World Bank Possibilities of Support to ACP Countries

8/2/2019 World Bank Possibilities of Support to ACP Countries

1/22

Possibilities of Support by theWorld Bank to the Mining

Sector of the ACP Countries

Ministerial Meeting on Mineral ResourcesBrusselsDecember 13-15, 2010

Paulo De SaSector ManagerOil, Gas and Mining Policy DivisionWorld Bank


2/22

Outline of Presentation

Recent Developments in the Extractive Industries

Role of Emerging Players

Flexible Fiscal Regimes

Sustaining Community Benefits

Beyond the Resource Curse

World Bank Response

World Bank Group Oil, Gas and Mining Policy Division

EITI++/Value Chain approach Lending, Non-lending, and Global Partnerships


3/22

Part I: Recent Developments inthe Extractive Industries

Commodity prices have gone through the full cycle, butthe mid-term fundamentals remain the same:

Governments remain key players in fostering enablingenvironment for sustainable development of the sector

Companies struggle to have access to new resources,but continue to value stable and transparent countries

Good governance on expenditures is key to maximizecontribution to the economy


4/22

Whats New?

Demand from emerging markets (BRICs) is expected toremain strong over the medium term

Major consuming countries are setting-up security ofsupply policies

BRIC companies are increasingly investing in extractive

industries abroad and changing the traditional playing field Despite the rise in fiscal revenues, many governments

believe profits werent shared equitably in high price period

Avoiding local conflict, particularly around mining areas, willplay an increasingly important role in success of extractive

industries ventures Climate change agenda puts spotlight on use of fossil fuels


5/22

Role of Emerging Players

Important transfer of power from traditional westerncompanies to firms headquartered in BRICs (mining) andnational oil companies (petroleum)

Non-traditional companies have different financial models and

perceptions of risk than western firms; former often investwhere latter are reluctant (under new models)

In mining, financial crisis has opened new, low-costinvestment opportunities in Australia and Canada, butinvestment flows to Africa remain strong

In the long-run, the perception of risk and profitability of thetwo groups should converge; similarly for corporate behaviorwith respect to the environment and social responsibility


6/22

Governments Want a BetterUpside from Investments

Taxation: predictable flexibility

Mining sector saw negotiation of new frameworks to share

revenues during good times, e.g., resource rent taxes (Chile),windfall profits taxes (Mongolia), sliding scale royalties(Ghana, Afghanistan) and renegotiation of unfair contracts


7/22

Sustaining Community Benefits

Countries calling for more local economic development:more jobs, increased local content, more integratedinfrastructure development

Vibrant communities, even after mine closure

Development of alternative livelihoods, diversification ofeconomy;

Development of multipurpose infrastructure

Transferrable skills development

Capacity building for local governance, environmentalmanagement

Distribution of revenues: how much back to the community?

Some new players lack experience in dealing with host

communities in developing countries


8/22

Avoiding the Resource Curse

Goes beyond sector policy:

National strategy and integrated policies Role of extractive industries in national development strategy National level political institutions - integrated approach

Sector policy and governance

Prudent macroeconomic policies Policies to promote macro stability, within well-defined

medium-term expenditure framework National investment plans - infrastructure, social investments Development funds - all revenues/expenditures through

Treasury/budget No stand alone entity with discretionary spending power


9/22

Part II: World Bank Response

World Bank Group Role: Oil, Gas andMining Policy Division

EITI++/Value Chain Approach

Lending and Non-lending Activities

Global Programs and Partnerships


10/22

World Bank Group RoleExtractive Industries Review

Strengthen governance and transparency

Ensure that extractive industry benefits reach poorpeople

Mitigate environmental and social risks

Protect the rights of people affected by extractiveindustry investments


11/22

Achieving Better Governance

Satisfactory legal, fiscal, and regulatory frameworks

Capacity building to put in place modern licensing systemsand institutional frameworks, institutional capabilities toensure investor compliance with applicable laws and

regulations, and to protect investor contractual rights Transparent and efficient revenue collection capabilities to

maximize the generation of revenues over time

Adequate revenue management for sustainablesocioeconomic development

Benefit sharing agreements with regions/communities Satisfactory environmental and social protection framework

and procedures to make local communities benefit fromoperations


12/22

Mitigating Social andEnvironmental Risks

Environmental, health, and safety regulations Environmental Impact Assessments (incl. baseline data),

Environmental Management Plans, Mine Closure and OilDecommission Plans

Social Impact Assessments, including identification of affectedcommunities members and vulnerable groups (gender, youth) Generating community benefits by broadening economic

opportunities (linkages): Regional Development Plans,Community Consultation Frameworks, CommunityDevelopment Plans

Enhanced Oversight, Monitoring and inspection capacityAssistance in prudent local government use of revenues Introduction of more environmentally friendly artisanal mining

techniques


13/22

EITI++: Sound Governancealong the Value Chain

+ EITI +

Access to

resources

Monitoring

of EI

operations

Collection

of taxes +

royalties

Revenue

management

+ allocation

Sustainable

utilization of

resources

Inclusive &

Sustainable

Development

Non-

renewable

resources

Extractive Industries Value Chain

EITI++, or the value chain approach, is a comprehensive,integrated approach to the management of extractiveindustry resources, to help resource-rich countries toleverage natural resource wealth for sustainable development


