Centerra Turkey

Location:

Turkey

Project number:

47880

Business sector:

Natural resources

Notice type:

Private

Environmental category:

A

Target board date:

20 Jul 2016

Status:

Disbursing

PSD disclosed:

08 Apr 2016

Translated version of this PSD: Turkish

Project Description

An up to US$ 75 million senior secured project finance loan with up to 6-7 years maturity to Öksüt Madencilik Sanayi ve Ticaret A.S. ('OMAS'), a 100% subsidiary of Centerra Gold Inc ('Centerra').

Project Objectives

The Loan will be used to partially finance the design, development and construction of the Öksüt open-pit gold mine in Turkey owned by OMAS.

Transition Impact

The transition impact of the project will derive from the Bank's requirements that OMAS applies disclosure standards in line with Publish What You Pay (PWYP) principles and bringing Öksüt in line with international standards for the management of environmental, health and safety issues and performance. Equal opportunities initiatives will be explored going forward.

Client Information

OKSUT MADENCILIK SANAYI VE TICARET A.S.

OMAS is the license holder and developer of the Öksüt open-pit gold mine in Turkey. OMAS is a 100%-owned subsidiary of Centerra Gold Inc. Centerra is an international gold mining company engaged in the operation, exploration, development and acquisition of gold properties in emerging markets. Centerra is listed in the Toronto Stock Exchange.

EBRD Finance Summary

USD 75,000,000.00

Total Project Cost

USD 230,000,000.00

Environmental and Social Summary

Categorised A (ESP 2014): Greenfield mining projects may be associated with various, potentially significant, environmental and social (E&S) impacts, which at the time of categorisation, cannot readily be identified or assessed, and which, therefore, require a formalised and participatory environmental and social impact assessment (ESIA) process. The Company has developed a fit for purpose ESIA for the Project in line with EBRD requirements and which was disclosed on 8 April 2016 for a minimum period of 60 days. The Project was subsequently approved by the EBRD’s Board of Directors.

The ESIA builds upon an already approved local EIA and includes a suite of management and monitoring plans. Key impacts and risks considered include land acquisition and impacts on land users and livelihoods, impacts to biodiversity, water use, cyanide risks, impacts on surface and groundwater, emissions including dust, noise, worker and community health and safety risks, labour and contractor issues and site closure and rehabilitation planning. 

The Project will not result in any physical displacement but will impact users of the Project site such as seasonal herders at the mine site and farmers along the associated power line.  The Project has developed a livelihood restoration framework which will be developed into a full plan to address livelihood issues for the mine and its associated facilities such as access road and power line.  A Livelihood Restoration Plan will be prepared in consultation with herders, community representatives and farmer associations and disclosed prior to construction works. 

Development of the mine will also directly impact critical habitat for two plant species and the project’s power line, which runs parallel to an existing power line, is adjacent to a protected wetland and Ramsar site. The Project has undertaken detailed surveys and an assessment of the potential impacts to biodiversity.  Impacts will be mitigated through implementation of a biodiversity action plan (BAP) and offset strategy, which will ensure a net gain of species and habitats of conservation importance.  Specific actions include, among others: the salvage and translocation of flora species of conservation importance from the mine site; conservation of on-site vegetation; seed collection and flora cultivation; and the installation of bird diverters on the power line together with additional bird surveys along the power line route.  

The Project will adopt specific measures to manage and avoid cyanide related risks including implementation of a cyanide management plan, a closed loop system with no discharges and compliance with the International Cyanide Management Code (ICMC). The ICMC is regarded as best practice for the transport, storage and handling of cyanide in mining operations.  A Transport Management Plan has been developed and will be integrated into the Contractor’s implementation plans to ensure safe transportation of cyanide from the selected port to the mine site.  The necessary dust control measures will be put in place to minimise impacts on air quality. Studies conducted as part of the ESIA have not identified a significant impact to water resources.  Community and worker health and safety impacts will be avoided and managed through specific management plans and internal procedures.  A new access road will be built to avoid traffic impacts to the surrounding communities.  An initial project closure plan has already been developed for the Project. 

