PROJECT APPRAISAL DOCUMENT ONA PROPOSED CREDIT IN THE AMOUNT OF 11.1 SDRIUS$ 15 MILLION EQUIVALENT TO THE FOR A

Transcription

1 Public Disclosure Authorized Document of The World Bank Report No MAU Public Disclosure Authorized Public Disclosure Authorized PROJECT APPRAISAL DOCUMENT ONA PROPOSED CREDIT IN THE AMOUNT OF 11.1 SDRIUS$ 15 MILLION EQUIVALENT TO THE ISLAMIC REPUBLIC OF MAURITANIA FOR A MINING SECTOR CAPACITY BUILDING PROJECT APRIL 20, 1999 Public Disclosure Authorized Mining and Industry Unit (EMTIM) Burkina Faso, Mali, Mauritania, Sao Tome & Principe (AFC15) Africa Region (AFR)

2 CURRENCY EQUIVALENTS (Exchange Rate Effective 03/04/99) Currency Unit = Ouguiya (UM) UM 1,000 = US$ US$ 1 = UM SDR 1 = US$ FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS CAS DCA DEAR DMG EIS EMS GIS ICR MIS MMI NGO OM1RG PAD PSDCB SNIM TA UCPM Country Assistance Strategy Development Credit Agreement Direction de l'environnement et de l'amenagement Rural Directorate of Mines and Geology Environmental Impact Statement Environmental Management System Geographical Information System Implementation Completion report Minerals Information System Ministry of Mines and Industry Non Governmental Organization Office Mauritanien des Recherches Geologiques Project Appraisal Document Private Sector Development and Capacity Building Project Societe Nationale Industrielle et Miniere Technical Assistance Mining Project Coordinating Unit Vice President: Mr. Jean Louis Sarbib Country Manager/Director: Mr. Hasan Tuluy Sector Manager/Director: Mr. Peter van der Veen Task Team Leader/Task Manager: Mr. Paulo de Sa

3 Islamic Republic of Mauritania Mining Sector Capacity Building Project CONTENTS Page A. Project Development Objective Background Project development objective and key performance indicators... 3 B. Strategic Context Sector-related CAS goal supported by the project Main sector issues and Government strategy Sector issues to be addressed by the project and strategic choices... 6 C. Project Description Summary Project components Key policy and institutional reforms supported by the project Benefits and target population Institutional and implementation arrangements D. Project Rationale Project alternatives considered and reasons for rejection Major related projects financed by the Bank and/or other development agencies Lessons learned and reflected in proposed project design Indications of borrower commitment and ownership Value added of Bank support in this project E. Summary Project Analyses Economic Financial Technical Institutional Social Environmental assessment Participatory approach... 15

4 F. Sustainability and Risks Sustainability Critical risks Possible controversial aspects G. Main Credit Conditions Effectiveness conditions Other H. Readiness for Implementation L. Compliance with Bank Policies Annexes Annex 1. Project Design Summary Annex 2. Detailed Project Description.. 22 Annex 3. Estimated Project Costs Annex 4 Cost-Effectiveness Analysis Summary Annex 5. Financial Summary Annex 6. Procurement and Disbursement Arrangements Table A. Project Costs by Procurement Arrangements Table Al. Consultant Selection Arrangements Table B. Tresholds for Procurement Methods and Prior Review Table C. Allocation of Credit Proceeds Annex 7. Note on the Financial Management System Annex 8. Project Processing Budget and Schedule Annex 9. Documents in Project File Annex 10. Statement of Loans and Credits Annex 11. Country at a Glance Annex 12. Proposed organization for the Ministry of Mines and industry's mining agencies. 45 Map

5 Islamic Republic of Mauritania Mining Sector Capacity Building Project Project Appraisal Document Africa Vice-Presidency Burkina Faso, Mali, Mauritania, Sao Tome & Principe (AFC 15) Date: 04/10/99 Task Team Leader/Task Manager: Paulo de Sa Country Manager/Director: Hasan Tuluy Sector Manager/Director: Peter van der Veen Project ID: MR-PE Sector: Mining Program Objective Category: Private Sector Development Lending Instrument: Technical Assistance Credit Program of Targeted Intervention: [ ] Yes [X] No Project Financing Data [] Loan [XI Credit [I] Guarantee [ Other [Specify] For Loans/Credits/Others: Amount (US$m/SDRm): US$ 15 million/sdr I 1. lmillion Proposed terms: standard IDA [X] Multicurrency [ ] Single currency, specify Grace period (years): [] Standard Variable [ ] Fixed [] LIBOR-based Years to maturity: Commitment fee: % Service charge: % Financing plan (US$m): US$ 15.5 million Source Local Foreign Total Government IDA Total Borrower: Islamic Republic of Mauritania Guarantor: Responsible agency: Ministry of Mines and Industry Estimated disbursements (Bank FY/US$M): Annual Cumulative For Guarantees: [] Partial credit [ Partial risk Proposed coverage: Project sponsor: Nature of underlying financing: Terms of financing: Principal amount (US$) Final maturity Amortization profile Financing available without guarantee?: [] Yes [] No If yes, estimated cost or maturity: Estimated financing cost or maturity with guarantee: Project implementation period: 5 years Expected effectiveness date: 07/31/1999 Expected closing date: 12/31/2004 OSD PAD Form: July 30,1997

6 Page 2 A: Project Development Objective 1. Background Mauritania has a favorable geologic environment but, apart from iron ore, there is little mineral production in the country. Exploration activities have rapidly increased since 1994 reflecting, among others: (i) the discovery of significant deposits in neighboring countries with similar geological conditions, especially Mali; and (ii) substantial improvements in the regulatory framework's attractiveness to private investors over the last years. These improvements, reflected in the approval of a new Mining Law, were praised by both donors and the private sector during the Consultative Group meeting in Paris in March The Government of Mauritania is actively seeking to attract private and foreign investment to promote growth in the sector and, so far, investors have shown positive interest in terms of exploration activities. Many other potential targets have been identified, but foreign investment in the mining sector has yet to materialize because of insufficient geological information available on the country, the lack of infrastructure, and the weakness of government institutions in key areas. While investments in exploration have expanded considerably in recent years, they are still well below what might be expected given Mauritania's mineral potential. There are three main reasons for this situation: (i) the geoscientific information presently available on the country is quite insufficient for investors. Mauritania does not have complete coverage of geological maps, and only limited geophysical, and geochemical maps. Most of the existing geological information was produced in the 1970s and early 1980s and is generally not accessible to private investors. There is urgent need to complete the geological coverage and mineral resources assessment of the country and to compile all information into a computerized minerals data base. (ii) in spite of the progress achieved in mining sector reform, namely in the drafting of a new Mining Code and the enhancement of security of tenure of mining rights, weak Govermnent institutions and cumbersome regulations pose severe constraints to the enforcement of the new legal framework. There is a need to reorganize and streamline the mining institutions under the Ministry of Mines and Industry (MMI), redefine their mandates and provide them with the required resources to fulfill their new mandates. (iii) the crisis in Asia (responsible for 50% of the growth in metals demand) and global instability in the financial markets have depressed commodity prices and led to a substantial reduction in the investment budget of most mining enterprises. While the major companies have scaled back their exploration expenditures, it is virtually impossible to small and medium-sized mining companies to raise capital under the present conditions of the mining cycling. Bank's assistance for mining sector reforrm in Mauritania started under the Private Sector Development and Capacity Building Project (Credit 2730-MAU) which provided technical assistance to the following activities: (i) Mining Sector Policy Declaration, clearly defining the respective roles of the State and of the private sector in mining development in Mauritania; (ii) Update of the Mining Code, with the draft of a new Mining Law recently approved by the Council of Ministers, and its application decrees; (iii) Enhancement of security of tenure of mining rights, with the establishment of a registry system for the granting and management of mining rights (Cadastre); (iv) Preparation for the reorganization of the mining institutions under MMI, through an Institutional Audit of the Ministry of Mines and Industry, identifying the major constraints for an efficient performance of its mining agencies; (v) Preparation of promotional material to help attract foreign direct investment in mining in Mauritania; and (vi) Exposure

7 Page 3 to international best practices of Government officials through the participation in field trips and seminars. A PHRD/Japanese grant obtained to finance technical support required by Government to prepare the proposed project is assisting in the consolidation of the mentioned reforms in the areas of: (i) Institutional strengthening, developing a scope of work to create an integrated computerized information system inside the Ministry available to private investors which would collect, store and treat all sector related data (geological, environmental, etc.), including identification of required human resources; (ii) Mining Cadastre, implementing of a manual registry system and designing a computerized one, including defining criteria and non discretionary procedures for the granting and foreclosing of mining rights; and (iii) Environment, preparing satisfactory mining environmental regulations; satisfactory institutional arrangements and capabilities for environmental protection; satisfactory procedures for environmental assessments; and building capacity inside the Ministry of Mines in environmental-related issues. The revised mining code and the reforms being supported by the proposed project will put Mauritania on the path of the international best practices being introduced by the most advanced mining countries of Latin America, and make the country a benchmark in mining sector reform for other countries in the Region. It will help to position Mauritania to fully benefit from the next surge in minerals investment brought by the recovery in the cycle, expected in two years. 2. Project development objective and key performance indicators (see Annex 1): The objective of the proposed project is to strengthen the Government's capacity to act as a facilitator and regulator of mining activities and significantly increase private investment in Mauritania's mining sector. The project will help the Government of Mauritania to address key needs (policy, institutional, environmental) in the mining sector, through a set of prerequisite steps that will lay the ground for future private investment and whose implementation will provide a sound basis for Mauritania in exploiting, over the long term and in a developmentally sound manner, the significant potential of its natural resources. The proposed project aims are : (a) to complete sector reforms in order to establish an enabling environment to attract foreign direct investment in mining, which would ensure a real and sustainable contribution to economic growth; (b) to build institutional capacity to effectively enforce laws and regulations, administer mining titles, and monitor sector developments; (c) to strengthen the Government's capacity to make essential geological information available to potential investors, including a mining data bank and a geological map; and (d) to establish capacity in the country, by means of pilot projects, to identify and address environmental as well as social impacts from mining. The project has been designed to provide a learning experience for the country, the Bank, and investors with respect to the mining sector but also for attracting private sector investment in other sectors. Learning will relate to the process of negotiating contracts, including interface between public and private sectors and communities; dealing with foreign investors, meeting investor needs; understanding crosssector dynamics in the context of regional development, and establishing effective inter-relationships with Environment agencies; and conducting baseline environmental studies and social assessments prior to introducing mining operations in an area. Valuable lessons for other sectors, especially tourism and fisheries, are also expected from the project. Mining sector experience could be especially helpful in learning how to administer the cadastre, with lessons for the administration on the land cadastre, the management of fishing rights, and overall investment promotion. Key indicators: 1) Increase Private Investment, exports and fiscal revenues: (a) Increase in the number of private operators involved in the different stages of the mining cycle. (b) Increase in average annual investments in mining. (c) Increase in average annual minerals exports. (d) Increase fiscal revenues from mining.

