The EIB confirmed today that it will not finance the first phase of the Tenke Fungurume mining project in the Democratic Republic of Congo. The Tenke project, one of the largest copper-cobalt deposits in the world and majority owned by the giant American mining conglomerate Freeport McMoRan, is notorious for lack of transparency and corruption allegations surrounding it.

Counter Balance believes the Tenke case epitomises deep-rooted problems with EIB development lending and with loans to extractive industries in particular. There have long been questions over the legitimacy of the Tenke project contract: a Congolese inter-governmental commission in 2007 found the contract contained numerous irregularities including a lack of transparency, undeclared conflicts of interest, questionable payments and the inclusion of terms that were highly disadvantageous to the DRC government.

In July 2007, the EIB decided to approve a EUR 100 million loan to the project conglomerate, Tenke Fungurume Mining SARL (TFM), before a DRC government review of mining contracts was completed and in the teeth of major opposition from Congolese and European NGOs. However, due to NGO pressure, the loan was made conditional on the Tenke contract passing the Congolese government review. It has failed to do so: the government and TFM cannot find agreement on the terms of the deal, thus preventing EIB disbursing the money.

Counter Balance coordinator, Desislava Stoyanova said: “EIB knew that the Tenke Fungurume Mining project was dodgy when it decided to grant the initial loan in 2007. Its decision was irresponsible and seriously undermined its credibility. We are relieved that thanks to the conditions attached to the EIB loan, no European public money can go to the project, but we have to ask: what has the EIB learned about its development role from this fiasco?”

Sadly, the answer appears to be not very much: the EIB states that it continues to have an interest in cooperating with TFM in the future. Counter Balance urges the EIB to renounce any current or future involvement in such a controversial project, and calls for an independent international extractive review on mining and extractives lending involving stakeholders and communities.

Anne-Sophie Simpere, campaigner at Friends of the Earth France, said: “In reality, I don’t think EIB can legally finance the Tenke project now, as the Bank adopted a new transparency policy including new conditions about the transparency of extractive industry projects that Tenke will never meet. But that isn’t the key lesson to be learned here.

What’s important is that EIB is wasting billions not only in development funds but in project appraisal and analysis on extractive industry lending that consistently proves to be anti-developmental. The EIB faces major embarrassment over Tenke, a project we specifically warned was unsuitable for support, and must now justify its continuing involvement in extractives projects not with waffle but by subscribing to an independent review of the entire sector. Anything less proves that the Bank simply hasn’t learned its lesson from the Tenke Fungurume fiasco."