Adriatic Metals’ ruthless mining: How can the EBRD help improve its clients’ practices when it doesn’t follow its own standards?

In 2020, nature-lovers from Kakanj started to notice tree-cutting in the mountains behind the town, together with damage to biodiversity, and heavy machinery carrying out unspecified works. Gradually it became clear that a zinc, lead and barytes mine was planned by Adriatic Metals, and that the EBRD had bought shares in the company. 

Due to a complete lack of consultation with people from Kakanj, in August 2022, a group of citizens filed a complaint to the EBRD’s Independent Project Accountability Mechanism (IPAM) requesting a Compliance Review procedure to establish if there had been breaches of the EBRD’s Environmental and Social Policy.  

Additionally, they contacted Bankwatch and in November 2022 we visited the area. They showed us an apparently endless road which had been newly built in the mountains to access the mine. We identified several issues of concern and contacted EBRD staff and IPAM. 

An unexpected access road to the mine 

During the visit, it immediately became clear that the road to the mine had been built in a different location to the one examined in the EBRD’s environmental studies. And it had been done carelessly. It was built on a pre-existing forest path, considerably widened by dug-out stone material. This also narrowed the stream bed running in parallel, which local people fear will increase flood and landslide risks. 

The fact that the road was not mentioned in the environmental studies also means that the local community was not consulted about it – a potential breach of the Aarhus Convention’s requirement for meaningful consultations on projects with significant environmental impacts. 

We later found out that the road has not been built instead of the originally planned one, but in addition – further increasing the environmental impact of the project.   

Biodiversity impacts 

The mountainous area around the mine is an important natural area, including for large carnivores such as bears and wolves. In 2013, the Kakanj authorities commissioned a study on the legal protection of the Trstionica forest, planned under the Spatial Plan and Development Strategy of the Zenica-Doboj Canton. However, formal protection never happened. By coincidence or not, the mine is being developed nearby this forest.  

The EBRD’s environmental studies show that the mine and its access roads will damage so-called ‘critical habitats’, which include important habitats for endangered, critically endangered, endemic or geographically restricted species. Yet, the Bank’s Environmental and Social Policy prohibits works in such habitats unless very stringent conditions are met.  

But in this case, although adjustments were made to avoid some critical habitats such as bear dens, the project environmental studies dismiss the remaining ones as not that critical after all, instead of seriously assessing whether the project should be further changed or stopped.  

Already at the time of our visit it was clear that the new access road had seriously damaged one such habitat – Vrući potok. The stream was also seriously muddy, presumably from the preparatory works for the mine. There are also new findings that Adriatic Metals may have further damaged other habitats of endangered animals.  

Earlier this year, activists visited a site named Red Rocks, where they allege the company is disposing of waste material from the mine, although a waste disposal permit has not yet been issued. Allegedly, traces of wolf’s fur were found 50 metres from the waste disposal location, which are now subject to laboratory analysis. 

In response, the Federal Ministry for the Environment and Tourism sent environmental inspectors to the scene and in mid-July, announced that several violations had been found. The landfill was not lined, no concrete channels were built at the edges, no sedimentation tank was formed, and the landfill is not fenced. Adriatic Metals was given a deadline to comply with the inspectorate’s requirements and an additional inspection was initiated to better understand the nature of the materials being dumped. 

Potential impacts on Kakanj’s water supply 

Some Kakanj residents are extremely concerned about the project’s impact on the town’s water supply. It is up to the Vareš municipal utility to balance water usage between the local community and the mine and to ensure adequate environmental flow in the local water courses, and neither the Kakanj authorities nor the EBRD have much control over this. In addition, even before the first phase of the mine is operating, a second phase is planned, which has not been included in the environmental studies. So, it remains unclear whether an adequate water supply can be maintained for both the mine and Kakanj during dry periods.  

Lack of public consultations in Kakanj  

Local people in Kakanj have pointed out that there was a complete lack of public consultation about the mine in the town. These claims are supported by the EBRD’s environmental studies, which show consultations only in the much smaller town of Vareš. As far as Kakanj residents are concerned, besides a few representatives of local villages in neighbouring settlements, no other residents of the broader community were made aware of the project.  

Why has the EBRD gone silent? 

After we approached EBRD staff and IPAM in December 2022, the Bank staff replied that it was aware of the additional access road and that the environmental studies would be updated accordingly. However, updating an environmental impact assessment after the road has been built is completely pointless and against all logic of public consultation. 

After we contacted the EBRD again in January, staff replied that they would be undertaking a site visit in early February which would enable a more detailed response. However, despite reminders in April and again in June, there is still no answer from the Bank.  

Tone-deaf statements by international community cause local protest  

On 5 June, the British Embassy organised a visit to Vareš, together with the representatives of the EBRD, and Norwegian and US Embassies, confirming their support for the Vareš project as ‘the most significant foreign investment in the country and emphasising commitment to talent, safety, community, and sustainability.’ The Norwegian embassy also joined in the praise for the company, who will apparently leave a ‘legacy of lasting prosperity and sustainable jobs to local communities, and are dedicated to talent, safety and sustainable mining.’ 

However, people in Kakanj do not share the same excitement about the mine development. In response to the visit, an informal citizens’ group organised a protest against the destruction caused by the mine and the ambassadors’ support for it. They also demanded the protection of the surrounding area’s water sources. 

The contradictions are clear: On one hand, promises of economic blossom and opportunities derived from sustainable mining operations with no harm to nature, and on the other the reality of the company’s careless approach and degradation and damage to biodiversity. Surely, before expressing support for projects with a high risk of environmental damage, international representatives should take a more sensitive approach and find out what the affected people think. 

While the international community praises the development of the project, Kakanj’s community initiative is gaining wide support from civil society throughout Bosnia and Herzegovina. People are fed up with feeling like a colony whose natural resources are being extracted at a low price for the companies and a high price for people and the environment. 

Following the ambassadors’ visit, five environmental networks in the country jointly sent an open letter to the embassies, expressing disgust at their support for the company’s activities, and lack of respect for the community’s concerns. 

The EBRD’s new mining strategy – more of the same? 

The EBRD recently drafted a new Mining Sector Strategy (2024-2028), demonstrating the Bank’s intention to increase investments in critical raw materials. It is currently open for public consultation. The proposed strategy outlines the Bank’s commitment to engage with relevant stakeholders in the mining sector, especially civil society organisations, sector specialists, and communities, but cases like Adriatic Metals raise the question of what exactly the Bank will do differently this time. 

One of the most important lessons learned from previous investments emphasised in the draft Strategy is obtaining and maintaining a social license for mines to operate. A key component is ‘comprehensive assessment of the company’s approach to stakeholder engagement throughout all stages of operations and providing support and guidance when needed.’ However, in reality, the Bank continues to reinforce the same old practices and fails to lead by example. 

A good starting point would be for the EBRD to unreservedly follow its own procedures when assessing and monitoring projects and interacting with civil society. In countries like Bosnia and Herzegovina, with stunning nature but weak rule of law and poor environmental governance, it must only invest in projects with no potential for significant environmental damage and harm to local communities. And it must consider grievances from local communities affected by projects in a much more meaningful way.