“IFC watchdog investigates Postal Savings Bank of China over loan for Indonesian mine”, 27 July 2020

… The Compliance Adviser Ombudsman (CAO), which scrutinises the social and environmental concerns of communities affected by IFC-backed projects, launched the investigation because the PSBC [Postal Savings Bank of China] – an IFC client that received a US$300 million equity investment in 2015 – loaned funds to the state-owned China Nonferrous Metal Mining Group and its Foreign Engineering and Construction Company (NFC) subsidiary in apparent contravention, activists say, of the IFC’s environmental and social standards.

This is because NFC went on to buy a controlling interest in Dairi Prima Mineral – which is developing the mine in Indonesia’s earthquake-prone Dairi Regency – from the politically well-connected Bakrie family’s Jakarta-based Bumi Resources Minerals…

IDI [Inclusive Development International] and the North Sumatra Advocacy and Legal Aid Association (Bakumsu), a local NGO, helped residents file their CAO complaint in October.

Villagers living near the proposed mine worry about leftover waste material from mining activity submerging their homes in the event of a catastrophe…

Building a tailings dam “in the middle of one of the riskiest places in the world for earthquakes” means that villagers living downstream from the mine site “will be forever living in fear of dam collapse and water contamination,” said David Pred, IDI’s executive director…

Work on the zinc mine has already begun… Merah Johansyah from JATAM said they suspected this facility… was built without a valid environmental impact assessment or disaster risk analysis being carried out…

In their complaint, the communities living near the proposed mine in North Sumatra expressed frustration at a perceived lack of transparency on the part of Indonesia’s government…

Andreas Harsono, a researcher with Human Rights Watch Indonesia, which was not involved in filing the CAO complaint, said a lack of consultation or any official response was common in the country’s land disputes.

“Conflicts related to land are pervasive and have frequently been linked to oil palm plantations and mining companies,” he said, adding that opposing such developments are often arrested or jailed “under various laws including anti-communist provisions, public order laws, and criminal defamation”.

If the mine in North Sumatra does go ahead, much of the zinc it produces is likely to be sold to China’s Wanxiang Group – a major manufacturer of car parts that supplies automotive giants such as Ford, Volkswagen and General Motors – according to a public statement NFC made in 2013 and its annual report for 2018…

In a written statement, the IFC said it supports the CAO’s work, “is committed to environmental and social sustainability” and welcomes “a productive dialogue” to address issues associated with its investments.

Dairi Prima Mineral, which did not respond to emailed requests for comment, says on its website that it “commits to the highest standards of environmental care, occupational health and safety and corporate governance”.

NFC, Bumi Resources Minerals and Indonesia’s environment ministry did not respond to requests for comment.