US abstains from IFC investment in Mozambique paper plantation

31 March 2015

In December 2014, the US abstained “on environmental policy grounds” from a vote on approving the first phase of a $2.3 billion investment by the World Bank’s private sector arm, the International Finance Corporation (IFC), in a Mozambique forestry project, implemented by Portuguese paper manufacturer Portucel Mocambique. The December IFC agreement will provide an initial investment of $32 million to Portucel to support the pilot phase of an industrial scale monoculture plantation.

The US statement notifying its abstention acknowledged “extensive bilateral discussions” with the IFC about the investment, but confirmed that it remains “concerned about the environmental and social impacts of this project”, citing the impact on water, wildlife and forests. An additional factor cited was the delay in providing environmental documentation for the Category A project (defined as one expected to have significant adverse social and/or environmental impacts that are diverse, irreversible, or unprecedented).

The IFC will also provide technical assistance “on enhancing the sustainability of forestry operations” under a further agreement signed in March. The investment is intended entirely for export with future annual sales estimated at $1 billion.