Document of The World Bank Report No. 13881-GH STAFF APPRAISAL REPORT REPUBLIC OF GHANA MINING SECTOR DEVELOPMENT AND ENVIRONMENT PROJECT MAY 19, 1995 Industry and Energy Operations West Central Africa Department Africa Region CURRENCY EQUIVALENTS (as of April 1995) Currency Unit = Cedi (C) US$1 = (˘)1130 1(C) = US$0.001 ABBREVIATIONS AND ACRONYMS EIA - Environmental Impact Assessment EPA - Environmental Protection Agency ERP - Economic Recovery Program GS - Geological Survey GTZ - Gesselschaft fur Technische Zusammenarbeit MC - Minerals Commission MD - Mines Department MEM - Ministry of Energy and Mines SSM - Small-Scale Mining SSMP - Small-Scale Mining Project TA - Technical Assistance FISCAL YEAR January 1 - December 31 REPUBLIC OF GHANA MINING SECTOR DEVELOPMENT AND ENVIRONMENT PROJECT TABLE OF CONTENTS Page No. CREDIT AND PROJECT SUMMARY ............................. iii 1. INTRODUCTION .1 2. THE MINING SECTOR .S A. Structure of the Sector .5 B. Small-Scale Mining .7 1. Gold .7 2. Diamonds .8 C. Future World Demand for Gold and Diamonds .9 D. Legal Framework ..10 E. Institutional Structure for Mining .12 F. Marketing Issues for Small-Scale Mining .13 G. Effect of Mining on the Environment .15 H. Health and Safety Effects .17 I. Institutional Structure for the Environment .17 3. THE BANK'S EXPERIENCE AND STRATEGY .19 A. IDA Lending to Ghana .19 B. Country Assistance Strategy .20 C. Mining Sector Strategy for Ghana .20 D. Lessons Learned from other IDA-Supported Projects .21 4. THE PROJECT.................................................23 A. Project Objectives ..................................................... 23 B . Project Sum m ary ..................................................... 23 C. Detailed Project Description ....................................... 24 1. Strengthening of Mining Sector Institutions ............................... 24 *2. Assistance to Small-Scale Mining Enterprises ............................. 26 This report is based on the findings of a pre-appraisal mission to Ghana in March/April 1994, and an appraisal mission in July 1994. The appraisal mission comprised Messrs. Leo Maraboli (Task Man-ager, Sr. Mining Engineer) IENIM, Paul Bermingham (Financial Analyst) AF4IE, Ms. Indu Hewawasarn (Operations Officer) AF41E, Mr. Robert Nooter (consultant) and Ms. Eleanor George (Sr. Statf Assistant) AF4IE. Mr. Jasdip Singh scted as Lead Adviser for the project and Messrs. James Kerr (COMD2) and Robert Tillman (AFTES) acted as peer reviewers for the project. Secretarial and administrative support was provided by Ms. Eleanor George and Ms. Lee Swapp (Staff Assistant), AF4IE. Ms. Mary Oakes Smith and Mr. Olivier Lafourcade are the managuig Division Chief and Departmental Director, respectively. - ii - Pa2e No. D. Cost Estimates and Financing ...................... 29 E. Implementation ...................... 31 F. Procurement ...................... 32 G. Disbursement ...................... 35 H. Project Supervision ...................... 36 I. Environment Aspects ...................... 36 J. Poverty Alleviation ...................... 37 5 PROJECT BENEFITS, RISKS AND SUSTAINABILITY .......................... 38 A. Project Benefits ............................................. 38 B. Project risks ............................................. 38 C. Project Sustainability ............................................ 38 6. AGREEMENTS AND RECOMMENDATIONS .......................................... 40 ANNEXES A. Institutional Structure of the Mineral Sector B. Detailed Project Cost Estimate C. Project Implementation Schedule and Monitorable Indicators D. Procurement Arrangements E. Procurement Plan and Schedule F. Estimated Schedule of Disbursement G. Environmental Analysis H. Contents of Implementation Manual I. Training Program J. Supervision Plan TABLES 2.1 Export of Major Minerals ..........................................5 2.2 Official Production of Gold ..........................................5 2.3 PMMC Purchases of Gold from Small-Scale Miners ..........................................7 2.4 Diamond Purchases from Small-Scale Miners ..........................................9 2.5 Summary of Small-Scale Gold and Diamond Concessions ....................................9 2.6 SSM Gold Purchases by PMMC ......................................... 14 4.1 Estimated Project Costs ......................................... 30 4.2 Financing Plan ......................................... 30 4.3 Summary of Proposed Procurement Arrangements ......................................... 34 4.4 Allocation of Disbursements Under IDA Credit ......................................... 34 4.5 Allocation and Disbursements Categories ......................................... 35 MAP IBRD NO. 21011R REPUBLIC OF GHANA MINING SECTOR DEVELOPMENT AND ENVIRONMENT CREDIT AND PROJECT SUMMARY Borrower: Republic of Ghana Beneficiaries: Ministry of Energy and Mines and Minerals Commission Amount: SDR 7.9 million (US$12.3 million equivalent) Terms: Standard IDA with 40 years maturity Onlending Terms: Not applicable Project Objectives: The overall objective of the project is to support the development of Ghana's mining sector on an environmentally sound basis through strengthened mining institutions and the provision of appropriate technology and organizational support to small-scale miners. Specifically, the objectives are: (i) to enhance the capacity of the mining sector institutions to carry out their functions of encouraging and regulating investments in the mining sector in an environmentally sound manner, and (ii) to develop techniques that will improve the small-scale mining (SSM) operations. Project Description: (a) Strengthening of the mining sector institutions through: (i) support to the MC to improve its organizational structure; expand its promotional activities; formulate regulations and amend existing legislation as necessary to set in place a sound regulatory framework for the sector; develop guidelines and standards for environmental monitoring and control, and for mitigation of environmental aspects of mining activities; and establishment of a minerals and environmental information system; (ii) support to the MD to carry out its inspection, monitoring and enforcement responsibilities, particularly with regard to environmental impact and health hazards, and for assisting small-scale miners in the application of the new technology to be developed under the project: (iii) support to the GS to improve its geological information base through an aerial survey and the publication and dissemination of the results; and (iv) support to the MEMto - iv - carry. out its policy planning and coordination role for the mining sector in a more effective manner. (b) Assistance to Small-Scale Mining Enterprises through: (i) pilot testing of identified modules of small-scale mining equipment for improving both productivity and yields, and the extension of successfully tested models to determine their applicability to Ghana's conditions and acceptability by the small-scale miners; (ii) a program to make better geological information available to small- scale miners through the establishment of teams of geologists trained and equipped to delineate recoverable ore bodies on SSM concessions; (iii) improvements in the sector framework for SSM operations, including needed modification of regulations and laws, and improvements in the marketing structure applicable to small- scale miners; and (iv) reclamation and rehabilitation of priority areas degraded through past SSM activities as a pilot exercise to determine best practices and cost-effective methods for future reclamation programs. Benefits and Risks: The main potential benefits of the project include: (i) improved mining sector institutions able to encourage and assist private investors to start or expand mining operations; (ii) improvement in productivity and incomes of small-scale miners through active technical and organizational support; (iii) reduction of the negative environmental impact of mining through the strengthening of environmental monitoring and enforcement; (iv) improved health, safety and working conditions for large numbers of small-scale miners through the introduction of appropriate technology and equipment; (v) minimized environmental impact of small-scale mining activities through the introduction of environmentally responsible technology and processing techniques; and (vi) mitigation of past environmental degradation caused by small-scale mining activities through land reclamation and rehabilitation activities. The main risks include: (i) the possibility that new technologies appropriate to small-scale mining in Ghana cannot be developed or will not be adopted by the mine operators; and (ii) the institutions responsible for carrying out the project may lack the staff, capability or incentive to carry out the project successfully. Appropriate technologies for small-scale miners have been developed and proved to be financially viable in other countries with similar conditions, and therefore there is reason to believe that these techniques can be made to work in Ghana. Adoption of the new processes by the miners would be facilitated by the field - v - demonstrations and trial periods under which equipment would be made available to them. The last risk is addressed by the capacity building nature of the project, which aims to strengthen the mining institutions. Estimated Project Cost:A1 Foreign Project Component Local (US$ million) Total Institutional Strengthening of 0.95 3.82 4.67 Mining Sector Agencies Assistance to Small-Scale 3.32 3.64 6.96 Mining Enterprises Contingencies: 0.78 1.24 2.02 Total Project Cost 5.05 8.60 13.65 a/ All costs estimated net of duties and taxes Financing Plan: Foreign Local (1US$ million) Total 1DA 3.7 8.6 12.3 Government 1.4 0.0 1.4 Total 5.1 8.6 13.7 Estimated Disbursements: IDA Fiscal Year (US$ million equivalent) 1996 1997 1998 1999 2000 2001 Annual 1.0 3.0 3.0 2.0 2.0 1.3 Cumulative 1.0 4.0 7.0 9.0 11.0 12.3 Economic Rate of Return: Not applicable. Poverty Category: Not applicable. I 1. INTRODUCTION Background 1.1 Country/Sector Background and Constraints. During the 10 years prior to the introduction of the Economic Recovery Program (ERP), real Gross Domestic Product (GDP) fell by 2 percent per annum. Since the ERP was adopted in 1983, the GDP has grown at an annual average rate of around 5 percent. Significant policy reform and fiscal adjustment occurred under the ERP. The policy reforms included the reform of trade and exchange rate systems, the elimination of price controls, and the liberalization of interest rates and investment regulations including those applicable to mining, which resulted in better incentives for efficient and sustainable growth. In addition, increased mobilization of revenue under the ERP permitted the Government to make significant investments in infrastructure, while at the same time reducing fiscal deficits. Inflation fell from more than 100 percent in 1984 to less than 20 percent in 1991. 1.2 Notwithstanding a decade of sustained fiscal adjustment, in 1992 the election-related wage increases and other fiscal slippages resulted in a re-emergence of fiscal deficits and inflation. There was some improvement in the fiscal situation in 1993 and 1994. The economy grew by 5 percent in 1993 but, due to unexpected rains and conflict in the Northern areas, GDP growth was less than anticipated in 1994, averaging about 3.8 percent, with inflation rising to 25 percent. Macroeconomic stability is expected to be restored in 1995 and sustained after that, leading to more rapid private sector growth in the medium to long term. 1.3 The mining sector in Ghana accounted for about 45 percent of export earnings in 1993. The sector employs about 20,000 workers in the larger mines and 30,000 people in small scale mining. Gold is its principal product, with about 85 percent of total mining sector export value and 85 percent of formal employment. In 1985, the Government introduced policy reforms to open up the sector to private investment. During the past decade, gold production has grown steadily from 277,000 ounces in 1983 to 1,261,000 ounces in 1993. Large-scale mining involves a few producers, and the largest among these, Ashanti Goldfields Corporation, accounted for 74 percent of the country's output in 1992. Continuing its divestiture policies, the Government recently reduced its stake in Ashanti Goldfields from 55 percent to 31.3 percent, raising $400 million in a transaction that saw the Corporation's stock successfully floated on the Accra and London Stock Exchanges. While the current mining policies are broadly consistent with Ghana's overall country assistance strategy of promoting the private sector, there is some concern about the capacity of the Government's institutional framework to implement the policy reforms, to carry out requisite promotional activities to attract new investment and to ensure appropriate environmental monitoring. -2 - Institutional Framework 1.4 The Ministry of Energy and Mines (MEM) is the main agency dealing with the mining sector. The Mines Department (MD) and the Geological Survey Department (GS) are the main departments of the Ministry responsible for the sector. The MD is responsible for mine safety, enforcement of licensing and leasing provisions of minerals concessions, and environmental monitoring. The GS gathers and publishes information on Ghana's mineral resources as a basis for attracting investment. The MC was established in 1986 as a semi- independent agency designed to help formulate Government policy, and generally to encourage the development of the mining sector. IDA's support for the mining sector included the Mining Sector Rehabilitation Project (IDA Credit No. 1921-GH), effective since March 1989, which was intended primarily to support the rehabilitation and privatization of three Government-owned and operated gold mines. Environmental Effects 1.5 For many years, the adverse environmental impact of mining was ignored, with resultant degradation of the land, adverse effect on water quality, and air pollution from the large-scale mining operations. These effects have had an adverse impact on the communities near the mining operations. The long established underground operation run by Ashanti Goldfields Corporation (AGC), for example, produced widespread contamination in the surrounding villages, particularly Obuasi and Sansu. Gaseous emissions, fallout from the stack, tailings spillages and various mine effluents over a prolonged period of time resulted in adverse effects on the surrounding eco-systems. Elevated concentrations of metals and suspended solids have rendered the Kwabrafo-Jimi and Ofin rivers unsuitable for domestic usage. AGC has, in collaboration with IFC, taken several steps to redress key pollution problems such as the emissions from the roasting stack, through the installation of a bio- leaching plant. i.6 During the last several years, large-scale mining operations run by foreign investors have generally adhered to internationally acceptable environmental practices, and Environmental Impact Assessments have been required for all new mining concessions. Neither the Environmental Protection Agency (EPA) nor the Mining Sector agencies, however, currently possess the institutional capacity necessary to carry out monitoring of the mining activities to ensure that they are carried out in an environmentally responsible manner. The mine operators largely carry out self-monitoring with random checks by the EPA. Since the EPA cannot be expected to monitor all developmental activities in all sectors, it is the responsibility of the sectoral agencies to carry out this function. This situation is expected to be alleviated through this project, which will provide institutional strengthening to the MD to be more effective in carrying out regular visits to mine sites to carry out sampling of natural resources affected. The Government-operated mines have made the least progress in remedying past environmental damage. This is now being remedied through the inclusion of provisions for mitigation of past damage (financed in part by funds made available through the Mining Sector Rehabilitation Credit) in connection with the privatization of these operations. - 3- Environmental audits have been prepared for all three mines and mitigation work is expected to commence before May 1995 in all three mines. Small-Scale Mining 1.7 Small-scale mining of both gold and diamonds is widespread, especially in the Southern and Eastern parts of the country. The Government adopted, in 1989, a law specifically regulating SSM gold operations. It also set up the Precious Minerals Marketing Corporation (PMMC) to buy the output of both gold and diamonds, either directly or through licensed traders, in order to attract these flows to authorized channels. Nevertheless, substantial amounts continued to be sold through illegal channels. During the past year, several initiatives have been taken by the Government to improve the commercialization of gold and diamonds. In the case of diamonds, PMMC has introduced competitive buying and exporting with the licensing of five international operators. In the case of gold, PMMC has opened a buying office in Tarkwa, and the Government has authorized a private company, Miramex, to purchase and export gold in competition with PMMC. In addition, PMMC has become more competitive with the unauthorized buyers of gold by offering better prices for the minerals, resulting in significant increases in purchases. 1.8 Small-scale mining production in Ghana is carried out in the most rudimentary fashion, and incomes from small-scale mining operations are minimal. Recovery is typically only 20 to 30 percent of the gold contained in the mined ore, and there is a general lack of knowledge and disregard for safety and environmental regulations. The MC is engaged in trying to improve small-scale mining of gold and diamonds through implementation of a pilot Small-Scale Mining Project (SSMP), carried out with assistance from Deutsche Gesellschaft fir Technische Zusammenarbeit (GTZ). The SSMP has undertaken an analysis of the needs of the sub-sector, identified the main constraints and initiated pilot testing of improved mining and processing techniques and equipment. The pilot testing activities of SSMP have confirmed significant potential for improvement in output, productivity and yields but the specific means to achieve this potential are yet to be proven for Ghanaian conditions. Country Assistance Strategy and Rationale for International Development Association (IDA) Involvement 1.9 The proposed project is consistent with IDA's strategy of supporting the Government's program of accelerated growth through private sector development, poverty alleviation, capacity building and improvement of environmental management. The Government's mining sector strategy emphasizes the liberalization and rationalization of sector policies, establishing an efficient and transparent system of handling prospecting and mining licenses and the divestiture of state-owned mines. The proposed project aims at providing capacity building support to the mining sector agencies to carry out the policy, and institutional and regulatory reforms needed to promote private sector growth in the mining industry. Establishing capacity for environmental monitoring and control of both large and small-scale mining operations, stimulating private entrepreneurship, alleviating poverty - 4- through improvements in productivity of the low-paid, small-scale miners, improving the safety of working conditions and improved environmental and social conditions are other objectives of this project. The achievement of these objectives is expected to assist in the translation of Ghana's market-based macroeconomic policies into increased foreign investment, increased output, exports, employment generation and minimization of environmental degradation. The project complements the ongoing Mining Sector Rehabilitation Project and the Environmental Resource Management Project. 2. THE MINING SECTOR A. Structure of the Sector 2.1 Gold mining has a long history in Ghana, which was known to the early European traders as the "Gold Coast" of Africa. A small-scale mining industry was already well developed by the late 1400s. By the late 1800s, mining activities had thrived and gold production increased rapidly. Since 1900, gold mining has gone through various boom and bust cycles with production increasing significantly but erratically. Gold output peaked in the early 1960s at around one million ounces per year and declined steadily thereafter to 277,000 oz. in 1983 because of various adverse conditions which included overvalued exchange rates that made exports uncompetitive, lack of spare parts, and deterioration of infrastructure related to the mining sector. 2.2 Ghana's mining sector also includes production of other minerals including bauxite, manganese, diamonds, salt and sand. Gold, however, is the main product as indicated below: Table 2.1: Exports of Major Minerals (US$'000) 1990 1991 1992 1993 Gold 205,786 303,480 346,220 444,469 Bauxite 9,971 8,735 9,477 9,472 Manganese 14,297 21,789 16,699 14,242 Diamonds 16,927 19,606 19,652 18,369 2.3 Gold production responded to the changes instituted through the Economic Recovery Program, as indicated by more than a four-fold increase in productive output since 1983: Table 2.2: Oficial Production of Gold a/ 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 Gold ('000 oz) 282 299 287 328 373 429 541 845 998 1261 -/Excludes production of small-scale miners: 2.4 Gold production is concentrated in ten privately owned and controlled mining operations and three state-owned mines. Of the three state-owned mines, the privatization of Tarkwa has been completed and the new management has commenced operations. At Dunkwa, the process of conversion to private ownership and management is well advanced - 6 - and the related agreement is shortly to be ratified by Parliament. At Prestea, negotiations for joint venturing have been completed. However, the related agreement still remains to be ratified by Parliament and management needs to be transferred to the joint venture partner. The Government recently reduced its stake in Ashanti Gold Corporation, which is by far the country's largest gold producer, from 55 percent to 31.3 percent, raising US$400 million in transactions that saw its stock successfully floated on the Accra and London Stock Exchanges. Another important source of production includes small-scale gold and diamond mining activities of over 30,000 miners who-use rudimentary artisanal technology. However, the production methods, institutional structure, marketing and environmental problems of the large and small-scale mining operations are distinctly different from each other, as described in Section B of this chapter. 2.5 The stimulus for increased production during the past decade was the result of the availability of foreign exchange for the purchase of capital equipment and imported supplies, a rTalistic exchange rate applicable to export sales, improvement in the transportation infrastructure, a Minerals and Mining Law enacted in 1986 that provided a clear framework for new mining investments, and an overall favorable investment climate that provided a more receptive atmosphere for foreign investors. These factors led to both increases in output at existing mines and the startup of several new privately owned and operated gold mines. 2.6 The country's second most important mining activity is the production of diamonds, dominated by Ghana Consolidated Diamonds (GCD), which until 1993 was a wholly-owned and operated Government corporation. GCD operated a diamond mine employing about 2,200 workers at Akwatia, about 150 km northeast of Accra, which also issued licenses for small-scale tributers to carry out artisanal operations on its property at approved sites. Production had been stagnant during the past ten years as GCD had operated with obsolete equipment, overstaffing, and poor management. In 1993, the Government entered into a joint venture partnership with its operations to be managed by a private foreign investor. Proven reserves indicate that there is sufficient ore to support mining for at least ten years at a much larger production rate of about double the present levels. 2.7 Future Requirements of the Sector. Gold and diamonds have been an important source of export earnings and employment and a significant contributor to increased GDP during the past decade. The role of the sector can mainly be attributed to the improved investment climate in Ghana and the development of known deposits rather than to the development of new deposits. In the recent past, there has been a downturn in investment in exploration and mine development as existing mines are brought up to optimal production levels. If the sector is to continue to expand, there is now a pressing need to expand the Government's general exploration work to locate additional likely deposits and to publicize the findings of that work in order to attract new investors. In addition, further sectoral development will result in enhanced demand for technical skills in the mineral industry. In order to respond to this need, local universities should include in their curricula pertinent courses on state-of-the-art technologies targeted at supporting the mineral industry. - 7- B. Small-Scale Mining 2.8 About two-thirds of the small-scale miners in Ghana are involved in gold production and the rest in diamonds. Gold sold by small-scale producers through official channels totaled US$12.6 million in 1993 as indicated in the table below, but estimates of total output from miners are much higher than the official transactions. Diamond sales through official channels are in the range of US$12 million annually, with substantial additional production also sold through illegal markets. 2.9 Gold. Small-scale gold mining in Ghana is conducted under the Small-Scale Gold Mining Law of 1989. The law defines SSM of gold as any mining activity not involving sbibstantial expenditures in areas not exceeding 25 acres. 2.10 The output of small-scale miners has increased substantially since the above mentioned enactment of legislation in 1989, as reflected by the sales of gold to the PMMC: Table 2.3: PMMC Purchases of Gold from Small-Scale Miners Year Quantity (ozs) Value (US$) 1989 9,273 3,730,000 1990 17,234 6,257,281 1991 15,601 5,325,236 1992 17,297 6,148,121 1993 35,145 12,647,290 Source: PMMC 2.11 Small-scale mining of gold is carried out by operators licensed by the Government to mine in designated areas for a period of three to five years. There are also a significant number of unauthorized operators largely because efforts to license small-scale mining are relatively recent. The licensed operators typically engage workers (tributers) to dig and process ore into a concentrate that is sold by the tributers to the licensed operators, who in turn are required to sell the final gold metal product to an approved Government purchaser. Individual concessions are granted for 3 acres of land, and corporate or cooperative concessions are allowed up to 25 acres. Each concession typically employs 5 to 20 groups of tributers consisting of 5 to 10 workers each. Over the duration of the concession, work is usually conducted on a production sharing arrangement whereby two thirds of the production belongs to the tributers and one third to the concessionaire, who has the first option to buy the tributers' shares. Equipment is confined to hammers, buckets, shovels, pick-axes, sluice boxes and the like. Processing includes the use of mercury with associated environmental and health impacts. Mining sites typically are identified on the basis of other mines in the area, and licensees lack any reliable knowledge of mineral potential yields. Tributers are frequently inexperienced in mining and processing techniques, and there is a general lack of knowledge and disregard for safety and environmental regulations. Recovery is typically 20-30 percent of the gold contained in the mined ore, as indicated by tests conducted by the MC. - 8- 2.12 Initial pilot operations for improving the yields and productivity of small-scale gold and diamond operations were initiated and carried out under the Small-Scale Mining Project unit administered by the Minerals Commission with the support of GTZ over the past several years. The SSMP had undertaken an analysis of the needs of the sub-sector, identified the main constraints and initiated pilot testing of improved mining and processing techniques and equipment, pilot tested a credit program and completed an assessment of the social and environmental impact of small-scale mining. Assessments have also been completed on the role of increased participation of women in the sector, as well as marketing mechanisms for gold and diamonds. The pilot testing activities confirmed the significant potential for improvement in output, productivity and resource recovery, and for the adoption of practices that would minimize the adverse impact on the environment. However, the specific potentials are yet to be demonstrated because attempts by the SSMP to develop improved small-scale mining equipment and to establish a credit scheme to make this equipment available to the miners have only focused on the most rudimentary elements of the sub-sector spectrum with marginal results. Commercial sales of equipment to upgrade the SSM processing systems have been limited mainly to pumps used to drain water from the diggings, with no impact on inproved recovery or efficiency of operations. There has been very little SSM equipment available commercially in Ghana, presumably because equipment of this kind is not marketed aggressively and because SSM in Ghana has only been legal since 1989. 2.13 Diamonds. Small-scale mining of diamonds is carried out in a manner similar to small-scale gold mining. About 60 percent of the licensed operators carry on their operations at the GCD site at Akwatia, with most of the balance in adjacent areas. The diamond concessionaires also engage tributers and purchase the output on a daily basis at the site. 2.14 The sales of diamonds by small-scale miners to the licensed foreign buyers operating under PMMC's auspices increased rapidly in the late 1980s due to a more active purchasing role by PMMC and because of exchange rate adjustments. However, formal sales have tapered off in the last two years, as indicated below. The reasons for this decline is unclear, considering that the prices offered by the licensed buyers have increased significantly as a result of the new liberalization initiatives and the introduction of competitive buying and exporting through the licensing of five international operators who carry out their activities at PMMC's office in Accra. Nevertheless, as with gold there is active unauthorized trading, and actual production levels seem substantially higher than indicated by the PMMC figures. Table 2.4: Diamond Purchases from Small-Scale Miners Year Quantity (carats) Value (US$) 1986 3,144 10,537 1987 4,445 16,845 1988 34,231 153,424 1989 151,606 2,108,961 1990 484,877 14,280,481 1991 541,849 17,444,007 1992 479,875 13,036,546 1993 368,195 11,574,979 Source: PMMC 2.15 The number of small-scale concessions granted up to November 1993 is summarized in table below. However, MC estimates that only about 100 gold and 20 diamond concessions are actively under production at present, with the balance inactive due to poor initial operating results and lack of resources. Table 2.5: Summary of Small-Scale Gold and Diamond Concessions (November 1993) Small-Scale Number of Concessions Mining District Diamond Alluvial Gold Hard Rock Gold Total Tarkwa - 97 3 100 Akim Oda 75 14 - 89 Bibiani - 25 25 50 Dunkwa - 28 21 49 Assim Fosu 33 14 - 47 Enchi - 10 28 38 Kibi - 36 - 36 Total 108 224 77 409 Source: Minerals Commission C. Future World Demand for Gold and Diamonds 2.16 Demand for gold and diamonds is difficult to predict, especially since demand and prices for each commodity are set under different conditions. The demand for gold depends on supply and demand in a volatile free market, based on a combination of demand for jewelry and for investment. Demand for jewelry in developing countries is high when prices are low and vice-versa. On the other hand, hoarding of bullion seems to rise when prices rise. Overall, investment demand for gold has increased steadily in recent years due primarily to growing private investment demand. Generally, the outlook for the demand for gold seems to -lo- be good, with demand for jewelry rising and investors continuing to place gold in their portfolios. Given the volatility of gold prices experienced since the early 1980s, future prices could be anywhere from 35 percent below or 50 percent above its recent price of US$380 per ounce. 2.17 The diamond market is essentially controlled by a well established cartel dominated by DeBeers. This cartel controls 90 percent of the diamond jewelry market, and has substantial control over the industrial diamond market as well. It sets prices on the basis of demand, and regulates its operations on the basis of an inventory buffer stock. This cartel has been effective in maintaining relatively stable prices for diamonds, and is likely to be able to continue to do so in the future. D. Regulatory Framework 2.18 The Minerals and Mining Law, 1986 (as amended by Act 475), is the key piece of legislation pertaining to the mining of precious minerals. It provides for state ownership of minerals in their natural state within the jurisdiction of the country and requires a prior application to and a grant from the responsible Minister before any person can carry out any type of exploration, production or marketing of such mineral. The law sets out the types of permits the Minister is empowered to grant, the duration and the size of the concessions, the criteria for eligibility and the procedures for applying for such grants. It also sets out in broad terms the rights and obligations of the holder of a mineral right and the powers of the MD over mineral operations. The Constitution, which came into force on January 7, 1993, vests all rights to minerals in the State. It requires Parliamentary ratification of the grant of a right to produce minerals. In certain circumstances, Parliament may delegate this power. 2.19 To date, no regulations have been formulated under the Minerals and Mining Law, 1986. Some regulations made under the Minerals Act of 1962 continue to be enforced, although some of the provisions in the regulations have been modified or replaced by specific provisions of the Minerals and Mining Law itself The Government, in consultation with IDA, is undertaking an assessment of the regulatory framework and the need for additional regulations. Draft mining and environmental regulations are already under preparation in collaboration with the EPA. 2.20 For small-scale gold mining, the most relevant pieces of legislation are the Small- Scale Gold Mining Law, PNDCL 218 enacted in 1989, and the Mercury Law of 1989. The latter requires that good mining practices are observed in the use of mercury. Main provisions of the former legislation relate to: (a) prohibition of small-scale gold mining unless a license has been granted by appropriate authority; (b) the size of concessions; (c) criteria applicable to license holders; (d) the establishment of District Small-Scale Mining Centers, and the provision of advice and training facilities to ensure effective and efficient mining operations; (e) requirements for good mining practices, including due regard to health, safety and environmental aspects; (f) compensation for land owners; (g) prohibition of the use of explosives; (h) exemption from payment of income tax and royalties for a three-year period from when the law was proclaimed; and (i) limiting the sale of gold only to authorized buyers. 2.21 Small-scale mining other than for gold is governed by the Minerals and Mining Law of 1986 and the Mining Regulations of 1970. The former contains a specific provision for the designation of areas for small-scale mining operations, with subsequent exclusion or modification by regulation of any of the provisions of the law which would otherwise apply. It also empowers appropriate officers to enter any premises other than dwelling houses to determine whether any disturbances are created by mineral operations. More specific provisions concern the need to obtain a license to divert streams of water for mining, and the ability to formulate regulations concerning the restriction of prospecting operations in or near any river, dam, lake or stream, the prevention of pollution of waters, springs, streams, rivers or lakes, the gathering of firewood, and the cutting down and use of timber for the purpose of carrying on prospecting and mining activities. In general, the Secretary for Energy and Mines is empowered to make regulations for the conservation and development of mines and minerals and to implement the provisions of the law. The Mining Regulations also contain a provision that water containing "any injurious matter" cannot be discharged offsite without having been rendered innocuous. 