The EBRD is considering providing a senior loan worth up to $35 million to finance the initial working capital, and part of the costs for the equipment required for contract mining of the UHG mine, and to finance additional work on Mongolian projects.
The project is expected to have transition impact mainly across two aspects:
(1) Greater competition in the project sector. The contract mining industry in Mongolia is non-existent. Through the proposed financing, the Bank will contribute to support the establishment in Mongolia of a new player, Leighton, which will introduce the contract mining industry in Mongolia, and provide hereto not available high quality services. The project is thus expected not only to facilitate replication of such contract mining activities to other Mongolian customers, but also to attract other international contract mining operators to Mongolia.
(2) Demonstration effect of highest standards of environmental conduct: The proposed transaction will support Leighton, which has one of the highest EHS track-record among contract mining operators in the world. Their operation of the UHG deposit will set the standard for future contract mining operators arriving in Mongolia.
Up to $35 million senior loan
The Project has been categorized as B in accordance with EBRD’s Environmental and Social Policy (2008).
Given Leighton’s contractual agreement with Energy Resources to develop the UHG Mine, a category A level project that was approved by EBRD’s Board in March 2009, the Bank retained an independent consultant to carry out an integrated corporate audit of Leighton's Environmental and Social Management Systems. The audit also included a review of the Company’s ability and commitment to implement the approved environmental and social management plans developed for the UHG project and the Company’s overall capacity to implement the Bank's Performance Requirements (PRs) on this project and all future Leighton projects in Mongolia.
Overall, the audit confirmed that Leighton has strong environmental and social management policies and procedures, including document control and comprehensive management systems. The audit further confirmed that the UHG project is being developed to relevant national and international environmental, social and health and safety standards, including the Bank’s PRs and other project commitments such as the Public Consultation and Disclosure Plan.
Key findings from the audit have been incorporated into an Environmental and Social Action Plan (ESAP) and agreed upon with the Leighton. A summary of the ESAP actions include:
- Develop a clear Responsibility Matrix to articulate the limits of responsibility for all Environmental, Community and Social issues that are in accordance with the Contract and to act as the basis for developing a framework plan Leighton can use for issues that do not fall under the existing contract;
- Develop a training program / knowledge transfer mechanism so that Leighton can transition quickly with any unexpected staff changes;
- Increase the priority of Mongolian language training for Leighton expat staff and build internal corporate capacity for Mongolian/English speakers;
- Develop Leighton specific emergency response (incident management), crisis management and security management plans;
- Revise project specific employment/labour policies to reflect ILO requirements; and,
- Conduct a Security Assessment/Human Rights Impact Assessment.
All actions identified in the ESAP will be carried out in 2010.
Tony Jacobs, Executive General Manager - Finance
Leighton Asia Limited
39/F Sun Hung Kai Centre
30 Harbour Road
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