The International Finance Corporation, the World Bank's private-sector lending arm, on Tuesday approved $125 million in loans for gold major Newmont Mining Corp.'s Ahafo project in Ghana, but not all countries on the IFC's 24-member board agreed it was a good move.
Board officials, who spoke on condition of anonymity, said three countries abstained and one objected during discussions on the project, amid concerns about the environmental impact and resettlement of families that were living on the mine's site.
The IFC investment includes $75 million of IFC's own resources with the remainder raised through a syndication of commercial banks.
The Ahafo project is expected to produce about 500,000 ounces of gold a year and production is likely to begin in mid-2006, as the Denver, Colorado-based company pushes to increase its gold reserves.
"The board recognized that it is a risky venture, but agreed that it is good to have the IFC around pushing for higher standards and social and environmental compliance," said one board official, on condition of anonymity.
"The IFC assured us of all the precautions and safeguards that have been put in place and that everything will be done in accordance with World Bank principles," the official said. "It was also clear that many of the fears expressed by people related to previous experiences and not necessarily this project."
Officials said IFC staff would report to the board on a regular basis on progress with the project.
INVOLVEMENT OR NOT
The World Bank has been grappling for several years with involvement in oil and gas and mining projects which development groups say cause more harm than good and are vulnerable to corruption.
The Newmont project comes in the wake of other recent high-profile IFC investments in a controversial oil pipeline in Chad and a gold project in western Guatemala.
World Bank President Paul Wolfowitz recently halted lending to Chad in a dispute over the government's grab for oil profits from the multinational pipeline project, saying Chad had breached an agreement to save the oil revenue for projects that benefit the poor.
Last week, six development groups wrote to the IFC board of directors, appealing to them to postpone approval of the loans for the Newmont project until all outstanding social and environmental issues were resolved.
The groups, including Oxfam, Earthworks and Bank Information Center, said Ghana's poor track record of regulating and managing environmental impacts in its emerging mining sector required additional oversight and monitoring.
"We are disappointed that the IFC has approved the project at this point without adequately resolving the serious potential social and environmental problems related to the project," said Keith Slack, policy adviser for development group Oxfam America.
"The IFC will be watched closely to make sure it is complying with social and environmental policies and protecting the livelihoods of people who will be affected," he added.
The IFC has said it was satisfied that Newmont, one of the world's largest gold miners, had taken the necessary precautions to ensure the project met World Bank standards on social and environmental protection.
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