The Company has committed to recruiting most of its work force from the neighbouring communities and the wider area and will also develop and implement skills development and vocational training projects as part of the Community Development Plan to ensure maximisation of the sustainable Project benefits for the local communities. In addition to the local hiring, the Company developed a Local Procurement Management Plan and are willing to support development of  a local supply chain (focusing on catering, transportation and cleaning services), which will help to create long term business opportunities for local people. The Company will develop and implement an equal opportunities action plan to promote best practice HR policies and practices with respect to gender and equal opportunities in the Company’s operations and supply chain.  Labour and contractor issues will be managed through internal procedures which are in line with PR2 requirements and national labour laws.

In order to meet the Bank’s stakeholder engagement and disclosure requirements the Company has developed a Stakeholder Engagement Plan (SEP), complaint procedure as well as a Non-Technical Summary of the ESIA.  ESIA disclosure included a series of meetings with stakeholder and the public in early May 2016.  ESD attended some of these meetings and confirmed general stakeholder support for the Project.  Various issues, including cyanide risks, impacts to water, air quality, impacts to pasture land, employment and Project benefits, were raised by stakeholders during these meetings but the Company was in a position to respond to these issues.  The ESIA and management plans adequately address the issues raised.

An ESAP has been agreed with the Company.  Key actions are described above and also include the need to develop the existing Environmental, Health and Safety and Social (EHSS) framework management plans into  detailed management plans prior to construction; allocation of adequate  EHSSS  resources at site, acquire ICMC certification; undertake further cyanide risk modelling; implementation of the BAP and implementation of measures to manage  EHSS risks. The Project will be monitored by an independent environmental and social consultant with semi-annual reporting to the Bank during construction and annual reporting during operations.

There is an Environmental and Social Impact Assessment available for this project.

July 2018 update

All required permits have been obtained and initial construction and site preparation works have commenced. An independent environmental and social consultant has conducted its first monitoring visited and confirmed that the Project is generally in line with the Bank’s requirements and progress against the ESAP is satisfactory.  Various minor recommendations have been made and areas of improvement have been identified.  These are currently being discussed with, and implemented by, the Company.

Technical Cooperation

The Project will not result in any physical displacement but will impacts users of the Project site such as seasonal herders.

The Project has developed a livelihood restoration framework which will be developed into a full plan to address livelihood issues for the mine and its associated facilities such as access road and power line. The mine footprint would directly impact critical habit for two plant species. The Project has undertaken a detailed assessment of the impacts to biodiversity and put in place a biodiversity action plan and offset strategy to ensure a no nett loss of biodiversity and preferably a net gain. This includes further flora study, salvaging and replanting of plant species and conservation of areas within the Project area. The associated power line runs parallel to an existing power line, which is adjacent to a protected wetland and Ramsar site and as such the Project will implement specific measures to avoid potential impacts to birds. An initial project closure plan has already been developed for the Project.

The Project will involve the use of cyanide. The Project will adopt specific measures to manage and avoid cyanide related risks including implementation of a cyanide management plan, a closed loop system with no discharges and compliance with international cyanide management code (ICMC) standards. The necessary dust control measures will be in put in place to minimise impacts on air quality. Studies conducted as part of the ESIA have not identified a significant impact to water
resources. Community and worker health and safety impacts will be avoided and managed through  specific management plans and internal procedures. A separate project access road will be built to avoid traffic impacts to surrounding communities.

The Company has committed to recruiting most of its work force from the neighbouring communities and the wider area and will also develop a detailed community development plan to ensure sustainable Project benefits for the area. Labour and contractor issues will be managed through internal procedures which are in line with PR2 requirements. In order to meet the Bank's stakeholder engagement and disclosure requirements the Company has developed a Stakeholder Engagement
Plan (SEP), complaint procedure as well as a Non-Technical Summary of the ESIA.

A draft ESAP has been agreed with the Company. Key actions are described above and also includethe need to develop the existing management plans into full plans prior to construction; acquire ICMC certification; undertake further cyanide risk modelling; implementation of the BAP and implementation of measures to manage contract E&S risks. The Project will be required to report to the EBRD on a quarterly basis during construction and annually during operation on the E&S performance of the Project. The EBRD will monitor the Project as necessary.

Company Contact Information

John W. Pearson
info@centerragold.com
+1 (416) 204 1241
+1 (416) 204-1954
www.centerragold.com
1 University Avenue, Suite 1500 Toronto, Ontario M5J 2P1 Canada

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