Private Sector


Honest broker? The IFC, extractive industries and affected communities

2 July 2007

versión en español

The World Bank’s private sector arm, the International Finance Corporation (IFC) is planning to double its mining investment in Africa and increase involvement in Southeast Asia, raising civil society concerns about the rights of affected communities.

In Africa the IFC plans to diversify its gold-dominated portfolio to copper, aluminium and iron ore. In 2006 $280 million was approved for three mining projects: $125 million for the controversial Ahafo gold mine in Ghana (see Update 50), $5 million for an iron ore project in Guinea, and $150 million for a platinum mine in South Africa.

In the Ahafo gold mine case, 10,000 residents have lost their homes and/or livelihoods. Thousands more in farming-dependent communities are expected to be displaced by its second phase. Ghana’s Food First Information and Action Network (FIAN) and Wassa Association of Communities Affected by Mining have urged the government to play a greater regulatory role to mitigate the adverse impacts of mining on local communities. FIAN’s coordinator Mike Anane believes that Ghana’s laws “should protect the right of communities to free and informed consent for mining projects on community lands”.

A civil society statement presented to a meeting of the African Commission on Human and People’s Rights in Ghana in May expressed grave concern that “continuing extraction of natural resources in particular mining, oil, gas and timber by multinational companies … as well as states and international bodies have resulted in serious and systematic violations of human rights”. Signed by 45 representatives of affected communities and NGOs from Cameroon, Ghana, Liberia, The Gambia, and Zambia, the statement called on the Commission to condemn the pattern of human rights violations resulting from extractive sector activity, investigate abuses, and appoint a special rapporteur on the extractive sector and human rights.

In Southeast Asia the IFC’s increased activity will focus on Indonesia, the Philippines and Vietnam. It will provide risk mitigation to mining projects, help companies to deal with the “social and environmental impacts of mining”, and develop community relations. Karsten Fuelster of the IFC’s newly created Southeast Asia resource division said: “We see that the uncertainties in mining in Asia might require an institution like ours to act as an honest broker and bring some stability.” In Vietnam the IFC is interested in the bauxite, nickel and coal industries. In Indonesia the Bank is in discussion with the government about the drafting of its new mining law. In other countries this has been used as an opportunity to open up the sector to multinational companies (see Update 47, 37).

A new guide to the World Bank’s indigenous peoples policy for affected communities, authored by UK-based NGO Forest Peoples Programme, explains the rules that World Bank projects must obey, and key processes and concepts such as social assessment and broad community support.

A report by US NGO World Resources Institute (WRI) makes the business case for incorporation of “free prior and informed consent” (FPIC) (see Update 47), which it states is a key part of legitimacy in large-scale development projects. FPIC is an internationally guaranteed human right of indigenous peoples, and is increasingly recognised in national law, international norms and voluntary best practice standards and guidelines. However, sponsors and financiers of high-risk projects may require community consultations as part of their assessment but rarely require that consent be achieved. The WRI report draws on four case studies, including the IFC-backed Newmont mining’s Minera Yanacocha Gold Mine Project in Peru (see Update 52).