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Premium member Presentation Transcript Slide1: Amsterdam, The Netherlands September 12, 2001 John Strongman Mining Department The World Bank Group Presentation to the Friends of the Earth Raw Materials versus Poverty Conference WORLD BANK ’S MINING ACTIVITIESSlide2: Topics to be Covered The World Bank Group World Bank Mining Activities C. Mining Work in Poland, Romania and PNG D. World Bank Non-Lending Mining Activities World Bank Mining Activities - Other Examples F. Linkages to Poverty Alleviation Safeguard Policies Activities to reduce Greenhouse Gas Emissions H. The Extractive Industries Review (EIR) The Mining Challenge – Summary Slide3: A. The World Bank Group The World Bank Group: The World Bank GroupSlide5: World Bank Strategy Comprehensive Development Framework Country ownership for development goals Partnership Long-term vision Structural/social equal to macroeconomic/financial Focus on results SOURCE: 1999 Annual Report on Development Effectiveness World Bank Operations Evaluation DepartmentWorld Bank Group Lending Assistance to Implement the CDF: World Bank Group Lending Assistance to Implement the CDF We lend money IBRD - lending to Governments for technical assistance and investment projects and for structural adjustment IFC – financing (loans and equity) for private sector projects MIGA – private sector promotion and loan guarantees Lending by Sector, FY99: Lending by Sector, FY99 Slide8: Total Average Operations Value per Operation World Bank (US$Millions) WB - Technical Assistance Lending 10 18 WB - Investment/Adjustment Lending 8 320 Total 18 150 IFC Transactions 31 16 World Bank Group Mining Transactions and Operations CY 96 - 00 World Bank Group Non-lending Assistance to Implement the CDF: World Bank Group Non-lending Assistance to Implement the CDF We undertake research, provide advice and facilitate consultation between governments, civil society and investors Economic management Poverty alleviation Environment and social guidelines and procedures Legal and fiscal reform Privatization of state enterprises Private sector development and promotionSlide10: Key points (Section A): 1. Our mining work is anchored in the Comprehensive Development Framework 2. Our lending for mining is very modest Our TA and IFC projects average only US$16-18 million per project Our large loans are only for sector reform mostly in Eastern Europe and Former Soviet Union We do a lot more than lending – we have important non-lending activities Slide11: B. World Bank Mining Activities Lending and Non-Lending The Changing World of Mining: The Changing World of MiningWorld Bank Group Mining Transactions and Operations CY 96 - 00: World Bank Group Mining Transactions and Operations CY 96 - 00 IBRD/IDA WB Technical Assistance for Mining Sector Reform and environmentally and socially responsible mining development Adjustment lending for mining sector reform and, in particular, mine closure, environmental improvement and social mitigation IFC IFC Transactions to support responsible private mining investment and enhance its contribution especially to local communities MIGA MIGA guarantees and promotional services to support responsible private sector mining investmentWorld Bank Mining Activities Working at the interfaces : World Bank Mining Activities Working at the interfaces Governments Private Sector Civil Society Mine closure Poland Russia Ukraine Romania Local Economic Devt. Mozambique Mexico Legal/Regulatory Reform Argentina Institution Building Papua New Guinea Burkina Faso Tanzania Ghana Mali Environ. Management Zambia Create a responsive interface between Government and Private Sector Equip Government to deal with the legacy, and to deal with communities Provide a voice for civil society in mining development process through improved consultation, and engagement with mining companies Workshops on Mining and Community; Social Charter; Sustainable Development IFC and MIGA supported private sector mining investments Slide15: Key points (Section B): 1. The mining world has changed greatly the past two decades – with the private sector taking the lead for investment 2. Environmental protection is well integrated Social mitigation is becoming accepted These changes have helped shape our activities in the mining sector. We work at the interfaces between government, civil society and private investors. Our activities include sector reform loans; technical assistance loans; project financing and guarantees; workshops; publications etc. Slide16: C. Mining Projects in Poland, Romania and Papua New Guinea (accounting for over 60% of World Bank and IFC mining operations by value in past two years)World Bank Mining ProjectsPoland Coal Sector Reform: World Bank Mining Projects Poland Coal Sector Reform Objective: support implementation of the Governments 1998 – 2002 Coal Sector Reform Program, including downsizing the sector in a socially acceptable manner, improving environmental and financial performance and preparing for the eventual privatization of the Polish coal industry Lending US$ 300 million (June 1999) US$ 100 million (August 2001)World Bank Mining Projects Poland Coal Sector Reform : World Bank Mining Projects Poland Coal Sector Reform Outcome (so far): 93,000 workers have left the industry (150,000 remain) about half have taken early retirement and half of the remainder have