CAO Cases

Arne Hoel, The World Bank

Latin America & the Caribbean

Colombia / Eco Oro-01/Bucaramanga

Complainant
Comité por la Defensa del Agua y el Paramo de Santurbán, national, and international NGOs
Date Filed
June 13, 2012
Concerns
Water quality and quantity, environmental degradation, project due diligence, community consultation and information disclosure
Case Status
Open - Compliance
 

Synopsis

Complaint

 

Eco Oro Minerals Corp (formerly Greystar Resources Ltd) is a publicly listed junior mining company headquartered in Canada. Eco Oro owns 100% of the Angostura gold and silver exploration project near Bucaramanga, in the Santander region of Colombia. IFC is supporting the feasibility study, environmental and social impact assessment (ESIA) and other needed ground works to prepare for the project development stage.

 

In June 2012, CAO received a complaint from local civil society committees in Bucaramanga, with the support of several international NGOs.  The complainants raise concerns about the development of the gold mine in the Santurbán Páramo. They contend that the mine development would have adverse impact on the quality and quantity of drinking water downstream and around the páramo, which is the major source of water for the Bucaramanga region. The complainants are also concerned about what they see as irreparable environmental damage to the unique ecology of the páramo.  Furthermore, the complainants are of the opinion that the project is in violation of IFC’s social and environmental policies and should not have received project approval.

 

The complainants originally requested that CAO keep their identities confidential. Subsequently, the complainants decided to publicly release the complaint and their identities.


 

CAO Action

 

CAO found the complaint eligible for further assessment in July 2012.  A CAO team conducted a field trip in October 2012 to meet with the relevant stakeholders and discuss options for addressing the issues in the complaint.  

 

During the assessment process, CAO understood from the complainants that pursuing a dispute resolution process was not an option at this point in time. CAO released its Assessment Report, which is available at the below links in English and Spanish, along with IFC's response. The case was transferred to CAO’s compliance function for appraisal in November 2012. CAO's Operational Guidelines provide for a compliance appraisal in order to decide whether an investigation of IFC's role in the project is warranted. 

 

On the basis of the Compliance Appraisal, which was completed in June 2013, CAO conducted a compliance investigation into IFC’s investment in Eco Oro. As the possibility for a discussion of outcomes is limited by the current stage of development of the project, the CAO investigation focused on IFC’s approach to E&S review and supervision. 

 

CAO’s compliance investigation was finalized in June 2016, and was released publicly on August 25, 2016. The investigation report makes findings in relation to: 

Environmental and Social Risk Assessment and Categorization
When considering its investment, IFC analyzed the E&S impacts of the client’s immediate planned activities—to complete a bankable feasibility study and prepare an E&S Impact Assessment (ESIA) for the proposed mine. IFC did not analyze the E&S risks beyond this phase. This approach allowed IFC to take an equity stake in a company that was planning to develop a mine for which the potential to comply with IFC’s E&S policies was uncertain and potentially challenging due to the location’s environmental sensitivity. IFC’s approach to categorizing the risk profile of this investment was also based on the client’s immediate planned activities, which contributed to gaps between IFC’s actions and community expectations. 

IFC Assessment of Client Commitment and Capacity
IFC’s project documentation did not promptly capture regulatory actions that were relevant to assessing the client’s capacity and commitment, including information about an investigation carried out by the regional environmental authority from 2006 to 2008. In 2010, the client was fined for breaches of environmental requirements related to acid water treatment, soil erosion and slides, but again IFC did not adequately capture this information. 

Consultation and Disclosure
IFC considered that the client had support of local communities for its immediate planned activities, and required its client to develop a stakeholder engagement process as the mine progressed towards construction. As the project proceeded, IFC identified significant gaps in the company’s stakeholder engagement strategy, and advised its client with the objective of strengthening community support. The IFC approach to project E&S review and categorization did not reflect the affected community members’ understanding of risks associated with the project (which included potential impacts from construction and operation of a mine). 

Compliance with National Law
IFC was aware of the project’s proximity to the páramo at the time of its investment, and recognized that the project would need to abide by the national law as it applied to the area. At the time of IFC’s investment in 2009, the legal restrictions related to the páramo were unclear, and its specific boundaries had not been determined. 

Community Health, Safety and Security 
IFC’s assessed security risks during its appraisal and recommended to the client that it implement new measures, including new legal arrangements to reflect the Voluntary Principles for Security and Human Rights (VPSHR). However, there was not sufficient information to establish whether IFC assured itself of the company’s compliance with PS4 requirements on security, in particular on the progress on implementing the VPSHR. 

Biodiversity Conservation
In its documentation for the project, IFC did require its client to complete an ESIA consistent with the Performance Standards, including a biodiversity assessment. IFC’s supervision did not show substantive progress on the completion of necessary studies, such as an adequate biodiversity baseline study or critical habitat assessment. IFC has not pursued a remedy, but has made subsequent investments in the company. 


 

Status
CAO released its Investigation Report and IFC’s official response on August 25, 2016. CAO will monitor IFC’s actions in response to this report and expects to issue a monitoring report within one year of the date of publication. CAO’s Investigation Report is available in English and Spanish, and a communique regarding the case is available in English under ‘View Documents’ below.

 

Status as of August 30, 2017

 

Project information

Institution
IFC
Project Name & Number
Eco Oro 27961
Department
Extractive Industries
Company
Eco Oro Minerals Corp
Sector
Mining
Region
Latin America & the Caribbean
Country
Colombia
Environmental Category
B
Commitment
US$9.6 million

Case Tracker

Ombudsman

  • Eligible: Completed
  • Assessment Period: Transferred

Compliance

  • Under Appraisal: Completed
  • Under Audit: Completed
  • Monitoring: In Process