Ministry of Mining and Geology

REPUBLIC OF GUINEA

MINISTRY OF MINING AND GEOLOGY

MINING SECTOR GOVERNANCE SUPPORT PROJECT

July 2012

I.BACKGROUND AND STRATEGIC CONTEXT

1. Country Context

Guinea possesses rich farmlands, a productive climate with abundant rainfall, a major river system with ample fish stock, a coastal network of 320 km, and major deposits of bauxite and iron ore. Notwithstanding these natural resource assets, the country remains one of the poorest and least developed in the world, ranked 156th of 169 countries by the United Nations Human Development Index. Just 2 percent of the rural population has access to electricity. Furthermore, poverty incidence is on the increase, rising from 49.2 percent in 2002 to 58 percent in 2010. Also, economic growth has slowed considerably since 2008, and is now negative per capita.

1. Sector Context
   

Mining is a key part of the Guinean economy. The mining industry currently accounts for more than 80 percent of exports and provides 20 to 25 percent of government receipts and more than 10,000 direct jobs. In 2011, 90 percent of revenues came from two companies: Compagnie des Bauxites de Guinée (CBG) and Anglogold Ashanti. Export taxes on diamonds and infrastructure leasing also contribute to government receipts. Guinea is also home to sizable populations of artisanal and small-scale miners, mainly in the gold and diamond subsectors.

The Guinean subsoil holds the world’s largest bauxite and iron ore deposits, along with tremendous potential for the mining of gold, uranium, and diamonds. The large new mining projects planned by the Government, both in iron ore and in the alumina sectors, are expected to result in a greatly improved outlook for growth in GDP over the next five years.

In this promising context, it bears mention that Guinea faces great challenges in translating its mining capital into sustainable development, in terms of the legal and institutional framework as well as appropriate stakeholder capacities for improved sector management and supervision. These challenges, listed below, span the full range of mining subsectors and encompass social and environmental impacts; collection, management, and distribution of revenues; investment of these revenues to the benefit of mining communities and the country as a whole. More specifically, these mainly structural challenges involve:

•Access to resources - Contracts and land registry

•Access to resources - Government property

•Access to resources – Infrastructure

•Regulations in effect and monitoring of operations

•Recovery of taxes and ITIE

•Revenue breakdown and management

•Financial management

•Durable investments

•Cross-cutting issues – Biodiversity and artisanal and small-scale mining

The mining and development of mineral resources could have positive repercussions for the economy and the entire Guinean population, but could also have negative effects on the country’s socioeconomic and environmental situation. There is an urgent need to assess these impacts in order to optimize the environmental and social benefits that could flow from implementation of these investments in the mining sector, especially regarding present and future environmental protection and the lasting effects of development involving the mining of natural resources and the equilibrium of ecosystems.

All these constraints and constraints effectively establish the scope of debate for identifying and prioritizing gaps to be addressed and actions to be taken in order to (i) overcome the challenges facing the mining industry in Guinea and (ii) make the mining sector part of the country’s sustainable economic and social development.

II.PROJECT DESCRIPTION

The Project Development Objective (PDO) aims tostrengthen institutional capacityandgovernance systemsofkey institutions involvedin managing themining sectorin Guinea.

Project Components

To achievethe PDO, the project will support short and medium-term reform initiatives on capacity developmentto improve efficiencyand accountabilityof institutions involved inthe management ofmining sector. In the short tomedium term, the project willfacilitate accessto resourcesto enablethe achievement of atleast onelarge mine/infrastructure project. Theproject will also supportthe developmentof a framework forthe promotion ofregional and local developmentin mining areasandincreases the demand and promotion forgood governance(DFGG). This would be donethrough fourmain components, namely:

Component A:Facilitating access tomineral resources, with the sub-components:

•A1. Shared statefacilitationof mining developmentand infrastructure;

•A.2. Reforming Mining Sectorregulations.

ComponentB.Institutional strengtheningfor theMinerals Management

•B1. Institutional strengthening ofMMG;

•B2. Institutional strengtheningat the Ministryof Environment(MOE);

•B3. Institutional strengthening of the Ministry of Finance and Economy (MOFE)regarding the collectionoftaxesandmineral revenues, and

•B4. Institutional strengthening at the ministries inchargeof Transport(MT).

Component C:Promote economic developmentin mining areasand the demand forgood governance(DFGG)

•C1. Public Private Partnerships(PPP) led byregional and local development;

•C2. Strengthening demandforgood governance(DFGG)

Component D:Project Management.

III – OBJECTIVES of the SESA

The general objectives of the Strategic Environmental and Social Assessment (SESA) are to:

1. Identify and boost attention to environmental and social priorities related to mining sector development;
2. Improve environmental and social management tools;
3. Improve social accountability by making the mining process more transparent;
4. Build sector capacities in regard to managing environmental and social risks linked to mining sector development.

