An up to USD 50 million senior loan (the "Loan") to Tumad Madencilik Sanayi ve Ticaret A.S. ("Tumad" or the "Company"), a 100% subsidiary of Nurol Holding (the "Sponsor" or the "Group"). The Loan will be a part of an up to USD 255 million senior loan with parallel lenders. Tumad is an existing EBRD client through the USD 40 million senior loan, a part of the existing USD 200m senior loan provided for the development of Lapseki and Ivrindi gold mines in 2017. The loan is fully guaranteed by the Sponsor.
The Loan will refinance the Bank's existing senior loan and other loans that were used for the development of Lapseki and Ivrindi gold mines and other project-related expenses as part of a restructuring to strengthen the balance sheets of the project and the Sponsor in response to increased short term uncertainty in the local financial sector and allow to focus on the long-term development of the Sponsor's businesses.
ETI score: 69
The Bank will continue to support the transition impact of the original project linked to the senior loan - Inclusive and Well-governed.
The "Inclusive" transition impact of the project is derived from the promotion of regional and youth inclusion and operational efficiency with use of best available technology in mining (dry stacking for tailings management at Lapseki). The project will improve the linkages between the industry and training/educational institutions and address skill mismatches through developments of standardised training for youth and increased workforce diversity.
The "Well-governed" transition impact promotes the implementation of international standards including the International Cyanide Management Code as well as other best practices in the environmental, social, health and safety management of the mines. Tumad has participated in the United Nations Global Compact program since December 2017.
TUMAD MADENCILIK SANAYI VE TICARET AS
Tumad was established in 1989 originally to supply construction materials (i.e. aggregate, concrete and plastering) for the Sponsor's construction business. From 2012 Tumad expanded into the metals mining and it currently owns two operating licenses - Lapseki and Ivrindi in Turkey. The Company commenced production at Lapseki in late December 2017 and produced 45Koz of gold last year. The Ivrindi construction has been completed with the project currently in the ram-up phase.
EBRD Finance Summary
Up to USD 50 million loan.
Total Project Cost
Environmental and Social Summary
Categorised A under the 2014 ESP. The project was appraised by the Bank in 2017 and a comprehensive ESIA was disclosed for 60 days. The Project had already been subject to national EIA, and public consultations in 2015 for Lapseki and 2016 for Ivrindi, and both received positive decisions from the Ministry of Environment and Urbanization in Turkey. The 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, traffic impacts, labour and contractor issues, CSO issues and site closure and rehabilitation planning.
Since the project disclosure Lapseki mine has become fully operational and Ivrindi has been recently commissioned. Ongoing monitoring by an independent environmental and social consultant confirms that the ESAP is being implemented; the mines are being largely operated and constructed in line with EBRD Performance Requirements; however, the management of health, safety, and social issues across two sites requires further improvement to fully comply with the ESAP requirements and the Bank's PRs. The Company has implemented Cyanide management compliant with ICMC requirements and is following the ICMC certification timeline agreed in the ESAP (with certification in 2020). The Company signed off the UN Global Compact and issued its first Sustainability Report in 2018. The Company also initiated an SA 8000 certification process, which ensures respect for human rights, including labour rights, at both mine projects. A collective bargaining agreement has been signed to cover the rights of Company workers at Lapseki mine. The process for Invrindi mine has started and number of workers that are unionized now reached to 160. A new collective bargaining agreement will be signed by end 2020.
Along with other players in the gold sector, the Project has been subject to CSO interest in relation to impacts on water resources, biodiversity and the cyanide management in 2018 and 2019. The Company has been responsive to CSO's and media concerns and has implemented a communication plan as a response to the nation-wide campaign targeting another gold mine project in the Dardanelles region. The communication strategy included an awareness raising camping to the general public on environmental and social risk management through consultation meetings with communities, CSOs and local authorities. Tumad has set up a Community Based Committee including representatives of local and regional stakeholders where they openly discuss the project progress and E&S performance of the company. Also, Tumad organised site visits for the CSOs and campaigners at Lapseki mine to show the operations and technology used on site. Also, the Company in close coordination with the Gold Miners Association of Turkey responded wider public concerns through media. TUMAD has an open door policy with the stakeholders and acts responsively in case of concerns and questions in line with the Stakeholder Engagement Plan prepared for each site.
