New EBRD mining strategy promotes unstable dependency on raw materials exports, say NGOs

Moscow, Russia — In response to a public presentation today from the European Bank for Reconstruction and Development of its new mining strategy, NGOs CEE Bankwatch Network and Greenpeace Russia are calling on the bank to deprioritise investments in mining and mining-related infrastructure in order to avoid deepening the dependency of its countries of operation on raw materials exports.

The statement from Moscow echoes the EBRD’s own strategic priorities in Russia, [1] which the EBRD has repeatedly reiterated needs to be weaned off its dependency on the natural resources sector and towards a more diverse economy. Currently one third of all EBRD natural resource investments are made in Russia, [2] and the new strategy would further resource-based economic models in its countries of operations, including the extraction of resources from naturally-sensitive areas. [3]

“The EBRD must reorient its mining strategy away from the business-as-usual scenarios and towards a more diverse economic base, one that aligns itself with principles of sustainable development,” said Vladimir Chuprov from Greenpeace Russia. “The strategy must also commit to refuse financing in cases where projects violate Protected Natural Territories and intact territories.”

In Russia’s eastern neighbour Mongolia, the EBRD is also promoting an economically unsustainable overreliance on the extraction and export of natural resources. Since Mongolia joined the EBRD as a country of operation in 2006, its natural resources sector has received the lion’s share of the EBRD’s country portfolio at EUR 176 million. [4] Bankwatch estimates that as of 2010 more than 70 percent of investments in Mongolia have been invested in natural resources, and this proportion continues to rise.

With the percentage of Mongolia’s exports coming from minerals expected to rise from 80 to 95 percent in the next few years, [5] coupled with the expected IPO of the 6.5 billion tonne Tavan Tolgoi coal mine later this year, symptoms of ‘Dutch disease’ and related macroeconomic instabilities threaten the country’s development beyond minerals.

Vladlena Martsynkevych of Bankwatch said, “Mongolian GDP is expected to grow by nearly 20 percent this year, so it is very difficult for the EBRD to demonstrate its principle of additionality in this environment. Instead the bank should focus its investments to help diversify the economy away from natural resources if Mongolia’s development is to truly benefit the country’s people, a third of whom live in poverty, and become anything more than a mirage on the Gobi’s horizon.”

For more information contact:

Vladlena Martsynkevych
Central Asia Program, CEE Bankwatch Network
vladlena at bankwatch.org

Vladimir Chuprov
Energy Unit Head, Greenpeace Russia
Tel: +79031294651

Notes for editors

[1] EBRD Russia country assessment http://www.ebrd.com/pages/research/publications/flagships/transition/russia.shtml

[2] Between 1992-2009, the EBRD invested over EUR 1 billion in Russia for mining, oil and gas projects. EBRD evaluation department special study “Extractive industries sector strategy review” August 2011
http://www.ebrd.com/pages/about/what/evaluation/special.shtml

[3] From the EBRD draft Mining Strategy “Where mining operations may affect protected areas or protected species, the Bank requires that clients should complete studies equivalent to those of the Habitats Directive (Council Directive 92/43/EEC on the Conservation of natural habitats and of wild fauna and flora); – When developing projects in large areas of previously little to no development (thereby requiring new transportation infrastructure) clients should look to work with the government and other project proponents to address biodiversity on a regional scale.”
http://www.ebrd.com/downloads/policies/sector/draft-mining-strategy.pdf

[4] EBRD evaluation department special study “Extractive industries sector strategy review” August 2011 August 2011
http://www.ebrd.com/pages/about/what/evaluation/special.shtml

[5] https://bankwatch.org/publications/preliminary-comments-and-recommendations-ebrd-draft-mining-strategy and