South Africa: Lonmin-02/Marikana
Local community members.
Air and water pollution, negative impact on living conditions.
IFC had an active Category A project with Lonmin Plc, a large platinum producer, for a multi-year expansion program of the company’s operations. The project consisted of the development, expansion, and mechanization of Lonmin’s South African mines; and the development of a comprehensive, large-scale community and local economic development program (LEDP). IFC’s investment in the project entailed a standby 10 year A loan of $100 million and an equity investment of $50 million. IFC completed its involvement in the project in January 2016.
In June 2015, CAO received a complaint from a local community organization and community members regarding Lonmin’s Marikana mine in North West Province, South Africa. The complaint cites concerns about contamination of air and groundwater and negative impacts on the living conditions of nearby communities, including on housing, water, sanitation, infrastructure, and employment. The complaint also cites concerns about the project’s social and environmental commitments, IFC’s social and environmental due diligence, and non-compliance with national law.
CAO found the complaint eligible for further assessment in June 2015, and an assessment trip was conducted in August 2015. During the assessment, the parties agreed to address the issues through a dispute resolution process. CAO subsequently held a series of bilateral meetings with the parties during 2016 to provide capacity building and assist them in drafting and adopting a set of principles to govern the dispute resolution process. CAO also convened several joint meetings as part of the process. However, in December 2016, the complainants decided to withdraw citing a lack of progress. This decision was confirmed in March 2017 and the case was transferred to CAO's compliance function for appraisal. In December 2017, CAO concluded that the case merited a CAO compliance investigation of IFC’s E&S performance.
In June 2023, CAO finalized its compliance investigation report. CAO’s investigation reviewed how IFC appraised, structured, and supervised its investment in Lonmin to ensure that impacts of the nature raised by the complainants were adequately considered and mitigated. CAO found that IFC was non-compliant with its environmental and social oversight requirements during both pre-investment review of Lonmin and its client supervision throughout the investment. In particular, CAO concluded that IFC’s failure to consider implementation of the Social and Labor Plan (South Africa national law requirement for mining company) as an E&S compliance issue was contrary to PS1 requirements. Given the time that has passed since IFC divestment (December 2015), and the subsequent change in ownership of the mining company, CAO determined that there was limited scope for CAO to make project-level recommendations. However, CAO did make systemic-level recommendations for IFC to consider in its response
On December 7, 2023, the IFC Board approved IFC’s Management Action Plan. Through this plan, IFC committed to develop guidance and strengthen internal controls; i) to review the adequacy of client's estimates of resources for the implementation of the Environmental and Social Action Plan (ESAP) as required in Performance Standard 1, and; ii) to document the review as part of the appraisal documentation. IFC will also update and disseminate ESAP guidance as part of its Environmental and Social Review Procedures (ESRP) Handbook.
The Board approved IFC’s Management Action Plan on an Absence of Objection (AOB) basis on December 7, 2023. After circulating the documents to the parties, CAO published its investigation report, IFC’s Management Report, and Management Action Plan on December 11, 2023.
See the IFC and CAO joint press release announcing the approval of IFC’s Management Action Plan here.
In accordance with the CAO Policy, CAO will now monitor the effective implementation of IFC’s Management Action Plan and publish IFC's progress reports on this page and in an annual monitoring report.
Status as of December 11, 2023