Indonesia: Financial Intermediary-01
Community members living near the DPM mine in North Sumatra, Indonesia
Consultation and information disclosure; fear of reprisals; pollution and natural resource impacts; influx of workers; and impacts to local infrastructure.
In October 2019, CAO received a complaint from two community members from the Bongkaras and Pandiangan villages, on behalf of themselves and other community members living in the vicinity of the Dairi Prima Mineral mine (DPM) zinc and lead mining project in North Sumatra, Indonesia. The complainants were supported by the international NGO, Inclusive Development International (IDI), and other local partner organizations based in Indonesia, including Perhimpunan Bantuan Hukum dan Advokasi Rakyat Sumatera Utara (BAKUMSU). The complaint raises concerns about the impact of the mine’s development on local communities, including: consultation and information disclosure regarding the project; fear of reprisals; contamination from tailing storage; potential impacts on water resources and agriculture; air pollution; influx of workers to the area; and impacts to local public roads from increased heavy vehicle traffic. The complaint stated that IFC was actively exposed to the DPM mine through its financial intermediary investments.
The complaint asserted that IFC was exposed to the mine through its financial intermediary investments in Postal Savings Bank of China (“PSBC”) and another commercial bank. In March 2020, CAO found the complaint eligible in relation to IFC’s investment in PSBC through PSBC’s potential exposure to two other companies, including the majority owner of DPM. The complaint was found ineligible in relation to the other commercial bank. Due to COVID-19 related restrictions, and to allow additional time for consultation with the complainants and IFC client, CAO extended the 120-day assessment period.
In January 2022, CAO concluded the assessment process. During CAO’s assessment, CAO engaged with the complainants, PSBC, and IFC. CAO attempted to contact the project operator, DPM, on several occasions to include their views in the assessment report but did not receive a response. In this case, there was no consensus to participate in a dispute resolution process, which is voluntary and requires the participation of both the Complainants and the IFC client and/or sub-client. Therefore, the case will proceed to CAO’s Compliance function for an appraisal in accordance with the CAO Policy.
The case has been referred to CAO’s Compliance function for an appraisal of IFC’s environmental and social performance in accordance with CAO’s Policy.
Status as of January 19, 2022