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Tuesday, 10 May 2011
Page: 2202

Export Finance and Insurance Corporation

(Question No. 345)

Senator Ludlam asked the Minister representing the Minister for Trade, upon notice, on 13 December 2010:

Given that the Export Finance and Insurance Corporation (EFIC) has provided new loan support to West African mines and according to a media release on its website dated 30 August 2010, EFIC is providing a 4 year loan facility to the Australian business, African Underground Mining Services Pty Ltd (AUMS), for its contract underground mining operations in Ghana and Mali to the value of US$15 million:

(1) On what date did EFIC sign the loan contract and the contract become valid.

(2) Did EFIC apply its environment policy to benchmark the application against International Finance Corporation (IFC) Performance Standards and the Equator Principles before making the decision to approve this loan facility to AUMS.

(3) Does one of the four contract mining agreements that AUMS has entered into relate to Newmont Mining Corporation's Ahafo gold mine in Ghana, located in a farming region northwest of the country's capital Accra.

(4) When EFIC approved this transaction, classifying it as a Category B project (rather than a Category A - significant impacts), was it aware of any controversy surrounding the Ahafo gold mine since its commencement in 2006.

(5) Can comment be provided on the following 'known' controversies associated with the Ahafo gold mine: (a) allegations of human rights abuses by security forces protecting the mine; b) displacement of 10 000 people (95 per cent of whom were subsistence farmers); (c) inadequate compensation; (d) irresponsible practices; and (e) a serious cyanide spill in October 2009.

(6) Was EFIC aware that a ministerial panel of the Government of Ghana has recommended that the Newmont Mining Corporation be fined US$4.9 million for failing to prevent a major cyanide spill in October 2009 at its Ahafo gold mine, and for failing to properly report on and investigate the spill.

Senator Conroy: The Minister for Trade has provided the following answer to the honourable senator's question:

(1) African Underground Mining Services Ltd (AUMS) is not an Australian business but is an Australian-owned joint venture incorporated in Ghana. The EFIC US$15 million facility relates to AUMS's operations in Ghana and Mali.

The effective signing date of the Ghana loan contract is 8 April 2010 and the effective signing date of the Mali loan contract is 13 September 2010.

(2) EFIC assessed this transaction under its Environment Policy. As required under the Policy EFIC assessed the activity of our client using the IFC Performance Standards as the benchmark.

The Equator Principles apply only to project finance and were not relevant to this transaction which does not involve project finance as described in the Equator Principles.

(3) EFIC provided a loan of $US15 million to AUMS, a Ghanaian joint venture company, owned by two Australian companies. The purpose of the loan was to allow AUMS to purchase mining machinery manufactured in Australia for use in contract mining services provided by the Ghanaian joint venture to its clients in West Africa. Those clients included Newmont Ghana Gold Limited which operates and owns Ahafo Gold Mine.

(4) EFIC's assessment included a review of publicly available information (at the time of assessment) on its client's customer, Newmont Ghana Gold Limited and its Ahafo Gold Mine Project. That information indicated that the project was assessed and funded by the commercial arm of the World Bank, the International Finance Corporation (IFC), and that the IFC financing of the project was subject to the mine operator meeting stringent environment and social standards. The IFC also has ongoing monitoring and reporting in place, including assessments by independent consultants. Since the financing was approved by the IFC, the project has publicly reported on its management of environmental and social issues. EFIC's review provided adequate assurance that World Bank Group policies and guidelines had been met at the time of that review.

(5) EFIC cannot comment on these issues specifically as they are related to the operator and owner of the Ahafo gold mine, Newmont Ghana Gold Limited, and EFIC has no relationship with that company.

(6) EFIC is aware from news reports of payment by Newmont Ghana Gold Limited of an unspecified amount as compensation for an accidental overflow at the Ahafo Gold Mine.

EFIC cannot comment specifically on this issue as it is the responsibility of the operator and owner of the Ahafo Gold Mine, Newmont Ghana Gold Limited. EFIC has no relationship with that company.