Afghanistan MHS-SIA

Sierra Leone

Mining Technical Assistance Project

Environmental and Social Management Framework

Terms of Reference

September 24, 2009

A.  Introduction

This document provides information on the background and objectives of a proposed Mineral Sector Technical Assistance program (MTAP), and describes environmental and social issues that will be dealt with in the project in order ensure that risks are mitigated and that social and environmental considerations for the mineral sector is adequately and responsibly managed within the project. This is done in form of terms of reference for an environmental and social management framework to be prepared as part of the technical assistance project.

B.  Background

Sierra Leone, a leading producer of diamonds, has a rich endowment of precious, base and ferrous metals, rutile and other industrial minerals. In the 1960s and 1970s the mineral sector provided the country with over 70% of foreign exchange earnings, 20% of Gross Domestic Product (GDP) and 15% of fiscal revenue. During the civil war (1991-2001), mining operations came to a standstill. Large scale mining ceased, with the destruction of plant equipment at the rutile, bauxite and iron mines, and ‘Conflict Diamonds’ came to characterize the systemic breakdown of the sector.

After the end of the war in January 2002, the Government initiated actions to reform its mineral sector. The diamond mining sector received special attention given its role in Sierra Leone’s conflict, and, as a result, the United Nations embargo on export of rough diamonds out of Sierra Leone was lifted in June 2003; subsequently, diamond exports increased ($126.65 million in 2004 – an increase of 67 per cent from 2003), with commencement of industrial-scale mining exports.

Mining contribution to GDP increased from less than 1% in 2005-06 to projected 17% in 2007[1]. Sector revenues remain modest at about $10.5 million per year (includes royalties, taxes, fees, rents) with limited production volumes by a few existing mining operations, and are mostly comprised of various types of license fees. Collection of royalties and income taxes, which comprise the largest share of revenues from the industry, is projected to take place in about 5-10 year time-frame when more mines move into production and the older mines regain their up-front investments. It is estimated that with comprehensive reforms value of mining exports can rise to $1.2 billion in year 2020, adding 1.2% additional annual GDP growth through 2020. Revenues from the sector are projected to increase to at least $500 million per annum. At the same time, if no new investment takes place in the mining sector, revenues from mining will decline 70% within 10 years.[2]

Today, there are four large scale mining projects in Sierra Leone– diamond operations by Koidu Holdings and African Minerals, formerly known as Sierra Leone Diamond Corporation; furthermore a rutile operation lead by Sierra Rutile Limited resumed its operations in 2006 with support from the European Union credit[3], there is also a bauxite operation lead by Sierra Mineral Limited[4]. A number of industrial-scale exploration licenses are active, with some preparing for mining operations, and several active explorations for bauxites. It is estimated that mining and quarrying still provide livelihood for up to 300,000 people, and employ about 14% of the total labor force, directly or indirectly.

Mining operations on an international scale are modest in size. Conflicts around mining communities and poor reputation of Sierra Leone’s mining sector both domestically and internationally persist and continue to undermine the reform efforts; mining sector that so far has not been able to attract and retain any significant number of quality investments.

C. Project Description for the Mineral Sector Technical Assistance Project

The Mineral Sector Technical Assistance Project (MTAP) includes three main components. The World Bank will finance 100% of the project cost.

Component A. Overarching Legal/Regulatory Frameworks for Mineral Sector

The objective of this component is to improve regulation of the minerals sector. This component will finance preparation and related consultations of the following technical regulations:

(i)  Developing environmental/ social regulations, including setting up requirements and mechanisms for monitoring EIAs and SIAs and mine closure regulations and requirements.

(ii)  The project will fund preparation of the Environment and Social Management Framework (ESMF) for mineral sector administration, which will provide the government officials managing minerals sector with:

(a) a set of procedures for environmental and social assessments;

(b) an environmental and social screening process/ guidance that will enable the government to identify, assess and mitigate potential negative environmental and social impacts of downstream projects at the planning stage.

(c) Sample ToR’s for Environmental Impact Assessments (EIAs), Social Impact Assessments (SIAs), Resettlement Action Plans (RAPs) and Mine Closure Plans (MCPs) for future mining development to be used by the investors for specific projects/areas, and the proper response to these issues through management plans.

(iii) Finalizing a Resettlement Policy Framework for Mining sector based on an initial draft prepared in August 2008. This will include updating the document as needed, carrying out consultations and steps to have it adopted by the Government

(iv) Developing Underground mining regulations. Although there are no underground mining operations in Sierra Leone at this point of time, there is a need to develop such regulations for future development.

(v) Developing Trading Licenses regulations (for diamond trading). The Trading Bill (focusing on compliance with Kimberley process) has been drafted under DFID project and submitted for legislative processing in mid- 2009 (currently undergoing review and consultation before adoption). Trading license regulations will be developed to support the proposed new Law and operationalize its implementation.

Component B. Institutional Strengthening

The objective of this component is to ensure good sector governance guided by the principles of transparent non-discretionary and efficient minerals administration. This component will implement the following activities:

(i) Support for National Minerals Agency:

·  Technical Assistance to Geological Survey Department (GSD) to evaluate reports and plans and manage geodata

·  Geochemical surveys for mapping and resource assessment in selected areas

·  Building GoSL capacity to run a modern mining agency by providing NMA equipment:

·  Vehicles, computes, building refurbishings

·  Provide capacity building towards investment promotion by:

o  training officials to prepare for events focused on mining investment promotion

o  international events for exploration and mining

(ii) Social employment and rehabilitation program (through MMR/ GSD). The activities will include:

Geochemical surveying of pilot 3-5 candidate areas requiring assessment before decision to rehabilitate the land,

Associated technical studies of candidate areas

Identification of alternative livelihood options

(iii) Build capacity of Ministry of Mineral Resources to manage donor-funded projects, including building skills and tools for procurement, financial management and project management and monitoring

Component C. Project Management

This component will finance activities required to implement the project activities in accordance with the Bank guidelines. It will assist in ensuring proper implementation and coordination of the Project activities among the government stakeholders and donors. To this end, the Project Support Team (PST) has been established within the MMR and is staffed by the Ministry’s employees.

