Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD1991 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF SDR 110.4 MILLION (US$150 MILLION EQUIVALENT) TO THE FEDERAL REPUBLIC OF NIGERIA FOR A MINERAL SECTOR SUPPORT FOR ECONOMIC DIVERSIFICATION PROJECT (MINDIVER) MARCH 27, 2017 Energy and Extractives Global Practice Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Transcript
Document of
The World Bank
FOR OFFICIAL USE ONLY Report No: PAD1991
INTERNATIONAL DEVELOPMENT ASSOCIATION
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED CREDIT
IN THE AMOUNT OF SDR 110.4 MILLION
(US$150 MILLION EQUIVALENT)
TO THE
FEDERAL REPUBLIC OF NIGERIA
FOR A
MINERAL SECTOR SUPPORT FOR ECONOMIC DIVERSIFICATION PROJECT (MINDIVER)
MARCH 27, 2017
Energy and Extractives Global Practice Africa Region
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
CURRENCY EQUIVALENTS
(Exchange Rate Effective January 31, 2017)
Currency Unit = Nigerian Naira (NGN)
NGN 304.75 = US$1
US$ = SDR 0.73592723
FISCAL YEAR
January 1–December 31
ABBREVIATIONS AND ACRONYMS
ASM Artisanal and Small-Scale Mining CBN Central Bank of Nigeria CBO Community-Based Organization CDA Community Development Agreement CPS Country Partnership Strategy CSO Civil Society Organization DSS Decision Support System EFO Externally Funded Output EI Extractive Industries EIA Environmental Impact Assessment EIMS Environmental Information Management System EIS Environmental Information System EITI Extractive Industries Transparency Initiative EL Exploration License ESHS Environmental, Social, Health, and Safety ESIA Environmental and Social Impact Assessment ESMF Environmental and Social Management Framework ESMP Environmental and Social Management Plan FCT Federal Capital Territory FIRS Federal Inland Revenue Service FM Financial Management FPM Financial Procedures Manual FPFMD Federal Project Financial Management Department GDP Gross Domestic Product GIS Geographic Information System GoN Government of Nigeria GP Global Practice GRM Grievance Redress Mechanism IC Individual Consultant IFC International Finance Corporation IFR Interim Financial Report IMF International Monetary Fund LSM Large Scale Mining
M&E Monitoring and Evaluation MBC Mineral Buying Center MCO Mining Cadastre Office MDAs Ministries, Departments, and Agencies MI Mines Inspectorate MID Mining Inspectorate Department MIREMCO Mineral Resources and Environmental Management Committee ML Mining License MMIS Mining Management Information System MMSD Ministry of Mines and Steel Development (current name of the responsible Ministry) MSMD Ministry of Solid Minerals Development (former name of the responsible Ministry) MTR Midterm Review NCB National Competitive Bidding NEITI Nigeria Extractive Industries Transparency Initiative NGO Nongovernmental Organization NGSA Nigerian Geological Surveys Agency NIMG Nigerian Institute of Mining and Geosciences NMMA Nigerian Minerals and Mining Act NPF New Procurement Framework OAGF Office of the Accountant General of the Federation OPRC Operational Procurement Review Committee PIU Project Implementation Unit PMO Project Management Office PPA Project Preparation Advance PPF Project Preparation Facility PPSD Project Procurement Strategy for Development QCBS Quality- and Cost-Based Selection QL Quarrying License REE Rare Earth Element RPF Resettlement Policy Framework RPM Resale Price Maintenance SBD Standard Bidding Document SESA Strategic Environmental and Social Assessment SMDF Solid Minerals Development Fund SME Small Medium Enterprises SMMRP Sustainable Management of Mineral Resources Project SPV Special Purpose Vehicle SSML Small-Scale Mining License TA Technical Assistance TOR Terms of Reference TQM Total Quality Management TTL Task Team Leader TWG Technical Working Group VfM
Value for Money
Regional Vice President: Makhtar Diop
Country Director: Rachid Benmessaoud
Senior Global Practice Director: Riccardo Puliti
Practice Manager: Christopher Gilbert Sheldon
Task Team Leader: Francisco Igualada Delgado
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 1 of 109
BASIC INFORMATION
Is this a regionally tagged project? Country(ies) Lending Instrument
No Investment Project Financing
[ ] Situations of Urgent Need of Assistance or Capacity Constraints
[ ] Financial Intermediaries
[ ] Series of Projects
Approval Date Closing Date Environmental Assessment Category
28-Mar-2017 30-Jun-2022 B - Partial Assessment
Bank/IFC Collaboration
No
Proposed Development Objective(s) To enhance the mining sector's contribution to the economy by strengthening key government institutions, improving information infrastructure and knowledge, and fostering domestic investment in the sector.
Components
Component Name Cost (US$, millions)
Establishing a Strong Foundation for Mining Sector Development 68,800,000.00
Facilitating Downstream Sector Development & Enhancing Competitiveness 67,600,000.00
Project Management and Coordination 9,600,000.00
Organizations
Borrower :
Federal Ministry of Finance
Implementing Agency : Ministry of Mines and Steel Development
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Gender Tag Does the project plan to undertake any of the following? a. Analysis to identify Project-relevant gaps between males and females, especially in light of country gaps identified through SCD and CPF Yes b. Specific action(s) to address the gender gaps identified in (a) and/or to improve women or men's empowerment Yes c. Include Indicators in results framework to monitor outcomes from actions identified in (b) Yes
SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT)
Risk Category Rating
1. Political and Governance Substantial
2. Macroeconomic Moderate
3. Sector Strategies and Policies Low
4. Technical Design of Project or Program Substantial
5. Institutional Capacity for Implementation and Sustainability Moderate
6. Fiduciary Moderate
7. Environment and Social Substantial
8. Stakeholders Substantial
9. Other
10. Overall Substantial
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 4 of 109
COMPLIANCE
Policy
Does the project depart from the CPF in content or in other significant respects?
[ ] Yes [✔] No
Does the project require any waivers of Bank policies?
[ ] Yes [✔] No
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment OP/BP 4.01 ✔
Natural Habitats OP/BP 4.04 ✔
Forests OP/BP 4.36 ✔
Pest Management OP 4.09 ✔
Physical Cultural Resources OP/BP 4.11 ✔
Indigenous Peoples OP/BP 4.10 ✔
Involuntary Resettlement OP/BP 4.12 ✔
Safety of Dams OP/BP 4.37 ✔
Projects on International Waterways OP/BP 7.50 ✔
Projects in Disputed Areas OP/BP 7.60 ✔
Legal Covenants
Sections and Description The Recipient shall, not later than twelve (12) months after the Effective Date, review and update the Sectoral
Environmental and Social Assessment under terms of reference satisfactory to the Association; and (b) adopt and
disclose an action plan to carry out the updated SESA.
Conditions
Type Description Disbursement for payments made prior to the date of this Agreement, except that withdrawals
up to an aggregate amount not to exceed SDR 1,900,000 may be made for payments made prior to this date but on or after November 1, 2016, for Eligible
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 5 of 109
Expenditures under Category (1) Type Description Disbursement under Category (3), unless and until the Recipient has: (i) prepared and adopted
the Small Grants Pilot Program Manual in accordance with the provisions of Section I.B.2 of Schedule 2 to this Agreement; and (ii) carried out under terms of reference satisfactory to the Association, a comprehensive fiduciary and technical audit of the entity implementing Part B.4(c) of the Project and submitted said audit to the Association
PROJECT TEAM
Bank Staff
Name Role Specialization Unit
Francisco Igualada Delgado Team Leader(ADM Responsible)
ANNEX 5: ROAD MAP FOR THE GROWTH AND DEVELOPMENT OF THE NIGERIAN MINING INDUSTRY............................................................................................................................ 96
ANNEX 6: RESOURCE POTENTIAL OF NIGERIAN GEOLOGY AND INVENTORY OF MINING LICENSE ............................................................................................................................. 101
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 9 of 109
I. STRATEGIC CONTEXT
A. Country Context
1. For over a decade, Nigeria experienced a relatively stable and positive economic growth averaging about 7 percent a year. As a result of a statistical rebasing of the gross domestic product (GDP) in 2014, Nigeria’s GDP was placed close to US$500 billion, making it the world’s 26th largest economy and the largest economy in Africa at that time. Nigeria’s economic position was founded on strong and stable macroeconomic fundamentals (tight fiscal and monetary stance, as well as stable interest and exchange rates). It was also underpinned by an oil price boom, particularly between 2010 and the last quarter of 2014 when it reached record high levels, especially in 2013. However, contributions from the oil sector as a share of the Government revenues have been declining since 2011 from about 80.95 percent to 67.12 percent in 2014 and growth contributions had been negative mostly due to supply disruptions. More importantly, the country’s strong platform created positive domestic developments through strong inflow of foreign direct investment and domestic investment into the non-oil sector, particularly, the communications, agriculture, construction, and manufacturing sectors. As a result, the Nigerian economy became more diversified, more services-oriented, and less dominated by oil and agriculture than it was a decade ago. The economy contracted in 2015 on the back of a sharp drop in commodity prices.
2. Although the Nigerian economy had become more diversified, its revenues did not reflect this diversity as it remained dependent on oil sector revenues. GDP contributions from the non-oil sectors (agriculture, trade, real estate) have been significant but the contributions to the Government revenues and taxes have been proportionately lower than expected. There were a number of reasons for this disparity. First, the non-oil sector has a higher degree of informality than the oil sector. This has placed it outside the fiscal control of the Government. In consideration of its large informality, tax contributions from the non-oil sector have been low especially from agriculture, which has a high incidence of subsidence farming, and trading. Further compounding the situation is the weak system for tax assessment and collection.
3. Nigeria’s GDP per capita is half that of the regional average and only a fourth of that of lower-middle-income countries. During the period of high growth, the greatest challenge that Nigeria faced was not only with sustaining growth but with making it more inclusive and socioeconomically beneficial to its citizens. Unfortunately, the achievements recorded in economic growth did not sufficiently and directly benefit the poor and vulnerable in the society. The poverty reduction rate was not commensurate with the rapid growth in the GDP of the country. Estimates of the growth elasticity of poverty indicate that for every 1.0 percent growth in GDP per capita, poverty declined by only 0.6 percent. Three factors determined this lack of responsiveness: (a) high growth rates have been accompanied by comparatively high rates of population growth; (b) Nigeria has been exhibiting a low capacity to absorb labor; and (c) inequality has been widening quickly and has adversely affected poverty reduction; only half the consumption per capita growth has translated into poverty reduction. Ongoing conflict in the North, particularly around the Northeastern part, has had negative implications for investment in that part of the country and created a large number of internally displaced persons.
4. After a successful political transition in May 2015, the new Government has been consolidating its efforts toward narrowing macroeconomic and fiscal risks, achieving more inclusive growth, and
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 10 of 109
increasing revenues from the non-oil sector to compensate for declining oil revenues. However, opportunities for rapidly recovering from the economic downturn and restoring growth to pre-oil price drop are limited. A paradigm shift in the way that the economy is managed, including revenues, expenditure, debt, and investment, will be needed to cope with the new landscape of low oil prices and low oil revenues without fiscal buffers to lean on. In aiming for more inclusive growth, Nigeria’s growth and poverty reduction strategy has to focus on addressing the fundamental and structural causes of inequalities across the country and to uplift its citizens out of poverty, as well as to ensure an even basis for sharing prosperity. An even stronger economic foundation is required to facilitate the diversification of the export base and non-oil growth through improvement in external competitiveness factors and structural reforms to address severe infrastructure deficiencies. It will also need policies to help support the manufacturing base to improve the ability to meet the needs of the public sector, service industry, and industrial sector. Investing in improving the competitiveness and governance of the mining sector will be key in achieving these goals. Revenues from Nigeria’s mineral sector will probably not be able to come close to revenues generated by oil or gas revenues. However, contributions from the sector will most likely have an impact on employment, livelihoods, economic diversification, and development of small- to medium-scale exploitation of quarry materials, gemstones, gold, and industrial minerals such as barites and limestone to meet domestic manufacturing and industrial needs for production input. Although the mineral sector provides an opportunity for growth and development, it is imperative that it does not cause poor social and economic outcomes for the country but rather transforms the wealth generated from the sector into well-being and economic, social, and political stability.
B. Sectoral and Institutional Context
5. One of the key priorities of the Nigerian Government is to enhance the diversification of the economy to a broader range of productive sectors. In this context, agriculture and the mining sector have been identified, by the newly elected Government, as potential sources of growth for the future. At the highest level, the Government efforts are focused on accelerating mining investment for resource development to meet the following objectives: (a) capture of lateral economic linkages to diversify the economy; (b) job creation including formalizing of artisanal and small-scale mining (ASM); and (c) increased revenues including capture of leakages within the current system.
6. Despite the country’s resource potential and its past experience as a significant mineral producer (contributing about 4–5 percent of GDP in the 1960s and1970s based on the production and export of tin, columbite, and coal), today the sector has one of the lowest outputs in the Nigerian economy. The mining sector’s contribution to GDP has steadily declined from 5.6 percent in 1980 to about 0.33 percent by 2015, which is significantly lower than other mineral rich countries in the region. In comparison, the mining sector’s contribution to GDP in neighboring states is 6.16 percent in Ghana, 8 percent in Mali, 20 percent in Guinea, 3 percent in Niger, 20 percent in Senegal, and 24 percent in Mauritania. In 2015, Nigeria gained about 0.02 percent of its export earnings from solid minerals, compared to more than 20 percent in Namibia, Botswana, and Zambia and more than 50 percent in the Democratic Republic of Congo. Moreover, exploration expenditures in Nigeria are not commensurate with the underlying mineral endowment.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 11 of 109
Structure of Mining Sector
7. Nigeria’s mining sector is defined by a diversity of mineral resources, classified into five broad groups (more details on each mineral group in Annex 5):
Industrial minerals (for example, barite, kaolin, gypsum, feldspar, limestone);
Energy minerals (for example, coal, bitumen, lignite, uranium);
Metallic ore minerals (for example, gold, cassiterite, columbite, iron ore, lead-zinc, copper, and rare earth elements [REEs]);
Construction material/dimension stones (for example, granite, migmatite gneiss, gravel, laterite, sand); and
Precious stones (for example, sapphire, tourmaline, emerald, topaz, amethyst, garnet)1
8. Nigeria is thought to have a favorable geological potential that—if adequately assessed, well exploited, and sustainably managed—could support broader economic growth through the mineral sector. There is, however, an incomplete understanding of the full mineral endowment, and technical specialists note that the currently available stock of mineral assets, either in production or available for production (brownfield), represents a small percentage of the total. One of the key objectives of this project is to support the Government in informing itself of the full mineral endowment (of both brownfield and potential greenfield assets) for policy planning, sector promotion, and integrated long-range planning purposes.
9. Highlighting the development potential within the existing stock of known mineral resources, one study estimated the known and potential mineral reserves, and compared them to current levels of production, which are modest across all of the commodity groups. The underlying reasons contributing to this disparity between reserves and production will be addressed in the proposed project. Unlocking this potential through key reforms and strategic interventions—even for a small number of mineral assets—would have a catalytic ‘proof of concept’ effect. Nigeria has recorded relatively few new producing mines over the past several years and there is need to demonstrate to investors an integrated and operating value chain, from initial exploration to brownfield investments to processing and sale of a mineral product.
10. Nigeria has an existing pool of current mining operators, active in developing, operating, or reopening mines. Mining is geographically widespread across almost all the states of the Federation and is being conducted by a small number of companies and individuals who are focused primarily on gold, iron ore, lead-zinc, and coal mineral resources. The most active participants in the sector are the quarry operators for construction stones (mostly aggregates), cement companies for limestone, artisanal miners, and mineral traders.
(a) Quarrying. As of December 2015, there were 633 companies involved in the mining sector. Most of these companies are quarry operators. Over 90 percent of the revenue accrued to the Government in royalties on minerals come from quarrying operations. Most of the quarrying activity supplies the local construction industry and, in recent years, has begun supplying local cement manufacturers
1 The mineral lists are only indicative—they are not exhaustive.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 12 of 109
(b) Mineral trade and ASM. Mineral trade and the ASM subsector are intertwined. It is important to note that an estimated 90 percent of mining production in Nigeria has its source from the ASM subsector. Market dynamics and ready market availability fuel the supply of minerals, increasing the mining activity of in-demand minerals. Consistent availability of mineral traders for lead, zinc, tin, gold, coltan, REEs, and gemstones has strengthened the ASM activity for those minerals. These minerals enjoy strong demand by mineral traders as they remain profitable despite high logistics costs and the inelasticity of the local mineral market. Some of these minerals can only be profitably exploited through the ASM subsector, which provides an important source of livelihoods for those who live in rural areas with no other source of income. However, data, formalization, health and safety, and revenue leakages for minerals traded out of Nigeria are a challenge.
11. Apart from these existing investors, there are other opportunities to be explored for accelerating private sector investment that—if adequately assessed, well exploited, and managed—could support economic growth through mineral sector development. To grow the sector, the Government has considered, within its sector road map,2 two available classes of opportunities: (a) reviving brownfield assets and (b) generating new discoveries/targets in greenfield exploration areas.
12. At present, there is incomplete understanding of the available stock of operating and abandoned mines. Nigeria had a successful mining sector in the 1960s and 1970s, and some mines were abandoned for a variety of reasons. Within this class of brownfield assets, some may have been ‘blocked’ as a result of poor environmental or social legacy issues, licensing, or market conditions at the time these mines were abandoned. A benchmarking assessment is needed to determine if current production is correctly sized relative to the underlying mineral resources, or there are impediments resulting from undercapitalization of operators using dated, inefficient exploration and extraction technologies. Moreover, within this first class of operating and abandoned mines, the proposed project (see Subcomponent B5) will assess and understand technological, financial, commercial, and environmental/social drivers that—if properly addressed—would provide the industry and Government with opportunities for growth.
13. To develop greenfield areas, generative exploration is necessary to build a pipeline of potential future discoveries to sustain sector growth. Adding new discoveries to the overall stock of Nigeria’s known mineral resources is an important contribution that will result from successful exploration, creating a pipeline of new opportunities for employment and broader economic development opportunities. This second class of opportunities is a longer-term activity, driven by private sector investors responding to local, regional, and global market prospects using state-of-the-art technology. Incentivizing exploration begins with the Government providing a credible understanding of the underlying mineral endowment, prospective areas, and in some instances detailed geological studies especially on interesting mineral assets.
2 Recognizing the need to strategically and systematically address the challenges listed above, in early 2016 the MMSD, led by its newly appointed minister, began the process of preparing a detailed sector road map. The road map was endorsed by the President in August 2016. For more details, please see the section of the PAD on higher-level objectives and annex 4.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 13 of 109
Institutions in the Mining Sector
14. The main federal institution that oversees mining activity in Nigeria is the Ministry of Mines and Steel Development (MMSD) (formerly known as the Ministry of Solid Minerals Development (MSMD)). The ministry is organized along several technical directorates and agencies: Mines Inspectorate (MI), Mines Environmental Compliance, ASM, Metallurgical Inspectorate and Raw Material Development, and Steel and Non-Ferrous Metals. Sector agencies include the Nigerian Geological Survey Agency (NGSA), Mining Cadastre Office (MCO), and Nigerian Institute of Mining and Geosciences (NIMG).
15. Established in 1995, the ministry is the principal organ for information, policy, and regulatory oversight in the solid mineral sector in Nigeria. Its mandate includes the following: (a) exploring the solid mineral resource of the nation; (b) advising the Government on the formulation and execution of laws and regulations guiding the various stages of prospecting, quarrying, and mining; (c) providing information and knowledge for enhancing investment in the solid mineral sector; (d) regulating the solid minerals sector; (e) handling sale and consumption of solid minerals in the country through the issuance of permits, licenses, leases and collection of rents, fees, and royalties; and (f) generating revenue for the Government.
Barriers to Sector Development and Project Approach
16. Nigeria continues to struggle with becoming a significant player in most of the core global mining commodities. Even during the commodity super cycle, the country was unable to attract significant investment in exploration and mining into the sector. Moreover, productivity from the Nigerian mining sector is still insufficient to meet local demands for key inputs from mining. Extensive stakeholder dialogue and analytical work has identified a number of barriers and challenges to sector development which are discussed in detail in the paragraphs below. Within these barriers, four have been identified as ‘binding constraints’ that have been prioritized and will be addressed in the project design. They include (a) insufficient geodata and geological knowledge; (b) weak governance, in particular weak capacity to implement and enforce the existing mining law and regulations; (c) a large, poorly regulated, and informal ASM subsector; and (d) fragility, environmental, and social issues (as a cross-cutting constraint).
17. Insufficient geodata. Currently available precompetitive geoscience knowledge and geological mapping (geodata) are insufficient to identify prospective areas for investor interest. Data dissemination remains a challenge and many international junior and mid-tier mining companies are unaware of Nigeria’s full mineral potential. More detailed analytical and geodata interpretation work is necessary to fully understand the geology, assess mineral potentialities, and thereafter undertake a new approach to engaging investors on investment opportunities at all the stages of the mineral development cycle. When compared with its neighboring countries in the West African region who are (on average) receiving a 5 percent share of exploration investments worldwide, Nigeria’s share is only 0.12 percent, which is insufficient to obtain any exploration success leading to future mines.
18. The provision of modernized geological information (‘geodata’) will be an important contribution to further both greenfield and brownfield investments. Beginning with the previous World Bank–supported technical assistance (TA) (from 2005 to 2012)3, Nigeria has been collecting, analyzing, and compiling geodata that broadly describes the mineral endowment. The challenge ahead is to focus on
3 Sustainable Management of Mineral Resources (P086716)
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 14 of 109
prioritized areas for more detailed survey and to prepare information packages consisting of interpreted geodata available online to the global investment community. This approach will require implementation of a comprehensive data management and linked information enterprise system—better connecting investors with important geological information.
19. Weak implementation and enforcement of the mining law and regulations. Complex and multiple regulatory requirements related to land acquisition, community relations, equipment importation, expatriate quota approvals, and so on currently serve to deter potential investors from investing in the sector. Furthermore, the Ministry of Mines and Steel Development (MMSD) needs to strengthen human resources to adequately enforce the mining law and regulations. Several key institutions, including the Mining Police and the MI have either been inactive or have been underutilized. As a result, Nigeria has seen a proliferation of illegal miners, spanning from Osun State in the Southwest to Zamfara State in the North.
20. Limited awareness in environmental, health, and safety. Multiple environmental issues and occupational health and safety violations have resulted from a high degree of informality in the artisanal mining sector due to weaknesses in regulatory and monitoring capacity of the MMSD, which remains a challenge for sector development. Moreover, there is no assessment of abandoned mines to know whether outstanding environmental/social legacy issues could be remediated, thereafter returning these assets to production.
21. Fragility and conflict. Mining is not immune to the anxieties around security in Nigeria as the country is faced with a number of security-related challenges such as mine site security, community-based conflicts, logistics-related security, general terrorism particularly in Northern Nigeria, kidnapping, and basic crime. All these threats present additional risks to discourage in-country operators as well as potential investors. While there are no known conflicts that have resulted directly from mining activities in Nigeria, given the country’s history of instability linked to Boko Haram in the Northeast and attacks on oil and gas infrastructures in the Niger Delta, an assessment and continuous monitoring of the potential drivers of conflict, under the project, will be necessary. In addition to this, the project will build capacity at the local level and a monitoring mechanism around issues related to community engagement in mining areas.
22. Insufficiently regulated ASM. The overarching challenge related to ASM activities, which constitute over 90 percent of mineral production sites in Nigeria, is largely as a result of limited government resources to have proper oversight and control of illegal and informal mining activities, including smuggling, and revenue leakages. Because of a lack of necessary monitoring and supervision facilities, artisanal mining is often an illegal and high-risk activity. A large number of ASMs usually operate without proper licenses, seek to avoid detection by mining inspectors, and avoid paying taxes. For workers in a typical ASM environment—increasingly women and children—harsh working and living conditions are the norm. Moreover, unregulated or poorly regulated ASM activities have resulted in significant environmental destruction of precious top soil, vegetation, and animal habitat. In addition to this, artisanal and small-scale miners often lack the technical capacity, skills, and resources that would allow them to grow their mines into a larger, more financially viable operation and improve their livelihoods. Box 4 provides an overview of lessons learned from ASM development in Ghana.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 15 of 109
23. Infrastructure limitations. Sector growth is also impeded by inadequate infrastructure and multisector planning for roads, rail, water, and electric power supply to support exploration, mining, and mineral processing activities. As an example, an uncompleted rail link for the transportation of iron ore from the Nigerian Iron Ore Mining Company Itakpe, where the mine is located, to the Ajaokuta and Delta Steel Plants represents potential example of unmet infrastructure needs that could serve to facilitate the development of the steel industry and associated economic activity along the route. Continued problems in the power sector is also a challenge, raising the cost of mine production. Moreover, investors cite inadequate master plans, economic corridors, and water resource management which has become a limiting factor to mineral sector development (see Box 1 for more details on the project’s support to linking a decision support system [DSS] to improve infrastructure planning and regional development in key mining areas).
