NGOs Oppose Copper Project in Laos.

A controversial decision to fund a copper mining project in Laos may harm local people, leading environmental groups say.

The European Investment Bank (EIB) board decided Tuesday (January 27) to approve a 76.2 million dollar loan for developing a copper mine in Laos. The landlocked country of six million west of Vietnam and north-east of Thailand has been struggling to develop its mining industry.

Laos has in recent years introduced market reforms and brought in privatisation to attract investment. The country lives largely on subsistence agriculture, but mining has in recent years grown at a rate of more than 7 percent a year.

Several international institutions have stepped in to finance mining and other development projects in Laos. The European Investment Bank (EIB), the largest financing institution of the European Union (EU) had been considering funding for the copper project since last year. The EIB finances agreements under European aid programmes.

Located in Savannakhet province near the Vietnam border, the proposed copper mine named Sepon will be 80 percent owned by Australian mining giant Oxiana.

The mine is due to come up near the Sepon gold mine owned by same company. It has been extracting gold here since 2002. Mining for copper is due to begin in 2005. The area is believed to have some of the world's best untapped copper reserves.

But an assessment by Oxiana pasted on its website admits that "the mining project may have environmentally and socially adverse impacts." It acknowledges that waste from its gold mining project at this site has threatened endangered species in a nearby river, that local forests have been destroyed, and indigenous people have been relocated without proper land compensation.

But Oxiana is going ahead with a 30-million dollar expansion of the goldmine, lifting output from 160,000 ounces a year to 230,000 ounces a year from next January.

The environment groups are concerned that the proposed copper mine will threaten the ecosystem of nearby rivers, which are key tributaries to the Mekong river. They say construction of the mine could lead to cyanide spills, illegal logging and increased stress on the biodiversity of the region.

The EIB was due to take a decision on this project last December. But it was put off following pressure from non-governmental organisations (NGOs) concerned about the effect the project would have on the local environment and community.

Three environmental NGOs -- Aidwatch that monitors Australian aid, Friends of the Earth International (FoEI), and CEE Bankwatch Network which monitors international aid in Central and Eastern Europe -- joined forces to campaign against the project, but the EIB approved the loan.

"It is astonishing that while one of the United Nations committees requests urgent action to stop the abuse of human rights in Laos, the EIB wades into this controversial project," the NGO campaign leader Magda Stoczkiewicz told IPS. "The Sepon copper mine is a huge project with detrimental environmental and social impacts which will do next to nothing for the population."

Stoczkiewicz said the EIB should be setting an example for other financial institutions. "Public financial institutions such as the EIB are instrumental in these type of financial deals because they bring a sign of security with their decision to step into the project, and other private financial institutions follow immediately."

Stoczkiewicz says the EIB is responsible for ensuring an independent environmental and social impact assessment to analyse the effect the mine would have on the local environment.

The NGOs are determined to pursue their campaign against the mine, Stoczkiewicz says. "We will be following up in this case, not only on the human rights aspects but in particular on the European Commission's pre-loan request to the EIB to conduct an environmental impact assessment specifically for the copper mine."

The NGOs point to recent findings in the extractive industry review of the World Bank that such mining projects do not alleviate poverty in countries with weak governance. The review says costs to the country and its citizens often outweigh the benefits of such a project because of corruption and frequent intimidation of local communities.

Following a two-year long evaluation of the development impact of the World Bank group's support for oil, mining and gas projects, the review recommended enhanced human rights protection, prior informed consent for people affected by a project, and an end to support for destructive mining technologies.

The World Bank had offered Oxiana 30 million dollars to finance the project in 2002 but the company did not take up the offer. A World Bank official said this could have been due to its "due diligence and environmental/social requirements."

The official said: "Clearly the lack of World Bank involvement in the project calls into question whether the World Bank guidelines will be met. With no formal agreement and hence obligation to adhere to the World Bank conditions there is no incentive for Oxiana to follow World Bank guidelines."

Stoczkiewicz says that "by approving the project without the environmental impact assessment requested by the (European) Commission the EIB proves it is unaccountable."

According to the project outline on the EIB website, the project will be "designed to comply with local environmental regulations, the World Bank guidelines and best industry practices."

But a Friends of the Earth International campaigner says "we are concerned that compliance will not be met, or in the case that it is, these measures alone will not provide adequate safeguards."

[Source: By Stefania Bianchi, Terraviva Europe, IPS, Brussels, 29Jan04]


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