Denmark’s ATP has blacklisted Mexico’s biggest mining company Grupo México, after multiple efforts to engage with the firm over dangers posed by a new tailings dam at the site of a disastrous spill in 2014.
The DKK934bn (€125bn) statutory pension fund revealed to IPE it made the decision to divest on 10 December and sold off the DKK13.2m of Grupo Mexico equity it held shortly after that.
In an interview, ATP’s head of ESG Ole Buhl told IPE: “At the beginning of 2019, our ESG team selected Grupo México as a company we would do work with, after receiving information about one of the company’s tailings dams, even though we were not heavily involved in this sector.”
ATP then tried to get a response from the company for eight months, he said.
“We tried different ways of communicating, but we did not get any response.
“So eventually we took the decision to blacklist the company,” said Buhl, describing this as a sad outcome.
Mexican news magazine Proceso reported last month that a new two billion cubic metre tailings dam at the Buenavista copper mine – the site of an environmental disaster in August 2014 – was posing a new threat to people living in the state of Sonora.
The dangers of tailings dams have been in the spotlight internationally, particularly since the tragic accident at the Brazilian town of Brumadinho a year ago when a dam owned by Brazilian mining company Vale collapsed killing around 300 people. In June Danish pension fund MP Pension divested the company’s stock after its efforts at engagement failed to bear fruit.
After the disaster, an investor group led by the Church of England Pensions Board and the Swedish AP Funds’ Council of Ethics formed the Mining and Tailings Safety Initiative, contacting hundreds of companies to gathering information about global tailings facilities.
Buhl said he regretted the failure of ATP’s efforts to discuss the environmental and safety concerns with Grupo México, because engagement was the pension fund’s “fundamental wish” in ESG dilemmas, rather than divestment.
“On the one hand we want to support our responsible investment guidelines, on the other hand, those same guidelines say we should have a preference for active ownership,” he said.
However, Buhl said that while patience was needed when engaging with companies, in this case talk had not been possible at all.
“At the same time, there was another company we invest in which had the same kind of allegations being made against it, though they were not as serious.
“We went into dialogue with this firm and they got the message that this was something they needed to do something about – so they are off the hook, so to speak,” he said.
Asked to comment on the matter, Marlene Finny De la Torre, chief financial officer at Grupo México, told IPE by email that the company did not know about ATP’s concerns.
“Unfortunately we are unaware of their concerns as we normally try to give an answer as soon as possible to any concern or information needed by our investors,” she said.