found employment so far; an attractive severance payment scheme has helped mitigate social impacts. As a miner’s wife said in response to a recent survey, “ The opportunity for her husband to take a miners leave social package helped to stabilize and secure the situation of the entire family” 26 million tpy loss making, excess capacity has been closed (with 111 million tpy remaining) Production costs per ton of coal have been reduced by 26% (in real terms) World Bank Mining ProjectsPoland Coal Sector Reform: World Bank Mining Projects Poland Coal Sector Reform Outcome (continued): Mine by mine environmental management plans have been prepared and are bring implemented Worst pollution, namely discharge of saline water and disposal of solid waste , reduced by 20% and 29% respectively since 1998 Coal industry is now making a profit on coal operations compared with a loss of about US$650 million in 1998 One mine has been privatized A Privatization Strategy Framework has been prepared for the entire industry and is now being discussed with trade unionsWorld Bank Mining Projects Romania Mine Closure and Social Mitigation: World Bank Mining Projects Romania Mine Closure and Social Mitigation Objective: to support the closure of 29 uneconomic mines and environmental remediation of mine sites; financing of social mitigation initiatives to help diversify the local economy in support of the Government’s restructuring program for the mining sector; and technical and institutional assistance for modernizing the administration of mineral rights and strengthening environmental protection Lending US$ 45.5 million (August 1999) World Bank Mining Projects Romania Mine Closure and Social Mitigation: World Bank Mining Projects Romania Mine Closure and Social Mitigation Main Components : Closure of 29 mines US$ 26.5 million Social Mitigation US$ 14 million Micro credit scheme Workspace centers Employment and Training Incentives Social dialogue Social Impact Monitoring Institutional Strengthening US$ 3 million Legal Environmental Project Implementation US$ 1 millionWorld Bank Mining Projects Romania Mine Closure and Social Mitigation: World Bank Mining Projects Romania Mine Closure and Social Mitigation Outcomes (so far): Mine closure manual prepared; 8 mines under closer; bidding documents well advanced for other 21 mines Training and employment incentives scheme under implementation to provide incentives for new job creation Micro finance law passed and scheme being established to provide micro finance for new business start ups Workspace centers being constructed for new jobs Sector Environmental Assessment completed and presented at stakeholder workshop New mining law drafted and discussed at stakeholder workshopWorld Bank Mining Projects Papua New Guinea Mining Sector Institutional Strengthening TA: World Bank Mining Projects Papua New Guinea Mining Sector Institutional Strengthening TA Objective: The main objective of the proposed project is to strengthen institutional capacity within the Department of Mining and the Internal Revenue Commission to administer and regulate exploration and mining projects and to thereby contribute to socially and environmentally sustainable private mineral investment in the Papua New Guinea mining sector. Lending US$ 10 million (June 2000) World Bank Mining Projects Papua New Guinea Mining Sector Institutional Strengthening TA: World Bank Mining Projects Papua New Guinea Mining Sector Institutional Strengthening TA The project will provide technical assistance to: review and develop mineral policy and regulations, improve the mining development contract strengthen the interface between public and private mining sectors, NGOs, and local communities; strengthen the Department of Mines and the Geological Survey; conduct technical and safety field audits of exploration and mining projects; improve environmental compliance and sustainable development benefits from mining; · World Bank Mining Projects Papua New Guinea Mining Sector Institutional Strengthening TA: World Bank Mining Projects Papua New Guinea Mining Sector Institutional Strengthening TA continued · address the issue of mine closure and its impact on local communities, · improve mine safety and investigate accidents; · improve the availability of geological data for potential mineral investors; · conduct tax audits of mining and petroleum companies; and · establish effective inter-relationships between different government agencies regarding tax collection, environment management, and industry oversight World Bank Mining Projects Papua New Guinea Mining Sector Institutional Strengthening TA: World Bank Mining Projects Papua New Guinea Mining Sector Institutional Strengthening TA Drafting of a Mining Sector Sustainable Development Policy for Papua New Guinea The policy aims to identify all the elements of sustainable development relevant to the mining industry in Papua New Guinea and to bring them together under a cohesive framework. Key elements are: Defining and measuring the economic sustainability of the industry. Defining the interface between the social and environmental impacts and taking measures to ensure that the sustainability of the social area is on par with that of the biophysical. Establishing effective arrangements for Benefits Distribution.World Bank Mining Projects Papua New Guinea Mining Sector Institutional Strengthening TA (cont): World Bank Mining Projects Papua New Guinea Mining Sector Institutional Strengthening TA (cont) . Taking measures and developing systems or institutions to ensure that the development initiatives of a mining project can be sustained after mining ceases Income replacement and sustainable economic activity for communities after mine life, Sustaining the essential services provided by the mining company beyond mine life, Creation and management of long-term funds to provide resources for Sustainable Development activities which are to be carried out beyond mine life. The above elements are currently viewed as among the key building blocks for the process of creating a culture for sustainability. World Bank Mining Projects Indonesia Mining Sector Reform : World Bank Mining Projects Indonesia Mining Sector Reform Objective: provide input to finalizing the draft Mining Law and preparing the associated implementing regulations. One day Symposium on Sustainable Mining Development (open to all) on October 8, 2001 Two day International Workshop on Policy Priorities for the Indonesian Mining Sector (selected government, company and civil society representatives) on October 9 and 10, 2001 Topics to be covered include legal, fiscal, social, environmental and decentralization-related issues Slide29: Key points (Section C): Over half our lending is to countries such as Poland for helping people losing their jobs in mining (social mitigation) and for environmental protection and clean up (is this really what you oppose?) In Romania the immediate focus is social mitigation and environmental clean up for closed mines; the future focus is on better legal frameworks and improved environmental performance Our technical assistance, in countries such as Papua New Guinea, helps governments to develop and establish the frameworks for responsible and sustainable mining development. Slide30: D. World Bank Non-Lending Mining Activities World Bank GroupNon Lending Activities in Mining: World Bank Group Non Lending Activities in Mining Publications: Latin America Study (1997); Small Scale Mining in Latin America (1999); Mining and Environment in Indonesia (1999); Mine Closure and Sustainable Development (2000); Poverty Strategy Reduction Toolkit (2001); Large Mines and the Community (2001); Review of the Legal and Fiscal Framework for Mining (2001) World Bank GroupNon Lending Activities in Mining: World Bank Group Non Lending Activities in Mining Workshops: Mining and Community – Quito (1997); Mining and Community – Madang (1998); Industry /NGO Workshop regarding ICME Social Charter (1998); Mine Closure and Sustainable Development (2000); China Investment Workshop (2000); Vietnam Investment Workshop (2001); Mining Taxation Seminar (2001); Finance, Mining and Sustainability (2001)World Bank GroupNon Lending Activities in Mining: World Bank Group Non Lending Activities in Mining Partnerships (ongoing): BPD (Mine Closure – Indonesia); Mine Minister Forum (MMF); Mining, Minerals and Sustainable Development (MMSD); Consultative Group on Artisanal and Small Scale (CASM) Slide34: Key points (section D) : Our non-lending activities address a broad range of social and environmental issues related to mining and actively facilitate dialogue between governments, civil society and private investors on important issuesSlide35: World Bank Mining Activities Other ExamplesWorld Bank Mining ActivitiesFour areas of Focus: World Bank Mining Activities Four areas of Focus World Bank Mining ActivitiesPoverty Alleviation: World Bank Mining Activities Poverty Alleviation examples Increase the sustainability of large scale mining activities by improving delivery of services (health, education, etc.) (Zambia) Support mining spin-off businesses and local economic development (Mozambique) Establish social mitigation activities to help communities when they are impacted by mine closure. (Poland) Establish job creation incentives (Romania) World Bank Mining ActivitiesEnvironmental Protection : World Bank Mining Activities Environmental Protection examples Establish modern environmental laws and standards. (Zambia) Prepare and implement mine by mine environmental management plans (Poland) Strengthen environmental monitoring and enforcement capabilities (Romania) Support “Clean Coal” initiatives (China) Ensure adequate provision for mine closure and post-closure environmental monitoring (Romania) Help clean up past environmental legacy (Zambia). World Bank Mining ActivitiesMacro-economic and Fiscal: World Bank Mining Activities Macro-economic and Fiscal examples Eliminate operating subsidies to state owned companies. (Russia) Close loss making mines mines (Ukraine) Improve management of mining sector revenues including distribution of taxes to sub national agencies (Argentina) Help strengthen tax collection capabilities (PNG) World Bank Mining ActivitiesBusiness Environment/Governance: World Bank Mining Activities Business Environment/Governance examples Introduce modern mining legislature with sound licensing procedures and minimal discretionary powers of government (Argentina) Improve governance of state mining enterprises (Mongolia) Support privatization of state mining assets in a transparent, socially responsible, corruption-free way (Peru). o Leveraging our Knowledge Impacting US$25 billion Annual Global Mining Investment: Leveraging our Knowledge Impacting US$25 billion