activism corporate responsibility development energy

Can Madagascar’s tar sands project be stopped?

A few months ago I wrote about Madagascar’s oil, a messy and marginal prospect made viable by the rising price of oil. With producers scratching around for new sources, the country’s shale oil stocks suddenly look worth pursuing, and a company has been formed to exploit them. They’ve been raising their money for the venture in London, and guess who’s funding them? None other than your bank and mine, the taxpayer owned RBS.

So say the World Development Movement, who have picked up the issue. And I’m very glad they did. Madagascar is the epitome of the faraway place, alongside Timbuktu and Outer Mongolia. It’s very easy for atrocities to go unnoticed, from the illegal forestry to smuggled gold. Far from international scrutiny, and with a willingly corrupt and illegitimate government to work with, the business opportunities are booming.

Rio Tinto managed to negotiate themselves a highly profitable deal at Madagascar’s expense, extracting titanium dioxide in a “meagre” 80:20 deal that may well cost Madagascar more than it gains. As one analyst put it when balancing the economics of the deal, “would such project have been allowed to proceed in any western countries?”

The deal around Madagascar Oil makes Rio Tinto look generous. The government was to keep just 1% of the profits for the first ten years – an utterly unprecedented ratio in the oil industry. There is no way on God’s green earth that a deal that profitable to an oil company has been negotiated honestly. I support Madagascar’s right to use its natural resources, but this is shameless exploitation by foreign companies and Madagascar’s corrupt elite, and it’s a travesty that it is being funded right here in the UK. The Madagascar Oil deal should never go ahead, and fortunately, it appears to be delayed by a somewhat random Malagasy government audit.

Perhaps that buys a little time to raise some objections. And there are plenty, long before you get what will probably become the main one – bringing the world’s dirtiest industry to one of the world’s biodiversity hotspots. Can it be stopped? Can that oil be kept in the ground? Can the whole thing somehow work out in favour of the Malagasy people? Can we at the very least keep RBS out of the whole affair?

WDM are bringing over a Malagasy tar sands campaigner, Holly Rakotondralambo, to start asking just such questions. I’m helping to fund the trip, and if you’d like to contribute too, you can do so here.

5 comments

  1. Thanks for this article Jeremy, and for your support to help us bring Holly to the UK! We almost doubled our initial fundraising target so people are clearly in support, we’re working on her visa right now. Really interesting blog and analysis, cheers!

  2. This makes me fall to my knees and cry. Greed blinds the corporate eye from moral right. All this money that is going into oil rigs could be going else where such as developing research for greener solutions to refrain from exploiting natural resources. It is disgusting. Why don’t they fund these types of projects? There is no rampant cash flow. Sometimes…I hate humanity. Madagascar is my favourite place on earth and I cannot believe what they are doing to the majesty of its land and its inhabitants.

    1. It’s sad, isn’t it? But there has been some good news since this post was written. Total have been assessing the project to see if they would move forward. They have decided the project is not yet viable for full scale production, and that more exploration is needed.
      So, the whole project is postponed, if not buried altogether. At the very least, it leaves more time to raise awareness and build a campaign to protect Madagascar’s people and environment.

  3. The biggest threat to the Leamur is not industry. It is the malagasy population hunting the animal for bush meat as they are so impovrished they can’t afford food. Oh well, at least they don’t live in horrible conditions like that of Albertan’s who used similar incentives to attract investment into their oil sands. “would such project have been allowed to proceed in any western countries?” – Yes it did, and yes it worked.

    1. That’s something of a knee-jerk comment Andrew. Did you read the article? I make no mention of lemurs.

      No, this kind of project wouldn’t be allowed in a developed country, and it’s completely different from Alberta. The Canadian government reaps billions in taxes from the tar sands. The Malagasy would get almost nothing from the deal the oil companies have negotiated – that’s my objection.

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