2.22 The Minerals Commission has prepared a Code of Practice for Small-Scale Gold Mining as an initial step to regularize this type of activity. The Code requires: * Concession holders to take preventive measures to avoid accidents. * Filling of worked-out pits and excavations in a systematic manner to allow the land to assume its natural state. * Appropriate occupational safety measures, such as maintaining a maximum vertical mining face height of 1.8 m. * No mineral dressing in streams that is likely to cause pollution, without the written approval of the Chief Inspector of Mines (or his representative). * No diversion of streams to allow mineral dressing, without the written approval of the Secretary for Energy and Mines. * No dumping of wastes or similar materials in or near streams. 2.23 While this code has been written in response to the perceived needs of the gold mining industry in particular, it has obvious application to other small-scale mining activities. In practice, however, there is little or no enforcement of the Code even among the small-scale miners who operate on a legal basis. This situation is expected to be addressed through capacity building assistance to be provided to MD under the project. - 12 - 2.24 Environmental Regulations. The Government has initiated the process of strengthening the environmental regulatory framework pertaining to the mineral sector. The Attorney General's Department has produced a first draft of Mining (Environmental) Regulations. In addition, the EPA has, in collaboration with the MC, produced Mining (Environmental) Guidelines, which provide specific guidelines for carrying out mining operations in an environmentally responsible manner. The newly ratified Environmental Protection Agency Act, 1994, empowers the EPA to require an EIA regarding any activity likely to have adverse effects on the environment. 2.25 The Government has, in consultation with IDA, initiated a review of the regulatory framework. Agreement was reached during negotiations that the Government will submit to IDA not later than December 31, 1996, a draft report outlining recommendations for modifying the regulatory framework, including relevant environmental, health and safety regulations (para. 6.1 (e)). During the mid-term review, program of developing reforms in the regulatory framework will be assessed, and agreement will be reached on an action plan for further reform. E. Institutional Structure for Mining 2.26 The main Government agency dealing with the mining sector is the Ministry of Energy and Mines (MEM). The Mines Department, the Precious Minerals Marketing Corporation and the Geological Survey Department are the ministry's main departments. MEM is also supported by the Minerals Commission, which is overseen by MEM but operates as an independent entity with its own operational budget. Brief descriptions of these institutions are provided below. 2.27 The Minerals Commission (MC) was established under the Minerals Commission Law of 1986 as amended by the Minerals Commission Act of 1993, primarily to help formulate Government policy with respect to "exploration for and exploitation of mineral resources" and to handle "all public agreements relating to minerals". Its principal function is to encourage the development of Ghana's mineral resources through attracting foreign investors, negotiating leases with them, and trying to bring the small-scale miners into legal channels through the establishment of PMMC buying offices and licensed traders. The MC is also the main sectoral agency responsible for ensuring that mining operations are carried out in an environmentally sustainable manner. To this end, they carry out priority studies on assessing environmental impact of both large- and small-scale mining and liaise as needed with the EPA. The MC has been funded through trading commissions on domestic mineral sales and by charges for mineral rights and concessions. This funding has kept the MC outside of the civil service pay system and allows it to pay somewhat higher salaries. Another funding source soon to be effective is the Minerals Development Fund (para 2.31). The MC has a Small-Scale Mining Unit (SSMU), with 13 professionals and 14 other staff, which has been responsible for carrying out the Small-Scale-Mining Project (para 2.12). SSMU has established seven outreach offices to provide extension services to small-scale miners (Annex -13 - F). At Tarkwa the outreach office includes a laboratory and testing facility for assay of gold samples. 2.28 The Mines Department (MD) has responsibility for inspecting Ghana's mines to ensure health and safety conditions and to enforce compliance with the licensing and leasing provisions of the Minerals and Mining Law of 1986. It is also responsible for environmental monitoring and enforcement, and is in the process of establishing a laboratory and field monitoring unit to ensure that Environmental Impact Assessments (EIAs) are implemented and that environmental standards are complied with. The Mines Department has been understaffed for many years, but now has 13 professionals and 43 other employees including field staff, support staff and laborers. The staff need to develop the necessary skills to carry out effective environmental monitoring of both large and small-scale mining operations; and to provide technical assistance to small-scale miners. 2.29 The Geological Survey Department (GS) conducts geological investigations to determine the mineral resources available in the country, and publishes information on its findings as a basis for attracting both domestic and foreign investment. It employs 23 geologists, 37 technical officers, 37 drafting personnel, laboratory technicians, laborers, and drivers. 2.30 The Precious Minerals Marketing Corporation (PMMC) is a Government-owned corporation with a Board of Directors appointed by MEM. It has responsibility for buying gold and diamonds produced by small-scale miners and, until 1994, had the exclusive right to export their output. It operates purchasing gold at offices in Accra and Tarkwa, and also has licensed buying agents and sub-agents who are authorized to buy gold for resale to PMMC. For diamonds, PMMC primarily oversees trading and exporting of licensed foreign buyers of diamonds, who operate from its office in Accra. In 1993, about 35,000 oz of gold and 368,000 carats of diamonds were sold to PMMC or its licensed diamond buyers. 2.31 In 1994, the Government established a Minerals Development Fund, (MDF) whereby 20 percent of all mining royalties are paid to the fund for institutional support for the mining industry. Ten percent of the assets of the fund are designated to finance capital expenditures needed by MC and for staffing requirements of MD and GS. F. Marketing Issues for Small-Scale Mining 2.32 PMMC gold and diamond buying operations run parallel to an extensive unofficial system of illegal buyers, as mentioned before. These buyers are closer to the mining sites and deal directly with the producers. They have in the past been able to offer better prices than the licensed buyers, usually by operating on a spot cash payment basis, and sometimes by prefinancing the producers. During the past two years, PMMC has taken steps to make its operations more competitive with the illegal buyers, as outlined below. - 14- 2.33 Diamonds. Diamond purchasing and exporting is carried out by authorized private diamond merchants. They conduct their activities in PMMC's Accra Office, for which they pay PMMC a two percent fee on the value of the diamonds purchased to cover PMMC's cost of providing these facilities. In the past, there were only two licensed buying agents. Within the past two years, PMMC has authorized three additional buyers to operate in Ghana, aiming to create more competition among the buyers and hence more attractive prices for the producers. 2.34 Gold. Prior to 1993, PMMC set its gold buying price at the world market price less 3 percent for its commission and 4 percent for a Land Rehabilitation Fund. This was not competitive with the unauthorized buyers who were able to offer higher prices. Therefore, PMMC adopted a more aggressive strategy in 1993. It now sets its buying price on a weekly basis at a guaranteed floor price of about 98 percent of the world market price, adjusting the price upward during the week if world prices rise. This strategy, plus the increase in world market prices for gold in 1993, led to a doubling of SSM purchases in that year compared to 1992 as shown in Table 2.3, indicating that PMMC had become more competitive with the illegal buyers. Additionally, PMMC also improved access to its buying offices in December 1993 by opening a second office in Tarkwa, where there is a concentration of small-scale mining activity. Previously, small-scale miners could sell directly to PMMC but had to travel long distances from remote areas to Accra. They could also sell to the licensed buying agents, but typically these agents offered only about 75 percent of the world market price. More recently, since opening the new office in Tarkwa, SSM sales to PMMC have increased substantially, as indicated below in Table 2.6. Table 2.6: SSM Gold Purchases by PMMC (oz) 1993 1994 Total Accra Tarkwa Total January 830 2,627 1,154 3,781 February 2,450 2,445 1,219 3,664 March 2,510 3,426 2,031 5,457 April 3,960 4,215 2,392 6 ,607 May 2,820 2,459 1,566 4,025 June 3,656 3,535 1,246 4,781 Six-Month Total 16,226 18,707 9,608 28,315 Source: PMMC 2.35 In early 1994, the Government approved an application for an international private company, Miramex, to operate in Ghana as a gold trader and exporter in competition with PMMC. This firm set up security facilities, offering producers another legal option for marketing their gold production. A total of 7,000 oz of gold was purchased and exported in its first two months of operation. The Government has assessed the performance of Miramex during 1994 and, being satisfied with its review, has stated that it is prepared to license, on a - 15 - gradual basis, additional buying and exporting agents in the future. The Government has adopted this phased approach to liberalize the commercialization of precious minerals as a precautionary measure to ensure orderly transition and sustainability of the liberalization process. A statement of the Government's policy and specific steps that will be taken for further liberalization has been included in a Letter of Sector Development Policy dated May 3, 1995. A draft of the letter was submitted to IDA as a condition of negotiations (see para 6. 1 (b)). G. Effect of Mining on the Environment 2.36 Large-Scale Mines. A report' prepared by consultants on the current state of Ghana's environment reviewed the effects of large-scale mining operations, based on an assessment of eleven operating mines. Excluding socio-economic impacts, environmental effects were summarized as follows: * A total of about 6,000 ha of land has been affected to date by the 11 mines visited. This can be compared with an annual deforestation rate of 22,000 ha. * Indirect effects on surrounding land, which includes the use of timber from adjacent forests, the effects on vegetation of air pollutants emitted from roasters, and changes in land use due to the in-migration of workers from other areas. * Adverse effects on water quality-with consequent impairment of downstream water uses, such as for drinking or other domestic functions. This is primarily due to mine-imposed sediment loadings although metal inputs also arise from in-river disposal of untreated effluents, fallout from arsenic trioxide emissions from sulfide ore roasting, and gravity separation of amalgamated gold ores. * Elevated ground level concentrations of sulphur dioxide and arsenic near established mines, such that public health criteria are likely to be frequently exceeded and vegetation has been affected. 2.37 For many years, the adverse environmental impact of mining was ignored, with resultant negative impacts on the communities located near the mining operations and on the surrounding eco-systems. For example, the town of Obuasi and the surrounding areas, located near the large Ashanti Goldfields mining operation, has a high level of contamination of its water supply, air and soil resulting from about one hundred years of uncontrolled processing of ore. Recently, AGC has in collaboration with IFC taken steps to put in place, an environmental mitigation plan which includes new and environmentally responsible technology, such as bio-leaching. During the last several years, other large-scale mining operators have also generally adhered to internationally acceptable environmental practices, I"Effect of Mining on the Environment in Ghana", 1991, NSR Env. Consultants Pty, Ltd. - 16- and adopted modem technologies, to minimize the impact on the environment. In addition, EIAs are now required for all new mining concessions. 2.38 The Government-operated mines have made the least progress in remedying past environmental damage, although this is now being remedied through the inclusion of provisions for mitigation of past damage (financed in part by funds made available through the ongoing Mining Sector Rehabilitation Credit) in connection with the privatization of these operations. Environmental audits have been completed for all three mines and priority problems and measures to redress these have been identified. Action plans have been drawn up to commence mitigation. They are currently being discussed by officials of the State Gold Mining Corporation (SGMC) and company officials to determine and demarcate responsibilities of the Government vis-a-vis those of the new companies. While environmental damage resulting from past mining activity is clearly the responsibility of the Government, wherever the future mine operations are likely to adversely impact the environment, the responsibility for mitigation measures will need to be shared (in the case of joint ventures) or borne by the new owners. US$3 million of IDA funds from the Mining Sector Rehabilitation Credit have been allocated for supporting environmental mitigation at the three mines. 2.39 Small-Scale Mines. In contrast, small-scale mining is carried out with virtually no regard for environmental regulations or standards, due to the scattered and uncontrolled nature of these operations. The direct effects of small-scale mining operations on the land include the alienation of small areas of land. The major impact, however, is not that associated with individual operations, but rather the cumulative effects. Based on Minerals Commission records in 1992 and further recent observations a total area of about 15,000 ha of land is estimated to be potentially affected by past small-scale mining activities, with about 10 percent of this total (1,500 ha) estimated to be under active disturbance at present. When compared to the cumulative effect of large-scale mining (6,000 ha), the extent of land alienation by small-scale mining is two and a half times as large and likely to continue growing. Also, the use of mercury in the amalgamation process results in the release of mercury into the environment, exposing miners to health hazards through mercury toxicity (see para 2.41). Some 4 to 5 tons of mercury are estimated to be released each year at the present level of small-scale mining activity. 2.40 The downstream effects of suspended sediment from small-scale mining operations are less severe than in large-scale mines, probably because the workings tend to be scattered and the amount of land disturbance at any one site is lower. An additional mitigating factor is that drainage from active small-scale mine workings often flows into nearby old pits and workings that tend to act as settling ponds. Nonetheless, elevated turbidity and suspended solids concentrations in downstream waters occur wherever small-scale mining is located adjacent to streams or rivers, especially diamond and alluvial gold operations resulting in lower quality domestic water supplies where villages are dependent on streams. -17- H. Health and Safety Effects 2.41 Except at the new modern mines, unsafe mining practices are common at both legal and illegal sites. At small-scale gold and diamond mines, lack of adequate benching in pits and insufficient roof supports in underground mines have caused fatal accidents despite the provision of Government extension and inspection services. Mercury is widely used in both small- and large-scale gold mining to amalgamate fine gold into a concentrate. While the large-scale mines recover their mercury during refining, the small-scale miners are in dire risk of developing mercury toxicity because they simply burn off mercury over an open fire or kitchen stove. This process allows mercury vapor to enter the environment and exposes miners and often their families to the fumes. Mercury analyses in scalp hair samples taken from occupationally exposed miners and unexposed control populations in Tarkwa and Accra shows elevated levels in the miners. 2.42 Compared to the general population, small-scale miners (especially gold and diamond miners) are likely to be more susceptible to diseases caused by water-borne agents because of their extensive use of untreated river water and the proximity of work areas to stagnant water. I. Institutional Structure for the Environment 2.43 The Environmental Protection Agency (EPA) is set up under the Environmental Protection Agency Law of December 1994. The role of the EPA is to ensure that all developmental activities take account of environmental concerns through EIAs and also to ensure that there is regular monitoring of environmental quality. The EPA also has the mandate to develop and implement programs for both formal and non-formal environmental education. The EPA is distinct from the former Environmental Protection Council in that the EPA is a body corporate with full powers for enforcing all environmental laws and regulations. The EPA law provides broad powers to the EPA and makes environmental offenses criminal offenses punishable with strict penalties including terms of imprisonment. 