Nicaragua: Ingenio Montelimar-01/Montelimar Environs

Date Filed
01 Oct 2015
Status
Open
Phase
Dispute Resolution (DR)
Country
Nicaragua

Case Tracker

Eligibility
October 01, 2015-October 20, 2015
Eligibility
Assessment
Assessment
Dispute Resolution
Mediation
Monitoring
Compliance
CURRENT Status
Mediation (DISPUTE RESOLUTION)

Complaint Overview

Complainant

Asociacion Montelimar Bendicion de Dios (AMBED)

Concerns

Community health & safety, environmental pollution, land tenure, and information disclosure.

Cross-Cutting Issues
Risk Management Labor Resource Efficiency Community Health and Safety Land Resettlement Indigenous Peoples Air Land Water Coercion Loss of Life Loss of Livelihoods Access to Information Policy

Project Information

Region
Latin America & the Caribbean
Institution
IFC
Name & Number
Ingenio Montelimar 32253
Company
Corporacion Montelimar SA
Sector
Agribusiness
Department
Manufacturing, Agribusiness & Services
Category
A
Commitment

$15 million A loan

Synopsis

Project Overview

Consorcio Naviero Nicaraguense (Navinic) owns the smallest of four sugar mills in Nicaragua (Montelimar mill), with a milling capacity of 2,300 tons of sugar cane per day. The project involves an increase in the company’s sugar annual production and includes the acquisition of 1,628 hectares of land to increase planted area, investment in irrigation and other infrastructure in the field, increasing milling capacity, acquiring additional harvesting and transportation equipment and funding incremental working capital needs. The total project cost is estimated at US $38 million, and IFC has provided a US $15 million A Loan for its own account.

Complaint

In October 2015, the Asociacion Montelimar Bendicion de Dios (AMBED)—a local organization comprising current and former workers of Montelimar, their families, and members of communities in the municipalities of San Rafael del Sur and Villa El Carmen—filed a complaint with CAO regarding IFC’s Montelimar project.  The complaint cites concerns about the high prevalence of Chronic Kidney Disease (CKD) in the local communities and the company’s response to the epidemic; environmental impacts due to industrial cultivation of sugarcane; issues related to evictions and land tenure; and lack of information disclosure and community engagement. The complainants also raise questions about IFC’s compliance with its environmental and social Performance Standards regarding these issues.

CAO Action

CAO found the complaint eligible for assessment in October 2015. During the assessment, the company and complainants wished to meet to exchange information on the concerns raised in the complaint and engage in a CAO dialogue process. The parties held several meetings to clarify misconceptions and address issues of common interest, and in January 2017, they signed an agreement to work together to provide support to those suffering from CKD. Agreed actions included health and livelihood support to former workers, which encompassed the creation of a cooperative, Textil of Multiple Services Manantial de Agua Viva. The parties also agreed to have AMBED operate as an additional intake channel for the company’s grievance mechanism and to request government support to form a commission to improve access to health care services and pensions.


From January 2017 to October 2019, the parties worked to implement the agreement and address the remaining concerns raised in the complaint. This took place amid an acute political crisis in Nicaragua that began in early 2018. Joint meetings were suspended but parties continued to work together. As a result of their sustained effort, the COSEMUNAV cooperative, which is composed of 172 former workers, including some complainants, started operating in August 2018. The cooperative’s first project is a small textile workshop. Despite the security challenges faced in 2018 and 2019, CAO continued to support the parties as they worked to address the issues through dialogue, reach agreements, and implement them to their satisfaction.

On October 10, 2019, the parties signed a final mediation agreement in San Rafael del Sur, Nicaragua, which sets out various actions and commitments. These include further commitments by Corporación Montelimar (CM) to support former workers with temporary, short-term benefits related to health and food, as well as sustainable, medium-term actions to implement employment and income generation projects. Parties also intend to collaborate with national authorities to improve health care services in the neighboring communities and decided to continue engaging in participatory water monitoring. In addition, they agreed to collaborate further regarding community complaints related to the company and agreed on ground rules for their long-term engagement. The agreement is available in English and Spanish under the “Case Documents” section below this page. 

CAO commenced monitoring and implementation of the agreement was well underway when the COVID-19 pandemic reached Nicaragua. The parties have shown their capacity and commitment to adapt to the challenges brought by the pandemic. CAO helped by equipping AMBED’s leaders with smartphones and internet service and trained them to use videoconferencing apps. CAO also helped parties prepare videos to disseminate good practices to prevent the spread of COVID-19 and later trained both parties in the production of short videos to keep their members and employees informed. After signing the agreement, the parties have held thirteen joint meetings (10 online and 3 in person), which have resulted in new agreements and they have continued working together to implement the commitments from the final mediation agreement signed in 2019.

Additionally, the company agreed to provide exceptional and temporary food supply and hygiene kits to AMBED’s members as a response to the dire economic situation created by the pandemic, and in coordination with donors such as ANDECU and SOMO, non-governmental organizations from Nicaragua and the Netherlands. 

With support from CM, a textile factory owned by the COSEMUNAV cooperative (now comprising 172 former workers) currently provides jobs to fifteen community members and in January 2022, distributed dividends to its members for a third year in a row. The factory produces and sells uniforms to various corporate clients, CM being the most important one. The cooperative has recently reached financial sustainability. The parties recently decided to fund the purchase of an embroidery machine for the cooperative.

Given this success story, parties have agreed to set up a new cooperative to develop and implement new income generation projects, including a microcredit project which will be carried out with the support of a local organization called NITAPLAN, in charge of providing technical assistance and managing funds. The cooperative is currently being set up. Parties have also completed five participatory rounds of water quality monitoring.

The parties continue to collaborate to implement the final settlement agreement and are preparing for the upcoming closing of CAO’s monitoring process. To facilitate the upcoming transition and support the strengthening of AMBED’s organizational capacity, CM is financing the recruitment of an assistant for AMBED.

Status

CAO continues to monitor the implementation of agreements regarding this case.

 

Status as of June 30, 2022

Case Documents

  • Complaint & Assessment

    Complaint
    Ingenio Montelimar Complaint
    Aug 23, 2015
    English
    Ingenio Montelimar Complaint
    Assessment Report(s)
    CAO Assessment Report
    Feb 01, 2016
    English
    CAO Assessment Report
    CAO Assessment Report
    Feb 01, 2016
    Spanish
    CAO Assessment Report
    IFC Response to the CAO Assessment Report
    Aug 29, 2016
    English
    IFC Response to the CAO Assessment Report
  • Agreement(s)
    Signed Agreement - Montelimar
    Jan 01, 2017
    Español
    Signed Agreement - Montelimar
    Annex 1 - Signed Agreement
    Jan 01, 2017
    Español
    Annex 1 - Signed Agreement
    Annex 2 - Signed Agreement
    Jan 01, 2017
    Español
    Annex 2 - Signed Agreement
    Signed Agreement with annexes
    Dec 01, 2018
    English
    Signed Agreement with annexes
    Progress Report
    Dec 01, 2018
    English
    Progress Report
    Progress Report
    Dec 01, 2018
    Español
    Progress Report
    Final Agreement with Annexes - Montelimar 01
    Oct 01, 2019
    English
    Final Agreement with Annexes - Montelimar 01
    Final Agreement with Annexes - Montelimar 01
    Oct 01, 2019
    Español
    Final Agreement with Annexes - Montelimar 01