Transcript No Slide Title

World Bank Mining Activities in Africa
Policy Framework and Country Experience
AfDB-WBG Experience-Sharing Meeting
Tunis
February 12-13, 2007
Gotthard Walser
Oil, Gas and Mining Policy
Division
The World Bank Group
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World Bank Mining Activities in Africa
Policy Framework and Country Experience
1.
2.
3.
4.
Mining in a changing world
Mining policy: guiding principles and
criteria
Country experiences
Issues and challenges
2
1. Mining in a Changing
World
3
1.1 Mining in a Changing World
Decade of the 1980s Late 1990s — present
Macro/Sector reform
Liberalization
Some privatization
of SOEs
Dominance of Markets
Shrinking State
Decentralization
Owner/operator of
mining assets
Regulator/administrator
Private sector in
Emerging Econs
By-stander in emerging
economies
Leading force in investment
New responsibilities
Role of NGOs
Environment
Awakening, acceptance
Fully integrated
Social Focus
Benign neglect
Awakening, acceptance
Macro-Economic
Government’s
Role in Mining
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1.2 What does this Mean for Governments?
Country
Competitiveness
Investment
environment
Sound and stable:
Macro-economic
management
Legal and regulatory
framework
Fiscal conditions
Institutional/administrative capacity
Infrastructure
Availability of:
Physical infrastructure
Services
Mining Sector
Sustainability
“Leaving something
of value behind”
Sound and Responsive:
Environmental
management system
Community relations
Equity in rent sharing
Stakeholder participation
Code of conduct/ethics
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:
1.3 Continuing Push for
Sustainable Mining Development
• Local communities continue to assert more strongly their
views on extractive industries developments that impact
them
• Industry bodies, business based organizations and civil
society groups are continuing to actively promote the
sustainability agenda
• The importance of sustainability in extractive industries has
been reaffirmed on the international political stage
• National and local governments remain key players in
fostering an enabling environment for sustainable
development at the national and community level
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1.4 Current and Emerging Issues
High prices
• Continuing commodity price boom leads to even greater push for
sustainability & increases its scope, but creates new interest groups,
often making needed political reforms harder
New Players
• China and India are important contributors to demand and are also
investing in extractive industries abroad – changing the traditional
playing field
• Africa: Significant mineral (and petroleum) potential—could be leading
location for new investment but weak governance and capacity make
sustainable development all the more difficult
Governance
• Including but beyond corruption and transparency
• Long-term capacity development, dispute settlement mechanisms,
contingency contracts & renegotiations, government legitimacy
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1.5 The Importance of Sustainability
What is Sustainable Mining Development?
• For World Bank-supported projects:
“Financially viable mining development that takes place in an
environmentally and socially responsible manner with sound
governance that provides lasting benefits to the communities where
mineral development, production and transportation take place”.
Sustainable Mining Development is essential:
• If a mining project is to contribute to effective and lasting poverty
reduction at local and regional levels
• To avoid major conflicts around mining developments
• For mining to contribute to political legitimacy and national level
policies and priorities
• For the sustainability of a profitable mining industry
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1.6 Why Sound Governance Is Critical
Poor macro & national level governance = benefits wasted:
• Government income spent unwisely, used to promote wrong
economic policies, booms mismanaged, culture of corruption
• Supports ‘sustainability’ of poorly functioning political and
economic institutions, illiberal democracies
• Creates new political economy & opposition to further reforms
• Can destroy the most well-conceived sectoral reform
Poor sector governance = social/environmental harm
• Long-term sustainable development highly unlikely
• Irreparable damage to local communities, especially indigenous
peoples
• Contributes to social conflict, even civil war
• Leads to demands for contract renegotiation, even nationalization
• Harms legitimacy of national government with repercussions for
national level governance
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2. Mining Policy: Guiding
Principles and Criteria
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2.1 Guiding Principles for the World Bank
Group in Mining
• Strengthen governance and transparency
• Ensure that extractive industry benefits reach
poor people
• Mitigate environmental and social risks
• Protect the rights of people affected by extractive
industry investments
Source: World Bank Management Response to Extractive Industries Review
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2.2 Criteria of a Successful Policy
Framework for Mining Development
• For these guiding principles to be attained, the policy
framework must meet the criteria below; where any are
missing, further reform &/or capacity building is needed
• A satisfactory macro framework is indispensable
• Government must be reasonably credible and legitimate--it
is crucial to be able to avoid political economy traps in
which elite groups capture a disproportionate share of
benefits
• Political institutions must allow for effective participation
and the ability to make transactions over time—no ‘winnertake-all’ mentality
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2.3 Criteria of a Successful Policy
Framework for Mining Development
• Benefits must be widespread at both the national and local
levels
• Local capacity building for both governance and
transferable occupational skills development must be a
continuous and adaptive process
• Long-run capacity building for implementation, monitoring,
evaluation and enforcement is institutionalized
• Stakeholders have a flexible and adaptive approach to new
developments in the sector
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2.4 Public vs Private Sectors Role in
the Mining Development Sequence
USD/km2
MINE
DEVELOPMENT
>10,000,000
1,000,000
DETAILED
EXPLORATION
PUBLIC FUNDING
100,000
100
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REGIONAL
EXPLORATION
REGIONAL
GEOLOGICAL
MAPPING
PRIVATE FUNDING
MINERAL
RESOURCES
ASSESSMENT
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3. Country Experiences
Madagascar
Mauritania
Zambia
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Morocco
Tunisia
Algeria
Libya
Egypt
Mauritanie
Mali
Niger
Gambia
Sénégal
Sudan
Tchad
Guinea Bissau
Guinée
Sierra Leone
Eritrea
Burkina Faso
Benin Nigeria
Côte
d’Ivoire
Djibouti
Togo
Liberia
Cameroun
Ghana
Guinea Eq.
Ethiopia
République
Centraafricaine
Somalia
Congo
Gabon
Uganda
République
Rwanda
Démocratique
du Congo
Burundi
Kenya
Tanzania
WB Mining
T.A. Projects
In Africa
Angola
Malawi
Madagascar
Zambia
Moçambique
Zimbabwe
Namibia
Botswana
Swaziland
South
Africa
Lesotho
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3.1 Madagascar (i)
Two Projects:
– Mining Sector Reform Project:


1998-2002: USD 5 million
Main policy and legal reform; initial institutional reform
(mining cadastre); ASM and environment
– Mineral Resources Governance Project:



2003-2008: USD 32 million
2007-2010: additional 8 million
Governance: Institutional reform (environment,
inspectorate, geological survey, gemmological institute),
decentralization, formalization of ASM and trade,
integration of large scale mining, community
development, geological infrastructure and promotion
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3.1 Madagascar (ii)


Policy reform (1998)
Legal reform:
– New Mining Code (1999, rev. 2005)
– Large Scale Mining Investment Law (1999)

Institutional reform
–
–
–
–
–
–
Bureau du Cadastre Minier (2000)
Institut Gemologique de Madagascar (2004)
Cellules Environmentales Minieres (2006)
Inspection Miniere (2007)
Service Geologique de Madagascar (2007)
Restructuring the parastatal mining and petroleum agency
OMNIS into an oil agency (2008/9?)
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3.1 Madagascar (iii)

Facilitating regional integration of large scale
mining projects – 4 “new” projects:
– Consultation process and regional/local
coordination committees involving mining
companies, government authorities and
communities
– Regional resources assessments (Dynamic
Mineral Resources Management)
– Regional/Community Development Plans, based
i.a. on the resources assessments
– Regional/Community Development Funds
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3.1 Madagascar (iv)

Artisanal and small-scale mining (ASM)
– Legalization of ASM (“mobile” cadastre); support
to establishing associations
– Technical and management capacity building
– Fiscal revenues decentralization
– Management capacity of local authorities
– Gemstones and gold trade formalization, fiscal
issues
– Value chain: development of local cutting and
polishing, jewelry (IGM role)
– Integration of ASM into local development plans
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3.1 Madagascar (v)