2.44 The EPA can, however, only fulfill this role with the cooperation of sectoral agencies responsible for implementation of programs that have an impact on the environment. A number of sectoral agencies have responsibilities for activities that affect the environment. The Department of Agriculture is responsible for policy formulation and for the implementation and supervision of natural resource utilization, conservation and management programs. Departments of Forestry, Lands, Game and Wildlife, and Mines are responsible for the national forestry programs, wildlife management and the control of mineral exploitation, respectively. The day-to-day monitoring of sectoral activities to ensure that due regard is paid to environmental concerns remains the responsibility of sectoral agencies. The EPA is empowered under the EPA Law to carry out inspectiorn and monitoring of sectoral activities to ensure compliance with environmental laws and regulations. The MC and MD collaborate with the EPA in implementing the inspection and monitoring activities. The project will assist - 18 - in clarifying jurisdictional responsibilities through the proposed institutional study to be carried out by MC (para 4.2(a)). 2.45 For environmental management in the mining sector, the Government needs assistance to achieve the following objectives: (a) minimization or prevention of negative environmental impact of new mines; (b) containment of the impact of established mines; and (c) assessing best practices and options for ensuring the rehabilitation of disturbed land. The EPA and MC have taken the initial steps to start the process of formulating regulations targeted at minimizing environmental impact through the introduction of environmental impact assessments to ensure that modem environmental controls are built into the design of new mining projects during the planning stage. General guidelines have been developed to outline how mining activities can be carried out in an environmentally responsible manner. Technical assistance will be provided under the proposed project to build upon this initial work and develop comprehensive, detailed guidelines and standards based on guidelines and standards that are currently operative in other mineral processing countries such as Australia, Canada and Malaysia. These guidelines will be studied and modified to suit Ghanaian conditions. The project would also provide training for staff of the MC, MD and GS to enable them to carry out their responsibilities with due regard to environmental aspects. 3. THE BANK'S EXPERIENCE AND STRATEGY A. IDA Lending to Ghana 3.1 Since the initiation of the Government's Economic Recovery Program (ERP), in 1983, IDA has provided assistance for policy as well as institutional reform programs and investment lending to support the recovery of the economy and to assist in creating a framework for sustained growth. Bank and IDA lending to Ghana as of December 31, 1994, amounted to US$2.86 billion2, with total disbursements of US$2.1 billion. 3.2 During the early 1980s, Bank and IDA lending focused mainly on providing foreign exchange and stimulating exports to cope with the lack of foreign exchange. While the lines of credit were slow in disbursing due to the depressed state of the economy at that time, the adjustment lending was successful in laying the groundwork for key reforms such as exchange rate and price liberalization, import liberalization, export promotion measures and regulatory reform. All these reforms resulted in greater availability of foreign exchange for domestic manufacturers; improved export earnings, particularly from non-traditional exports; increase in the production of locally manufactured goods; and improvement in institutional capacity for project analysis and implementation. In the decade since the ERP was introduced, real GDP growth averaged 5 percent per annum, compared with minus 2 to 3 percent per annum in the preceding decade. On a per capita basis, real income grew by 2 percent per annum. 3.3 By the end of the 1980s, despite much progress throughout the decade, particularly improvements in infrastructure, health and education through targeted credits from IDA and the donor community, the main issues were still an unsatisfactory supply response and an increasingly distressed financial sector. In 1988 and 1991, two IDA Credits3 aimed at redressing the financial sector distress were approved. They addressed resource mobilization and credit allocation in the financial system as well as improvements in the regulatory framework of the banking system and the restructuring of distressed banks. In the early 1990s, IDA credits focused on creating an enabling environment for private investment; maintaining macroeconomic stability; undertaking tax reform to improve incentives for private investment; taking steps to make the regulatory environment in Ghana more consistent with the liberalized economy, making further progress on state enterprise reform; and maintaining the momentum of reforms designed to increase the efficiency with which public resources are used and, thereby, enhancing their support for private sector development. 9 Private sector development accounts for 42 percent, including adjustment loans; infrastructure accounts for 34 percent including transport, power and teleconmnunications; agriculture 11 percent; education and health 7 percent; natural resources and environment 2 percent; and freestanding technical assistance 4 percent. 3 Financial Sector Adjustment Credit (FINSAC 1) (1988) and the Financial Adjustment Credit (FINSAC II) (1991). - 20 - B. Country Assistance Strategy 3.4 In recent years, the emphasis of the IDA strategy has shifted from structural adjustment to capacity building in both public and private sectors, promotion of non- traditional exports, environmental issues, and poverty alleviation as the basis for sustainable long term development. The key objectives of IDA strategy, as stated in the CAS of 1995 are: (i) accelerating action on poverty reduction; (ii) restoring and maintaining macroeconomic stability; (iii) developing a national program for capacity building under conditions of good governance; (iv) fostering private sector development in all sectors, especially agriculture; and (v) helping create the conditions for environmentally sustainable growth. IDA's current strategy for Ghana is aimed at assisting the Government to achieve its stated goal of achieving poverty reduction through accelerated growth. This entails maintaining the macroeconomic situation under control, establishing a favorable environment for attracting vigorous private sector participation throughout the economy, and investing in the development of human resources and infrastructure. The proposed project would support the strategy by encouraging labor-intensive private sector activities, improving incomes, capacity building, and adoption of environmental practices in the mining sector. Given the embryonic status of its nontraditional export base and its dependence on a few export commodities which are subject to volatility in prices, Ghana is not yet in a position to increase substantially external borrowing on commercial terms. The role of the donor community in continuing to provide assistance to help ensure an adequate flow of foreign exchange to Ghana will, therefore, remain crucial. C. Mining Sector Strategy for Ghana 3.5 The Government's strategy for the mining sector is consistent with its overall economic strategy. It encourages foreign investment through creation of open exchange markets and realistic exchange rates, reasonable taxation policies, and freedom to market production through legal channels, while adhering to sound environmental standards. It also includes successful efforts to privatize state-owned mines and encouragement of small-scale mining activities, which are still rudimentary, through improved technology and better access to official marketing channels. This strategy has been most successful for large-scale gold mining, with dramatic increases in output (Table 2.2) and improved environmental conditions at the large privately-operated gold mines. It has not been as successful for diamond mining, which was until recently dominated by a state-owned corporation, or for small-scale mining, which has been legalized only recently, with the consequence that technology still remains at a rudimentary level with marginal output, environmental damage continues unabated, and much of the output is sold through unauthorized channels. 3.6 IDA's ongoing support for the mining sector has been limited to the Mining Sector Rehabilitation Project, effective since March 1989. This project, financed by US$40 million from IDA and US$50 million in cofinancing, was primarily intended to support the rehabilitation and privatization of three state-owned gold mines. The privatization process of the mines is well advanced (para 2.4). Support under this project also included the provision - 21 - of limited amounts of equipment and training to MD, GS, MC and MEM to establish capacity in these institutions. 3.7 With regard to the SSM sub-sector, there is considerable scope for expanding production through improved recovery rates, more efficient equipment, and marketing arrangements that will induce more sales through official channels. There is also an urgent need to reduce the negative environmental impact of small-scale mining and to improve the safety of these operations. Enforcement of environmental regulations will only be feasible if small-scale miners are able to generate reasonable financial retums. Further, incentives to operate on a legal basis need to offset the increased cost of complying with environmental and other regulations. D. Lessons Learned from Other IDA-Supported Projects 3.8 Ghana's overall project implementation performance compares favorably with other countries in the Region. An increased focus on implementation, complemented with actions to address generic as well as project specific issues, resulted in increased disbursements for investment lending by over 30 percent in FY93. The recent Country Portfolio Performance Review (CPPR), carried out in June 1994, examined ways to improve procurement processing. A simplification of procurement procedures was agreed, and the number of steps for review and approval have been reduced. Of total lending, about 80 percent of completed projects have been rated satisfactory. The number of problem projects have fallen steadily from 7 in FY92 to 5 in FY93 to 4 in FY94. Disbursements, however, deteriorated during FY94. Unsatisfactory disbursement performance was discussed with the Ghanaian authorities during the CPPR in June 1994. Disbursement performance has improved during the first half of FY95 with total disbursement as of December 31, 1994 amounting to US$2.1 billion. A 10-15 percent increase is expected in FY95 over FY94 disbursements. As part of the Bank's Country Assistance Strategy, disbursement performance is now linked to new commitments. 3.9 There were three operations in Ghana which focused on developing the mining sector. They are the Export Rehabilitation Project, the Export Rehabilitation Technical Assistance Project and the ongoing Mining Sector Rehabilitation Project. The two former projects identified mechanisms for the development of the state-owned mining enterprises and the latter project focused on the rehabilitation and divestiture of these mines. The divestiture of all three mines is well advanced, as described in para 2.4. The implementation of the Mining Sector Rehabilitation Project revealed the need for strengthening of the institutional and regulatory framework. None of the above projects addressed issues concerning environmental impact of mining. Sectoral agencies lacked capacity to carry out environmental monitoring of either the large-scale operations or SSM activities. The existence of a very large and growing SSM sub-sector, and related social, economic and environmental issues remained unaddressed. The proposed project will address these weaknesses through capacity building assistance for environmentally sustainable sectoral development. Consistent with the Bank's "Strategy for African Mining" (1992), the project also focuses on providing technical - 22 - and organizational support as well as improved social and health conditions for the small-scale mining community. 3.10 Additional IDA support relevant to this project includes the Environmental Resource Management Project (IDA Cr. 2426-GH of September 1992), which is aimed at strengthening the capacity of both the Government and communities to manage environmental resources. The Credit provides technical assistance for the development of environmental management and technical skills for the staff of the EPA and other sectoral agencies' administrative officers at national and district levels, to develop an environmental information system, and to develop a strategy for increasing public awareness of environmental issues. The Credit also supports the development of a community-based land and water management system and a coastal wetlands management system. While not directed specifically at the mining sector, it should have an indirect impact on mining activities through the strengthened national environmental institutions that should result from the project. Implementation of the Environmental Resource Management Project was slow at the beginning, mainly on account of the lack of leadership at the EPA and continued changes in the institutional framework. With the appointment of a new Executive Director and key staff and consultants to manage major areas of work, there has been a noticeable improvement in project implementation. The proposed project has the advantage of close collaboration with key staff in the sector as well as in the EPA, from the inception of project design and preparation. 4. THE PROJECT A. Project Objectives 4.1 The overall objective of the project is to support the sustainable development of Ghana's mining sector on an environmentally sound basis through strengthened mining institutions and organizational support to small-scale miners to introduce the use of appropriate and environmentally responsible technology. Specifically, the objectives are (a) to enhance the capacity of the mining sector institutions to carry out their functions of encouraging and regulating investments in the mining sector in an environmentally sound manner; and (b) support the use of techniques and mechanisms that will improve the productivity, financial viability and reduce environmental impact of small-scale mining operations. B. Project Summary 4.2 In order to achieve these objectives, the project would consist of the following components: (a) Strengthening of the mining sector institutions through: (i) support to the MC to: a) improve its organizational structure; b) expand its promotional activities; c) review existing monitoring and enforcement practices including an assessment of jurisdictional responsibilities of sectoral agencies and the EPA with regard to environmental monitoring; d) develop guidelines and standards for implementing sectoral and environmental regulations; and e) establish a minerals and environmental information system; (ii) support to the MD to: a) carry out its inspection, monitoring and enforcement responsibilities, particularly with regard to environmental impact and health hazards; and b) assist small-scale miners in the application of the new technology developed under the SSM component of this project; (iii) support to the GS to improve its geological information base through an aerial survey and to publish and disseminate the results; and (iv) support to the MEM to carry out its policy planning and coordination role for the mining sector in a more effective manner. (b) Assistance to Small-Scale Mining Enterprises through: (i) pilot testing of identified modules of small-scale mining equipment for improving both productivity and yields, and the dissemination of successfully tested equipment to determine their applicability to Ghana's conditions and acceptability by the small-scale miners; (ii) a program to make better geological information available to small-scale miners through the assistance of geologists to delineate recoverable ore bodies on SSM concessions; (iii) improvements in the sector framework for SSM operations, including review of the regulatory framework - 24 - and improvements in the marketing arrangements for SSM production; and (iv) reclamation and rehabilitation of priority areas degraded through past SSM activities as a pilot exercise to determine best practices and cost-effective methods for future reclamation programs. C. Detailed Project Description 1. Strengthening of Mining Sector Institutions 4.3 This component has the purpose of ensuring that the institutional structure of the sector is adequate to respond to the demands of a more competitive and growing mineral sector. It will focus on providing support to mining agencies to be effective in implementing sectoral policy and legal and regulatory regimes with particular focus on environmental factors. The project will also assist in developing new geological information to establish a robust pipeline of priority prospect areas to attract investors and enhance promotional capabilities needed to attract investments in exploration and mine development. These objectives will be met with four sub-components, as described below. 