Update on the status of the EIB loan for the Mopani Copper Project, Zambia

Update on the status of the EIB loan for the Mopani Copper Project, Zambia

  •  Date: 25 July 2014

The European Investment Bank (EIB) confirms that independent procedures relating to a complaint related to a USD 50 million loan provided in 2005 for investment in Zambia by Mopani Copper Mines Plc (MCM) to reduce industrial emissions have been completed. It further confirms that this loan was repaid by the borrower in 2012.

The loan was signed on 25 February 2005 to partially fund the first phase of the renovation and modernisation of the Mufulira copper smelter to reduce the emissions of sulphur dioxide at the industrial plant dating from the 1930s. The borrower has since made an early repayment of the loan at their own request.

Following the publication of a leaked draft audit report in February 2011 containing allegations on tax matters against MCM and its parent company Glencore, and in accordance with the EIB’s Anti-Fraud Policy, the Bank informed the European Anti-Fraud Office (OLAF) and launched its own investigation conducted by the EIB’s independent Inspectorate-General. The investigation of the EIB Inspectorate General was finalised in November 2011.

Glencore informed the Bank that the Zambian Revenue Authorities had completed an audit and that all outstanding issues were satisfactorily resolved. The Bank has not been able to obtain further details on this matter from the Zambian Authorities, Mopani Copper Mines Plc, or parent company Glencore.

The EIB was informed by the European Anti-Fraud Office (OLAF) of its decision to close the investigation into this matter with no action, due to the fact that no EU budget funds were involved. The EIB has also taken note of the conclusions of the OECD National Contact Point of Switzerland regarding the specific instance launched on these allegations.

Given that the EIB no longer has any contractual relation with MCM/Glencore, and that these matters concern MCM/Glencore’s relations with the Zambian authorities, the Bank has not taken any further view on this and considers this case as closed.

The part of the project financed with the EIB loan was completed in 2007. In June 2014 MCM publicly announced the completion of the smelter upgrade project, 15 months ahead of the original schedule Mopani agreed with the Zambian government. The smelter now uses sulphur-dioxide reduction technology that would be capturing approximately 97% of all sulphur dioxide emissions, in line with the recommended international standards set by the World Health Organisation.

The Bank has put in place a number of important policies and measures since this project was signed in 2005. This includes the EIB’s Environmental and Social Handbook, a revised Anti-Fraud Policy and policy towards non-compliant jurisdictions and the Results Measurement framework which includes specific indicators on governance and tax revenue matters.

The EIB remains committed to constantly improving its procedures and standards, as well as its due diligence, monitoring and evaluation of the projects that it finances. The EIB recognises the importance of the integrity of independent investigations carried out by the bank’s Inspectorate-General.

Update 29 January 2015: Following the draft recommendation of the European Ombudsman in the inquiry into complaint 349/2014/OV, the EIB is publishing a summary of the main findings of the investigation of the EIB Inspectorate General Fraud Investigation regarding this project.

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