8 Page 4 2) Set the base for the creation of an Environmental and Social Management for Mining: (a) Preparation of detailed procedures for Environmental Impact Assessments. (b) Number of Environmental Impact Assessment appraised. 3) Improve Minerals Information System. (a) Number of maps published (b) Number of consultations to the MIS system 4) Improve the efficiency of the mining institutions under MM (a) Average number of days required for granting a mining title (b) Backlog and number of complaints of the Mining Cadastre The performance of key indicators grouped under point (1) is expected to decline in the next couple of years as a result of the current downturn in the investment cycle for minerals and metals. However, as a result of the project, Mauritania should be in a position to fully benefit from the next recovery and register a significant improvement in key indicators. The number of private operators actively involved in exploration, for example, is expected to increase from the current 10 to about over the next five years, resulting in an increase of annual investment expenditures from less than US$ 20 million today to US$ million. On the other hand, non-iron ore mineral exports could go from virtually nil to about US$ million over the next ten years (see project description). B: Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project (see Annex 1): CAS document number: Date of latest CAS discussion: June 17, 1997 Since 1992, the Government of Mauritania has been implementing a wide range of policy, economic and sector reforms under its structural adjustment program. In the course of the dialogue preceding the 1997 Country Assistance Strategy (CAS), the Government has acknowledged that sound economic management, conducted by dynamic and competent institutions, is crucial to its ability to act efficiently both as a promoter of economic development and as a regulator of economic activities. The proposed project supports the following CAS objectives: (i) Broad-based growth led by private sector development: the supply response to the major structural reforms adopted by Government has been slow, and Mauritania continues to be highly dependent on two export products: fish and iron ore. In the period, direct private investment averaged about US$ 75 million per annum, of which foreign investment amounted to about US$ 8 million per year. These weak results are due mainly to the inconsistent application of a strong and clear private-sector regulatory framework, a judiciary which is neither independent nor reliable, and the lack of a sound financial intermediation system. Moreover, the lack of a well developed and maintained transport infrastructure, the inadequate supply of skilled labor, high freight costs and high utility tariffs do not make Mauritania a competitive environment for long-term private investment. The Government needs to aggressively accelerate economic growth through policies and programs aimed at increasing the level of private investment, thereby raising productivity, providing employment and generating income for the labor force. Foreign-led private sector investment in mining could be instrumental in opening up the economy to investment and competition, effectively supporting macroeconomic stability and structural reform. The proposed project will contribute to unlock the country's good geological potential through enhanced access to foreign technology and financing, while promoting the development of a sound regulatory framework for private-led growth. (ii) Restructuring and Modernizing the Public Sector: Government's institutional apparatus has not yet adapted to its new role of regulating economic activities and promoting poverty reduction in a marketoriented economy. The Government is aware that an inappropriate institutional framework, weak

9 Page 5 administrative capacity, and a civil service that is reluctant to adopt up-to-date work practices and lacks accountability, have contributed to inefficiencies and mismanagement of public resources, which in turn has restrained the development of a dynamic private sector. The Government is convinced that its central objective of reducing poverty through accelerated growth can only be accomplished through institutional and administrative reforms that refocus the role of the State, remove inefficient and arbitrary regulations, and build a strong partnership between the State and the civil society at large. Mining has been in the frontline of sector legal reform and could also became a pilot sector for public institutions reform. The project will allocate most of the resources for institutional development to public mining institutions, including the environmental protection agencies, as a basis for the sound and sustainable development of the mining industry. This includes improved administration, and rationalization of staff. The project will help widen and deepen reform, and establish environmental safeguards in selected pilot areas and support the sustainable development of the sector. Environmental baseline studies would also help improve management of renewable natural resources. 2. Main sector issues and Government strategy: Mauritania is known to have a diverse composition of minerals, given that a part of its territory represents a structural extension of the mineral provinces of Western Africa, namely Ghana, Burkina Faso and Mali. Nevertheless, the country's geological potential can still be classified as vastly unknown due to the paucity of high-quality exploration activity. Current mining activity is dominated by iron ore. Other than majority state-owned iron ore producer SNIM, there is currently a copper-gold project (also with significant State participation) whose development plans have been adversely affected by low metal prices. In parallel to these more traditional activities, the country has been experiencing in recent years a surge of exploration activities mainly financed by private foreign companies. Their work has resulted in the recent discovery of promising gold and diamond deposits. Although their economic potential still needs to be evaluated, these discoveries confirm Mauritania's mineral potential and reinforce Government's commitment to attract more private investment to the sector. Mauritania's Mining Policy Declaration approved by the Council of Ministers in 1997 states that one of the Government objectives is to increase revenues through the diversification of production in the mining sector. Government is therefore seeking to accelerate the growth of the mining sector by creating favorable conditions through the removal of obstacles which constraint private sector development. The main sector issues to be addressed by the Government strategy under the proposed project are: (i) Rationalizing the role of the State by reducing its involvement in mining exploration and development activities. Given the high-risk nature of exploration, the role of the State should be confined to the administration of the sector and the provision of basic geologic information, leaving the high cost, risky exploratory activities to the private sector. Government's strategy is to reduce its involvement in mining exploration by reorienting the state-owned exploration unit, the Office Mauritanien des Recherches Geologiques (OMRG) to more upstream activities like geological reconnaissance and mapping. (ii) Strengthening and modernizing MMI's agencies involved in monitoring and regulating mining activities. Institutions such as the Directorate of Mines and Geology (DMG) and OMRG, which fulfill the role of the State as administrator - regulator of the mineral resources of the country, and whose performance in the discharge of their services and responsibilities (such as enforcement of laws and regulations, provision of reliable geological database, administration of mineral rights and monitoring of environmental liabilities), are critical in the efficient operation of a private sector-led mining industry. At present, these institutions are deficient in their level of expertise, capabilities, and do not have adequate equipment to undertake their activities. Furthermore, they are poorly funded and have limited experience in dealing with the private sector. The project would provide technical assistance for consultancy services for training and procurement of essential modern equipment for these institutions.

10 Page 6 (iii) Developing Environmental baseline data and a monitoring system. Although Mauritania is preparing legislative and a regulatory framework to address environmental impact assessment issues, the procedures for the execution of these regulations are fragmented. Furthermore, the institutions lack the capabilities to monitor and address the environmental problems efficiently and in a timely manner, and in particular to implement rehabilitation measures with regard to mining. In order to assess the gravity of the problem, there is a need to undertake environmental baseline studies in selected areas, which would provide a basis for the environmental protection measures to be implemented in the mining areas. In this regard, technical assistance would be- provided for upgrading the capabilities of the institutions responsible for monitoring and regulating environmental pollution including developing environment impact assessment procedures and appropriate monitoring procedures. The program will be conducted in cooperation with the staff of the Ministry of Rural Development and Environment. (iv) Promoting private sector investment in the mining sector. With regard to promotion of private sector participation in exploration and mine development, a new mining law was recently approved by the Government. By reducing the discretionary power of Government, increasing transparency, and improving security to potential investors, the new Mining Code is expected to provide the adequate legislative framework for regulating and monitoring activities in the sector, and to make a major contribution to attract foreign investments into mining, namely of gold and diamonds. Of particular importance to provide a sense of security for potential investors is the stabilization of the legal, fiscal, and institutional arrangements prevailing at the time of the investment, as well as setting-up a professional system to manage the granting of mining rights. In addition to that, the new geological information that will be generated under the project will provide a new tool to guide the exploration efforts of private mining companies in Mauritania, especially in remote areas of difficult access. 3. Sector issues to be addressed by the project and strategic choices: The last 25 years have seen significant changes in the international mining industry, in large measure because of the liberalization of economic and mining policies of previously restrictive governments in mining countries. These reforms have had three broad objectives, to improve sector performance and growth and the contribution of mining to the national economies, to ensure the sustainability of the mining industries in the developing countries, and to ensure that the host countries get a fair share from the benefits of growth of the sector. In the context of a generally healthy metal commodity price scenario, the result has been an upsurge in mining investment in those countries which have adopted legal, institutional and taxation reforms. Between 1989 and 1997 Latin America, the region where the reform was implemented more thoroughly, saw a four-fold increase in investment in exploration (for the countries of the region with comprehensive reform programs the increase was twelve-fold) while the world total increased by 90%. Furthermore, the reforming countries have achieved progress in the economic, environmental and social aspects of mining, thus strengthening the sustainability of the sector. Work Bank involvement in the reform process of successful mining countries shows that, for this to happen, the enactment of the necessary legal, fiscal and environmental policies and the establishment of strong mining institutions to implement and administer them have proven to be the keys to success. This includes: (i) a background of sensible economic policies and a coherent general legal framework; (ii) a mining law providing security of tenure, clarity and transparency and access to land (including the release of reserved areas held up by the State and full transferability of concessions to remove all barriers to the entry of investors), and an investment framework providing access to foreign exchange and a stable and equitable fiscal regime; (iii) public mining institutions that apply properly the sectoral policies; (iv) a sensible environmental management system, and (v) clear, economically efficient rules dealing with enterprise restructuring and privatization. Further progress will depend to a large extent on the continued development of institutional capabilities, in an environment of sensible macro-economic policies, to ensure the sustainability of the progress achieved.

11 Page 7 The main issues to be addressed by the proposed Project are: a) Building Capacity of the MMI's mining agencies. The project would assist in: (i) strengthening the policy making, regulating development and sector monitoring capabilities in MMI; (ii) rationalizing the role of the State from being an owner and operator of mining assets to a regulator and administrator by reducing State involvement in exploration and mining by allowing and promoting private sector participation; (iii) finalizing the implementation of an enabling legal and regulatory framework aimed at promoting private mining enterprises; and (iv) restructuring and modernizing of the Directorate of Mining and Geology, based on the redefinition of its mandate and procedure, in order to transform it into a sector promotion tool providing a good base of sound geological information; (v) establishing proper computerbased cadastre and mine-reporting systems as well as explicit criteria and non-discretionary procedures for the granting and foreclosing of mining rights; and (vi) improving capacity at MMI to attract private sector investment by allocating resources for promotional programs, and institutional development. Technical assistance would be provided through the preparation and implementation of a program which would provide for training of staff and for the procurement of equipment and materials to improve the administration and regulatory role of these institutions, including, enforcement of the laws and regulations, administering of mining titles, and monitoring of sector development. b) Developing the country's Geological Infrastructure. The project would: (i) provide for a complete coverage of geological maps for Mauritania at the 1:500,000 scale, as well as mapping of selected areas at the 1:200,000 scale; (ii) carry-out geophysics airborne survey in selected promising areas; (iii) provide assistance in introducing new technologies, especially in GIS-based geological mapping, thematic mapping, mineral resource assessment, and environmental base line information; and (iv) provide assistance in the implementation of a Minerals Information System (MIS), a computer-based system to compile and catalogue dispersed data, to facilitate the access to information (bibliography, technical reports, statistics, legal documents, etc.) both for private users and public institutions. c) Protecting and enhancing the environment. The project would lay the base for the preparation of a sector environmental assessment, by establishing pilot environmental baseline data and a monitoring system for the environmental impacts of mining; implementing adequate procedures and guidelines for the preparation of environmental impact studies in mining; defining sector specific environmental regulations and standards, including the procedures for the rehabilitation of the area after mine closure; developing health and safety provisions, and enhance the Ministry of Mines and Industry monitoring capacity. The capability of the Ministry of Mines and Industry to deal with environmental issues would be strengthened through the training of its staff, in order to ensure that mining operations are conducted in compliance with sound environmental practices.

12 Page 8 C: Project Description Summary 1. Project components (see Annex 2for a detailed description and Annex 3for a detailed cost breakdown): Component Category Cost Incl. % of Bank- % of Contingencies Total financing Bank- (US$M) (US$M) financing 1. Capacity Building, including: Institution Institutional Reform: restructure building, and strengthen MMI's ability to Physical enforce the mining law. This includes: organization and staffing of key administrative units, setting-up of efficient work procedures; training of staff; provision of adequate office and field equipment; rehabilitation of facilities; participation in and organization of seminars; and promotional publications Mining Titles Registry and Management System (Mining Cadastre): establish proper computer based cadastre and mine reporting systems as well as explicit criteria and non discretionary procedures for the granting and foreclosing of mining rights, and training officials to implement and manage the system. 2. Geologic Infrastructure, Institution including: building, 2.1. Geological Mapping/ Minerals Physical Information System: preparation of digital geological maps covering the entire country, plus development of a data base, providing for compilation, treatment, and updating of geological information. This includes: field campaigns, purchase of information, provision of hardware and software, internet connection, collection of geological data, training of staff Geophysic Airborne Survey: aeromagnetic and radiometric survey of two of the most promising mineral provinces of Mauritania, over an area of 200,000 km2, in support of geological mapping Supervision and publication of maps: supervision and integration of the two previous sub-components; processing, and printing of the geological maps produced on digital form.