14/22

Supporting the Value Chain:Lending Operations

The Oil, Gas and Mining Policy Unit delivers assistanceinter aliavia lending TA operations - the Unit currentlymanages 13 projects, and is working with several countries onpreparation of others

Oil, Gas and Mining Policy Unit Lending Operations (incl. Supplemental/Additional Financing)

Actual Plan

Zambia Copperbelt (FY03)Madagascar Mining TA (FY03)Mauritania Mining TA (FY04Uganda Mining TA (FY04)Nigeria Mining TA (FY05)

Afghanistan Nat. Resources (FY06)Mauritania Suppl. for Petrol (FY07)

Madagascar Suppl. (FY07)Mongolia Mining TA (FY08)PNG Mining TA II(FY08)Uganda AF (FY09)Tanzania Mining TA (FY09)

Afghanistan AF (FY09)

Pakistan Thar Coal to PowerBalochistan Mining TALao Hydro Power for MiningMongolia Mining TA IIDRC Mining TA

Africa Mineral Governance(regional project) -possible countries to beincluded:

-Burkina Faso-Cote dIvoire-Guinea

-Sierra Leone

The Unit supports other World Bank teams on oil, gas, and miningcomponents of lending operations: Botswana, Ghana, Kosovo, Mali,Philippines, Rep. of Congo, Romania, and Sao Tome & Principe


15/22

Supporting the Value Chain:Technical Advisory Assistance

In addition to lending operations, the Unit provides technicaladvisory assistance to many countries on issues along thevalue chain, for instance most recently in:

Mining: Angola, Albania, Armenia, CAR, Cameroon,Ethiopia, India, Niger, Solomon Islands, Philippines, SaudiArabia, Yemen


16/22

Analytical Work/Publications

The Unit also has an active program of knowledge

management, including most recently in the following areas:

Mining: Mining Together, Mining Cadastres, Financial Surety forMine Closure, West and Central Africa Aluminum Study,Experience with Mining Foundations, Local Economic

Development, Country-specific Mining Sector Reviews

Global: EITI++/Value Chain Approach, Decommissioning of Oil,Gas and Mining Operations, Petroleum and Mining FiscalRegimes, Engagement with Civil Society in Extractive Industries


17/22

Global Programs and Partnerships

The World Bank Oil, Gas and Mining Policy Unit manages 3Global Programs and Partnerships for the mining sector:

Extractive Industries Transparency Initiative (EITI)

Extractive Industries Technical Advisory Facility (EI-TAF)

Communities and Small-scale Mining Partnership (CASM)


18/22

Extractive IndustriesTransparency Initiative (EITI)

A small part of the value chain, EITI promotes extractiveindustries revenue transparency

Reconciliation and publication of payments and receipts

Tripartite approach government, industry, and civilsociety; international Board/Secretariat

Well-established as a global standard

30 countries implementing EITI (29 candidate, 1compliant)

World Bank assisting close to 50 countries (includes pre-candidates)

Focus on validation in coming months

World Bank administers multi-donor trust fund

10+ donors, approximately US$25 million in contributions

Grants to 19 countries, and growing


19/22

EI-TAF: Rapid-response

Advisory Services

Address demand for rapid-response advisory services. The typesof support to be provided include:

Negotiations: Advisory assistance on negotiations on atransaction related to the development of a specific projectwith a selected company (inc. preparatory work, ancillaryinfrastructure and E&S management)

Allocating Resources:Assistance in structuring publicofferings of extractive industry resources, including

competitive tender, licensing/bidding rounds, or auction

Capacity Building: Assistance in preparation fordevelopment of EI resources (legal/regulatory framework),aspects of EI revenue management, determining benefits

sharing mechanisms at the national and local levels, etc.


20/22

CASMs objective is to reduce poverty by improving theenvironmental, social, and economic performance of artisanaland small-scale mining in developing countries

Is a network, coordination, and knowledge clearing housefacility

Chaired by DfID, with Secretariat provided by World Bank Oil,

Gas and Mining Policy Unit 9th Annual CASM Conference September 8-14, 2009,

Maputo, Mozambique

Communities and Small-scale

Mining Partnership (CASM)


21/22

IBRDInternational Bank forReconstruction and

Development

IDAInternationalDevelopmentAssociation

IFCInternational FinanceCorporation

MIGAMultilateral

Investment and

Guarantee Agency

Est. 1945 Est. 1960 Est. 1956 Est. 1988

To promoteinstitutional, legal

and regulatoryreform

Governments ofpoorest countrieswith per capitaincome of less than$1,025

- Technicalassistance- Interest FreeLoans- Policy Advice

To promote private

sector development

Private companiesin member countries

- Equity/Quasi-Equity- Long-term Loans- Risk Management- Advisory Services

To reduce political

investment risk

Foreign investors inmember countries

- Political RiskInsurance

Role:

Clients:

Products:

To promoteinstitutional, legaland regulatoryreform

Governments withper capita incomebetween $1,025 and

$6,055.-Technicalassistance- Loans- Policy Advice

World Bank Group

Shared Mission: To Promote Economic Development and Reduce Poverty


22/22

Thank You

Questions?

World Bank Possibilities of Support to ACP Countries

Documents

Transcript of World Bank Possibilities of Support to ACP Countries