Annual Global Mining Investment Direct Impacts Country Level: TA for sector regulatory /institutional reform Industry Level: SECALS/SILS for reform and closure Project Level: IFC transactions (mobilizing investment in frontier situations and demonstrating “good practice”) Indirect Impacts Country Level: World Mine Minister Forum /Regional Groups Industry Level: Workshops/Partnerships with Industry Associations and work on codes of conduct /voluntary standards Project Level: Individual private sector companies follow WBG guidelines on a voluntary basis. Slide42: Key points (Section E): We can demonstrate important benefits from our projects relating to poverty alleviation, governance, environmental sustainability, macro/fiscal aspects 2. Examples are given here from Zambia, Mozambique, Poland, Romania and China – but many more exist in other projects Typically each project has several such attributes 4. Our support for private mining investments helps improve the social and environmental performance of such operations and helps provide “demonstration projects” Many private sector companies are starting to use World Bank/IFC social and environmental Guidelines on a voluntary basisSlide43: F. Linkages to Poverty AlleviationSlide44: Economic Opportunity Fiscal income and foreign exchange Employment generation Investment in local infrastructure Spin off developments Source of energy (coal mining) for economic growth Security If coal: Life-line for heating in severe climates Capability Training and education, with spill-over to community and suppliers (SME’s) Strengthening of local government capacity Investment in health /education with universal access Empowerment Public Consultation Capacity Building for civil society organizations Main Linkages of Mining to Poverty Alleviation Positive Linkages (from WB Poverty Sourcebook) Slide45: Economic Opportunity Corruption Macro-economy: Dutch disease effect on non-mining sectors · Poor governance of State mining enterprises · Reduced opportunities for non-mining sectors who compete for use of natural resources and infrastructure Capability Health risks “culture of dependency” Security Environmental and social risks, and related health impacts ·Threats to indigenous’ peoples’ land ownership and use Work-related health risks · Income security of non-miners at risk · Sudden end of economic opportunities and employment in the context of mine closure · Risks to political stability/peace Empowerment · Local communities often lack information and participation in key decision making processes Main Linkages of Mining to Poverty Alleviation Negative Linkages (from WB Poverty Sourcebook) Slide46: Key points (Section F): We are using these linkages (economic opportunity, capability, security and Empowerment) in designing our projectsSlide47: G. Safeguard PoliciesMain Thrust – Proactively Identifying and Managing Environmental and Social Risks : Main Thrust – Proactively Identifying and Managing Environmental and Social Risks Proactive strategy, anchored in “precautionary principle”, using environmental and social assessment to: Identify and anticipate risks --- consultation ensures EA and SA addresses issues of concern to stakeholders develop processes for including stakeholders in plan/program design to address risks and to ensure benefits to local communities agree implementation mechanisms, responsibilities and funding arrangements to minimize and mitigate risks monitor implementation through environmental management systems and make corrections as neededWorld Bank Policies and Guidelines: Legal Policies Disputed Areas International Waterways Environmental and Rural Policies Environmental Assessment Natural Habitats Forestry Pest Management Safety of Dams Social Policies Involuntary Resettlement Indigenous Peoples Cultural Property Guidelines Pollution Prevention and Abatement Handbook Occupational Health and Safety Guidelines Environmental Assessment Sourcebook (and updates) WB Participation Sourcebook (1996) World Bank Policies and Guidelines Environmental Assessment, Consultation and DisclosureObjectives of Safeguard Policies: Objectives of Safeguard Policies OP 4.01 Environmental Assessment: ensure that projects proposed for Bank financing are environmentally sound and sustainable inform decision makers of the nature of environmental risks (e.g. provisions to ensure compliance and prevent likely non-compliance) OP 4.36 Forestry: prevent encroachment upon significant natural forest areas; support local communities’ traditional use of forests; not support logging in tropical forest. Slide51: OD 4.12 Involuntary Resettlement: avoid or minimize involuntary resettlement and related disruption and, where necessary, to resettle people in a manner that provides them with sufficient resources and opportunities to share in project benefits. OP4.11 Cultural Property: cultural property is identified and protected national laws governing the protection of cultural property are complied with capacity to identify and protect cultural property is enhancedSlide52: OD 4.20 Indigenous peoples: are afforded full respect for their dignity, human rights and cultural uniqueness in the development process do not suffer adverse effects receive culturally-compatible social and economic benefits benefit from provision of informed participation in the project OP 4.37 Safety of dams: ensure due consideration is