13 Page 9 3. Environmental Management Institution System (EMS): including capacity building, building at MMI for monitoring and Physical enforcement of environmental regulations; pilot environmental and socio-economic baseline studies in selected mining areas as a basis for development of methodology and capacity to assess and monitor social, cultural and economic impacts of mining on local communities; development of consultation and participatory procedures, training for MMI and Ministry of Environment's officials. 4. Project Coordination Unit Project (UCPM) Management Total Key policy and institutional reforms supported by the project: Policy reform. The Project will help Government to: (i) consolidate key reforms attempting to create an enabling environment for an economically, socially and environmentally sound development of the sector; and (ii) strengthen its capacity as a regulator - in a transparent and non-discretionary manner - of mining activities. Institutional reform. The main mining agencies under MMI are the Minister's Cabinet, where the legal expertise is located, the General Secretariat, in charge of planning, and administrative matters, and the Directorate of Mines and Geology which currently includes five units: Strategic Planning and Studies; Minerals Promotion; Mining; Geology; and Hydrocarbons. The main state-owned companies or agencies under the Ministry are SNIM and its subsidiaries, SAMIN which is a shareholder of GEMAK, promoter of the Akjoujt project, and OMRG. An audit of MMI conducted under the Private Sector Development and Capacity Building Project identified its major institutional constraints: (i) absolute lack of financial resources that prevents the Ministry from monitoring the real developments in the mining areas; (ii) extreme insufficiency of qualified human resources and lack of technical skills; (iii) lax procedures, namely in the administration of mining titles; (iv) very limited availability of geologic information, stored in poor physical conditions and not available to the public; (v) excessive centralization at the manager's level and inefficient procedures and flow of information; (vi) poor relations with other line ministries; (vii) lack of strategic vision; and (viii) lack of coordination with the private sector in the promotion of the private investment. The audit proposed a new organization for MMI, including inter-institutional relationships and mandates, and an action plan for the establishment of new internal procedures, the definition of the skills profiles required, and correspondent training programs, as well as budget requirements. The institutional reorganization proposed by the audit was introduced by Government Decree in March The new organization is however far too ambitious with regards to the mandates and staffing of the Directorate of Mining and Geology (DMG), and is beyond MMI's current human and financial resources. During appraisal, a new functional organization for DMG was agreed with MMI, focusing its service units on the three main components of the proposed project - Mining, Geology, and Environment - and creating a Mining Cadastre inside MMI, as a separate unit from DMG (Annex 11). The capacity building measures required to meet the project's objectives have also been identified and agreed upon. The publication of a Decree establishing the new organization agreed during appraisal is a condition for negotiations.

14 Page 10 The institutional reform agreed during appraisal will be implemented in the context of this project. An important aspect of the reform will be the introduction in the Cadastre of a principle of cost recovery for the services performed to users. The Mining Cadastre will charge fee for the registry, and renovation of mining licenses and will be financed through a rental surface fee to be paid by title holders in accordance with the extension of the areas requested. These revenues from will be deposited on an existing special account called "Contribution of the Mining Operators to the Promotion of Mineral Exploration in Mauritania", managed by the Minister of Mines and audited by the Minister of Finance. The money available in the account will be allocated to: (i) the operation of the Mining Cadastre; (ii) the supervision of mining operations and enforcement of the Mining Law, including from the environmental point of view; (iii) the acquisition of new geoscientific data; and (iv) training and seminars. A financial simulation made during appraisal concluded that the proposed organization could be financed out of the cadastral fees resulting from 50% of the current area covered by mining pertnits. It should be noted that the Geological Service could be at least partially funded from the sale of geological data (on a cost-recovery plus small margin basis). 3. Benefits and target population: Benefits: The following benefits are expected: (i) induced by the project: (a) Increased foreign and local direct investment in mining and increased export revenues; (b) development of capacity in private services to the mining industry, such as exploration and drilling services, environmental impact studies, laboratories, mining construction works and earth removal, maintenance and others; (c) development of infrastructure related to mining and with a regional development impact (e.g. roads, energy); (d) increased income-generating opportunities in remote areas, increased education opportunities and reduced migration outflow; (e) contribution to a better regional distribution of productive activities; and (f) sustainable development and fair distribution of benefits to local communities located around mining areas; (ii) as a direct result of the project: (a) establishment of a modem, consistent and homogeneous mining legal and regulatory framework; (b) better understanding of how Government, private sector, communities and donors can work together dealing with foreign investors, and the contract negotiations process; (c) improved efficiency in MMI's mining agencies (e.g. faster and non-discretionary administration of mining rights and improved understanding of issues involved in managing such rights), and improved enforcement capacity of environmental, health and safety regulations; (d) improved security of tenure for mining rights through non-discretionary procedures and accurate geological location of concessions; (e) improved knowledge of existing environmental and socio-economic conditions, as a basis for improved management and participation of local communities; (f) protection of the environment from potential damage caused by mining and a better grasp of how to design future environmental protection measures in the sector; and (g) generation of baseline regional information that can be used by all sectors (e.g. water resources). Target Populations and Sectors: - Private foreign and local mining investors; - National and provincial mining authorities; and - Local communities in mining districts. 4. Institutional and implementation arrangements: Project implementation period: The Project would be implemented over a period of 5 years. The Project completion date would be June 30, 2004 and the Credit closing date would be December 31, Executing agency: The Ministry of Mines and Industry (MMI) would be responsible for the implementation of the project.

15 Page 1 1 Implementing agency: The Ministry of Mines and Industry, through an officially designated coordinator, will be responsible for the overall implementation of the project. MMI's line units will be established and/or strengthened to include a Mining Cadastre and Registry unit, an Environmental Affairs Unit and a Minerals Information System (MIS). Project Administration: MMI will maintain and strengthen a Mining Project Coordination Unit (UCPM) to (i) coordinate project implementation, and (ii) manage (a) procurement - including all contracting for works and purchases - and the hiring of consultants, (b) project monitoring, reporting and evaluation, (c) the contractual relationship with IDA, and (d) financial record keeping, the Special Account and disbursements. The establishment of the UCPM is a condition of negotiations. Accounting, financial reporting and audits: The UCPM will include a financial management expert to maintain accounts and process payments, and monitor compliance with accounting, financial reporting, and auditing requirements. Terms of reference for the selection of a private accounting firm hired to set up the project financial and accounting system according to international standards have been prepared by the Region's Financial Management expert to ensure adequate attention to financial management issues. The financial and accounting system for the proposed Project will be based on the one developed for the Private Sector Development and Capacity Building Project. During appraisal, the financial management specialist has identified weaknesses in the proposed financial system, and no-objection was given to selected firm. The Financial Management expert will certify UCPM's accountant and the proposed financial and accounting system before credit effectiveness. The review witl cover: (i) the project's chart of accounts and linkages to activities; (ii) selection of disbursement categories; (iii) ability to distinguish between sources of funds (IDA, Government, other donors); (iv) accounting standards; (v) reporting formats; (vi) recording of measurable outputs, and integration of accounting and budget information; (vii) contract management data; (viii) the budgetary process (preparation and monitoring); and (ix) internal control arrangements (segregation of duties, documented procedures for purchase and expense authorizations). A summary financial report would be included in the quarterly progress reports. Project Accounts, the Special Account and all procurement, including Statements of Expenditure, would be audited annually by independent auditors satisfactory to IDA and appointed for three years. Audit reports would be submitted to IDA not later than six months after the end of each calendar year. The selection of external auditors represents an effectiveness condition. Project preparation ensured that the accounting system including the chart of accounts would be in compliance with LACI by Mid-Term Review. Specifically, this implies that it would be: (a) configured and capable of preparing monthly/quarterly/semestrial and annual financial reports (including, a Sources and Application of Funds statement and a balance sheet, if deemed appropriate); and (b) able to produce the following quarterly reports/statements: (i) summary of Sources and Uses of Funds; (ii) Contract Expenditure Report- Goods and Works; (iii) Contract Expenditure Report- Consultants; (iv) Procurement Management Report- Goods and Works, and (v) Procurement Management Report- Consultants. Monitoring and Evaluation. Not later than 45 days after each quarter, the UCPM will submit to the IDA quarterly progress reports covering all project activities, including procurement, and a financial summary report. A Mid-Term Review, 30 months after effectiveness, would provide detailed analysis of implementation progress towards development objectives, including performance to date on selected indicators of project benefits (see 3-i and 3-ii above). Baseline data on these indicators will be gathered prior to this mid-term review and used in the assessment. During the Mid-Term review, the mission will assess and review the project's financial management system and determine if the system is in compliance with LACI.

16 Page 12 D: Project Rationale 1. Project alternatives considered and reasons for rejection: When considering the most appropriate instrument to facilitate institutional capacity building to Mauritania's public mining institutions, two main alternatives were examined: a Technical Assistance Credit, and a Learning and Innovation Loan (LIL). The proposed project would meet the criteria for LILs in two main aspects: (a) it includes work to develop an understanding of and capacity to address social impacts of mining - for which solutions and examples of good practice are not readily available elsewhere; and (b) it contains pilot projects for environmental management and social assessment which if successful are replicable. Given the country's limited ability to absorb substantial amounts of money to finance sector reforms, the LIL would lay the foundation for a follow-up TA to broaden and deepen the reform effort once it is demonstrated that the first round of reform is successfully absorbed. This alternative was rejected because the proposed project will help to implement reforms that were originally conceived under the Private Sector Development and Capacity Building Project, which Government is now ready to implement. It includes institutional strengthening (for both mining and environmental functions of Government) to assist the institutions to cope with an anticipated large program of exploration and development by private mining investors. Because foreign investment will not materialize unless MMI is able to efficiently administer and manage the sector, a strategic decision was taken to use an integrated approach to sector reform while, at the same time, supporting the preparation of pilot projects in selected areas, like environmental baseline studies and audits, and assessment of social impact of mining projects and participatory approaches. Experience in other countries of the region like Mali, Burkina Faso and Guinea suggests that a single TA operation can be an effective way to implement lasting mining sector reform. The reform agenda is quite comprehensive and ambitious, considering the current state of the public mining institutions in Mauritania. Mining could be a pioneer sector for further foreign investment in the country, and lessons learned during the negotiating of contracts and in the process of creating an enabling environment for foreign investment could later serve as a catalyst for other sectors such as tourism and fisheries. 2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned): Sector issue Project Latest Supervision (Form 590) Ratings (Bank-financed projects only) Implementation Progress (IP) Development Objective (DO) Bank-financed Capacity building for Government Private Sector S S Institutions and promotion of private Development and sector development Capacity Building Project (Credit 2730-MAU) Other development agencies IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)

17 Page Lessons learned and reflected in the project design: Lessons have been learned from the ongoing activities being carried out under the PSDCB, as well as from other countries where the Bank has financed similar capacity building operations (e.g. Mali, Burkina Faso, Guinea, Ghana, and Tanzania) and from a recent Bank review on mining sector reform in Latin America (A Mining Strategy for Latin America and the Caribbean, 1996). Experience in other countries indicates that improving the enabling environment increases the ability of a country to attract and retain appropriate private investment. For instance, Ghana in the late 1980s undertook significant reforms, supported by the Bank and other donors, to improve the enabling environment for private sector investment in mining. The result has been a four-fold increase in gold production, a mining investment climate that is consistently ranked among the best in the world by investors, and the privatization of state-owned mining enterprises. Experience with establishing capacity for environmental management in other countries, namely Latin America, indicates that the central agency mandated with environmental responsibility needs to adopt an integrated approach and establish close linkages with sector agencies in implementing environmental policies and regulations. Experience in Mauritania with capacity building, for instance, the Private Sector Development and Capacity Building Project, suggests that emphasis on beneficiary participation in project preparation, intensive supervision, organization and coordination in the field are critical for timely and effective implementation. Ownership and political commitment to project objectives are key to ensuring strong local leadership, availability of counterpart funds, and clear delineation of ministerial authority and responsibilities. 4. Indications of borrower commitment and ownership: Commitment of the Borrower is shown by the effort put into the preparation of a new Mining Code (with Bank's assistance, under the Private Sector Development and Capacity Building Project), and on the preparation of a mining session during the last Consultative Group Meeting in Paris. Ownership: the Borrower took initiative in requesting the preparation of a stand-alone operation for mining. Government ownership is indicated by the seriousness of its participation in the preparation of the project so far, including the realization of several workshops dealing with in-depth analysis of sector reforms to be supported by the project. 5. Value added of Bank support in this project: The Bank has been the leading provider of assistance to mining sector reform in African and Latin American countries during the last decade and in this capacity has contributed to the present mining "boom" in both continents. Since 1992, Mauritania is making good use of the Bank's experience in sector reform, particularly with respect to sector policy and modernization of its institutional and legal frameworks. Given its experience and established presence in the country, Bank involvement would facilitate the implementation of the project in a timely and efficient manner and ensure that the Government maintains its focus on the objectives of the project. Bank involvement will also be catalytic in attracting additional funds and support from bilateral donors particularly for the implementation of the social mitigation measures, and in providing the environment for encouraging private sector investment. E: Summary Project Analysis 1. Economic (supported by Annex 4): [ ] Cost-Benefit Analysis: NPV=US$ million; ERR= % [ Cost Effectiveness Analysis: [X] Other: The Project is a capacity building operation and, as such, does not lend itself easily to quantitative investment analysis. However, a number of economic indicators can be projected and compared, such as value of mineral exports, fiscal revenues coming from the sector, and amount of investments. The value of iron ore production is about $216 million or almost 20 percent of Mauritania's 1997 GNP of US$1.1

