Source: IDI
Indonesia: Preventing the looming Dairi Prima Mineral mine disaster
When local communities heard that Dairi Prima Mineral’s proposed zinc mine in their earthquake prone region would require a tailings dam to sit behind a 25-meter-high wall to prevent toxic waste flowing downstream, they were understandably very concerned. Feeling that they had been kept in the dark by the authorities, the community members decided to get informed and get organized. Inclusive Development International has helped them obtain independent technical information on the risks of the mine and pursue accountability through the International Finance Corporation’s complaint mechanism and other international channels.
CASE FILE
Location:
Indonesia – North Sumatra
Project:
Zinc Mine
Companies:
Dairi Prima Mineral, China Nonferrous Metal Industry’s Foreign Engineering and Construction Co. Ltd. and Bumi Resources Minerals
Key concerns:
High risk of a catastrophic tailings dam failure
Human safety
Environmental damage
Population displacement
Lack of information, community consultation and consent
Community goals:
Meaningful consultation on an independent and robust environmental and social impact assessment.
Cancellation of the project unless it meets international environmental and safety standards
Key investors and financiers:
Postal Savings Bank of China, a financial intermediary of the International Finance Corporation, has provided working capital loans to the mine’s parent company, China Nonferrous Metal Mining Co Ltd. Dairi Prima Mineral is expected to raise 80% of the mine’s cost (approximately $366 million) through project loans. Bank of China, Industrial and Commercial Bank of China (ICBC) and Sinosure have previously expressed an interest in financing or insuring the project.
Our partners:
BAKUMSU Association, Mining Advocacy Network (JATA
In March 2020, the Ombudsman accepted the complaint because Postal Savings Bank of China provided general corporate loans to the mine developer. This was the first complaint involving a Chinese financial intermediary accepted by the Ombudsman And led to a compliance appraisal that concluded in June 2022, finding that the mine and tailings dam pose “extreme” risks. Unfortunately, Dairi Prima Mineral had by this time ended its financial relationship with the IFC intermediary Postal Savings Bank of China. As a result, the Compliance Advisor Ombudsman decided not to continue its investigation.