Bankwatch scoring against EBRD’s Mining Projects

CEE Bankwatch, an advocacy NGO, has been scoring PR points against the European Bank (EBRD) and its involvement in gold mining projects in Armenia, Bulgaria and Kyrgyzstan. Would EBRD’s exit resolve the allegations and concerns raised by Bankwatch - and existing legacies associated with 'brownfield mining'?

The report by CEE Bankwatch, carried on human rights related website, alleges that gold mining projects financed by the EBRD harm environment, local communities in Armenia, Bulgaria, Kyrgyzstan. 

Putting aside the usual distractions of fact and fiction, more interesting question emerge. One of them is about the role EBRD should play with regard to ‘brownfield’ mining operations often located within a depressing environmental and socio-economic context. Also, are the project developers doing enough to demonstrate their impacts – positive, negative and differentiate these from major legacy issues - in a balanced and credible way?

 Watching an interviewee complain that the ‘cherry harvest was heavy before’ or that there are ‘lots of people with cancer now’ placed in the context of a project co-financed by the European Bank is – by design – shocking. But it is not clear why the viewers are not also allowed to appreciate the realities of the local context.

For the Armenian project, for example, this includes a history of Soviet-era mining legacies, armed conflicts between Armenia and Azerbaijan leaving bomb shell marks and too many graves in the villages, a crumbling infrastructure and poor health conditions, and an economy which is largely dependent on diaspora for its survival.

It seems that the EBRD has its work cut out to formulate a nuanced mining strategy. The EBRD will need to balance the – sometimes limited - opportunities (additionality) that some initial investments and improvements can bring to such ‘brownfield sites’ loaded with heavy legacies and many competing priorities, against a persistent PR risk and potential additional project impacts.

Or do you think that the EBRD should simply stay away from these sorts of projects? And what do you think the project developers should do faced with such legacies - and competing opportunities?

2 Comments to Bankwatch scoring against EBRD’s Mining Projects

  1. The Bankwatch report attempts to throw light on some unresolved problems around three projects financed by the Bank – the Deno Gold project in Kapan, Armenia; the Chelopech Mining Phase 1 project in Bulgaria; and the Centerra Gold project in Kumtor, Kyrgyzstan. Unlike the author of the article, who shares concerns about the difficulties facing the Bank and the project developers, Bankwatch focuses on the problems from a different point of view – that of the affected communities.

    In the context of EBRD developing a new mining strategy, and in addition to the author’s questions above, Bankwatch wants to reformulate the discussion on the role of the EBRD in the mining sector of the ex-Communist states. The question we want included in this discussion is: What kind of engagement can bring real benefits to local communities – both in terms of employment and in improvement of their environment?

    It is important to understand how Bankwatch and local stakeholders form their expectations of the EBRD. On one hand, the EBRD mission and policies outline the minimum standards a project should comply with, and on the other hand there are national and European laws, the best available practices in the mining sector and … “the highest standards of corporate governance and sustainable development” (http://www.ebrd.com/about/index.htm).

    At the mining conference in London in November last year, mining companies and the EBRD spoke at length about best practices in stakeholder engagement. But in the case of Kapan, Armenia, it has been impossible for local, national and international organisations to obtain the Environmental Action Plan that Deno Gold developed with the EBRD’s help. In the case of Chelopech the communities downstream from the mine were not consulted, although thousands have signed petitions either for consultations or against cyanide leaching of gold. A human rights activist who witnessed the tragedy after the cyanide pollution of Baskoon river is being persecuted by state authorities for speaking up and requesting improvements and compensation. (http://bankwatch.org/project.shtml?apc=147581—–1&x=2210687&d=c)

    Needless to say that access to loan agreements between the EBRD and project developers – or even just the relevant parts of them – is denied to the so-called stakeholders. As a result the expectations about an EBRD supported project are formed by the information the Bank publishes in the Project Summary Documents (PSDs). These are often too optimistic about the outcomes of the project, and rarely reflect any controversial issues. Communication with bank staff has shown that monitoring by the Bank can be non-critical, ‘blind’ about persisting problems and too reliant on the client’s self-monitoring data.

    There are a lot of excuses why the EBRD’s engagement in mining projects has not brought significant improvements for mining communities, eg. “the realities of the local context.” But the real question Bankwatch is asking ultimately: Is the EBRD existing and working for these communities, or is their well-being only a secondary goal, if and when it is compatible with the Bank’s clients’ objectives?

    See page 19 in the study “Between a rock and a hard place” of Bankwatch for recommendations to the EBRD about its engagement in mining projects in its countries of operation.

  2. Fidanka, Many thanks for sharing your detailed comments and concerns on this blog. I think some of our perspectives are not mutually exclusive. I tried to comment more on the role of banks (and perhaps project developers) in view of challenging local context, which – I think – should not be ignored. That does not mean that I have no concerns about local communities.

    I note your points about what might be an ‘eternal optimism’ of some Project Summary Documents. Some remind you of the proverbial story of the frog who gets kissed (by the EBRD?) and turns into a prince. Except perhaps the other way around: some projects are portrait as a prince and one has to make sure they don’t turn into an ugly frog – and this is perhaps one of the important roles your organization is playing.

    With regard to some of the other points you make, I have some firsthand (but now perhaps dated) knowledge of these projects you mentioned. I am not sure if I agree with some of your characterization, terminology and selected use of information which are used to make your point. I think that this approach may actually detract from your efforts to influence practices and policies at the EBRD – and more importantly – the conditions in the ex-communist countries in which these projects are located.

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