International environment groups are raising the alarm about a funding decision to be taken next week by the European Investment Bank (EIB). The EIB board will meet on January 27 to discuss a EURO 60 million loan for the development of Sepon copper mine in the Lao People’s Democratic Republic (Lao PDR). Originally scheduled for December, the decision was delayed following a letter-writing campaign by non-governmental organisations (NGOs).

Located in the province of Savannakhet near the Vietnam border, the Sepon copper mine is owned by Australian company Oxiana. The copper mine follows a gold mine project on the same site which has been the source of ongoing environmental and social controversies already exposed by an international NGO campaign.

Lao PDR has notoriously poor governance and human rights problems. An August 2003 report by the UN Committee on Elimination of Racial Discrimination mentions “serious and repeated human rights violations in the Lao People’s Democratic Republic, particularly violations of the rights to life, physical integrity and security, and the freedoms of expression, association and religion […]”.

It is extremely doubtful that open and free consultations with local communities affected by the mine have taken place. The recent findings of the World Bank’s Extractive Industry Review spells out that such mining projects do not alleviate poverty in countries with weak governance. On the contrary, the costs to the country and its citizens often outweigh the benefits because of corruption and the frequent intimidation of local communities.

Compounding matters, environmental legislation and enforcement in Lao PDR remains very weak. The proposed copper mine threatens the ecosystem of nearby rivers (key tributaries to the Mekong River), and the likelihood of cyanide spills, illegal logging and increased stress on the biodiversity of the region will significantly increase.

Philippe Maystadt, EIB president, in conversation with a Friends of the Earth International campaigner at the Climate Change Convention in December in Milan (Italy) acknowledged that, “Even if we put forward environmental and social conditions [on projects outside Europe] there is no guarantee that they will be met by the project implementers.”

Further evidence that the EIB is no champion of environmental and social rights is provided by the Framework Agreement for financial cooperation which it signed with the Lao PDR on 25 November 2003. The agreement permits the EIB to support capital investment projects that contribute to sustainable development. Such projects, the agreement suggests, can be found in the mining sector despite general agreement that mining is the least sustainable sector, particularly in a country run by an oppressive regime.

Magda Stoczkiewicz, leading the EIB campaign on behalf of CEE Bankwatch and Friends of the Earth International said, “The EIB needs to reconsider its involvement with the Lao PDR. The Sepon copper mine is a huge project with detrimental environmental and social impacts which will do next to nothing for the population. If approved it will only confirm the EIB?s arrogant approach to project finance.”


In Europe: Magda Stoczkiewicz, CEE Bankwatch/FoEI
tel: +31 20 622 13 69 or email:

In Australia: Kate Walsh, AID/WATCH
tel: +61 2 9557 8944 or email: