IFC criticised over Peruvian mine investment

29 September 2014

In September the Compliance Advisor Ombudsman (CAO), the accountability mechanism of the International Finance Corporation (IFC, the Bank’s private sector arm), published its compliance investigation into the IFC’s investment in the Quellaveco mine in southern Peru (see Bulletin Feb 2014, Update 82). In 2012 the IFC sold its 20 per cent stake in the Anglo-American majority owned mine. The mine, for which construction approval is still pending, was the subject of complaints from local groups between November 2011 and March 2012 because they believe that the mine is likely to have likely negative environmental impact.

The CAO highlighted a series of errors in the IFC’s management of the project’s environmental and social (E&S) risks, including that the project “would properly have been categorised A (significant E&S risk)” instead of “limited risk”. The CAO noted that the IFC’s procedures for dealing with rights issues were “inconsistent” with its E&S commitments. The CAO also found “no evidence” that an analysis of E&S and future risks was conducted.

The CAO will monitor IFC’s response to its findings and issue a monitoring report “within the next year”.