiming an arrow directly at the worker and at this moment the bulldozer revved and they went back to the forest.

It’s very traumatic for indigenous people, who have no idea what’s happening. We speak to the relatives of the Hongana Manyawa who have contact and they were very concerned about their uncontacted relatives in the forest. They don’t know what [the bulldozers] are and they just see something destroying everything they need to survive.

Although the incident on video involved a logging company, Survival International is even more concerned about the impact of nickel mining in Halmahera on uncontacted tribes.

A few kilometres away, the huge Weda Bay Nickel (WBN) mining concession is managed by the Chinese company Tsingshan (its majority shareholder) and the French company Eramet (37.8 percent shareholder). The French government holds a 25.7 percent stake in Eramet via a public investment bank.

This huge nickel deposit is mainly used to manufacture electric car batteries for international companies. But the lucrative project is widely criticised by NGOs that defend indigenous rights, who say that huge swathes of the forest where the Hongana Manyawa live have already been destroyed or polluted.

‘The Hongana Manyawa never gave their consent for this’

Satellite images provided by Survival International show the mining concession encroaching on Halmahera’s forests. 

Most of the nickel mined in Halmahera is used for car batteries. The irony is that the most ecological people in the world, the Hongana Manyawa, are suffering so that people can live a supposedly sustainable lifestyle. 

The Hongana Manyawa never gave their consent for this, especially not the uncontacted ones because they can’t. They could be wiped out. They are extremely vulnerable because they have no immunity to outside diseases like the flu or measles. 

A contacted Hongana Manyawa told me a few months ago: “I will never give the company permission to use our land. Weda Bay Nickel has tried several times and the police have also tried to obtain my consent and that of others. For a new project, the company is doing everything it can to get permission, but we will never give it to them.”

Survival Internation accuses Eramet and the Weda Bay Nickel company of continuously mining Hongana Manyawa territories since 2013, dispute knowing that uncontacted people live in their concession.

Eramet told the FRANCE 24 Observers team that Weda Bay Nickel’s activities on the island are carried out with respect and dialogue with indigenous populations, with the help of independent studies.

The company claims that there are only nine members of the Hongana Manyawa tribe on their concession, and that they regularly interact with workers on the site. Eramet told us that no uncontacted people are living on their concession.

While our team was able to consult documents indicating that the WBN concession overlaps with Hongana Manyawa territory, it is not possible to estimate the number of uncontacted people living within this area.

‘This kind of footage is important to show that uncontacted peoples do exist’

A spokesperson from Eramet also questioned the term “uncontacted people”, arguing that this term has no significance in international law.

According to Callum Russel, this is one of the major difficulties in legally protecting the Hongana Manyawa, who have no defined legal status. In Indonesia, they are only covered by a law protecting old-growth forest

Nevertheless, according to the United Nations Declaration on the Rights of Indigenous Peoples, the consent of the individuals concerned is required for all developments on indigenous territories. 

Survival International respects the desire of uncontacted tribes to stay isolated. That’s why videos like these that emerge are so important to raise awareness of their situation, Russell said.

We have only three of these videos. As a matter of principle, since we don’t try to contact people who don’t want to be contacted, we rely on documents from people working for mining companies. 

This kind of footage is important to show that uncontacted peoples do exist, despite what the companies or the government may say. 

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‘Own what the Mother of All Bubbles crowd doesn’t.’ This market strategist expects stagflation and is investing for it now.

There’s always a bull market somewhere — if you can find it.

Keith McCullough encourages investors to join him in the hunt. You’ll need to be agnostic and open-minded, the CEO of investment service Hedgeye Risk Management says. If you’re wedded just to U.S. stocks, or the market’s latest darlings, you’re setting yourself up for disappointment — particularly in the hostile environment McCullough sees coming.

This coming challenge for U.S. stock investors, in a word, is stagflation, McCullough says. Stagflation — higher inflation plus slow- or no economic growth — is hardly a bullish outlook for stocks, but McCullough’s investment process looks for opportunties wherever they may be. Right now that’s led him to put money into health care, gold, Japan, India, Brazil and energy stocks, among others.