Box 1. DSS to Improve Infrastructure Planning and Regional Development
Prior World Bank assistance (P132733, 2015) has completed the first phase preparation of a core element for resource corridor analysis, a web-based DSS. Under the proposed MinDiver project, the DSS will be fully operational and enhanced to allow for regionally based resource corridor analysis that will support the Government in identifying opportunities for value chain and local content development, as well as infrastructure development in those regions. The main task of the DSS is to centralize the collection and collation of mineral data from relevant Government departments. The system serves to improve decision making for the mining sector and infrastructure development planning. It integrates spatial data on mineral occurrences, mineral licenses, infrastructure, and other parameters such as socio-economy, population, density, and land use. The information would facilitate analysis and prioritization of areas for socioeconomic growth and development based on the availability of mineral assets in the country. The system is fully multisectoral and will also serve for planning future land-use development, agriculture, transport, oil and gas, power, and overall industrial and urban development envisaged under the central corridor and other future planned corridors.
The central corridor, which is yet to be integrated and completed, is anchored on the iron ore resource within the Itakpe-Agbaja axis and other minerals, gold, coal, clay, lead/zinc ore, limestone, bitumen, and so on along the central railway line. Based on the deposit found in Itakpe, the Government established the Nigerian Iron Ore Mining Company. It also established the Ajaokuta steel complex to process the iron ore concentrates from Itakpe into steel. The mine and the steel complex are connected by a rail line to terminate at the Warri port for exportation of steel. The Ministry of Transport recently signed a Memorandum of Understanding with a Chinese Company, China Civil Engineering Construction Corporation Ltd, to complete the central rail line. Next steps include development of a feasibility study and then negotiations between the two parties. Toward the Southern part, the company would complete and extend the line to Warri town, complete and extend the Warri port, and also construct a deep-sea port. This route crosses through Delta, Edo, Kogi, Niger states and the Federal Capital Territory (FCT).
The company is also expected to extend the rail line northwards to Abuja to complete the Abuja-Ajaokuta part, which will complete the North-South transport corridor that passes through Kaduna and terminates in Kano. Once completed, it will serve existing industries along the railway route such as textile companies, vehicle assembly plants, a rolling mill company, plastic factories, cement plants, glass factor, steel plants, and a vehicle manufacturing company.
An example of the potential opportunities within the corridor is in the Ajaokuta-Itakpe axis, where two ceramic companies are located because of their proximity to industrial mineral raw materials, and the gas pipeline transporting gas to Geregu I and II, which are both open cycle gas turbine power plants with total installed capacity of 414 MW and 560 MW, respectively. Also, within the Ajaokuta steel complex, there is a 110 MW gas turbine power plant, which is not operational.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 16 of 109
24. Limited human resources and technical capacity. Over the last several decades, the sector has been constrained by a lack of investment in building human resource capacity and related manpower development programs to enhance professional skill acquisition—key areas for strengthening include modern mining and processing technologies. The decline of the mining industry in Nigeria has resulted in a deterioration in the domestic skills base and reliance on foreign labor for the mining sector. University curricula have also become outdated, with only two institutions in the country offering mining engineering programs, at a general level. Professional associations also have limited capacity to offer continuous learning and professional development to their members.
25. The mining industry is highly technologically oriented, and although Nigeria has a history of mining, the downsizing of the industry has triggered the collapse of the required capacities and human resources. The majority of the mining sector today is largely nonmechanized and labor intensive, with small and artisanal miners who have few, if any, technical, business development, finance, or marketing skills. The project intends to address these skills gaps through capacity building of key government agencies and institution, establishment of practical training for the next generation of sector specialists, implementation of a partnership program and integrated capacity development strategy with universities and other training or educational institutions (international or local), including NIMG based in Jos, and the private sector focusing on building practical technical and vocational capacity within Nigeria.
26. Lack of access to financing. Domestic investors lack access to exploration and capital financing and are therefore unable to undertake preliminary work that would attract foreign investors. Today, Nigeria’s banking system has some exposure to mining, for example, financing trading activities for lead-zinc and gold. However, financing for exploration and mine development continues to be limited because of the lack of specialist knowledge and bankable information needed to access financing for production activities. In addition, Nigerian public mining companies are struggling to identify other sources of finance to revitalize brownfield mining operations, which requires some exploration work. Moreover, the domestic banking sector does not have a sufficient understanding of the sector’s potential and as a result, few banks have dedicated minerals and mining desks and teams. Access to credit either from banks or capital markets has also been low, and as a result, the small and artisanal miners who are looking to expand their operations do not have access to financing for capital equipment (such as rigs and draglines).
27. The Mining and Minerals Act of 2007 authorized the establishment of the Solid Minerals Development Fund (SMDF) to provide funding and interventions in the key segments of the mining sector value chain. The act provides that the fund shall be utilized for geoscientific data gathering, equipping mining institutions, capacity building, developing infrastructure, and providing extension services to ASM operations. Funding for the SMDF could come from a variety of sources, including the Natural Resources Development Fund, budgetary allocations, the small- and medium-scale industries equity investment scheme, grants, donations, foreign loans, and long-term swaps; however, the SMDF was never fully capitalized and therefore never operationalized. In line with the act, the SMDF will be able to leverage its balance sheet to catalyze the emergence of a financing ecosystem that includes financial instruments such as equity, convertible debt or structured credit products, which provide cost-competitive working capital for miners.
28. Under the Government’s new road map for sector development (please see section “Road map for the growth and development of the Nigerian mining industry” and annex 4 for more details on the road map), the Government intends to restructure and then operationalize the SMDF. It is envisaged that
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 17 of 109
it will operate independent of annual budgetary cycles to support mining projects, providing capital grants, and government guarantees as credit enhancements to improve the commercial viability of projects. As part of the efforts to quickly provide access to funding to private sector operators, the MMSD plans to establish a private sector-focused mining fund as a special purpose vehicle (SPV) under the SMDF to attract larger amounts of capital and investor interest in the mining sector, in particular for high-risk investments. While the SMDF will provide the ‘seed funding’ for the SPV, other sources of finance are envisaged, including commercial sources, Development Finance Institutions, Export Credit Agencies, donor agencies, and so on. Another initiative planned under the Government road map is the establishment of a long-term assets financing and refinancing mechanism for mining projects. A facility would be established by a federal government agency such as the Central Bank of Nigeria (CBN) or the Nigerian Infrastructure Fund (under the Nigerian Sovereign Investment Authority) with the objective of encouraging commercial banks to lend to mining projects and take construction risks through provision of medium-term debt.
29. Coordination. The mining sector is complex, requiring a high degree of inter-ministerial coordination, including with and among state-level actors. At present, no permanent mechanism exists to shape, coordinate, and drive such activities and as such, a mechanism is needed. Core ministries include those responsible for the environment, power and energy, finance, trade, infrastructure, and the central bank. Interministerial coordination is essential to ensure a sufficient level of planning and inclusion of stakeholder inputs. As proposed in the Government’s road map and from the project, interministerial coordination will be enhanced through a functional analysis (Subcomponent A1) and an internal realignment within the ministry that will be translated into regulatory reforms.
30. Federal and state relations. In the case of extractive resources, the federal government has always had exclusive responsibility over its exploitation and development since the 1963 Constitution established Nigeria as a Federal Republic. During that time, Nigeria was divided into four regional governments and practiced the fiscal federalism principle, which gave the regions financial autonomy to generate revenue. Whatever the regions lacked in ownership and control over extractive/natural resources, they regained it through the revenue allocation formula that recognized their revenue contributions to the central pool. At that time, the revenue allocation formula was 50 percent in favor of the revenue-generating region. In contrast, under the Land Use Act 1978, land ownership is the exclusive responsibility of the state governments except where it is designated for public use, including use of land for mining activities. Through this act, the states are provided with a measure of control over extractive resources activities.
31. Since 1999, when Nigeria returned to democracy, the quest toward a more acceptable revenue-sharing formula has been contentious. This has typically been between the federal and state governments and even among several states. For the oil-producing states, the agitation has been with the derivation principle, which allocates 17 percent of revenues derived from the states, and their preference for a more acceptable revenue generation and distribution formula. However, because the economy contracted over the oil price crash, the public concern over the lack of revenue-generating opportunities has been enormous. Faced with the lack of revenue-generating opportunities and a quest to diversify their revenue base, a large number of states, especially those with a large occurrence of mineral resources, have also began to agitate for more control in mineral resource management. One of the ways that states have tried to exercise more control over the sector is through their authority under the Land Use Act in the mineral licensing process.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 18 of 109
Box 2. Facilitating ‘Proof of Concept’ Investments through Access to Financing
The proposed MinDiver project intends to improve access to financing for mine operators for ‘proof of concept’ investments through a number of activities, one of which includes providing the Government with TA (including analytical work) and capacity building to facilitate the establishment of the SPV in accordance with international best practices for fund management (see Subcomponent B4-3 for more information). Upon establishment of the fund and an independent verification of its governance and fiduciary mechanisms, the project will then channel direct support through the SPV for sub-grants program, targeting small- and medium-size mining operations to finance activities that will allow them to move toward a more advanced stage of the mining cycle, thereby stimulating investment in the country’s mining sector. Specific activities to be funded through the small-grants program will include preparation of environmental and social baseline studies, certification of reserves, in-fill geodata collection, preparation of financing packages, leasing equipment, and development of a framework for establishing and operationalizing mineral support centers containing mineral buying and processing centers. Figure 1 illustrates the funding cycle.
Figure 1. Schematic View of MinDiver Project’s SPV and Interaction with Other Funding Schemas for the Nigerian Mineral Sector
Road Map for the Growth and Development of the Nigerian Mining Industry
32. Recognizing the need to strategically and systematically address the challenges listed above, in early 2016 the MMSD, led by its newly appointed minister, began the process of preparing a detailed sector road map aimed at advancing the following strategic objectives: (a) to create a globally competitive sector capable of contributing to wealth creation; (b) to provide jobs and advance social and human
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 19 of 109
security by focusing on using its mining assets to drive domestic industrialization initially; and then (c) to migrate to winning in global markets through a value chain-based growth plan. The road map details a comprehensive set of short-, medium-, and long-term initiatives, action, and reforms that if implemented, is expected to drive the growth of the sector in Nigeria for years to come. The road map has benefited from an extensive consultative process with all of the key stakeholders, and in August 2016 was approved and endorsed by the President of Nigeria.
33. The road map recognizes that building a competitive mining value chain means firms operating in Nigeria must compete on quality and cost versus its global peers; and that the Government and the private sector will have to share the responsibility of investing in key drivers of success such as the availability of (and access to) public geosciences data that investors need, the appropriate infrastructure (for example, access roads, railways, power, bulk ports, and mine security networks), specialized technical talent, and of course, regulatory and enforcement capacity. Moreover, given one indicator of sector performance is payment of direct and indirect taxes, there is a compelling need for strengthening the systems for assessment and collection as well as transparent reporting that underpin tax policy and tax administration. Refer to annex 4 for more information.
World Bank’s Engagement in the Sector
34. In 2005 with support from the World Bank Sustainable Management of Mineral Resources Project (SMMRP, P086716), the Government embarked on a series of institutional and administrative reforms, aimed at refocusing the role of the state and removing inefficient and discretionary regulation in the mining sector. The objective of the project was to provide support to the Government in the implementation of a strategy designed to (a) increase the Government's long-term institutional and technical capacity to manage Nigeria's mineral resources in a sustainable way and (b) establish a basis for poverty reduction and rural economic renewal in selected areas by developing nonfarm income-generating opportunities through ASM and through diversification away from oil sources of income. At project closure, in May 2012, implementation was rated as Satisfactory by the Independent Evaluation Group. The project was able to achieve some strong results, including (a) first-phase geodata collection through airborne geophysical surveys of the entire country and creation of a geodata database; (b) establishment of modern mining cadastre (licensing management) system and cadastral procedures are considered transparent, publicly available, and nondiscretionary; (c) creation of an investor-friendly legal and regulatory framework based on international standards, including passage of the Minerals and Mining Act (2007), promulgation of regulations (2011), and an update to the fiscal regime; (d) capacity building for staff from the ministry’s departments, the MCO, the NGSA, and the NIMG; and (e) established linkages throughout the sector and formalized employment for about 251,500 miners who had previously engaged in informal and illegal mining.
35. Recognizing the need for transparency to reduce corruption, increase investor confidence, stimulate foreign investment, bolster financial independence, reduce donor assistance, and regain the trust, the Nigerian Government launched the Nigeria Extractive Industries Transparency Initiative (NEITI) in 2004. In doing so, Nigeria became the first African country to follow the Extractive Industries Transparency Initiative (EITI) global standard for improving transparency of resource revenues as well as to enact legislation, the NEITI Act, 2007, to sustain implementation of the standard. With support from the World Bank (P090895, P132087), Nigeria produced and published its first NEITI audit report for the mining sector in December 2012 covering the 2007–2010 period. For six years before that, NEITI looked
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 20 of 109
only at the oil and gas sector. Since then, the country has published two additional reports covering 2011–2012, and the latest NEITI report (for 2013) was published in May 2016.
36. Following the completion of the SMMRP, the World Bank provided support to the Preparation of a Strategic Roadmap for Mining Sector Development in Nigeria (P132733) through an Externally Funded Output (EFO) financed by the Australian and Canadian governments from 2012 to 2015. The aim of the EFO was to provide analytical support to the MMSD for design of a long-term sector vision using key analytical products on mineral resource corridor development and DSS for information management, ASM development, environmental analysis, mineral taxation optimization, gender mainstreaming, and education and learning, among others. Based on these priorities, six separate EFO products covering each of these topics were developed. In addition, the road map provides the basis for the design of many key elements of this proposed project such as an enhanced DSS for multi-sectoral and regional planning.
C. Higher-Level Objectives to which the Project Contributes
37. The Nigeria Country Partnership Strategy (CPS FY14–17, Report No. 82501-NG) puts strong emphasis on supporting the Government to achieve its goals of laying the foundation for a socially and regionally inclusive economic growth. This includes addressing the infrastructure deficits and stimulating non-oil growth. Targeting the mining sector through this project’s interventions at the large, medium, small, and artisanal scale levels of the mining sector would improve the contributions and impact from the sector on job creation, poverty alleviation, revenue generation, and non-oil growth. In response to Government priorities, the CPS seeks to support the Government through three main strategic clusters: (a) federally led structured reform agendas for growth and jobs; (b) quality and efficiency of social service delivery at state level for greater social inclusion; and (c) governance and public sector.
38. The proposed project directly supports the CPS and will build on first-generation governance reforms to address the fundamental barriers to sector development and stimulate non-oil growth through the mining sector. In aligning with the CPS, the project will stimulate foreign direct investment and domestic investment to develop medium to large mining operations; and facilitate the flow of mineral transactions for domestic market industrial development. This project also aligns with the second CPS cluster by stimulating job creation, as well as enhancing the economic opportunities of artisanal and small-scale miners. Lastly, improvement of governance and public sector management along with greater transparency and increased accountability of the mining sector is a crosscutting component of the program that aligns well with the third CPS component. Apart from aligning with national strategies, the project is also aligned with the African Mining Vision through its emphasis on integration and linkages with the domestic economy, improvement of economic opportunities for ASMs, improved geological and mining information systems, and mineral sector governance.
39. Relationship with the World Bank’s Gender Strategy. The World Bank’s New Gender Strategy with its emphasis on gender equality and poverty reduction will help inform the project’s gender analysis to increase the potential benefits of a strong mining sector equally between men and women. Building on the gender and mining study prepared under the EFO, the MinDiver project is linked to the World Bank’s Gender Strategy through the implementation of the following activities: (a) undertaking a gender impact assessment; (b) inclusive stakeholder consultations; and (c) a gender mapping exercise identifying the history of gender relations in formal and informal mining in Nigeria. On the basis of this analysis, several
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 21 of 109
activities targeting women and gender inclusiveness will be designed and implemented throughout the life of the project.
II. PROJECT DEVELOPMENT OBJECTIVES
A. PDO
40. To enhance the mining sector’s contribution to the economy by strengthening key government institutions4, improving information infrastructure and knowledge, and fostering5 domestic investment in the sector.
B. Project Beneficiaries
41. The main direct project beneficiaries include: (i) Ministry of Mines and Steel Development and its key departments and directorates, (including the directorates for Mines Inspectorate, Metallurgical Inspectorate and Raw Material Development, Mines Environmental Compliance, and Artisanal & Small Scale Mining; the Mining Cadastre Office, and the Nigerian Geological Survey Agency) who will benefit from technical assistance and capacity building from the project; (ii) The Solid Mineral Development Fund and its “facilitator fund” which will benefit from technical support for strengthening the SMDF governance and operations as well as establishing the facilitator fund; (iii) Mine operators and investors, including artisanal, small-scale, and medium size miners who will be the direct beneficiaries of the SMDF and its facilitator fund when established by the project, activities under the ASM component of the project (including technology transfer, access to financing and equipment, and job formalization), and the implementation of activities such as the development of a framework for establishing and operationalizing mineral support centers, which may include mineral buying centers; (iv) Mineral producing states within Nigeria who will benefit from access to equipment, finance, and general technical guidance for their ASM support programs and also a boost in the profile of their states as mining destinations within the country based on transaction support and proof concept investments that will be targeted for support under the project; (v) women and civil society including community–based and non-government organizations and institutions that will benefit from capacity building and improved public information on sector development and impacts. 42. Indirect beneficiaries will include: 1) the general population of Nigeria, who will benefit from increased tax and revenue collection from mining and increased job opportunities from mining and from its upstream and downstream linkages; and 2) Communities in mining areas who will benefit from enhanced social and environmental protection.
4 The key institutions are the Ministry of Mines and the Solid Mineral Development Fund. 5 Fostering will imply the process of facilitating actions leading to, basically, enhanced domestic participation and investment in the mineral sector.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 22 of 109
C. PDO-Level Results Indicators
43. The key results of this operations will be as follows:
(a) Mining information management systems (including geological database, DSS, Environmental Information Management System [EIMS]) developed (yes/no)
(b) ‘Proof of concept’ transactions undertaken through the project (number) (c) Geological knowledge enhanced through an integrated geological database made publically
accessible (yes/no) (d) Increased economic linkages from industrial minerals to the services and manufacturing
sectors (manufacturers sourcing mining materials locally) (number) (e) Increase percentage of ASM operators in target areas inventoried, formalized, and
supported through TA (%) (f) Increase percentage of mining exportation and production projects subject to formal
environmental and safety inspections following good international practices set under the project (%)
(g) Increased production data collected from artisanal, small-, and medium-size mining operations (as a percentage of total number of operations inventoried under the project) (%)
III. PROJECT DESCRIPTION
A. Project Components
44. The proposed project will be financed through an IDA Credit in the amount of US$150 million equivalent. Based on consultations with Government counterparts, this proposed project is designed to deliver both short-term results (1–2 years) and longer-term results (4–5 years). Targeted activities are expected to produce ‘quick win’ results which will be implemented earlier on in project implementation and include the following: (a) undertaking a demand/gap analysis of industrial minerals required by the local industries to explore some import substitution potentials as well as facilitate the flow of mineral transactions; (b) facilitating access to finance, technology and equipment, knowledge, and markets as well as provision of mineral extension services; (c) supporting the mining and processing of industrial minerals and dimension stones from upstream to downstream parts of the value chain to meet the required specifications of the local industries in accordance with best practices; and (d) developing measures for formalizing, regulating, and inventorying ASM.
45. Over the medium to longer term, the Government’s success in developing its mining sector and achieving diversification through the sector will ultimately be measured against the ability to successfully attract and develop mineral transactions on medium to large mining operations as well as any other mining-related (that is, infrastructure) investments. As such, this proposed project has largely been designed based on this principle. Activities under Component A are aimed at establishing a strong foundation for mining sector development, while Component B seeks to leverage these gains toward downstream sector development and enhancing competitiveness by providing practical TA based on ‘proof of concept’ investment/transaction, bringing the asset (from the upstream part) to a higher
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 23 of 109
developed stage within the conventional mining cycle. The proposed MinDiver project has been designed to support the Government in implementing its road map6 in a number of key strategic areas.
Box 3. Distinctions between Supporting Bidding at the End of Component A and Transactions in Component B
In Component A, prospective bidding areas are those which require substantial further exploration but have a quantifiable commercial value.
In Component B, asset/site-based transactions are those which may comprise bidding, auction, or other competitive sale, for sites of smaller areas (mining assets) which are considered to be much closer to production or require to be revitalized (having prefeasibility/feasibility potential status).
Component A: Establishing a Strong Foundation for Mining Sector Development (US$68.8 million)
46. The objective of this component is to strengthen the Government in its role to establish a strong foundation for mining sector development, thereby enhancing its capacity as regulator and facilitator. Special attention will be given to boosting the capabilities and operational capacity of the NGSA as a key sector vehicle. This will involve reviewing and enhancing a number of key requirements for a successful mining environment.
47. Subcomponent A1. Strengthening Mining Governance, Transparency, Accountability, and Administration (US$14.4 million). The objective of this subcomponent will be to support a second generation of governance reforms to improve performance of the sector. This will involve building capacity and updating, strengthening, and improving the mining governance and administrative framework, with a particular focus on the MMSD. Specific activities to be implemented under this subcomponent include the following:
(a) A1-1. Strengthening the institutional frameworks governing the mining sector through preparation and implementation of an institutional functional analysis of workflows, processes, and information flows; updating the institutional dimensions of the policy, legal, and regulatory framework to reflect the finding and recommendations of the functional analysis; defining a road map and implementing institutional reforms; and designing and implementing an integrated Mining Management Information System (MMIS) based on the functional analysis.
(b) A1-2. Sector administration capacity building to assist the Government (in particular staff from the MMSD and its associated agencies, as well as other relevant ministries including the Ministry of Finance) to build the required technical skills and managerial capabilities to
6 The Government roadmap includes the following strategic areas: (a) strengthening mining governance and institutions; (b) enhancing opportunities for value addition and developing the mineral value chain; (c) ASM formalization; (d) providing TA and access to financing for artisanal, small- and medium-size mines; (e) geological exploration and mineral asset identification leading to ‘proof of concept’ investments; and (f) building regional linkages for sector development, (Annex 4 links the objectives outlined in the road map with subcomponents and activities proposed under the MinDiver project).
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 24 of 109
service and develop the mining sector.
(c) A1-3. Strengthening revenue assessment, collection, and forecasting, including through support to EITI and setting up systems to improve revenue collection in a transparent and accountable manner.
(d) A1-4. Building independent oversight capacity and stakeholder consultation mechanisms, including by providing support to non-state actors (civil society, nongovernmental Organization [NGOs], community-based organization [CBOs], media, academia, professional associations, and technical experts) to strengthen their participation in increasing transparency and disclosure in the mining industry.
48. Subcomponent A2. Strengthening Geological Knowledge and Information Infrastructure (US$33.50 million). The objective is to strengthen geological knowledge of the Nigeria’s mineral wealth, prepare for the identification of prospective areas (under Component A), and facilitate bidding rounds (under Component B) to attract investors. All activities under this subcomponent will be implemented with a view toward building capacity within the Nigerian Geological Survey Agency. Specific activities under this subcomponent include the following:
(a) A2-1. Basic mapping with international standards using a common satellite imagery and geophysical methods.
(b) A2-2. Development of a GIS geodata schema supported by interpretation of data.
(c) A2-3. Targeting prospective areas through diagnostic field work in localized areas to advance priority assets toward further development.
(d) A2-4. Valuation, standards, methodologies and processes for nonproducing assets linked with prospectivity ranking.
(e) A2-5. Assess mineral asset valuations and deliver a standard procedure to value assets on nonproducing mineral properties to be considered within pre-feasibility and feasibility studies.
(f) A2-6. Develop geological data for preparation of bidding packages and prepare the necessary bidding processes and workflows to efficiently attract international investors.
(g) A2-7 Dissemination of geological information through a web-based portal, investment promotion conferences, and other mechanism.
49. Subcomponent A3. Skills Building and Education Support for Mining Sector Development (US$8 million). The main objective is to address skills gaps in the industry and support the education and practical training of the next generation of sector specialists. Programs supported under this subcomponent will be based on needs and requirements of the mining industry, and as such, an initial scoping study will be undertaken. As a complement to this, the project will support designing and implementing a partnership program and integrated capacity development strategy with a local university and other training or educational institutions (international or local), including the NIMG, the MMSD, and
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 25 of 109
the private sector focusing on building practical technical and vocational capacity within Nigeria. It will also involve reintroducing and providing vocational training to technical staff in the country, which is a fundamental requirement to develop and maintain a solid skills base for the industry. One such model that could be deployed is Technikon in South Africa, which provides vocational training for the mining sector.
50. Subcomponent A4. Environmental, Health, and Social Performance (US$12.9 million). The objective of this project activity will be to assist the Government to improve environmental and social sustainability of the mining sector and improve its regulatory enforcement capability. Activities under this subcomponent will include the following:
(a) A4-1. Updating and preparing a Strategic Environmental and Social Assessment (SESA) and implementation of its recommendations, including a review of legal and regulatory framework (including guidelines) for environmental management with the aim of strengthening the roles of the relevant departments within the ministry toward ensuring effective implementation.
(b) A4-2. Mitigating social, health, and safety (ESHS) impacts associated with mining, including medical geology. This includes an assessment of the impact of associated regulatory reforms, and capacity building of the inspectorate services to monitor those impacts.
(c) A4-3. Designing and developing an Environmental Information System (EIS), linked with the DSS, MMIS, and Knowledge Management Systems.
(d) A4-4. Implementing conflict assessment to identify potential risks and mitigation measures focused on key areas of the North, including establishing robust grievance redress mechanisms (GRM) and undertaking regular stakeholder consultations.
(e) A4-5. Implementing gender inclusiveness programs for the mining sector, based on preparation of a detailed assessment and action plan.
Component B: Facilitating Downstream Sector Development and Enhancing Competitiveness (US$67.6 million)
51. The objective of this component is to facilitate sector development and enhance its competitiveness and attractiveness to investors for both (a) Greenfield exploration targets identified under A2-1; and (b) Brownfield mineral assets that have been blocked as a result of social and environmental legacy issues, past market conditions, and infrastructure gaps. This component will focus on prioritized key targets including (a) developing measures for formalizing, regulating, and inventorying ongoing ASM; (b) catalyzing the mineral sector for regional development; (c) implementing steps to enhance production and value addition with special emphasis on industrial minerals and dimension stones; (d) addressing access to finance and mineral sector investment climate constraints; and (e) identifying and advancing ‘proof of concept’ investments.
52. Component B includes those aspects of the MinDiver project that are required to achieve the benefits and economic value from both highly prospective areas and potential mineral assets identified in
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 26 of 109
Component A, as well as existing brownfield assets, including industrial minerals and dimension stones. This involves facilitating and strengthening those economic, commercial, and financial aspects required for the growth and development of the mining/mineral sector. It also establishes those factors required for enhancing direct and indirect value chains of key minerals necessary for supporting industrialization and inclusive growth.
53. Subcomponent B1. Developing Measures for Formalizing, Regulating, and Inventorying ASM (US$11.7 million). The objective of this project activity will be to enhance the economic opportunities of artisanal miners, reduce smuggling practices, and create incentives for their inclusion in the formal economy, thus increasing revenue collection, poverty alleviation, and job creation. Specific activities to be supported through this subcomponent include the following:
(a) B1-1. Developing an inventory of ASM operations/activities aimed at monitoring the scale and the size of the subsector.
(b) B1-2. Incentivizing ASM formalization and registration, including through the development of a policy and regulatory framework for establishing and operationalizing mineral support centers, which may include mineral buying centers (MBCs) and cooperatives, and by offering TA, equipment leasing and extension services.
(c) B1-3. Preparation of comprehensive regulatory framework for ASM and strengthening the functions and capacity of the ASM Department and inspectorate services within the MMSD.
54. Subcomponent B2. Catalyzing the Mineral Sector for Regional Development (US$12.5 million). The objective of this project activity is to leverage the mining sector to enhance regional development in several strategic resource-rich regions identified as priorities for the Government. This subcomponent will support the following:
(a) B2-1. Development and implementation of a road map identifying the routes and physical carrying capacities for existing supporting infrastructure and where existing gaps would be met by investments in minor infrastructure and/or mineral processing centers. The road map will take as input the results of Subcomponent A2-3 (Targeting Prospective Areas) and the identification of brownfield assets/abandoned mines sites under Subcomponent B5-1 (Identifying ‘Proof of Concept’ Investments), to invest in feasibility studies and construction of minor infrastructure, mineral processing and refining, and other gaps across the mineral value chain that are impeding production.
(b) B2-2. Development of minor infrastructure, defined as being ancillary to the mine (within the boundaries of the mineral lease) and associated with facilitating mine development, such as building or refurbishing an access road, power interconnect, gas connection, water management system. Any such support will be in accordance with the project’s Environmental and Social Management Framework (ESMF)/Resettlement Policy Framework (RPF), and will include an Environmental and Social Impact Assessment (ESIA) and a site-specific environmental impact assessment (EIA), where relevant.
55. Subcomponent B3. Implementing Steps to Enhance Value Addition and Some Upstream
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 27 of 109
Activities (US$10.7 million). The objective of this project activity is to enhance the value of mineral products including some aspects of upstream development of the industrial minerals and dimension stones domain (linked to B5-1) and downstream processing and refining across the range of mineral categories (excluding energy minerals) found in the country. The proposed project will provide support to the Government on the following activities:
(a) B3-1. Analyzing economic drivers to link supply of industrial minerals with demand for construction and industrial materials and providing recommendations.
(b) B3-2. Formulating effective policy provisions related to value addition for mineral products.
(c) B3-3. Purchasing and installing laboratory equipment, to accredit and certify quality and develop strategies for managing laboratories (metallurgical, geotechnical).
(d) B3-4. Developing and providing a specialized training program for local enterprise and entrepreneurs along the mineral value chain.
(e) B3-5. Analyzing benefit-sharing aspects of the different stages of the value chain.
56. Subcomponent B4. Addressing Access to Finance and Mineral Sector Investment Climate Constraints (US$12.7 million). The objective of this project activity is to develop and implement reforms, in collaboration with the Trade and Competitiveness Global Practice (GP) to address access to finance and investment policy constraints to encourage greater competitiveness of Nigeria in the global mineral market. This will involve the following activities:
(a) B4-1. Assessing investment entry constraints and identifying the key factors limiting access to finance for each category of industry participant (local ASM, junior, and medium-scale companies) and the appropriate financing mechanisms to strengthen their participation in the sector.
(b) B4-2. Assessing the SMDF and providing TA for its restructuring and operationalization to include a private sector-focused mining fund (that is, the SPV facilitator fund) by identifying and supporting the preparation of appropriate governance, structure, organization, strategies, operations, and so on.
(c) B4-3. Establishing a small-grants pilot program and designing its implementation arrangements (through the SMDF SPV or another potential funding vehicle) to support mine operators to bring their projects to a more advanced stage of development in the mining cycle (see paragraphs 26–29 for more detailed information).7 For the small-grants program, there will be condition of disbursement, which is the completion of the Manual for Small-
7 Once the fund has been established and its governance and fiduciary mechanisms verified by an independent party and acceptable to the World Bank, the project will then channel direct support through the SPV for the sub-grants program, targeting small and medium miners to finance activities that will allow them to move toward a more advanced stage of the mining cycle, thereby stimulating investment in the country’s mining sector. Specific activities to be funded through the sub-grants program include preparation of environmental and social baseline studies, certification of reserves, in-fill geodata collection, preparation of financing packages, leasing equipment, and development of a framework for establishing and operationalizing mineral support centers containing mineral buying and processing centers.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 28 of 109
Grants Program satisfactory to IDA.
(d) B4-4. The development and implementation of a training program targeted toward Nigerian financial sector institutions, particularly through the Bankers Committee, aimed at educating them on mining financing, the review of bankable feasibility studies, project economic assessments, and business plans.
57. Subcomponent B5. Advancing ‘Proof of Concept’ Investments (US$20.0 million). The objective of this subcomponent is to provide support to the Government aimed at attracting private sector investment into targeted exploration areas and mineral production at specific sites including work on industrial minerals and dimension stones. Specific activities financed through this subcomponent include the following:
(a) B5-1. Developing key industrial mineral and dimension stone areas/sites with a view to enhancing their production leading to value addition that would be enhanced in B3.
(b) B5-2. Undertaking analytical work to identify several ‘proof of concept’ investments to create a pipeline of mineral assets that are ready for investment within the mining cycle (strategic concessions, mines or infrastructure, and so on).
(c) B5-3. Providing transaction support to the Government to move investments from potential areas and identified assets to contractual close. The tender process will be designed and conducted in line with relevant country procurement laws and, in this particular instance that the World Bank is financing a TA project, in line with applicable donor guidelines.
Component C: Project Management and Coordination (US$9.6 million)
58. This component will provide support at implementation to the MMSD to undertake project management, in accordance with the World Bank’s fiduciary and other guidelines, including incremental operating costs, equipment, training on fiduciary and project management issues, project audits, and engagement of technical advisers to provide technical expertise on project performance monitoring and planning. This component will also include provisions for a Total Quality Management (TQM) program, to ensure quality assurance and control of the activities implemented under this project.
59. Project Preparation Advance (PPA) refinancing (US$4.0 million, US$2 million of which is a supplemental PPA). A PPA has been processed to support the Government in preparation of this project. Activities under the PPA include establishment of the Project Implementation Unit (PIU), as well as preliminary preparatory analytical to help inform the project design and implementation. Specific analytical work included the following: (a) gap analysis of responsibilities and related capacities within the MMSD; (b) preparation of a communications plan and strategy; (c) preparation of the ESMF and RPF for the project; (d) gap analysis of the legal and regulatory barriers to mining sector development; (e) site assessment and road map for formalizing ASM; (f) identifying prospective mineral targets and mining assets; and (g) assessment of tax compliance.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 29 of 109
B. Project Cost and Financing
Project Components Project Cost
(US$)
IBRD or IDA Financing
(US$)
Trust Funds
Counterpart Funding
Component A: Establishing a Strong Foundation for Mining Sector Development
68,800,000 68,800,000 0 0
Subcomponent A1. Strengthening Mining Governance, Transparency, Accountability, and Administration
14,400,000 14,400,000 0 0
Subcomponent A2. Strengthening Geological Knowledge and Information Infrastructure
33,500,000 33,500,000 0 0
Subcomponent A3. Skills Building and Education Support for Mining Sector Development
8,000,000 8,000,000 0 0
Subcomponent A4. Environmental, Health, and Social Performance
12,900,000 12,900,000 0 0
Component B: Facilitating Downstream Sector Development and Enhancing Competitiveness
67,600,000 67,600,000 0 0
Subcomponent B1. Developing Measures for Formalizing, Regulating, and Inventorying ASM
11,700,000 11,700,000 0 0
Subcomponent B2. Catalyzing the Mineral Sector for Regional Development
12,500,000 12,500,000 0 0
Subcomponent B3. Implementing Steps to Enhance Value Addition
10,700,000 10,700,000 0 0
Subcomponent B4. Addressing Access to Finance and Mineral Sector Investment Climate Constraints
12,700,000 12,700,000 0 0
Subcomponent B5. Advancing ‘Proof of Concept’ Investments
20,000,000 20,000,000 0 0
Component C: Project Management and Coordination
9,600,000 9,600,000 0 0
PPA 4,000,000 4,000,000 0 0
Total Costs 150,000,000 150,000,000 0 0
Total Project Costs 150,000,000 — — —
Front-End Fees 0 — — —
Total Financing Required 150,000,000 — — —
C. Lessons Learned and Reflected in the Project Design
60. The design of this project has benefited from lessons learned from implementing extractives projects in Nigeria over the last more than 10 years, as well as the collective experience of implementing mining projects in other parts of the world. Specific lessons learned and incorporated into this proposed project include the following:
(a) Importance of Government ownership. A high level of ownership is a key element of implementation success, through direct participation of the borrower at the technical, managerial, and political levels. Over the last decade, the World Bank has had the benefit of
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 30 of 109
developing a strong and trusted partnership with the MMSD that has led to the successful implementation of the SMMRP and the EFO and the design of the proposed project. It is anticipated that this close relationship will be maintained into the next decade and assistance to the Government in the mining sector is seen as a long-term engagement for the World Bank. Similarly, the Government’s road map for mineral sector development shows a clear commitment and vision on the part of the Government to the development of the sector. In designing this project, the team sought to leverage that commitment by creating a clear linkage between this proposed project and the road map.
(b) Importance of geological information. A key role for the collection of geological data is to attract quality investors into the mining sector. The absence of sufficiently comprehensive geological and geophysical data has contributed to hampering the Government’s efforts to attract foreign capital for exploration and development. While acquisition and development of geodata (geological, geo-physical, magnetic, and so on) is instrumental in attracting investors, there is a parallel demand for designing adequate systems and modalities for dissemination (and sale) of the data to a wide international audience. Web-based solutions have proven most efficient but constrained by national security concerns and limited bandwidth in developing countries.
(c) Importance of developing a sector strategy/vision. Having a strong vision for resource development, especially in a transition economy, enables the Government, investors, and citizens to envision and embrace broader development opportunities that may integrate resource development with local economy, regional business, and generally improved socioeconomic conditions. The earlier in the resource development process that strategic priorities are agreed and published, the higher the likelihood to test financial, technical, and other implementation practicalities and to modify strategy as needed. The Government’s road map on sector development is its vision, and the project seeks to support the Government in implementing it.
(d) Importance of grounding TA in concrete extractives operation. One key lesson learned from implementation of other World Bank extractives projects is that TA and capacity building are most impactful and sustainable when grounded in the development of concrete mining projects. This allows the Government counterparts to benefit from a ‘learning-by-doing’ approach and gain practical knowledge and skills. The integration of these two components into the MinDiver project design is intended to build Government capacity to catalyze concrete investments in the mining sector.
(e) Importance of the ‘proof of concept’ investment. As indicated elsewhere in the PAD, although Nigeria has mineral potential, the sector has been dominated by ASM, with few successful medium (or large) size mines being brought into full-scale production which could serve as an example of the country’s potential (with regard to governance, administration, and geology) to the investment community. Based on the lessons learned from other World Bank projects, MinDiver will aim to support the Government in bringing a number of ‘proof of concept’ investments into contractual close and production, as a signal to the investment community that Nigeria is indeed a mining destination.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 31 of 109
(f) Importance of community engagement. The lesson of involving communities and civil society has also been incorporated into the design of the project at several levels. The project involves communities and civil society in the ASM, regional development, and other component. The environmental and social component involves civil society in the SESA, as well as in consultations on procedures, guidelines, and environmental and social awareness programs. The communication strategy and work plan involve civil society in communication campaigns. Civil society is also represented in the project‘s oversight structure. In addition to these measures, which improve transparency, the project will also develop multistakeholder public accountability mechanisms that involve civil society, legislative institutions, academia, and media.
Box 4. Lessons Learned on ASM Reform in Ghana: What Worked and What Did Not Work
Small-scale mining in Ghana was most likely established in the 4th century A.D., giving the country’s name ‘Gold Cost’. However, it was not until 1989 that there was a legal recognition of ASM through the enactment of what came to be known as ‘the Small-Scale Gold Mining Law’. The law paved the way for a formalization process which saw hundreds of individuals and cooperatives register their small-scale mining operations. This process was guided by the small-scale mining project under the Minerals Commission. The Commission established seven district offices staffed with mining engineers and inspectors to oversee ASM administration and extension services, including financial assistance, training on mining techniques, and logistics support. The Government also established the Precious Minerals Marketing Corporation with a mission to purchase gold from registered small-scale miners.
To solidify these extension services, the Tarkwa Mining Center was established as a demonstration center. It was equipped with a lab and a processing plant to demonstrate best practices on gold recovery. The Government established a buying office on site to facilitate gold purchase directly from the miners. The Government also put an office of the Mines Department on site to monitor the activities. In effect, the Tarkwa Mining Center represented a holistic approach toward addressing all the challenges facing the development of a formal, small-scale mining sector.
What worked?
A key feature of the 1989 Small-Scale Gold Mining Law was the simplification of licensing procedures for ASM and the demarcation of areas for small-scale mining. The 2006 Mining Act built upon lessons learned from the enforcement of the 1989 Act to address some shortcomings. The first area of improvement was further decentralization of ASM administration aimed at expanding the presence of the Minerals Commission in ASM areas to facilitate registration and the provision of extension services in nine district offices.
The formalization agenda initiated in 1989 has resulted in a significant growth of the contribution of ASM to the economy. During the first four years, the program saw the registration of 400 properties. The share of ASM in total gold production grew from 3.2 percent in 1990 to nearly 28 percent in 2011. By 2013, small-scale mining was contributing about 1.4 million ounces of gold, accounting for 34 percent of the total gold production, with an estimated 1 million people directly involved in the activity. ASM also produces currently the totality of the country’s diamonds.
In support of the formalization agenda, the Government established four institutions which oversee the development of small-scale mining:
The Minerals Commission is the institution responsible for the regulation of the mining sector. It has a Small-Scale Mining Unit which conducts training and extension services and appraisal and approval of license applications and inspections.
The Environmental Protection Agency with a specific mandate to conduct monitoring and assessment of the environmental issues related to small-scale mining at the permitting stage,
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 32 of 109
educate miners about safe and environmentally sound operations, and enforce laws on environmental protection.
The Precious Minerals and Marketing Corporation is mandated to purchase gold from all legal sources through its licensed buyers.
The Geological Survey Department has the responsibility for this prospecting and undertaking surveys to identify and demarcate designated areas for ASM.
What did not work?
The ASM development approach had been to conduct geological exploration and demarcate designated areas for ASM, organize small-scale miners into cooperatives or associations, and assist them to obtain a license. In spite of the achievements of this approach, the ASM sector has been beset with growing illegality, conflicts between ASM and large scale mining (LSM), and influx of foreigners engaging in illegal mechanized mining in ASM designated areas. These unintended effects resulted from implementation weaknesses of the Government policies. These are described here:
Complicated licensing procedures. The Small-Scale Gold Mining Law of 1989 was followed by the establishment of the Small-Scale Mining Project which was mandated to streamline licensing procedures. Although the procedures were simplified to enable ASM operators to apply for licenses at the district level, the district offices of the Minerals Commission were under resourced and the decision making on licenses was still centralized, requiring miners to travel to Accra to finalize their permit applications. Also, the independent environmental permitting by the Environmental Protection Agency became an additional requirement for which small-scale miners had little TA to navigate the permitting process.
Limited availability of prospective ground. The limited supply of suitable ground for ASM eventually led to ASM-LSM conflicts, with frequent encroachment of LSM concessions, and even influx of foreigners using large-scale equipment to engage in illegal mining. A number of large-scale companies were confronted with a sudden influx of galamsey operators who are sometimes forcibly removed by security forces. The Geological Survey was not adequately resourced and was not exploring fast enough to satisfy the growing demand for ASM demarcated areas. Because large-scale mining concessions included near-surface deposits which are suitable for ASM, and the ASM demarcated areas were not adequate, resource conflicts became frequent and increasingly violent.
IV. IMPLEMENTATION
A. Institutional and Implementation Arrangements
61. The project will use streamlined institutional and implementation arrangements with the aim of maximizing project management, ensuring a high degree of technical input, and facilitating coordination within the MMSD and among all relevant government agencies. The project is designed to ensure that a wide range of stakeholders (government, industry, civil society) is actively participating in promoting transparency and accountability.
62. The MMSD will be responsible for the overall coordination and implementation of the project, including the drafting of annual work programs and budgets of the project. Technical departments will hold main responsibility for drafting of terms of reference (TOR), definition of technical designs, and oversight of consultant deliverables and installation of goods and works. Being the ultimate beneficiaries, the technical departments will hold final responsibility for quality assurance of deliverables. The MMSD will provide updates and inputs to progress implementation reports for the project, which will be finalized
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 33 of 109
by the PIU four times a year in a format and content acceptable by the World Bank. The MMSD will resolve any conflicts that may arise between the different entities involved in the implementation of the project.
63. A dedicated PIU will be established within the MMSD and will be responsible for day-to-day project implementation activities, including procurement, disbursement, financial management (FM), and monitoring and evaluation (M&E). The head of the PIU will be the Project Coordinator, who will report directly to the Permanent Secretary and Minister on issues related to project implementation. The PIU may also include two to three staff seconded from key departments within the MMSD or other relevant agencies (that is, Cadastre office, ASM department, NGSA, Admin). In addition to its fiduciary responsibilities (Safeguards, Financing Management, and Procurement), the PIU’s main functions are to ensure that the project work plans are properly coordinated and implemented by the different agencies and departments involved and coordinate strategic planning for project implementation. The PIU will be strengthened by additional national and international experts as necessary, in particular a technical expert. The PIU will also compile a biannual (six months) implementation progress report for submission to the World Bank and Interim Financial Reports (IFRs) on a quarterly basis. The PIU staff are all assigned to work on the MinDiver project by the Ministry of Mines and Steel Development. In order to achieve continuity and to build capacity in a sustainable way, it is important to have ministry employees and relevant consultants work on the Project for the duration of the project (on the basis of positive performance). This provision may be overridden only on the basis of documented non-performance.
64. A high-level coordination committee will be established under the project to facilitate sustainability and proper mainstreaming of project activities into the relevant ministries, departments, and agencies (MDAs). The committee will be responsible for overall strategic planning and overall program development, coordination across the project to ensure coherence in interrelated activities; and monitoring of progress. Members of the high-level coordination committee will include at least a Project Coordinator from the PIU, technical expert(s), directors of departments and agencies of the MMSD, and the director of the SMDF. The committee will meet on a quarterly basis, if not more often depending on the pace of project implementation. The committee will report to the Minister and Permanent Secretary of the MMSD. In addition, one of the short-term initiatives of the ministry included in the road map is to strengthen the federal-state coordination through establishing and operationalizing the Mineral Resources and Environmental Management Committee (MIREMCO). The MIREMCO is a mechanism provided under the Nigerian Minerals and Mining Act (NMMA) for federal-state coordination in each state of the federation. The purpose of the MIREMCO is to facilitate federal-state coordination in matters relating to mining titles, compensation, pollution and land degradation, mineral resources development, and mineral exploitation. Other matters include environmental and social mitigation plans, conflict resolution, and provision of advisory support to the sector minister in relation to the NMMA implementation.
65. Responsibilities of the coordination committee are to:
Ensure coherence and synergies in policy-level interventions related to the development of the mining sector in Nigeria;
Promote effective coordination and communication across the various agencies, ministries, and departments on a macro level and project level;
Provide strategic guidance and set priorities for project implementation;
Review the project’s progress in meeting its objectives and results indicators;
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 34 of 109
Approve the Project Implementation Manual and subsequent changes;
Approve on an annual basis the procurement and training plans submitted by the beneficiaries;
Approve accounts and audits reports; and
The committee shall not intervene in day-to-day management of the project, which is the sole responsibility of the PIU.
66. Project Management Office (PMO). Embedded within the PIU, will be a PMO which will include a set of project management professionals, who will oversee M&E activities including setting up an M&E system, instituting a quality assurance and quality control program for the project, and ensuring that the project is implementing in accordance with project plans and budgets. The PMO will set up and maintain a project server as a monitoring tool which will provide up-to-date information in the implementation of the project and its deviation against agreed milestones. The project servers will be accessible to key project stakeholders, including the World Bank. Key staff within the PIU are expected to be experienced project managers, with Project Management Institute/Project Management Professional/Prince2, and so on certifications. The PMO will report directly to the PIU Coordinator.
67. Technical expert(s). As mentioned earlier, the PIU will include at least two technical advisers who will support and provide advice to the relevant department and agency heads on developing their programs, drafting TORs, and reviewing consultant outputs during implementation. The technical expert(s) will report directly to the PIU Coordinator.
