Equity investment into Euro Manganese (the "Company" or "EMG") via a private placement of CAD 8.5 million in exchange for a minority stake in the Company. The proceeds of the EBRD's investment will be passed on to EMG's subsidiary in the Czech Republic for the purpose of completing a Feasibility Study and building / operating a demonstration plant for the reprocessing of historic mine tailings at the Chvaletice deposit (the "Project").
The Project is a flagship project that will meet some of the rapidly increasing demand for high-purity manganese in Europe and offer a local and reliable supply to European battery manufacturers.
From a socioeconomic and environmental perspective, as well as a health impact perspective, the Project will have a positive effect as it will remediate a polluted site through the implementation of high environmental standards and engineering practices. In addition, it is expected to support regional economic development following the significant slowdown in the Czech economy caused by the COVID-19 pandemic.
The transaction is fully aligned with the Country Strategy for the Czech Republic approved by the Board on 15 September 2021, which highlights the need to focus on supporting a green recovery and diversifying financing resources, including by providing equity to private companies. Green investments are a priority both for the Czech Republic government and under the EU Recovery and Resilience Facility and next Multiannual Financial Framework. The transaction is also aligned with the Mining Operations Policy dated 13 December 2017, which highlights the need to "support environmentally responsible mine remediation and remediation of contaminated sites". In addition, the Project is in line with the Strategy for the Promotion of Gender Equality, which promotes gender mainstreaming into EBRD operations, especially in male-dominated sectors.
ETI score: 60
Greater competition: The Project will help facilitate the competitiveness of electric vehicles and energy storage and provide more competition between the critical raw materials used in different batteries with a focus on using safer, more environmentally friendly, abundant and inexpensive minerals, such as manganese, where appropriate. The Project will also support the development of a secondary market for critical raw materials by using the tailings as a feedstock and processing it into high-purity manganese.
New processes / innovation: This is the first such project in the Czech Republic and in Europe, with potential for replication in other old mining tailings in the EBRD's COOs, where processing will prove to be economically viable with current technology.
Significant innovation in green products:
(a) The manganese produced by this Project will be aligned with the EU Circular Economy Classification: "Category 3.b i Recovery of materials from waste in preparation for circular value retention and recovery strategies". Furthermore, the Project will be subject to European ESG standards and will help remediate the current tailings storage issues.
(b) This is an innovative project which will introduce a recycling process of old mining tailings to produce high-purity manganese, with the innovation of the process stemming from the feedstock sourced. This is the first such project in Europe.
EURO MANGANESE INC
Euro Manganese Inc (TSX-V: EMN.V, ASX: EMN.AX, OTCQX: EUMNF) is a Canada-based mineral development company, that holds the rights to the Chvaletice Manganese Project in the Czech Republic through its fully owned subsidiary, Mangan Chvaletice s.r.o. ("Mangan").
EBRD Finance Summary
Total Project Cost
Risk Mitigation: There are currently few foreign investments in the Czech Republic, and especially in the mining sector. The participation of the Bank is expected to mitigate the Project's exposure to country's regulatory and political risks.
Higher standards: The Company would further draw on EBRD's expertise to inform and guide the identification, assessment and management of E&S risks. The Environmental and Social Action Plan, agreed between the EBRD and the Company, includes key actions, aligning the Company with the EBRD's Environmental and Social Policy requirements.
Gender: EMG will incorporate higher gender equality standards by improving its HR policies and practices to support care responsibilities (e.g. improved maternity leave arrangements, paternity leave policies, parental leave policies with transferrable days between spouses, subsidised child/ elderly care support, flexible working arrangements). The Company will also increase the female representation in decision-making bodies by including at least one woman in the Board of Directors. The implementation of these activities has been included in the ESAP.
Environmental and Social Summary
Category B (2019 ESP). The Project involves an equity investment into an entity developing a brownfield site for the reworking of old mine tailings to exploit the manganese left in place following the initial processing of mined ore. Given the nature of the investment, the due diligence has focussed on the capacity and capability of the client to manage the Project in line with the Bank's Performance Requirements ("PRs"), and on the planned project development schedule in order to understand what future works would be required to maintain on-going compliance with the PRs. This due diligence was carried out with the support of an independent consultant who visited the proposed site and interviewed site management and staff in detail with regard to EHSS management.
The current stage of development is that the client is at the stage of preparing a Feasibility Study and mine design. At this stage, the EHSS risks are low and the client is managing these in line with the PRs. The Bank's equity involvement would require that the completion of the Feasibility Study be accompanied by the development and completion of a detailed Environmental and Social Impact Assessment ("ESIA"). An Environmental and Social Action Plan ("ESAP") has been developed which includes a requirement for the disclosure of an ESIA package for public consultation along with other commitments to develop and maintain risk management systems in line with the PRs and appropriate for the phase and scale of site operations. While the ESIA will address all EHSS risks facing the Project and all those required under the PRs, the current due diligence identified that the site sits within the Buffer Zone for a UNESCO World Heritage Site and this issue requires further elaboration.
The UNESCO Site is the designated as 'Landscape for Breeding and Training of Ceremonial Carriage Horses at Kladruby nad Labem' and was first designated in 2019. In 2021, the protected area was enlarged to include the project area in a Buffer Zone, although not in the UNESCO site itself which lies across the River Labe from the site. The Czech Authorities and UNESCO agreed the extension with knowledge of the fact that this proposed development, and other projects were planned to be carried out over the next few years. Further, it was agreed that the developments could proceed subject to completion of a screening process, which was completed for the proposed project in early 2021, and a full Environmental and Social Impact Assessment (ESIA) which will be carried out on the project in 2022. The results of the screening process confirmed that the Project, as designed, would not have the characteristics to trigger the need for further heritage assessment.
Technical Cooperation and Grant Financing
Company Contact Information
+1 (604) 681-1010
709 700 West Pender Street, Vancouver, BC, V6C 1G8, Canada
PSD last updated
01 Mar 2022
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