Public Disclosure Copy The World Bank Implementation Status & Results Report Sustainable Management of Mineral Resources (P096302) Sustainable Management of Mineral Resources (P096302) AFRICA | Tanzania | Energy & Extractives Global Practice | IBRD/IDA | Investment Project Financing | FY 2009 | Seq No: 15 | ARCHIVED on 08-Feb-2018 | ISR31272 | Implementing Agencies: Ministry of Energy and Minerals, Tanzania Extractive Industries Transparency Initiave Key Dates Key Project Dates Bank Approval Date:09-Jun-2009 Effectiveness Date:22-Sep-2009 Planned Mid Term Review Date:15-Oct-2012 Actual Mid-Term Review Date:12-Nov-2012 Original Closing Date:30-Jun-2014 Revised Closing Date:31-Dec-2018 Project Development Objectives Project Development Objective (from Project Appraisal Document) To strengthen the Governments capacity to manage the mineral sector to improve the socioeconomic impacts of large and small-scale mining for Tanzania and Tanzanians and enhance private local and foreign investment. Has the Project Development Objective been changed since Board Approval of the Project Objective? No PHRPDODEL Components Name A. Improving the Benefits of the Mineral Sector for Tanzania: Artisanal and Small-Scale Mining, Local Economic Development and Skills Development:(Cost $53.40 M) B. Strengthening Governance and Transparency in Mining:(Cost $14.60 M) C. Stimulating Mineral Sector Investment:(Cost $25.00 M) D. Project Coordination and Management:(Cost $6.90 M) Physical and price contingencies:(Cost $2.30 M) PPF refinancing Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO  Moderately Satisfactory  Moderately Unsatisfactory Overall Implementation Progress (IP)  Moderately Satisfactory  Moderately Unsatisfactory 2/8/2018 Page 1 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Sustainable Management of Mineral Resources (P096302) Overall Risk Rating  Substantial  Substantial Implementation Status and Key Decisions The review of the implementation progress, based on the action plan agreed during the April, 2017 mission revealed that the implementation progress continues to be unsatisfactory. This has largely been affected by the pause in implementation of the project following the recent changes to the policy and legislative direction of the sector. The majority of activities (only 28 out of 82) from the agreed action plan have yet to start, and of those initiated, only 11 are completed. The disbursement rate remains low at about 28% following two years of project implementation, and with only one more year remaining. To achieve the development objective, the project will need to be restructured, including a no-cost extension. The restructuring will enable to project to better respond to the new policy environment, sector demands, preferred operational approaches, and the client’s efforts to strengthen the business climate. The project is being affected by tensions between mining companies and the government which led to drastic changes in policy. The government is concerned about not getting sufficient revenues from the sector. On the other hand, mining companies have raised concerns about the new legislation, which allows the Government to acquire up to 50% stake in strategic projects, (not defined in the law) commensurate with accumulated tax expenditure (to be assessed and determined by the state). In addition, an October 2016 government order requires all special mining license holders to list 30% of their paid-up shares with the Dar es Salaam Stock Exchange. This, they fear, could raise the government and local stake in strategic projects to 80%, leaving investors with only 20% stake. Other concerns include: • The provision that the Government will have lien on all won minerals. Such a provision could make it difficult for investors to raise project finance, (unless the government acts as a guarantor). • The definition of raw material: the new legislation re-classifies gold doré which means companies are not eligible to claim also Value Added Tax credit when exporting raw materials. • The lack of recognition for investors to use international arbitration measures previous in place • The state’s requirement for renegotiation of agreements which contains terms deemed unconscionable by the Government, and if the investor disagree to the proposed changes the respective section will just be expunged • The requirement that exploration companies will not be allowed to market their properties unless they have obtained clearance from GST In conclusion, it was agreed that the Government and the mining companies would pursue a constructive dialogue to understand each other's positions and craft win-win solutions which would preserve the existing investments while increasing benefits for Tanzania. