In one of recent articles we have told about the best alternative to reducing environmental and social risks in mining and construction through adoption of sectoral approaches used by financial organizations while detecting, identifying, assessing, reducing and managing environmental and social risks during project funding process. These approaches or so-called “Equator Principles” are mainly based on IFC performance standards are put forward to mining companies as a requirement for funding.

IFC is one of the shareholders of British Lydian International whose Armenian subsidiary Geoteam is going to operate Amulsar gold mine.

Corporation’s Environmental and social specialist for mining investment Raymi Beltran told Mediamax about IFC’s environmental and social requirements as well as how the corporation oversees client companies.

- What are those environmental and social requirements that IFC’s client mining companies have to meet?

- You may know that IFC has a set of environmental and social performance standards which are public and which represent best international industry practice. So our clients need to adopt these standards in order to get the investment. Of course, the management of environmental and social risk can be measured with the level of activities and the investment. What I mean is that during exploration, when environmental and social risks are not that significant, the requirements are going to be also different than for an operating mine.

So, paramount to all of these performance standards is the adequate assessment of environmental, social, health and safety impact and the management of those impacts in order to either avoid, manage or minimize impacts on environment, social receptors and workers.

That’s the general overview of our requirements for all our investments.

IFC is investor in Lydian International, which is operating Amulsar mine in Armenia through it’s subsidiary Geoteam. Our reason for being involved in mining projects is the long term benefits to Armenia. We are development institution that works to promote economic growth and create economic opportunities in developing countries around the world. IFC is involved in number of different sectors: renewable energy, the banking sector, manufacturing sector and also in the mining sector. We regard projects like Lydian’s as an opportunity to support a project that could make long term benefit for the country by generating taxes, creating jobs and also setting good standards for how mines can be operated in that countries.

It’s all for development under sound environmental and social practices. As I mentioned earlier, our performance standards are regarded as good international practice. These performance standards are also being used by more than 70 “Equator” banks.

- How does IFC oversee those companies? Is there possibility that they cheat in order to save money?

- We work with these companies and engage with them throughout our investment, engage in communications with them throughout our relationship in terms of formal checks and supervision we carry out. We assess the situation on the ground either annually or semiannually, or two times a year depending on the risk of the project. The companies we work with also have to submit what is call an Annual Monitor Report which summarizes a lot of environmental and social data. We have formal reports that are submitted to us and also we carry out site visits to assess and support the company.    

- Have there been any cases of environmentally poorly managed operations, even if supervised by organizations like IFC?

- Mining is always challenging, and we cannot say that everything is perfect with every project we have been involved around the world. What we look for in the company is the commitment to do the right thing, to adopt these higher standards and to follow what we call the Continuous Improvement Cycle of managing their operations adequately and improving if there is any issue. So part of our support is to identify those issues together with the company and address those issues.
 
- There was a recent visit by IFC representatives to Amulsar. What is your opinion on Geoteam’s environmental and social policy?
 
- We continue to support the company in developing of their environmental and social standards, we are working with them to make sure the construction phase of the project meets our standards, and for that they need to work on developing an Environmental and Social Impact Assessment (ESIA) which meets IFC performance standards. This is something that they are currently working on prior to any construction of the mine.

In terms of social aspect, we are very impressed with the work they're doing in the different localities. It shows a lot of commitment on their side to support the communities in productive projects and in capacity building.

- We know that you are from Peru, where IFC is a shareholder in country’s largest mining project. Can you tell us, was there really a tangible improvement in those people’s lives, who live in neighboring communities, as a result of mine developer’s social policy? What is the role of mining in the economy of Peru and what are the examples worldwide of mining contributing positively to the economy?
 
- Mining in Peru has been paramount for the country's economic success. It's an important sector in terms of creating revenue for the country. Mining in Peru indeed provides significant benefits to the regions and local communities. However, there are environmental and social risks that need to be taken seriously and carefully managed.There are many mines at different phases throughout Peru and development impact of many of them has been positive.

- Armenia is also a mining country, there are more than 600 mines in this small country. Mining makes more than half of our exports and nearly 5% of GDP. But to be sincere, there are very few cases when mining really contributes to the prosperity of the particular region. Are you aware of other mining projects in Armenia and what’s your opinion on their policies?

-   I have not focused on other projects in Armenia. My engagement in Armenia has been specifically for Amulsar, where I've been there several times.

But just to follow up on your question on development:  I think it’s important that companies realize that they need to be responsible, they need to be aware that it’s important for them to provide development opportunities for the local communities. I think it takes management decisions and management commitment to make sure that development opportunities are realized at the local level.

I think that it’s very important for the companies to be a good local citizen and to think carefully about how they relate to the local community. Let’s take the Lydian: even at an early stage they are taking steps to provide jobs for local people, to support local development programs, local hospitals and schools etc. That’s what we call acting in responsible manner. We hope that Geoteam can become an example for other mining companies in Armenia.

Raymi Beltran was interviewed by Ruben Harutyunyan.