European Investment Bank (EIB) announced last week that it would endorse and support the Extractive Industries Transparency Initiative (EITI). The EIB, which has invested over EUR 700 million in large scale mining projects in Africa since 2000, stated that it is ‘committed to promoting good transparency and governance in all the projects it finances’. [1]

While campaign groups welcomed the EIB’s support for EITI, they emphasised the major contradiction between the development and transparency ideals in the initiative and the realities of the EIB’s lending practices. In particular, NGOs pointed to the recent controversial EIB loan for a major mining project in the Democratic Republic of Congo (DRC), a project notorious for the lack of transparency and the alleged corruption surrounding it.

In July 2007, the EIB granted a EUR 100 million loan to the Tenke Fungurume Mining SARL (TFM) project in the DRC, whose majority shareholder is US mining giant Freeport McMoRan [2]. EIB lending in Africa takes place under the Cotonou Agreement, which aims at ‘reducing poverty with the objective of sustainable development.’ EIB also claims that it ‘applies EU standards and international best practice in all projects it finances.’ But the Tenke loan flatly contradicts both these stated aims.

Desislava Stoyanova, coordinator for the new campaign coalition Counter Balance: Challenging the EIB, said: “This was a highly controversial decision, as the TFM contract was being reviewed at the time by an inter-ministerial commission set up by the Congolese government to examine mining contracts signed during the war and transition period. Many of those contracts, including that of TFM, are characterized by gross irregularities or imbalances such as a lack of transparency in the negotiation and awarding of deals, conflicts of interest, a failure to properly assess Congolese assets prior to the deals and the inclusion of terms that are highly disadvantageous to the Congolese government.”

The flaws in the acquisition and terms of the TFM contract have been well-documented by numerous studies, including a legal audit commissioned by the World Bank. [3]

Anne-Sophie Simpere, of Friends of the Earth France/Counter Balance, said: “In light of the questionable validity of the Tenke contract, the EIB’s financing of the project can only be described as an irresponsible investment. With so much EIB lending, using EU taxpayers’ money, now taking place far beyond the boundaries of Europe, much better oversight of the EIB’s activities is needed. Only fundamental reforms will ensure that the EIB assumes its role in promoting sustainable development outside of the EU in a transparent manner.”

Judith Verweijen, from Broederlijk Delen, added: “EIB support to such a controversial project casts serious doubts on its commitment to promote transparency and good governance in the mining sector. The EIB and its shareholders, the EU member states, must acknowledge that endorsing EITI can only be a small part of an all-encompassing commitment to transparency and accountability.”

The NGOs are calling on the EIB to take the necessary measures to improve transparency and accountability for its support to projects in the extractive industry, and ask the Budget Committee of the European Parliament to address this issue during its discussion of the EIB’s annual report next week.

Notes for editors

[1] See

[2] The Tenke Fungurume project covers one of the world’s richest copper and cobalt reserves. The project is a joint venture between majority shareholder Freeport McMoRan copper and gold inc. (USA, 57.75%), Lundin Mining (Canada, 24.75%) and the Congolese para-statal Gecamines (17.5%).

[3] The legal audit of Ernst and Young commissioned by the World Bank and the DRC government’s Commission on Public Sector Reform (COPIREP) (Contrat de consultant n° 24/COPIREP/ SE/11/2004) is available on See also, IPIS and Swedwatch, Risky Business. The Lundin Group’s involvement in the Tenke Fungurume Mining Project in the Democratic Republic of Congo (February 2008)

The contract was signed in July 2005 after a hasty negotiation process that took place largely behind closed doors. At the time, the deal was being questioned as World Bank consultants advised that the signing of any new contracts be suspended until existing mining contracts had been revised. The conclusions of the inter-ministerial commission, which were leaked to the press in November 2007, confirmed the problems with the contract, recommending that the contract be renegotiated.