IFC is proactive in the sustainable infrastructure space. What is IFC doing in the mining sector?
At IFC, we believe that environmentally sound and socially responsible mining can catalyse long-term economic growth in host countries through direct and indirect job creation, development of local supply chains, exports, and contribution to fiscal revenues. Mining is also essential for the energy transition. In fact, according to the World Bank, the transition to a low-carbon future will be quite mineral-intensive, as demand for the minerals and metals that play a key role in low-carbon technologies increases significantly in the coming years.
For these reasons, IFC holds a portfolio of responsible mining investments, contributing to our triple bottom line of development impact, profitability, and sustainability. We work with investors, partners, and governments to unlock private mining investments in environmentally and socially sustainable ways. This includes identifying and mitigating environmental, social, governance (ESG) and transparency risks, as well as highlighting opportunities for mining companies to go beyond compliance and leverage operations for stronger development impact.
Specifically, we offer integrated financing and advice on sustainable business solutions for mining clients at all stages of mineral development. These solutions, which include strategic community investment, local supply chain development, and gender and youth programmes, deliver positive impacts for the country and communities, creating shared benefits, improving company-community relations, and enhancing social license to operate.
On the topic of enabling a greener future, what are some measures you are exploring to enable decarbonization and sustainability in your mining investments?
\All our investments aim to integrate the sustainability angle. For example, we offer project financing and corporate financings for mining projects—many of which are associated with energy-transition metals and minerals—through the use of green bonds and loans linked to the United Nations’ Sustainable Development Goals.
We also invest in multi-use shared infrastructure, water solutions, and renewable power-to-mines initiatives—all of which promote a low-carbon future in an environmentally and socially sustainable manner. For example, IFC is working with an energy client that is looking to provide a decarbonized solution to an existing mining client. We’re building on our intersectional expertise to deliver customized, low-carbon solutions that address the needs of both the energy client and the mining client.
Why all the recent buzz about sustainability-linked finance?
Sustainability-linked finance is a powerful tool for mobilizing capital as the world moves towards a greener global future, helping countries reach their emissions reduction targets made under the Paris Agreement. Specifically, sustainability-linked financial instruments can incentivize companies to pursue ambitious, long-term environmental and social goals, in alignment with their own mission and strategy.
For example, our US$100M sustainability-linked financing with global mining company Anglo American (LSE: AAL) includes company commitments to local community development, in the form of improved education quality for more than 73,000 students and job creation. We’re really proud of this, in part because it’s the first-ever sustainability-linked loan to a mining company focused solely on social development indicators.
What potential does Africa’s mining industry hold in the race to net-zero and where do you see IFC’s role?
Africa’s rich natural resources include significant caches of high-grade, energy-transition minerals like copper and nickel, giving the continent a major competitive advantage in a low carbon future. African countries have exciting opportunities to capitalize on the increased mineral demand that comes with the energy transition. However, there are challenges, including the need for stronger and more transparent ESG, as mineral value chains decarbonize. Transportation infrastructure needs to be upgraded. Clean energy availability is also an issue.
Our experience has shown that proactive mitigation of ESG risks creates long-term shareholder value
Investing in infrastructure and natural resources in Africa is a strong focus for IFC. Globally, we have committed and mobilized around US$5B over the last decade in the mining sector, with approximately 40% in Africa. In terms of renewable energy in Africa, IFC has mobilized over US$4B in the last 10 years and installed 2.6GW renewable energy capacity, reaching 60M customers. On the policy side, we work with our World Bank colleagues on the regulatory reforms needed to attract foreign direct investment.
We see ourselves as catalysts for mobilizing commercial funding, such as with Tasiast, the largest private sector mining project in Mauritania. Our involvement in the African mining space also includes sustainable advisory services and support to project sponsors that aim to go beyond compliance and increase the positive impacts for communities and national economies. In practical terms, this means identifying ways to leverage operations for enhanced development impact, such as strategic community investment, local supplier development, capacity building, and better management of the revenues that flow to governments and communities. In turn, this improves company-community relations, contributes to increased productivity, and yields shared benefits for all stakeholders.
In Guinea, for instance, our financial relationship with Compagnie Des Bauxites and Guinea Alumina has led to expanded local supplier networks and support for more than 200 small enterprises and cooperatives, increasing economic opportunity particularly for women and youth.
Can you explain what IFC Performance Standards are about and the impacts on all involved?
Our experience has shown that proactive mitigation of ESG risks creates long-term shareholder value. This value is created by ensuring alignment between stakeholders and thereby reducing the likelihood of disagreements between stakeholders.
Our Performance Standards aim to ensure that risks are avoided or mitigated to the fullest extent. All of our investments – not just those in the mining space – must comply with and report on key performance indicators associated with these standards, including revenue and contract transparency, employment and gender impacts, community development programmes, and climate-related targets. Going into a project, we conduct robust risk assessments and carry out detailed due diligence to assess the fiscal, economic, environmental, and social impacts.
We work with our clients to address all applicable performance standards and help them adopt industry best practices. Ultimately, these requirements yield significant business benefits since such upfront public disclosure demonstrates a strong commitment to responsible mineral development.
How can the industry scale up investment in mining, while also ensuring that the mining industry improves its sustainability performance?
At this moment, the industry is facing an inherent challenge. The World Bank estimates that 17 critical minerals and metals will be needed at scales significantly beyond current production levels to enable a global transition to clean energy. As a result, demand for critical energy transition metals like copper and nickel will increase by about 300%. But, like any economic activity, mining generates greenhouse gas emissions. So, increased mineral production must be accompanied by a decarbonization drive.
We will soon release the “Net Zero Roadmap for Copper and Nickel Mining Value Chains”, a solutions guide aimed at decarbonizing copper and nickel mines. The roadmap outlines tangible decarbonization actions the industry can take to cut emissions by up to 90% and reach net zero emissions goals by 2050. It offers a range of solutions, including renewable and low-carbon technologies, energy efficiency, and digitization, that are applicable not just for copper and nickel, but can be adapted for other minerals as well.
Successfully reaching the twin goals of increased critical minerals production and mine decarbonization will require strong collaboration across the mining ecosystem, with engagement and commitment from policymakers and sustainable finance investors as well as mining industry stakeholders themselves. We stand ready to support.