68. Technical Working Group (MinDiver TWG). A TWG will be established to work directly with the PIU and technical adviser(s), primarily on the technical aspects of project implementation and coordination. The TWG will comprise focal points, formally appointed by member of the high-level coordination committee. The TWG is expected to meet at least on a quarterly basis, if not more often, depending on the pace of project implementation.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 35 of 109
Financial Management
69. Responsibility for establishing and maintaining acceptable FM arrangements for the project will be handled by the existing Federal Project Financial Management Department (FPFMD). The Federal Treasury Circular of March 2010 established the FPFMD in the Office of the Accountant General of the Federation (OAGF) to handle the FM responsibilities for funds provided to MDAs by donor partners.
Procurement Arrangements
70. The procurement activities under this project will be implemented by the PIU, which will be headed by the Project Coordinator. The project has competitively recruited a procurement consultant during the implementation of the project preparation advance (PPA). He will continue to provide procurement support to the project team in the first two years of the project. The consultant will report to the Project Coordinator during his/her contract implementation. The Procurement of Goods, Works, Non-Consulting, and Consulting Services under MinDiver will be carried out in accordance with the World Bank’s New Procurement Framework (NPF). All procurement activities would be in line with the World Bank’s Procurement Regulations for Investment Project Financing Borrowers (July 2016). The project will refer to ‘Guidelines on Preventing and Combating Fraud and Corruption in Projects financed by IBRD Loans and IDA Credits and Grants’, (the Anti-Corruption Guidelines) (October 15, 2006, revised in July 2016 and the provisions stipulated in the Legal Agreement. A Project Procurement Strategy for Development (PPSD) has been prepared (February 2017) to consider, among other things, the market situation, the operational context, previous experience, and the risks present—then from this, determine the right procurement approach that will yield the right type of response from the market. For each contract to be financed by the Credit, the different procurement methods or consultancy services selection methods, estimated costs, prior review requirements, and time frame have been agreed between the borrower and the World Bank in the Procurement Plan. The first 18-month Procurement Plan of the project has been approved by the World Bank and will subsequently be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.
B. Results Monitoring and Evaluation
71. M&E is a key activity in the project and will be carried out by the PIU at the MMSD on the basis of the indicators and milestones developed in the Results Framework (section VII). A robust M&E system will be developed early on in project implementation to monitor progress and ensure impact. Where applicable, M&E will include gender-disaggregated data. Strengthening client capacity for M&E for the sector will be an integral part of the project to enable the relevant institutions to keep track of environmental and social safeguards implementation and compliance.
72. The PIU will have overall responsibility for monitoring and evaluating the project subcomponents/activities in accordance with the indicators and benchmarks included in the Results Framework (section VII). The other beneficiary agencies will be responsible for collecting, analyzing, and supplying the indicator data relevant to the project components/activities under their implementation to the PIU. The mechanism of feeding the indicator data into a centrally managed system in the MMSD is reflected in the Project Implementation Manual.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 36 of 109
73. No later than 45 days after each quarter, the MMSD will submit to the World Bank the consolidated quarterly progress reports covering all project activities, including a procurement and a financial summary report. Biannual reviews, the first one to take place six months after effectiveness, should provide detailed analysis of implementation progress toward achieving the project development objectives and include evaluation of the FM and a post review of procurement aspects.
C. Sustainability
74. The GoN is committed to the implementation of the project. The authorities and stakeholders realize that the mining sector constitutes the key growth opportunity and lever for the development of other economic and socially productive activities.
75. Key parameters for sustainability include the Government’s commitment to implementing the sector reform agenda. Mining is a priority sector to bring about development and improvement of socioeconomic conditions in Nigeria while also increasing its attractiveness to investors. In the long run, investments in the sector are expected to provide sustained revenues for wider development purposes as well as for sustaining sector oversight and management systems set up during the project.
76. At the national level, the project will help improve the Government’s capacity to (a) manage the sector properly; (b) ensure that the revenues due to the Government from mining, including from ASM, are collected; and (c) support local economic development and value addition for mining. The project is also expected to strengthen Nigeria’s policy/regulatory framework and enhance its institutional and human resources capacity to address the economic, environmental, and social impacts of mining as well as stimulate private sector participation.
77. At the community level, sustainability will be supported by positive changes fostered by including mining communities in essential decision-making processes. Specifically, the communities are expected to see increased influence over local economic development, use of revenue generated by mining activities to foster development at the local level, and improved socioeconomic linkages to the mines. By supporting artisanal and small-scale miners’ efforts to improve their formalization, the project is expected to improve management of mineral resources toward contributing to increased mineral revenues and the promotion of sustainable livelihoods.
D. Role of Partners
78. The World Bank has been and remains the lead donor in the mineral sector in Nigeria since 2005. Other development partners include the African Development Bank and the governments of Australia and Canada, of which the latter two have provided support through a World Bank EFO. The ministry intends to establish a donor working group for the mining sector under the Country Assistance Framework to ensure coordination on project activities related to implementation of the road map and policy dialogues. Procedures for establishing and operating the coordination group will be like those adopted by donors for their support to the Government in the environment, power, and agriculture sectors. These include selection of a chair and deputy to coordinate and dialogue with the Government on behalf of the group, group mandate, meeting timing and format, policy dialogue mechanisms, and so on.
79. Members of the donor group for the mining sector will comprise donor agencies, development
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 37 of 109
partners, and embassies of Nigeria’s mineral ore trade partners. Potentially, it could also include the International Monetary Fund (IMF) for fiscal regime, taxation reform, and capacity building. So far, ongoing and planned support for the sector from donors includes (a) plans for building the MMSD capacity to negotiate with investors by the African Development Bank; (b) plans for institutional capacity development support by the Australian High Commission through the Australian Resources Development Hub about to be established; (c) ongoing support in producing a Medium-Term Expenditure Framework for the MMSD by the U.K. Department for International Development; (d) ongoing support for building civil society capacity to support mining host communities in negotiating Community Development Agreements (CDAs) with mining companies by the Open Society for West Africa; (e) plans for providing technical advisory support for aligning legislation with the African Mining Vision by the United Nations Development Programme; (f) ongoing support to the MMSD in addressing environmental impacts associated with artisanal gold mining, developing a National Action Plan for the Artisanal and Small-Scale Gold Mining sector in Nigeria and building the capacity of artisanal gold miners to improve their economic performance.
V. KEY RISKS
A. Overall Risk Rating and Explanation of Key Risks
80. The overall risk rating during implementation is considered to be Substantial. The following risks are rated as low to moderate: (a) sector policies and strategies, given the success of the previous project on this and the Government commitment to developing a more up-to-date strategy over the next several months; (b) in general, implementation capacity at the MMSD is considered to be high as some capacity has been developed and retained through the first project; (c) it is unlikely that a further deterioration of the macroeconomic environment will have negative consequences for project outcomes; indeed there is perhaps greater concern that should oil prices rebound, the Government commitment to diversification may be strained.
81. Key factors contributing to the Substantial risk rating are (a) political and governance factors/stakeholder, such as lingering federal-state tensions over mineral ownership rights and management and insecurity, and (b) complex technical design.
Risks and Mitigation Measures
82. Political, governance, and stakeholder. As states seek to generate alternative revenues and participate in mineral resources administration, there is a high risk of increased federal-state tensions around the exclusivity of the federal government over mineral resources ownership and management as well as revenue collection. Amending the Nigerian constitution to provide an arena for federal-state collaboration on oil sector development has always been highly politicized and could follow the same trend for the mineral sector. A mechanism to mitigate these tensions from arising is proposed under the Minerals and Mining Act but has never been operationalized. The North has a high degree of mineral occurrences, but some parts of the Northeast has been experiencing high levels of violence and crimes perpetuated by insurgency groups operating in the region. This will have a strong impact on the project implementation, if areas within the region are found to have high prospectivity. Public aversion for external borrowing is increasing, as many would like to see the Government plug revenue leakages in the
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 38 of 109
system to finance investments.
83. Mitigation. The project could support federal-state dialogue and provide international experience with addressing benefit-sharing tensions in the mineral sector. The team will work closely with the Governance GP and the Fragile States Hub to determine the full extent of the political economy and governance risks around agitations by states for more control of the mineral resources. It will also work closely with the team working on conflict assessment in the North East. It will also support the Government to effectively manage the expected resource revenue inflows and avoid the potentially detrimental effect on other industries and productive sectors in urban and rural areas. Overall, the team will rely on the World Bank-IMF dialogue with the Government on macroeconomic performance. Strong emphasis is put on effective communication as well as stakeholder consultation and participation in the preparation and implementation. Third-party monitoring protocols have been built and will be implemented throughout the project.
84. Technical design. There is a substantial risk from implementing a wide-reaching program with a complex subject matter and multiple interventions proposed, making the possibility of implementing and managing it difficult. Although the operation is of high technical complexity, it is also informed by strong analytical underpinnings across a number of critical issues. The World Bank has substantive experience in designing similar operations. For the World Bank, all aspects of the design incorporate tested and familiar technologies and processes. Although the client prepared bid packages during the privatization of state-owned mining assets in 2005, the major risk is that this operation introduces new and complex bidding methodologies from what the client was exposed to previously.
85. Mitigation. The project has been divided into more clearly targeted subprojects under a building block as well as cross-cutting approach to achieve efficiency in achieving the overall desired results. Procurement activities will also be packaged in accordance with the structure to ensure simplicity in management and supervision. Continuous project management is critical for such a project with so many linkages and diverse components. Therefore, a number of options will be explored so that effectiveness and project control will be the driving factors that will converge for achieving the MinDiver outcomes. It is important to highlight that the project will play a role in enhancing the MIREMCO and using it to reinforce federal-state government collaboration as envisaged by the ministry.
86. Environmental and Social. The project is primarily a technical assistance project with limited financing of small (minor) infrastructural development associated with facilitating mine development such as building or refurbishing access roads, power interconnect, gas connection, water management system, etc. During implementation, these sub-projects could exert some negative impacts on the society and bio-physical environment within the project area of influence where they are implemented. The government will be expected to comply with World Bank’s safeguards policies as set out in the ESMF and RPF.
87. Mitigation. The project has prepared and disclosed an ESMF and RPF which identifies and proffers measures to mitigate, address, and ameliorate potential indirect and direct adverse impacts posed by the project. Together with this, MinDiver also has a dedicated sub-component A-4 (Environmental Health and Social Performance) that intends to assist the Government to improve environmental and social sustainability of the mining sector and improve its regulatory enforcement capability. Also, a Strategic Environmental and Social Assessment (SESA) will be prepared during project implementation. Moreover,
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 39 of 109
Nigeria has demonstrated its commitment to mitigating adverse environmental and social impacts in the implementation of a range of World Bank projects, including category A projects. Consequently, there are adequate legal and institutional frameworks in the country to ensure compliance with World Bank safeguards policies triggered by MinDiver. Furthermore, the Federal Ministry of Environment (FMEnv) is responsible for setting policy guidelines on environmental issues and ensuring compliance with national environmental standards. While in the MMSD, the Environmental Compliance Department has had several years of supporting World Bank projects and has supported the preparation of SESA, ESIA, and RPF for the Sustainable Management of Mineral Resources Project (SMMRP) which was the first mining project.
88. A set of screening criteria will be applied to filter the activities with the least risk of not being implemented and the highest impact on the Government’s agenda of mining sector strengthening. These criteria include the following:
(a) Capacity (resources): Do the implementing agencies have time, skills, and facilities to implement the activity?
(b) Leadership: Is there a ’champion’ of the activity that has full technical understanding of its real purpose?
(c) Consistency with the Government’s current work program: Does the activity fit into the Government’s own work plan and high-priority activities or will the activity add extra workload to the implementing agency?
(d) Commitment: Is there a clear sign of conscious involvement and ownership in activity execution?
(e) Complexity: Are the implementing arrangements clear (institutional and technical) or does implementation require complex structures and workflows for implementation and decision making?
VI. APPRAISAL SUMMARY
A. Economic and Financial (if applicable) Analysis
89. The economic benefits of this project, though difficult to measure precisely, are expected to be much higher than the proposed investment. The proposed project activities are expected to bring both direct and indirect benefits to Nigeria’s economy and people. Quantifying them is not a straightforward exercise, as it is difficult to precisely define the counter-factual scenario that is, what would be the outcomes in the sector without the World Bank’s involvement. Multiple uncertainties include mineral prices, technical feasibility, political stability and the security situation in Nigeria. Experiences from resource-rich countries across the world range from resource discoveries having an overall negative economic impact to being the main driver of inclusive economic development. Given the potential and increasing interest in the mineral sector, supporting Nigeria to manage the solid minerals sector can help to ensure that its experience with oil is not repeated. Nigeria’s mining sector offers the potential to bring
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 40 of 109
multiple benefits including reduced dependence on the oil sector allowing diversification of the tax base, increased jobs and substantial foreign exchange benefits arising from both export earnings and import substitution. Considering the variety of minerals with economic potential in Nigeria (including gold, bitumen, iron ore and gemstones amongst others), there is the opportunity to develop a diversified range of mineral exports contributing to growth and enabling diversification from the oil sector. There is also the opportunity for mineral resource based industrialization which can assist the development of value-adding industries in Nigeria.
90. Contributions from the solid minerals sector to Government revenues is low but growth has been seen as a trend in the recent past. The share of the sector in national income increased progressively from 0.09 percent in 2010 to 0.15 percent in 2015. Rising from 12.19 percent in 2010 to a peak of 19.7 percent in 2012, the consistent growth recorded in the sector decelerated recently to 7.7 percent in 2015, nevertheless the total contribution of the minerals sector to GDP increased from N82.87 billion in 2013 to N102.54 billion in 2015. In addition to the direct GDP effects, there are indirect impacts from the mining supply chain and the ‘induced’ impacts. These multiplier effects arise from the additional consumption made by procurement by producers of local supplies and local workers. Although data for indirect and induced impacts are not available for Nigeria, the roadmap assumes a conservative multiplier of two, which means that US$1 of spending in the mining sector leads to an additional US$2 of economic activity as a result of that expenditure of US$1. Based on these assumptions, it is possible to estimate the total economic effect of the mining sector, meaning that the sector may have contributed as much as N1.53 trillion between 2010 and 2015.
91. The current fiscal contribution of the mining sector is negligible, just 0.32 percent of total revenue in 2013. The majority of this is collected by Federal Inland Revenue Service (FIRS) in the form of corporate income tax accounting for NGN28.9 billion (about US$231.6 million) while the MCO, Mining Inspectorate Department (MID) and NGSA also collected smaller revenue streams. There are just over 3,000 mining titles currently reported in the MCO database (2016) with 1,418 exploration licenses, 1,019 quarry licenses, 751 small-scale mining licenses and 195 mining leases (see Annex 6). The expectation is that the number of exploration licenses will increase and that a proportion of these will convert to mining and quarrying leases as exploration proves the in-situ resource potential. Revenues are also expected to increase in proportion to the rise in mining activity through the generation of royalties on production and corporate income tax, and license fees. Other contributing factors would include commodity prices during the period and improvement in revenue assessments and collection.
92. The economic benefits from the sector can be estimated using certain assumptions because of the high levels of informality as well as weak monitoring and enforcement. According to the roadmap, a 10 percent annual growth in the mining sector is assumed, between 2016 and 2025 and that GDP contributions from the sector would rise to approximately US$27 billion or 3 percent of 2025 GDP, including indirect benefits. The multiplier can be further increased by Nigeria implementing effective local content policies during mining operations. Given the current absence of local content policies, Nigeria has the benefit, with support from the MinDiver project, of starting a local content policy from scratch and suitable with national goals. In order to increase output from the sector, MinDiver will support the Government to attract private sector investment into targeted exploration areas and mineral production at specific sites. Studies carried out in several countries show that for each dollar spent in exploration (geological mapping is 80 percent exploration work), 7 to 10 dollars can be generated in investments in mining exploitation alone. This return does not take into consideration other benefits such as better soil
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 41 of 109
survey, geotechnical engineering maps for planning infrastructures and supporting agricultural practices, as well as the identification of hydrogeological or groundwater resources. Moreover, when compared with its neighboring countries in the West African region who are (on average) receiving a 5 percent share of exploration investments worldwide, Nigeria’s share is only 0.12 percent, which is insufficient to obtain any exploration success leading to future mines.
93. This “proof of concept” support is aimed at unlocking the sector’s potentials by bringing the assets to a higher developed stage within the conventional mining cycle. There are a number of advanced projects, in terms of readiness to mine, that could yield important revenues to the Government within the projected period. For example, the Segilola gold project located in Osun State is currently the most advanced gold project in Nigeria. After conducting extensive exploration over a wide area, the project is now working on a detailed options study to refine the mineral resource model (+500,000oz indicated) such that a definitive Feasibility Study can be undertaken. Development of this and similar projects would demonstrate a landmark in the growth of medium scale mining in the country. As the mining sector grows, there should be increased revenue potential from the sector and from industries it supports indirectly. Actually, collecting this revenue will depend on increasing capacity within specific institutions, including FIRS, MID and MCO to collect revenues. The MinDiver project will support the process of improving the framework for licensing and revenue collection derived from the sector. Also, it will support the departments and agencies to integrate their processes as well as improve their effectiveness and efficiencies in licensing and revenue collection. These improvements to be brought in by the project are expected to provide the economic basis for fiscal sustainability of the sector. The mining sector also brings potential employment benefit for Nigeria. Whilst the mining sector currently accounts for 0.3 percent of total employment, significant mining activity takes place informally and without licensing suggesting this figure is a significant underestimate. There will also be large numbers of people economically dependent on the mining sector. Therefore, by encouraging investment in the sector, encouraging formalization of artisanal and small scale miners and fostering the use of local content where available, the project should have a significant impact on employment opportunities.
94. The MinDiver project is designed to support the Government of Nigeria to develop and manage its mining sector by strengthening key institutions, improving information infrastructure and knowledge, and fostering domestic investment in the sector, the expected development impact is going to be: (i) more private investment in the sector and greater and more efficient production, (ii) more efficient mining sector regulation and management resulting in higher government take of mining income and more spending for development, and (iii) enhanced linkages between the mining sector and the domestic economy specifically the construction, manufacturing and industrial sectors. In terms of the rationale for public sector provision, the state has the exclusive authority in defining the system for management of natural resources including mining, as well as in regulating the sector. The Minerals and Mining Act of 2007 already makes provision for private sector participation when it comes to mineral exploration, production, development, and processing, and this approach is expected to be maintained in the future. Finally, the World Bank’s value added can be seen from similar engagements in other countries as well as through the support that the World Bank has been providing to Nigeria in this area through the SMMRP and the EFO concluded in 2012 and 2015 respectively. The Government values the World Bank’s support so far and has requested further technical assistance. Moreover, other donors value the World Bank’s engagement because of its leading role in the sector since 2005.
95. This is a TA project that does not finance any discrete investments which generate clearly
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 42 of 109
separate cash flows; thus it does not lend itself to traditional measurement of net present value or economic rate of return. Rather, the project is justified on the basis of the cost-effective achievement of development objectives. Similar technical assistance projects executed in other countries have demonstrated that the cost of improving governance of the sector, increasing the capacity for sector oversight, and strengthening geoscience data acquisition and government institutions significantly improves the use, distribution, and management of benefit streams.
96. Development Impact. The development impact of TA projects in the extractive industries is best illustrated through relevant examples of past experience. In Burkina Faso, successful implementation of a similar TA project in the mining sector has resulted in substantially increased investment, improved government oversight over the sector, and greater accountability of revenue streams generated by the sector. Similarly, in Mauritania, a recently completed technical assistance project allowed the Ministry of Petroleum, Energy and Mines to become an important revenue source for the government budget thanks to the reinvigoration of the mineral cadastre system, which has attracted a large number of foreign and local investors. At the same time, the project is considered to have contributed to Mauritania’s ability to outperform global and regional benchmarks in attracting investors in exploration as well as mine construction.
97. The MinDiver project will support improved monitoring of production statistics and enhanced tax collection, which are expected to generate short-term gains through additional revenue to Government from more efficient methods of tax assessment and collection. However, efficiency gains cannot be quantified, nor directly attributed to the project. The longer term impacts are expected from increased investor interest which will produce valuable geological information of interest not only to the mining industry but also hydrologists, the agricultural sector, and rural planning. In addition, it is extremely difficult to give an estimate of the full potential revenue, linked to geoscience work and actual geological mapping for some areas in MinDiver. However, based on a conservative view that 5-15 percent of exploration companies budget may be spent on data acquisition and, that half of this may be spent purchasing geological data for exploration. By supporting Nigeria within this domain, the MinDiver project could contribute to the weakening of the geoscience knowledge barrier to facilitate sector access. A relevant economic analysis from existing social and economic evaluation applied by the Illinois Geological Survey (USA) in 2000 focused on detailed geological mapping and found that a Benefit/Cost ratio ranged from 10.35 to 27.54 (for the 1035 geological map sheets at 1:50k scale). Whereas for the geologic mapping of Kentucky, the Benefit/Cost ratio ranged 12.1 to 18.5 (having 707 map sheets at 1:24k). Obviously, some promising parts of Nigeria will be mapped in detail to identify targets and new assets and this will have an economic and development impact in the long run. This type of mapping work also provides multi-sector indirect benefits.
98. At the community level, the promotion of economic linkages and planning of infrastructure and social services is expected to improve economic and social indicators of beneficiary communities, as has been documented in Ghana, Guinea and Mali. Enhanced capacities for environmental and social management will lead to reduced risks of negative impacts and mine site accidents. However, the previously mentioned problems of quantification and attribution persist.
99. Concrete experience is drawn from the Mauritania Mining Sector Capacity Building Project (P078383), which recorded major progress of social and economic indicators (access to services, schooling, employment, income) during the course of project implementation from 2004 to 2013 with
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 43 of 109
increases ranging from 11 percent to 120 percent compared to baselines. Of particular significance in these areas: (i) the average monthly revenue per working person more than doubled from Mauritanian Ougyias (MRO) 42,600 in 2004 to MRO 98,950 in 2013. This was higher than national average and significantly higher than comparable rural communities.
100. Rationale for Public Sector Financing. There is no alternative to public sector financing of institutional strengthening, pre-competitive data acquisition and capacity building of government agencies. Investment in institutional and organizational structures and skills development of staff is indispensable. The proposed project design aims at improving the Government’s bargaining power vis-à-vis investors in situations of negotiations, oversight, and enforcement. At the same time, the project aims at crowding in private investment in the mining industry and associated infrastructure development. This objective will be realized through sectoral reform which will transform the role of government from being a (monopolist) operator in the sector to becoming a regulator and planning authority (through the decision support system) which guides and facilitates industry development.
101. World Bank Value Added. In 2004 the Bank completed a multi-stakeholder review of the World Bank Group’s support to the extractive industries which concluded that the World Bank Group can play an important role in the oil, gas and mining sector if it allows and designs its interventions for the extractive industries to contribute to poverty reduction. In response, the World Bank developed a holistic approach which takes into account the entire “lifespan” of EI project development from first discovery of resources through development and exploitation through decommissioning. The approach is illustrated in the Extractive Industries Value Chain (see Figure below).
102. The competitive advantage of the Bank compared to other development partners (and the private sector) is its ability to accompany all stages of the value chain. Accordingly, the World Bank is in possession of the instruments to support (i) the enabling environment which will attract investors, (ii) enhance capacities for oversight and enforcement of operators’ obligations, including tax payments, and (iii) facilitation of community development and protection of the rights of impacted constituencies. Hence, the value addition of the Bank engagement is found in the balanced and multi-dimensional sector support which targets all aspects of sector governance in the interest of promoting poverty reduction and shared prosperity.
B. Technical
Figure 3. Extractive Industries Value Chain
103. Extractive industries value chain framework. At first glance, a review of the EI sector value chain as applied to Nigeria provides a sound basis to support reforms to accelerate the creation of sustainable development settings for the extractive sector of Nigeria. The EI value chain framework is particularly
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 44 of 109
suited to the proposed World Bank’s assistance to Nigeria as reflected in Component A of the project. Indeed, inadequate monitoring of EI operations, unreliability of data on mineral production and hence revenues collected, the uneven distribution of internally generated wealth with still prevailing high poverty levels among the population, and the overall failure of the sector to generate sustainable development, warrant the establishment of direct links to the institutional, revenue collection, governance, and sustainable development gaps to be filled by the project. Also, it is in line with the Government’s road map for mineral sector development as it sets out to (a) develop sectors having great potential of growth; (b) strengthen economic infrastructures; (c) develop human resources, social welfare, and employment; (d) strengthen governance; and (e) promote a participative, well-balanced, and sustainable development approach to resource management.
104. The proposed project will provide a considerable amount of TA to most entities related to the management and regulation of the mining sector, including the MMSD and the agencies reporting to the ministry and any other units involved in mining permitting and control; the relevant entities at the state and local levels; and civil society. The project has been prepared with the cooperation of mining technical experts in the MMSD and the World Bank. One important component addresses the need for more properly trained national technicians and professionals through support to technical training centers and universities in selected areas. Reversing the negative trend in sector education will be critical, as the average age of staff in public mining institutions is quite high and there is a shortage of younger mining professionals.
105. The project will establish an enabling institutional and regulatory environment to help attract and sustain mining investment. In particular, it will strengthen the technical governance capacity of government staff to administer and regulate exploration and mining projects and to achieve socially acceptable and environmentally sustainable private investment in the sector. Expert TA will also build capacity to establish professional relations with private companies, to foster development of the EI sector. These capacities—all important building blocks of a strong sector—will strengthen the Government‘s ability to promote the sustainable development of mineral resources.
C. Financial Management
106. In view of the Federal Treasury Circular of March 19, 2010, which established the Federal Project Financial Management Department (FPFMD) in the Office of the Accountant General of the Federation (OAGF), assigning the responsibility of FM functions on all the World Bank-funded projects at federal MDAs to the FPFMD, the department will be responsible for the FM arrangements of the project. The FPFMD is a multi-donor and multi-project FM platform, established through the joint efforts of the Government and the World Bank. This common FM platform features robust systems and controls. The FPFMD is involved in the implementation of a number of World Bank-assisted projects. The World Bank’s recent review showed that these units have been performing moderately satisfactorily. The FPFMD consists of Accounting and Internal Audit Sections with qualified accounting and auditing staff with appropriate expertise. The project accountant and internal auditor will be supported by adequate and qualified staff to ensure that internal controls and a through segregation of duties are not undermined. As workload necessitates, additional professionally qualified accountants and internal auditors may be seconded by the OAGF, for the duration of the project. The FM arrangements will meet the minimum FM requirement in accordance with OP/BP 10.00. Considering the risk mitigation measures, the FM risk for this financing is assessed as Moderate. Annex 2 provides additional information on FM.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 45 of 109
D. Procurement
107. Procurement of Goods, Works, Non-Consulting, and Consulting Services under MinDiver will be carried out in accordance with the World Bank’s NPF. All procurement activities would be in line with the World Bank’s Procurement Regulations for Investment Project Financing Borrowers (July 2016). The project would refer to ‘Guidelines on Preventing and Combating Fraud and Corruption in Projects financed by IBRD Loans and IDA Credits and Grants, (the Anti-Corruption Guidelines)’ (October 15, 2006, revised in January 2011 and as of July 1, 2016); and the provisions stipulated in the Legal Agreement. For each contract to be financed by the Credit, the different procurement methods or consultancy services selection methods, estimated costs, prior-review requirements, and time frame have been agreed between the Borrower and the World Bank in the Procurement Plan. In order to assure quality of project implementation, a Project Management firm was hired to provide the required technical support to the PIU. This is in addition to the engagement of qualified professionals as consultants to support the PIU. Most of these key consultants have been competitively selected in the course of this project preparation. The Project implementation team will be trained on the World Bank new Procurement Framework. The procurement implementation will be closely monitored and supported by the World Bank to ensure transparency, accountability, and value for money.
108. The identified risks include: political interference – frequent changes of political appointees
(Honorable Minister and permanent secretary), volatile exchange rate, low procurement capacity of the
Ministry and low response to bidding opportunities etc. Adequate mitigation measures have been
provided in the PPSD (dated February 2017) which will be implemented during the course of the project.
The impact of the identified risks of the project is expected to be low.
Assessment of the Ministry’s Capacity to Implement Procurement
109. A procurement consultant has been competitively recruited to provide procurement support to the PIU because the ministry's procurement capacity needs to be developed. In consideration of the magnitude of procurement activities and the low procurement capacity in the MMSD, the procurement consultant would be supported by a procurement assistant. Both officers will be responsible for the procurement activities at the PIU. Because procurement activities have not really commenced on the project, the overall procurement risk assessment rating of ‘High’ is being retained.
110. Procurement assessment of the ministry which was carried out at the preparation of the PPA was updated in mid-February 2017. This assessment focused on updating the procurement risk assessment, mitigation actions, and recommendations agreed with the World Bank at the commencement of the PPA. The recruitment of a procurement consultant has been completed and the World Bank ‘No Objection’ has been issued. The consultant has been providing the required procurement support to the project and the consultant would be supported by a procurement assistant, who would also be competitively selected by the project. The procurement team of the project would be supported by the procurement specialist at the World Bank. The procurement assessment has shown the need to build the capacity of procurement consultant and other key PIU officers on the application of the NPF. The project has not established a functional filing system and the staff are yet to be trained on procurement filing. It is necessary to build the capacity of the procurement staff and also to set up a robust record management system as soon as this project kicks off.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 46 of 109
E. Social and Environment (including Safeguards)
111. The project is identified under Safeguards Category B, implying that the potential environmental and social impacts are expected to be minor, site specific, and manageable to a reasonable level. Based on the information provided until this stage, the project triggers three World Bank safeguard policies: Environmental Assessment (OP/BP 4.01), Physical Cultural Resources (OP/BP 4.11), and Involuntary Resettlement (OP/BP 4.12). However, the project will provide financing to small (minor) infrastructural development associated with facilitating mine development such as building or refurbishing access roads, power interconnect, gas connection, water management system, and so on. Therefore, as a precautionary measure, an ESMF has been prepared and disclosed, the RPF prepared for the SMMRP has been updated and disclosed during project preparation, and a SESA will be undertaken (based on a Sectoral Environmental and Social Assessment prepared under the SMMRP) during implementation to ensure that any potential adverse social and environmental impacts are mitigated.
112. Involuntary resettlement. While this is a TA project and specific information on location of potential transaction support and small infrastructure development subprojects are not yet known, the involuntary resettlement safeguards have been trigged. The RPF prepared under the SMMRP was updated and disclosed as part of project preparation.
113. The ESMF ensures that the principles and procedures for the development of in-country capacity and compliance with local regulations are established and it serves as the basis for environmental assessment of all subprojects to be carried out under the project. Furthermore, the ESMF provides guidance for preparation of ESIAs, Environmental and Social Management Plans (ESMPs), and environmental audits. It includes a screening process that is consistent with both the World Bank operational policies and Nigerian environmental regulations and a chapter on project processing that describes the responsibilities of stakeholders. Most of the infrastructural development activities are not expected to result in major losses or acquisition of land or in restrictions to sources of livelihoods. However, given the possibility that some of the project activities may involve land acquisition and involuntary resettlement, an RPF has also been prepared and disclosed.
114. The ESMF describes the potential environmental and social impacts of project activities to be financed. In particular, it focuses on baseline data and environmental conditions in Nigeria; review of the present status of the environmental, legal, regulatory and institutional frameworks; evolution of the mining sector, including a description of most of the mining projects in operation or under development; and potential physical and socioeconomic impacts of sector activities on the environment and on the communities.
115. Safeguards instruments include the ESMF and RPF, which already have been disclosed in Nigeria on December 8, 2016, and the SESA and any site-specific ESIAs, ESMPs, and RAPs that may be needed, which will be disclosed in-country in Nigeria and in the World Bank. Transaction advisory services on mineral developments will be supported through the project and thus safeguards policies as they pertain to the relevant transactions, and support to the development of minor infrastructure will apply.
116. Small-grants program. It is anticipated that some of the institutions that will be receiving grants (based on a specific eligibility criteria) under this project will be from the private sector and thus some of the activities will be done with private sector actors. In these circumstances, the project’s ESMF, RPF, will
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 47 of 109
be the guiding safeguards documents. However, the adverse social impact of these activities are anticipated to be minimal and the triggering of the main social safeguard, except for the environmental and social assessment (OP 4.01) seems unlikely.
117. General social issues. The key social issues for this project are social accountability and citizen engagement and gender mainstreaming and analysis. The GRM, discussed below, will be one of the key tools and mechanisms to ensure accountability and social inclusion. The GRM should be used in conjunction with a detailed stakeholder engagement plan and if the performance standards are triggered this would require a Public Consultation and Disclosure Plan, which has more extensive requirements.
118. Environmental Assessment (OP/BP 4.01). Safeguards policy OP 4.01 is triggered in Subcomponent B2, and the potential infrastructural development activities include building or refurbishing access roads, power interconnect, gas connection, water management system, and so on. The exact locations and impacts of the infrastructural development activities have not been identified; thus, an ESMF has been prepared with potential mitigation measures to address minor impacts and includes an indicative budget for such mitigation activities.
119. Involuntary Resettlement (OP/BP 4.12). Most of the infrastructural development activities are not expected to result in major losses or acquisition of land or in restrictions to sources of livelihoods. However, an RPF was prepared under the SMMRP and has been updated under this project.
120. Physical Cultural Resources (OP/BP 4.11). Some potential infrastructural development activities in Subcomponent B2 could expose chance finds. These chance finds sites may include sacred shrines, burial sites, and cultural artifacts. The ESMF includes provisions for addressing such heritage chance finds.
121. Cumulative and induced impacts. No long-term or cumulative adverse impacts are anticipated. However, the combination of multiple impacts from existing projects, the proposed project, and/or anticipated future projects may result in adverse and/or beneficial impacts that would not be expected in case of a stand-alone project. The ESMF provides a framework to prepare ESIAs as needed that in turn will assess relevant existing environmental and social conditions in Nigeria, including cumulative impacts. In addition, the proposed SESA for the project is expected to provide insights into cumulative impacts stemming from the proposed project activities.
122. Screening process. A review process will be put in place to ensure screening of all potential civil work activities for environmental and social impacts before approval by the PIU. The screening can be carried out by a designated officer of the PIU (Environmental and Social Officers) or the relevant MDA (MMSD) in accordance with the laid-down procedure. This will include an environmental screening sheet showing the estimated impact category of each subproject destined for rehabilitation and/or refurbishment. The screening process will involve an assessment of the project to determine (a) the appropriate project categorization for the environmental assessment; (b) applicable World Bank environmental and social safeguards; (c) potential for environmental and social impacts; and (d) cultural or other sensitivities. In addition, each project will be screened to identify relevant stakeholders and the nature and extent of engagement for each stakeholder category.
123. ESMPs. The project and all infrastructural activities will include the preparation of ESMPs to achieve ESHS regulatory compliance objectives; institutional responsibilities (for example, World Bank);
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 48 of 109
and other related commitments. An ESMP is an important element of the overall environmental and social sustainability strategy of the mining sector to ensure environmental, health, and social performance.
G. Other Safeguard Policies (if applicable)
124. Legacy issues. Finally, the activities in Component B may have legacy issues. These could include a situation where the World Bank is asked to participate in a relatively small or narrowly defined component of a much larger or broader project whose design has been completed and construction has progressed significantly or is near completion, with the exception of the component for which the World Bank participation has been requested. The component for which the World Bank support is solicited could be an associated facility in some cases. A rapid assessment would be prepared to assess the existing safeguards documents and/or implementation measures, taking into account the World Bank safeguard requirements. Appropriate follow-up terms of safeguards due diligence, including updating or preparing new safeguards instruments, would be undertaken once the rapid assessment is completed.
125. Climate change. The MinDiver project will explore for a type of rock called pegmatites (along the known pegmatite belt of Nigeria). This type of rock may contain REEs from lanthanides that are 15 naturally occurring elements. It is well known that high technology and environmental applications of REEs have grown dramatically in diversity and importance. The environmental applications of REEs have increased over the past three decades and this will continue, given the growing concerns about ‘global warming’ and ‘energy efficiency’. The use of REE magnets, for instance, reduces the weight of cars. New widespread adoption of energy-efficient fluorescent lamps achieving reductions in carbon dioxide emissions are nowadays important. Also, large-scale applications of magnetic-refrigeration technology could significantly reduce energy consumption and carbon dioxide emissions. Rechargeable batteries is another new application of REEs from pegmatites, among many other uses for minimizing climate change effects that MinDiver will somehow contribute to.
H. World Bank Grievance Redress
126. Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/en/projects-operations/products-and-services/grievance-redress-service. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 49 of 109
VII. RESULTS FRAMEWORK AND MONITORING
Results Framework COUNTRY : Nigeria
Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) Project Development Objectives
To enhance the mining sector's contribution to the economy by strengthening key government institutions, improving information infrastructure and knowledge, and fostering domestic investment in the sector.
Project Development Objective Indicators
Indicator Name Core Unit of Measure
Baseline End Target Frequency Data Source/Methodology Responsibility for Data Collection
Name: Mining information management systems (including geological database, DSS, EIMS) developed. Only DSS established but not rolled-out.
Text None of the systems have been fully developed
All systems in place and in use by staff in relevant agencies and institutions
Bi-Annually
PIU/PMO Reports
MMSD, PIU/PMU
Description: Measures improvement in sector planning and regulatory oversight based on a successful restructuring of the institutional framework separating mining sector policy, planning, and promotion from sector regulation.
Note to Task Teams: The following sections are system generated and can only be edited online in the Portal.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 50 of 109
Indicator Name Core Unit of Measure
Baseline End Target Frequency Data Source/Methodology Responsibility for Data Collection
Name: Number of proof of concept transactions undertaken through the project
Number 0.00 7.00 Bi-Annually
PIU
MMMSD, PIU
Description: Measures the number of sites taken to contractual closures through the transaction process.
Name: Geological knowledge enhanced through an integrated geological database made publically accessable
Yes/No N Y Bi-Annually
MMMSD, NGSA
PIU/PMO
Description: Measures geophysical, geochemical, and geological aspects carried out and the level of transparency in releasing the data.
Name: Increased economic linkages from industrial minerals to the services and manfactoring sectors
Number 0.00 10.00 Bi-Annually
MMMSD, Department of Statistics, Chamber of Commerce
PIU/PMO
Description: Measures the number of manufactures that are sourcing their materials (ceramics, dimension stones, etc. or any mining related materials) domestically
Name: ASM operators inventoried, formalized, and supported through technical
Percentage 0.00 40.00 Bi-Annually
MMMSD, ASM cooperatives
PIU/PMO
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 51 of 109
Indicator Name Core Unit of Measure
Baseline End Target Frequency Data Source/Methodology Responsibility for Data Collection
assistance
Description: At least 30%-40% (cumulative) of all ASM operators (areas) are inventoried, operators formalized, and receiving technical assistance.
Name: Mining exportation and production projects subject to formal environmental and safety inspections following good international practices set under the project
Percentage 0.00 75.00 Bi-Annually
MMMSD, Ministry of Environment, Mining Inspectorate, Private companies
MMMSD
Description: A system including geospatial data related to environmental issues linked to mining sites and presenting an overall picture at the country level of environmental concerns is prepared.
Name: Production data collected from Artisinal, Small and Medium size mining operations (as a % of total number of operations inventoried under the project)
Percentage 0.00 50.00 Bi-Annually
MMSD/Inspectorate Services
PIU/PMO
Description: Measures the percentage of Artisanal, Small and Medium size operations included in inventory.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 52 of 109
Intermediate Results Indicators
Indicator Name Core Unit of Measure
Baseline End Target Frequency Data Source/Methodology Responsibility for Data Collection
Name: Functional reviews undertaken and action plan implemented
Text No functional review has taken place
Functional review undertaken and action plan fully implemented.
Bi-Annually
PIU/PMO reports
MMSD, PIU/PMO
Description: Functions, tasks and roles performed within the MMSD and its agencies analyzed and institutions restructured.
Name: Esablishment of a system for the transparent assessment and collection of revenues from the mining sector
Text No such system has been established
Revenue system for assessment and collection fully established and operational
Bi-Annually
PIU/PMO reports
MMSD,PIU/PMO
Description: Development of a management information system linking all MMSD departments and agencies and information portals for regulatory effectiveness and efficiency.
Name: Establishment fiscal accountability and transparency framework for
Text No fiscal accountability and
Independent audit of the SMDF
Annually
MMSD, Ministry of Finance
MMSD, Dept. of Statistics, Ministry of Finance, PIU
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 53 of 109
Indicator Name Core Unit of Measure
Baseline End Target Frequency Data Source/Methodology Responsibility for Data Collection
the Solid Mineral Development Fund (SMDF)
transparency framework in place.
carried out on an annual basis and disseminated publicly.
Description: Providing a system for Accountability and Transparency in the distribution of funds managed by SMDF.
Name: Number of exploration sites monitored and inspected by the Mines Inspectorate Department in collaboration with other relevant agencies
Number 0.00 40.00 Annual
Records at Mines Inspectorate, MEC, ASM Department, FMoEnv
PMU
Description: Measures the number of annual inspection to ensure compliance with law and regulations.
Name: Number of staff of MMSD and agencies trained through MINDIVER to manage, regulate, and monitor the mining sector, disaggregated by gender and function (policy, regulation, planning, revenue management
Number 0.00 200.00 Bi-Annually
Activity reports
PIU/PMO, Agencies
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 54 of 109
Indicator Name Core Unit of Measure
Baseline End Target Frequency Data Source/Methodology Responsibility for Data Collection
Description: Measures the cumulative number of staff identified through a skills gap analysis and training provided.
Name: Partnership programs for skill development and vocational training under implementation
Text NIMG has been established but has not been effective in fulfilling its mandate
Action plan developed, partnerships established, and training programs implemented
Bi-Annually
Activity reports
PIU/PMO
Description: Framework will be adopted by all stakeholders and curriculum and training provided.
Name: Number of mineral resources identified from new geoscience knowledge and information collected
Number 0.00 10.00 Bi-Annually
MMSD, NGSA, PIU
PIU
Description: Measures the number of mineral resource areas/deposits identified by the provision of new geoscience data identified by the project.
Name: Number of potential mineral prospectivity areas identified for targeting
Number 0.00 18.00 Bi-Annually
NGSA, PIU
PIU & NGSA
Description: Measures the number of areas with probability of having high prospectivity for a specific commodity or set of them based on the prospectivity based analysis
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 55 of 109
Indicator Name Core Unit of Measure
Baseline End Target Frequency Data Source/Methodology Responsibility for Data Collection
Name: Decision Support System upgraded with new geo-data on strategic areas
Yes/No N Y Bi-Annually
MMSD. Planning Ministry, Environment Ministry and PIU
PIU, NGSA
Description: Decision Support System will be operationalized for use by an inter-ministerial Committee in analyzing Strategic areas to be developed and for Strategic Planning.
Name: Number of artisanal miner cooperatives accessing finance and equipment from microfinance institutions and leasing companies (percentage that are female)
Number 0.00 100.00 Quarterly
Activity report, regulations, MFIs, State Governments
PIU/PMO
Description: State Governments will organize the ASM miners into cooperatives for registration at the MMSD ASM department and access to finance at the Micro Finance Institutions.
Name: Guidance on local supply chain development for industrial minerals developed
Yes/No N Y Quarterly
Chamber of Industries, Manufactures Association of Nigeria, Miners Association
PIU/PMO
Description: This indicator measures local industrial miner’s supply of industrial minerals to meet standards and specifications of domestic industries and manufacturing
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 56 of 109
Indicator Name Core Unit of Measure
Baseline End Target Frequency Data Source/Methodology Responsibility for Data Collection
plants.
Name: Mechanism for attracting long term capital into the SMDF SPV in place
Yes/No N Y Bi-Annually
PIU/PMO
PIU
Description: Advice provided to the SMDF SPV by a study into the most appropriate mechanism for attracting long-term capital finance to the mining sector.
Name: Citizen participation and accountability mechanism established for CSO/CBO/Non-state actor participation in the mineral value chain
Yes/No N Y Bi-Annually
Activity reports, CSO/CBO reports
PIU/PMO
Description: Non-state actors capacities built to play an active role in sector monitoring across the value chain, particularly in production and revenue transparency and community participation.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 57 of 109
Target Values Project Development Objective Indicators FY
Indicator Name Baseline YR1 YR2 YR3 YR4 YR5 End Target
Mining information management systems (including geological database, DSS, EIMS) developed. Only DSS established but not rolled-out.
None of the systems have been fully developed
No No Yes Yes Yes
All systems in place and in use by staff in relevant agencies and institutions
Number of proof of concept transactions undertaken through the project
0.00 0.00 1.00 1.00 2.00 3.00 7.00
Geological knowledge enhanced through an integrated geological database made publically accessable
N N N Y Y Y Y
Increased economic linkages from industrial minerals to the services and manfactoring sectors
0.00 1.00 1.00 2.00 2.00 2.00 10.00
ASM operators inventoried, formalized, and supported through technical assistance
0.00 5.00 15.00 25.00 35.00 40.00 40.00
Mining exportation and production projects subject to formal environmental and safety inspections following good international practices set under the project
0.00 5.00 20.00 35.00 60.00 75.00 75.00
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 58 of 109
Indicator Name Baseline YR1 YR2 YR3 YR4 YR5 End Target
Production data collected from Artisinal, Small and Medium size mining operations (as a % of total number of operations inventoried under the project)
0.00 5.00 15.00 20.00 30.00 45.00 50.00
Intermediate Results Indicators FY
Indicator Name Baseline YR1 YR2 YR3 YR4 YR5 End Target
Functional reviews undertaken and action plan implemented
No functional review has taken place
No No Yes No Yes
Functional review undertaken and action plan fully implemented.
Esablishment of a system for the transparent assessment and collection of revenues from the mining sector
No such system has been established
No No Yes Yes Yes
Revenue system for assessment and collection fully established and operational
Establishment fiscal accountability and transparency framework for the Solid Mineral Development Fund (SMDF)
No fiscal accountability and transparency framework in
No No Yes Yes Yes
Independent audit of the SMDF carried out on an annual basis
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 59 of 109
Indicator Name Baseline YR1 YR2 YR3 YR4 YR5 End Target
place. and disseminated publicly.
Number of exploration sites monitored and inspected by the Mines Inspectorate Department in collaboration with other relevant agencies
0.00 5.00 10.00 10.00 10.00 5.00 40.00
Number of staff of MMSD and agencies trained through MINDIVER to manage, regulate, and monitor the mining sector, disaggregated by gender and function (policy, regulation, planning, revenue management
0.00 25.00 50.00 150.00 175.00 200.00 200.00
Partnership programs for skill development and vocational training under implementation
NIMG has been established but has not been effective in fulfilling its mandate
Action plan developed, partnerships established, and training programs implemented
Number of mineral resources identified from new geoscience knowledge and information collected
0.00 0.00 1.00 3.00 3.00 3.00 10.00
Number of potential mineral prospectivity areas identified for targeting
0.00 1.00 3.00 5.00 5.00 4.00 18.00
Decision Support System upgraded with N N Y Y Y Y Y
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 60 of 109
Indicator Name Baseline YR1 YR2 YR3 YR4 YR5 End Target
new geo-data on strategic areas
Number of artisanal miner cooperatives accessing finance and equipment from microfinance institutions and leasing companies (percentage that are female)
0.00 0.00 50.00 70.00 100.00 100.00
Guidance on local supply chain development for industrial minerals developed
N N N Y Y Y Y
Mechanism for attracting long term capital into the SMDF SPV in place
N N N Y Y Y Y
Citizen participation and accountability mechanism established for CSO/CBO/Non-state actor participation in the mineral value chain
N N Y Y N N Y
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 61 of 109
ANNEX 1: DETAILED PROJECT DESCRIPTION
COUNTRY: Nigeria
Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver)
Component A: Establishing a Strong Foundation for Mining Sector Development (US$68.8 million)
1. The objective of this component is to strengthen the Government in its role to establish a strong foundation for mining sector development, thereby enhancing its capacity as a regulator and facilitator. This will involve reviewing and enhancing a number of key requirements for a successful mining environment. This will be accomplished through the following: (A1) strengthening mining governance, transparency, accountability, and administration; (A2) strengthening geological knowledge and information infrastructure with special focus on the operational capacity of the NGSA; (A3) skills building and education support for mining sector development; and (A4) enhancing environmental, health, and social performance.
