Miners worry as World Bank weighs financing future

Reuters ^ | October 10, 2003 | Eduardo Orozco

[Cuttnhorse]

Miners worry as World Bank weighs financing future Friday October 10, 2:45 am ET By Eduardo Orozco

LIMA, Peru, Oct 10 (Reuters) - To fund or not to fund, that is the thorny question facing the World Bank's (News - Websites) International Finance Corp. (IFC.UL) as it weighs its future in mining. The investment wing of the multilateral lender has commissioned an expert report on whether to continue financing an industry that is key to the development of many poor countries, but brings a heavy social and environmental burden.

The report's recommendations are due out in January 2004 and World Bank President James Wolfensohn has already vowed to implement them in full. The IFC has pumped $430 million into 25 mining projects worldwide, 13 of them in Latin America.

"The message that appears to be coming out...is that there is no reason to pull out of extractive industries," a World Bank official who declined to be named told Reuters.

But miners are not so sure. The latest draft of the report -- based on consultations with the World Bank and IFC, mining companies and environmentalists -- sparked concern in the industry.

"The information we have about the policy criteria for funding mining projects is that there is a relatively negative view of mining," Juan Villarzu, president of the world's biggest copper company, Codelco, told Reuters recently.

"If the decision is not to continue financing, that will seriously affect small and medium-sized mining," he added.

One mining official hoping for IFC cash who declined to be named said the preliminary report was not positive.

He said environmentalists were pressuring the Bank to withdraw from the sector, but added: "Mining is important and the last word has not been said yet."

Analysts say that had it not been for the Bank, some highly successful projects -- like Yanacocha, Latin America's biggest gold mine, or Escondida, the world's biggest copper mine -- may never have got off the drawing board.

The IFC has five percent of Yanacocha in Peru, which is owned by world No. 1 gold miner Newmont (NYSE:NEM - News) and Peru's Buenaventura (Lima:BUEV.LM - News; NYSE:BVN - News). It has 2.5 percent of Escondida in Chile, which is owned by Anglo-Australian firm BHP Billiton (London:BLT.L - News; Australia:BHP.AX - News).

Analysts say the World Bank presence was the motor to allow them to complete their financing.

'TRAGIC AND IMMORAL' TRACK RECORD?

According to the draft report, seen by Reuters, "efforts by the World Bank to improve the social and environmental impact of these sectors (such as mining) have not been able to prevent or sufficiently mitigate the negative aspects."

Cases like the accidental Yanacocha mercury spill three years ago that contaminated hundreds of people are a problem for the Bank, environmentalists say.

"The question is, if we don't put up cash or if we raise the funding requirements, is that going to bring about more change in favor of sustainable development or will it just isolate us, because the mining companies are going to get funding somewhere else?" Kent Lupberger, the IFC's manager of mining investment, told Reuters.

"A lot of times, if you don't get involved, you can't bring about change," he added, noting that social responsibility in mining projects can no longer be overlooked.

But environmentalists say too little is still being done -- and their concerns are reflected in the draft of the report, which states that "extractive industries clearly affect the climate" and "their impact on indigenous peoples over the centuries has been tragic and immoral."

Miguel Palacin, the leader of a Peruvian anti-mining lobby group, said it was simple.

"We're asking the World Bank not to finance (mining) projects because they disturb the ecology and living conditions of neighboring communities. There's a long, dark history of this," he said.

Environmentalists have suggested, for example, that the IFC should not support gold mine projects because they use cyanide and move a large amount of earth to extract a gram of metal.

They also suggest open pit mining, operations that pump waste into the sea or rivers and those that have lack local community backing should be put on the blacklist.

"The main environmental problem is poverty and one way of escaping that is with extractive industries since they meet strict operating requirements," Jose Miguel Morales, president of Peru's National Society of Mining, Energy and Petroleum, told Reuters. "You can't condemn poor countries to misery."

[Cuttnhorse]

More missinformation from Reuters; Cases like the accidental Yanacocha mercury spill three years ago that contaminated hundreds of people are a problem for the Bank, environmentalists say.

A truck carrying mercury did crash and mercury was lost to the environment; however, the locals that were contaminated became so after repeated warnings not to touch any mercury. What happened is the locals were convinced there was gold in the mercury and recovered as much quicksilver as they could and roasted it in their homes. After repeated warnings and a big PR blitz by the mining company and the government.

It would have been nice if Reuters mentioned this.

[Support Free Republic]

These Guys Don't Want You To Donate!
	Tick them off! Donate Here By Secure Server Or mail checks to FreeRepublic , LLC PO BOX 9771 FRESNO, CA 93794 or you can use PayPal at Jimrob@psnw.com
STOP BY AND BUMP THE FUNDRAISER THREAD- It is in the breaking news sidebar!