Tenke Fungurume Mining project, Democratic Republic of Congo (DRC)
The Tenke Fungurume Mining project consists in the development of three consecutive open pit copper/cobalt ore mines, as well as in the construction and operation of an ore processing plant with a production capacity of 115,000 t/a of copper cathode and 8,000 t/a of cobalt metal. The Tenke Fungurume copper-cobalt deposits comprise one of the world's largest known copper-cobalt resources. The deposits are located within two concessions totaling over 1,500 square kilometers in the Katanga Province of the Democratic Republic of Congo (DRC).
The Tenke mining project is one of the first large private sector projects to be carried out in post-conflict Congo, and it is highly significant from an economic and developmental point of view. This project has been in preparation for over a decade, and the environmental and social issues have been subject to careful in-depth analysis. The promoter and financiers have carried out a very thorough due diligence, including extensive public consultations. The Environmental and Social Impact Assessment (ESIA) and other project documentation have been available to the public on the promoter's website for several months.
The DRC's interest
The DRC critically needs this investment and the fiscal revenues it will generate. Additionally, the Tenke project will help strengthen economic recovery and restore confidence with international investors. The project fosters economic growth, without which there can be no sustainable poverty reduction, through private sector development and the Bank's participation serves as a catalyst to attract foreign investment in a post-conflict country. The project is thus fully in line with the role of the EIB in the ACP countries under the Cotonou Agreement.
The project will valorise numerous indigenous natural resources (copper, cobalt, but also local generated power) and provide direct employment of some 1,100 people, supporting the livelihood of more than 5,000 people. During construction the project is likely to employ around 1,600 people, and at least two times as many indirect jobs will be created.
In addition, the promoter is setting up different initiatives - amongst those a community development fund - to improve the local education and health infrastructure and other social benefits, including improving the local transport service, refurbishing fresh water wells and new/rehabilitated schools to the local population.
The current review of the mining licenses by the Government of the DRC is being followed closely by the financiers of the project. High-level DRC government officials have already indicated that no fundamental problems are expected to arise with the Tenke project. This confirms the conclusions of a report published by the UN in 2003 on the investigation of illegal natural resources exploitation in the DRC. The UN report was generally rather critical, but the companies involved in this project were classified as "cleared, no further action required". Of course the Bank fully respects the work of the commission set up to carry out the review of the mining licenses and will take appropriate actions, if needed, in light of the commission's conclusions.
EIB's decision for the financing of the project
The EIB's Board of Directors has approved a loan of up to EUR 100 million for the Tenke project, subject to the following explicit conditions for disbursement:
- All of the financing must be in place and no obstacles subsist to pari passu disbursement by any of the lenders.
- The Bank will have received a non-objection letter from the DRC authorities (a standard requirement under Cotonou), which will not be issued before the review commission has conducted its work on Tenke.
Adequate monitoring will be put in place to ensure that the promoter performs and meets the obligations as foreseen in the contractual clauses.
Environmental and social issues
An independent Environmental and Social Impact Assessment (ESIA), compliant with EU Directive 97/11 as amended by Directive 2003/35, has been carried out. It has been written in a format to demonstrate conformity with the Equator Principles and IFC Performance Standards for both social and environmental issues. It includes detailed attention to biodiversity conservation, evidence of extensive public consultation, a comprehensive resettlement action plan as well as the frameworks for Environmental and Social Action, Reclamation and Closure, Occupational Health & Safety, and Emergency Response plans.
The project incorporates best industry practice and complies with the Bank's environmental statement and EU standards. An Independent Engineer has provided a comprehensive overview of the draft ESIA. The sponsors have employed experienced and competent professionals to handle physical environmental issues, biodiversity conservation and community outreach programmes. Work is being undertaken in accordance with prudent environmental management policies. Some details of the Action Plans will need to be further detailed as implementation proceeds but the existing frameworks provide competent bases for elaboration. A grievance redressal mechanism has been put in place.
Update 08 December 2008
The project has not yet been signed by the EIB, pending the satisfactory resolution of the mining review initiated by the Government in 2007. Disbursement of EIB funds will be subject to fulfilment of the conditions indicated above.
Update 26 March 2010
The EIB has been informed by the sponsors of the Tenke Fungurume project that the initial phase of the project has been completed. This initial phase was fully financed through sponsor's own funds and did not require debt finance from the EIB or other financial institutions. Until this notification, the EIB had remained committed to financing this initial phase of the Tenke project pending the satisfactory resolution of certain pre-conditions, including the mining contract review initiated by the DRC Government in June 2007. The EIB has informed the sponsors that it continues to have an interest in jointly exploring future areas of co-operation.