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Kolubara lignite mine, Serbia

People living near the Kolubara mine have suffered for many years from pollution and geological impacts. The mine operator does not provide for a timely resettlement and fair compensation.

 

Linked to a slew of controversies, the Kolubara lignite mine in Serbia will receive loans from European public banks. Corruption allegations, pollution at local level, irregularities in resettlement of local populations and not to forget a climate damaging approach to energy investments should be reason enough to find alternatives to lignite mining.

Quick facts

Planned investment: development of a new field in the lignite open pit mine in the Kolubara mining complex (located 60km south of Belgrade, spanning over 600 square kilometres)

Loans: European Bank for Reconstruction and Development (EBRD) - EUR 80 million; German development Bank KfW (EUR 65 million loan plus a grant of EUR 9 million).

Corruption: Several high ranking employees were under arrest in 2011. Allegations of corruption against the project promoter EPS are under official investigation.

Loan approved: The EBRD approved the loan without proper time to assess the loan's impacts on the local population and the Serbian energy sector.

The Serbian energy sector - dominated by lignite and the company EPS

The additional support for EPS by European public banks does not only strengthen its dominant position in the Serbian energy sector. It also directly contributes to the country's long-term reliance on lignite, one of the dirtiest and most climate damaging fossil fuels.

The state-owned energy provider Elektroprivreda Srbije (EPS), owner of the Kolubara mining complex (via its daughter company RB Kolubara), dominates the Serbian energy sector:

  • 69% of total electricity generation in Serbia is based on lignite (2010). 75% of the lignite production is coming from the Kolubara basin.
  • Power plants within the Kolubara/Obrenovac thermal and mining complex produce more than 50 percent of Serbian electricity.
  • The vertically integrated power company has a monopoly in lignite mining, electricity generation and distribution throughout the country.

The company becomes even more powerful through close personal connections between ruling political parties and the EPS management, allowing EPS to influence political decision on the Serbian energy sector to its own advantage. The Strategy for the development of the energy sector in Serbia until 2015 for instance clearly favours the interests of EPS and its coal business.

Future prospects for the energy sector

Lignite, mined in opencast pits, remains one of the main fuels for power generation within the long-term development plans of EPS.

According to official assessments the Kolubara basin has still 2.1 billion tonnes of lignite at disposal in its underground layers. Depending on the dynamics of exploration, Kolubara is expected to produce coal for another 50 years.


Power plants within the Kolubara complex already produce more than 50 percent of Serbian electricity.

More controversies around Kolubara

Corruption in Kolubara

In October 2011, 16 current and former members of the EPS management, including directors of the Kolubara mining complex, were arrested for embezzlement.

The case was already under investigation when the EBRD approved the Kolubara loan and Bankwatch made sure the EBRD was informed. But instead of waiting for the results of the police investigation, the EBRD chose to rush into the loan.

Resettlement of local communities

Local communities are not against coal exploration as such but they are fighting the expropriation of properties and are tired of the pollution from decades of coal development in the Kolubara complex.

    Barosevac

    Directly affected by the EBRD's project is the Barosevac community. The EBRD's project summary document (PSD) states:

      Land acquisition and resettlement was substantially completed in 2008 in line with Serbian legal requirements.

    That this isn't the case proved a Bankwatch fact-finding mission to Kolubara in summer 2011:

    • The Barosevac cemetery has not been removed - a precondition for opening the EBRD supported mining field C. None of the landowners have given their consent for the removal of graves.
    • 21 Barosevac households so far not included in the resettlement plans are located only 50 meters from the open pit mine. Despite the heavy impacts from the mining operations (for instance cracks in their homes), these households are not to be resettled and will not receive compensation.

     


    Vreoci

    The EBRD points out that their loan is not connected to field D. The bank therefore does not feel responsible to ensure a fair resettlement in Vreoci.


    Vreoci villagers protesting in front of the EBRD offices in Belgrade (Summer 2011)

    To further develop another mining field in Kolubara (field D), EPS tries to have 1180 households in the village of Vreoci resettled.

    Villagers agreed with the Serbian government, that the village will be resettled collectively, but so far, no concrete plans have been established.

    Instead, the Kolubara company offers insufficient compensation to households individually. Families are under pressure, live in unhealthy conditions and have been stigmatised in the Serbian media.

    In summer 2011, authorities began to excavate bodies from the village's cemetery, ignoring objections by inhabitants and the fact that no agreement had been reached.

    The EBRD points out that their loan is not connected to field D. The bank therefore does not feel responsible to ensure a fair resettlement in Vreoci.