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance  --  Substantial  Substantial Macroeconomic  --  Substantial  Substantial Sector Strategies and Policies  --  Moderate  Substantial Technical Design of Project or Program  --  Low  Low Institutional Capacity for Implementation and Sustainability  --  Substantial  Substantial Fiduciary  --  Moderate  Moderate Environment and Social  --  Moderate  Substantial Stakeholders  --  Low  Low Other  --  --  -- 2/8/2018 Page 2 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Sustainable Management of Mineral Resources (P096302) Overall  --  Substantial  Substantial Results Project Development Objective Indicators PHINDPDOTBL  Percentage increase of household income levels in selected ASM communities (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 200.00 200.00 100.00 Date 31-Dec-2010 24-May-2017 21-Nov-2017 30-Jun-2015 PHINDPDOTBL  Percent of citizens in participating communities who consider that their views have been taken into account in the local economic development strategic planning process (perception survey) (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 12.00 42.00 50.00 60.00 Date 31-Dec-2010 24-May-2017 21-Nov-2017 30-Jun-2015 PHINDPDOTBL  Time to process mineral rights (exploration licenses). (Months, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 18.00 1.00 1.00 2.00 Date 09-Jun-2009 24-May-2017 21-Nov-2017 30-Jun-2015 PHINDPDOTBL  Time taken to transform identified ASM areas into established PML mines. (Months, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 12.00 12.00 12.00 3.00 Date 20-Feb-2015 24-May-2017 21-Nov-2017 31-Dec-2018 2/8/2018 Page 3 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Sustainable Management of Mineral Resources (P096302) PHINDPDOTBL  Annual publication of mining sector revenue (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value N Y Y Y Date 30-Jun-2009 24-May-2017 21-Nov-2017 30-Jun-2015 PHINDPDOTBL  Improvement in Tanzania's ranking as a mining investment destination as evidenced by independent investor survey (Fraser Institute). (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Increase of 2-3 points/palces or 59/104 for policy 59/104 for policy 48/71 for policy ranking & more over Value perception & 71/104 for perception & 71/104 for 22/71 for mineral potential baseline in one mineral potential mineral potential or both indicators. Date 30-Jun-2009 24-May-2017 21-Nov-2017 30-Jun-2015 PHINDPDOTBL  Percentage increase in mining revenue (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 52.00 52.00 5.00 Date 30-Jun-2009 24-May-2017 21-Nov-2017 30-Jun-2015 PHINDPDOTBL  Percentage increase in share of royalty from PML holders. (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 7.00 7.00 7.00 7.50 Date 20-Nov-2014 24-May-2017 21-Nov-2017 31-Dec-2018 PHINDPDOTBL  Annual publication of mining sector revenue with an ASM annex. (Amount(USD), Custom) 2/8/2018 Page 4 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Sustainable Management of Mineral Resources (P096302) Baseline Actual (Previous) Actual (Current) End Target Value 1.00 0.00 0.00 4.00 Date 20-Nov-2014 24-May-2017 21-Nov-2017 31-Dec-2018 Overall Comments Intermediate Results Indicators PHINDIRITBL  Regulatory gaps addressed (Value Addition Regulations, Explosives Regulations, EITI Bill) (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value N N Y Y Date 20-Feb-2015 12-Feb-2015 21-Nov-2017 31-Dec-2018 PHINDIRITBL  Number of ASM operators benefiting from technical capacity building services provided by the project. (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 20.00 170.00 170.00 100,000.00 Date 12-Feb-2015 24-May-2017 21-Nov-2017 31-Dec-2018 PHINDIRITBL  Increase in total aggregate production value from ASM beneficiary areas. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value $4/day $23/day $23/day $50/day Date 09-Jun-2009 24-May-2017 21-Nov-2017 31-Dec-2018 2/8/2018 Page 5 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Sustainable Management of Mineral Resources (P096302) PHINDIRITBL  Reduction in child labor participation in PML areas benefiting from the project (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 1.8% of miners -- 10% 75% reduction Date 12-Feb-2015 12-Feb-2015 21-Nov-2017 31-Dec-2018 PHINDIRITBL  Number of new incorporations of ASM cooperatives, SMEs or associations as a result of new initiatives. (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 250.00 250.00 260.00 400.00 Date 07-Oct-2014 20-Nov-2014 21-Nov-2017 31-Dec-2018 PHINDIRITBL  Number of PMLs registered (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 14,880.00 14,880.00 34,567.00 45,000.00 Date 07-Oct-2014 20-Nov-2014 21-Nov-2017 31-Dec-2018 PHINDIRITBL  Number of districts with strategic development plans that integrate mining communities. (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 3.00 3.00 3.00 6.00 Date 07-Oct-2014 20-Nov-2014 21-Nov-2017 31-Dec-2018 2/8/2018 Page 6 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Sustainable Management of Mineral Resources (P096302) PHINDIRITBL  Revised mineral law and regulations disseminated (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target End Target fully End Target fully achieved. Revised achieved. Revised Revisions and Value Revisions ongoing Mineral Law and Mineral Law and dissemination Regulations completed Regulations completed completed. and disseminated. and disseminated. Date 09-Jun-2009 24-May-2017 21-Nov-2017 30-Jun-2015 PHINDIRITBL  Number of graduates in value addition from the Tanzania Gemological Centre (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 26.00 47.00 200.00 Date 07-Oct-2014 16-Jun-2016 21-Nov-2016 31-Dec-2018 PHINDIRITBL  Number of inspections completed according to the new mines inspection checklist and new environmental protection plan (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 1,000.00 2,759.00 2,759.00 2,500.00 Date 09-Jun-2009 24-May-2017 21-Nov-2017 31-Dec-2018 PHINDIRITBL  Percentage of country covered by geophysical airborne surveys at 1:100,000 scale. (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 3.00 15.70 15.70 14.00 Date 09-Jun-2009 24-May-2017 21-Nov-2017 30-Jun-2015 2/8/2018 Page 7 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Sustainable Management of Mineral Resources (P096302) PHINDIRITBL  Number of areas suitable for ASM identified and set aside for permitting. (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 4.00 104.00 104.00 12.00 Date 07-Oct-2014 24-May-2017 21-Nov-2017 31-Dec-2018 PHINDIRITBL  Project monitoring and evaluation. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Successful Value Project start In progress In progress M&E Date 09-Jun-2009 24-May-2017 21-Nov-2017 30-Jun-2015 PHINDIRITBL  ASM database established and updated quarterly (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value N N Y Y Date 20-Nov-2014 16-Jun-2016 21-Nov-2017 31-Dec-2018 PHINDIRITBL  Compliance with Minamata Convention on Mercury Reduction Target (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value N Y Y Y Date 12-Feb-2015 24-May-2017 21-Nov-2017 31-Dec-2018 Overall Comments 2/8/2018 Page 8 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Sustainable Management of Mineral Resources (P096302) Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed P096302 IDA-45840 Closed USD 50.00 49.13 0.87 50.17 0.00 100% P096302 IDA-56330 Effective USD 45.00 45.00 0.00 12.58 34.12 27% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P096302 IDA-45840 Closed 09-Jun-2009 22-Jul-2009 22-Sep-2009 30-Jun-2014 30-Jun-2015 P096302 IDA-56330 Effective 07-May-2015 03-Jun-2015 28-Aug-2015 31-Dec-2018 31-Dec-2018 Cumulative Disbursements Restructuring History Level Approved on 25-Jun-2014 2/8/2018 Page 9 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Sustainable Management of Mineral Resources (P096302) Related Project(s) P151124-TZ Sustainable Management of Mineral Resources ,P152916-Additional Financing for P096302 2/8/2018 Page 10 of 10 Public Disclosure Copy