MAC: Mines and Communities

Gabonese group challenges Chinese bank over major mine project

Published by MAC on 2009-01-13

The Gabonese NGO, Brainforest, has sent a letter to China's Exim Bank addressing the likely impacts of the proposed Belinga iron ore mine.

The deposit is located in a remote area of the country, close to the protected Konguo Falls. It is Gabon's biggest investment, with planned annual iron ore production capacity of 30 million tons. The US$ 3.5 billion project includes construction of a deep-water port; 560km of railroad track from the mine site to the seaport in Libreville; and two hydroelectric dams.

The China Machinery and Electric Equipment Export & Import Company (CMEC), one of China's major corporations operating in the construction sector, owns 85% of the Belinga project and is in charge of construction. Financing is being provided by the China Export-Import Bank.

On 20 October 2008, Brainforest raised concerns with the Bank about the mine's impacts on communities in the area; likely environmental impacts on nationally-protected areas; lack of fairness in the concession agreement; and lack of revenue transparency. The NGO noted that the project does not abide by the export credit agency's own environmental standards and that project construction had started, without the Social and Environmental Impact Assessment (SEIA) having been made available for public discussion and consent.

This appears to be a violation of China Exim Bank's July 2007 updated environmental and social guidelines, which referred to explicitly to the need for environmental and social assessments, and explicitly mentioned safeguards for land rights and fair resettlement schemes. The guidelines require that SEIAs meet host country laws and, where host countries do not have adequate legislation, that international or Chinese standards should be applied. Most importantly, China Exim Bank now reserves the right to cancel financing if environmental impacts are not adequately addressed.

The Brainforest letter requested that the Bank:

1) investigate if CMEC completed an SEIA for the project;

2) if so, investigate if it met China Exim Bank's conditions for respecting local communities' rights;

3) request that CMEC publicly disclose its SEIA according to China Exim Bank's guidelines.

The letter was also signed by several supporting international NGOs (though no Chinese NGOs).

How this strategy may apply to other Chinese companies

Brainforest points out that NGOs and communities can clearly document such violations in the case of other projects, bringing them to the attention of China Exim Bank. In addition, "clearly pointing out violations of local law may be helpful, since China's central government has repeatedly said that Chinese companies should respect host country laws. Although such NGO actions aimed at China Exim have not yet succeeded (a similar tactic was tried with the Merowe dam in Sudan and the Ramu mine in Papua New Guinea), it has the potential of forcing the Chinese company to rectify the problem(s), creating delays for the project, and (theoretically) resulting in project loans to be cancelled.

" If time permits, it may be wise to privately raise concerns about a company or project because Chinese government institutions strongly disapprove of public critiques. However, if China Exim Bank does not respond within a given time period, NGOs may choose to leverage the media to put additional pressure on the export credit agency to take

*For more information

On Brainforest (website in French):

On the current campaign, email Marc Ona of Brainforest at:

Background on China Exim Bank:

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