Environmental groups have filed a lawsuit accusing a US development bank of providing an “unlawful” near-$5 billion loan to a fossil fuel project in southern Africa.
Friends of the Earth US, Mozambican environmental charity Justiça Ambiental, and EarthRights International are accusing the US Export-Import Bank (EXIM) - which uses US public money to support US investments abroad - of not conducting sufficient due diligence around the re-approval of the $4.6bn loan to a liquefied natural gas (LNG) project in Mozambique.
In March, under President Donald Trump, EXIM announced the re-approval of the loan, which had been paused after the project ran into difficulties related to an ongoing Islamic Insurgency in the Cabo Delgado region where the project is based in 2021.
The groups allege EXIM “rushed through approval” without conducting required environmental reviews, economic assessment, or complying with the procedural requirements mandated by Congress. The lawsuit also claims that EXIM failed to follow neither its own Charter nor federal law, setting a dangerous precedent for future decisions.
The Independent has previously reported on the numerous human rights and environmental concerns that surround the project.
"There are legal procedures and processes in place to ensure the U.S. Export-Import Bank does not waste taxpayer dollars on risky projects plagued by violent insurgencies,” said Kate DeAngelis, deputy director for economic policy at Friends of the Earth US.
“Yet EXIM – like the rest of the Trump Administration – believes that it can operate outside the law. We will not stand by while the Trump Administration cuts health care and disaster aid so that it can give handouts to fossil fuel companies.”
Richard Herz, of EarthRights International, added: “EXIM’s Board’s illegal decision to subsidize this project, without even considering the risks to local people, let alone the serious allegations that project security committed a massacre at the project site, is beyond reckless.
“EXIM needs to do its job and actually consider the harms this project will inflict on local people.”
The long-delayed LNG project has displaced thousands of local people. In 2021, French oil giant TotalEnergies, which is spearheading the project, was forced to halt operations after Islamist insurgents killed dozens of workers near the company’s main site in the Cabo Delgado region. The ongoing insurgency – and a “force majeure” declaration around the project – also means that TotalEnergies has been unable to resume operations.
Signs of discontent can be found in villagers claiming that they have not been sufficiently compensated for giving up land that most rely on for subsistence farming, according to evidence collected by local NGO Justica Ambiental, after Mozambique LNG was given rights to 6,625 hectares of land to build its liquefaction terminal.
A spokesperson for TotalEnergies previously told The Independent that prior to the force majeure announcement, 89 per cent of compensation payments had been paid within six months of the signing of compensation agreements, and 66 per cent were paid within 90 days.
“The Force Majeure situation has prevented the full implementation of the relocation and compensation process and has slowed down the exercise,” they said.
A spokesperson for Justiça Ambiental said: “To continue financing gas projects in Cabo Delgado would be a betrayal of Mozambique and humanity.
“It would ignore the voices of the families who are bearing the heaviest burdens – who have lost their land, access to the sea, and their livelihoods. It would show a lack of commitment to national laws, international standards, and any efforts to deal with the climate crisis.”
An EXIM spokesperson said: “The Export-Import Bank of the United States is aware of recent reports and inquiries regarding ongoing legal proceedings. As a matter of longstanding policy, EXIM does not comment on pending litigation.
“EXIM remains committed to its mission of supporting American jobs by facilitating the export of U.S. goods and services. The Bank continues to operate in accordance with all applicable laws and regulations.”
This piece has been produced as part of The Independent’s Rethinking Global Aid series
