| CASE FILE | |
| Location: | Grand Cape Mount County, Liberia |
| Project: | Gold mine, processing facilities and related infrastructure |
| Companies: | Bea Mountain Mining Corporation, a wholly-owned subsidiary of Avesoro Resources Inc., which is ultimately owned by MNG Group of Turkey |
| Key concerns: | · Physical and economic displacement without adequate compensation · Loss of income, lack of employment and failure to provide livelihood assistance · Destruction of agricultural lands and threats to food security · Health and safety concerns from water pollution, dynamite blasting, the tailings storage facility and a holding dam · Lack of local benefits |
| Community goals: | · Full implementation of all agreements already signed with the company · Just compensation for lost land and assets · Livelihood restoration and social benefit programs · Remediation of polluted water sources and access to adequate, clean water · Prevention of future harm |
| Key financiers and buyers: | Three European development banks – DEG (German), Proparco (French) and FMO (Dutch) are linked to the Liberian mine through investments in FirstRand Bank, a South African commercial bank which financed the project, along with Nedbank. The South African government’s export credit agency, ECIC, guaranteed the loan. The International Finance Corporation, part of the World Bank, had previously investment in the project, but pulled out after an accident that spilled cyanide and arsenic into a river. Early company disclosures revealed that gold from the New Liberty mine was being sold to the MKS PAMP refinery in Switzerland, a member of the London Bullion Market’s Good Delivery List. Major consumer brands, including Alphabet, Apple, Disney, Starbucks and others disclose that they sourced gold from this refinery in their conflict minerals reports to the U.S. Securities and Exchange Commission.
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| Our partners: | Liberian NGOs |
With infrastructure, social services and the economy decimated by a protracted civil war, Liberia has sought to attract foreign investment as part of its effort to rebuild. But community leaders say that the New Liberty project has taken their homes and farms, polluted their water and failed to provide promised jobs and social benefits.
Though they live next door to Liberia’s first and largest commercial gold mine, most community members are worse off than before. As farmers and artisanal miners, community survival previously relied on access to land and natural resources. They ate primarily what they could grow, hunt and fish, supplementing their farming income with small-scale mining.
Now, many find themselves cut off from the land and unable to support themselves and at times have faced violent retaliation when they try to hold the company to its promises. Yet the company continues to expand the project by developing the Ndablama satellite deposit and other deposits in the area.
Liberian NGOs that had been working with the community since 2015 turned to Inclusive Development International to help investigate the project’s financial backers and gold off-takers. Through this research, we identified that the German development agency DEG, the French development bank Proparco and the Dutch development bank FMO were all linked to the project through their investments in South Africa’s FirstRand Bank. This enabled the communities to file a groundbreaking complaint to the development banks’ accountability mechanism, opening the door to a formal mediation process with the company.
The complaint, filed with the development banks’ Independent Complaints Mechanism (ICM), describes the harm experienced by each of the five communities in their own words. An annex to the complaint that we drafted details how the European development banks are exposed to the project and argues that the banks’ novel “portfolio-wide approach” to financial intermediary lending should be interpreted to give affected communities access to the ICM complaint process.
In a groundbreaking decision, the ICM agreed, finding the complaint admissible as to DEG and Proparco. The ICM dismissed the complaint against FMO on technical grounds.
The ICM’s decision now opens the door to a formal mediation process between the mining company and the affected communities. Complainants believe the mediation process presents an opportunity to secure full and fair redress for all of the harms and losses they have suffered, hold the company to its prior agreements with communities and prevent future harm as the mine continues to expand.
Inclusive Development International also traced the gold from Liberia, discovering links to major U.S. brands. Company disclosures revealed that gold from the New Liberty mine was refined at MKS PAMP refinery in Switzerland. This refinery is subject to a number of standards requiring due diligence on human rights issues in the supply chain. These include the Responsible Gold Guidance of the London Bullion Market Association, to which members are required to adhere to in order to access the market. The PAMP refinery supplies gold to some of the largest brand names in the world, including Alphabet, Apple, Disney, Starbucks and others. Following the onset of the Covid-19 pandemic in 2020, our researchers found that the gold from the New Liberty mine started being flown to Istanbul, Turkey. From there, we believe it is transported to the Nadir Metal Rafineri, which is also a member of the London Bullion Market’s Good Delivery List and supplies gold to a number of multinational consumer brands, including Apple, Macy’s and Alphabet. These brands also disclose in recent conflict minerals reports to the U.S. Securities and Exchange Commission that they may be sourcing gold from Liberia.
