Involving the Public - Mining and the Environment: From Ore to Metal - page 135

they survive on their reputations. Also beside the test of commerciality, a mining project
must pass a rigorous environmental assessment to demonstrate that its development is
without severe negative environmental and social consequences to the host region.
As mentioned in the introductory chapter of this text, leading commercial banks have
now subscribed to World Bank standards for environmental assessment as a prerequisite
for participation in project i nancing in excess to 10 million US dollars:
The Equator Principles Financial Institutions (EPFIs) have consequently adopted
these Principles (the Equator Principles) in order to ensure that the projects we i nance
are developed in a manner that is socially responsible and rel ect sound environmental
management practices. By doing so, negative impacts on project-affected ecosystems
and communities should be avoided where possible, and if these impacts are unavoid-
able, they should be reduced, mitigated and/or compensated for appropriately. We
believe that adoption of and adherence to these Principles offers signii cant benei ts
to ourselves, our borrowers and local stakeholders through our borrowers' engage-
ment with locally affected communities. We therefore recognize that our role as i n-
anciers affords us opportunities to promote responsible environmental stewardship
and socially responsible development. As such, EPFIs will consider reviewing these
Principles from time-to-time based on implementation experience, and in order to
rel ect ongoing learning and emerging good practice ( www.equator-principles.com ).

Commercial fi nancial institutions
survive on their reputation.

In case of a large consortium of lenders, environmental matters are usually delegated to
one of the consortium members. This bank appoints a specialized independent environ-
mental advisor (often a well-established independent environmental consultancy) to advise
on environmental matters and to liaise with the mine owners.

Export Credit Agencies - The Quiet Giants of Mining Financing

Related to the role of i nancial institutions are investment guarantee schemes to facilitate
the assembly of i nance packages for mining projects in developing countries. Export Credit
Agencies, Government Development Agencies, and Investment Insurance Agencies, com-
monly known as ECAs, are public agencies that provide government-backed loans, guaran-
tees, credits, and insurance to private corporations from their home country to do business
abroad, particularly in the i nancially and politically risky developing world. Most industrial-
ized nations have at least one ECA, usually an ofi cial or quasi-ofi cial branch of government.
The oldest insurance system is the Overseas Private Investment Corporation (OPIC), an
agency established by the US government in 1948. Since then many countries have established
similar schemes such as Hermes (Germany), DANIDA (Denmark), PFCE and COFACE
(France), ECGD (United Kingdom), MITI and JBIC (Japan), Finnvera (Finland) - one of
the biggest lenders to the mining sector, EDC (Canada) and MIGA, established by the World
Bank in 1990 to complement the IFC, the World Bank's private investment arm. The ofi cial
OECD website now lists 49 such agencies as of October 2006 ( www.oecd.org ).
Today, ECAs are collectively among the largest sources of public i nancial support for
foreign corporate involvement in industrial projects in the developing world. For exam-
ple, ECAs are estimated to support four times as many oil, gas, and mining projects as all
the multilateral development banks such as the World Bank Group combined (NGO Eca-
Watch 2002). Typically, ECAs provide part of the i nance required for a mining project's
purchases of goods and services in the agency's home country. For example, if Komatsu
Earth moving equipment is to be used, the Japanese agencies would i nance its purchase;
if Caterpillar equipment was planned, the American agencies would step in. Bearing in