Two pressure groups have filed a legal action against the London Metal Exchange (LME) for allowing the sale on its platform of metal produced in Indonesia that they allege is polluting local rivers used by indigenous communities, they said on Thursday.
The London Mining Network (LMN) and the Global Legal Action Network (GLAN) said in a statement papers have been filed in London’s High Court asking for a judicial review.
They say the LME is breaching British anti-money laundering and proceeds of crime legislation. Reuters confirmed that court documents were filed at the court on Tuesday.
“The LME believes that the claim filed by the London Mining Network and the Global Legal Action Network is misconceived and intends to resist that claim,” the exchange said in response to a request for comment.
The LME requires companies that trade on the exchange, the world’s largest and oldest forum for trading metals, to undergo audits for sustainability.
The 147-year-old LME is in the process of suspending or delisting 10% of its metals brands until their producers provide it with responsible sourcing information, which includes requirements for environmental management.
But the LMN and GLAN say the LME’s sustainability framework is not enough.
“If successful, this case will force the LME to revisit the rules under which it lists metal for trading on its exchange,” the two groups said in a statement.
“This in turn will force metal producers to adapt their mining practices if they want to keep being able to access this platform which is essential for them to reach customers and to sell their products.”
The court action will allege mining waste is being dumped from the giant Grasberg copper mine in West Papua Indonesia owned by Indonesia’s state mining company and US-listed Freeport McMoRan, opens new tab, which is also the operator of the mine. The legal action is not against Freeport.
“In West Papua, indigenous communities are suffering the effects of mining waste pollution from the Grasberg mine being dumped into the water sources that they rely on for basic needs like drinking, cooking and bathing,” the release said.
Freeport said in a sustainability report, opens new tab on its website that tailings disposal in Indonesia is reliable and safe.
“Nearly three decades of engineering analyses, extensive monitoring and data collection, and computer modelling confirm that the current tailings management system poses the lowest risk to people and the environment,” the Freeport report said.
GLAN and the LMN say copper derived from Grasberg and traded on the LME is “criminal property” as it is produced in circumstances that would breach British criminal law if they were to occur in Britain.
“The LME is a recognised investment exchange, which means it has specific legal obligations around identifying and mitigating the risk of financial crime on its platform,” said Leanna Burnard, a lawyer with GLAN.
The LME is owned by Hong Kong Exchanges and Clearing (HKEx).
(By Pratima Desai and Eric Onstad; Editing by Jan Harvey)