How were communities affected by the IFC’s decision to divest from the Kipoi copper mine?

BIC and our partner, Afrewatch, monitored the IFC’s investment in the Kipoi copper mine in the DRC. We found that the IFC failed to enforce its Performance Standards or achieve its stated development impacts, resulting in harm to communities and environment. Despite the IFC's divestment from the Kipoi mine, the IFC should act to redress the harm caused by the mine and learn lessons from this project to improve future mining investments.

Our partner African Resources Watch (Afrewatch), with support from BIC, monitored the IFC’s investment in the Kipoi copper mine, located in the Democratic Republic of the Congo (DRC). Historically, large-scale mines are known to have severe impacts both on the environment and surrounding communities. Unfortunately, our findings demonstrate that the IFC’s investment in the Kipoi mine was no exception. The IFC not only failed to hold its client, Société d’Exploitation Kipoi (SEK), accountable to the Performance Standards (PSs), but also failed to achieve its four stated development impacts before completely divesting from SEK in July 2020. 

Afrewatch’s report finds that SEK violated three PSs: PS1 Assessment and Management of Environmental and Social Risks and Impacts, PS3 Resource Efficiency and Pollution Prevention, and PS4 Community Health, Safety, and Security. Regarding PS1, local communities stated that the last time SEK held consultations with them was in 2016 when the IFC first invested. The communities describe the communication between the company and the community to be almost non-existent. Although the IFC suggested SEK create a formal long-term communication strategy for community engagement and a formal grievance mechanism, Afrewatch found no evidence that SEK complied. Our partner also found that SEK dumped toxic acids into the Lukutwe River, damaging the soil of agricultural lands, causing fish and aquaculture to disappear, and disrupting the communities’ access to clean water. SEK did not abate water and soil pollution to levels safe for local communities nor provide the communities with adequate alternative water sources. As the number two investor and lender, the IFC could have done much more to make continued investment in SEK conditional on the company’s implementation of the PSs.  

In addition to the IFC’s lack of enforcement of the PSs, the IFC’s investment also failed to produce any sustained development benefits, either locally or nationally. The IFC stated their investment in the Kiopi mine would result in: increased taxes and royalties to the DRC government, increased direct and indirect employment opportunities, increased community investments, and in-country value addition. However, Afrewatch found the opposite of these purported impacts occurred. The IFC’s investment did not result in an increase in the mine’s production or profit, so greater tax revenues for the DRC government never materialized. Concerning employment, out of nearly 44,000 people in six villages, SEK employs only 15 local people. While SEK employed 264 DRC nationals in 2017, this was down from 273 before the IFC’s investment. On community investments, SEK had made various investments prior to the IFC’s involvement, but except for a single well serving fewer than 400 people, Afrewatch found no evidence that the company supported, upgraded, or expanded these community investments as SEK agreed it would in accordance with DRC law. Finally, according to the last published financial report of SEK’s parent company, the mine’s production rate did not increase but fell; therefore, it is hard to discern any in-country value addition resulting from IFC’s role. 

As the IFC has since divested from the Kiopi mine, it has not shown a willingness to provide communities with any redress. In response to our findings, the IFC commented they were unaware of any water or soil pollution during its investment and stated that they had provided SEK with guidance “on the need for ongoing environmental and social risk management.”  However, IFC did not address how it expected such risk management to be maintained, much less improved, in the absence of external oversight or of community engagement. 

The IFC needs to monitor and enforce its clients’ compliance with the PSs to prevent and mitigate social and environmental harms that can result from its investments. Given the adverse local impacts of industrial mining, we recommend that all future IFC mining investments require, in addition to conformity with the Performance Standards: 

  • A percentage increase in permanent, direct jobs for local residents, including for women; 
  • Annual payments to government (in percentage of revenues with a dollar minimum); 
  • Community development spending (percentage of revenues with dollar minimum); and 
  • Annual reporting of community development impacts and number of local people benefiting.

Additional indicators of investment success, depending on the circumstances, could include: 

  • forest in or adjacent to the mine concession restored or added with native tree species (number of hectares); 
  • improved drinking water sources provided (percentage of population served);
  • improved sanitation provided (percentage of population served);
  • increased percentage of wastewater processed to potable levels, or reduced pollution of rivers downstream of the mine (all contaminants reduced to safe levels); 
  • increased percentage of local school-age children attending school; and 
  • electricity access [household service/connections] provided.

Read Afrewatch’s full report in English or in French.