Inclusive Development International is calling on FirstRand, the European development banks, the gold refineries and the retail and technology brands that ultimately source gold from New Liberty to ensure that the mining company engages in good faith mediations with the community to resolve their long-standing grievances.
Bea Mountain Mining Corporation, which operates the New Liberty project, is a wholly-owned subsidiary of privately held Avesoro Resources Inc. Avesoro Resources is ultimately owned by the MNG Group of Turkey, which is controlled by the billionaire Günal family. Bea Mountain Mining Corporation first signed a Mining Development Agreement with the Liberian government in 2001, giving it a mining license covering a 457 km2 area in western Liberia. The mining license area contains a series of gold deposits, of which the New Liberty Gold Mine was the first to be developed.
The original project included an open pit mine, a processing plant, a tailings storage facility and a waste rock dump, as well as related infrastructure. Construction began in 2014, and full commercial production began in 2016. Since then, the company continues to expand, announcing that it will transition to underground mining operations at the original site and developing other satellite deposits. Each expansion compounds the impacts on affected communities, increasing the footprint and lifespan of the project and necessitating larger waste storage facilities and additional infrastructure.
Around 2,000 people were forcibly resettled, losing their homes and farmland to make way for the mine’s open pit. Community members report being pressured to sign agreements that moved them into temporary, inadequate housing in 2014, while the company stopped working on construction of their permanent homes, leaving them unfinished for years. It took four years before community members began to get possession of their resettlement homes, and even then, there were problems with the size and quality.
To make matters worse, the company seriously underestimated the amount of land needed, failing to acquire enough land to ensure that resettled residents would have access to agricultural land. As the population of the resettlement town has boomed because of the mining project, there is no land available for farming.
Other affected communities have also suffered restrictions on land use and loss of access to agricultural lands and forests they used for hunting, leading to food insecurity and loss of livelihoods. Many community members also participated in artisanal mining, either directly or indirectly by providing goods and services to miners. Yet the company’s mining license permitted it to restrict this type of small-scale mining, and these important economic opportunities have disappeared.
The project has also been beset by design flaws and dangerous accidents. Between December 2015 and June 2016, the mine’s tailings storage facility periodically released harmful chemicals, including cyanide and arsenic, because of a defect in the processing plant. During this time, the processing plant caused at least one significant cyanide spill, in March 2016, eventually prompting the company to temporarily suspend operations of the plant. Nearby communities suffered from mass fish deaths and serious skin rashes, and fear other health risks from their exposure to the polluted water, but company disclosures downplayed the incident, stating that “there has been no adverse impact on any human settlement.”
Community members have struggled to hold the company accountable. At least one protest to try to secure promised benefits resulted in police violence, with community members beaten, arrested and detained and later blacklisted for employment. Some residents were allegedly injured by police and never received proper medical care.
More recently, following a visit by the Liberian President last year, the company has embarked on several long-overdue community infrastructure improvement projects. Complainants are hopeful that the Liberian government’s efforts to ensure that the project brings promised benefits to local communities will help ensure that the company participates in good faith in the ICM mediation process.
DEG’s, Proparco’s and FMO’s Exposure to New Liberty
DEG, Proparco and FMO have been lending money to FirstRand Bank of South Africa for years. FirstRand participated in project loans of $110 million to develop New Liberty while it was a client of the development banks. While the development banks “ring-fenced” their loans to FirstRand, restricting their use to particular types of projects, all three development banks take a portfolio-wide approach to their financial intermediary lending. This approach, recognizing that money is fungible, requires banks like FirstRand to apply stringent social and environmental standards to all of their high-risk clients, no matter their size or location and regardless of any ring fences.
Inclusive Development International and its partners argued that for this approach to have meaning, it must also give affected communities access to the ICM. In a groundbreaking decision, the ICM agreed.
After reviewing all of the confidential contracts between the development banks and FirstRand, the ICM determined that FirstRand’s loan to develop the New Liberty project was not within the ring fences that the development banks had placed on their loans. Nevertheless, the ICM accepted the New Liberty complaint on the basis of the development banks’ portfolio-wide approach to financial intermediaries – a first in development finance accountability.
However, the mechanism only found the complaint admissible as to DEG and Proparco, which had a longer and more consistent lending relationship with FirstRand Bank. FirstRand Bank is also an ongoing financial intermediary of FMO, which has provided several different types of financial support to FirstRand. The ICM dismissed the complaint against FMO on technical grounds related to the different nature of its financial links with the intermediary bank.