    But the director of fields C and D has stated in an interview with our campaigner that those fields are technologically and geologically interconnected and that their conceptual separation would be artificial.

 


Is there a way forward?

More detailed recommendations are in our briefing (pdf):
EBRD support for Kolubara paving the “ash way” for development of Serbia

The only proper solution to the range of problems with Kolubara would be not to finance the project at all. Instead, the EBRD could identify investments that counter the dominance of lignite in the Serbian energy sector and that help to increase the share of renewable energy in the country (currently only about 1%, excluding large hydro installations).

In case of the Kolubara investment, the least we ask of the EBRD is to make sure EPS respects the agreement with local communities, prepares a detailed plan for the collective resettlement of Vreoci and offers adequate compensation for families in Barosevac.


For more information, contact Zvezdan Kalmar, the Bankwatcher from Center for Ecology and Sustainable Development (CEKOR), Serbia, monitoring the project's development.

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Latest developments


 

Blog entry | September 10, 2014

The news portal Deutsche Welle has visited the Kolubara lignite mine in Serbia and produced a short clip about the difficulties faced by the Serbian energy sector.

Our Serbian colleague Nikola Perusic speaks in the video about the terrible landslide that happened in May 2013.

Press release | July 7, 2014

The EBRD should stick to its newly approved Energy Strategy and reject any investments in the Serbian coal sector, argue a group of 7 international NGOs in a letter sent to the bank’s board of directors today. The groups were concerned with recent statements by the EBRD according to which the bank’s regional flood response in the Balkans could include “rehabilitation of (…) damaged power stations and transmission and distribution networks.”

Press release | June 24, 2014

June 24, Brussels, Belgium - High-level corruption in the energy sector is affecting countries in South Eastern Europe, with tens of millions of euros being lost over the last decades in seven countries from the region surveyed in the study Winners and Losers: Who Benefits from High Level Corruption in the South East Europe Energy Sector? launched today in Brussels during the High Level Policy Conference of EU Sustainable Energy Week 2014.

Blog entry | May 30, 2014

People living next to the Kolubara lignite mine in Serbia have suffered more under the floods due to the vicinity of the mine. Their demands for resettlement and compensation have now become more urgent than ever.

Blog entry | April 16, 2014

One year after a landslide destroyed thirteen houses the Kolubara mining company continues to dump waste in the same area without information from its investigations forthcoming. Locals fear that more landslides may occur. Bankwatch member group CEKOR has now increased pressure on the company and the EBRD.

Publications

Study | June 24, 2014

Energy is one of the biggest economic sectors in south-eastern Europe and is set to grow even further with the region moving closer to the EU. The region has high potential for energy efficiency and sustainable renewable energy investments. Yet, as this study illustrates with a number of examples, countries have shown little ability to absorb investments at a large scale without systemic corruption and patronage.

See also an interactive map with summaries for each case at http://bankwatch.org/SEE-energy-corruption

Briefing | May 9, 2014

The story of Junkovac in Serbia highlights systemic violations of human rights, neglect and wrong doings in the lignite mining sector that have not changed since the involvement of the European Bank for Reconstruction and Development began in 2000. One of most recent cases of violations of human and property rights involves the illegal dumping of overburden from the mines at the Junkovac site that for years has been a threat to the properties and lives of hundreds of people in the nearby village.

Bankwatch Mail | March 20, 2014

The EU-backed Energy Community Treaty, signed in 2005 and comprising the western Balkan countries, Ukraine and Moldova, has been widely hailed as encouraging regional co-operation. It also sets a legislative framework for the signatories (also known as the contracting parties) that should contribute, along with the EU accession process, to addressing the environmental and social impacts of the energy sector. Indeed, examples of the Energy Community's added value are its adoption of renewable energy targets in October 2012, as well as a requirement for power plants to comply with EU emissions limits.

Briefing | March 4, 2014

The EBRD loan for the Kolubara lignite mine project in Serbia was approved when the forced removal of the local graveyard of the Vreoci community was already initiated and in spite of protests and appeals to the EBRD and in spite of on-going corruption investigations of the company. This case offers important lessons learned for the Environmental and Social Policy of the EBRD with regards to human rights.

Study | December 9, 2013

The EBRD is about to approve a new energy strategy, yet it is unclear to what extent it will follow other public lenders in halting coal financing. In this paper we step away from the discussions on climate issues to take a look at another reason why the EBRD should be wary of investing in coal projects: corruption.