Yanacocha III

completed

Summary Of Project Information (SPI)Project Name:Peru - Yanacocha IIIRegion:Latin America and CaribbeanSector:Mining and Extraction of Metals and Other OresProject No:009502Projected Board Date:June 2, 1999Company Name:Minera Yanacocha S.A.Technical Partner and/or Major Shareholders Yanacocha is an unlisted Peruvian company owned: 51.35% indirectly by Newmont Mining Corporation ("Newmont") of the USA; 43.65% indirectly by Compañía de Minas Buenaventura S.A. of Peru (Buenaventura), and 5% by IFC. Though a Newmont affiliate manages the Company, the Company''s employees consist almost entirely of Peruvian nationals, including the Company''s general manager.Project Cost Including proposed IFC investment The project cost is approximately US$120 million, to be financed, as currently contemplated, with US$20 million of A loan, US$40 million of B loan, and US$60 million of internal cash generation.Location of project and Description of site The project is located in northern Peru approximately 47 km north of the city of Cajamarca at an altitude of 4,000 meters above sea level. The site is a current mining facility on a high plateau above the tree line. Prior economic uses were primarily grazing land of inferior quality because of sparse vegetation, with a few pockets of irrigated agricultural land or commercial reforestation.Description of Company and Purpose of Project Yanacocha is currently the largest gold mine in Latin America. It produced 1.3 million oz of gold in 1998. It was started in 1993 with financing provided by IFC. Due to the emerging markets debt crisis and Peruvian borrowers'' reduced access to long-term credit, the Company requested financing from IFC. The project is the development of the La Quinua deposit, containing approximately 7 million reserve oz of gold, which will replace the production of exhausting deposits and increase the mine''s total production and life.Environmental Category and Issues This is a Category A project according to IFC’s Environmental and Social Review Procedure. Environmental, health and safety issues include: dust and exhaust emissions; water resources and quality; water impoundments (process, storm water, and sediment ponds); natural ecosystems; handling of hazardous materials; occupational health and safety; emergency response; waste management; and reclamation and closure. Social issues include: relocation of approximately 26 families, whose presence was seasonal (the "Landowners"); economic displacement resulting from acquisition of farm lands; and social development in the area of mine influence. Land for La Quinua was purchased through market transactions, with adequate compensation for assets and improvements. The Company either constructed houses for the Landowners at a new site, or they were paid the equivalent value in compensation. Approximately 30% of the Landowners relocated out of the immediate area, most to the City of Cajamarca. Significant assistance was provided through relocation assistance, priority hiring, production intensification on remaining land, and participation in various assistance programs administered by the Company’s rural development program. Project impacts on surrounding communities were addressed through consultation and negotiation on compensation. The Company is currently in compliance with Peruvian environmental regulations and IFC environmental and social requirements. The Company''s environmental and social performance and plans are set forth in documentation, including the Environmental Impact Study, its addendum and the Environmental Action Plan, released by the Company to the InfoShop on March 30, 1999. Specific mitigation measures taken by the Company include: dust suppression measures to mitigate dust emissions; minimization of water uptake to ensure adequate water supply to Cajamarca and continuation of traditional activities in the various catchments within Yanacocha''s area of influence; leachate collection and recovery systems and an intensive monitoring program to prevent contaminated process solutions from entering surface water or groundwater systems; location of process installations outside the Río Porcón and Río Grande basins, which are Cajamarca''s sources of water supply, as an additional preventive measure; reclamation of areas directly affected by the operations according to a well designed and properly budgeted plan; adequate Occupational Health and Safety and Emergency Response programs; a land acquisition policy which complies with IFC policies and has a good record in the resolution of the few land use conflicts that have arisen as a result of Yanacocha''s purchase of grazing and farm land; and an ongoing Community Development Plan which maximizes the Company''s development impact in its area of influence through effective partnering with development organizations, government, and other private sector enterprises.No significant impacts are expected on natural habitats due to Project activities. Yanacocha''s safety record is consistent with international standards and has improved over time.The is from the InfoShop.Host country location of environmental documentsMunicipality of Cajamarca Public LibraryCajamarca ProvincePasaje Adhulpa 360Date SPI sent to InfoShop: May 3, 1999“This Summary of Project Information is prepared and distributed to the public in advance of consideration of the proposed transaction by the Corporation’s Board of Directors. It is provided for the purpose of enhancing the transparency of IFC’s activities and should not be construed as presuming the outcome of IFC Board consideration.”For Additional Information contact: Corporate Relations Unit -telephone: (202) 473-7711facsimile: (202) 974-4384Environmental documents for this project are available at http://www.ifc.org and from the World Bank InfoShop (http://www.worldbank.org/html/pic/aboutinfo.html).