In July 1996 the EIB announced an ECU 46 million loan package to the Lihir gold mine in Papua New Guinea. In the 30 years of operation 104 million tonnes of ore reserves will be exploited, producing 341 million tonnes of waste rock. The waste rock would be discharged into the nearby Louisiana harbour on the east coast of Lihir Island. The mining company Rio Tinto use the open pit cyanide leaching process, which is generally known to be highly polluting. During the mine's lifespan 89 million tonnes of toxic tailings would be produced. The tailings will be treated, however the treatment water will also be discharged into a deep submarine outfall. Trace metals in the treatment water would include copper, arsenic, cadmium, lead, chromium and mercury.

The American Overseas Private Investment Corporation declined to provide a political risk insurance in 1995 because of the abovementioned environmental impacts. They do not adhere to US standards regarding waste disposal.

1. Which environmental standards have been applied by the EIB when considering the Lihir gold project?

2. Does the Lihir gold project adhere to the environmental standards of the EIB?

3. As the project is operating already, how does the EIB intend to monitor the environmental impacts, and which criteria does the EIB apply if doing so?

4. What is the EIB's policy and practice about integration of compliance with multilateral agreements into the bankability criteria for project proposals?

5. How did the EIB take into consideration the principles and practices declared in the UN Convention on the Law of the Sea (date of entry into force 16 November 1994) with particular reference to part XII, Article 194.1. and Part XII, Article 196.1. when it decided to support the Lihir gold mine project?

Answer given by Mr de Silguy on behalf of the Commission

(25 June 1998)

Upon appraisal of the Lihir project in Papua New Guinea (PNG) the European investment bank (EIB) applied its current environmental standards set out in its "environmental policy statement". In line with these, the project is in compliance with all national as well as relevant internationally recognised requirements (especially Australian and United States Environmental protection agency), and follows best available and proven environmental practice. The project is also in compliance with the United Nations Convention on the law of the sea, to which PNG is party.

EIB-financed projects have to comply with those international agreements to which the host country is a party. The competent body of that country is formally responsible for compliance with such agreements. In the case of Lihir, granting of the environmental plan was conditional upon the submission, approval and adherence to an environmental management and monitoring programme with extensive reporting requirements to the respective PNG authorities. Based on this and other information, the promoter is required to send regular reports, including independent audits, to the EIB. These requirements have been respected.

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