US NGO challenges Peru mine inspection process

17 September 2002

Project Underground, a US NGO working on mining issues, has released a damning assessment of the way that the IFC‘s Compliance Advisor/Ombudsman (CAO) has handled complaints about a mine in Peru. It examines the way that the CAO, the equivalent of the Bank’s Inspection Panel that deals with the International Finance Corporation, has conducted investigations into community complaints since they were filed eighteen months ago. It criticises the CAO for limiting its actions to the establishment of a local dialogue process. This process, Project Underground argues, is being conducted by an ineffectual team of mediators leading to few concrete results except a public relations triumph for the mining companies.

The complaint concerns Minera Yanacocha, the largest gold mine in South America, which is a joint venture led by Newmont, the world’s largest gold mining company. The International Finance Corporation has a minority stake in the mine. In March 2001 Project Underground supported the Federation of Rondas Campesinas Femininas del Norte del Peru to file a complaint to the CAO alleging “numerous, egregious violations of IFC and World Bank social and environmental safeguard policies, most notably the mine’s failure to consult with the affected community as part of the environmental impact assessment process and its refusal to recognize the campesino community as an indigenous people”.

An evaluation by the campesino (peasant) community of the mediation approach established by the CAO to deal with these complaints has established that little of substance has been achieved in nine months of roundtable workshops. As the mayor of one rural community commented: “we are not here to just drink the mineral water and then return to our communities”. Important issues such as a moratorium on mine expansion to a sensitive area have simply been ruled out of the discussions while the mining company has been allowed to make lengthy presentations.

Project Underground expresses frustration that the CAO, considered by many NGOs to be a forum for independent scrutiny of the IFC‘s support for controversial private sector operations, is too defensive of the private consultants it has hired for Minera Yanacocha. They argue that this “raises serious questions about the competence and integrity of the CAO office”.

The Path of Least Resistance: An Assessment of the Compliance Advisor Ombudsman’s Handling Of the Minera Yanacocha Complaint