4.4 Minerals Commission (US$ 2.48 m.). This sub-component would aim to ensure that MC is fully equipped with the organizational structure, manpower and logistical capabilities required to carry out its responsibilities as the main operational promoter and coordinator of the Government's strategy for private sector-oriented mineral growth. Specifically, the project would support: (a) an assessment of current mining sector institutional arrangements to identify and formulate restructuring steps that may be necessary to implement sectoral strategy effectively, including a review of the adequacy of current monitoring and enforcement practices of environmental, health and safety standards. The analysis would include: (i) an assessment of jurisdictional responsibilities of sectoral agencies and the EPA with regard to environmental monitoring, (ii) identify appropriate enforcement mechanisms, including the viability and cost effectiveness of performance bonds for ensuring adherence to environmental standards, and (iii) prepare guidelines for implementing sectoral and environmental regulations. A draft report outlining the findings of the analysis is expected to be submitted to IDA by December 31, 1996. The final report would be the basis to prepare an action plan to further strengthen the effectiveness of sectoral institutions (para 6.1(d)). (b) the execution of promotionat activities of MC, which are required to attract potential investors in exploration and mine development, including the design and preparation of promotional brochures and activities; (c) the establishment of a comprehensive minerals information system which would consist of: (i) a concession cadastral system; (ii) a mineral information - 25 - database; (iii) a geological information database for promotional purposes, generated under the above-mentioned program of compilation of geological information and an aerial survey; and (iv) a mining environmental information system; (d) the preparation of a pollution abatement strategy for ground and surface water systems of the Tarkwa, Dunkwa and Prestea areas to remedy environmental degradation caused by mining operations (para 1.5); and (e) an assessment of the curricula of local universities and technical colleges in order to develop a program to introduce modemn mineral exploration technologies and processing techniques (para 2.7). 4.5 Mines Department (US$ 0.81 m) . The project would provide technical assistance, consultant services, training, equipment and logistical support to enable MD to fully and effectively perform its responsibilities for inspection, monitoring and enforcement of sectoral and environmental regulations. Emphasis would be given to strengthen the organization, manpower and logistic capabilities of MD and its district offices for executing periodic mine i1spections, field verification of work programs and monitoring of mine health, safety and environmental aspects at both large and small-scale mining operations. 4.6 With regard to small-scale mining, training and technical assistance would be given to ensure that MD can provide: (a) assay services and technical extension support to improve the productivity and viability of small-scale miners based on the technology generated by the SSM pilot testing program; and (b) extension services to sensitize miners about health, safety and environmental problems related to small-scale mining including training for small-scale miners in special skills such as blasting and subsequent certification of competence. Goods financed by the project would include test instruments for field monitoring, laboratory equipment, vehicles and office equipment and supplies. 4.7 Geological Survey (US$ 1. 66). This project sub-component is aimed at determining priority mining areas attractive for their subsequent promotion to potential investors in order to sustain further sectoral growth. This activity has been assigned a high priority because of a recent downturn in investment in exploration and mine development, which raises an urgent need to use more advanced geological technology to develop new geological information. For this purpose, the use of airborne geophysical survey technology has been selected mainly because of its low cost and ability to carry out rapid mapping of extensive areas. This will be used to identify target areas for exploration of gold and base metals. 4.8 Main elements include: (a) the compilation and interpretation of available geological information; (b) the definition of priority areas to be covered by the aerial survey; (c) the preparation of an action program with detailed survey specifications; (d) the selection of a survey contractor, and mobilization and execution of the survey; (e) the reinforcement of geophysical capability at GS, structuring these functions away from detailed mineral evaluation activities (which should be left to potential investors); (f) the processing and -26 -- interpretation of survey data; and (g) the publication and dissemination of results and raw data. The IDA credit would finance the aerial survey, consultant services to assist GS, and training. 4.9 Ministry of Energy and Mines (USS 0.49 m.). MEM is the principal government agency responsible for the mining sector. Main areas for strengthening under the project would include funding of office and communication equipment and provision of technical assistance through consultants to: (a) improve the overall operational effectiveness of MEM to examine, address and coordinate the work of other mining sector agencies; and (b) conceptualize and oversee the execution of policy and strategy review, including market liberalization and commercialization aspects. 2. Assistance to Small-Scale Mining Enterprises 4.10 This component would be executed by MC, with assistance from the Mines Department and the Geological Survey. It would include a testing phase (Phase I) and a disseminating phase (Phase II) which would be formulated on the basis of the outcome of Phase I. 4.11 Testing of ImprovedEquipment andProcessing (US$ 1.25 m.). Pilot testing of specific combinations of equipment likely to be applicable to Ghana's SSM conditions would be carried out, both for improving productivity and yields. The equipment packages, which have been identified during study tours undertaken by a team comprising officials from the MC and a small-scale miner, mainly include small-scale crushers, pulverizers, pumps, amnalgamators, and gravity concentrators such as sluice boxes. The complete listing of equipment to be tested during Phase I, provided in Annex K. The objective is to keep the total cost of capital equipment for each processing system or module to US$30-50,000 for alluvial mining and to around US$100,000 for hard rock mining. Testing would be confined to equipment available on the world market, although some adaptation to local conditions may be necessary. Analysis would be done of the technical and cost effectiveness of various pieces of equipment and processes and their effect on productivity and total output. The testing program would also address the introduction of improved processing technology which is environmentally responsible and suited to Ghanaian conditions, and improved sorting of crushed ores to maximize yields. The testing program would extend over a two year period and would be carried out by three teams of contractors (two for alluvial mining of gold and one for hard rock mining) under the supervision of the SSM section of the MC, with each contractor testing two different processing systems. 4.12 Dissemination of Equipment and Technology (USS 1.29 mn). This sub- component would be implementaed by the MC in close coordination with the M.D. After the first phase is completed, results would be assessed and the design of a second phase would be agreed upon by the MC and IDA. The second phase would be designed to expand the field testing of the equipment and processing procedures in an operational setting, and would include workshops and field demonstrations of the new equipment and processes to small- scale miners. It would also include the establishment of assay equipment at each of the seven - 27- existing SSM outreach offices similar to the-facilities presently available at Tarkwa (see para 2.27). This phase would include experimentation with mechanisms for the delivery of technology and equipment to small-scale miners, including the use of credit arrangements through rural banks, NGOs, and cash sales through equipment suppliers. An Environmental Impact Assessment (EIA) would be carried out prior to the commencement of the second phase. The EIA would assess possible disturbances and impact on the environment and outline measures to mitigate these impacts. The mitigation measures identified would be incorporated into the design of the second phase. 4.13 Improved Geological Information (US$ 1.88). A program to make geological information available to small-scale miners, who now operate without any reliable information as to the location and extent of exploitable ore, would proceed simultaneously with the activities designed to improve SSM technology. The GS would organize teams consisting of a geologist, a technical officer and laborers to delineate areas with favorable geological prospects where SSM concessions can be granted, and to work with the small-scale miners in delineating recoverable mineralization after a concession has been obtained. General information of a preliminary nature would be made available to prospective applicants at no charge. After a license has been granted, the survey team would assist in delineating ore within the concession area for potential yield, size and depth, and in providing a map recording the results of the survey. A fee would be charged for this purpose to cover the out- of-pocket costs of the survey team (per diem, gasoline, assay test, etc.) in order to maintain the service on a sustainable basis. 4.14 During the first year of the project, two teams would be put into operation: one for regional mapping of prospective concession areas and one for working directly with small- scale miners on their concessions. If the operating results are favorable during the first year, two additional teams would be established to assist the small-scale miners. The information generated by producing these separate mapped areas would be subsequently integrated into an overall geological map of the area in order to provide more detailed and integrated information to serve as a basis for future work in adjacent areas. The equipment, vehicles, and incremental operating costs necessary to operate the survey teams and integrate the results into a mineral resource map of the surveyed areas would be financed under the project. 4.15 A Joint Geological Task Force would be established to oversee the geological assistance included in this component of the project. The Task Force would include members from the MC, the MD, and the GS. The Task Force would provide guidance to the GS on areas to be surveyed, would review the Annual Work Program outlining the work of the teams, and would receive and review periodic progress reports on the work accomplished. It would also evaluate, along with IDA, the results of the first year's activities. A continuation of the survey work by the GS and an expansion from two to four teams would be predicated on the Task Force and IDA findings that the first year's results were satisfactory. 4.16 Improved SSMSub-Sector Framework and Set-up (US$ 0.77 m.). This sub- component would be implemented by the MC in close coordination with the MD. The project would finance a study to review the present regulatory framework for the mining sector to - 28 - analyze how these regulations affect SSM operations. Specifically, it would review the process and conditions for granting concessions, the length of time for which they are granted, and their cost. It would also review operating restrictions, with special attention to restrictions on blasting by small-scale miners. As the volume of SSM activities increases with the adoption of new technology, the use of appropriate safety controls becomes even more relevant. The study would give special attention to environmental, health and safety regulations, as well as to review how and to what extent they can be enforced. It would conclude with specific recommendations and an action plan for improvements needed to facilitate SSM operations, to improve safety conditions, and to reduce their negative environmental impact. 4.17 This subcomponent would also include a study of marketing conditions and issues affecting small-scale miners and measures to improve the commercialization of gold and diamonds. A study would also be carried out as to how small-scale miners can secure additional financial resources in the form of both equity and debt in order to expand their operations. This would include a review of the roles of existing financial institutions, including NGOs, leasing companies and rural banks. The Government will provide to IDA, a draft report outlining recommendations for further liberalizing the market for precious minerals. On the basis of the final report, an action plan would be prepared, satisfactory to IDA, by June 30, 1997 (para 6.1(c)). 4.18 This sub-component would also include a program of in-country training in basic financial management and business practices which would be organized by the MC and carried out by local training institutions for interested small-scale miners in order to enhance their creditworthiness and to improve their prospects for successful operation. Under Phase II of the Project, extension services would be provided to the small-scale miners to use the new equipment and technologies with due regard to impact on the environment. Also, MEM would establish an Advisory Board, whose membership shall include small-scale miners, for the purpose of advising MEM on the development of policies affecting small-scale mining activities. The Advisory Board would be established not later than June 30, 1996. 4.19 Land Reclamation for Small-Scale Mining Degradation (US$2.63 m). Small- scale mining has created extensive damage in mined-out areas. Environmental problems resulting in these activities include the removal of the topsoil; rendering the land unsuitable for any type of agricultural activity; serious erosion leading to salinization in creeks and river systems and permanently affecting watersheds; contamination of ground water sources through metal concentration and the seepage of mercury used in gold extraction; creation of large craters on the land surface, which turn into stagnant ponds, increasing the incidence of malaria; and the elimination of biodiversity in affected areas. 4.20 The project would carry out, the reclamation and rehabilitation of high priority land areas as a pilot exercise. The program currently targets 500 acres. The pilot activity will seek community involvement, particularly in the tending and care of the woodlots, which will ultimately benefit the communities. While the areas selected will represent only a small fraction of the total area in need of eventual reclamation, it will provide a basis to determine - 29 - best practices and to assess efficient and cost-effective mechanisms for carrying out ieclamation. The areas identified for reclamation would be selected considering both the economic value of the land as well as the losses to be incurred in terms of degradation of natural resource stock, threat to human health and to eco-systems upon which populations depend. Three sample areas for reclamation have been identified and cost-benefit analysis has been carried out for each selected site, with favorable results. Benefits included in the analysis included those expected from agriculture, improved health conditions and fisheries benefits from desilting of rivers and streams, with alternative cropping systems for calculating agricultural benefits. All alternatives yielded positive net present values based on a discount rate of 10 percent. If the value of non-measurable benefits, such as restoration of a favorable eco-system and secondary employment effects were taken into account, the potential benefits to be derived from reclamation would be even more favorable. Detailed reclamation plans are currently being prepared for each of the three sites, which will be the basis for requests for proposals to carry out the work on a contract basis. Planning for the land reclamation pilot work is being coordinated with the EPA and the Ministry of Agriculture and Forestry. Consultant services and earth-moving components would be financed by the IDA credit. 4.21 This component would also include activities by the MD to determine appropriate operating procedures, regulations, enforcement measures, and incentives to cause future SSM operations to be carried out on a basis that avoids the degradation of past operations. The principal incentive for SSMs to adhere to good environmental practices is expected to be their interest in benefiting from the availability of improved geological information and information regarding appropriate equipment and improved processing techniques. Consultant services, equipment and vehicles would be provided under the project to assist the MD in carrying out this work, including the training of its field personnel to prepare them for advising the small- scale miners in best practices to avoid degradation during mining operation. D. Cost Estimates and Financing 4.22 The estimated total cost of the project is US$13.7 million, net of duties and taxes, including physical and price contingencies, with a foreign component of US$8.6 million, equivalent to 63 percent of total project costs. Costs were estimated on the basis of 1994 prices and include physical contingencies of 10 percent for equipment, consultant services and training. Price contingencies, amounting to US$0.9 million, are based on the October 1994 forecast Index of Unit Value of Manufactured Exports. The estimated cost of the project is given in detail in Annex B and is summarized in Table 4.1. 4.23 IDA would finance the consultant services, equipment and supplies, a portion of the civil works cost of land reclamation and the contract cost of pilot testing, and training for a total of US$12.3 million or 90 percent of total project costs. The Government would finance local costs of workshops, per diem and operating expenses for field operations, and part of the cost of the environmental reclamation component and contractor costs for testing of SSM equipment. The Government would provide a total of US$1.4 million equivalent, equal to 10 percent of total project costs, plus any duties and taxes payable on items procured for the - 30- project through the Project Account (paras 4.40 and 6.2(f)). Deposits would be made for this purpose on a periodic basis. Table 4.1: Estimated Project Costs al (US$ million) Project Component Local Foreign Total Foreign/Total % Institutional Strengthening of Mining Sector Agencies 0.95 3.72 4.67 80 Assistance to Small-Scale Mining Enterprises 3.32 3.64 6.96 52 Contingencies 0.78 1.24 2.02 61 TOTAL 5.05 8.60 13.65 63 -_AeAll costs estimated net of duties and taxes. 