An investigation by the bank’s internal watchdog warns that the proposed Dairi Prima Mineral mine, backed by the China Nonferrous mining group, threatens local and indigenous communities and the environment.

A World Bank investigation has concluded that a zinc and lead mine being developed in North Sumatra, Indonesia by Dairi Prima Mineral, a subsidiary of China Nonferrous Metal Industry’s Foreign Engineering and Construction (NFC), poses “extreme” risks to nearby communities. Of particular concern is a planned tailings dam meant to store the toxic byproducts of mining activities, which experts say is almost certain to fail. The investigation report notes that such a failure “could result in significant and potentially irreversible impacts on the lives and livelihoods of several thousand villagers located downstream.”

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The investigation was undertaken after local communities opposed to the project filed a complaint with a World Bank internal watchdog, the Compliance Advisor Ombudsman. The complaint was filed after an investigation by Inclusive Development International revealed financial ties between the International Finance Corporation (IFC), a World Bank Group member, and the mine developer, Dairi Prima Mineral, through financial intermediaries. The complaint argued that according to IFC’s own policy, the mine’s developers should be required to comply with World Bank standards for social and environmental protection.

After the complaint was submitted, the mine’s owner ended its financial relationship with IFC’s intermediary, Postal Savings Bank of China, which avoided a fuller investigation. Nonetheless, the Ombudsman reports multiple damning findings in its compliance appraisal report [...]

People living near the mine are infuriated. “We have never agreed to this enormously risky mine. We have never been given an opportunity to decide about this project,” [...]

Role of Chinese Investors

As the majority owner of Dairi Prima Mineral, the state-owned China Nonferrous Metal Industry’s Foreign Engineering and Construction (NFC) has been deeply involved in the company’s management and operation. It is also the mine’s engineering, procurement and construction contractor. In its report, the CAO concludes that NFC has effective control of Dairi Prima Mineral and is specifically responsible for the mine’s construction.