18 Page 14 billion. Mauritania's total exports in 1997 were about US$ 500 million, of which 40 percent corresponded to a single mineral export. Most of the foreseeable expansion is in base and precious metals, as well as diamonds, and the majority of this production will be exported and generate foreign exchange. Mining investments other than SNIM are limited to exploration and estimated to average $10 million a year in recent years. To test the robustness of the possible contribution of mining to the economy, two scenarios (low and high case) have been constructed. The results of this analysis, projected to the year 2005 and 2010 are: Scenario Gross Production Gross Export Value Average Annual Value Investment Low Low High High Financial (see Annex 5): NPV=US$ million; FRR= % Fiscal impact: SNIM benefits from a special regime that limits its contribution to the budget to 10% of sales. The mining code recently approved by the Council of Ministers introduces a fiscal regime for mining consistent with what is considered international good practice. The new law does not contemplate investment agreements for the large-scale project providing for rather generous tax exemptions and fiscal holidays. The impact of the additional production (outside SNIM) on fiscal revenue can be estimated to be in the range of US$5 to 10 million per year, depending on the scenario. 3. Technical: The project will establish an enabling institutional and regulatory environment to help attract and sustain mining investment. Expert technical assistance will help the Government to avoid mistakes in dealing with private companies which could result in forgone revenues. The project will help strengthen tax assessment and collection procedures for statutory royalties, license fees, income, dividend, and other direct and indirect taxes. The project will also help put into place environmental regulations, procedures, and monitoring capacity to minimize damage to the environment from mining operations. 4. Institutional: a. Executing agencies: The experience and implementation capacity of the sector unit is limited. There is a major need for capacity building at all levels, including project management. The institutional audit conducted under the Private Sector Development and Capacity Building Project identified a major capacity problem in terms of human resources to implement the planned reform and technical programs. As a consequence, the project design has incorporated a substantial provision for the hiring of external consultants (national) which will be in charge of the implementation of specific sub-components. The project cost estimate includes a budget for incremental operating costs in order to fund these expenses. The institutional assessment of the project will be monitored through intermediate output indicators and impact indicators. Intermediate output indicators are designed to track the implementation and the expected outcomes of the project, and have to be assessed during the lifetime of the project. Impact indicators are designed to assess the achievement of the final objectives of the project, and their assessment should be carried out after the closure of the operation. The accomplishment of the final objectives will imply the achievement of a number of intermediate outputs and conditions, including: * Number of months required to make the Mining Cadastre operational.

19 Page 15 * Number of months required to make the MMI's Environmental Unit operational. * Average number of days required for granting a mining title. * Backlog and number of complains of the mining Cadastre. * Number of maps published. * Number of consultations to the MIS system. * Number of Environmental Impact Assessment appraised. * Number of pilot baseline studies prepared. Impact indicators will refer to: * Increase in the number of private operators involved in the different stages of the mining cycle. * Increase in average annual investments in mining. * Increase in average annual minerals exports. * Increase fiscal revenues from mining. b. Project management: The experience and implementation capacity of the sector unit derives from the fact that the Coordinator of the Project's Implementation Unit (UCPM) was previously the coordinator of the mining component of the Private Sector Development and Capacity Building Project. The UCPM will be created as an extension of this work, which is being performed in a satisfactory manner. The UCPM will be strengthened in terms of personnel, to respond to the increased volume of work. It will manage procurement and supervision of works and consulting services. 5. Social: Traditionally, assessment of the economic impact of a mining project has been at the level of the national economy, in terms of fiscal revenues, export earnings, GDP, gross capital investment, value added, and other parameters. These impacts can be measured using well-developed statistical and other techniques. However, the socio-cultural impacts of mining on local communities are receiving growing attention, and the parameters, methodologies, and techniques used to assess these impacts are only now being developed, in contrast to macro-economic impact assessment. Fundamentally, social assessments involve identifying for each group of stakeholders the balance of positive and negative impacts, devising numeric or other objective indicators, and recommending measures to maximize positive outcomes and attenuate negative effects. Experience has shown that consultation and involvement of local communities in these assessments is critical and forms the basis for subsequent action programs. However, assessment of the impacts and involvement of the local community in the consultation process is still at an early stage, due principally to lack of familiarity with the techniques and practices of social assessment as well as an inadequate institutional and regulatory framework to provide for such assessments. 6. Environmental assessment: Environmental Category [ ] A [ ] B [X] C The project is a capacity building operation that will not involve direct investment in mining activities. It should, therefore, be classified as category "C". The project is expected to have a positive impact on the environment by building capacity in the country for environmental management at the national level and within the mining sector. A comprehensive Sector Environmental Assessment (SEA) will be carried out as part of the project, including the: (i) review of the present status of the environmental legal, regulatory and institutional frameworks; (ii) evolution of the mining sector, including a description of most of the mining projects in operation or under development; (iii) potential physical and socio-economic impacts of sector activities on the environment and on the communities, including indigenous populations; (iv) preparation of environmental baseline studies, to assess natural, social and sector background data in selected areas of each of the participating Provinces; (v) preparation of pilot socio-economic baseline studies aiming at the definition and implementation of consultation procedures, training requirements and programs, ad hoc institutional strengthening and other related measures. 7. Participatory approach [key stakeholders, how involved, and what they have influenced; if participatory approach not used, describe why not applicable]: a. Primary beneficiaries and other affected groups:

20 Page 16 The Federation of Industrial and Mining Companies as well as all mining companies active in Mauritania have been consulted and are active members of fora and committees set up under the Private Sector Development and Capacity Building Project to reflect on the future orientations of mining policy. The implementation of the PHRD grant being used for project preparation will allow to bring on board NGO's and affected communities. b. Other key stakeholders. F: Sustainability and Risks 1. Sustainability: Mauritania has good geological potential as is evidenced by the interest major intemational mining companies are showing in the country. However, the Government will encounter difficulty in sustaining this interest and in ensuring the maximum contribution to economic development unless the major reforms which have already begun are completed and deepened. If proper regulations and enforcement mechanisms as well as a competitive environment are put into place, minerals exploration and development of mines will become self-sustaining to provide a continual revenue stream and other economic benefits to the country. In addition, the project will attempt to implement a full cost-recovery system in the Mining Cadastre, and partial recovery at the Minerals Information System and the Geophysic Airborne Survey. Sustainability will be enhanced through the project's strong emphasis on institution building, training, human capital development and environmental awareness in the public as well as private sectors. 2. Critical Risks (reflecting assumptions in the fourth column of Annex 1): Risk Risk Rating Risk Minimization Measure Annex 1, cell "from Outputs to Objective" Government continued commitmento sector reform M Government's program for mining sector reform is on schedule and was confirmed and reinforced during the Consultative Group meeting. Condensed timing to build-up capacity to manage M Preparatory work funded by PHRD grant. cadastral data by Mining Cadastre Office Institutional strengthening will be phased and prioritized Reasonably stable world minerals market conditions M Although the general trend in mineral and prices prices will continue to be flat or down over the long term, it is expected that as a result of the project potential investors will find promising targets that will allow them to position themselves favorably in the next minerals investment cycle. Commitmento honor the provisions of the new M Stability clauses in the new code, Mining Code international arbitrage, guarantees and insurance. Continued staff ownership regarding project M Provision of necessary staff, resources and objectives conditions to effectively implement the reform to be defined by Institutional Audit. Political interference M Project implementation guidelines to be included in the General Agreement will aim at minimizing political interference. Overall Risk Rating M I Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N (Negligible or Low Risk)

21 Page Possible Controversial Aspects: None. G: Main Credit Conditions 1. Effectiveness Conditions: A. Ensure that the following three positions at UCPM are staffed by suitably qualified and experienced personnel, satisfactory to the Association, namely: (i) the project coordinator; (ii) the procurement specialist; and (iii) the accountant and financial analyst. B. Opening of an account in UM in a commercial bank in Mauritania acceptable to the Association (the Project Account), and deposit into the Project Account an initial amount equivalent to $50,000, to finance the Borrower's contribution for expenditures under the Project not financed out of the proceeds of the Credit; C. Establishment of an appropriate financial management system, certified by the Region's Financial Management expert, and selection of external auditors for the project acceptable to the Association. 2. Other: Implementation Program A. Implementation of the Project in accordance with the procedures, guidelines, timetables and criteria set forth in the Project Implementation Manual adopted by the Ministry of Mines and Industry. B. Project Monitoring and evaluation: The Borrower shall: (a) maintain policies and procedures adequate to enable it to monitor and evaluate on an ongoing basis the carrying out of the Project and the achievement of its objectives; (b) prepare, under terms of reference satisfactory to the Association, and furnish to the Association, during the twelfth month following Effectiveness, or such later date as the borrower and the Association shall agree upon, and thereafter in regular intervals of twelve months until the completion of the Project, a report integrating the results of the monitoring and evaluation activities performed pursuant to paragraph (A) above, on the progress achieved in the carrying out of the Project during the period preceding the date of said report and setting out the measures recommended to ensure the efficient carrying out of the Project and the achievement of the objectives thereof during the period following such date; and (c) review in a meeting with the Association, 45 days following the submission of the report referred to in subparagraph (b) of this paragraph, or such later date as the Association shall request, said report, and, thereafter, take all measures required to ensure the efficient completion of the Project and the achievement of the objectives thereof, based on the conclusions and recommendations of the said report and the Association views on the matter. C. Mid-term review: UCPM will include in the report for the third review meeting referred to in paragraph B (c), to be referred to as midterm review, in addition to the information furnished as set forth in subparagraph B (b), a detailed description of progress made towards: (i) the increase of foreign investments in the mining sector; (ii) the increase of fiscal revenues from the mining sector; (iii) the implementation of environmental protection activities; (iv) the performance of the mining title registration system; and (v) the quality and timeliness of the reports furnished. D. Environmental studies: The Borrower shall: (a) by April 30, 2002, carry out the studies planned in the Project; (b) promptly upon completion of the said studies, submit their results to the Association for its review and comments; (c) take into account the comments and recommendations made by the Association; and (d) implement the recommendations of the said studies, as agreed and in accordance with the timetable agreed upon with the Association.

22 Page 18 E. Financial Covenants : (a) the Borrower shall maintain or cause to be maintained records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project of the departments or agencies of the Borrower responsible for carrying out the Project; (b) the Borrower shall: (i) have the records and accounts referred above, including those for the Special Account for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than six months after the end of each such year, the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning said records and accounts and the audit thereof as the Association shall from time to time reasonably request; (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Association has received the audit report for the fiscal year in which the last withdrawal from the Credit Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Association's representatives to examine such records; and (iv) ensure that such records and accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. F. Financial management system and the LACI Initiative: The Borrower shall carry out a timebound action plan acceptable to the Association designed to: (a) strengthen its financial management system for the Project; and (b) develop, not later than thirty months following the Effective Date, or such later date as the Association shall agree, a system acceptable to the Association for the preparation of quarterly Project Management Reports, each of which: (i) sets forth actual sources and applications of funds for the Project, both cumulatively and for the period covered by said report, and projected sources and applications of funds for the Project for the six-month period following the period covered by said report; (ii) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and explains variances between the actual and previously forecast implementation targets; and (iii) sets forth the status of procurement under the Project and expenditures under contracts financed out of the proceeds of the Credit, as at the end of the period covered by said report. Upon the completion of the action plan referred above, the Borrower shall prepare, in accordance with guidelines acceptable to the Association, and furnish to the Association, not later than 45 days after the end of each calendar quarter, a Project Management Report for such period. G. Plan for the future administration of the sector: The Borrower shall prepare, on the basis of guidelines acceptable to the Association and furnish to the Association not later than six (6) months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Association, a plan for the future administration of the Borrower's mining sector; and afford the Association a reasonable opportunity to exchange views with the Borrower on said plan. H. Readiness for Implementation [ ] The engineering design documents for the first year's activities are complete and ready for the start of project implementation. [X] Not applicable. [X] The procurement documents for the first year's activities are complete and ready for the start of project implementation. [X] The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. [X] The following items are lacking and are discussed under Credit conditions (Section G): Accounting Procedures Manual for the financial management of the project.