The Company is planning the introduction of underground mining in Lapseki (to become operational in 2020), which has been already approved by the General Directorate of Mining and Petroleum Affairs, and has been reviewed by the Ministry of Environment who concluded that the project is within permitted area and additional EIA is not required. The underground component of Lapseki mine is an associated facility of the project and requires a supplementary ESIA in line with the commitments undertake by the Company to operate in compliance with EBRD PRs. The Company has carried out additional hydrogeological surveys, air and noise assessments, acid drainage rock study and H&S risks assessments under the Supplementary ESIA for the underground mine. It has also has reviewed its OHS, waste management, noise and air quality and labour management plans to address new operational requirements.
Cut and Fill is the preferred mining method for the Lapseki Underground mine. In this method ore is mined in horizontal slices and once each slice is taken, the voids are backfilled to support the walls and to provide a working platform for the equipment when the next slice is mined. The backfill will be placed in order to maintain long term stability and to provide a new working platform for the level above.
The preliminary groundwater model predicts that groundwater drawdown during the life of the Tumad Project will not extend beyond the boundary of the site. However, continuous monitoring will be installed in observation wells to monitor the progress of dewatering to ensure that dewatering progresses as predicted. Further hydrogeological studies are ongoing and hydrogeological model will be regularly updated.
The process water requirements of the project have been supplied from the groundwater wells of the Lapseki Municipality through the Lapseki water pipeline (10.12 km from Lapseki to iahinli), the construction of which has already been completed. The water supply agreement is for 40 l/s and the pipeline has the same capacity. Approximately 10 l/s is being used for the process water supply and 3.5 l/s is being used at concrete batching plant and 2 l/s will serve the Villages of iahinli and Kocabailar. The remaining capacity will be used in case of increasing water demands in the future. Tumad has implemented a set of mitigation measures to prevent contamination of surface waters including separation and management of non-contact water and contact water. All the rain and snow falling in ore processing areas and active mining areas and the water getting out of the underground mine openings will be collected and reused in the process or will be discharged to the Kovanlikdere stream following regular quality monitoring .
No further impacts on air quality in relation to gaseous emissions or noise are expected on the environment or sensitive receptors. TUMAD has established a programme for the monitoring of the air quality at the mine site and the closest settlements, including barns in proximity of the batching plant. Results of the monitoring are regularly shared with local communities and feedback is sought through grievance mechanism.
Impacts on biodiversity are minimized, due to the underground mine being located in the already affected open pit mine. Considering the sensitivity of the biodiversity components, the potential impacts and the application of specific mitigation measures, the total effects of operation activities are expected to be low.
Additional Environmental and social impact assessment studies proved that the impact of underground mine will be negligible on land users and livelihoods. No physical resettlement has taken place due to the mine operations in Lapseki and in Ivrindi to date. The Company has measures in place to ensure monitoring of livelihoods and compensation and restoration of potential losses.
The Company will continue to provide jobs to local people living in the neighboring settlements around mines. They employed approx 70% of the workers from the region. In order to increase local employment, TUMAD is supporting various skill development, vocational training activities through the vocational training school financed by the Company.
They will continue to engage stakeholders and manage complaints, concerns of communities in line with the project commitments.
The ESAP has been updated to address impacts related to underground component of Lapseki mine and to reflect the status of Project implementation in regards to open cast mines. Revised ESAP forms part of the disclosure package along with Supplementary ESIA NTS, SEP and Updated Management Plans.
The disclosure package for the Underground Mine has been made available by the Company in the local villages of Sahinli and Kocabaslar and on Company's website at https://www.tumad.com.tr/en/sustainability.
The Project will continue to be monitored by Lenders Environmental and Social Advisor and the Bank through review of regular reports and site visits (6 monthly until the end of 2021 and annually from 2022).
Technical Cooperation and Grant Financing
Up to EUR 100,000 TC to support implementation of Tumad's economic inclusion initiatives
Company Contact Information
Hasan Yucel, General Director
Bugday Sokak No: 9 Çankaya Ankara
PSD last updated
14 Jul 2020
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