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PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB4010 Project Name Region Sector Project ID Borrower(s) Implementing Agency Environment Category Date PID Prepared Estimated Date of Appraisal Authorization Estimated Date of Board Approval Mineral Sector Induced Growth Program AFRICA Mining and other extractive (40%); General agriculture, fishing and forestry sector (15%); Power (15%); General industry and trade sector (15%); General transportation sector (15%) P112177 GOVERNMENT OF GUINEA Ministry of Economy and Finance [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined) July 8, 2008 (revised November 5, 2008) January 20, 2009 March 17, 2009 1. Key development issues and rationale for Bank involvement Guinea hosts some of the largest global resources of bauxites and iron ore, and sizable gold and diamond deposits. The country is the preferred destination for mineral FDI in West Africa with possible FDI of about $12 billion over the next 3-4 years and potentially additional $8 billion thereafter. These expected investments will likely result in extractive industries representing over 50% of the GDP by 2015 from the current levels of about 20%. In particular, two mining poles are expected to develop: One around the CBG mines, BHP Billiton Global Aluminia (GAC) and Alcan/Alcoa Kamsar alumina plants in the Boke/Sangaredi area in the east of the country, and one in the South-West region around the Iron ore deposits of Simandou and Euronimba sponsored respectively by Rio Tinto and BHP-Billiton/Newmont. These large investments represent both risks and opportunities for economic growth and employment in Guinea. With the right enabling environment, these mining projects can create employment opportunities through linkages and subcontracting to local firms. Considering the concentration of mines in the two areas, or “growth poles,” mentioned above, the cumulative impact of these investments also has the potential to spur broader private sector growth. The key development issues are hence to use mineral sector induced activities and available capital to promote local and regional economic development and increase employment opportunities. The World Bank is involved in the mining sector dialogue with the Government of Guinea since 2004, and the Mining Policy Division has established good dialogue and relations with relevant public, private and civil society stakeholders. It is currently helping Guinea to improve management of the mining sector by strengthening capacity of relevant public institutions, helping to reform the legal and regulatory frameworks, and by supporting EITI implementation. This work has placed the Bank as the leading donor in the mining sector, and the Government has requested further Bank assistance to build on progress achieved so far and to support relevant institutions to improve governance, effectiveness, and contribution of the sector to national and regional development. IDA’s comparative advantage is its long-term engagement and depth of knowledge of Guinea’s mining sector, combined with international mining sector experience and practice. The breath of IDA’s interventions in activities directly linked with the development of mineral projects such as the legal, regulatory and institutional framework, infrastructure development, and local economic development opportunities, position the organization in a particular way to help countries optimize the benefits from mining projects by assisting them in enabling the expansion of non mining economic activities. The methodology of promoting mining-induced regional growth poles has been successfully applied by the World Bank in the Anosy region, Madagascar, which has made significant gains with regard to the MDGs through integrated regional development planning fueled by a major mineral resource development project. There are currently no other sources of assistance in Guinea to initiate such broad, cross-sectoral impacts. Moreover, the value added by IDA’s leadership in supporting mineral development is recognized by other development partners in the country who have confirmed that the proposed Project fits well with their activities and approaches. 2. Proposed objective(s) Project Objectives are to assist the Government of Guinea to develop a dynamic framework for resource management and economic linkages that ensures that mining activities: (a) benefit the people of Guinea, in particular the communities and regions where the mining assets are located; and (b) serve as a catalyst and an engine private sector led growth for other sectors of the economy. 3. Preliminary description The program is an opportunistic operation that does not involve direct investments into mining activities, but rather will promote the economic activities and linkages that ensure that mining activities will benefit both the local economy and the country at large. The proposed program has four components: Component A: Strengthening Mining Revenue Collection Capacity of the Government and Public Private Dialogue (i) Collect, administer, and monitor mining taxes and royalties; (ii) Facilitate the public private dialogue and engagement with the mining companies to formulate, prepare, implement and manage medium- and long-term integrated development projects aligned with the decentralization framework in Guinea, and long term sought sustainable development programs. Component B: Development of Integrated Economic Clusters. The interventions under this component are aimed at supporting the development and the transformation of new economic opportunities in the socio-economic spaces that are targeted for investment in the mining sector. Micro, small and medium scale enterprises (MSME) will be supported to capitalize on the increased direct and indirect demands generated by the presence of mining operations or news projects. The component will strengthen the business environment in the targeted pilot areas to allow Guineans to realize the existing opportunities and thereby improve the contribution of mining to local and national economies. Component C: Capacity building and Support to public service delivery in the targeted clusters. Institutional strengthening to enable active and informed leadership and participation of central and decentralized authorities in the design and implementation of appropriate public policies, and services required to tune the country economic and fiscal policies with cluster-based economic promotion, and the development of entrepreneurship and entrepreneurs. Decentralized service delivery may be strengthened around: (i) agricultural extension services in the targeted clusters with the objective of increasing production, and (ii) municipal services (water, electricity, etc.) in partnership with the mining industry through PPPs. Component D: Program implementation, evaluation and monitoring At the central, regional, and local level, the project would provide support for project implementation, project coordination, procurement, financial management, monitoring and evaluation. 4. Safeguard policies that might apply The environmental and social impacts of the program are expected to be minimal sitespecific, and manageable to an accepted level. Hence, project is rated as a category B operation. Since the locations, number and scale of some of the activities are undefined at this moment, it is proposed that an environmental and social management framework (ESMF), and resettlement policy framework to be prepared by the client. The potential for triggering the natural habitat policy OP 4.04, the forestry policy OP 4.36 and the international waterways policy OP 7.50 will be assessed in the context of ESMF. If confirmed the appropriate mitigation measures will be developed and put in place. The environmental and social assessment framework will provide guidelines for use and management of pesticides and fostering of the integrated pest management in the agricultural production system in the selected areas. The Resettlement Policy Framework (RPF) will provide guidelines for resettlement compensations, mitigation measures, along with grievance mechanisms in the event Program activities result in land acquisition and/or loss of livelihood on the part of Program affected people (PAPs). The ESMF and RPF will be disclosed (in English and local language) in Guinea and InfoShop before the start of appraisal, tentatively scheduled end January. Safeguard Policies Triggered by the Project Environmental Assessment (OP/BP 4.01) Yes [X] No [] Natural Habitats (OP/BP 4.04) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Involuntary Resettlement (OP/BP 4.12) Indigenous Peoples (OP/BP 4.10) Forests (OP/BP 4.36) Safety of Dams (OP/BP 4.37) Projects in Disputed Areas (OP/BP 7.60)* Projects on International Waterways (OP/BP 7.50) [tbd] [X ] [] [X] [] [tbd] [] [] [tbd ] [] [] [X] [] [X] [] [X] [X] [] 5. Tentative financing Source: Borrower Africa Catalytic Growth Fund (ACGF) Other Donors Private Sector Total ($m.) 0.0 15.0 0.0 0.0 15.0 6. Contact point Contact: Boubacar Bocoum Title: Senior Mining Specialist Tel: 202-478-1151 Fax: 202-522-0396 Email: [email protected] Location: Washington D.C. * By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas