A REPORT funded by the World Bank Group (WBG) that recommends ending investment in African mining projects looks like a false alarm for the mining sector. Judging by comments from within SA and World Bank chief James Wolfensohn, the report's recommendations would be cherry-picked rather than adopted wholesale. The International Finance Corporation (IFC), the World Bank's commercial arm, supported this view in Johannesburg recently.

Haydée Celaya, the IFC's director for the sub-Saharan department, said it was highly unlikely that the World Bank would pull the rug from under the feet of African mining. 'I don't agree that the WBG should not finance any project,' she says.

The report was not the work of the World Bank but the result of a suggestion by Wolfensohn at the bank's annual meeting in 2000. The outcome of that meeting was the formation of the Extractive Industries Review (EIR), authored by Emil Salim, former environmental minister for Indonesia. Reports suggest that the EIR was constantly troubled by disputes and in-fighting even up to its submission on 15 January. At that time an internal memo was leaked in which officials at the World Bank dismissed the report, according to Internet publication Environment News Service. It went on to say that Wolfensohn considered the phasing out of coal and oil projects, one of the EIR's key recommendations, far too controversial.

That's a far cry from the panic that the EIR generated several weeks ago when mining and minerals ministers from about 22 African countries, including SA's Phumzile Mlambo-Ngcuka, voiced their concerns. Says Mlambo-Ngcuka: 'We're seeking dialogue to see where there are shortcomings without taking away resources altogether.'

As one analyst observed, the fear is that the withdrawal of IFC support would weaken the confidence of insurance and credit guarantee entities. That, in turn, would deter banks from investing in African mining projects. Nothing of the sort seems to be anticipated and the outcome might be a further tightening of environmental standards on projects.

The World Bank is expected to make recommendations shortly on the study. Celaya, meanwhile, says that the IFC is interested in building on its involvement in sub-Saharan Africa. It's a stakeholder in the R600m New Africa Mining Fund, which was created to identify and help fund early stage mining projects.

Celaya says that the IFC also has appetite and 'headroom' to triple its investment in SA, which was US$200m last year. Many of the projects in which the IFC would get involved are empowerment transactions, either by providing secondary funding or in taking riskier equity finance.