The Mopanicopper mine,Zambia
How Europeandevelopment moneyhas ed a mining scandal
December 2010
The mission o “Counter Balance: Challenging the EIB” is to make the European InvestmentBank an open and progressive institution delivering on EU development goals and promotingsustainable development to empower people aected by its work. The Counter Balance coalitionconsists o the ollowing NGOs: CEE Bankwatch Network (Central and Eastern Europe), lesAmis de la Terre (France), urgewald (Germany), Campagna per la Riorma della Banca Mondiale(Italy), Both Ends (Netherlands), Bretton Woods Project (United Kingdom).CTPD (Centre or Trade Policy and Development) is an NGO with the objectives o inuencingpro-poor trade reorm at national, regional and multilateral levels as well as acilitating or theparticipation o various stakeholders - including member organizations - in ensuring that tradeis used as tool or poverty eradication. CTPD carries on advocacy work, monitoring o policies,and awareness raising activities related to trade issues. The network gathers 12 memberorganizations in Zambia and regularly collaborates with European NGOs.Les Amis de la Terre is an association or the protection o Man and the environment. Createdin 1970, the organization participated in the environmental movement in France, and in theormation o the largest global environmental network, Friends o the Earth International, withmore than two million members in 77 countries. Les Amis de Terre engages in advocacy witheconomic and political policy makers and policy and raises public awareness o environmentalissues. It relies on a network o 30 local groups.
CONTENTS
1.2.
2.12.22.32.4
3.
3.13.23.33.4
4.
4.14.24.34.4
5.6.7.INTRODUCTIONZAMBIA’S MINES: A KEY SECTOR FOR DEVELOPMENT?
The privatization o Zambia’s mines: opacity and corruptionA tax system that deprives the state o mining proftsCommunities heavily impacted by privatizationEnvironmental impacts poorly managed
MOPANI: MINIMUM TAX REVENUE AND MAXIMUM SOCIALDEGRADATION
A minimal contribution to the Zambian budgetPublic services abandonedForced expulsions and violation o human rightsTemporary, dangerous and poorly paid jobs
DISASTROUS ENVIRONMENTAL IMPACTS
An essentially environmental project?Mopani and air pollutionAcid water pollutionContamination by mining waste
CONCLUSIONRECOMMENDATIONSANNEXES57
78911
12
12131516
18
18192021
232526Written by:
Anne-Sophie Simpere - Les Amis de la Terre
Edited by:
Greig Aitken - CEE Bankwatch Network
Translated by:
Liz Libbrecht
Photo credits:
Petr Hlobil, CEE Bankwatch Network, Anne-Sophie Simpere
Layout:
Ola Dolinska
December 2010
This publication was produced with the nancial support o the European Commission. The content o this document is the sole responsibility o CEE Bankwatch Network and does not necessarily refectthe position o the European Union.
The Mopani copper mine, Zambia. How European development money has ed a mining scandal.
5
The European Investment Bank (EIB) is the fnancialinstitution o the European Union (EU). It invests inprojects that contribute to achieving the EU’s objectives.In Arica, the EIB supports European cooperation anddevelopment policies. It acts on a mandate rom theCotonou Agreements, the top priorities o which arepoverty alleviation, sustainable development, and thegradual integration o the Arican, Caribbean and Pacifc(ACP) states into the global economy
1
.When we examine the EIB’s activities in Arica, we fndthat it invests millions o Euros in large mining projects.Since 2000, loans amounting to 650 million Euros havebeen granted to mining companies on the continent.From 2000 to 2007, over 80% o EIB unding in Zambiawent to the mining sector
2
.
1 See the EIB website: http://www.eib.org/about/cr/responsible/development/acp/index.htm?lang=en2 See the EIB website: http://www.eib.org/projects/news/eib-fnancing-or-mining-projects.htm?lang=en
The European Investment Bank: a catalyst or investment(s)
Founded by the Treaty o Rome in 1958, the EIB is not well knownand keeps a low profle, even though it manages a loan portolioo EUR 79 billion (2009). Its shareholders are the member stateso the European Union who contribute to its capital. The bank’sorientations are thereore decided by the European fnance ministerswho orm the Board o Governors. France, UK, Germany and Italy arethe our largest shareholders o the EIB and have a decisive positionwithin the bank.Although its initial mission was to invest in Europe, the EIB hasgradually expanded its activities throughout the world. It fnancesprojects in Arica, in particular, where it has a development mandate.It thus claims to support projects that contribute to the achievemento the objectives o the Cotonou Agreement and the UN MillenniumDevelopment Goals (MDGs).EIB unding is o particular interest to frms as the bank has atriple-A rating on the fnance markets and can supply them with“long-term fnancial resources either not available at all or atleast not available on terms suitable to ensure the sustainability oprojects, while oten having a strong catalytic eect to attract othersources o unding”
1
. Thus, apart rom particularly avourable loanconditions, the EIB’s involvement sends a strong signal to privateinvestors, who will perceive the projects as less risky because theyare supported by this public institution.Since 2007, Les Amis de la Terre has been campaigning to challengethis international fnance giant and to redirect its investments.They have also participated in the creation o “Counter Balance:Challenging the EIB”, a coalition o NGOs in the bank’s shareholdercountries, set up to put international pressure on the institution.1 See the EIB website: http://www.eib.org/projects/news/eib-fnancing-or-mining-projects.htm?lang=en
Even though the mining industry is highly controversial,the EIB considers that these investments can contributeto development, mainly because they create tax revenueor the host states and jobs or the local populations. Itrecognizes that the mines can have heavy environmentalimpacts, but claims that it pays “particular attention toenvironmental sustainability”, and “strong attention tothe social and governance acceptability o projects”.
3
Focus on a controversial project: Mopani
The present report examines the real impacts ondevelopment and the environment o a project unded bythe EIB: the Mopani copper mine in Zambia.This mine belongs to the consortium Mopani CopperMine (MCM), whose main shareholder is the Swiss frmGlencore. MCM owns the mines at Nkana and Muulira,both situated in the Copperbelt, a mineral-rich areastretching across a part o Zambia and the DemocraticRepublic o Congo. The Muulira mine borders on thetowns o Kantanshi, Kankoyo and Muulira. It consists oan underground mine, a concentrator, a smelter anda refnery. In February 2005 the EIB granted a EUR 48 millionloan to MCM or the construction o a new smelter atthe Muulira mine. The aim o this loan was to make itpossible to reduce pollution in the area by cutting dustand sulur emissions, to saeguard jobs, and to alleviatepoverty through economic growth and the spin-o oMCM’s activity (wages, taxes, social services)
4
.Our report was drawn up ater two missions to Zambia,in March 2009 and August 2010 with the NGO Center
3 Les Amis de la Terre, “Banque européenne d’investissement : six ansde fnancement du pillage minier en Arique”, November 2007.4 See the EIB website: http://www.eib.org/projects/news/eib-fnancing-or-mining-projects.htm?lang=-en
1.Introduction
Map o Muulira. The mine is surrounded by three towns :Kantashi, Kankoyo and Muulira.
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