23 Page 19 I. Compliance with Bank Policies [X] This project complies with all applicable Bank policies. [] [The following exceptions to Bank policies are recommended for approval: complies with all other applicable Bank policies.]. The project [signature] Task Team Leader/Task Manar: Paulo de Sa [signature] Sector Manager/Director: Pete V een [signature] Country Manager/Director: Hasan Tuluy

24 Page 20 Annex 1 Project Design Summary Mauritania: Mining Sector Capacity Building Sector Narrative Summary Key Performance Indicators Monitoring and Evaluation Critical Assumptions Sector-related CAS Goal: (Goal to Bank Mission) I. Broad-based growth led by - Approval of at least one mining Midterm evaluation, Continued neutral private, foreign investment investment by a foreign investor. Implementation Completion macroeconomic and sector 2. Improve the performance and - No backlog of unprocessed Report (ICR) and continued policy environment institutional capacity of concession applications monitoring; statistical data Government to deliver key social, - Systematic application of EIA and environmental services Project Development Objective: (Objective to Goal) 1. Encourage Private Investment in - Increase average annual - Midterm evaluation and ICR - Stable, long-term politically Mining investments in mining - Statistical data. neutral macroeconomic and - Increase average annual minerals - Continued monitoring by MMI. sector policy environment 2. Increase Fiscal Revenues exports - Baseline and monitoring reports. - Reasonably stable world - Increase fiscal revenues from - Continued monitoring by MMI's minerals market 3. Develop Environmental and mining Environmental Group. conditions/prices Social Management for Mining - Define procedures for EIA for - Environmental control mining. procedures are enforceable and 4. Improve Capacity of - Systematic application of community consultative Government Institutions consultative processes processes are applicable. - Improve geological mapping coverage of the country Outputs: (Outputs to Objective) 1. Government institutions in - Environmental monitoring - Midterm evaluation and ICR - Continued commitment to capacity to provide timely, reliable system operational 36 months AE. - Quarterly and annual technical reform and transparent administrative - Baseline data in selected areas performance reviews - Timing to build-up Mining services to the sector. available 36 months AE. - Baseline studies reports Cadastre Office's capacity to 2. Establishment of a modern, - Cadastral management system - Mining Cadastre data base. manage cadastral data updated and accurate Mining operational 24 months AE. - Annual social assessment reports. according to schedule. Cadastre. - Pilot baseline studies available - Commitment to honor the 3. Improved social awareness, 36 months AE. provisions of the new Mining conditions for consultative - Consultative procedures Code. processes and community implemented at end of project. - Reasonably stable world participation in new mining - MIS in place 24 months AE. minerals market projects. conditions/prices 4. Minerals Information System (MIS) Project Components/Sub- Inputs: (budget for each (Components to Outputs) components: (see Annex 2 for component) project description) I. Capacity Building, including 1. Capacity Building: US$2.55 Contracts, procurement records, - Line staff continued Institutional Reform: million monitoring reports, technical and environmental/social awarenes Implementation of the new 1.1. Institutional Reform: US$2.12 training performance evaluation related to mining institutional model: staffing, million reports, manuals, maps. - Continued commitment to organization, procedures, financial reform resources; equipment and works: Quarterly and annual reports, - Staff stability upgrading of facilities; seminars, contracts and procurement records, - Continued project ownership promotional publications. financial reports and audits. - No political interference - Satisfactory performance by 1.2. Mining Cadastre and contracted consultants. Registry System: equipment, 1.2. Mining Cadastre and Registry upgrading of facilities; System: US$ 0.43 million implementation of the Cadastre. 2. Geologic Infrastructure, Contracts, procurement records, including: 2. Geologic Infrastructure: US$ monitoring reports, technical and 2.1. Geological Mapping: million training performance evaluation - Line staff continued preparation of a complete 2.1. Geological Mapping/MIS: reports, manuals, maps. environmental/social awarenes

25 Page 21 coverage of the country with US$6.50 million related to mining digitalized maps, and setting up of Quarterly and annual reports, - Continued commitmento Minerals Information System: contracts and procurement records, reform upgrading of the information financial reports and audits. - Staff stability system; upgrading of facilities; - Continued project ownership training; and documentation. - No political interference 2.2. Geophysic Airborne Survey: - Satisfactory performance by aeromagnetic and radiometric contracted consultants. survey of two of the most 2.2. Geophysic Airborne Survey: promising mineral provinces of Mauritania, over an area of 200,000 km2, in preparation for geological mapping Supervision and publication of maps: contract supervision; printing of maps. US$2.85 million 2.3. Supervision/Publication: US$ 3. Environmental Management 1.10 million Contracts, procurement records, System-EMS/ Environmental monitoring reports, technical and Control and Assessment, including training performance evaluation environmental and socio-economic 3. Environmental Management reports, manuals, maps. baseline studies, development of System-EMS: US$1.50 million - Line staff continued consultative procedures and Quarterly and annual reports, environmental/social awarenes assessment criteria, environmental contracts and procurement records, related to mining management capacity building and financial reports and audits. - Continued commitment to training; reform and implementation of the EMS. - Staff stability - Continued project ownership 4. Project Coordination, Contracts, procurement records, - No political interference Monitoring and Evaluation monitoring reports, technical and - Satisfactory performance by - Hire and supervise staff training performance evaluation contracted consultants. - Manage procurement reports, manuals, maps. - Contract accounting and auditing - Prepare quarterly and annual 4. Project Coordination: US$1.00 Quarterly and annual reports, reports and annual operation plans million contracts and procurement records, - Line staff continued - Monitor progress and evaluate financial reports and audits. environmentausocial awarenes results. related to mining - Continued commitment to reform - Staff stability - Continued project ownership - No political interference - Satisfactory performance by contracted consultants. AE = after effectiveness

26 Page 22 Annex 2 Mining Sector Capacity Building Project Project Description Project Component 1 - Capacity Building of MMI's mining agencies - US$ 2.55 million (16.5% of total Project costs). The broad capacity building program was designed in the context of an institutional audit carried out under the Private sector Development and Capacity Building project, as part of the policy to reduce the role of the State and to adapt MMI to better-defined functions, eliminating widespread overlapping of functions and modemizing its capacity to administer the sector. The recommendations of the audit were reviewed during appraisal and resulted in a new organization where the mandates of the institutions have been redefined to take into account the clarification of the respective roles of such agencies, of the private sector, and their inter-relationships. The institutional model and a detailed action program, also reviewed during appraisal, will be implemented under the proposed Project. Two sub-components are included: 1.1. Institutional Reform - US$2.12 million (13.7% of totaltproject costs). This program aims at specifically adjusting the institutional model defined under the Private Sector Development and Capacity Building project, as reviewed during appraisal, to take into account sector reform and the skills required for a smooth implementation of the project. The new organization will be implemented through a participative process (workshops and seminars) and on-the-job training. Work will include the detailed and ad hoc design of the institutional model, including organization, staffing, budget and identification of long-term financial sources for core responsibilities; the setting up and implementation of efficient work procedures; and on-the-job training of staff in policy, legal and management matters; participation in Seminars abroad and organization of seminars and roundtables; in the country; and preparation of promotional material on the mining sector in Mauritania. Provisions include the financing of international and local consultants, of incremental operating costs related to travels and to training, of office rehabilitation, of purchase of basic core office equipment, of vehicles and of legal and technical literature, and of publication of information and legal and administrative procedures Mining Cadastre and Registry System - US$0.43 million (2.8% of total Project costs). A priority objective of the Government's mining sector policy is to establish a well-informed, and interactive cadastral system. Based on the audit carried out under Private sector Development and Capacity Building project, the proposed Project will finance the creation of a proper mining cadastre as an autonomous institution under the Ministry of Mines. The cadastre will provide reliable information about the precise location of mining rights in the territory. The procedures required in order to apply the cadastre process will be transparent, public, of general application and non-discretionary. In addition, the cadastre will cover both the mining rights requested and granted after it becomes effective, and already existing ones as well as the ones that have been simply requested. Hence the cadastral procedure will have stages, instances and resources to allow owners of acquired mining rights to adequately defend their rights in accordance with the provisions of the Mining Code. Older rights which are not inserted into the new cadastre must be legally canceled in order for the information resulting from the cadastre to be correct and useful in practice. Work under the sub-component includes the purchase of modem hardware and software, vehicles, the provision of adequate facilities for the cadastre and registry functions, the

27 Page 23 implementation of the computerized Mining Cadastre System, and on-the-job and external training. Project Component 2 - Upgrade of Geologic Infrastructure - US$ million (67.4% of total Project costs) Geological Mapping of MauritanialMinerals Information System - US$6.5 million (41.9% of total Project costs). The main goal of this sub-component is to provide the basic and reliable geological information necessary to attract investments and plan sectoral and cross-sectoral activities. In order to achieve this goal, the sub-component would support the systematic geological mapping of previously unmapped or inadequately mapped areas, and publish professional quality packages of new as well as existing, but previously unavailable, data and maps. It would strengthen and modernize MMI's geological map production through the development of remote sensing data processing and digitalized map processing and editing capacity, and train geologists on-the-job in dynamic and modern field mapping and map production techniques. The sub-component would also support the creation at the DMG of an integrated information data bank, the Minerals Information System (MIS), which would systematize the collection and interpretation of sector information into a data base, making use of state of the art technology to gather, store and provide the information to interested parties in a timely fashion. The work would aim at the digitized production and publishing of maps covering the entire territory at the 1:500,000 scale, plus about fifteen 1:200,000 scale maps, covering the promising but remote Northern area of Mauritania, and another 15 covering priority areas in the rest of the country, representing about 35% of the total area. The bulk of the work will be carried out by MMI's permanent staff, under the guidance of international consultants and the support of specialized national consultants. This sub-component includes the following activites: (i) financing of international and local consultants, installation of the LAN and connection to Internet, communications fees; (ii) provision of equipment and software, including, i.a., hardware and software specifically dedicated to data treatment and map processing equipment, communications devices and accessories; (iii) some rehabilitation work, in particular network cabling and connections, up-grading of electrical supply and computer security in government offices will be provided; (iv) purchase of geological documentation and data and satellite images; and (v) a training program focused on information, data bases and network management, and on the implementation and use of the MIS. Specific on-the-job training is also included. The Project will finance incremental operating costs and subscriptions to various local and provincial electronic databases, and Internet Geophysics Airborne Survey - US$2.85 million (18.4% of total Project costs). More information than basic geology is required to develop a specific data base for use by the private mining enterprises. The objective of the Geophysics Airborne Survey is to efficiently furnish essential geological information of public domain to private investors. This is an important service customarily maintained by the responsible Government agencies in most countries, to allow them to keep a register of the country's mineral resources and to attend the needs of the private sector. There is ample evidence that mining investors prefer to work in countries with well developed geological data systems than in countries with poor geological data. The Bank has been supporting the acquisition of geological and mining data in other countries, including Argentina, Bolivia, Ecuador, Guinea and Tanzania. The specific objective of the sub-component would be to support the mineral resource assessment of regions where mining potential is deemed to be high, bur poorly defined. In view of the high costs of such surveys, several alternatives have been considered, including reduction of the geographical area to be covered, the density of the data and the scope of the field work. This activity would provide valuable information for the geological mapping component (with which resources such as satellite images, remote sensing

28 Page 24 processing and digitalization and interpretation facilities would be shared), although the later can be executed separately. The sub-component would provide about 200,000 line-km of airborne sunrey (magnometry and radiometry) over the Northern area Sub-component supervision and publication of maps - US$1.10 million (7.1 % of total Project costs). This sub-component includes the following activities: (i) financing of international consultants, for the supervision and the integration of the two previous sub-components; (ii) processing, and printing of the geological maps produced on digital form under sub-component 2.1. Project Component 3 - Environment Management System (EMS) - US$ 1.5 million (9.7% of total project cost) The general objective of this Component is to set up a preventive environmental protection system for mining activities. This system should bring together the mining administration unit with other public and private environment entities, namely the Ministry of Rural Development and the Environment. The Component will: (i) carry out pilot environmental baseline studies and socio-economic baseline studies over selected areas as a basis for development of methodology and capacity to assess and monitor social, cultural and economic impacts of mining on local communities, and develop consultation and participatory procedures; (ii) support the creation and strengthen the capacity of an Environment Unit at DMG for the monitoring and enforcement of environmental regulations, and the setting up of procedures for the processing of Environmental Impact Statements in mining; and (iii) develop a data basis for the Environmental Management System (EMS). It includes: training of staff in environmental and socio-economic management related to mining; provision of infrastructure, field and data processing (hardware and software) equipment. Major activities are as follows: (i) Environmental Baseline Studies and Assessment of Socio-Economic Impacts of Mining Investments: Baseline studies will be carried out to obtain comprehensive information regarding the existing natural and social conditions of a given area, while assessing, at the same time, the likely socio-economic impacts of potential mining developments on the local community. This Program will: (i) provide the specific information and data for the formulation, establishment and adaptation of realistic environmental norms and standards, and to support decision-making regarding the location of infrastructure, mining and processing facilities; (ii) develop multidisciplinary research methodologies to be applied in environmental analysis; (iii) strengthen the research capacity and human resources in environmental issues related to mining activities; and (iv) develop methodologies for the assessment of the socio-economic impacts of mining on the local community, through the development of participatory approaches. Work will make selective use of existing data from available sources, through field and source compilation, revision, update, and comprehensive interpretation of such data. Such work will include, i.a., (i) the study and determination of water resources: watershed areas, rain statistics, resource modeling, and water sampling and analysis (results will also be documented in and be compatible with Geographical Information System (GIS) being strengthened in the MIS); (ii) evaluation of the areas' environmental vulnerability; and (iii), determination of mining impacts regarding existing or past operations; (iv) identification of the likely social, cultural, macro and micro economic, financial, fiscal, and other impacts of mining; (v) identification of main groups of local and regional stakeholders in the development of a mining project; (vi) selection of statistical and other performance indicators to objectively assess the costs and benefits of the impacts for each stakeholder; and (vii) evaluation and assessment of the key questions and issues to be addressed. These studies will serve as templates for subsequent work in other areas. A series of training programs and seminars will be conducted locally, for public and private sector participants. This

29 Page 25 training will focus on consultation procedures and continual monitoring and evaluation of sociofinancing of international and local consultancy services contracts. (ii) Creation of an Environmental Unit at DMG: This Program aims at supporting the creation and strengthening of the capacity of a mining Environmental Unit at DMG as a coordinating unit responsible for the development of an adequate and consistent environmental regulatory and monitoring framework, in the context of the country's Environmental Charter. This Unit would also deal with the supervision of the base line and socio-economic studies to be carried out under the Project. Provisions include the financing of international and local consultants, administrative support, training and minor purchases of equipment (office equipment, hardware and software). (iii) Environmental Management System data base: This Program is specifically directed at the implementation of a mining environmental information system, a data base inter-related to those existing in other line ministries to help administer environment licensing procedures as well as compile and process base line and monitoring data. The subcomponent includes equipment which will upgrade office facilities, and consultant services to implement the system and provide training. Project Component 4 - Project Implementation Unit (UCPM) - US$ 1.0 million (6.4% of total project cost) The Project was prepared with the strongly committed support of the coordinating team of the mining component of the Private Sector Development and Capacity Building which will be strengthened and continue to operate throughout the implementation of the Mining Sector Capacity Building Project as the Project Implementation Unit (UCPM). The UCPM will link with MMI's line agencies, and during implementation will monitor, supervise and provide management control, by Components and Sub-components, and for the Project as a whole. The UCPM will be strengthened accordingly, and will manage procurement - including all contracting works and purchases - and the hiring of consultants, the contractual relationship with the Bank and the Project's overall administration and financial management - which includes accounting, reporting, managing the Project's Credit Account and its other funding. UCPM staff will attend Bank training seminars. The UCPM will be responsible for preparing and submitting to the Bank quarterly reports dealing with Project implementation, and for contracting under Terms of Reference acceptable to the Bank, the yearly audits of the Project including the timely submission of such audit reports to the Bank. The Project will finance the contracting within the UCPM of a General Coordinator, a procurement expert, an accountant/financial expert, and administrative support staff. Funding is provided for the unit's operating costs, as well as some minor additional office equipment.

30 Page 26 Annex 3 Mining Sector Capacity Building Project Estimated Project Costs Project Component Local Foreign Total US $ thousand Capacity Building of MMI's Mining Agencies Institutional Reform Works Equipment and consumables Consultant services Training and seminars Incremental operating costs Mining Cadastre Equipment and consumables Consultant Services Training and seminars Geologic Infrastructure Cartography / MIS Consultant Services- Northern area Consultant Services - Southern area Airborne Geophysics Works Supervision and publication Consultant services Works (publication) Environment Information System (EIS) Consultant Services Mining Project Implementation Unit (UCPM) Works (rehabilitation) Equipment and consumables Consultant services Training and seminars Incremental operating costs Total Baseline Costs Physical Contingencies Price Contingencies Total Project Cost

31 Page 27 Annex 4 Mining Sector Capacity Building Project Cost Effectiveness Analysis Summary Summary of benefits and costs: Mining in Mauritania has consisted essentially of two main products, iron ore (for which production started in 1961) and copper (1970). The gross value of minerals production in Mauritania is extremely dependent on iron ore, exploited by the state-owned enterprise SNIM, that has traditionally accounted for one-third to one-half of the country's exports. Gold recovery from the Akjoujt copper mine tailings was drawn to a close in 1996 as the tailings stockpile was depleted. Plans to restart mining of the deposit on a large-scale basis have been adversely affected by the fall in metal prices. Gypsum and salt are also produced in the country. Other than iron ore and the Akjoujt copper/gold project, there are two major short-term exploration targets in Mauritania: (i) gold, where principal activities by companies like Australia's General Gold and France's LaSource, have been focused on the Tassiast, Tijirit, and Inchiri regions; and (ii) diamonds, where Australia's Ashton Mining and Canada's Rex Diamonds have obtained several permits in the Tassiat and R'Gueibat shield. In addition, an increasing number of foreign companies have established or are considering to develop exploration programs in the country which could result in the discovery of new major deposits. Mauritania's total exports in 1997 were about US$ 500 million, of which more than 40% corresponded to iron ore exports (equivalent to US$216 million). Most of the foreseeable expansion is in metallic minerals (gold and base metals) and diamonds, and the majority of this production will be exported and generate foreign exchange. Average annual investments in mining outside SNIM are essentially limited to exploration, and can be estimated to have been about US$ 10 million in While investments in exploration have expanded considerably in recent years, they are still well bellow what might be expected given Mauritania's mineral potential. The project will establish an enabling institutional and regulatory environment to help attract and sustain mining investment and increase exports. It will help to position Mauritania to fully benefit from the next surge in minerals investment brought by the recovery in the cycle, expected in two years. The revised mining code and the reforms being supported by the proposed project will put Mauritania on the path of the intemational best practices being introduced by the most advanced mining countries of Latin America, and make the country a benchmark in mining sector reform for other countries in the Region. The fiscal reform will aim at introducing a fiscal regime for mining consistent with what is considered international good practice. The project will help strengthen tax assessment and collection procedures for statutory royalties, license fees, income, dividend, and other direct and indirect taxes. The impact of the project on fiscal revenue can be estimated to be in the range of US$15 to 30 million per year, depending on the scenario.

32 Page 28 The following projections were prepared to test the robustness of the possible contributions of mining to the economy to the year Table A.4-1: Mauritania Mineral Production and Export Projections by 2010 (US$ million) Scenario Gross Production Gross Export Value Average Annual Value Investment Low Low _ _... High High Other economic benefits of mining include the development of support industries (manufacture of mining equipment, provision of consulting services, development of capital and commercial markets), transfer of technology and management know-how, and limited direct job creation. These benefits have not been quantified. The project will also help put into place environmental regulations, procedures, and monitoring capacity to minimize damage to the environment from mining operations. Main Assumptions: Low Case Scenario. SNIM's iron ore exports decrease to around US$ 150 million per year, as a combined effect of lower prices and progressive depletion of high grade ore. Akjoujt project's comissioning delayed until A small gold mine begins production by 2005 and another one by 2010; a diamond mine is commissioned by High Case Scenario. SNIM's iron ore exports remain at the US$ 200 million per year level, as a result of a new pellet plant. Akjoujt is commissioned by A small gold mine begins production by 2005, a second one by 2005, and a third one by 2010; a diamond mine is commissioned in 2005, and another one in Industrial minerals production for the domestic market reaches about US$ 5 million by Iron Ore- Current reported production: 11.5 million tons (1998). Low Case Scenario: average iron ore prices decreasing to about US$ 17.5 per ton (i.e. 1996's levels) by 2001, and remaining at that level until 2010; High Case Scenario: average iron ore prices decreasing to about US$ 17.5 per ton by 2003, and increasing to US$ 23 per ton between 2005 and 2010; pellet plant commissioned by 2005, with an annual capacity of 4 million tons per year. 2. Copper- Current reported production: none. Low Case Scenario: Akjoujt delayed 4 years; copper prices at today's levels (US$ 0.80 per pound); High Case Scenario: Akjoujt delayed 4 years; copper prices recovering to about US$ 1.00 per pound. 3. Gold- Current reported production: none. Low Case Scenario: Average annual investment: $10 million ( ); Annual Exports: $ 5 million in 2005, and $ 10 million by 2010;High Case Scenario: Average annual investment: $20 million ( ); Annual Exports: $ 10 million in 2005, $ 25 million by Diamonds - Current reported production: none; Low Case Scenario: Average annual investment: $ 15 million ( ); Annual Exports: $ 10 million in 2007, and $ 20 million by 2010; High Case Scenario: Average annual investment: $ 40 million ( ); Annual Exports: $ 10 million in 2005, and $ 50 million by 2010.

33 Page 29 Annex 5 Mining Sector Capacity Building Project Financial Summary Years Ending December 31 (US$ thousands, 1999 base year) Implementation Period Project Costs Investment Costs Recurrent Costs Total Operational Period Financing Sources (% of total project costs) IBRD/IDA Government Total Main assumptions:

34 Page 30 Annex 6 Mining Sector Capacity Building Project Procurement and Disbursement Arrangements Procurement A. General Goods and works financed by IDA will be procured in accordance with IDA Guidelines for Procurement under IBRD and IDA Credits dated January 1995 and revised in January 1996, August 1996, September 1997, and January Consultancy services financed by IDA will be procured in accordance with IDA Guidelines for the Selection of Consultants by World Bank Borrowers dated January 1997, revised in September 1997 and January The Project Coordination Unit of the Ministry of Mines and Industry, the executing unit for the project, will be responsible for procurement. This unit will be reinforced to ensure that it is adequately staffed to manage the procurement arrangements. A capacity assessment will be carried out by the procurement specialist of the Resident Mission under the supervision of AFTS2, before negotiations, an action plan addressing deficiencies in the implementing unit's capacity to administer procurement in an efficient and transparent way will be addressed as necessary and its implementation would be a condition of credit effectiveness. At negotiations, assurances will be obtained from the Government that the agreed action plan will be implemented and the following procurement arrangements will apply for the implementation of the project. In addition, a General Procurement Notice (GPN) has been transmitted to IDA for publication in the United Nations Development Business to advertise for major consulting assignments and goods contracts. This notice is to be updated every year during the execution of the project until all the contracts have been procured. Procurement methods and prior review arrangements are indicated in Tables A and B of this Annex. B. Works and Goods Works. An airbome geophysical survey at an estimated cost of US$2,850,000 will be procured according to International Competitive Bidding (ICB), after a pre-qualification process. Other works to be carried out under the project consist of (i) the printing of maps, notices and promotion brochures and (ii) the rehabilitation of small office and buildings. In view of the small cost of each of these contracts, they will be procured under National Competitive Bidding (NCB) procedures for an aggregate amount of US$500,000. Goods. Goods consisting of vehicles, instrumentation, field and office equipment and furniture as well as smaller quantities of office equipment costing US$30,000 or more but less than US$100,000 for an aggregate amount US$380,000 will be procured under NCB procedures. Other smaller items of office equipment, furniture, training materials, and office supplies and documentation purchase costing less than US$30,000 per contract for an aggregate of US$240,000 will be procured on the basis of national or international shopping procedures (minimum of 3 quotations from eligible suppliers). Prior Review Arrangements. Goods and works contracts costing more than US$100,000 per contract will be subject to prior review by IDA. All other contracts will be subjected to post review.

35 Page 31 C. Consultancy Services and Training Recruitment offirms. Consultancy services for studies, technical assistance and training requiring the recruitment of firms will be procured in accordance with Bank Guidelines. Most of these services, including (i) one package for the preparation of a geological synthesis, mineral resources assessments and development of a related geographic information system; (ii) the technical supervision of larger geological and geophysical contracts; (iii) the contracting of assistance in institutional capacity building; and (iv) environmental and socio-economic baseline studies, will be recruited on the basis of the Quality and Cost Based Selection (QCBS) method for an estimated aggregate amount of US$7,500,000. Exceptions to the QCBS method will include the use of single sourcing for the second package for the preparation of a geological synthesis, and mineral resources assessments, for an estimated aggregate amount of US$1,800,000. The reason for accepting single source is based on the fact that the task represents a natural continuation of previous work carried out by French scientific institutions. BRGM has access to previous works carried out by them during decades, which will result in substantial savings of money compared with a situation where a similar task would have to be performed by competitors from other countries. It would also help to generate a grant from the French assistance program which will also contribute for the Government of Mauritania to a substantial reduction of the total amount of borrowed money. For contracts based on a shortlist of consultants estimated to cost US$ 50,000 or less per contract, the shortlist may consist entirely of national consultants if a minimum of three qualified ones are available. Recruitment of Individuals. Individuals will be recruited in cases where a firm is not needed. Such individuals will be selected and recruited on the basis of qualification and experience in accordance with Bank Guidelines. Prior Review Arrangements. All procurement documents for consulting contracts with firms for amounts exceeding US$100,000 per contract selected on the basis of a shortlist and any contract involving individual consultants exceeding US$50,000 per contract will be subject to prior review by IDA. In addition, for consultant contracts with firms exceeding US$100,000 per contract, the technical evaluation report will also be required by IDA for prior review. All other contracts will be subjected to post-review. Disbursement Allocation of credit proceeds (Table C). The credit would be disbursed over a period of 60 months (the Project completion date would be June 30, 2004 and the Credit closing date is December 31, 2004), as follows: (i) 100 percent of foreign and 85 percent for contract works; (ii) 100 percent of foreign and 85 percent of local expenditures for goods; (iii) 100 percent for consultancies; (iv) 100 percent for training and seminars; and (v) 70 percent for incremental operating costs. Disbursement of Credit proceeds would be made against five categories (base costs): (i) contract works (US$2.70 million); (ii) goods (US$0.55 million); (iii) consulting contracts (US$9.65 million); (iv) training (US$ 0.75); and (v) incremental operating costs (US$0.30 million). Unallocated contingency allowances amount to about 7 percent of total project base costs. Retroactive Financing. Eligible expenditures incurred four months before the actual signature of the Credit Agreement would be retroactively financed up to a maximum equivalent of US$0.5 million, about 3% of the Credit value. Retroactive finance would reimburse start-up

36 Page 32 activities that are essential for timely project implementation, namely office rehabilitation at DMG and essential equipment and software for the Cadastre and the Minerals Information System. Use of statements of expenses (SOEs): Disbursements will be made against Statement of Expenses (SOEs) for contracts and goods not requiring the Bank's prior review. Therefore disbursements for all contracts for: goods and civil works of less than US$150,000; consulting services, by firms and individuals of less than US$100,000 and US$50,000 respectively; and all incremental operating expenses and training, would be made on the basis of SOEs and certified by the UCPM. SOE statements will be audited annually by independent auditors acceptable to the Bank. Special account: Payments from the Credit proceeds would be administered by the UCPM from a Special Account. The Special Account would be maintained in US dollars in a commercial bank selected by the Borrower and acceptable to the World Bank. The authorized allocation, sufficient for about four months of financeable expenditures, would be US$ 1 million; however, the initial allocation would be limited to US$0.5 million until the aggregate amount of withdrawals from the Credit Account plus the total amount of all outstanding special commitments entered into the Bank shall be equal to or exceed SDR 1 million. The Special Account would be managed by the UCPM which would be responsible for preparing disbursement requests. These requests would be submitted monthly or when the Special Account has been drawn down by a third of the initial deposit, whichever occurs first. Replenishment of the Special Account would follow Bank procedures. Disbursements will be made under the authorized signature from a designated representative of the Borrower. The Special Account would be audited annually by independent auditors acceptable to the Bank.

37 Page 33 Annex 6, Table A: Project Costs by Procurement Arrangements' (in US$ thousands equivalent) Expenditure Category Procurement Method Total Cost (including contingencies) ICB NCB Other N.B.F 1. Works 2, ,350 (IDA) (2,460) (450) (2,910) 2. Goods (IDA) (380) (220) (600) 3. Consultancy services 10,360 10,360 (IDA) (10,360) (10,360) 4. Training (IDA) (805) (805) 5. Incremental operating cost (IDA) (325) (325) Total 2, ,770 15,500 (2,460) (830) (11,710) (15,000) Note: Figures in parenthesis are the amounts to be financed by the Bank Credit/IDA credit For details on presentation of Procurement Methods refer to OD 11.02, "Procurement Arrangements for Investment Operations." Details on Consultant Services can be shown more easily in the Table Al format (additional to Table A, where applicable).

38 Page 34 Consultant Services Expenditure Category Annex 6, Table Al: Consultant Selection Arrangements (optional) (in US$ thousands equivalent) Selection Method QCBS QBS SFB LCS CQ Other N.B1.F. Total Cost (including contingencies) A. Firms 7,420 1,800 9,220 (7,420) (1,800) (9,220) B. Individuals 1,140 1,140 (1,140) (1,140) Total 7,420 1,140 1,800 10,360 (7,420) (1,140) (1,800) (10,360) Note: QCBS = Quality- and Cost-Based Selection QBS = Quality-based Selection SFB = Selection under a Fixed Budget LCS = Least-Cost Selection CQ = Selection Based on Consultants' Qualifications Other = Selection of individual consultants (per Section V of Consultants Guidelines), Commercial Practices, etc. N.B.F. = Not Bank-financed. Figures in parenthesis are the amounts to be financed by the Bank Credit.

39 Page Works Annex 6, Table B: Thresholds for Procurement Methods and Prior Review' Expenditure Contract Value Procurement Contracts Subject to Category (Threshold) Method Prior Review / Estimated Total Value Subject to Prior Review US $ thousands US $ millions > 100 ICB All/ NCB None <30 Price quotations None (shopping) 2. Goods >100 ICB n.a NCB None <30 Shopping None 3. Services Firms > 100 All/10.4 < 100 None Individuals > 50 All/0.8 < 50 None Total value of contracts subject to prior review: 14.0 Thresholds generally differ by country and project. Consult OD "Review of Procurement Documentation" and contact the Regional Procurement Adviser for guidance.

40 Page 36 Annex 6, Table C: Allocation of Credit Proceeds Amount of the Credit Allocated Category (Expressed in SDR % of Expenditures to be equivalent) financed 1. Geophysical and civil works 2,.000, % of foreign expenditures and 85% of local expenditures 2. Equipment 400, % of foreign Expenditures and 85% of local expenditures 3. Consultant's services 7,100, % 4. Training 550, % 5. Incremental operating costs % 6. Unallocated 800,000 Total 11,100,000

41 Page 37 Annex 7 Note Technique sur la Gestion Financiere du Projet 1. Pendant 1'evaluation du projet, la mission a procedd A une appreciation du systeme de gestion financiere qui est en train d'etre mis en place par l'unite de Coordination du Projet Minier (UCPM): budget, comptabilite, contr6le interne, audit et etablissement de rapports financiers. Le systeme defini s'inspire de celui en place au Projet de Renforcement des Capacites de Developpement du Secteur Priv6 (PRCDSD) qui a A son sein une composante de renforcement du secteur minier. 2. Enseignements du PRCDSD. La gestion administrative, comptable et financiere du PRCDSP est assuree par un agent comptable. Le systeme comptable est un systeme du type entreprise, le traitement des donnees comptables est informatise (logiciel comptable SAARI), et le traitement de la paie est realise sur le logiciel de paie du meme fournisseur SAARI. Les autres operations sont rdalisees sur le Tableur EXCEL. II s'agit notamment de l'ptablissements des etats certifi6s de depenses et de la preparation des tableaux des immobilisations et du suivi des categories budgetaires. Le plan comptable utilise pr6voit une codification generale et une codification analytique. Le dernier rapport de l'auditeur sur les procedures a conclu que les operations courantes sont correctement effectuees, et que les pieces justificatives presentent le caractere de documents probants. 3. Recommandations pour Pamnlioration de ce systm _. La mission estime que le systeme du PRCDSP est un bon exemple que le PRISM peut adopter. La mission a fait les observations suivantes afin de rendre ce systeme plus performant: * le choix definitif du logiciel ne devrait 8tre fait qu'apres l'6tude a realiser par le cabinet d'expertise qui fait la mise en place du systeme. L'UCPM peut par contre informer le cabinet des avantages comparatifs du logiciel SAARI, notamment en lui demandant d'avoir des rencontres avec le PRCDSP dans le cadre de son etude. La mission a note dans d'autres projets de la Banque Mondiale que le systeme SAARI presente quelques faiblesses, qu'il faut attenuer. En effet, le systeme conduit l'equipe de la comptabilite A effectuer de nombreuses operations sur tableurs pour le suivi du compte credit en DTS ainsi que les engagements et depenses par composantes. II est par consequent indispensable au niveau du parametrage du logiciel, qu'une attention particuliere soit accordee sur ce point. L'UCPM doit s'assurer que la codification analytique permet d'obtenir le suivi par categorie budgetaire et par composante. Le logiciel doit egalement 8tre mis au point de maniere a obtenir automatiquement les etats financiers. * La Banque a mis en place l'initiative pour l'amenagement de l'administration des Pr8ts (Loan Administration Change Initiative, LACI). Cette initiative vise a integrer tout ce qui se rapporte au projet - comptabilite, passation des marches, gestion des contrats, decaissement et audit, aussi bien qu'avancement physique - dans en seul document : le Rapport de Gestion du Proj et. Afin de prdparer le passage futur du projet a ce systeme, comme c'est le souhait de la Banque Mondiale, le parametrage du logiciel doit prevoir la preparation de situations trimestrielles qui fournissent ce genre d'information. L'Emprunteur et l'ida se sont accordes sur le calendrier pour la mise en place de tous le elements necessaires A la mise en place 6ventuelle du systeme LACI (Annexe 7.A). Ce calendrier prevoit sa mise en place A compter du 3 1 eme mois suivant la mise en vigueur du credit. Le nouveau mode de decaissement necessitera la remise des rapports trimestriels

42 Page 38 suivants: (i) rapport financier; (ii) rapport de contr6le des resultats physiques; et (iii) rapport de contr6le des procedures de passation de marche. Enfin le systeme A mettre en place doit permettre un passage adequat a l'an Selection de la firme pour la mise en place des capacites durables de programmation budgetaire, de gestion du personnel, de gestion du patrimoine, de gestion comptable et financiere et de la gestion des marches. La mission a fait connaitre sa non-objection aux termes de reference, au projet de lettre d'invitation et A la liste restreinte. La Societe Mauritanienne d'etudes et de Comptabilite SOMECOMPT a ete retenue pour cette prestation. Ce bureau mettra en place: * Un systeme informatise qui comportera des modules de: (i) comptabilite generale; (ii) comptabilite budgetaire; (iii) gestion du personnel; (iv) gestion du patrimoine (immobilisations et stocks); et (v) gestion de marche. * Un manuel de procedures administratives, comptables et financieres qui comportera: (i) les procedures comptables; (ii) les procedures de gestion du personnel; (iii) les procedures d'achat; (iv) les procedures de gestion et de suivi des marches; (v) les procedures de gestion de patrimoine (immobilisations et stocks); (vi) les procedures d'elaboration et de suivi du budget; et (vii) les procedures de gestion des financements. * un programme de formation sur l'outil informatique et sur le manuel de procedures. Le bureau assurera la formation apres avis du gouvernement et de la Banque sur le manuel et le programme de formation. Toutes ces activites doivent etre realisees en fonction du chronogramme presente en Annexe 7.A. L'Emprunteur s'assurera du respect de ces delais, la presentation du manuel de procedures qui garantisse un systeme comptable et financier etant une des conditions necessaires pour la negociation du credit. * Des prestations supplementaires par rapport A la proposition technique et financiere du Consultant s'averent indispensables et donc feront l'objet d'un avenant. Cette mission consiste a superviser I'agent comptable de l'ucpm dans la preparation des etats budgetaires et financiers trimestriels (r6vision de comptes et etablissements des etats). L'objectif etant qu'a la fin de la premiere annee d'assistance, donc de formation de la part du consultant, le comptable soit entierement autonome pour l'ensemble de ses fonctions. La mission estime le budget de cette mission a environ une semaine/homme par trimestre. 5. Selection de l'auditeur financier. La mission a fait connaitre sa non-objection aux termes de reference. Par contre, elle a souhaite qu'on relance la procedure de selection, car dans la liste restreinte proposee, seulement un cabinet sur les trois remplissait les exigences de l'ida en matiere d'audit. En effet, I'audit doit etre effectues par "les cabinets qui ont des liens directs avec des grands cabinets intemationaux (qui font notamment l'objet de contr6le de qualite du groupe) ou qui sont membres A part entiere d'organisations professionnelles internationales d'audit." Afin de respecter l'ech6ance prevue pour les negociations, la nouvelle consultation doit suivre le calendrier presente en Annexe 7.B. La selection des auditeurs du projet est une condition de mise en vigueur du projet. 6. Specialiste de passation de marches et agent comptable. Conformement A l'organigramme propose, ces deux personnes doivent etre recrutees dans les meilleurs delais, afin qu'ils puissent suivre les formations que va assurer le cabinet charge de la mise en place du systeme administratif, comptable et financier. La mission a fait des propositions des termes de references.

43 Page 39 Annexe 7.A - Plan d'action pour la Gestion Financiere du Projet 1- Manuel de Procedures administratives, comptables et financieres Actions Dates Observations Transmission par le cabinet du draft du 15 avril 99 A suivre par le Coordinateur manuel Transmission du Manuel de Procedures 15 avril 99 La Coordinateur s'assurera en liaison avec par le Coordinateur au differents les autorites competentes nationales de la partenaires: bonne mise en forme du document, et IDA/Ministere/Composantes procedera a la reproduction et a la distribution du document aux partenaires. - Commentaires des differents 22 avril 99 Le coordinateur formalisera les partenaires: commentaires des differents partenaires et UCPM/Ministere/Composantes/IDA reagira aupres du Consultant pour incorporer les revisions qui s'avereraient necessaires. Transmission de la version finale apres 30 avril 99 prise en compte par le Consultant des differents commentaires, le cas echeant. Programme de formation sur le manuel 30 avril 99 de procedures Formation de 1'ensemble du personnel 15 mai 99 sur le manuel de procedures Evaluation des capacit_s de gestion 30 mois IDA financiere, de passation de marche et apres mise d'execution physique du projet. en vigueur. Mise en place 6ventuelle du LACI 33 mois Emprunteur/IDA apres mise en vigueur. 2 - Systeme informatique Actions Dates Observations Transmission de la proposition technique et 31 mars 99 financiere du consultant pour le choix du logiciel Avis de l'ucpm (l'ucpm demendera au 05 avril 99 prealable l'avis de l'ida ) Installation du logiciel 30 avril 99 Transmission du programme de formation sur 31 mai 99 le logiciel Formation sur le logiciel 15 juin 99

44 Page 40 ANNEXE 7.B - Plan d'action pour la Selection du Cabinet charge de I'Audit Financier du projet Examen par Ouverture Non-objection Accord IDA Lancement Ouverture I'IDA du des offres IDA sur sur Lettre de la des offres rapport financieres proposition invitation et consultation techniques d'evaluation (apres attribution liste des offres accord de contrat et restreinte techniques I'IDA) Signature du contrat Audit j22/02/ / 03 / 99 01/04/99 05/04/99 26/04/99 financi r I 22 L

45 Page 41 Annex 8 Mining Sector Capacity Building Project Processing Budget and Schedule A. Project Budget (US$000) Planned Actual (At final PCD stage) $ 49,800 B. Project Schedule Planned Actual (At final PCD stage) Time taken to prepare the project (months) 6 months 6 months First Bank mission (identification) 10/15/ /15/1998 Appraisal mission departure 02/05/ /10/1999 Negotiations 04/09/ /09/1999 Board Presentation 05/13/1999 / /19 Planned Date of Effectiveness 07/31/1999 _I_/19= Prepared by: Ministry of Mines and Industry Preparation assistance: PHRD/Japanese Grant Bank staff who worked on the project included: Name Specialty Paulo de Sa Task Team Leader Gotthard Walser Senior Mining Specialist Hans Wabnitz Legal T. Mpoy-Kamulayi Legal Wolfgang Chadab Disbursement Siaka Bakayoko Financial Management Abdoulaye Coulibaly Financial Management Bernard Abeille Procurement Claude Ginet (Consultant) Mining T.A.

46 Page 42 Annex 9 Mining Sector Capacity Building Project Documents in the Project File* A. Project Implementation Plan Manuel d'implementation du Proj et (Draft) B. Bank Staff Assessments C. Other Private Sector Development Capacity Building Project Memorandum of the President, Staff Appraisal Report, Aide-memoires and BTOs 9tll year PFP Matrix Mining Sector Policy Declaration Mining Law *Including electronic files.

47 CAS Annex B8 Generated: 01/30/99 Status of Bank Group Operations in Mauritania Operations Portfolio Difference Between expected Original Amount in USS' Millions and actual Last PSR Fiscal disbursements a/ Supervision Rating b/ Project ID Year Borrower Purpose IBRD IDA Cancel. Undisb. Orig Frm Rev'd Dev Obi Imp Prog Number of Closed Projects: 33 Active Projects.. MR-PE GOVERNMENT TECItNICAL/VOCATIONAL S S MR-PE GOVERNMENT AGRIC SERVICES S HU MR-PE FIN/PRIV.SCTR.CAPACI S S MR-PE GOVT OF MAURITANIA GENERAL EDUCATION PR S S MR-PE ISL. REP. OF MTA INFRAST & PILOT DEC S S MR-PE MINISTRY OF PLAN PUBLIC RESOURCE MGMT HS S MR-PE OMVS REGIONAL POWER S S MR-PE GOVERNMENT RAINFED NAT RES MGT S S MR-PE MINISTRY OF HEALTH & SOCI HEALTH SECTOR INVEST HS HS Total (D Active Pro1ects Closed Proiects Total Total Disbursed (IBRD and IDA): of which has been repaid: Total now held by IBRD and IDA: Amount sold : Of which repaid : Total Undisbursed : a. Intended disbursements to date minus actual disbursements to date as projected at appraisal. b. Following the FY94 Annual Review of Portfolio performance (ARPP), a letter based system was introduced (IS - highly Satisfactory, S - satisfactory, U - unsatisfactory, )IU- highly unsatisfactory): see proposed Improvements in Project and Portfolio Perforasance Rating Methodology (SecM94-901), August 23, Note: Disbursement data is updated at the end of the first week of the month. G Generated by the Operations Information System (OIS) PageI

48 Annex 10 - Page 44 - CAS Annex B8 Mauritania STATEMENT OF IFC's Committed and Disbursed Portfolio As of 3 1-Dec-98 (In US Dollar Millions) Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1996 AEF Mayo Fish GBM AEF Codipal AEF STEP BMCI Total Portfolio: Approvals Pending Commitment Loan Equity Quasi Partic Total Pending Commitnent: Generated by the Operations Information System (OIS) on

49 Page 45 Annex 11 Maunrtania at a glance Sub- POVERTY and SOCIAL Saharan Low- Mauritania Africa Income Development diamond' 1997 Population, mid-year(millions) ,048 Life expectancy GNP per capita (Alas metho4 US$) GNP (Atlas method, USS bilons) Average annual growth, Population (X) Labor force (%/6) GNP - Gross per F primary Most recent estimate (latest year available, ) capita N / enrollment Poverty (% of population below national poverty line) 50 Urban populabtion (% of total populaton) Life expectancy at birth (years) Infant mortality (per live births) Child mainutrition (% of children under S) Access to safe water Access to safe water (% of population) Illiteracy (% of populabon age 15+) Gross primary enrollmdnt (% of school-age populaton) Mauntania Maie Low-income group Female KEY ECONOMIC RATIOS and LONG-TERM TRENDS : 1997 Economic ratloas GDP (US$blfions) Gross domestcinvestmenvgdp Trade Exports of goods and services/gop U3 Gross domestc savings/gop Gross national savings/gop Current account balance/gop Domestc Interest payments/gop Savi0 Investment Total debt/gop Sa n Total debt servicelexports I Presentvalue of debtwgdp Present value of debt/exports Indebtedness (average annual growth) GOP S Ma untania GNP percapita Z9 2.1 Lowincome group Exports ofgoods and services ,1,9a STRUCTURE of the ECONOMY S97 Grwth stasofoutputandlnvestm nt(%.) (% of GDP) 4 Agriculture r Industry ,_ Manufacturing Services ' SR u\a4f 95 go Private consumpbon Generai govemment consumption Go -GCw Imports of goods and services (average annual growth) Growth rtes of export and Imports l.) Agriculture Industry Manufacturing Services Private consumpbon General govemment consumpton Gross domestic investment Imports of goods and services Export - mports Gross national product Note: 1997 data are preliminary estimates. * The diamonds show fbur key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete..

50 Page 46 Annex 1 1 PRICES and GOVERNMENT FINANCE Domestic prices Inflation (%l (M change) T Consumer prices Implicit GOP deflator s Mauritania Govemment finance (% of GDO includes current grants) Current revenue Current budget balance Overall surplus/deficit GOP deflator OCPt TRAOE Export and import levelsa(us$ millions) (USS millions) Total exports (fob) cj Iron Fish a c Manufactures Total imports (Of o Food Fuel and energy Capital goods c * Export pnce index (1995=100) z Import price index (1995=100) a*exports simports Terms of trade (1995=100) BALANCE of PAYMENTS Current account balance to GDP ratio I%) (US$ millions) Exports of goods and services Imports of goods and services Resource balance i Net income Net current transfers Current account balance j. Financing items (net).. 21a Changes in net reserves S- Memo: Reserves including gold (USS millions) Conversion rate (DEC, localnjss) EXTERNAL DEBT and RESOURCE FLOWS _ i (USS millions) Composition of total debt, 1997 (US$ millions) Total debt outstanding and disbursed 407 1,749 2,415 2,376 IBRD G: 217 IDA F: 24:372 Total debtservice IBRD : 119 IDA Compositon of net resource flows Official grants Official creditors Private creditors Foreign direct investrnent : 1,07 s62 Portfolio equity World Bank program Commitments A - IBRO E -Bilteral Disbursements IDA 0 - Other Mutltateral F -Private Prncipal repayments C - IMF G -Short-tera Net flows Interest payments C Net transfers Development Economics t MRTCAAGB

51 PROPOSED ORGANIZATION OF MMI'S MINING AGENCIES Ministry of Mines and Industry Sector Policy and Promotion I ~~~~~~~~~~ ~ Hea... Mining Directorate I Director Mining Cadastre Unit I Head Sector monitoring and supervision I Sr. Conlsit (Intranel) Management of mini ig permits I Deputy Management of sector data bases 2 Jr. Coij~~~ Graphic Register 1 Receptionist Information to Investors Support to the definition of sector policy Mining Service Monitoring and supervision of operations (health, safety, environment) Mining promotion and data Technical and Financial evaluation of applications for permits I Head 2 Jr. Consits. m X Environmental Service Evaluation of Environmental studies (Impact Studies and Audits) Environmental Management and Information System Coordination with Ministry of Environment I Head I senior Staff I Sr. Conslt. I Yr. ConsYt Geological Service Coordination of the Mapping Program Management of the Geological Information System (SIG) Information gathering and diffusion I I-lead 2 Staff Documentation I Sr. Conslt. I Jr. Consit. L Servie Servic, _._ Conslt:consultant, non-permanent (fr the Project) _of H_ydrocarbonsu ltnt "p the Proect) Consit: consultant, "permanent", to be hired later by DMG

52 MAP SECTION

53 Il 18D 16 14e Atlantic e.niesh - N * CQcoear,/S;ahoraj! MAU RITAN IA A 30tMAURITANIA IBRD ALGERIA 0 -~">~ PRIMARY ROADS MNokchott MA L I SECONDARY ROADS._ Nema* *Tombouctou TRACKS D ks t ---- '---4- RAILROADS THk~ ENEA \.K RAMS / Aamoko / 0 SELECTED TOWNS GUINEA /(Ou.a du~j ts REGION CAPITALS ROi HOA 2 AtRPORTS MO ROCCO 2 C EGC>PORTS -C--U--A The boundaries, colors, denominations REGION BOUNDARIES To Tindoavi and ony other information shou,n on INTERNATIONAL this map do not imply, on the port.of The Worldi Bank Group, any judgment BOUNDARIES on the legal status of any territory, or I 'l o any endorsement acceptance of I * ~~~~~~such bounacries, *ALGERIA I 26' 1 1 ~~~~~~~~~~~~~~~~~~~~~~~~N26- KitOMETERS Till 0~ ~ ~ To La'Youni ren r-a 1±. -.. At'ontic ToLa Bir Mogrein N 2 FORM ER TIRIS Ocean SPANISH i ZEMMOUR 24- SAHARA I A - ct' ZouSrot '<---' ".K-- '> ""2 Fd6rik I TouaiYnI/ / j NouadhJb * Lu /houm- - I to Gou6rroi H ur d n DAaET ]/ Aiq' ~~~~~~A D R A R!i 20 NOUADHO I N C H 1NiDHChinguetti / j. rjw j ~~~Akjo Obuie'fr,, Nou6mgh6r / V- '.>X/ i ' 'v NOUAKCHO3!, -Agoildl / ~ TAGANT/ HODH ECH I FaT m Tichtt / C H A R GUI I 180 '~AZBoutiimt ~ - : -16,uis aounios 1 'E A * I '%" Bassik > Gouraye, ss X~~~~~~~~~~kosa 16 ojoi a *\,K A 0I' ~ mu~~.senegal A 5M L I 14- Irse 1; B FEBRUARY 1995