4.24 The proposed financing plan is as follows: Table 4.2: Financing Plan (US$ million) Local Foreign Total IDA 3.7 8.6 12.3 Government 1.4 0.0 1.4 Total 5.1 8.6 13.7 E. Implementation 4.25 Project Management Structure. The Republic of Ghana would be the borrower (represented by the Ministry of Finance), and MC would be the coordinating agency for the project, with MEM, Geological Survey Department, and the Mines Department as participating agencies. MC would liaise closely with EPA in regard to the environmental components of the project, including the setting up of the minerals environmental information system and the land reclamation component. A Project Coordinator acceptable to IDA has been appointed by the MC to manage and coordinate the implementation of the project. The Project Coordinator would be assisted by a Technical Officer and an Accountant. Each of the participating agencies would also appoint Project Liaison Officers within their organizations to liaise with the Project Coordinator. The appointment of the Project Coordinator acceptable to IDA was a condition of negotiations (see para 6.1(a)). - 31 - 4.26 Project Startup. MC would organize a project launch workshop within one month of signing of the Credit to bring together all of the participating agencies. The workshop would clarify responsibilities and would assist in initiating Project activities as agreed in TORs and schedules described in detail in the Project Implementation Manual, including key performance indicators which would be agreed upon during negotiations (para 6. l(h)). 4.27 Annual Work Program and Budget. Annual work programs will be prepared by all participating agencies by December 31 of each year starting from December 31, 1996. The first year's program has already been finalized in consultation with IDA. Subsequent annual work programs will be based on an evaluation of the previous year's experience. The MC will submit to IDA not later than October 31 of each year, a budget for each succeeding fiscal year, specifying by quarter, the Government's contribution to the financing of the project (para 6.1(f)). 4.28 Mid-Term Review. A comprehensive mid-term review would take place, not earlier that April 1, 1997, and not later than June 30, 1997, (para 6.1(a)), after the completion of the first phase of the SSM pilot testing program. The review would be carried out jointly by MEM and IDA and would include: (a) an evaluation of the results of the pilot testing of equipment and technology for SSM. Agreement would be required, based on these results, on the equipment to be included in the second phase, and the terms of reference for the consultant services required; (b) the progress in the development of standards and guidelines to ensure that all mining operations are carried out in an environmentally responsible manner; (c) an assessment of the findings of the EIA that would be prepared after the completion of the first phase (para 4.12 and 6. 1 (b)); (d) an examination of the results from the land reclamation testing and agree on best practices and cost-effective methods suitable for Ghanaian conditions to continue rehabilitation of priority areas (para 4.20 and 4.21); (e) the progress made in improving the marketing environment for small-scale miners and liberalization of the market for precious minerals; (f) the progress in developing reforms to the regulatory framework governing the mining sector; (g) the status of project monitoring indicators; and (h) the performance of consultants. F. Procurement 4.29 Procurement under the project will cover the supply of civil works, goods, and consultancies for technical assistance, training and operational support. Procurement of all items for goods and works funded by IDA will follow the Guidelines for Procurement under World Bank Loans and IDA Credits. All contracts for consulting services will be in accordance with IDA's Conditions for Consulting Contracts (1981), and Guidelines for use of Consultants by World Bank Borrowers and by the World Bank as an Executing Agency (1981). All contracts under International Competitive Bidding (ICB) procedures and contracts for the appointment of consultants will be based on World Bank Standard Bidding and Contract documents. Under National Competitive Bidding (NCB) procedures for the supply of goods and works, interested foreign firms will be allowed to participate. Import taxes levied on project imports funded by IDA should be borne by the Government, in - 32 - accordance with IDA's guidelines. To facilitate and ensure the orderly execution of procurement tasks, the Minerals Commission will be responsible for the management and processing of procurement activities, which it will conduct in a centralized manner and in close coordination with all project participating agencies. 4.30 The amount of Civil Works under the project are estimated at about US$3.6 million. They will comprise land reclamation for mitigation of environmental damages from SSM amounting to US$2.5 million, and testing of equipment for SSM (mostly earthmoving and materials handling) amounting to US$1.1 million. These works are not likely to attract responsive interest from international contractors because they are widely located geographically, and individual contracts are relatively small in size, with estimated cost of US$0.2 million or less. These works can be provided through local contractors at competitive prices. Contracts for such civil works, each of which is estimated at US$200,000 or less, will be procured by NCB up to an aggregate value of US$3.4 million. 4.31 The procurement of Goods for the project would slightly exceed US$2.8 million. This would include nearly US$0.9 million for the acquisition of SSM mining and processing equipment to be pilot tested, and the remaining balance of approximately US$1.9 million to provide the Mines Department (US$0.7 million), Geological Survey (US$0.5 million), Minerals Commission (US$0.7 million) and Ministry of Energy and Mines (US$29,000) with equipment. Such equipment would include laboratory components (required for assays related to environment, health and safety, and for assistance to SSM on reserve estimations), computer hardware and software, office implements, specialized equipment, instruments and tools, and field vehicles. Procurement contracts which are estimated to exceed US$100,000 each, will follow ICB procedures. 4.32 Because of the specialized nature of a number of the required equipment and limited number of suppliers, procurement of goods below US$100,000 per contract will be awarded by Limited International Bidding (LIB), up to an aggregate value of US$1.1 million. All known suppliers will be invited to bid for specialized equipment/instruments procured by LIB. Contracts below US$50,000 each will be procured by International Shopping up to an aggregate value of US$0.3 million, by obtaining at least three quotations from suppliers of at least two different countries. 4.33 The service contract for geo/aerial survey (US$1.2 million) will be procured by ICB in accordance with the Procurement Guidelines of the World Bank. 4.34 Provision of Consulting Services and Training will involve contracts for a total of nearly US$5.6 million of which approximately US$4 million is for consulting services. This will include approximately: (a) US$ US$3.0 million for technical assistance and training to strengthen the functions of the Minerals Commission, Mines Department, Geological Survey, and Ministry of Energy and Mines; (b) US$ 0.5 million for technical assistance and training concerning tests for SSM equipment; (c) US$1.3 million for services to provide geological assistance to SSM; and (d) US$0.8 million for technical assistance to improve SSM framework. Terms of reference for the main consulting contracts related to the above - 33 - mentioned activities are contained in the Implementation Manual. These contracts will involve a broad range of services which will include geophysics, geology, mineral promotion, mineral policy and legislation, mining and environment aspects, database development, and technologies for small-scale mining. Local training will include activities in the form of attendance to conferences, seminars, workshops and on-the-job-training, which will be organized and carried out under the project. Overseas training, mostly in mining countries, will include attendance to specialized short-term conferences, seminars and workshops, and short-term attachments to overseas institutions or agencies for on-the-job training. For this purpose, the Minerals Commission will submit annually to IDA a proposed training program for the review and clearance of IDA, which will identify staff to be trained, field of training, training venue, period of training and cost. 4.35 IDA review of Procurement Decisions. For all IDA funded procurement activity, all contracts for the supply of goods and works with an estimated value of US$100,000 or more will be subject to IDA's prior review procedures. All contracts to consultant firms with a value above US$100,000 and to individuals with a value above US$50,000 will also be subject to IDA's prior review and clearance. This procedure would result in a prior review by IDA of nearly 70 percent of the total number of contracts under the project. All other contracts below the prior review thresholds will be subject to IDA's post review (one out five contracts). IDA's prior review will involve all procurement documentation as per Appendix 1 of the World Banks' Procurement Conditions and Guidelines for Consulting Contracts. The procurement arrangements to be applied during the project are summarized in Table 4.3. Finally, to ensure satisfactory adherence to IDA's procurement procedures, the first ten contract packages handled by MC will be subject to prior review by IDA for its clearance on a case-by-case basis for bidding documents, bid evaluations, contract awards, and termns and conditions of contracts prior to their finalization. - 34- Table 4.3: Summary of Consulting Services (Cost and Man-months) BudEet ($M) Budeet (P/M) Component Foreign Local Total Foreign Local Total Minerals Commission 0.49 0.49 0.98 23 65 88 GSD (Geol Survey) 1.24 0.00 1.24 59 0 59 Mines Dept. 0.00 0.00 0.00 0 0 0 MEM 0.20 0.11 0.31 8 12 20 1.93 0.60 2.53 90 77 167 Pilot Testing 0.25 0.11 0.36 10 15 25 Improved Geology 0.15 0.08 0.23 6 9 15 Improved Framework 0.56 0.20 0.76 23 24 47 Land Reclamation 0.11 0.00 0.11 6 0 6 1.07 0.39 1.46 45 48 93 Total 2.00 0.99 3.99 135 125 260 4.36 Reporting Requirements. The status of procurement progress will be furnished to IDA every six months in an agreed format. Copies of awarded contracts will be provided promptly to IDA. Table 4.4: Summary of Proposed Procurement Arrangements (US$ million) Project Element ICB NCB - Other NBF Total Civil Works - 3.654 - - 3.654 (Including Field (3.400) (3.400) Tests) Goods and Services (Equipment and 2.389 - 1.621 - 4.010 Instruments - (2.389) - (1.407) - (3.796) Geo/Aerial Survey) Consulting Service - - 5.601 - 5.601 and Training - - (5.104) - (5.104) Total 2.389 3.654 7.222 - 13.265 (2.389) (3.400) (6.511) - (12.300) - 35 - G. Disbursement 4.37 The project is expected to be completed over a period of five years, and the proceeds of the IDA Credit are expected to be disbursed during six years. There are strong indications that disbursements will take place in accordance with projected schedules, since counterpart funds are not in issue. Further assurance is provided by the Government's keen interest to strengthen sectoral agencies, improve the efficiency of SSM activity and reduce the adverse impact of mining on the environment. Further, after the first two years of project implementation, the bulk of remaining project activities will consist principally of technical assistance and training for which disbursements would be mainly completed during the first four years of project implementation. 4.38 The IDA Credit would be disbursed against the following categories: (a) 100 percent of expenditures for consultancies, training and training materials; (b) 100 percent of foreign and 90 percent of local expenditures for equipment and materials contracts; and (c) 80 percent of civil works for land reclamation and test work for SSM equipment. The disbursement profile is set out in Table 4.5. Table 4.5: Allocation and Disbursements Categories Credit Allocation Percentage of Expenditure Category (US$ million) to be Financed Civil Works (including 2.9 80% equip. testing) Equipment, Supplies 2.2 100% foreign, 90% local Geo/Aerial Survey 1.0 100% foreign, 90% local Consultant Services 4.4 100% Training Unallocated 1.8. Total 12.3 4.39 Special Account. To facilitate disbursements of the credit proceeds, the Government will establish an Special Account in a commercial bank to be operated by MC on terms and conditions acceptable to IDA to cover IDA's share of eligible expenditures for a four month period for all participating agencies. The authorized allocation amounts to US$300,000. Upon effectiveness of the IDA credit, an amount of US$150,000 representing fifty percent of the initial deposit will be made available from the proceeds of the credit. The remaining balance will be disbursed when needed. The Special Account should be replenished monthly. Replenishment applications should be supported by appropriate documentation including bank statements and a reconciliation statement. Details of the establishment and operations of the Special Account and other disbursement procedures were discussed and agreed during negotiations of the IDA Credit. 4.40 Project Account. The Government will establish a Project Account in cedis in a commercial bank for local matching funds. The Government will make quarterly deposits in -36 - advance on the basis of an agreed budget for the project, proposed by Government and accepted by IDA by October 31 of each year. The first contribution of US$30,000 equivalent will be deposited in the account as a condition of credit effectiveness (para 6.2). 4.41 All disbursements of the IDA Credit will be fully documented except for contracts: (a) for goods, works and consulting services (firms) of less than US$100,000 equivalent; and (b) individual consultants of less than US$50,000 equivalent, which will be made on the basis of Statements of Expenditure (SOEs). MC will be fully responsible for preparing withdrawal applications for all components. The documentation for withdrawals under SOEs will be retained at MC, appropriately cross-referenced to the relevant withdrawal application and made available for review by supervision missions of IDA and the external auditors, upon request. Audit reports will be provided within six months at the end of each fiscal year and will include a review of the adequacy of documentation for all amounts withdrawn on the basis of SOEs. H. Project Supervision 4.42 The first supervision mission and the project launch workshop would take place one month after signing of the Credit. Three supervision missions each year, each staffed by a mining engineer and such other specialists as may be appropriate for each phase of the project, would be required during the entire project implementation period of five years. A schedule of supervision missions is included in Annex J. L. Environment Aspects 4.43 The project is expected to have a positive environmental impact both through capacity building in sector institutions for environmental monitoring and management, and through the adoption of specific measures to be determined by the MD with the assistance of consultants to minimize the impact on the environment from SSM operations (see para 4.20). In addition, the project has a sub-component which will specifically address the rehabilitation of lands degraded by past small-scale mining activity. A cost benefit analysis carried out to determine the potential benefits to be obtained by reclaiming three pilot sites indicate that positive returns are to be derived from the exercise. Detailed reclamation plans are currently being prepared for these three sites. Similar studies will be carried out prior to undertaking more reclamation work under the project. The project has been classified as environmental category "B". An environmental analysis (EA) of the proposed project has been prepared and is available for review by the public at the MC and the EPA. The EA is attached to the SAR as Annex G. A specific EIA will be carried out as part of the project execution with regard to SSM technology and processing techniques when these have been tested for acceptability by the end of Phase I of the project. - 37- J. Poverty Alleviation 4.44 The project is consistent with the Government's anti-poverty strategy. It aims to provide opportunities to small-scale miners to enhance their productivity and incomes through the provision of technology and organizational support. Current productivity of the small- scale miners is very low with recovery ranging between 20 to 30 percent. The introduction of new but simple technology is expected to improve the recovery at least up to 50 percent, with resultant improved incomes for the community. 