2. Subcomponent A1. Strengthening Mining Governance, Transparency, Accountability, and Administration (US$14.4 million). The objective of this subcomponent will be to support a second generation of governance reforms to improve performance of the sector. This will involve building capacity and updating, strengthening, and improving the mining governance and administrative framework, with a particular focus on the MMSD. This subcomponent will finance consulting services, non-consulting services, works, and training. Specific activities to be implemented under this subcomponent include the following:
(a) A1-1. Strengthening the institutional frameworks governing the mining sector. The objective of this activity is to assist the Government in improving the institutional efficiency and effectiveness of the MMSD and sector agencies as well as improving the institutional linkages between the MMSD and sector agencies with other Federal Government of Nigeria MDAs. This activity will support four broad and interrelated subactivities: (i) preparation and implementation of an institutional functional analysis of workflows, processes, and information flows, needs assessment; (ii) TA to the MMSD to update the institutional dimensions of the policy, legal, and regulatory framework to reflect the finding and recommendations of the functional analysis; (iii) TA to the MMSD and its associated agencies to define a road map and implement institutional reforms on the basis of the functional analysis and update to the legal, policy, and regulatory framework; and (iv) design, development, and implementation of an integrated MMIS based on the functional analysis. The MMIS will integrate software modules linking with a knowledge system, human resource management system, the DSS, EIMS, cadastre system, and the revenue collection system. The operationalization of those systems will require a review and enhancement of information and communication technology infrastructure of the ministry. Consequently, the MMIS will receive inputs from preexisting subsystems (that is, the Cadastre, DSS); new subsystem to be developed under other components of the project (that is, EIS, revenue collection system); and several system developments under this subcomponent as outputs of the functional analysis (including the knowledge system and human resource management system). The MMIS will be accessible through an integrated web portal with
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 62 of 109
different granting rights for various users.
(b) A1-2. Sector administration capacity building. The objective of this project activity is to assist the Government to build the required technical skills and managerial capabilities to service and develop the mining sector. This activity will provide support to the following: (i) identification of existing gaps in institutional and administrative capabilities and proposing changes that would promote the MMSD’s long-term vision; (ii) design and implementation of capacity development programs in a number of functional areas to address identified gaps; and (iii) support to a wide range of modalities to build capacity in the short term and long term (consultancies, advisers, on-the-job training, conference visits, cooperation with international institutes, participation in BSc, MSc, or PhD programs and so on) for relevant Government staff in accordance with the agreed work programs and the annual training program cleared by the World Bank.
(c) A1-3. Strengthening revenue assessment, collection, and forecasting. The activity will support the following: (i) mainstreaming the EITI standard in the mining sector; and (ii) developing, operationalizing, and building capacity on mechanisms for mineral revenue modeling, forecasting, planning, and collection. This project activity will be carried out in collaboration with the World Bank Governance and Macroeconomics and Fiscal Management teams, as well as the IMF-Fiscal Affairs Department and will involve enhancing collaborations between the MMSD with the Ministry of Finance and the Ministry of Budget and Economic Planning.
(d) A1-4. Building independent oversight capacity and stakeholder consultation mechanisms. The objective is to assist non-state actors (civil society, NGOs, CBOs, media, academia, professional associations, and technical experts) by strengthening their participation in increasing transparency and disclosure in the mining industry, specifically in revenue and production transparency and environmental and social compliance and improving social accountability. The project will support the following subactivities: (i) developing a mechanism for citizen engagement through a platform/working group and dissemination portal; the process will be linked with the SESA and CDA development process using the EIS to be developed at the community level; (ii) developing guidelines and model agreements for community engagement on issues such as benefits sharing, obtaining consent, and land access for exportation and production activities and CDAs; (iii) capacity building of civil society organizations (CSOs), CBOs, and other relevant stakeholders to participate in key decisions in mining operations within communities including the development and negotiation of CDAs, mining revenue transparency, sector accountability and governance, environmental management, and so on; (iv) developing guidelines on benefit sharing mechanisms such as foundations, trusts, and funds and their applicability in different mining operations at all levels of engagement on behalf of mining communities; (vi) developing a geographically based support for elaborating the baseline to apply community development funds within selected buffer areas around intended operating sites to be supported under this project; and (vii) preparing a communication strategy for civil society and CBOs and other community representatives.
3. Subcomponent A2. Strengthening Geological Knowledge and Information Infrastructure
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 63 of 109
(US$33.50 million). The objective is to strengthen geological knowledge of the Nigeria’s mineral wealth, prepare for the identification of prospective areas (under Component A) and facilitate bidding rounds (under Component B) to attract investors. This work will include the preliminary analysis related to industrial minerals and dimension stones. All activities under this subcomponent will be implemented with a view toward building capacity and boosting the capabilities and operational capacity of the NGSA as a key sector vehicle. Special attention will be given to boosting the capabilities and operational capacity of the NGSA. This subcomponent will finance consulting services, non-consulting services, goods (geoscience and office/IT equipment), works, and training. Specific activities under this subcomponent include the following:
(a) A2-1. Basic mapping with international standards using a common satellite imagery and geophysical methods. The objective of this project activity will be to undertake basic mapping of identified areas for potential mineral prospectivity targeting within geologically endowed regions. Specific sub-activities to be financed under this activity may include (i) the development of common satellite imagery foundation layers; (ii) airborne and ground magnetic, gravimetrical, electro-magnetic geophysical methods; and (iii) subsurface sampling. This activity will finance consulting services, non-consulting services, training, goods, and works.
(b) A2-2. Development of a GIS geodata schema and undertaking interpretation of data. The objective is to improve the mechanism for gathering, interpreting, and managing acquired geodata. This work is intended to be developed in full conformity to international standards such as the Open Geo-spatial Consortium standards. This schema will involve developing a type of ‘box’ that will contain structured geo-information from different sources such as remote sensing, collateral geological data, and geophysics and achieving higher detailed geological maps to narrow down risks in prospective mineral areas.
(c) A2-3. Targeting prospective areas through diagnostic field work in localized areas to advance priority assets toward further development. This activity will support the identification of potential sites for priority geological exploration. It is primarily analytical and will involve developing and using GIS-based prospectivity models and methods for analyzing target areas through various algorithms to establish their suitability and likelihood of having potential mineral prospects. This will link those prospects with the probability of success and comparing those targets with existing concession areas at all mineral cycle stages (greenfield, prefeasibility, and so on). This activity will use the data generated in A2-2 such as geological mapping data, imagery, geophysics, geochemistry, and borehole information (if available) and will be the basis for the geological knowledge of the selected zones of interest.
(d) A2-4. Valuation methods for nonproducing assets linked with prospectivity ranking. The aim of this activity is to assess mineral asset valuations and deliver a standard procedure to value assets on nonproducing mineral properties. This activity will support the MMSD in developing a methodology to assign values to potential mineral targets, to assess which of these can be advanced for further development within the project. This will include developing new processes, standards, and methodologies to enable reports on the valuation of exploration to be prepared to assist in later negotiation (including bidding) with interested
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 64 of 109
exploration and mining companies. This process will serve for assigning economic value (weight) for applying geoscientific valuation methods as well as developing a ‘new’ standard methodology. In addition, a comparison between exploration expenditure and prospectivity to focus promotion strategies will be possible through this activity.
(e) A2-5. Assess mineral asset valuations and deliver a standard procedure to value assets on nonproducing mineral properties. This activity will support the establishment of an internationally certified procedure to support asset transfer and negotiation processes for early-stage exploration assets. A consultancy will be procured to assist the MMSD review and select the appropriate mineral valuation method and the development of an international standard for early-stage, nonproducing, exploration assets to guide negotiations for sites in Nigeria. This activity has a direct relationship with the subcomponent dealing with ‘proof of concept’ and transactions leading to pre-feasibility and feasibility studies because valuing mineral properties is a fundamental practice for ‘bringing a mineral asset to the market’.
(f) A2-6. Develop geological data for bidding packages and prepare the necessary bidding processes and workflows to efficiently attract international investors. This activity will support the preparation of geological knowledge and data from favorable mineral prospectivity areas/sites (identified in activity A2-3) into individual bidding package for subsequent commercial transaction.
(g) A2-7. Dissemination of geological information. The objective of this project activity is to disseminate the results of the geosciences activities under the MinDiver project and to transfer knowledge gained to all interested stakeholders. This activity will support (i) the ministry’s participation in investment promotion seminars/conferences such as PDAC, INDABA Mining Conference, and ChinaMining; and (ii) the development and operation of a web application/portal aimed at disseminating geological information to potential investors and other stakeholders. Geological information has multi-sectoral applications and can be used across government for land use planning, groundwater, DSSs. Consideration will be given to any restriction related to geodata ownership that could be applied. Moreover, this activity will take stock of earlier work done on the MMIS and will be supplemented with various dissemination applications through a single portal. It is important to note that the Government will need to strengthen its information and communication infrastructure to meet the important data transmission rates required for handling such a portal.
4. Subcomponent A3. Skills Building and Education Support for Mining Sector Development (US$8 million). The main objective is to address skills gaps in the industry and support the education and practical training of the next generation of sector specialists. This activity will support the following subactivities: A3-1. Undertake an industry skills needs assessment and complementary skills gap assessment; A3-2. Design and implementation of an integrated capacity development strategy and partnership program with a local university and other training or educational institutions (international or local), and the private sector to build practical technical and vocational capacity within Nigeria; A3-3. Development and upgrading of teaching and training curriculum for Nigerian universities and the NIMG; and A3-4. Refurbishment of the physical infrastructure of the NIMG. This subcomponent will finance consulting services, training, goods, and works.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 65 of 109
5. Subcomponent A4. Environmental, Health, and Social Performance (US$12.9 million). The objective of this project activity will be to assist the Government to improve environmental and social sustainability of the mining sector and improve its regulatory enforcement capability. This subcomponent will finance consulting services, non-consulting services, works, and training. Activities under this subcomponent will include the following:
(a) A4-1. Updating and preparing the SESA and implementation of its recommendations, including a review of legal and regulatory framework (including guidelines) for environmental management with the aim of strengthening the roles of the relevant departments within the ministry toward ensuring effective implementation. The objective of this project activity is to provide the MMSD with guidance and strategy to ensure that environmental and social impacts are fully taken into account and mitigated in accordance with the World Bank policies within the overall development of the mining sector. The SESA will elaborate on potential mitigation measures (in detail/site and regional level) and provide detailed diagnostic assessment of the performance related to the current regulatory and site inspection context. The SESA will address strengthening of institutions and organizations (laboratories and so on) concerned with environmentally related tests so that Nigeria will be ready for an ideal and sound development of a dormant sector. In addition, the legal and regulatory framework (including guidelines) for environmental management will be reviewed with the aim of strengthening the roles of the relevant departments within the ministry toward ensuring effective implementation and not only revisions.
(b) A4-2. Mitigating ESHS impacts associated with mining, including medical geology. The objective of this project activity is to build the human resource and information capacities necessary for a sound ESHS approach to the management and mitigation of impacts arising from the sector. This activity is linked directly to the SESA (A4-1) and will provide deeper analysis of ESHS issues at specific sites affected by the project. At the site level, the project will develop EIAs to appraise physical effects of the intervention. Specific activities supported under this subcomponent include (i) building capacity and providing TA on the planning and implementation of ESHS best practices; (ii) undertaking baseline assessment on the medical geology in the mining sector; (iii) carrying out site-specific ESHS assessments and EIA; and (iv) preparing sector-specific environmental and social regulations.
(c) A4-3. Designing and developing an EIS. The objective of this project activity is to improve decision making and data handling in the MMSD. The project will support the development and operationalization of the EIS to encompass regional and specific data, linked with the DSS, MMIS, and Knowledge Management Systems.
(d) A4-4. Conflict assessment to identify potential risks and mitigation measures focused on key areas of the North. The objective of this project activity is to ensure that mining activities and the wider society do not come into conflict and that risks are minimized and mitigation measures are addressed. The project will support the development and implementation of a conflict assessment to identify potential conflict risks that may result from project activities and mitigation measures along the extractive industries value chain, including establishing robust grievance redress mechanisms (GRM) and undertaking regular stakeholder consultations. The information generated from the conflict assessment will be integrated
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 66 of 109
into the DSS for ongoing monitoring.
(e) A4-5. Implementation of gender equality programs based on a detailed action plan. The objective of this project activity is to support the MMSD in creating opportunities for women and gender mainstreaming throughout the mining sector. The project will support (i) the development of gender action plan to create opportunities for women in the sector and to mitigate risks that are unique to women that may result from mining activities and (ii) implementation of the action plan through a variety of projects and programs. The MinDiver project can draw extensively on experiences from other World Bank projects, which have been specifically targeting women, such as the NSP, AREDP, MISFA, and Agribusiness Supplier Development Programme (Skills Development Project). It is anticipated that there will be a significant role for women in the mining sector.
Component B: Facilitating Downstream Sector Development and Enhancing Competitiveness (US$67.6 million)
6. The objective of this component is to facilitate downstream sector development and enhance sector competitiveness and its attractiveness to investors. This will involve providing support to the following broad subcomponents: (B1) developing measures for formalizing, regulating, and inventorying ASM; (B2) catalyzing the mineral sector for regional development; (B3) implementing steps to enhance value addition; (B4) addressing access to finance and mineral sector investment climate constraints; and (B5) identifying and advancing ‘proof of concept’ investments including industrial minerals and dimension stones among other minerals.
7. Component B includes those aspects of the MinDiver project that are required to achieve the benefits and economic value from both highly prospective areas and potential mineral assets identified in Component A. This involves facilitating and strengthening those economic, commercial, and financial aspects required for the growth and development of the mining sector. It also establishes those factors required for enhancing direct and indirect value chains of key minerals necessary for supporting industrialization and inclusive growth.
8. Subcomponent B1. Developing Measures for Formalizing, Regulating, and Inventorying ASM (US$11.7 million). The objective of this project activity will be to enhance the economic opportunities of artisanal miners, reduce smuggling practices, and create incentives for their inclusion in the formal economy, thus increasing revenue collection, poverty alleviation, and job creation. This subcomponent will finance consulting services, non-consulting services, works, and training. Specific activities to be supported through this subcomponent include the following:
(a) B1-1. Developing an inventory of ASM operations/activities aimed at monitoring the scale and the size of the subsector. The objective of this activity is to develop an inventory of all current ASM operations and activities to determine their scale and extent. By undertaking this inventory process, information on the scale, range, and rapidity of change can be monitored. The areas of ASM activity will be revised and adequately outlined using a time monitoring tool based on multidate and multispectral high-resolution satellite remote sensing imagery; through this process a verification will be done so that areas of activity will be updated. Specific subactivities will include (i) satellite data acquisition and processing; (ii)
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 67 of 109
preparation of high-resolution image maps on ASM areas using the georeference information; mobile phone and smart device systems will be used to cross-reference and upgrade ASM operators’ basic information so that a formalization could be an ongoing process as operators move in and out; and (iii) the development and installation of remote sensing system for processing satellite imagery and GIS information on ASM sites as a supplementary tool for inspection purposes.
(b) B1-2. Incentivizing ASM formalization and registration, including through the establishment of the MBCs and cooperatives, and by offering TA and extension services. Specific activities will include (i) developing and implementing a program to formalize ASM miners into larger cooperatives to support the growth and transformation of small-scale miners into larger enterprises; (ii) developing a framework for establishment and management of the MBCs; (iii) establishing the MBC to ensure formal mineral certification to standardize quality, control, and maintain production and revenue transparency; the MBCs will also provide access to value addition and processing opportunities together with the development of skills in entrepreneurship; and (iv) developing and implementing a leasing program for mining equipment targeted toward artisanal and small-scale miners who do not have the capital to purchase their own equipment or ensure its operations and maintenance. The leasing program should be implemented through one or more of the leasing companies operating in the country. This activity will also support the procurement of equipment through the MMSD.
(c) B1-3. Preparing of ASM regulatory framework and strengthening the functions and capacity of the ASM Department and inspectorate services. It is considered that this regulatory framework is required to meet the particular challenges related to the difficulties in regulating their activities, resulting in significant environmental destruction and health and safety risks. Specific activities supported under the project will include (i) preparing technical, health, safety, and environmental regulations to address ASM activities in Nigeria; (ii) developing and implementing a regulatory and enforcement program aimed at strengthening inspectorate functions and capabilities related to ASM, by developing and implementing the program, federal regulatory functions with state government supervision functions will be aligned; (iii) developing guidelines for addressing potential conflicts between ASM operators and other land users; (iv) developing and implementing an action plan to curb smuggling or black market trade of minerals; it will also involve supporting the inclusion of ASM surveillance within the Special Mines Surveillance Taskforce to be established by the Government; (v) equipping the MI with technical and logistics equipment and tools for ASM field inspection and monitoring as well as ease of mobility and in-field analysis; and (vi) detailed geodata collection on ASM sites to facilitate the process of identifying existing or new geological features that might be capable of being worked as an extension of ASM activities. Geodata collection under this sub-activity may include field-based geophysics, auger drilling, trenching, and various types of geochemical sampling, including panning fractions.
9. Subcomponent B2. Catalyzing the Mineral Sector for Regional Development (US$12.5 million). The objective of this project activity is to leverage the mining sector to enhance regional development in several strategic resource-rich regions identified as priorities for the Government. This subcomponent will
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 68 of 109
finance consulting services, non-consulting services, works, and training. More specifically, this subcomponent will support the following activities:
(a) B2-1. Enhanced DSS and preparation of a road map for regional development. Through the use of a regionally enhanced DSS, development and implementation of a road map identifying the routes and physical carrying capacities for existing supporting infrastructure and where existing gaps would be met by investments in minor infrastructure and/or mineral processing centers. The road map will take as input the results of Subcomponent A2-3 (Targeting Prospective Areas) and the identification of brownfield assets/abandoned mines sites under Subcomponent B5-1 (Identifying ‘Proof of Concept’ Investments), to invest in feasibility studies and construction of minor infrastructure, mineral processing and refining, and other gaps across the mineral value chain that are impeding production.
(b) B2-2. Mineral-related infrastructure subprojects program. Development of minor infrastructure as subprojects under MinDiver, defined as being ancillary to the mine (within the boundaries of the mineral lease) and associated with facilitating mine development, such as building or refurbishing an access road and rail line, power interconnect, gas connection, water management system, and so on. Any such support will be in accordance with the project’s ESMF/RPF, and will include an ESIA and a site-specific EIA, and ESMP where relevant. This activity will be led by the MMSD, in cooperation with relevant state governments and other ministries when necessary (that is, on providing technical inputs and assisting with supervision). It is expected, however, that all fiduciary matters related to this activity will be the responsibility of the MMSD, and as such the MMSD PIU will be responsible for procurement of services contractors and supervision of activities. The management of the program will be detailed in the PIM approved by the World Bank, including the selection criteria for the subprojects, type of infrastructure, operation and maintenance, and legal, financial, and procurement modalities.
10. Subcomponent B3. Implementing Steps to Enhance Value Addition and Some Upstream Activities (US$10.7 million). The objective of this project activity is to enhance the value of mineral products through upstream development in the industrial minerals domain (from B5-1) and downstream processing as well as downstream processing and refining across the range of mineral categories (excluding energy minerals) found in the country. This subcomponent will finance consulting services, non-consulting services, works, and training. The proposed project will provide support to the Government on the following activities:
(a) B3-1. Analyzing economic drivers to link supply of industrial minerals with demand for construction and industrial materials and providing recommendations including support to (i) industrial minerals value chain analysis for limestone and dimension stone and (ii) value chain analysis in Kogi, Kaduna, and Kano states as identified through previous spatial analysis work undertaken in the framework of infrastructure development corridors (using the DSS).
(b) B3-2. Formulating effective policy provisions related to value addition for mineral products, including support to (i) targeted sector value addition policy reforms and implementation of policy provisions in priority areas (central corridor); (ii) TA for mineral sector private operators outreach program for value addition; (iii) development of a strategy
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 69 of 109
to integrate mineral support centers and value addition; and (iv) establishment of value-addition pilot programs in priority areas.
(f) B3-3. Purchasing and installing laboratory equipment, to accredit and certify quality (metallurgical, geotechnical). This will include support to (i) undertake an assessment of laboratories needed in the sector and in targeted regions, including pre-audit and capacity/quality control needs’ assessment for laboratories and technical staff; (ii) equipment acquisition for upgrading of laboratories; (iii) capacity building and TA for inspections, accreditation, and certification of laboratories; and (iv) developing a strategy for management and sustainability of laboratories.
(c) B3-4. Developing and providing a specialized training program for local enterprise and entrepreneurs along the mineral value chain. The training program should be on demand basis and will address value chain technical skills, business management, FM, quality control, and access to markets.
(d) B3-5. Analyzing benefit-sharing aspects of the different stages of the value chain with a view to the countrywide institutional and governance framework and set standards for small-scale mining companies. TA to implement a customized local community development policy in the priority areas from actors entering the value chain.
11. Subcomponent B4. Addressing Access to Finance and Mineral Sector Investment Climate Constraints (US$12.7 million). The objective of this project activity is to develop and implement reforms, in collaboration with the Trade and Competitiveness GP to address access to finance and investment policy constraints to encourage greater competitiveness of Nigeria in the global mineral market. This subcomponent will finance consulting services, non-consulting services, works, and training. This will involve the following activities:
(a) B4-1. Assessing investment entry constraints and identifying the key factors limiting access to finance for each category of industry participant (local ASM, junior and medium-scale companies) and the appropriate financing mechanisms to strengthen their participation in the sector.
(b) B4-2. Assessing the SMDF and providing TA for its restructuring and operationalization to include a private sector-focused mining fund, (that is, the SPV facilitator fund) by identifying appropriate governance, structure, organization, strategies, operations, and so on.
(c) B4-3. Establishing a small-grants pilot program (subprojects), including designing its implementation arrangements (through the SMDF SPV or another potential funding vehicle). Once the SPV has been established and its governance and fiduciary mechanisms verified by an independent party and acceptable to the World Bank (Subcomponent B4-2), the project will then channel direct support through the SPV for sub-grants program, targeting artisanal, small, and medium (junior) miners to finance activities that will allow them to move toward a more advanced stage of the mining cycle, thereby simulating investment in the country’s mining sector. Specific activities to be funded through the sub-grants program include preparation of environmental and social baseline studies, certification of reserves, in-fill
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 70 of 109
geodata collection, preparation of financing packages, leasing equipment, and development of a framework for establishing and operationalizing mineral support centers containing mineral buying and processing centers. As one of the conditions of disbursement, a Sub-Grants Operations Manual will be prepared by the Borrower and approved by the World Bank team. The Small-Grants Operations Manual will include the (i) governance structure of the fund; (ii) key personnel managing the fund; (iii) fiduciary and oversight modalities, including auditing; (iv) safeguard arrangements; and (v) list of eligible activities and selection criteria for small grants.
(d) B4-4. The development and implementation of a training program targeted toward Nigerian financial sector institutions, particularly through the Bankers Committee, aimed at educating them on mining financing, the review of bankable feasibility studies, project economic assessments, and business plans.
12. Subcomponent B5. Advancing ‘Proof of Concept’ Investments (US$20 million). The objective of this subcomponent is to provide support to the Government aimed at attracting private sector investment into targeted exploration areas and mineral production at specific sites including work on industrial minerals and dimension stones among other minerals. This subcomponent will finance consulting services, non-consulting services, works, and training. Specific activities financed through this subcomponent include the following:
(a) B5-1. Developing key industrial mineral and dimension stone areas/sites with a view to enhancing their production. This work will be necessary to bring these areas and sites from an early stage production to an advanced situation leading to value addition that would be enhanced in B3. This activity could finance sub-activities such as the following: (i) asset certification and technological assistance by an internationally recognized consultant to adhere to recognized international standards; (ii) surveys including detailed geophysical survey (drilling and reserves assessments) and better resource assessments and geochemical studies; (iii) support for preparing a prefeasibility report; (iv) geochemical studies; (v) equipment for mining, crushing, and milling for sales to intermediaries; (vi) studies to ascertain quality and quantity to bring more value to the industrial minerals and dimension stones areas/assets; (vii) conclusion of feasibility and production plans; and (viii) completion of rehabilitation works as well as rebuilding access and haul works.
