MIGA Issues Guarantees to Support Pre-Construction Study of Iron Ore Mining Project in Guinea
WASHINGTON DC, March 10, 2021 — MIGA, a member of the World Bank Group, is planning to issue guarantees of up to US$130.5 million to High Power Exploration (HPX) of the United States for investments into the pre-construction study phase of a high-grade, open-pit iron ore mine in Mount Nimba, southeastern Guinea, along with the development of a transportation route for the iron ore through neighboring Liberia, for a period of up to four years. MIGA’s support for the project is aimed at keeping MIGA’s Performance Standards on Environmental and Social Sustainability ‘front and center’ in the planning of the broader mining project and requiring HPX to consider application of the mitigation hierarchy (i.e., avoid, minimize, mitigate, restore, and compensate) at the design stage.
MIGA’s guarantees do not comprise support for, and this guarantee will not cover, any of the subsequent construction and operational phases of mining in Mount Nimba; commercial production is excluded from the scope of guarantee. If a MIGA guarantee is requested for future construction and mining operations, MIGA will undertake a new assessment including disclosing a separate Environmental and Social Review Summary, Environmental and Social Action Plan (if required), and relevant project documents as specified by MIGA’s Access to Information Policy, as well as organizing a separate Board approval process.
Sustainable development of the mining sector is key to diversified economic growth in Guinea. Guinea is a low-income and fragile country endowed with vast natural resources, especially mining and hydropower resources, which have the potential to generate substantial income. Growth in Guinea is driven significantly by foreign direct investment in the mining sector. The mining sector accounts for over 25% of GDP, 80% of foreign exchange earnings, and 25% of government revenues. Together with related services, mining employs over 25,000 people and many more indirectly. Guinea is one of five African countries expected to have positive GDP growth in 2021 despite the COVID-19 pandemic, mainly due to investments in the mining sector.
MIGA’s guarantee helps mobilize private financing and international technical expertise toward a project that, if completed and compliant with the highest environmental and social performance standards, could advance a key project for the country, contribute significantly to Guinea’s economy, and protect the country’s rich biodiversity.
“If iron ore mining is to take place in this highly sensitive location, the greatest care and attention must be paid to the environmental and social impacts,” Sarvesh Suri, MIGA Director for Operations said. ”MIGA’s participation in this development phase will help design a project that will place the highest priority on addressing these concerns.”
Over the course of this pre-construction study, some of the key milestones to be undertaken include the completion of pre-feasibility studies, as well as a viability study, bankable feasibility study, Environmental and Social Impact Assessment (ESIA), and the finalization of agreements for the transport of the iron ore through Liberia.
The proposed project is in line with the World Bank Group’s (WBG) engagement in Guinea, focusing on improving the management of the mining sector, as well as protecting natural resources and biodiversity. The project is also aligned with the WBG’s engagement in Liberia, namely by supporting regional transport integration.
MIGA was created in 1988 as a member of the World Bank Group to promote foreign direct investment in emerging economies by helping mitigate the risks of restrictions on currency conversion and transfer, breach of contract by governments, expropriation, and war & civil disturbance; and offering credit enhancement to private investors and lenders.
Since its creation, MIGA has issued over $59 billion in guarantees across 118 developing countries.
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