5. PROJECT BENEFITS, RISKS AND SUSTAINABILITY A. Project Benefits 5.1 The main benefits of the project include: (a) improved mining sector institutions able to encourage and assist private investors to start or expand mining operations; (b) improvement in productivity and incomes of small-scale miners through active technical and organizational support; (c) reduction of the negative environmental impact of mining through the strengthening of environmental monitoring and enforcement; (d) improved health, safety and working conditions for large numbers of small-scale miners through the introduction of appropriate technology and equipment; (d) minimized environmental impact of SSM activities through the introduction of-environmentally responsible technology and processing techniques; and (e) mitigation of past environmental degradation caused by SSM activities through land reclamation and rehabilitation activities. The benefits identified in (b), (d) and (e) are contingent upon the success of the pilot program to assist small-scale miners. B. Project Risks 5.2 Main risks include: (a) the possibility that new technologies appropriate to SSM in Ghana cannot be developed or will not be adopted by the mine operators; and (b) the institutions responsible for carrying out the project may lack the staff, capability or incentive to carry out the project successfully. Appropriate technologies for small-scale miners have been developed and proved to be financially viable in other countries with similar conditions, and therefore there is reason to believe that these techniques can be made to work in Ghana. Adoption of the new processes by the miners would be facilitated by the field demonstrations and trial periods under which equipment would be made available to them. The last risk is addressed by the capacity building nature of the project, which aims to strengthen the mining institutions. C. Project Sustainability 5.3 The strengthening of the sectoral agencies is intended to ensure sustained growth of the sector, attract private investment as well as to encourage the Government to establish environmental controls to be maintained beyond the life of the project. The strengthening of sectoral agencies to provide capacity for environmental monitoring as well as the establishment of a mining cadastre and environmental baseline monitoring are expected to be completed during the project life, and would therefore minimize recurrent costs thereafter. Environmental guidelines that are put in place during project implementation would most likely be maintained through the technical assistance and guidance to be provided under the project and also due to the economic incentives to be gained. In the case of large scale mines, the government agencies will be provided with the regulatory framework as well as implementation capacity required to carry out environmental monitoring and control. If the improved packages made available to small-scale miners increase their financial returns - 39- significantly, as anticipated, there is a high probability that the improvements will be adopted and sustained since there will be a strong economic incentive to do so. I 6. AGREEMENTS AND RECOMMENDATIONS 6.1 During negotiations, agreement was reached with the Government on the following points: (a) to carry out a comprehensive mid-term review jointly by the MC and IDA, to be held not earlier than April 1, 1997, and not later than June 30, 1997 following the completion of Phase I. A program of further work will be agreed as a basis for proceeding with Phase II of the SSM pilot testing program (as described in para 4.28); (b) to carry out an EIA after the completion of Phase I, and to be reviewed during the mid-term review. The EIA would identify possible impacts on the enviromnent and outline remedial measures which will be incorporated into the design of Phase II of the pilot testing program (para 4.28); (c) to provide to IDA, not later than December 31, 1996, a draft report outlining recommendations for further liberalizing the market for precious minerals. On the basis of the final report, an action plan would be prepared, satisfactory to IDA, by June 30, 1997 (paras 4.17 and 4.28); (d) to submnit to IDA, not later than December 31, 1996, a drafl report outlining recommendations for enhancing the effectiveness of sectoral institutions. The final report, satisfactory to IDA, will be used as the basis to prepare an action plan, not later than June 30, 1997, to further strengthen the effectiveness of sectoral institutions (para 4.4(a)); (e) to submit to IDA, not later than December 31, 1996, a draft report outlining recommendations for modifying the regulatory framework including relevant environmental, health and safety regulations. During the mid-term review, progress of developing reforms in the regulatory framework will be assessed (para 2.25). An action plan for further reform will be prepared by June 30, 1997; (f) to deposit amounts necessary to meet project requirements into a project account (para 4.40) established for this purpose on a periodic basis; to prepare a budget for each fiscal year not later than October 31 of each year, satisfactory to IDA specifying by quarter the Government's contribution to the financing of the project (para 4.27); (g) to prepare annual work programs, including training, for each of the participating by December 31 of each year starting from December 31, 1996, based on an evaluation of the previous year's experience (para 4.27), and - 41 - (h) TORs and schedules including key performance indicators; agreement on the Project Implementation Manual (para 4.26). 6.2 The conditions of effectiveness include the establishment of the Project Account (para 4.40) and deposit of the Government's first contribution to the project of US$30,000 equivalent. 6.3 With the agreements reached above, the proposed Mining Sector Development and Environment Project is suitable for an IDA Credit of US$12.3 million equivalent, to the Republic of Ghana on standard IDA terms. I ANNEXES A- Institutional Structure of the Mineral Sector B. Project Cost Estimates and Financing Plan C. Detailed Implementation Plan and Monitorable Indicators D. Procurement Plan and Schedule E. Estimated Schedule of Disbursements F. Small-Scale Mining Districts G. Environmental Analysis H. Contents of Implementation Manual L. Training Program J. Supervision Plan K. Lists of Equipment to be Used in Phase I of the Project I GHANA PROJECT IMPLEMENTATION PLAN MINING SECTOR DEVELOPMENT AND ENVIRONMENT PROJECT INSTITUTIONAL STRUCTURE OF THE MINERAL SECTOR MINISTRY OF ENERGY AND MINES (MEM) Minerals Mines Geological Precious Minerals Comniission Department Survey Department Marketing Corporation (MC) (MD) (GSD) (PMMC) ANNEX B GHANA PROJECT IMPLEMENTATION PLAN MIN1NG SECTOR DEVELOPMENT AND ENVIRONMENT PROJECT PROJECT COST ESTIMATES AND FINANCING PLAN (Net of Duties & Taxes) US$ Million Equivalent Local Foreign Total COST ESTIMATES A. Assistance to SSM Enterprises Pilots testing of equipment 1.02 1.46 2.48 Improved geology 0.97 0.62 1.59 Improved sector framework 0.23 0.44 0.67 Land reclamation 1.10 1.12 2.22 Sub-total 3.31 3.64 6.96 B. Strengthening of Mining Sector Institutions Minerals Commission 0.46 1.66 2.12 Mines Department 0.06 0.65 0.71 Geological Survey Department 0.27 1.16 1.43 Ministry of Mines and Energy 0.16 0.25 0.41 Sub-total 0.95 3.72 4.67 Total Base Cost 4.27 7.36 11.63 Contingencies Physical 0.43 0.73 1.16 Price 0.35 0.51 0.86 Total Contingencies 0.78 1.24 2.02 Total Project Costs &p 516 Financing Plan (US$ Million Equivalent) Local Foreign Total IDA 3.7 8.6 12.3 Govemment -1.4 0.0 1.4 Total 5.1 8.6 13.7 Ghana: Mining Sector Development and Environment Project Detailed Implementation Plan Strengthening of Mining Sector Institutions _ lmplement Procurement Start End Cost Est. FYJ96 I FY97 F)Y98 FY99 F0 I FY01 Cmnpimet g Arrangements Date Date USS'O0O CY9S CY96 CY97 CY98 CY9" CYWO Minerals Commission Promotional Activities MC LCB Publications Jul-96 Dec-98 128 ****** ***E Seminars, worlkhops, etc. Apr-% Dec-00 64 *E ***** ** ***** *E * Travel & subsistence Jul-96 Jun-00 49 ***** ****** *** Consulting services - foreign Apr-% Dec-99 240 *** ****** **** Consulting services - local Apr-% Sep-98 129 ** ******* Minerals Infonnation System MC LCB Mineral Concession Cadastre Equipment (computers) & vehicles Jul-96 Jun-97 222 * * * * lstallation & training Jul-% Jun-98 95 ******** Geological Infonmation Sub-system Equipment (computers) Jul-% Jun-97 58 * * * * Installation & taining Jul-96 Jun-98 59 * u...... Mineral Information Database Equipment (computers) Jul-96 Jun-97 94 * * * * Installation & training Jul-96 Jun-98 59 ** * * Environmental Information Data Equipment (computers) Jul-96 Jun-97 58 * * * * Installation & training Jul-% Jun-98 59 * .. U.. Equipment & vehicles MC LCB Vehicles Oct-% Apr-97 245 U Library Oct-96 Dec-96 12 2 Other Equipment Jan-97 Jun-97 59 * * Training MC Other Overseas training Jul-96 Dec-00 343 *E * * ** *** **** Local training Jul-% Dec-00 67 ** **** *E*E Woishops MC Other Local vwkshops & seminars Jul-% Dec-00 67 ** **** * *U*E General Consulting Services MC LCB Foreignconsultants Oct-% Jun-00 252 ** ** ** * * ||U Localconsultants Oct-95 Dec-99 128 -*E E E E UUEUUUUUU Ghana: Mining Sector Development and Environment Project Detailed Implementation Plan Strengthening of Mining Sector Institutions Implement Procurement Start End Cost Est FY9t | F.Y97 | FY98 I FY"99 |YOO I FY01 Component Agency Arrangements Date Date USS-00O CY95 CY96 CY97 CY98 CY99 CY00 Geological Survey Department Aerial Survey GSD Aerialsuvey contract ICB Jul-96 Dec-97 1,199 * * * * * - Consulting services LCB Jul-96 Dec-97 47 * * * * * C Equipment & vehicles GSD LCB Vehicles Jul-% Dec-96 69 * U Office equipment Jul-96 Dec-96 63 * C Training GSD Other Overseas trainling Jul-96 Dec-00 216 ** * * * ******* Local training Jul-96 Dec-00 67 *** ** * * * * * 1,661 Mines Department Equipment & vehicles MD LCB Vchicles Oct-96 Mar-97 87 * A Environmental instruments Jul-96 Jun-97 301 * * * - Laboratory equipment Jul-96 Jun-97 266 * * * - Office equipment Oct-96 Dec-96 12 - Training MD Other Overseas training Jul-96 Dec-99 82 ** * * ** * Local training Jul-96 Dec-99 68 ** ** ******* 816 Ministry of Energy and Mines General consulting services MEM LCB Foreign consultants Jul-96 Jun-00 201 ************* *D Local consultants Jan-96 Dec-98 113 ** Equipment & vehicles MEM LCB Oct-96 Mar-97 29 * D Training MEM Other Overseas Jul-96 Dec-99 83 **** * **** - Local Jul-96 Dec-99 67 ** * * ** ** __E 493 1 1 1 1 1~ ~ ~ ~ ~ 10 5,4 57 ___________________________________ _ _ m-~~~~~~~~~~~~~~~~~.~~~~D Ghana: Mining Sector Development and Environment Project Detailed Implementation Plan Assistance to Small Scale Mining Enterprises Impkmnent Procurement Start End Cost Est 96 | F97 | F98 | 9 o FYOI Component A Arrangements Date Date USS'OOQ CY95 CY96 CYS Cy"9 CYOG Pit Tesdng of Equlpsent MC Phase I equipnent teiWn LCB Equipment testing Jul-96 Jun-97 399 * * * - Consuling services Jul-96 Sep-98 1,145 * U Phase 11 equipmnt terting LCB Disanination of phase I equipment Jul-98 Jun-00 492 Training Other Apr-96 Dec-00 160 * * a * * * * * * * * * a * * a * * - General consulting services Foreign consultans LCB Jan-96 Dec-00 251 ** * Locl cornsutants LCB Jan-96 Dec-00 116 * **** ** MC operating costs Other Jan-96 Dec-00 195 * * c * Phase 11 ectensioservices Other Jan-96 Dec-00 195 * D * * * * * * * * * * * * * * * * * - 1 2,953 J Improved Geology MC Lage suvey teamn LCB Equipment Jul-96 Jun-97 93 * * * - Consuling se-vics Jul-96 Jun-00 423 * * * * * * * * * * * * * * - Small vcy tcan # I LCB Equipnent Jul-96 Jun-97 S2 a * * - Consuling services Jul-96 Jun-00 302 * * * * * * a * * * * * * * - Small survey team Ws 2 and 3 LCB Equipmnt Jul-96 Jun-97 164 a * a - Consuling sevics Jul-96 Jun-00 603 *UUEUEUEUuUEu * a *m General consulting services LCB Foreign cofultaZts Jan-9S Jm-99 153 * * * * a a Local consultants Jul-97 Jun-99 94 _ _ a _ a _ _ IN _ _ _ _ _ _ ~~~~~1,904 1 1 1 Improved Small-scale Mining Fssnevork MC Reguly famework rtudy LCB Apr-97 Sep-97 101 U Finial study LCB Jul-96 Dec-96 99 * U Marketing sludy LCB Jul-96 Dec-96 74 * - Develtopet of environental sandard and guidelinea LCB Oct-96 Sep-97 299 * * - Polution abatnent in Ouasi LCB Ot-96 Sep-97 199 _ _ _ _ _________________________ _______ _____ _ _ _ _ 77~~~ ~ ~ ~ ~~2 _0t Land Redasltion MC (Iq Consuting services LCB Jul-96 Mar-97 109 * * * Works contract LCB Oct-96 Scp-00 2,555 ** ***** | .__ ___ ___ ___ ___ ___ ___ ___ ___ ___ _______ ____2,664 _ _ 8.293 GHANA MINING SECTOR DEVELOPMENT AND ENVIRONMENT PROJECT MONITORIBLE INDICATORS BS Year Moultoribk Items Units 1994 1s 19X 17 1998 19f 2006 SSMS asided with geogical wk # of minrs assist-d Completion of(Equipmmt Tedsin& Phan % Phkse 2 % Gold poduAtii hram SSMs 02 D_m podA= iam SSMs caus iSd_ - pt bd s Aerial u K Isaim' of nolgical infontion databa % New umwmnints of fragn investment ian USS pol & diamosd Wining Toal god production on II TFal diind psoduction carat" Ghana: Miniing Sector Development and Environment Project Procurement Plan and Schedule ukmml Pewemmi Blt Ed Cowi C_E ofd C _mpuami ...Am A,rraagea"b pos Dale US%" 1m of DeC of BWProp. Conerctf/Sig,ang MAuas Cumue Ptuinlimi Adivis me LCB PsMiculian Jul-96 Dec96 125 Dec-96 Feb-96 May-9 S d=iMM w p. eli ApF-96 Dec-00 64 Twwd a M_i1e Jul-96 Jun-00 49 C__mdlia =Vic- Iwein Apr-96 Doc-9 240 Nov-96 Jan-96 Maz-96 Cmamaking in - bcal Apr-96 Sep.96 129 Nov-95 Jan-96 Mar-96 Miwala b%uI ia Syim NC LCB mim al Ceio Cndmed Equ_gm (c_Wlu) & vwil LCB/ICB Jul-96 Jun-97 222 Feb-95 Apr-96 Jun-96 Inaliim . ksi Jul-96 Jimu-9 95 Feb-96 Apr-96 Jun-96 EquOM (ipuimu) Jul-96 Jun-97 St Feb-9i Apr-96 Jun-96 laulaUc _a & Ju1-96 JuS-96 59 Feb-9S Apr-96 Jun-% Maa hk_Dibe Equimeui(o=aus) Jul-96 Jun-97 94 Feb-95 Apr-96 Jun-96 h1af_1n & kai n JU-96 Jun96 59 Feb-95 Apr-96 Jun-96 En_virI bhIdm_ Del Egu-M(cmPsM) Jul-96 Jun-97 5S Feb-95 Apr-96 Jun-96 hlilalima kaia* Jul-96 Jun-96 59 EqgupmM vdhicks MC LCBICB Vdiidm Oct-96 Apr-97 245 Apr-96 Jun-96 Aug-96 Libfru Ocd-96 Dec-96 12 Apt-96 Jun-%| Aug-96 O1b Equipm_t Jn-97 Jun-97 59 Jun-96 Scp-96 Nov-9% TEaug MC Other O - q Jul-96 Dec00 343 l.ca t,aiang Jul-96 Dec40 67 ( z Wmrkehapa MC Otb I mAXl Whup A mamunara Jul-96 Dec-00 67 *0o06 4.'UUWWf bOl W' II'B a a haceg . a- - A ( :O-96 Jun-00 252 Apr-96 Jun-% Aug - -.4"&MuA tO95 c-99 125 Apr-95 Jwt--9S Aug-9) 1/. /J'519 Ghana: Mining Sector Development and Environment Project Procurement Plan and Schedule SlrengIhening of ining_tar _ Inslitulions Impkmnet Pgocu,reaat Stari EnA C"at E SubAo A rd of _ Coimjneal AgenY Arrang~eeb Dasl e Di. USWo lshe of Doe of HidProp. Cularac /sigidwg Geological Survey Deparent Aial SWvgy GSD Aaiulsuwy coubscl ICU Jul-96 Dec-97 1,199 Jan-96 Mar-96 May-96 Comultin avicesa LCa Jul-96 Dec-97 47 Jan-96 Mar-96 Mxy-9 Equipmcai A vdhicks GSD LCI43/L1B Vebhicl Jul-96 Dec-96 69 Jan-96 Mar-96 Miy-96 Office equipowi Jul-96 Dec-96 63 Jan-96 Mar-96 May-96 Traing GSD Oth0 Owrsea Baining Jul-96 Dec-0 216 LAl raining Jul-96 De-0 67 hines Departmat Equipen A vehicles MD LCBDILB Vehicles OCt-96 Mar-97 87 May-96 Jul-96 sep-96 Env i_ i _s Jul-96 Jun-97 301 Jan-96 Mar-96 May-96 Labhniy .qWpulp Jul-96 Jun-97 266 Jan-96 Mar-96 May-96 Of -eqia Oct-96 Dec-96 12 May-96 Jul-96 Scp-96 Trainiqg MD Otha ov0lle rainn Jul-96 Dec-99 82 LOa Jul-96 Dec-9 68 Mlstsy of lErgy sad h ins Gm"l coaling savies MEM LCBLIB Foae f .e n ialal Jul-96 Jun-00 201 Jan-96 Jul-96 LAl Omallant Jan-96 Dec-91 113 Jul-35 Sep-95 Nov-96 Equip & veie MEM LCID Odc-96 Ma-97 29 May-96 Jul-96 Sc4)-96 Tainlng MEM Otber P > ov0n Ju1-96 Dec-9 a3 11cal Jul-96 Dec-99 67 _____ __ ___ __ _ _493 _ o 1 12519 Ghana: Mining Sector Development and Environment Project Procurement Plan and Schedule Asisine lo Snall Scale Mhin gEnkrlpcs_ CeaupanA =q D Dale 0.4. US5 Dec.I WP Cwm4,ud/S4.Ins Plbt Taiig of iSupmeei SMC Pb.u I _W*i lU amg LCH E- Ieg Jul-96 Ju.97 399 Dec-5 Feb-9 May-96 CA-ipsa aim Jul-96 Sq-98 1.145 De-95 Feb-9 May-96 Pb... UI4pm t_ ng LCB Dia i_ d I _Ap.ah Ju-98 JuF-0O 492 Dec-97 Feb-97 May-97 Teaming Af-6 Da--0 10 &95 De-95 Fb-96 F- ib is.. ~~4. rw at4 ' Plate 11.1I Active mine area Plate 11.2 Gravel-washing at-ea ANNEX HI Page 1 of 2 GHANA MINING SECTOR DEVELOPMENT AND ENVIRONMENT PROJECT CONTENTS OF THE PROJECT IMPLEMENTATION MANUAL Introduction II. The Project - Project Objectives - Project Summary - Detailed Project Description - Cost Estimates and Financing - Risks III. Implementation Arrangements - Organizations Responsible for the Project - Implementation Agreement Between the Borrower and the Implementing Agencies - Responsibilities of the Implementing Agencies - Relationship of Implementation Agencies to Other Entities - Administrative Arrangements for Project Implementation - Role of IDA in Project Implementation IV. Implementation Plan - Implementation Plans - Procurement - Disbursements - Principal Actions Required to Achieve Development Objectives - Project Accounting and Financial Management System V. Monitoring and Evaluation - Key Development Impact Indicators - Key Progress Indicators - Key Financial Indicators - Major Loan Covenants ANNEX H Page 2 of 2 CONTENTS OF THE PROJECT IMPLEMENTATION MANUAL ANNEXES A Project Costs B Project Financing Plan C Institutional Structure of the Mineral Sector D Plan of IDA Missions E Detailed Implementation Plan F Detailed Work Program for First Year G Terms of Reference for Consulting Services H Vehicle and Equipment Specifications I Training Program J Specification of Other Activities ANNEX I Page 1 of 6 GHANA MINING SECTOR DEVELOPMENT AND ENVIRONMENTAL PROJECT Training Program Training and Capacity Building. The training and capacity building activities included in the proposed project have two main objectives. They aim at building necessary manpower skills, know-how, and organizational capacity at public agencies related to the mining sector, w%ith the purpose of enabling their fulfillment of regulatory, monitoring and promotional roles. They also aim at improving the technology and operational practices of small-scale miners, through mechanisms of extension services, in order to promote a self-sustainable evolution of efficient and environmentally responsive formal small-scale mining activities in Ghana. Emphasis has been placed at project design on the establishment of appropriate systems and procedures in key areas of sectoral management, and on the development of skilled professional manpower, with a particular priority assigned to address the requirements related to environmental matters. These objectives will be achieved principally through the execution of training programs at MC, GS and MD. which will consist principally of staff improvement activities through implementation of workshops, on- the-job-training, and short-term overseas training. The program to achieve these objectives is summarized below in Figure X. The execution of such training activities will in turn form the sound cores of technical skills and know-how, which are needed by these agencies for their subsequent use as vehicles to realize meaningful technology transfers to SSMs. At the Minerals Commission, the short term objective will be to provide MC with the professional manpower base and logistical capacity to enable the satisfactory fulfillment of its fundamental role as the principal sectoral administrator and promoter of Ghana's private sector oriented mining development strategy. The short-term objective will also aim to develop the manpower capacity required to fulfill MC's role as main