Land use management:
– Mineral resources
Geological, geophysical and
geochemical survey of about
60% of the country
 Set up of a multi users data bank =
core system of the Geological Survey

– Environment and social vs mining:
Conflict prevention and management:
“Mines-Forest committee”: large and
small scale mining
 Environmental base line surveys
 Environmental mining units

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3.2 Zambia (i)

Several projects:
– ERIPTA (multi-sector; closed)


Policy, legal and institutional frameworks
Privatization of State owned ZCCM (closed)
– Social services: water and electricity in mining towns
– Copperbelt Environment Project:



2003-2008; USD 55 million
Remediation of GoZ and ZCCM environmental liabilities (as part of
privatization process)
Strengthening of GoZ environmental regulations enforcement capacity
– SEED (multi-sector):



2005-2010; USD 5 million
Adjust policy, fiscal and regulatory frameworks to high commodity
prices and mining boom
ASM (see Madagascar)
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3.2 Zambia (ii)

Copperbelt Environment Project
– Legal definition of liabilities and of who should remediate them has
facilitated the privatization process at a time commodity/Cu prices were
low
– Plan based on private and “public” environmental management plans,
approved by environmental authority (ECZ)
– Capacity building – and implementation – on site closure processes,
incl consultation, resettlement and technical “best practices”
– Comprehensive environmental data bank for monitoring
– Major case: lead contamination affecting a 50,000 community (Kabwe)
– Communities and local authorities involvement in sites remediation and
maintenance

Main issues:
– Sustainability of financial and institutional environmental management
mechanisms
– But, major issue: active mining operations and private sector represent
still >90% of contamination flows..
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3.2 Zambia (iii)

SEED:
– Earlier agreements between GoZ/ZCCM still based partly on
“negotiations”, incl. e.g. fiscal aspects
– GoZ would like to re-negotiate as it feels it does not benefit
as it should under higher commodity prices.
– Improve capacity to negotiate? Or Reduce room for
“discretionary” negotiation through legally pre-defined
agreements? (cf Madagascar, Mauritania, Chile, Peru..)
– Zambia has data banks: data banks are important; more
important is to learn how to use them and to share the
information..
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3.3 Mauritania (i)

Two – and a half –
projects
– Projet de Renforcement
Institutionnel du Secteur
Minier (PRISM I): 19992004; USD 15 million
– PRISM II: 2003-2008,
USD 18 million +
additional USD 5 million
on oil
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3.3 Mauritania (ii)
Basic reform:
– Legal framework:


Mining Code and Mining Agreement Law
Regulations, incl. environmental
– Institutional reform:



Mining cadastre – one of the most performant in Africa, 2nd only
to Madagascar
Environmental mining service and Environmental Information
and Management System (SIGE) for EIA evaluation and
monitoring)
Geological and Mining Information System (SIGM) for
promotion and land use management
– Geological Infrastructure

About 70% of country covered with geological, environmental,
geochemical and airborne geophysical data
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3.3 Mauritania (iii)
Mining and Local Economic
Development:
– Socio-economic
development based on the
SOE SNIM iron mine within
the Zouerate (mine) to
Nouadhibou (port) 700 km
corridor: small businesses
development, economic
diversification, social
services, renewable energy,
water resources
development.
– Additional water resources
would allow the development
of new mines
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4. Issues and Challenges

Regional instead of a country-by-country approach:
– Western Africa
– Great Lakes: trade roads
– SADC




Institutional sustainability: everybody recognize the
importance of institutions. But why government and
international aid agencies are reluctant to set up long
term financing mechanisms?
“Newcomers”: how to react? Increased flexibility to keep
“competitive”? But what about environment and social?
Convince IMF, WB – and ADB? –, and Finance
Ministries economists that local management of locally
generated revenues is key to EI based development
EI Funds..
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Thank you!
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