Barclays was mandated to act as joint lead arranger for a mining development project. The deal followed a project finance structure, and so fell within the scope of the Equator Principles.

The Environmental Risk Management team categorised the project to assess the magnitude of impacts and risks.  Following this, we hired a firm of consultants from Barclays’ preferred panel to conduct an independent assessment of the sponsor’s social and environmental impact assessments.

Close scrutiny

The assessment included a site visit and interviews with the sponsor and its environmental consultants. It also involved a detailed review of supporting documentation and relevant data, including the financial model, a feasibility study, related permits and licences, and environmental management programmes. It was also important to review the ongoing engagement and consultation with the community affected, as well as how local grievances were handled and the arrangements for offering compensation.

The consultants also reviewed the decommissioning and mine closure plans, the degree of compliance with national environmental and public consultation standards, compliance against the IFC Performance Standards and EHS Guidelines, and the ongoing monitoring arrangements.

Industry standards

The independent review revealed several important points. It found that the data collection and mine planning were undertaken to industry standards, and the health, safety and environmental plans were comprehensive, with sound risk assessment and strong execution and mitigation plans. The public consultation was also consistent with good industry practices and with the requirements of the Equator Principles.

In the future, the sponsor’s plans will include a number of social programmes together with a website providing information on project status and allowing the local community to raise concerns.

Contractual requirements

To ensure continuing sound management of the environmental and social impacts, Barclays placed several conditions in the project’s Credit Facility Agreement (CFA). As well as requiring the sponsor to comply with environmental laws and to implement its environmental and social management plan, Barclays also stipulated that it must give notice of - and remediate - any material environmental non-compliance; provide an annual progress report on the Environmental and Social management plan; and allow an independent consultant to review the annual report, including assessing the project’s ongoing compliance with the Equator Principles.

The conditions of lending also protected employees’ rights of association, collective bargaining, and acceptable working wages and conditions. Following the review process and insertion of these requirements into the CFA, the Environmental Risk Management team concluded that the project met the requirements of the Equator Principles, and confirmed their support for the deal.