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Zambia- Konkola Copper Mine

Project

The 2000 investment in the Konkola Copper Mine (KCM) project was “Phase 1” of a two-phase project to purchase and rehabilitate the mine and its processing facilities at the Konkola, Nchanga and Nampundwe divisions of Zambia Consolidated Copper Mines (ZCCM). “Phase 1” focused on the rehabilitation of existing KCM assets at a cost of US$ 345 million. “Phase 2” concerned the development of the Konkola Deep Mining Project (KDMP), a deep and complex underground mine. KDMP was scheduled to be authorized approximately two years following approval of KCM project.

IFC Interest

IFC subscribed 7.5 percent equity interest in KCM at a total (capped) cost of US$30 million on March 28, 2000. On January 23, 2002, Anglo Gold, which owned KCM, announced it was pulling out of the project. The withdrawal of Anglo also resulted in IFC’s withdrawal and exit from the project on 25 January 2002.

Environmental and Social Context

 

“Phase 2” of the project required the building Lubengele Tailings Dam, meaning the neighboring communities of Kawama and Ming’omba would need to be resettled. The Resettlement Action Plan (RAP) identified a number of development needs in Kawama, including the provision of basic infrastructure such as access roads, a health facility and water supply that including assistance for agriculture through the irrigation of community gardens. For Ming’omba, the plan identified infrastructure development needs including a clinic and additional classrooms at the primary school. The plan also indicated there was an urgent need to resolve issues related to social infrastructure such as education and health facilities for both communities.

 

The report also noted that Ming’omba depended on the production of charcoal for livelihoods and that, in a worst case scenario, the population might cut down all the area’s trees and then move in to forest reserves to gather wood unless alternative sources of livelihood could be developed. The report suggested measures to help people make a transition to agriculture should be put in place to provide an environmentally and economically sustainable livelihood. Although affected communities had not called attention to environmental issues, the report noted that prolonged deforestation around Ming’omba could emerge as an environmental concern.

   
Request to CAO

The CAO received and accepted a complaint in July 2003 from a local NGO, Citizens for a Better Environment (CBE), on behalf of people in Ming’omba and Kawama who were involuntarily resettled as a result of mining operations. The complaint argued that:

  • Due to Anglo Gold’s exit from KCM, the IFC had prematurely abandoned the project before the full implementation of the RAP in violation of its Safeguard policies; and
  • IFC never consulted or publicly disclosed to the affected communities its decision to exit the project and RAP, contradicting its own policy on public consultations and disclosure and leading to uncertainty and desperation in the minds of affected people.

CAO Action

The CAO found that neither the IFC’s operational procedures nor its investment and subscription agreements for KCM obligated it to remain engaged in the environmental and social performance of KCM after its exit as an investor and shareholder. However, at the time of exit, IFC did engage with KCM to help it continue its environmental and social programs and to ensure the completion of the RAP.

The CAO therefore recommended that it take no further action on the complaint by CBE. The CAO did say that the resettlement should include coordination, partnership, patience and creativity, and that IFC should find sources of technical support for KCM to increase its capacity to fulfill its social agenda.

 

IFC reported that it had exited the project with many environmental and social commitments uncompleted, but indicated that its involvement, even for a short time, had led to considerable improvements in environmental and social conditions as compared to before its investment.

Current Status
The complaint was closed on January 19, 2005.

Appraisal
Assessment
Closed
5 days
15 days
30-90 days
Complaint Closed
Accepted July 3, 2003
Final Report Completed Nov. 2003
January 19, 2005

 

Documents

Assessment in Relation to a Complaint Filed Against the IFC Investment in KCM, Zambia
English/pdf

 

 

 

This page last updated: 6/21/2006