In this recent interview, which has been edited for length and clarity, McCullough takes the Federal Reserve and Chair Jerome Powell to the woodshed, offers a warning about the potential fallout from Powell’s upcoming speech at Jackson Hole, Wyo., and implores investors to discount happy talk and always watch what they do, not what they say.

MarketWatch: When we spoke in late May, you criticized the Federal Reserve for being obtuse and myopic in its response to inflation and, later, to the threat of recession. Has the Fed done anything since to give you more confidence?

McCullough: The Fed forecast of the probability of recession should be trusted as much as their “transitory” inflation forecast or a parlor game. People should not have confidence in the Fed’s forecast. The “no-landing” or “soft-landing” thesis is looking backwards. The Fed is grossly underestimating the future, doing what they always do, in looking at the recent past.

Their policy is wed to what they say. They claim they’re not going to cut interest rates until they get to their target. But any hint of the Fed arresting the tightening gives you more inflation. So there’s this perverse relationship where the Fed is the catalyst to bring back the inflation they’ve spent so much time fighting. 

Read: ‘The Fed is way late and they’ve already screwed it up.’ This stock strategist is banking on gold, silver and Treasurys to weather a recession.

MarketWatch: U.S. Inflation has come down quite signficantly over the past year. Doesn’t that show the Fed is well on the way to achieving its 2% target?

McCullough: A lot of people are peacocking and declaring victory over inflation when we’re about to have reflation that sticks. We have inflation heading back towards 3.5% and staying there.

Our inflation forecast is that it’s set to reaccelerate in the next two inflation reports, which will lead to another rate hike in September. The Fed’s view is that until they get to the 2% target they’re not done. A lot of people are really confident because inflation went from 9% to 3% that it’s getting closer to 2%, therefore the Fed is done. Given what Fed Chair Jerome Powell said, the next two inflation reports are critical in determining whether we hike rates in September. I think maybe even one in November. This is a major catalyst for the next leg down in the equity market.

The Fed is going to see inflation go higher, and they’ve already articulated to Wall Street that no matter what happens, that should constitute a rate hike. That’s a policy mistake. They’re going to continue to tighten into a slowdown. When the Fed tightens into a slowdown, things blow up.

MarketWatch: By “things blow up,” you mean the stock market.

McCullough: I don’t think the Fed cuts interest rates until the stock market crashes. The Fed is going to be tightening when the U.S. economy and corporate profits are at a low point, going into the fourth quarter. It’s not dissimilar from 1987 where all of a sudden a market that looked fine got annihilated in very short order. There are a lot of similarities to 1987 now; the market’s quick start in January, people in love with stocks. That’s a catalyst for the stock market to crash.

When the Fed has an inconvenient rule, particularly for the U.S. stock market, they just move the goal posts or change the rule. If they actually started to cut interest rates, inflation would go up faster. This is exactly what happened in the 1970s and what Powell explains is the risk of going dovish too soon – that he becomes [much-criticized former Fed chair] Arthur Burns. That’s why you had rolling recessions in the 1970s; the Fed would go dovish, devalue the U.S. dollar
and the cost of living for Americans would reflate to levels that are prohibitive.

People can’t afford reflation at the gas pump, or in their health care. It’ll be fascinating to see how Powell pivots from fighting for the people to bailing out Wall Street from another stock market crash, which will therein create the next reflation.

‘The Federal Reserve has set the table for a major event in the U.S. stock market and the credit market.’

MarketWatch: Speaking of a Powell pivot, the Fed chair speaks at Jackson Hole this week. Last year he put markets on notice for rate hikes. What do you think he’ll say this time?

Powell’s going to see inflation accelerating. I think Jackson Hole is going to be a hawkish meeting. That might be the trigger for the stock market.

