MAC: Mines and Communities

World Bank Urged to Postpone Loan for Controversial Gold Mine in Ghana

Published by MAC on 2006-01-31

World Bank Urged to Postpone Loan for Controversial Gold Mine in Ghana


31st January 2006

A group of Ghanaian and international organizations is urging the World Bank to postpone funding for a new gold mining project in Ghana until the Bank addresses the project's human rights and environmental problems. Tomorrow, the Bank's Board of Directors is to consider loans of $125 million by the International Finance Corporation (the Bank's private sector arm) to Newmont Mining Corporation, one of the world's largest mining companies, for the development of the Ahafo gold mine project in western Ghana.

The project comes to the Board just weeks after World Bank President Paul Wolfowitz suspended the institution's support for a high-profile oil pipeline project in Chad over the government's decision to use oil revenues to fund the military. The Bank's support for large oil and mining projects in Chad, Guatemala, Peru and elsewhere has been the source of significant controversy in recent years. At the same time, Denver-based Newmont's operations in Peru and Indonesia have been rocked in the last two years by community protests over environmental contamination and health concerns.

"The living conditions of the communities affected by the Ahafo mine are already worsening even at this construction phase of the project," said Daniel Owusu-Koranteng, executive director of the Wassa Association of Communities Affected by Mining, in Ghana.

The mine will displace more than 9,000 people, at least 95 percent of whom are subsistence farmers. Land replacement measures critical to restoring the livelihoods of the displaced farmers remain incomplete or uncertain, according to the company's own assessment. Communities are concerned that the mine, which will use cyanide to extract gold, may also pose a serious risk to human health and the environment. An independent technical review revealed that Newmont did not provide sufficient information to assess risks of serious water contamination. The review calls for the company to implement more stringent environmental provisions. Weak laws governing the mining sector in Ghana make it nearly impossible to hold companies accountable in the event of environmental catastrophes such as cyanide spills.

"Given the problems we have already seen with this project, and the Bank's poor track record in managing mining projects in general, we don't think the Bank should support this project at this time," said Keith Slack, senior policy advisor for aid group Oxfam America. "The Bank needs to demonstrate to the world that it has learned the lessons from its past mistakes with these kinds of projects."

The Ahafo project will generate a relatively paltry $300 million over 20 years for the government of Ghana and create just 620 long-term jobs, while resulting in the economic displacement of nearly 20,000 people when the project's two phases are completed. Non-governmental groups argue that the development benefits of the project hinge upon the restoration of sustainable livelihoods and the protection of clean water for the rural communities affected by the project.

"The rural communities of Ahafo depend on land and natural water sources to sustain their livelihoods. The World Bank needs to ensure these resources are protected, not damaged, if it expects to alleviate poverty and promote sustainable development," said Mike Anane of the human rights group FIAN-Ghana.

Ensuring the project respects human rights and environmental standards is a key test for new World Bank president Paul Wolfowitz, who has become personally involved in efforts to clean up controversial Bank-funded mining projects in Guatemala and the Democratic Republic of Congo, in addition to freezing the oil-focused program with Chad.

"Newmont wants to obtain a 'social license' for its project via World Bank support. We call on President Wolfowitz to take strong action to ensure that the company complies with the highest human rights and environmental criteria," said Radhika Sarin, international program coordinator at EARTHWORKS, an environmental group that promotes mining reform.

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