Mindoro Resources Ltd (MRL), a junior mining company headquartered in Canada, plans to build an exploration and mining company in the Philippines with focus on nickel, copper and gold.  Mindoro’s primary asset is the 75% interest in the Agata nickel laterite deposit on the Northern Mindanao Island of the Philippines.  IFC is supporting the company’s resource drilling, feasibility and other studies, and exploration activities for nickel, copper and gold prospects with an approx $9.5 million equity investment.

In September 2011, two indigenous communities filed a complaint to the CAO.  The two communities belong to the ethno-linguistic group of Mamanwas and live in the settlements of Dinarawan and Bunga. Their concerns relate to areas within the Tapian Extension EP.  The complainants voice concerns that IFC failed to acknowledge them as Indigenous People and claim that the company’s mining exploration is being conducted in their ancestral lands. The complainants also contend that MRL did not provide sufficient informationc and contend the extent and quality of consultations with the communities; activities being conducted without prior consent; undue influence on the Free, Prior, and Informed Consent process; and concerns regarding potential social and environmental impacts of future mining activities in contested areas.

The CAO found the complaint eligible for further assessment in September 2011 and a CAO Ombudsman team traveled to the field in December 2011 and February 2012 to meet with relevant parties to discuss available options for addressing the issues. 

During the assessment process, the CAO understood from community members that pursuing a dispute resolution process was not an option at this point in time. Given the voluntary nature of a dispute resolution process, the CAO Ombudsman concluded its involvement in the case and released an assessment report, which is available in English and Bisaya (see View Documents below). 

In line with CAO's Operational Guidelines, the complaint was transferred to CAO Compliance for appraisal in May 2012 to determine whether or not an audit of IFC’s role in the project was merited.

CAO's appraisal report, completed October 2012, found indications of shortcomings with regard to IFC’s environmental and social performance. In particular, the CAO has questions as to (a) how IFC ensured the project area of influence was appropriately defined; (b) IFC’s risk categorization; and (c) IFC’s supervision.

More generally, CAO finds that this case raises issues on the effectiveness of IFC’s policies, procedures and standards in managing undefined downstream risks in early stage mining ventures. Furthermore, CAO questions whether IFC policies and procedures provide sufficient guidance to staff in responding to complaints.

As the immediate impact of MRL’s operations on the complainants was mitigated by the MRL’s decision to suspend exploration operations in the contested area, and IFC’s legal leverage with regards to resuming operations, CAO finds limited value in conducting a compliance audit at present. However, CAO reserves the right to reconsider this decision should operations resume in a manner that raises significant concerns regarding impacts on communities or the environment.