Take the bond market’s word for it.  The bond market is saying the Fed is going to remain tight and seriously consider another rate hike in September. The reasons why markets crash in October during recession is that the fourth quarter is when companies realize that there’s no soft landing and they need to guide down.

The Federal Reserve has set the table for a major event in the U.S. stock market and the credit market. We’re short high-yield and junk bonds through two ETFs: iShares iBoxx $ High Yield Corporate Bond
and SPDR Bloomberg High Yield Bond
 On the equity side the best thing is to short the cyclicals; I would short the Russell 2000

MarketWatch: What’s your advice to stock investors right now about how to reposition their portfolios?

McCullough: Own what the “Mother of All Bubbles” crowd doesn’t. The things we’re most bullish on include gold
 The Fed is going to keep short term rates high and both the 10 year and 30 year go lower. Gold trades with real interest rates. I think gold can go a lot higher, towards 2,150. Our ETF for gold is SPDR Gold Shares

Also, you can be long equities and not take on the heart-attack risk that is the U.S. stock market. I’m long Japanese equities — ETFs for this include iShares MSCI Japan
and iShares MSCI Japan Small-Cap

We’re long India with iShares MSCI India
and iShares MSCI India Small-Cap
Both Japan and India are accelerating economically. Were also long Brazil iShares MSCI Brazil
which is weighted to energy. We are bullish on energy. 

MarketWatch: Clearly accelerating inflation and slowing economic growth is an unhealthy combination for both investors and consumers.

McCullough: What I’m looking for, with inflation reaccelerating, is stagflation.

Stagflation pays the rich and punishes the poor. You want to be the landlord. The prices of things people own are going to go up, and the prices of things you need to live are also going to go up. So for example, we are long energy, uranium and timber as stagflation plays. ETFs we’re using for that include Energy Select Sector SPDR
Global X Uranium
and iShares Global Timber & Forestry

One positive thing that happens from stagflation is that because it’s so hard to find real consumption growth, there’s a premium on the growth you can find.

If there is something that actually accelerates, then those stocks will work, which puts a nice premium on stock picking. You can be long anything that is accelerating because so many things are decelerating. So avoid U.S. consumer, retailers, industrials and financials, which are all decelerating. Health care is our favorite sector, which we own through the ETFs Simplify Health Care
and SPDR S&P Health Care Equipment

Instead, people are betting we’re going to go back to some crazy AI-led growth environment. Now everyone thinks everything is AI and rainbows and puppy dogs. I’m old enough to remember we were in a banking crisis in March. From an intermediate- to longer-term perspective, I don’t know why you wouldn’t want to protect yourself until this inflation cycle plays out.

Also read: Jackson Hole: Fed’s Powell could join rather than fight bond vigilantes as yields surge

More: Will August’s stock-market stumble turn into a rout? Here’s what to watch, says Fundstrat’s Tom Lee.

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Wood Mackenzie: Oil and mining companies must adapt new strategies to deliver low-carbon transition

As companies in the energy and natural resource sector struggle to find the balance between satisfying shareholder returns and meeting stakeholder low-carbon demands, new strategies are emerging that could be the catalyst to drive capital allocation decisions toward growth and closing valuation gaps, according to ‘Fuelling Change’ a new Horizons report from Wood Mackenzie.
“In the last year, energy security has trumped sustainability,” said Tom Ellacott, Senior Vice President, Corporate Research for Wood Mackenzie. “Companies too have benefitted from recent commodity prices and margins to deliver record cash flow.”

“That is not to say that decarbonisation goals cannot be met and priorities cannot change. But to spur activity, there needs to be a recalibration of current risks and rewards for investment in low carbon technologies, as well as new incentives from both government stakeholders and financial institutions. There’s no one answer, but smart oil and gas and natural resources companies will realise that protecting the status quo would be a mistake and start to manage their portfolios to reflect a balanced approach of managing legacy output and carbon management.”

According to the report, companies can address this complex dynamic in three key ways: nurturing legacy cash cows while simultaneously shifting to a transition-growth mindset, incorporating transition risks and rewards into differentiated investment hurdles rates and using new business models to enable growth and close valuation discounts.

