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The Role of Financial Institutions in Sustainable Mineral Development

Nairobi, July 2002 - In other cases, mining operations have been halted or new projects prevented from opening because of local community pressure. Annual general meetings of major banks have been disrupted over the banks' involvement in mining finance and non-governmental organizations (NGOs) have sometimes been very vocal.

Mineral exploration, mine site development and minerals and metals production are financed by a variety of institutions in various ways. The financing may be private or public, debt or equity, as well as insurance. Whatever the form, those who put their funds at risk have an increasing number of reasons to inform themselves about the mining industry's performance on environmental, social, and economic issues.

The United Nations Environment Programme (UNEP) commissioned this Report on the Role of Financial Institutions in Sustainable Mineral Development in order to better understand the investment process from exploration through development to mine closure. It is important to identify the key financing stakeholders at each stage of mineral development and understand their role in the environmental and social performance of particular mining projects.

The Report identifies the main parties involved in the mining process and describes the types of financing available to mining projects. It then explains 'who is doing what' and 'who pays for what'.

There is a lack of an internationally recognized benchmarking system for mining finance banks and technical consultancy firms. More dialogue with NGOs can bring genuine improvements to environmental management and improve the image of the financial institutions and mining companies alike.

The Report concludes that partnerships and information exchange between all stakeholders are the key to sustainable mineral development and with the least amount of environmental impact from this industry which is environmentally invasive, but without which our modern civilization cannot exist.

Copies of this publication are available from: SMI (Distribution Services) Limited (www.earthprint.com). Electronic copies (in pdf) are available at:

www.mineralresourcesforum.org.

UNEP Information Note 2002/23