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PROJECT INFORMATION DOCUMENT (PID)
CONCEPT STAGE
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
Report No.: AB2571
Pakistan: Sustainable Management of Mineral Resources - TAL
SOUTH ASIA
Mining and other extractive (100%)
P099375
GOVERNMENT OF PAKISTAN
[ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined)
October 11, 2006
June 4, 2007
October 24, 2007
1. Key development issues and rationale for Bank involvement
The borrowers’ objective is for the mineral sector to contribute to economic development
through export earnings, taxes and royalties, employment, and community level well-being.
Pakistan has a rich mineral endowment, but the current contribution from the production of solid
minerals to the GDP is about 0.5%, significantly below a global range of between 2 and 8% of
GDP. Pakistan’s near term growth potential exists with commercial exploitation of Saindak
copper and possible future exploitation of Reko Diq copper deposits, Duddar zinc-lead deposit
and other polymetallic deposits, Punfmin iron ore deposit, Thar coal, gemstones, and
construction materials including dimensional stones. It is estimated that with sufficient capital
and a favorable investment climate Pakistan’s solid minerals sector has the capacity to contribute
annual foreign exchange earnings in the range of $1.5-2.0 billion or 2-3 % of GDP, contribute
annually $200 million to tax revenues of federal and provincial governments, stimulate
secondary and tertiary economic activity, promote growth and provide employment and
community development in the largely remote rural regions of the country.
The Government has started the reform of the sector by formulating in 1995 a National Mineral
Policy (NMP). The NMP decentralized licensing, regulatory, oversight functions, and taxation
to provincial governments to achieve efficiencies and promote local economic development. The
federal government remained responsible for sector promotion and coordinating across federal,
provincial, and regional governments. However, the results are still below expectations mostly
due to relatively slow implementation of the NMP, and uncertainty created by inadequacies of
provincial mining concession rules, which fail to meet international standards; and lack of
knowledge of the mineral potential of the country.
To address these circumstances and to achieve greater international competitiveness, the
Government in November 2005 requested the Bank to assist it with: strengthening mineral sector
institutions and legislation at both the federal and provincial levels; improving respective social
and environmental performance and community well-being; establishing transparent, uniform
and non-discretionary provincial mineral cadastre systems; and promoting investment
opportunities by disseminating Pakistan’s mineral resource information and geo-data globally.
The proposed project will contribute to CAS objectives as follows: (i) strengthening the enabling
investment climate – the project will assist developing a regulatory framework for mining sector
development and sector investment in manner that is competitive and in line with best
international practice, adjusted to the particular conditions of Pakistan; and (ii) supporting propoor policies – the project will assist formulation of sustainable development policies, including
preparation of community development plans for mining communities (most are in remote
areas), mitigation of adverse impacts of mining on communities, and greater benefits sharing at
the local level.
The project will build on the successful dialogue between the Bank and the Government on
mineral sector development through reviews, strategic analysis and stakeholder dialogue over the
past three years. The proposed project is a direct extension of this dialogue. The Bank’s lending
will bring unique expertise on development of sustainable mineral sector given its successful
growth experience in similar operations in Ghana, Peru and Tanzania, as well as in Madagascar,
Mauritania, Mozambique, Papua New Guinea and other countries. The project will also benefit
from the results and recommendations of the Extractive Industry Review of 2003, and the
Management Response of 2004.
2. Proposed objective(s)
The core objective is to assist the government of Pakistan in implementing its strategy to
accelerate sustainable mineral sector development by (i) strengthening governance, transparency,
and capacity in the management of mineral resources, with particular emphasis on community
development, environmental compliance, and equitable sharing of mineral resource benefits, and
(ii) attracting private sector mining investment. The provincial level reforms will be
implemented in Balochistan as a pilot case, and will aim to provide a demonstrative effect so that
other provinces follow with similar reforms.
The project is expected to yield the following outcomes: (i) increased private-sector investment
in the mineral sector as a result of: (a) collection and dissemination of basic geodata, and (b)
improved investment enabling climate through enhanced legal and fiscal frameworks in line with
international practices; (ii) improved institutional capacity at the federal and provincial levels to
manage the mineral sector; (iii) increased taxes/royalties revenues at federal and local levels; (iv)
formulated policies on mitigation of potential impacts of mining on associated communities and
on increased benefit sharing at the community level; and (v) improved efficiency and
transparency of licensing process through a harmonized mineral licensing system.
3. Preliminary description
The project is expected to be an IDA Credit with indicative cost of US$48-55 million. Most of
the project activities will be implemented simultaneously, but certain reforms at the provincial
level (including development of provincial mining regulatory framework and community
development policies) will start after overarching federal level frameworks are established.
A. Provincial Level (approximately US$40-45 million)
(i) Production and Management of Geo-Data - includes establishment of a mineral resource
information center for the management and dissemination of mineral resource information;
compilation of existing and collection of new basic geo-data; and activities to support sector
promotion.
(ii) A Provincial Regulatory Framework and Institutional Strengthening - includes restructuring
of provincial regulatory and fiscal frameworks relating but not limited to licensing, cadastral
services, environmental compliance, mine health and safety, inspection and training; and
institutional modernization and strengthening.
(iii) Mining and Community Development – includes development and implementation of
overarching policies for improved sharing of resource benefit streams, mining & community
development programs, improved environmental and social performance, and community wellbeing pilot projects.
B. Federal Level (approximately US$8-10 million)
(i) Improvement of the Federal Legal / Regulatory Framework, Fiscal / Taxation Regimes, and
Institutional Framework –includes modernizing and strengthening legal and fiscal frameworks,
monitoring of industry activities, enforcing regulatory and environmental compliance, and
institutional modernization and strengthening as well as technical and non-technical capacity
building
(ii) Development of a Template for Provincial Mineral Concession Rules and Regulations includes development of standardized rules and regulations for the award, renewal, cancellation
and administration of mineral rights, and coordination of standardized mineral cadastre system at
the provincial level.
(iii) Formulation of National Sector Policies for Sustainable Development – includes
modernization and strengthening of existing policies using international best practice duly
adjusted to local conditions and formulation of consultation and planning frameworks to ensure
community well-being for both large and small-scale mining.
(iv) Coordination and Promotion of Mineral Sector Development and Dissemination of Basic
Geo-Data - includes establishment of a national mineral resource information center; and
institutional strengthening and capacity building of the Geological Survey of Pakistan.
4. Safeguard policies that might apply
Safeguard Policies Triggered by the Project
Environmental Assessment (OP/BP/GP4.01)
Natural Habitats (OP/BP 4.04)
Pest Management (OP 4.09)
Cultural Property (OPN 11.03, being revised as OP 4.11)
Involuntary Resettlement (OP/BP 4.12)
Indigenous Peoples (OD 4.20, being revised as OP 4.10)
Forests (OP/BP 4.36)
Safety of Dams (OP/BP 4.37)
Projects in Disputed Areas (OP/BP/GP 7.60)
Projects in International Waterways (OP/BP/GP 7.50)
Yes
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5. Tentative financing
Source:
BORROWER/RECIPIENT
INTERNATIONAL DEVELOPMENT ASSOCIATION
Total
6. Contact point
Mr. Michael Stanley, Sr Mining Specialist
Oil, Gas, Mining and Chemicals Department
The World Bank
Tel. 202-473-6165
Fax 303-202-522-0396
Email: [email protected]
($m.)
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