PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB6108 Project Name. Mineral Development Support Project Region

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB6108 Project Name Mineral Development Support Project Region AFRICA Sector Mining and other extractive (100%) Project ID P Borrower(s) GOVERNMENT OF BURKINA FASO Implementing Agency Ministry of Mines, Quarrying, and Energy (MMQE) Ministry of Mines, Quarrying, and Energy (MMQE)01 BP 644 Burkina Faso Tel: (+00226) / Fax: (+00226) / Environment Category [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared November 9, 2010 Estimated Date of February 16, 2011 Appraisal Authorization Estimated Date of Board June 9, 2011 Approval 1. Key development issues and rationale for Bank involvement In the last two decades Burkina Faso, a resource poor, land locked country, has achieved significant progress towards development. Political stability and the Government s progressive platform of economic and social reforms, sound macroeconomic policies and steady investment enabled Burkina to sustain significant growth rates (averaging 6 percent per annum) and maintain relative macro-economic stability over the decade preceding Still, Burkina faces the challenge of sustaining its positive growth trajectory, while at the same time laying the foundation for a diversified economy and decreasing vulnerability to exogenous shocks. Mining is a key driver of diversification and growth. Mineral resources are currently the first export commodities in Burkina. Government reforms in the mining sector, including a modern mining code in 2003, have already attracted important foreign direct investments, notably in gold mining exploration. According to the National Mining and Quarrying Direction 5.5 tons of gold were produced in 2008, 12 tons in 2009, 18 tons are projected in 2010, and 26 tons per annum starting from Export earnings from gold mining rose from 2 billion CFAF in 2007 to 177 billion CFAF in The mining sector generated 3,350 direct jobs in 2008 and represented 2.8% of GDP in The contribution of the sector to GDP will significantly improve with the opening of the Essakane gold mine in October Essakane is the largest mine thus far in Burkina, and the sixth currently producing gold mine. Further developments are expected on gold, manganese and Zinc (the first such a mine in West Africa). The mineral deposits are well spread across the country, and could play an important role in developing rural economies. Three groupings of clusters of mines and advanced projects have the potential to become growth poles. The Government is developing new policies and strategies to continue attracting investment, while also ensuring that the impact of these investments on the overall economy and on poverty

2 alleviation is optimized. These reforms include the preparation of a new mineral policy declaration and a new mining code which promotes a greater impact of mining on the national economy and local community living conditions, environment, mine closure, etc. The Government still needs to develop a longer term vision of its mineral sector, and to put in place the framework and capacities needed to enable improved benefits from the sector including the revenues, economic linkages, and induced economic development opportunities. Rationale for Bank Involvement The Government of Burkina Faso is committed to making mining an important development instrument. The Government has initiated a policy of diversifying export revenue sources through agriculture, and the promotion of tourism and mining. These build upon the orientation of Pillar 1 of the PRSP. It seeks the Bank s international experience and ability to explore synergies and catalyze reform efforts, integrating technical expertise and public policies to address sector challenges. IDA s comparative advantage is, first, its depth of knowledge of Burkina s and Africa s mineral sector, combined with international mining sector experience and practice; and its long standing engagement in public expenditure management, macroeconomic and infrastructure development in Africa. IDA is thus well-placed to integrate mining sector reforms and capacity building with broader macro, microeconomic and fiscal management issues. Burkina Faso is committed to regional integration and is an active participant in the streamlining and region wide efforts to improve mineral sector management. The regional mining code of the Union Economique et Monetaire Ouest Africaine (UEMOA) prevails over the national code, and on some points it is more favorable. The current updating of the mining code is also intended to align this document to the UEMOA mining code. The West Africa region is working toward a unified mining code through the 16-member Economic Community of West African States (ECOWAS). While the code is yet to be produced it is expected to harmonize approaches in the sub-region, boost investment and benefits and help to reduce the perceived operating risk. The World Bank is working with ECOWAS to prepare a regional mineral governance program (WAMGP). This project will help prepare the country and stakeholders, in putting in place a platform for further regional integration in mineral development approaches. The proposed project is aligned with the Country Assistance Strategy (CAS) which primary objective is to help Burkina Faso make progress on promoting economic transformation and activating new drivers of growth that can be sustained over time. It will contribute to the CAS objectives of accelerated and shared growth, increased employment opportunities, and is consistent with the Africa Action Plan (AAP). The proposed project is also aligned with the objectives of the Stratégie de la Croissance Accélérée et du Developpement Durable (SCADD) being developed by Burkina Faso for the period The SCADD aims to increase and sustain an economic growth with positive impacts on the revenues and living standards of the population in a context of sustainable management of natural resources through four pillars including i) promotion of growth poles and reduction of economic vulnerabilities, ii) development of economic infrastructure, iii) investment in human capital, and iv) improvement of the sustainable development framework. Mining has

3 been identified as a strong priority sector for the realization of the SCADD, and the proposed project is aligned with all its pillars. 2. Proposed objective(s) The proposed operation is expected to be an integral part of the continued World Bank support to improve governance, sector management, and contribution to growth and sustainable development for the years to come. It has two specific objectives: (i) to strengthen institutional capacity to manage the minerals sector in an efficient, accountable, and transparent manner and, (ii) to improve conditions for improving socio-economic benefits from industrial mining. The project would also help the country put in place a platform for better regional integration of the mining sector with derived synergies for improved benefits for the country. The proposed operation will also continue to support an array of cross-cutting issues, such as strengthening of the Extractive Industry Transparency Initiative (EITI) and other accountability mechanisms, enhancing capacity and coordination for mining revenue collection, infrastructure, public-private planning, and artisanal and small-scale mining. 3. Preliminary description The proposed project comprises four components. Component A. Ensuring Access to Resources. Sub-Component A.1. Policy, Legal, and Regulatory Framework. Legislative and regulatory reform will cover the following aspects: Mining regulations Mining community development framework Fiscal policy and accounting standards Guides and standards for the implementation of the updated Mineral Policy Transparency and participatory policies. Environment, health and safety standards and guides, etc. Mining and gender policies Sub-Component A.2. Geo-Data Infrastructure. This sub-component will finance geo-scientific surveys and mapping of selected prospective and little known areas of Burkina Faso. It will finance the upgrading of the existing GIS systems at the national geological survey (BUMIGEB) and at the mining cadastre to ensure adequate storage, management and assessment of the geological and titling information. The databases will integrate geological, geophysical and assay of exploration sites reverted back to the public domain. This component will also finance tools equipment and technology to ensure that BUMIGEP services meet international standards in areas such as laboratory assaying for example; and that it could support the proposed surveys.