Shifting risk-reward balance

Expected reinvestment rates (investment as a percentage of operating cash flow) in oil and gas companies and miners of between 40% and 50% trail the investment rates of utilities chasing growth. Reinvestment rates in both sectors have been trending down since the middle of the last decade.

In a large part, this has been due to strategies such as capital restraint and massive buybacks that have been successful for companies and investors. The oil and gas and metals and mining sectors have outperformed the broader market by 44% and 16%, respectively, since the end of 2021.

“Realistically, the only way to change investor sentiment is to bring about further shifts in the risk-reward equation,” said Ellacott. “We will have to see this in a variety of ways. Examples are government support schemes like the Inflation Reduction Act in the US, regulations such as The European Carbon Border Adjustment Mechanism, or customer-driven market creation, such as a willingness from consumers to pay premiums for low-carbon energy. Financial institutions could also play a big part by punishing slow-to-change companies with higher borrowing rates. This will all hopefully drive new investment inflection points that will catalyse more activity for low-carbon energies.”

Managing investment inflection points

Wind and solar have passed through inflection points and are scaling rapidly, thanks to strong infusions of capital. A similar point will have to be reached for the energy transition support system – metals, CCUS, bioenergy, hydrogen and charging infrastructure.

“The evolution of policy is a big unknown. Companies may face the capital allocation dilemma of high hydrocarbon returns versus lower-risk, lower-return transition-enabling projects for decades yet,” said James Whiteside, Head of Corporate Metals and Mining for Wood Mackenzie. “Rather than chasing carrots or ducking sticks, companies need to develop robust strategies to navigate the unfolding regulatory landscape of the energy transition. The metals most exposed to the transition, such as lithium and rare earth elements, have garnered more media attention than established commodities such as nickel, copper and aluminium. But it is these base metals that need to mobilise the most growth capital to achieve climate goals.”

According to the report, there are three key routes for corporate boards to navigate this dynamic:

Tend to the legacy cash cows while shifting to a transition growth mindset. Investors expect companies to balance the need for returns in the short term by tending to their legacy portfolio, while delivering low carbon transformation plans. Visibility of low-carbon profit centres starting to support – and supplant – the legacy cash cows could be a revaluation trigger that shifts the market to a transition growth mindset. Companies can scale back share buybacks to fund the shift. The mining majors and international oil companies allocated US$157 billion, or 30% of their operating cash flow, to buybacks in 2022. Companies could still grow base dividends and lift reinvestment rates to over 60%.

Bend hurdle rates to reflect transition risks and rewards. Internal hurdle rates need to follow the divergence in external costs of capital, risk and long-term growth potential. Part of the low ‘return’ of transitional investment is risk avoidance and optionality. Higher returns could be up for grabs in low-carbon projects with greater commercial risk, such as CCUS developments that include carbon price risk. In times of uncertainty, companies need a bigger portfolio of options to manage risk.

Use Mergers and Acquisitions (M&A) and new business models to enable growth and close valuation discounts. Major oil companies are already using M&A to accelerate expansion into low-carbon businesses, such as biofuels, biogas and renewable power. However, overall capital allocated to low-carbon M&A remains limited. Mining majors also continue to take a low-risk approach to acquisitions of transition-focused commodities. New or modified business models can help reduce the transition valuation discount and support efficient capital allocation in businesses with quite different costs of capital and risk-reward profiles.

“A transition growth mindset does not mean abandoning capital discipline if combined with risk-adjusted and transparent hurdle rates,” said Ellacott. “There are different horses for different courses, depending on a company’s scale, portfolio make-up, geographical focus and legacy skillset. The prize is worth fighting for, bending the carbon curve to limit the world’s temperatures to well below 2°C. And a balanced, disciplined, transition-focused investment approach could grow corporate cash flows sustainably, boosting company valuations.”

Read the entire report here.

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