(b) B5-2. Undertaking analytical work to identify several ‘proof of concept’ investments to create a pipeline of mineral assets that are ready for investment within the mining cycle (strategic concessions, mines or infrastructure, and so on), including undertaking a preliminary review of potential assets, in different stages of the mining cycle to select a number of mineral assets and mining operators requiring immediate support to bring those assets to a higher level. A number of requirements have been identified for advancing transactions on specific assets and this activity could finance sub-activities such as the following: (i) asset certification and technological assistance by an internationally recognized consultant to establish JORC, PERC, or others8 standard documents; (ii) surveys
8 The JORC standard is used for Australasian companies whereas PERC standard is used by European and some African based companies. These standards are required for resource assessment and are used for financing in various stock exchanges.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 71 of 109
including detailed geophysical survey (drilling and reserves assessments) and better resource assessments and geochemical studies; (iii) support for preparing a prefeasibility report; (iv) geochemical studies; (v) equipment for mining, crushing, and milling for sales to intermediaries; (vi) studies to ascertain quality and quantity and a metallurgical study to bring more value to the asset; (vii) conclusion of feasibility plans for a larger-scale development focusing on further processing to produce concentrate that could be fed to smelters; and (viii) completion of rehabilitation works as well as rebuilding access and haul works.
(c) B5-3. Providing transaction support to the Government to move investments from potential areas and identified assets (from B5-1 and B5-2) to contractual close. This activity will primarily be TA through consultancy services and will support the Government in (i) identification of good-quality mineral/mining assets which could drive sector investments which, in parallel, will help in planning related infrastructures that are key mineral development modifying factors affecting a proper transformation from resources in the ground to exploitable reserves considered as the fundamental for mining operations; (ii) a full analysis of early screened mineral assets in the activity above with all the required collateral information of specific value (second ranking/screening); (iii) preparation of bidding packages and procedures at all stages of the mining cycle through internationally competitive bidding, auction, or tender process; (iv) evaluation of bidding packages; and (v) contract negotiations, including legal and fiscal analysis with the model contract and rules for negotiation identified and selected. The tender process will be designed and conducted in line with relevant country procurement laws and, in this particular instance that the World Bank is financing a TA project, in line with applicable donor guidelines. The advantage of an internationally competitive and transparent bidding, auction, or tender process is that it ensures quality standards by selecting the most qualified bidder and enables the Government to have an optimal return and maximize revenues through a transparent and nondiscretionary process.
13. Overall implementation of these activities will involve working with the MMSD to maintain institutional capacity in managing the transfer of rights to a recognized international standard. A team of technical experts (the transaction adviser) will recommend to the Government the specifics of the potential mineral development site or mine's tender and of the regional infrastructure, whenever this is applicable at this stage in Nigeria. These recommendations will be based on the data available; the complexity of the development; the level of the Government contributions; and the Government’s institutional organization and capacity to handle the transaction, assign the rights, and manage the regulatory aspects. The tender process will be designed and conducted in line with relevant country procurement laws, and in this particular instance that the World Bank is financing a TA project, in line with applicable donor guidelines.
Component C: Project Management and Coordination (US$9.6 million)
14. This component will provide support at implementation to the MMSD to undertake project management, in accordance with the World Bank’s fiduciary and other guidelines, including incremental operating costs, equipment, training on fiduciary and project management issues, project audits, and engagement of technical advisers to provide technical expertise on project performance monitoring and
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 72 of 109
planning. This component will also finance activities related to quality assessment and control, aimed at overseeing the quality of the processes leading to the generation of products and deliverables throughout the project, but in particular for acquiring geological information and developing information infrastructures to support the sector. This will involve carrying out audits, checks, and verification exercises on processes designed as part of the MinDiver geological information and information infrastructure project and outputs. The focus will be on TQM rather than on each and every product and output, even though those products will be assessed. The PIU staff are all assigned to work on the MinDiver project by the MMSD. In order to achieve continuity and to build capacity in a sustainable way, it is important to have ministry employees and all staff assigned to work on the Project continue on the Project for the duration of at least two years on the basis of positive performance.
15. PPA refinancing (US$4 million, US$2 million of which is a supplemental PPA). A PPA has been processed to support the Government in preparation of this project. Activities under the PPA include establishment of the PIU, as well as preliminary preparatory analytical to help inform the project design and implementation. Specific analytical work included the following: (a) gap analysis of responsibilities and related capacities within the MMSD; (b) preparation of a communications plan and strategy; (c) preparation of the ESMF and RPF for the project; (d) gap analysis of the legal and regulatory barriers to mining sector development; (e) site assessment and road map for formalizing ASM; (f) identifying prospective mineral targets and mining assets; and (g) assessment of tax compliance.
Table 1.1. Nigeria MinDiver Project Costing Table
Activity US$, millions
Component A Establishing a Strong Foundation for Mining Sector Development
68.80
Subcomponent A1 Strengthening Mining Governance, Transparency, Accountability, and Administration
14.40
A1-1 Strengthening the institutional frameworks governing the mining sector
3.40
A1-2 Sector administration capacity building 5.00
A1-3 Strengthen revenue assessment, collection, and forecasting
5.00
A1-4 Building independent oversight capacity and stakeholder consultation mechanisms
1.00
Subcomponent A2 Strengthening Geological Knowledge and Information Infrastructure
33.50
A2-1 Basic mapping with international standards 10.60
A2-2 Development of a GIS geodata schema 8.80
A2-3 Mineral prospectivity targeting 5.50
A2-4 Valuation methods for nonproducing assets 3.80
A2-5 Assess mineral asset valuations and deliver a standard procedure to value assets on nonproducing mineral properties
1.40
A2-6 Develop geological data for bidding packages 1.60
A2-7 Dissemination of geological information 1.80
Subcomponent A3 Skills Building and Education Support for Mining Sector Development
8.00
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 73 of 109
Activity US$, millions
A3-1 Skills building and education support for mining sector development
8.00
Subcomponent A4 Environmental, Health, and Social Performance 12.90
A4-1 Preparation of SESA 2.40
A4-2 Assessment of ESHS 2.00
A4-3 Establishment of an EIS 3.00
A4-4 Conflict assessment, potential risks, and mitigation measures for key areas of the North
3.00
A4-5 Implementation of gender equality programs 2.50
Component B Facilitating Downstream Sector Development and Enhancing Competitiveness
67.60
Subcomponent B1 Developing Measures for Formalizing, Regulating, and Inventorying ASM
11.70
B1-1 Providing an inventory of ASM operations/activities to assess scale and extent
2.50
B1-2 Formalizing, registering, and incentivizing ASM activities
3.60
B1-3 ASM regulation processes 5.60
Subcomponent B2 Catalyzing the Mineral Sector for Regional Development
12.50
B2-1
Develop and implement an enhanced regionally based resource corridor (DSS) system incorporating various GIS models, collecting additional geodata for mineral sector development
2.20
B2-2 Small infrastructure development subprojects 10.30
Subcomponent B3 Implementing Steps to Enhance Value Addition 10.70
B3-1 Analyzing economic drivers to link supply of industrial minerals with demand for construction and industrial materials and providing recommendations
2.20
B3-2 Formulating effective policy provisions related to value addition for mineral products
0.75
B3-3 Accrediting and certifying laboratories 2.00
B3-4 Promoting research and development processes for new technologies while targeting backward integration
2.00
B3-5 Developing a specialized training program for local enterprise and entrepreneurs along the mineral value chain
1.55
B3-6 Analyzing benefit sharing aspects of the different stages of the value chain as well as with a view to the countrywide institutional and governance framework
2.20
Subcomponent B4 Addressing Access to Finance and Mineral Sector Investment Climate Constraints
12.70
B4-1 Assessing investment entry constraints and recommending appropriate financing mechanisms to strengthen their participation in the sector
1.00
B4-2 Assessing the SMDF and providing TA for its restructuring
1.50
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 74 of 109
Activity US$, millions
B4-3
Establishing a small-grants program and designing its implementation arrangements (through the SMDF SPV or another potential funding vehicle) to support mine operators
9.00
B4-4 Building capacity and knowledge of Nigerian financial institutions
1.20
Subcomponent B5 Advancing ‘Proof of Concept’ Investments 20.00
B5-1 Developing key industrial mineral and dimension stone areas/sites with a view to enhancing their production
3.00
B5-2 Analytical work for identifying a number of ‘proof of concept’ investments
7.00
B5-3 Transaction support to the Government to move investment to contractual close
10.00
Component C Project Management and Coordination 9.60
General Project Management
4.00
Project Administration
5.00
TQM 0.60
PPA 4.00
Total MinDiver 150.00
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 75 of 109
ANNEX 2: IMPLEMENTATION ARRANGEMENTS
COUNTRY: Nigeria Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver)
Project Institutional and Implementation Arrangements
1. The project will use streamlined double-tiered institutional and implementation arrangements with the aim of maximizing project management, ensuring a high degree of technical input, and facilitating coordination within the MMSD and among all relevant government agencies. The project is designed to ensure that a wide range of stakeholders (government, industry, civil society) are actively participating in promoting transparency and accountability.
2. The MMSD will be responsible for the overall coordination and implementation of the project, including the drafting of annual work programs and budgets of the project. Technical departments will hold main responsibility for drafting of TOR, definition of technical designs, and oversight of consultant deliverables and installation of goods and works. Being the ultimate beneficiaries, the technical departments will hold final responsibility for quality assurance of deliverables. The MMSD will provide updates and inputs to progress implementation reports for the project, which will be finalized by the PIU four times a year in a format and content acceptable by the World Bank. The MME will resolve of any conflicts that may arise between the different entities involved in the implementation of the project.
3. A dedicated PIU will be established within the MMSD and will be responsible for day-to-day project management activities, including procurement, disbursement, FM, and M&E. Key staff within the PIU are expected to be experienced project managers, with Project Management Institute/Project Management Professional certifications. In addition to its fiduciary responsibilities, the PIU’s main functions are to ensure that the project work plans are properly coordinated and implemented by the different agencies and departments involved. The PIU will be strengthened by additional national and international experts as necessary. Embedded within the PIU will be a set of technical experts, who will play a coordination role between the PIU and the technical departments. These technical experts are expected to play a strategic role and will be responsible for working with technical departments within the ministry to draft TORs, oversee implementation, and ensure quality control. The PIU will also compile a biannual (six months) implementation progress report for submission to the World Bank and IFRs on a quarterly basis.
4. PIM. A PIM has been developed by the Borrower and approved by the World Bank. The PIM will be subject to updates, as needed, throughout project execution. Development of the PIM involved a core team from the MMSD as well as representatives from all the entities involved in implementation. The PIM includes (a) a detailed description of the planned project activities; (b) the mechanism of operation and interaction among the involved entities; (c) the level of authority entrusted to the MMSD, PIU, and the different committees, and the relationships among them; (d) their organization, responsibilities, and functions; (e) detailed procurement and FM procedures; and (f) a separate section on how subprojects for infrastructure development will be carried out, including the selection criteria for the subprojects, operation and maintenance, and legal, financial, and procurement modalities for subprojects that may fall under state jurisdiction.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 76 of 109
5. Small-Grants Operations Manual. As one of the conditions of disbursement under activity B4-3, a Sub-Grants Operations Manual will be prepared by the borrower and approved by the World Bank team. The Small-Grants Operations Manual will include the (a) governance structure of the fund; (b) key personnel managing the fund; (c) fiduciary and oversight modalities, including auditing; (d) safeguard arrangements; and (e) list of eligible activities and selection criteria for small grants.
6. Annual work plan. The PIU will prepare, not later than November 15 each year throughout the implementation of the project, an annual work plan found satisfactory by the MMSD and approved by the World Bank for the period January 1 to December 31 of the next calendar year, together with a budget for such activities and a timetable for their implementation. Work plans will also include an annual training plan that specifies the trainings to be financed through the project for that year, who will be trained (name and title), duration and date of the training, place (Nigeria or abroad), objective of the training, and proposed budget. When necessary, training can be approved by the World Bank on an ad hoc basis. These work plans will be reviewed and approved by the World Bank.
Financial Management
7. An FM assessment of the implementing entities in line with the FM Manual (March 1, 2010) and the Financial Management Assessment and Risk Rating Principles (October 2010) was conducted in August 2016. The objective is to determine whether the implementing entities have acceptable FM arrangements, which will ensure (a) that all transactions and balances relating to the project are correctly and completely recorded; (b) the preparation of regular, timely, and reliable financial statements; (c) safeguarding of the entity’s assets; and (d) existence of auditing arrangements acceptable to the World Bank.
8. The overall FM risk for the project is assessed as Moderate at preparation phase. The FM risks will be reviewed during project implementation and updated as appropriate.
9. The FPFMD was established at the federal level through the joint efforts of the World Bank, and the Government will be responsible for the FM arrangements of the project. The unit is presently involved in the implementation of a number of World Bank-assisted projects. The FPFMD features, among other things, the following: (a) all the key elements of FM, including budgeting, funds flow, accounting, internal control, reporting, and audit; (b) computerized system and robust FM procedures manual; (c) qualified staff who are well trained in relevant World Bank procedures and requirements, including procurement; (d) robust segregation of functions/duties; (e) a strong control environment, which is required to mitigate fiduciary risks; (f) highly independent and well-trained internal auditors; and (g) full alignment with the Government’s FM system but with some important enhancements and controls.
10. The World Bank’s recent reviews showed that the FPFMD is performing moderately satisfactorily.
11. Planning and budgeting. On an annual basis, the Project Accountant, in consultation with key members of the implementing unit, will prepare the budget for the fiscal year based on the work program. The budget will be submitted to the Task Team Leader (TTL) at least two months before the beginning of the project fiscal year. Detailed procedures for planning and budgeting is documented in the PIM.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 77 of 109
12. Funds flow. Project funding will consist mainly of IDA Credit. The project accounts will be opened with the Central Bank of Nigeria (CBN).
13. Accounting. IDA funds will be accounted for by the project on a cash basis. Computerized accounting system will be used. Annual financial statements will be prepared in accordance with the relevant International Public Sector Accounting Standards. All accounting and control procedures will be documented in the FPM, a living document which will be subject to review as appropriate.
14. Financial reporting. IFRs will be prepared by the project on a quarterly basis. The formats of IFRs will be developed and updated.
15. Internal control. Adequate internal controls are in place at the FPFMD but will be strengthened further. The control features include a robust FM procedures manual; qualified staff who are well trained in relevant World Bank procedures and requirements, including procurement; robust segregation of functions/duties; and highly independent and well-trained internal auditors. Additional controls in the form of an enhanced accountability framework will be implemented to mitigate the risk of misuse of funds for soft expenditures (travel, workshops, study tours, and so on). The details of the enhanced accountability framework will be elaborated in the FPM. The FM staff are appointed by the Accountant General of the Federation.
16. External audit. The annual financial statements will be audited by the Auditor General of the Federation on the basis of TOR acceptable to IDA. The auditor will express an opinion on the annual financial statements in compliance with International Standards on Auditing. In addition to the audit report, the external auditors will prepare a Management Letter. Copy of the audited financial statements along with the Management Letter will be submitted to IDA not later than six months after the end of each financial year.
FM Action Plan
17. Project actions to further strengthen its FM system are listed in table 2.1.
Table 2.1. FM Action Plan
No. Action Date Responsible
1 Agreement of format of IFR, Annual Financial Statement and External auditors’ TOR and finalize the FPM incorporating an Enhanced Accountability Framework
Before effectiveness World Bank/PIU/FPFMD
2 Designate Project Accountant, and support accounting technicians
February 14, 2017 FPFMD
3 Agreement on memorandum of financial services and service standards
February 14, 2017 PIU/FPFMD
4 Train designated FPFMD staff in the World Bank FM procedures and disbursement guidelines
Before effectiveness PIU/FPFMD
Conclusion
18. The FM assessment conclusion is that, subject to mitigating measures and the action plan being
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 78 of 109
implemented as per the agreed time frame, the project has met the minimum FM requirement in accordance with OP/BP 10.00. Further, this objective will be sustained by ensuring that strong and robust FM arrangements are maintained for the project throughout its duration. Detailed FM reviews will also be carried out regularly, either within the regular proposed supervision plan or a more frequent schedule, if needed, to ensure that expenditures incurred by the project remain eligible.
Disbursements
19. The project will use the transaction-based disbursement procedures and not report-based disbursements at effectiveness. Details of the disbursement arrangements will be in the Disbursement Letter.
Disbursement Categories
20. Table 2.2 sets out the expenditure components and percentages to be financed out of the credit proceeds.
Table 2.2. Allocation of Credit Proceeds to be financed for Eligible Expenditures in Each Category
Category Amount of the Credit Allocated
(expressed in SDR)
Percentage of Expenditures to be
Financed (exclusive of Taxes)
(1) Goods, works, non-consulting services, consulting services, Training and Operating Costs for Parts A, B.1, B.2(a), B.3, B.4(a), (b) and (d), B.5 and C of the Project
93,200,000 100%
(2) Goods, works, non-consulting services, consulting services, Training and Operating Costs for Sub-projects Program under for Part B.2(b) of the Project
7,600,000 100%
(3) Small Grants for Business Development Sub-projects under Part B.4(c) of the Project
6,600,000 100%
(4) Refund of the Preparation Advance
1,500,000 100%
(5) Refund of Supplemental Advance
1,500,000 100%
TOTAL AMOUNT 110,400,000
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 79 of 109
21. With regards to retroactive financing, it is important to highlight the clause in the Financial Agreement. “Notwithstanding the provisions of Part A of this Section, no withdrawal shall be made: (a) for payments made prior to the date of this Agreement, except that withdrawals up to an aggregate amount not to exceed SDR 1,900,000 may be made for payments made prior to this date but on or after November 1, 2016, for Eligible Expenditures under Category (1)”. This ensures that financial compliance is in place in the project.
Procurement
Country Environment
22. Nigeria has been implementing a procurement reform program based on the recommendations of the 2000 Country Procurement Assessment Review. A review of the progress made on the 2000 Country Procurement Assessment Review recommendations, as reflected in the 2007 Public Expenditures Management and Financial Accountability Review, shows that reforms have brought about substantial improvements in obtaining value for money (VfM) in the public expenditure. It further introduced some level of transparency into the country’s procurement process, which has led to substantial reduction of contract prices. Considerable progress has been made on procurement reforms in Nigeria since the Procurement Act was passed in 2007. Among the results are the creation of procurement cadre of and the development and deployment of the national standard bidding document (SBD). The national SBDs have been cleared for use in national competitive bidding (NCB) in World Bank−funded projects in Nigeria. Over two-thirds of the federating states have enacted the public procurement law, which are modeled after United Nations Commission on International Trade Law model law, and many have functional regulatory agencies. The remaining states are at various stages of enacting the public procurement law. In spite of these achievements, challenges remain. Procurement capacity is generally low and most of the states do not have procurement tools. Although procurement activities are carried out at the procuring entity level, approval of contract awards at a predetermined threshold is the prerogative of the Governor and the State Executive Council at the state level and Federal Executive Council at the federal level. In many states, the procurement law is not applicable to local governments, thus excluding substantial public expenditure from the procurement law.
23. Procurement of Goods, Works, Non-Consulting, and Consulting Services under the MinDiver project will be carried out in accordance with the World Bank’s NPF. At the commencement of the PPA, a Procurement Plan for the agreed activities was cleared by the World Bank. The Procurement Plan is currently being implemented by the project. The first 18-month Procurement Plan of the project will be approved by the World Bank at the commencement of this project and the plan will subsequently be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity
24. Procurement of works. Procurement of works is envisaged. However, any work contracts under this project shall be procured in line with the World Bank’s SBD with references to the relevant clauses of the Procurement Regulations for Investment Project Financing.
25. Procurement of goods. The goods to be procured under the project will include vehicles, geoscience equipment, and office/IT equipment for the implementing and coordinating units.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 80 of 109
Procurement of goods will be carried out using the World Bank’s SBD for all international competitive bidding (if any). NCB procurement will be carried out using the national SBDs already in use at the federal level. Readily available off-the-shelf goods that cannot be grouped or standard specification commodities for individual contracts of less than US$100,000 equivalent may be procured under shopping procedures. All goods shall be procured following World Bank’s SBD with references to the relevant clauses of the Procurement Regulations for Project Financing. Procurement of information technology. Procurement of information technology under the project will include the procurement of a management information system. This will be carried out using the World Bank’s SBD for Supply and Installation of Information Systems. Single-stage bidding is envisaged as it will be possible to use off-the-shelf application software packages after making the appropriate reconfigurations.
26. Selection of consultants. Consultancy services will be provided under the operation in the following categories: software development, studies, development of a communication strategy, and social and environmental safeguards. Consultancy firms and individuals will be selected from short lists put together, as may be applicable, after the implementing unit has solicited a request for expressions of interest using the World Bank’s standard template. The selection of consultants will be in accordance with the relevant clauses of the Procurement Regulation for Investment Project Financing. Short lists of consultants for services estimated to cost less than US$300,000 equivalent per contract may consist entirely of national consultants. The appropriate selection method for each consulting contract will be set out in the Procurement Plan.
27. Operating costs. The operating costs will include staff’s travel expenditures and other travel-related allowances with prior clearance from IDA; equipment rental and maintenance; vehicle operation, maintenance, and repair; office rental and maintenance; materials and supplies; utilities and communication expenses; and bank charges. The operating costs financed by the project will be procured using the federal government administrative procedures.
28. Training, capacity building, and workshops. The project coordinating and implementing units will submit their annual training plans to IDA for clearance. The plans will include, but not be limited to, the names of the officers to be trained, the training institutions and/or facilitators, the cost contents, the justification for the training, and the estimated cost of the training. Substitution of training candidates will require the clearance of the World Bank.
29. Project Procurement Strategy Development (PPSD). The PPSD has been prepared (February 2017) under the MinDiver project to consider, among other things, the market situation, the operational context, previous experience, and the risks present—then from this, determine the right procurement approach that will yield the right type of response from the market. There will be several procurement activities in all three components of the project. Some of the major procurement packages in the project will comprise of:
Procurement of Goods: the project would be procuring Field based geological exploration data
MMT among other companies. Open international competition will be adopted to attract wide spectrum
of players in the sector. These will be International Competitive Bidding and Quality and Cost Based
Selection methods. In works contracts, there are many experienced local engineering firms that would be
showing interest in the bidding opportunities.
31. The identified risks include: political interference – frequent changes of political appointees
(Honorable Minister and permanent secretary), volatile exchange rate, low procurement capacity of the
Ministry and low response to bidding opportunities etc. Adequate mitigation measures have been
provided in the PPSD and hopefully will be implemented and therefore their impacts on the project is
expected to be low.
32. By designing the right procurement approach, there is far more likelihood of the right bidders participating, better bids being received, and an overall increased chance of achieving VfM. Therefore, determining the right procurement approach, informed by appropriate analysis is a critical activity that subsequently affects every following step of the procurement process and onwards into project implementation. In view of the nature and magnitude of procurement packages and contracts to be implemented under this project, the short form of the PPSD would be required to guide the use of modern set of procurement tools and techniques to achieve best VfM during the project implementation. As with the overall preparation of the PPSD, the use and application of these tools need to be proportionate to the level of market research and information required to develop a ‘fit for purpose’ procurement approach.
33. Procurement implementation arrangement. The procurement activities under this project will be implemented by the PIU, which will be headed by the Project Coordinator. The project has competitively recruited a procurement consultant, during the implementation of the PPA. He will continue to provide procurement support to the project team in the first two years of the project. The consultant will report to the Project Coordinator during his contract implementation. The Procurement of Goods, Works, Non-Consulting, and Consulting Services under the MinDiver project will be carried out in accordance with the World Bank’s NPF. All procurement activities would be in line with the World Bank’s Procurement Regulations for Investment Project Financing Borrowers (July 2016). The project would refer
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 82 of 109
to ‘Guidelines on Preventing and Combating Fraud and Corruption in Projects financed by IBRD Loans and IDA Credits and Grants (the Anti-Corruption Guidelines)’ (October 15, 2006, revised in January 2011) and the provisions stipulated in the Legal Agreement. For each contract to be financed by the Credit, the different procurement methods or consultancy services selection methods, estimated costs, prior review-requirements, and time frame have been agreed between the borrower and the World Bank in the Procurement Plan.