4 Component B. Strengthening Institutional Sector Management Capacity, and Accountability. Sub-Component B.1. Strengthening Capacities of Public Institutions in Managing the Mining Sector. The objective of this sub-component will be to develop the country s skill base to meet the requirements for efficient, transparent and accountable mineral sector management. It will include the following activities: Organizational audit of the mining sector institutions and implementation of strengthening measures. Establishment and equipment of units such mining inspectorate, legal department, economic and statistic departments, etc in the Direction of Mines. Rehabilitation of the mining cadastre office, supply and updating of IT systems. Mapping of existing skills and demands related to the mineral sector management, including legal, regulatory and negotiation skills, bidding, investment promotion, geological survey, and geological information management skills, revenue collection and management skills, social and environmental skills related to mining, EHS-skills, inclusive ancillary infrastructure development, etc. Prioritization of skill needs and designing of training programs. Working with an education organization in the country to develop key curricula needed for sustained longer term training. Institutional capacity building for the enhanced implementation of the mineral law, regulations, standards and systems to ensure compliance of operations with established norms. Training will be provided for technical, environmental, social and health and safety inspections. Equipment and strengthening of the artisanal mining extension services department. Environmental and social sensitization of artisanal miners. Strengthening the demand side of governance through capacity building for civil society, Parliamentarians, journalists, etc. Sub-Component B.2. Framework for Tax and Revenues Collection from Mining. Under this sub-component the proposed operation will assist with (i) development of coordination and collaboration framework between the Ministries of Finance and Mines, (ii) mapping of physical and financial control points, (iii) training on revenue information collection and processing (iv) development of management reporting systems and database on revenues, and (iv) procurement of tools needed for assessing the compliance of revenues collection. Sub-Component B.3. Accountability Platform. This sub-component will focus on (i) training and development of intelligible information sharing platform on mining for civil society, academics, media, mining communities and other mining stakeholders, and (ii) following up capacity building on issues surfaced through EITI reports. Component C. Enhancement of Socio-Economic Benefits Sub-Component C.1. Public-Private Forum for Facilitating Ancillary Infrastructure Development. The objective of this sub-component is to facilitate planning and discussions on the costs, benefits and ways to approach ancillary infrastructure development around mines. The activities will include (i) evaluation of possible infrastructure development scenario, (ii)

5 facilitation of a dialogue between potential investors, project sponsors and the government, and ways to enable communities access to utilities in mining region through commercial means. Sub-Component C.2. Potential for Mining Growth Poles. Under this sub-component the activities will include regional spatial analysis of integrated geological and mining information, infrastructure data, environmental priorities, and other economic opportunities around clusters of mines in Burkina. A classification will be made and further assessment done on the most prospective cluster to become a potential growth pole. The strengths and constraints will be identified along with success factors. The most prospective opportunities will be further enabled though identification of funding sources. Sub-Component C.3. Community Development and Local Content Knowledge Sharing. Knowledge platforms will be developed in the form of forums of exchange on in/out of country best practice in: a. The approaches to community development including engagement process, participation, funding, inclusion, gender, transparency mechanisms and alignment with local economic development plans. b. Measures to improve the quantity and quality of goods and services procured locally including procurement forums and similar initiatives. c. The updating of selected mining areas local economic development plans. The platforms are anticipated to using various communication medium to share good practice in improving mining socio-economic benefits. The idea of the development of a website to provide for an e-platform for continued knowledge sharing medium and for contributions to policy dialogue on mining benefits will be explored Component D. Project Coordination and Management This component will focus on project implementation and coordination, including procurement, financial management, and disbursement aspects. It will also include monitoring and evaluation of project implementation, including reporting, audits, and assessment of safeguards policies. An existing Project Implementation Unit (PIU) within the Ministry of Mines, Quarrying, and Energy (Energy Division) will be used during project preparation, while human resources and capacity is built within the Mines Division to take over project management during implementation. 4. Safeguard policies that might apply The proposed project is a technical assistance which does not include activities related to the mining operations. The terms of reference for a sectoral environmental and social impact assessment (SESA) will be developed, but the assessment itself will be carried out as part of the project implementation. This approach has been used for similar technical assistance projects, and the TOR will be disclosed for consultation both in in-country and InfoShop prior to Appraisal. The SESA will examine the current situation in the sector in terms of environmental and social management and describe potential environmental and social impacts in the sector, including site-specific and cumulative impacts, pollution, health and safety, and social issues (e.g. inclusion, gender, vulnerable groups, land administration/management, labour issues, conflict,

6 etc.). This assessment will draw on extensive consultations with stakeholders and include discussions on community participation in the sector, governance, transparency, and conflict resolution. 5. Tentative financing Source: ($m.) BORROWER/RECIPIENT 0 International Development Association (IDA) 23 Total Contact point Contact: Boubacar Bocoum Title: Sr Mining Spec. Tel: (202) Fax: (202) bbocoum@worldbank.org