coordinator and instrument for improving the small-scale mining sub-sector. Accordingly, the project would finance the following training and staff development activities of MC: a) upgrade the skills of a limited number of professional staff through one to two-month courses or attachments to appropriate foreign mining institutions or mining companies; b) refresher training of staff to upgrade their skill levels through local training workshops executed with assistance of local or foreign consultants, and local institutions; c) specialized training in such areas as environmental management, organizational and technological aspects related to small-scale mining, and computer skills for selected staff of MAC, as needed for the efficient performance of their duties, through study tours or short courses at appropriate foreign institutions and companies; and d) management training in policy, institutional and legal aspects of mining sector administration, and in international mining investment, trade and promotion for senior management of MC, through study tours and attendance at appropriate international seminars and workshops. At the Geological Survey, a main short term objective will be to develop a satisfactory capability for prospecting and determining areas which are suitable for SSM activities, and to provide geological assistance to small-scale miners on mineralization trends, and reserve estimation and evaluation. Another short-term objective under the proposed project will be to develop capabilities to avail prospective investors, both local and foreign, with basic geological data and ANNEX I Page 2 of 6 information for attracting their investments in exploration. This will involve particularly the improvement of capabilities for undertaking geological interpretations, and geophysical and geo- chemical surveys and analysis. The ensuing medium-term objectives will be to improve these capabilities through a combination of continued field experience and further training. Accordingly, the project would finance the following training and staff development activities of GS: a) skill upgrading of a limited number of geological staff for the execution of mineral resource assessments, geo-physical interpretations, geo-chemical surveys and analysis, and related data processing, through one to two-month courses or attachments to appropriate foreign mining institutions or mining companies; b) specialized training on aspects related to mineral resource trends and assessments for small-scale mining, for GS staff involved in SSM, through local training workshops executed with assistance of local or foreign consultants, and local institutions; and c) training of GS staff to increase their awareness of environmental issues in mining, through participation to local workshops. At the Mines Department, a main short-term objective will be to restore the capacity of MD to carry out its basic responsibilities, focusing primarily on mine health and safety, and environmental monitoring and compliance. Another main-short term objective will be to develop adequate capability to provide guidance and assistance to small-scale miners on evaluation of mineral property, mine planning and technology applications for processing ore. The medium-term objective will be to build the needed field experience, and technical and managerial skills to enable MD to carry out these functions efficiently under the project. Accordingly, the project would finance the following training and staff development activities of MD: a) upgrade the skills of a limited number of professional staff through one to four-month courses or attachments to appropriate foreign mining institutions, with particular emphasis assigned to improve the capabilities of: mine wardens, on small-scale mining methods and technology, and environmental monitoring; chemists, on environmental sampling and assaying; mining engineers, on best practices and issues related to inspectorate functions of monitoring and compliance with health and safety, and on specialized aspects of environmental management, impact assessments, monitoring and compliance; and b) training to enhance environmental awareness, and to upgrade laboratory skills for assaying and testing of, including environmental testing and trend analysis, materials for selected staff of MD, as needed for the efficient fulfillment of inspectorate functions and duties, through local training workshops executed with assistance of local or foreign consultants, and local institutions; At the Ministry of Energy and Mines, the objective will be to better equip the staff within the central MEM organization to oversee the work carried out by the Geological Survey, the Mines Department and the Minerals Commission. This will require training to increase the staffs knowledge of environmental, legal and managerial aspects of the mining industry. In-country workshops will be organized by the MC for the SSM program, and by the MD for training its staff. Instructors will include staff that has received overseas training supported by foreign consultants. There will be two workshops per year for the SSM program, and two per year each for the MD and the Geological Survey. SSM workshops will be utilized to keep the SSMs informed as to the progress of the testing program, and to extend the knowledge gained from the field testing. MD workshops will provide MD staff with training in monitoring technology, laboratory trend analysis, land reclamation techniques, database analysis and environmental issues. ANNEX I Page 3 of 6 GS workshops will concentrate on techniques of mineral exploration, data analysis and interpretation, and mineral economics. GHANA MINING SECTOR DEVELOPMENT AND ENVIRONMENTAL PROJECT OVERSEAS TRAINING PROGRAM Minerals Commission INSTITUTION/ DATE OFFICER COURSE DURATION ORGANIZER REMARKS Jan. 1996 Exploration Training in a Geological 8 Weeks To be identified There is a need to upgrade Officer's Geologist Survey Organization skills and technical abilities in general survey work. Jun. 1996 Cartographer Computer Application 6 Weeks To be identified To educate Officer in the use of in Cartography computer in the compilation of data for map production and reproduction. Aug. 1996 Cartographer Cartography 10 Months Horsens Technical To improve Officer's technical ability College, Denmark in map production and reproduction from data compilation Nov. 1995 6 District Study Tour 4 Weeks each Chile or Peru Study tour for the District Officers in and Officers (Small charge of Small Scale Mining Jun. 1996 Scale Mining) operations in the Districts to acquaint (Two Groups) them with small scale mining activities in Chile and Peru, Philippines or Bolivia Jan. 1966 Environmental Environmental Impact 6 Weeks Hill International, Training in environmental impact Officer Assessment Ltd., Washington, assessments D.C. >q INST1ITUTION/ DATE OFFICER COURSE DURATION ORGANIZER REMARKS Jan. 1977 Environmental Environmental 14 Weeks UNEP, Tufts, To broaden the Officer's Officer Management University understanding of environmental management Sep. 1996 Asst. Legal Foreign Investment & 3 Weeks Intemational Law Introduction to Investment Officer Contract Negotiation Institute Negotiations May 1996 Accounts Public Financial 8 Weeks University of To improve officer's knowledge and Officer Management Connecticut Hartford, skills in managing the Commission's ____________ _______________ USA financial resources Jun. 1996 Administrative Human Resource 8 Weeks USDA Graduate To sharpen Officer's skills in the Manager Development School, Washington, handling of personnel matters in the D.C. Commission Apr. 1996 Principal International Capital 3 Weeks St. Catherine's Course will enhance Officer's skills in Financial Markets Training College, Oxford, U.K. analytical and valuation procedures in Analyst Course investment decision-making process Geological Survey Nov. 1995 2 Geologists Computerized Systems 4 Weeks To Be Determined Field techniques in geological and in Minerals Exploration geochemical sampling and mapping Nov. 1995 1 Geochemist Data Analysis and 8 Weeks To Be Determined To learn latest techniques in analysis I Geophysicist Interpretation - Remote and interpretation Sensing Jan. 1996 2 Geologists Environment and 5 Weeks To Be Determnined Relation of exploration and mining to Exploration I_the environment Jan. 1996 2 Geologists Exploration for Small 6 Weeks To Be Determined Special exploration requirements for Scale Mining small scale miners (A INSTITUTION/ DATE OFFICER COURSE DURATION ORGANIZER REMARKS Mar. 1996 1 Geochemist Minerals Economic 6 Weeks To Be Determined Economic analysis of geological data 1 Geophysicist Data Analysis Jul. 1996 2 Geophysicists Data Presentation 5 Weeks To Be Determined Presentation techniques Mines Department Jan. 1996 4 Mine Wardens SSM Methods and 4 Weeks Department of Mines, To familiarize MWs with SSM Technology Zimbabwe technology Sep. 1996 2 Chemnists Environmental 14 Weeks Illinois Institute of To expand knowledge of Chemistry Technology environment chemistry Sep. 1996 2 Mining Environmental 14 Weeks Tufts University To familiarize MD staff with Engineers Management environment management concepts Feb. 1997 4 MD Staff Study Tour of Mines 3 Weeks Tufts University To expand knowledge of how MDs Departments in Other work in other countries Countries Feb. 1998 4 MD Staff Environmental Impact 2 Weeks Hill International, Ltd. Familiarization with EIA techniques Assessment I MEM Feb. 1996 Environmental Environmental 8 Weeks To Be Determined To provide knowledge within MEM Officer Management . of environmental issues Sep. 1996 Legal Adviser Foreign Investment and 8 Weeks To Be Determined To provide knowledge of legal issues Contract Negotiation Feb. 1997 Division Chief Management of Mining 8 Weeks To Be Determined To strengthen MEM management of Sector the mining sector to ANNEX J Page 1 of 3 GHANA MINING SECTOR DEVELOPMENT AND ENVIRONMENT PROJECT SUPERVISION PLAN Project supervision will include the following: (a) A Project Launch Workshop would take place as soon as the conditions of effectiveness are about to be met. It would focus on (i) accounting procedures needed for keeping project accounts and for setting up and controlling the Special Account; (ii) procurement procedures, including the use of the Bank's standard bidding documents; (iii) disbursement procedures, including replenishment of the Special Account, Statements of Expenditure and documentation to be kept and to be forwarded to IDA; (iv) audit requirements; (v) coordination between the recipient agencies, including the selection of individuals in each agency to serve as a point of contact; and (vi) progress on preparation of bidding documents for early procurement action. (b) Regular supervision missions would be carried out three times a year during the life of the project. (c) Mid-Term Review. A comprehensive mid-term review would take place, not earlier that April 1, 1997, and not later than June 30, 1997, after the completion of the first phase of the SSM pilot testing program. The review would be carried out jointly by MEM and IDA and would include: (a) an evaluation of the results of the pilot testing of equipment and technology for SSM. Agreement would be required, based on these results, on the equipment to be included in the second phase, and the terms of reference for the consultant services required; (b) the progress in the development of standards and guidelines to ensure that all mining operations are carried out in an environmentally responsible manner; (c) an assessment of the findings of the EIA that would be prepared after the completion of the first phase; (d) an exarnination of the results from the land reclamation testing and agree on best practices and cost-effective methods suitable for Ghanaian conditions to continue rehabilitation of priority areas; (e) the progress made in improving the marketing environment for small-scale miners and liberalization of the market for precious minerals; (f the progress in developing reforms to the regulatory framework governing the sector; ANNEX J Page 2 of 3 (g) the status of project monitoring indicators; and (h) the performance of consultants. (d) An Implementation Completion Review (ICR) would be carried out jointly by the Government and IDA three months before the project closing date to review the achievements of the project in relation to its objectives. This review would serve as the basis for the Government's ICR report to be submitted to IDA not later than six months after the completion of the project. Tentative Project Supervision Schedule Dates Activity Skill Requirements Staff Weeks Sep 1995 Project Launch Workshop Task Manager 2 Procurement Specialist 1 Disbursement Specialist 1 Accounting Specialist I Dec 1995 Supervision Task Manager 2 Environmental Officer 2 Mar 1996 Supervision Task Manager 2 Jul 1996 Supervision Task Manager 2 Environmental Officer 1 Oct 1996 Supervision Task Manager 2 Feb 1997 Supervision Task Manager 2 Jun 1997 Supervision Task Manager 2 Oct 1997 Supervision Task Manager 2 Mar 1998 Mid-Term Review Task Manager 2 Environmental Officer 2 Economist/Financial Analyst 2 Jul 1998 Supervision Task Manager 2 Nov 1998 Supervision Task Manager 2 Mar 1999 Supervision Task Manager 2 ANNEX J Page 3 of 3 Dates Activity Skill Requirements Staff Weeks Jul 1999 Supervision Task Manager 2 Nov 1999 Supervision Task Manager 2 Apr 2000 Supervision Task Manager 2 Sep 2000 Implementation Completion Review Task Manager 2 Environment Officer 2 Financial Analyst 2 Feb 2001 Supervision Task Manager 2 MINING SECTOR DEVELOPMENT AND ENVIRONMENTAL PROJECT Phase I Equipment List AL-4 Alluvial Processing Using Knelson Concentrators Component Equipment Name QTY Power Cap/Size Supplier Cost (USD) 1. Warman pump, rubber-lined, 1800 1 30 1 1/2"/1" Peacocke, Simpson 4,000.00 rpm 2. Skid mountings for above and 2 - - - 2,000.00 piping 3. Skid mounted trommel (including 1 5 Im x 3m Satellite Marketing 3,500.00 motor) 4. Wheel barrows 10 - - Local Purchase 800.00 5. Shovels 20 0 0 Local Purchase 300.00 6. Knelson concentrators with screen, 2 4 7.51 Peacocke, Simpson 2,000.00 motors 7. Diesel generator, skid mounted 1 50 kva - Hubert Davis 8,500.00 It > 30 2 o X Component Equipment Name QTY Power Cap/Size Supplier Cost (USD) 8. Distribution board, cables, I - - Hubert Davis 5,000.00 switchgear 9. Smelting furnace (gas) I LPG - Peacocke, Simpson 500.00 10. Lining for water storage/water - - I,000m2 - 2,000.00 tank 1,000 gals. 11. Amalgam barrel 1 3 - Peacocke, Simpson 2,000.00 12. Copper plate 1 - Im x 2m Radiator & Tinning 550.00 13. Retort 1 - - Peacocke, Simpson 200.00 14. Miscellaneous (pans, balance, etc.) 2.,000.00 TOTAL 51.350.00 .. * q z~~~~~~~~~~~~~~~~~~~~~t MINING SECTOR DEVELOPMENT AND ENVIRONMENTAL PROJECT Phase I Equipment List AL-6 Alluvial Processing with Jig, Querl and Panner Component Equipment Name QTY Power Cap/Size Supplier Cost (USD) I. Scrubber/sizing trommel 1 5 30" x 12' Silver Springs 6,000.00 2. Mineral jig 1 1/2 12" x 12" Silver Springs 3,700.00 3. Querl bowl concentrator 1 10 24" ABJ 2,500.00 4. J. R. Ezi panner 1 12 volts - EEZEE Gold 750.00 5. Water pump (warnian) 1 15 1 1/2"/1" Peacocke 2,000.00 6. Diesel generator 1 50 kva - Hubert Davis 8,500.00 7. Distribution board 1 - - - 5,000.00 8. Smelting furnace (gas) 1 LPG - Peacocke, Simpson 500.00 9. Miscellaneous 27000.00 TOTAL 3__9_5_0. uIJx MINING SECTOR DEVELOPMENT AND ENVIRONMENTAL PROJECT Phase I Equipment List HR-I Hard Rock Ore Processing Using Shaking Table and EZI Panner Component Equipment Name QTY Power Cap/Size Supplier Cost (USD) I. Grizzly I - 4" opening - 300.00 2. Shaking table 1 1 4' x 8' Silver Springs 3,600.00 3. Osbom 2fs jaw crusher 1 1.5 4tph Osbom Engineering 23,000.00 4. J. R. Ezi panner 1 12 volts - EEZEE Gold 750.00 5. Water pump 1 15 1 1/2"/1" Peacocke, Simpson 2,000.00 6. Water tank 1 - 1,000 gals. - 2,000.00 7. Diesel generator 1 75 kva - Hubert Davis 9,400.00 8. Distribution board I - - Hubert Davis 5,000.00 9. Feed conveyor 1 5 8m x 450mm IMF Engineering 4,250.00 10. Fine ore bin I - 20 tons 4,000.00 we1I ° 1iA Component Equipment Name QTY Power Cap/Size Supplier Cost (USD) 10. Fine ore bin 1 - 20 tons 4,000.00 11. Ore feeder 1 5 4m x 450mm IMF Engineering 2,880.00 12. Ball mill (self classifying) 1 30 1 1/2 tph ABJ Engineering 33,000.00 13. Smelting furnace (gas) I LPG - Peacocke, Simpson 500.00 14. Slurry pump 1 15 15' head Mitchell Cotts 4,440.00 15. Hydro cyclone I - 3" Peacocke, Simpson 500.00 16. Miscellaneous 2.000.00 TOTAL 97.620.00 >1 MINING SECTOR DEVELOPMENT AND ENVIRONMENTAL PROJECT Phase I Equipment List HR-7 Hard Rock Ore Processing Using Shaking Table and EZI Panner Component Equipment Name QTY Power Cap/Size Supplier Cost (USD) 1. Grizzly I - 4" opening - 300.00 2. Shaking table 1 1 4' x 8' Silver Springs 3,600.00 3. Osbom 2fs jaw crusher 1 1.5 4tph Osbom Engineering 23,000.00 4. J. R. Ezi panner 1 12 volts - EEZEE Gold 750.00 5. Water pump 1 15 1 1/2"/1" Peacocke, Simpson 2,000.00 6. Water tank I - 1,000 gals. - 2,000.00 7. Diesel generator 1 75 kva - Hubert Davis 9,400.00 8. Distribution board I - - Hubert Davis 5,000.00 9. Feed conveyor 1 5 8m x 450mm IMF Engineering 4,250.00 oX Component Equipment Name QTY Power Cap/Size Supplier Cost (USD) 11. Ore feeder 1 5 4m x 450mm IMF Engineering 2,880.00 12. Ball mill 1 30 1 1/2 tph ABJ Engineering 33,000.00 13. Smelting furnace (gas) 1 LPG - Peacocke, Simpson 500.00 14. Miscellaneous 2.000.00 TOTAL 92.680.00 IV MAP SECTION IBRD 2101 1R 30BURKINA FASO0 00 1 GHANA Ha~o~ Ton, Noor.~go ~ / MINING SECTOR MANAGEMENT AND ENVIRONMENT PROJECT U\ t;PPE R WBE5T Ssbdlt A ~REGION -k{ oeoe I olWA I 0Pgu/ NOR?THEVIT Dboby \\ * WoA _.- International Boundaries- J-~~~~ ~ Ports BR G-AHAFO RE,ION g Lon t SUNYANI \" X; ~E1uorL- _ J 7-7°/ \X T ASiNT! JKpEn) TOGOt (~~~~G KUioAS H w F V ' A/~~~~~ _ ''\,> RE A N A-: ~~~~~~/Brofaer j ~~~~KOORIDU.- MpeDn -6 ' WESTERN) ) 9,i q ( REXoSt < CR_~~~~~~~~~~~~~~~~~~~~~~~~Kt ' pto C _ _ ) S L-pAPE COASiT him~~~~~E -bro Tkr rJi I I 50 Ninoonto .11, ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 2 40 60 80 KILOMETERS 5 A~orro 0TokRra0 Th. boundori-. colona. d.n-oin,otMr,. ond ony oth.r infonm_not .hon nM. rpdontinpy on i7-,-ort of Tho World fBonk o aky . 2n . o D r Mndor..n,.nt or too.ptono. of .boh bo4EndodoI. S' 0 10 20 30 4~~~~~~~~~~0 0 IE FEBRUARY 1995 IMAGING Report No: 15881 GH Type: SAR