given to the safety of dams1 in projects involving construction of new dams, or that may be affected by the safety or performance of an existing dam or dams under construction 1Dams include hydropower projects, water supply projects, irrigation projects, mining (tailings dams) projects etc.Slide53: OP 4.04 Natural Habitats: ensure due consideration is given to the conservation of natural habitats safeguard their biodiversity ensure the sustainability of the services and products which natural habitats provide to human societySlide54: Key points (Section G): Our approach is evolving from “do no harm” to proactively identifying and managing both environmental and social risks 2. We have five environmental and rural safeguard policies, three social safeguard policies, two legal safeguard policies as well as four guideline/source books Oversight and review are provided by two independent bodies – the IFC Ombudsman or the World Bank Inspection Panel. Slide55: H. World Bank Activities to help reduce Greenhouse Gas EmissionsWorld Bank Group Activities to Help Reduce Greenhouse Gas Emmissions: World Bank Group Activities to Help Reduce Greenhouse Gas Emmissions With regard to the GHGs produced by developing countries we help by Mining – lowering emissions per unit of energy produced by encouraging production of higher quality coal where possible reducing methane release by coal mines (one of worst gases) Power plants Introducing clean coal burning technology increasing thermal efficiency substituting gas for coal in power generation supporting gas trade Carbon trading and offsets Carbon trading pilot and support for private sector trading But about 15% of the world’s population in industrialized countries produce more than two thirds of world GHGsSlide57: Key points (Section H): We are actively working to help reduce Greenhouse gas (GHG) emissions 2. But our clients, developing countries, account for less than one third of GHG emissions 3. Over two thirds of GHG emissions are generated by the 15% of the world’s population that live in industrialized countriesSlide58: I. The Extractive Industries Review (EIR)EIR - How it started: : EIR - How it started: James Wolfensohn at an NGO Briefing at Prague last September: "What I am prepared to do is to do with you in a way that I think we should explore what I have done on dams. …. take a look … on whether we've got it wrong or whether we've got it right …, and what it is we should do and what it is we shouldn't do. I would be perfectly happy to sit down with you and with your colleagues to try to see if there is some mechanism that we can stand back and take a look at the actualities of this extractive industry, the pros, the cons, the pluses, the minuses, and see if together we can come up with something that will either lead to an exclusion or to an inclusion on certain terms of what we are doing.” EIR - Roadmap and Timetable: Draft Report Consultation Report OED/OEG Review OED/OEG Report WBG Issues Paper September 2001 Other Stakeholders Issues Paper EIR - Roadmap and Timetable ECA LAC AFR ASIA Final Consultation Workshop June 2002 Baseline Workshop October 2001 Other forms of contributions from stakeholders Management Recommendations Slide61: J. The Mining Challenge SummaryThe Challenge of Mining We are working to better manage the environmental, social, economic and governance risks: The Challenge of Mining We are working to better manage the environmental, social, economic and governance risks Mining can have significant negative environmental and social impacts Mining can leave a negative legacy for future generations For small economies over dependence on mining can harm other sectors Large wealth creation can result in governance problems (misuse of funds, abuse of power)The Challenge of MiningIf managed well mining can bring significant benefits : The Challenge of Mining If managed well mining can bring significant benefits Mankind needs minerals and energy and demand will continue to grow Many developing countries are well endowed with mineral resources and can help meet the demand Mining can make a positive contribution to economic development and poverty reduction Mining contributes significantly to the economies of many developing countries (as well as several industrialized countries)The Challenge of MiningMining can be an engine of economic growth : The Challenge of Mining Mining can be an engine of economic growth Countries with larger mining sectors USA; Australia; Canada; South Africa; China; India; Brazil Countries with smaller mining sectors LAC – Chile, Peru, Mexico, Bolivia Africa – Botswana, Ghana, Guinea, Mauritania, Jordan Europe – Poland, Romania, Russia, Kazakstan, Uzbekistan Asia – Indonesia, Philippines, Papua New Guinea, Mongolia Counties with emerging mining sectors Argentina, Mali, Tanzania, Uganda, EcuadorThe Challenge of MiningMining contributes significantly to many developing counties: The Challenge of Mining Mining contributes significantly to many developing counties Based on case studies in nine emerging markets Positive impacts of MiningSlide66: Key points (Section J): We are working to better manage the environmental, social, economic and governance risks associated with mining 2. When managed well mining can bring significant benefits and can be an engine of economic growth Slide67: END You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.