The SESA is a way to initiate the process of mining sector reform through an approach that combines analytical work and a dialogue with sector stakeholders. It covers environmental and social issues directly related to mining sector development, as well as broader, indirect environmental and social implications resulting from the development of urban human settlements and the infrastructure needed for mining sector growth.

To achieve these ends, the study will be divided into three major stages:

(i)Identification of environmental and social priorities

(ii)Assessment of institutional capacities and economic policies for sector management

(iii)Analysis of risks and formulation of recommendations

The overall objective of the strategic environmental and social assessment (SESA) is to inform the environmental and social assessment of current and future investments as well as their cumulative effects. The SESA has a national scope and focuses on the old or inactive, current or future mining zones, where the need for appropriate environmental and social management is markedly felt.

The specific objective of the SESA study is to assess the environmental and social impacts of current and future mining investments in the country and to propose measures to mitigate, avoid, or compensate for the negative environmental and social impacts. These measures are expected to encompass technical, social, institutional, legal and regulatory aspects. The SESA will also identify the conditions for monitoring and implementation of recommended measures. The SESA will follow the national and the World Bank‘s norms and standards of sector environmental assessment.

III. Organization of the work

The SESA will be conducted under the technical support and supervision of the Ministry of the Environment (MOE) and the administrative supervision of the Project Preparation/Implementation Unit (UEP) at the Ministry of Mining and Geology. More specifically, the Project Management Team at the Division of Mines of the Ministry of Mines and Geology will constitute the contractual interlocutor of the Consultant. Support and Supervision of the study implementation will be assured by the Mining Environmental Unit (MEU), or equivalent, at the MOMG, the Directorate-General of Environment and Pollution and Nuisances Control, or equivalent.

Additionally, a Steering Committee will be charged with validating the consultant’s initial work plan, as well as the progress reports and the various deliverables. UEP may, if necessary, call on an independent panel of experts to help monitor, review, and validate the SESA prior to its presentation. It will also set in place a mechanism for ongoing consultation with public and private sector companies, NGOs, trade unions, universities, and central, provincial, and local agencies, along with community-based organizations, so as to enable the Consultant to benefit from their support, obtain the information needed to conduct the SESA, as well as bring about complete stakeholder involvement in and ownership of throughout its implementation. This ongoing mechanism could take the form of an Advisory Committee with representatives from the different stakeholder categories/groups. In addition, the SESA Advisory Committee will participate in the partial and final validation of the SESA findings.

Before the beginning of the study, the Client will set up a Committee made up of representatives of key organizations (8 people to the maximum representing inter alia the Ministry of Environment, Ministry of Mining and Geology, other interested public institutions, and NGOs active in the environmental protection in Guinea) to ensure proper supervision of the work, and to support it implementation. This committee will support the Consultant throughout the mandate within the scope of various activities of the SESA: revision of the work plan, facilitation of information and data collection, organization of consultations, validation of results and their analysis etc. The appointment of such a committee will contribute on the one hand to develop the relationships between these organizations and on the other hand to develop their capacity of managing environmental issues.

The preliminary draft of SESAwill be submitted for review and analysis to the stakeholders representing the civil society, environmental and development NGOs, private and public sector companies of the mining sector and government authorities of other concerned sectors. The comments and recommendations received will be integrated in the final report.

The study area covers the entire country of Guinea. However based on the current knowledge and information on the development of mining activities the most prospective areas requiring more focus will be targeted as will the areas of historical mining activities (with current and past environmental contamination). The consultant will finance within the scope of their contract the transportation fees and the field allowances of two counterparts from the MOE and MOMG, as well other resources, as needed, throughout the study. The financing of these expenses shall be included in the financial proposal of the bidder with the mention financing of counterpart ‘field work expenditures.” Allowances will be decided during the negotiation of the contract and inserted in the contract.

International consulting firms are thereby invited to carry out the strategic environmental and social assessment of Guinea‘s mining sector. The services will be carried out by missions of short duration of international experts in Guinea. However in order to optimize the transfer of knowledge and the training of counterparts, the important stages of the interpretation of data, and the formulation of conclusions and recommendations will have to be carried out in Guinea.

IV. Conditions for the preparation of the SESA

The SESA will be carried out according to international standards in general and World Bank procedures and guidelines, in particular, accepted and applied by public and private sectors for environmental management in the mining sector. The SESA will also integrate the concepts of environmental protection included in Guinea‘s environmental legislation, its relevant ministerial decrees, the mining and the water codes, among others.

