NORWAY - A South African gold mining company has been dropped from the portfolio of the NOK1.8trn (€221bn) Norwegian Government Pension Fund - Global for environmental reasons.

"DRD Gold causes severe environmental damages as a direct consequence of their mining operation at Tolokuma in Papua New Guinea," the Norwegian Finance Ministry said in a statement.

The ministry asked Norges Bank, which manages the pension fund, to divest the NOK4m it had invested in the company and that process is now completed. The fund's investment represented an ownership interest of 0.2%.

The government's main concern is that a subsidiary of DRD Gold Ltd., Emperor Mines Ltd., disposes 430 tonnes of waste product known as tailings into a natural river system.

It is the second time that the fund's Council on Ethics has recommended divesting from a company because of environmental damage. In February 2006, the Norwegian Government fund divested from the US-based Freeport McMoRan Copper & Gold company.

Like DRD Gold it was charged with using natural river systems for tailings disposal. Furthermore, the ethics council was worried about abuses against the local population, complicity in human rights violations and corruption surrounding Freeport McMoRan. As of December 2005 the fund had held NOK116.3m in the company, a 0.174% ownership interest.

Regarding DRD Gold the ethical council found that "the company for many years has been aware of the serious health and environmental damage its operations have caused, but despite this the company has failed to put any measures into effect aimed at reducing the damage".

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