Corporate and Financing Landscape
The Amazon rainforest is one of the world’s most important ecosystems, home to several million species of native plants and animals, as well as Indigenous peoples, and is a critical carbon sink. The Amazon region also holds substantial energy and mineral resources and is dotted with hydroelectric dams, oil and gas drilling sites, and mining projects producing gold, copper and other substances. A variety of companies own and operate these projects, while numerous banks and funds provide financing to back them.
State-owned enterprises, as well as small and mid-sized international companies from a handful of countries, operate the largest share of energy and mining projects in the Amazon region, and thus have an important impact on the implementation of environmental and social safeguards, according to a new report by the Inter-American Dialogue. The analysis is based on findings from a new database developed by the Dialogue that provides a snapshot of the entities that own, operate, and finance hydroelectric, oil and gas, and mining projects in the Amazon region, including the countries where companies are headquartered, the types of companies present, the major financial backers, and the deals made within the three sectors.
- State-owned enterprises own a large share of projects in the oil and power sectors in the Amazon region. Small and mid-sized foreign companies are also prevalent, particularly in the mining sector.
- Major international companies have very limited presence in all three sectors in the Amazon, possibly due in part to the potential environmental and social liabilities and reputational risks. If projects continue to operate in this sensitive ecosystem, this may represent a negative development since these large companies are believed to have higher environmental and social standards than smaller, less accountable companies.
- Foreign companies from a wide variety of countries own and operate oil, mining, and hydropower projects, but the majority of foreign firms are headquartered in a small group of countries, including Canada, Spain, Australia and Chile. Chinese companies are the largest foreign investor in Amazon hydropower projects, but their overall footprint in energy and mining in the Amazon is small: Chinese companies own less than 10 percent of total project equity in each of the three sectors.
- The companies that own and operate energy and mining projects in the Amazon biome have remained mostly consistent over the life of the projects, with relatively few transactions despite major international shifts in commodity prices and interruptions to operations in recent years. Given the long life of such projects, this means the entities that initially acquire the rights to develop them will likely influence their environmental impacts for decades.
- Financial backers could also have substantial influence over these companies’ practices. Multilateral and national development banks have made loans to many Amazon hydropower projects over recent decades but been almost entirely absent from the mining sector. Commercial and investment banks have also loaned to both the hydro and mining sectors while private equity funds have financed mining projects in the Amazon region.