V. Scope of services

The scope of services encompasses the following main activities:

a. Confirmation of the work plan.

b. Description of the current state of the environment in the mining sector.

c. Evaluation of the mining policy and the legal, regulatory and institutional framework pertaining to environmental protection in Guinea.

d. Evaluation of the social and environmental conditions of the mining sector and identification of sensitive zones in which mining activities should be limited.

e. Definition of the strategic priorities for environmental protection or remediation actions regarding environmental liability; and preparation of the Terms of Reference for the studies or works to be carried in the future.

f. Training of counterparts.

g. Development of a plan for public consultation on the study.

These activities are described as follows:

1. Work plan confirmation

The Consultant shall present a confirmation of the beginning of SESA, with the main characteristics of the study, as well as those of the work plan. This will include the areas and topics, which will be the focus of more specific analysis. The same will be required for the precise methods of interventions in particular with regard to the participation of affected groups, the consultation process etc.

The SESA final work plan will have to be approved by the Client before the execution of services. During the process of confirmation, the shortcomings of the bidder‘s proposal will be corrected or if relevant the scope of work adjusted in accordance with these changes.

1. Description of the current state of the environment in mining sector

During this activity the consultant shall collect, compile, evaluate and present all baseline data concerning the environmental characteristics related to the mining sector in Guinea. This includes:

Physical environment - basic geology, existing and potential mineral resources, topography, soils, climate and an outline of recent meteorology, the extent and hydrogeological conditions of the nape, current sources of air, water, soil pollution, the nature of contaminants and others.

Biological environment - flora, fauna, threatened species, and the sensitive habitats potentially affected by mining development. Emphasis shall be put on protected or currently classified zones, spaces of commercial interest and human disease generating vectors, animals and others.

The socio-economic and cultural environment - the population and the ethnic characteristics, demography, Community structure, land use as well as the traditional and non-traditional rights, the benefits resulting from the activity of ongoing development projects, the community infrastructure and cultural properties (sacred forests or hills), archaeological goods and remains, etc.

The compilation of existing data will primarily serve as basis for the assessments described within the scope of this work. Short field visits could also be done if necessary in the case of significant zones for which data would not be available.

c.Evaluation of the mining policy and of the legal, regulatory and institutional framework of the environmental protection in Guinea.

The consultant will evaluate the regulatory and institutional framework which governs mining sector activities within the context of the government policies for socio-economic and environmental development. The consultant will identify those which concern sector policies from those which refer to the national or multi-sector development as well as the role played by sector policies in the use of natural resources, water and lands.

This activity will be carried out mainly through the evaluation and updating of previous studies of the same scope, as is the case for example for the documents prepared within the framework of the mining and environmental project sponsored by the World Bank – the PRECAGEME.

d. Assessment of social and environmental conditions of the mining sector and identification of sensitive zones within which mining activities should be limited.

Within the scope of this activity, the consultant will proceed to the determination of past, current and potential impacts of the mining policy led by the Government of Guinea. The consultant shall identify, qualify and quantify, in physical as well as economic terms, if possible, the impacts whether positive or negative that could be generated by the Government mining policy. It will be important to distinguish direct and indirect impacts on the one hand and immediate and future impacts on the other. The assessment shall keep a sub-regional strategic character, especially taking into account the cumulative effects of the various mining activities within the same area.

The consultant will ascertain the position of the mining sector within the government environmental policy. This positioning of the mining sector will cover past, current or planned industrial exploitations of primary and secondary deposits and artisanal exploitations of mineral resources. Typically, such an assessment of the environmental liabilities, the flows of contamination and the potential impacts in the future of the development of the mining sector will cover inter alia the following aspects:

The exhaustion of scarce or non-renewable natural resources: land use, exploitation of mineral resources, use of water resources (surface or underground), etc.

The degradation of landscapes: open-cast mines, dredging, disposal of wastes and tailings of treatment plant, etc.

Specific impacts resulting from mining operations such as the use and transportation of explosives.

Contamination of surface or underground waters and soils by the drainage of acid water, the discharge of treatment water, the suspended particles and the lixiviation of the old tailings and deposition of mineral processing discharges or other sources related to mining.

 Problems relating to the storage, use and elimination of toxic or hazardous substances.

The emission of dust and particles containing heavy metals which may contaminate water and soils, gas and other emanations from the processes of ore processing or smelters and refineries.

Safety and industrial accidents including in the case of artisanal mining; other health impacts resulting from mining activities.

Landslides or depressions engendered by mining

The closing/decommissioning and rehabilitation of mining sites or quarries.

The consultant will present a qualitative and quantitative estimate of flows of contamination of current mining and the environmental liabilities of the historical exploitation within the principal mining regions of the country. The storage of tailings and wastes produced by mining shall be evaluated in relation to their possible impacts on public health, and strategic sanitation measures shall be recommended for the rehabilitation of old mining sites.

In the context of the promotion and development of the mining sector, the following aspects, among others, shall be examined: