Ecocimento Fibre Cement, Mozambique

The Project

The conversion of a construction materials plant from asbestos fibre cement to clean fibre cement, in particular the environmental decontamination and environmental upgrade of the site, located near Beira, in the central coast of Mozambique. The Borrower went bankrupt and the Project had been cancelled, and almost fully repaid, leaving the Bank with limited leverage on the Borrower to bring the Maputo site to compliance.

The Complaint

The complaint concerned the alleged negative environmental impact of the Ecocimento Fibre Cement Project in Mozambique. The complainant‘s company had purchased a property containing the asbestos dumps in Maputo in Mozambique under the condition that the property would have been decontaminated from asbestos for which, as the Bank was financing the company for the decontamination and upgrade of i.a. that production site, the complainant had i.a. relied on the EIB web-notice on the Project. However, between 250 000 tons and 400 000 of contaminants have remained untouched on the contested property.

As (i) the company failed to comply with EIB loan conditionality and (ii) that on the concerned site the asbestos dumps had since remained unprotected and unsecured, and thus present a threat to public health and local laws and international protocols on the decontamination procedures have been violated, there is a substantial negative environmental impact from the site. The complainant argues that the EIB has committed an instance of maladministration by approving the Project and points out that EIB has breached its environmental policy.

The EIB-CM assessment & investigation

1. The EIB-CM’s investigation found that at the time of receipt of the complaint (i.e. almost four years after the project approval) the EIB’s Web-site stated that the Ecocimento Fiber Cement Project included both the Maputo and Dondo site, whereas the final Project financed by the EIB only included one site, the Dondo site; the Maputo site was not part of the Ecocimento Fiber Cement Project financed by the Bank, and that therefore no direct contractual obligations re. the Maputo site existed between the Borrower and the Bank. It appears that by error an initial project description (including the Maputo site) was left on the EIB’s Web-site. 
2. For the time the Loan is outstanding, the Borrower undertakes to implement and operate the Project in conformity with Environmental Laws (laws and regulations of Mozambique applicable to the Project) and best international practice in respect of protection of the Environment. However, the relation between the Bank and the Borrower had become very difficult and the attempts of the EIB-CM to discuss the issues raised by the complainant re. the decontamination of the Maputo site, even including the support of the Bank’s relevant services, have remained without result.  
3. With regard to the complainants' allegation on the EIB’s failure to comply with the environmental legislation and the loan conditions, on the basis of the documentation provided by the complainant (i.e. the contacts), it is understood that the company had initially applied for funding from the EIB to clean and reconvert its factories of asbestos and that it was its responsibility to clean those premises. However, as the Maputo site, which was polluting the environment and putting public member’s health at risk was not part of the project the Bank provided finance for (see i.) these negative impacts generated by the asbestos contamination of the Maputo site are not within the area of the Bank’s responsibility
4. With regard to the due diligence of the EIB operational services regarding this project, the EIB-CM notes that:
   1. The Bank has accidentally left an outdated project description on its Web-site, which has been used by the Borrower to mislead the complainant
   2. The Bank acted in compliance with its policies and related dispositions of the Finance Contract, regarding the Project monitoring and implementation – with the Dondo site as part of the Ecocimento Fiber Cement Project financed by the Bank.

Conclusion

The EIB-CM has helped the complainant in clarifying the situation, providing relevant information and documentation and seeking ways for the Bank to pressure the company to decontaminate the Maputo site. The EIB-CM takes note of the fact that, after obtaining the injunction against the company, the complainant pursued the matter by lodging a further recourse with the national legal instances and that a Court Injunction against the company is committing it to clean up the site. It is clear that the EIB-CM cannot help the complainant further and therefore proceeds with filing of the complaint, with no further recommendations.