PPF refinancing category

The World Bank will also finance the project preparation cost. This was done though a Project Preparation Facility (PPF) financing (US$0.4 million). The PPF supported preparation of safeguards documents, procurement of IT and office equipment for the PST and preparatory steps for project implementation, including preparation of the Project Operations Manual, setting up financial management system and commencing procurement.

D. Environmental and Social Safeguards

This technical assistance project has been classified as Category B, and according to World Bank Safeguards Policies (OP/BP 4.01) an environmental assessment is required. However, this technical assistance project will not directly have environmental impact. But, it is possible that future mining project following regulations being developed by this project might have environmental impact. Because these projects are not currently know, it is impossible to foresee which areas of what people might be impacted.

In order to mitigate these risks, the project will prepare an environmental and social management framework as part of the project, and the content is described below.

E. Tasks for Development of Environmental and Social Management Framework

The Environmental and Social Management Framework (ESMF) aims to provide the government officials managing minerals sector with (i) a set of procedures for environmental and social assessments; and (ii) an environmental and social screening process/ guidance that will enable the government to identify, assess and mitigate potential negative environmental and social impacts of downstream mining projects at the planning stage.

This will include the following tasks:

·  Review of Existing, Procedures and Institutional Capabilities for EIA and associated permitting processes. In collaboration with the preparatory legal work, specific thresholds and acceptable levels of pollutants will be identified for each key pollutant, with recommended criteria values/levels, in line with the national and international standards (such as International Standards Organization, US Environmental Protection Agency, or Organization for Economic Co-operation and Development). A penalty regime will be proposed in case the emissions/discharges exceed these limits, based upon the international best practice/available technologies and where necessary, recommendations provided on new pollutant limits. Mechanisms for proper compliance and enforcement and will be proposed.

·  Preparation of Environmental and Social Assessment Procedures for mining sector. The procedures should clearly distinguish actors and roles in the procedure, linkage to permitting procedures, scoping and reporting requirements, timing and maximum duration and validity of approval, consultation requirements and appeal procedures.

·  Preparation of Environmental and Social Screening Procedures to allow government to properly classify the downstream projects, and apply relevant requirements - ranging from the application of simple mitigation measures as outlined in the environmental checklist, to the preparation of a separate environmental assessment (EA), social assessment (SA) and resettlement action plan (RAP) according to Sierra Leone’s requirements. In addition, special focus on biodiversity resources, and in particular bush meat hunting, and overharvesting of endangered natural resources, and opening of previously closed natural ecosystems, should be dealt with according to international standards, such as IUCN Red list of Threatened Species, and best practice to reduce impact of extractive industries on biodiversity.

·  Preparation of sample/templates of Terms of Reference for EIAs, SIAs, and Mine Closure Plans. The ToRs will be annexed to the ESMF; the ToRs will be used by future project sponsors in preparation of their project specific assessments and plans.

·  Finalizing Resettlement Policy Framework (RPF) for Mining Sector and Preparation of sample/templates of Resettlement Action Plans (RAPs). The Government prepared in August 2008 a draft Resettlement Policy Framework for mineral sector. The draft RPF will be taken as a starting point in this task. The RPF will identify key mitigation measures of any land acquisition and economic and physical resettlement impacts. The Resettlement Policy Framework will establish resettlement objectives and principals, organizational arrangements, and funding mechanisms for any resettlement operation as part of project activities. This RPF will be prepared since the extent and location of resettlements are not known at this time. The RPF will include guidance and detailed Terms of Reference for the Resettlement Action Plans (RAP) that will need to be prepared by future investors at the beginning of any industrial mining operation.

·  Capacity Building for Implementation of Recommendations of the ESMF. Upon preparation of the ESMF, the consultant shall undertake a workshop introducing and explaining ESMF to a broad and relevant range of stakeholders. Special attention will be paid to explaining the steps towards implementing the recommendations at each level and building capacity of the stakeholders to manage these activities.

·  Consultation, Disclosure and dissemination. The ESMF (with attached sample Terms of Reference for EIAs, SIAs, and Mine Closure Plans) will be prepared following consultations with stakeholder groups at different stages of preparation, including i) at draft ESMF Terms of Reference Stage, ii) at draft report stage. Final ESMF will be disclosed at locations and by the means necessary to reach the stakeholders related to the project. Final products will be disseminated in print to key stakeholders, and also be published on a government website.


[1] Poverty Reduction Strategy Paper Completion Report, draft June 2008

[2] Adam Smith Institute estimates, draft October 2007

[3] European Union has provided a Euro 25 million credit to Sierra Rutile Limited to restart its operations. Repayments from the credit (interest payments are starting in mid- 2008) will be made to the Government of Sierra Leone and will be utilized for mineral sector development programs and growth strategies in mining areas.

[4] Sierra Rutile Ltd and Sierra Mineral Ltd both are a part of the Titanium Resources Group (TRG), Texas-based mining firm.