34. Assessment of the ministry’s capacity to implement procurement. Upon the approval of the PPA, a procurement consultant has been competitively recruited to provide procurement support to the PIU, because the ministry's procurement capacity needs to be developed. In consideration of the magnitude of procurement activities and the low procurement capacity in the Ministry of Solid Minerals, the procurement consultant would be supported by a procurement assistant. Both officers will be responsible for the procurement activities at the PIU. Because procurement activities have not really commenced for the project, the previous overall procurement risk assessment rating of ‘High’ is being retained. Procurement assessment of the ministry which was carried out at the preparation of the PPA was updated. This assessment focused on updating the procurement risk assessment, mitigation actions, and recommendations agreed with the World Bank at the commencement of the PPA. The recruitment of a procurement consultant has been completed and the World Bank’s ‘No Objection’ has been issued. The consultant has commenced providing the required procurement support to the project and the consultant would be supported by a procurement assistant, who would also be competitively selected by the project. The procurement team of the project would be supported by the Procurement Specialist at the World Bank. The procurement assessment has shown the need to build the capacity of the procurement consultant and other key PIU officers on the application of the NPF. To enable the project to sustain the project implementation capacity, the Government and the World Bank would agree to retain the key project staff of the PIU for the full duration of the project. The project has not established a functional filing system and the staff are yet to be trained on procurement filing. It is necessary to build the capacity of the procurement staff and to also set up a robust record management system as soon as this project kicks off.
35. Procurement risks and mitigation measures. Following years of investment in building capacity of the government staff including procurement consultants in Nigeria, the system has led to modest improvements in the capacities, including procurement. However, some weaknesses remain mainly in the area of frequent movement of trained project and procurement officers, poor documentation, nonadherence to the procurement scheduling, political interference, and weaknesses in the contract management and monitoring of NGOs. The risk mitigation measures to be put in place will include (a) establishment of a procurement complaints mechanism; (b) establishment of a procurement standard filing system; and (c) supervision missions and post procurement reviews of approved procurement activities procured under goods, works, and non-consulting and consultancy services. While no major procurement risk is envisaged under the MinDiver project, the following procurement implementation plan will be used to mitigate the procurement implementation weaknesses and risks identified to strengthening the internal procurement systems of the implementing agency.
Table 2.3. Procurement Risk Assessment and Mitigation Action Plan
Risk Mitigation Action Responsibility Action Due Date Remarks
Poor record keeping system
Establish a procurement records management
MinDiver Within three months of
Training will be continuous
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 83 of 109
Risk Mitigation Action Responsibility Action Due Date Remarks
system and train staff in records management
effectiveness
Lack of Project Management (PM)
Prepare Procurement Manual as part of the PIM
MinDiver Before effectiveness
Continuous
Inadequate procurement skills of the existing procurement staff
Engage a procurement consultant. Train procurement staff using workshops and institutional training
MinDiver/World Bank
By effectiveness Continuous
Lack of contract administration skills
Organize contract administration training for staff
MinDiver/World Bank
Not later than three months into project implementation
To improve the contract administration skills of the project staff
Lack of knowledge of the World Bank’s procurement tracking system (STEP)
Train procurement staff in procurement tracking system
World Bank By effectiveness
Procurement Plan
36. The Government has finalized an 18-month Procurement Plan for project implementation that outlines the procurement methods to be used. It will be made available in the project’s database and on the World Bank’s external website. The Procurement Plan will be updated on agreement with the project team annually or as required, to reflect actual project implementation needs and improvements in institutional capacity.
37. Publication of results and debriefing. The awarding of all NCB contracts, direct contracting, and the selection of consultants that are worth more than US$300,000 must be made public. In the case of direct contracting and NCB, the contract awards can be announced collectively every quarter in local newspapers. All consultants competing for an assignment involving the submission of separate technical and financial proposals, irrespective of its estimated contract value, should be informed of the result of the technical evaluation (including the number of points that each firm received) before the opening of the financial proposals. The implementing agencies of the borrower will be required to offer debriefings to unsuccessful bidders and consultants.
38. Fraud and corruption. All procuring entities as well as bidders, contractors, suppliers, and consultants must observe the highest standard of ethics during the procurement and execution of contracts financed under the project. The World Bank requires application of and compliance with the World Bank’s Anti-Corruption Guidelines, including without limitation of the World Bank’s right to sanction and the World Bank’s inspection and audit rights.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 84 of 109
Procurement Reviews and Thresholds
Table 2.4. Procurement of Goods and Works and Non-consulting Services
Procurement Method Prior Review Threshold
(US$) Comments
1 NCB (goods) packages Above 750,000 All
2 Non-consultant Services packages Above 750,000 All
3 Shopping (goods) Below 100,000 None
4 Shopping (works) Below 200,000 None
39. Summary of the procurement packages planned during the first 18 months after project effectiveness (including those that are subject to retroactive financing and advanced procurement).
Table 2.5. An 18-Month Procurement Plan for Goods and Works
Activity #
List of Contracts
Contract Type Time Based or
Lump Sum
Procurement Type
Original Estimate
(US$, thousands)
Prior or Post
Review
Expected Proposal
Submission Dates
Estimated Completion
Dates
36 Equipment for vocational training
Lump Sum Not Stated
2,000.00 Prior July 1, 2017 September 29, 2017
38 Office Equipment for MinDiver and other agencies
Lump Sum NS 200.00 Post June 1, 2017
30 August, 2017
39 Solar Panel system for NGSA
Lump Sum NS 50.00 Post August 1, 2017
October 30, 2017
40 Motor vehicles - Saloon Cars (three)
Lump Sum NS 75.00 Prior June 1, 2017
August 30, 2017
41 Motor vehicles - 4 × 4 (seven)
Lump Sum NS 175.00 Prior May 1, 2017 July 30, 2017
42 Completion of the dimension stone laboratory in Kaduna
Bill of Quantities
NS 70.00 Post
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 85 of 109
Selection of Consultants
40. Prior review threshold. Selection decisions subject to prior review by the World Bank as stated in the Procurement Regulations.
Table 2.6. Selections Subject to Prior Review by the World Bank
41. Short list consisting entirely of national consultants. A short list of consultants for services estimated to cost less than US$300,000 equivalent per contract may consist entirely of national consultants.
Consultancy Assignments with Selection Methods and Time Schedule
Table 2.7. An 18-Month Procurement Plan for Consultancy
Activity #
List of Contracts
Contract Type Time Based or
Lump Sum
Procurement Type
Original Estimate
(US$, thousands)
Prior or Post
Review
Expected Proposal
Submission Dates
Estimated Completion
Dates
Consultancies
A1-1.1 Functional analysis within the MMSD, its associated agencies, and other MDAs based on identifying and reviewing the workflows and information flows
Lump Sum QCBS 1,000.00 Prior May 1, 2017 October 28, 2018
A1-1.2 Upgrading and automation of the MCO
Lump Sum SS 440.00 Prior November 1, 2017
June 29, 2018
A1-2.1 Review and update of the NMMA, 2007
Lump Sum QCBS 600.00 Prior May 6, 2017 May 1, 2019
A1-4.1 Assisting the GoN to build the required technical skills and managerial capabilities to service and develop the mining sector
Lump Sum QCBS 250.00 Post November 1, 2017
October 27, 2018
A1-7.1 Design and develop a mechanism for citizen engagement and social accountability in the MinDiver project and the mining sector
Lump Sum IC 300.00 Prior May 1, 2017 March 27, 2018
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 86 of 109
Activity #
List of Contracts
Contract Type Time Based or
Lump Sum
Procurement Type
Original Estimate
(US$, thousands)
Prior or Post
Review
Expected Proposal
Submission Dates
Estimated Completion
Dates
A2-1-3.1 Geological mapping, GIS geodata base, mapping, and reinterpretation of data, and mineral prospectivity targeting
Lump Sum QCBS 14,000.00 Prior May 1, 2017 December 22, 2018
A2-1.2 TA on exploration embedded within the NGSA
Lump Sum CQ 150.00 Post May 1, 2017 August 24, 2018
A3-1.1 Scoping analysis and strategy development to create the basis for reintroducing and/or providing vocational training to achieve excellence for the training of the Government's technical staff as well as private sector (national pole)
Lump Sum QCBS 400.00 Prior September 1, 2017
November 25, 2018
A3-1.2 Analyze and design a program to address the skill gap in the domestic mining industry
Lump Sum CQ 180.00 Post November 1, 2017
August 28, 2018
A3-1.3 Design and implement partnership program between the MMSD, Nigerian universities, and the NGSA on selected topics
Lump Sum IC 100.00 Post November 1, 2017
April 30, 2018
A3-1.4 Assess and develop policy and strategy for achieving local content in Nigerian mining sector
Lump Sum CQ 150.00 Post November 1, 2017
November 26, 2018
A4-1.1 Update SESA and prepare action plan for implementation of recommendations
Lump Sum CQ 150.00 Post July 1, 2017 April 27, 2018
A4-2.1 Phase 1: Address potential medical geology issues arising from interaction between geological
Lump Sum QCBS 250.00 Post May 1, 2017 October 28, 2018
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 87 of 109
Activity #
List of Contracts
Contract Type Time Based or
Lump Sum
Procurement Type
Original Estimate
(US$, thousands)
Prior or Post
Review
Expected Proposal
Submission Dates
Estimated Completion
Dates
background and its influence on the plants, animals, and humans to explore general mining-related health impacts.
A4-5.1 Support the creation of opportunities for women and gender mainstreaming in the mining sector
Lump Sum CQ 250.00 Post June 1, 2017 January 27, 2018
B1-1-3.1 Providing ASM inventory, operations/activities to assess scale and extent
Lump Sum QCBS 2,800.00 Prior June 1, 2017 November 28, 2018
B3-1.2 Analyze economic drivers linking supply of industrial minerals with demand for construction and industrial materials; analyzing benefit sharing aspects (different stages of the value chain) institutional and governance.
Lump Sum QCBS 200.00 Post January 1, 2017
December 27, 2017
B3-1.3 Needs assessment and evaluation for accrediting and certifying laboratories including operationalization geological research laboratories
Lump Sum QCBS 4,120.00 Prior May 1, 2017 April 26, 2018
B3-1.4 Development of support action to improve the metallurgical and steel Inspectorate including an initial baseline study
Lump Sum QCBS 500.00 Prior December 1, 2017
November 26, 2018
B4-1.1 Analysis and development of strategies for addressing access to
Lump Sum QCBS 540.00 Prior November 1, 2017
October 27, 2018
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 88 of 109
Activity #
List of Contracts
Contract Type Time Based or
Lump Sum
Procurement Type
Original Estimate
(US$, thousands)
Prior or Post
Review
Expected Proposal
Submission Dates
Estimated Completion
Dates
finances constraints for local ASM, junior and medium scale companies
B4-1.2 Assess the SMDF and provide recommendations for its restructuring and operationalization, covering governance, structure, organization, strategies, and operations
Lump Sum QCBS 600.00 Prior March 1, 2018
November 26, 2018
B4-1.3 Assist in building capacity for financial institutions, public and semipublic bodies through the Bankers Committee, in understanding of mining financing, preparation of bankable FS, business plans, and marketing
Lump Sum QCBS 600.00 Prior June 1, 2017 November 28, 2018
B5-1.1 Initial review and development of potential assets in different mining cycle stages to select some Mineral Assets, and Mining Operators requiring Support, to bring those Assets to a higher Level or Advancing transactions on specific Assets.
Lump Sum QCBS 3,000.00 Prior June 1, 2017 November 28, 2018
B5-1.2 Preliminary identification of ‘proof of concept’ investment
Lump Sum IC 40.00 Post November 1, 2017
December 26, 2018
B5-2.1 Preliminary assessment and transaction advisory services for State Own Enterprise NIOMCO
Lump Sum CQ 180.00 Post May 1, 2017 February 25, 2018
A2-2.2 Consultancy services Lump Sum IC 150.00 Post May 1, 2017 January 26,
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 89 of 109
Activity #
List of Contracts
Contract Type Time Based or
Lump Sum
Procurement Type
Original Estimate
(US$, thousands)
Prior or Post
Review
Expected Proposal
Submission Dates
Estimated Completion
Dates
for review of legal framework
2018
A1-5.1 Consultancy services for identifying revenue leakages, strengthening the administrative system, and oversight of revenue assessment and collection
Lump Sum IC 75.00 Post May 1, 2017 January 26, 2018
B5-1.1 Consultancy service for identifying prospective mineral targets and mining assets to be analyzed as candidates for transaction processes and investment promotion. (Geological Analyst)
Lump Sum IC 400.00 Prior May 1, 2017 January 26, 2018
C1-1 Technical expert for the project (1 and 2)
Lump Sum IC 600.00 Prior n.a. October 23, 2018
C1-2 Procurement Specialist Time based IC 75.00 Post n.a. October 23, 2018
C1-3 M&E Specialist Time based IC 75.00 Post n.a. October 23, 2018
C1-4 Project Coordinator Time based IC 120.00 Post n.a. October 23, 2018
C1-5 PMO (for subsequent months)
Lump Sum QCBS 1,500.00 Prior n.a. October 23, 2018
Note: IC = Individual Consultant; QCBS = Quality- and Cost-Based Selection; SS = Single-Source Selection.
Frequency of Procurement Supervision
42. In addition to the prior review supervision to be carried out by the World Bank, the capacity assessment of the implementing agency has recommended that the World Bank should carry out supervision missions at least twice a year to review procurement actions. These post procurement reviews should cover at least 20 percent of the contracts subject to post review.
Monitoring and Evaluation
43. M&E is a key activity in the project and will be carried out by the PIU at the MMSD on the basis of the indicators and milestones developed in the Results Framework (section VII). A robust M&E system will be developed early on in project implementation to monitor progress and ensure impact. Where applicable, M&E will include gender-disaggregated data. Strengthening client capacity for M&E for the sector will be an integral part of the project to enable the relevant institutions to keep track of
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 90 of 109
environmental and social safeguards implementation and compliance.
44. The PIU will have overall responsibility for monitoring and evaluating the project subcomponents/activities in accordance with the indicators and benchmarks included in the Results Framework (section VII). The other beneficiary agencies will be responsible for collecting, analyzing, and supplying the indicator data relevant to the project components/activities under their implementation to the PIU. The mechanism of feeding the indicator data into a centrally managed system in the MMSD is detailed in the Project Implementation Manual.
45. No later than 45 days after each quarter, the MMSD will submit to the World Bank the consolidated quarterly progress reports covering all project activities, including a procurement and a financial summary report. Biannual reviews, the first one to take place six months after effectiveness, should provide detailed analysis of implementation progress toward achieving the project development objectives and include evaluation of the FM and a post review of procurement aspects.
Safeguards
46. The project is identified under Safeguards Category B, implying that the potential environmental and social impacts are expected to be minor, site specific, and manageable to a reasonable level. Based on the information provided until this stage, the project triggers three World Bank safeguard policies: Environmental Assessment (OP/BP 4.01), Physical Cultural Resources (OP/BP 4.11), and Involuntary Resettlement (OP/BP 4.12). However, the project will provide financing to small (minor) infrastructural development associated with facilitating mine development such as building or refurbishing access roads, power interconnect, gas connection, water management system, and so on. Therefore, as a precautionary measure, an ESMF has been prepared and disclosed, the RPF prepared for the SMMRP has been updated and disclosed during project preparation, and a SESA will be undertaken (based on a Sectoral Environmental and Social Assessment prepared under the SMMRP) during implementation to ensure that any potential adverse social and environmental impacts are mitigated.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 91 of 109
ANNEX 3: IMPLEMENTATION SUPPORT PLAN
COUNTRY: Nigeria
Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) Strategy and Approach for Implementation Support Implementation Support Plan and Resource Requirements
1. Task Team composition. The World Bank TTL will handle the day-to-day matters of the project as well as coordination with the client, with support from other members of the task team and specialists from other GPs, including Trade and Competitiveness and Macroeconomics and Fiscal Management. The country office has, to a large extent, the required staff to provide necessary support to the PIU and local communities and fulfill the project needs, including in regard to fiduciary, safeguards, M&E, and communications. The country office will maintain liaison and provide support to the client on a daily basis, under supervision and guidance of the TTL from headquarters.
2. The team will also conduct at least biannual supervision missions, including technical, safeguards, operational, and fiduciary staff. In conjunction with government counterparts, the World Bank team will monitor and report on progress against the monitoring indicators agreed in the Results Framework, as well as verification of their achievement. The team will also monitor risks, updating the risk assessment as needed and paying particular attention to the ‘Institutional Capacity for Implementation’ risks.
3. The midterm review (MTR) will be carried out by the Government and the World Bank 30 months after the project effectiveness date, to measure progress toward achievement of the project’s objective. The MTR will assess overall project performance against indicators, as well as the level of political commitment during the first half of the project. Based on the assessment of progress at the midpoint of the project, recommendations for improvements/changes would be considered by both the Government counterparts and the World Bank management team. The MTR will also review overall project implementation arrangements, making adjustments as necessary.
4. Table 3.1 maps out the proposed implementation plan, skills mix, and other inputs required.
Table 3.1. Implementation Support
Time Focus Skills Needed Resource Estimate
First 12 months
Team leadership, technical and procurement review of the TORs and procurement documents, institutional arrangement, project management, and supervision
TTL and other World Bank technical team members, consultants (technical professionals, operations officer/analyst, Fiduciary Specialists, Safeguards Specialist)
US$150,000
Implementation of procurement planning and control system; strengthening capacity of the PIU, including additional procurement and FM training
Procurement and FM Specialists
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 92 of 109
Time Focus Skills Needed Resource Estimate
Verifying if the fiduciary risk mitigating measures implemented by project effectiveness are still functioning as intended; identification of any potential problems early in the life of the project
Fiduciary Specialists
SESA preparation and implementation Environment and Social Experts
FM FM Specialist
12–48 months
Project management, operational and technical inputs
TTL and other World Bank technical professional team members and operations officer
US$200,000
FM, disbursement, and reporting FM Specialist, Disbursement Officer
Procurement review Procurement Specialist
M&E M&E Specialist
Communications Communications Officer
Environmental monitoring Environmental Specialist
Social monitoring Social Specialist
Table 3.2. Skills Mix Required
Skills Needed Number of Staff
Weeks (SW) Number of Trips Comments
TTL/Mining Specialist 6 SW annually As required HQ based
Additional World Bank technical professional members to assist TTL
4 SW annually As required —
Procurement 4 SW annually — Country office based
FM 2 SW annually — Country office based
M&E 2 SW annually As required HQ based
Short-term consultants (technical professionals, and so on)
5–6 SW annually As required —
Social 2–3 SW annually — HQ based
Environment 2–3 SW annually — Country office based
Communications 2 SW annually As required Local consultant
Operations Specialist/Analyst 4 SW for the first 12 months; 3 SW annually afterwards
As required HQ based or country office based
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 94 of 109
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 95 of 109
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 96 of 109
Annex 5: Road Map for the Growth and Development of the Nigerian Mining Industry
COUNTRY: Nigeria Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver)
1. Recognizing the need to strategically and systematically address the challenges listed in Section-I. In early 2016 the MMSD, led by its newly appointed minister, began the process of preparing a detailed sector road map aimed at advancing the following strategic objectives: (a) to create a globally competitive sector capable of contributing to wealth creation; (b) to provide jobs and to advance social and human security by focusing on using its mining assets to drive domestic industrialization initially; and then (c) to migrate to winning in global markets through a value chain-based growth plan. The road map details a comprehensive set of short-, medium- and long-term initiatives, action, and reforms that if implemented is expected to drive the growth of the sector in Nigeria for years to come. The road map has benefited from an extensive consultative process with all of the key stakeholders and in August 2016 was approved and endorsed by the President of Nigeria.
2. The road map recognizes that building a competitive mining value chain means firms operating in Nigeria must compete on quality and cost versus its global peers and that the Government and the private sector will have to share the responsibility of investing in key drivers of success such as the availability of (and access to) public geosciences data that investors need; the appropriate infrastructure (for example, access roads, railways, power, bulk ports, and mine security networks); specialized technical talent; and of course, regulatory and enforcement capacity. Moreover, given one indicator of sector performance is payment of direct and indirect taxes, there is a compelling need for strengthening the systems for assessment, collection, and transparent reporting that underpin tax policy and tax administration.
3. Successful implementation of the road map is expected to result in, among others, (a) new exploration activity and discoveries; (b) increased mine production emerging from both new discoveries and the unblocking of assets impeded by current regulatory, institutional, and infrastructure deficiencies; (c) expanded processing and refining capacity; (d) improved economic, social, and environmental performance of the artisanal sector; and (e) higher value addition in exports. As with all sector activities, an overall macro outcome is expected to be (a) the creation of direct jobs and indirect jobs and (b) increased GDP and balance of payments.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 97 of 109
Figure 5.1. Timeline of Key Action Items for Executing the Road Map
4. The proposed MinDiver project has been designed to support the Government in implementing its road map in a number of key strategic areas, including (a) strengthening mining governance and institutions; (b) enhancing opportunities for value addition and developing the mineral value chain; (c) ASM formalization; (d) providing TA and access financing to artisanal, small-, and medium-size mines; (e) geological exploration and mineral asset identification leading to ‘proof of concept’ investments; and (f) building regional linkages for sector development. (Table 5.1 links the objectives outlined in the road map with subcomponents and activities proposed under the MinDiver project.)
Table 5.1. Road Map Objectives and Activities Proposed under the MinDiver Project
Road Map Objectives MinDiver Activities
Minerals Value Chain
Developing an industrial minerals strategy to boost the local economy through utilization of domestic minerals
B3. Implementing Steps to Enhance Value Addition. B3-1. Analyzing economic drivers linking supply of industrial minerals with demand for construction and industrial materials and providing recommendations; B3-2. Formulating effective policy provisions related to the value addition for mineral products
Contributing to better understanding of factors that could help develop the mineral value chain to provide a solid backbone for the manufacturing and industrial economy
B3. Implementing Steps to Enhance Value Addition. B3-1. Analyzing economic drivers linking supply of industrial minerals with demand for construction and industrial materials and providing recommendations; B3-2. Formulating effective policy provisions related to the value addition for mineral products
38
Timeline of key action items for executing the roadmap
Immediate Short-term Medium term Long-term
• Launch roadmap and begin communication campaign to generate industry buy-in
• Set up Mining Implementation and Strategy Team (MIST) to drive execution of the roadmap
• Design/establish process for strategic planning for long-term development
• Begin active communication and promotion of roadmap with stakeholders
• Finalize review of key industrial assets and prepare them for strategic turnarounds
• Identify gaps in existing training programs and suggest changes
• Develop strategy to
utilize priority minerals domestically and
substitute exports
• Restructure and reorganize the MSMD
for more efficient operations
• Improve regulatory clarity on powers and
duties of MDAs in mining and establish
clear fiscal framework for state participation
• Incentivize financial participation of
communities in mining
• Actively drive the formalization of ASMs
• Expand coverage, resolution of, and
access to geosciences data in Nigeria
• Strengthen the financial and business
climate
• Work with National & State legislatures and govts to address gaps and conflicts in governing legislation
• Deepen engagement of communities in mining
• Develop and harmonize (financial) incentives for attracting mining majors and juniors to Nigeria
• Encourage forward integration of mining and exploration companies into downstream operations
• Build local technical /managerial skills and capabilities required in the industry
• Promote gender equity and female participation in the sector
• Catalyse investments in infrastructure
• Drive the development and expansion of supporting infrastructure for mining (e.g. power generation, transportation)
• Invest in education for citizens of mining communities
• Drive the growth of export of value-added mining products
• Encourage the formation of private mineral and metals exchanges to increase trading liquidity
• Entrench gender equity and eliminate the exploitation of child labour
• Deepen financial services expertise and access to funds to drive sector growth
Ongoing
• Invest in tools and trainings required for effective service delivery by the MSMD and its agencies
• Enforce established laws and regulations governing the mining sector
• Work with other MDAs involved in the sector to coordinate policies, regulations and their implementation
• Work with state governments to build and maintain an enabling environment for the mining sector
• Provide trainings and extension services for ASMs to improve their productivity
• Reinforce geoscience technical and research capabilities to drive investments
0 - 6 months 6 months – 2 years 2 – 5 years 5 – 10 years To refresh regularly
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 98 of 109
Road Map Objectives MinDiver Activities
Contributing to bringing mineral assets to a higher level of development by tackling brownfield and greenfield projects that could lead to an industrial development
B5. Advancing ‘Proof of Concept’ Investments
Institutions and Governance
Enhancing the organizational and functional capabilities of the MMSD
A1. Strengthening Mining Governance, Transparency, Accountability, and Administration. A1-1. Institutional and functional analysis of the MMSD and sector agencies as well as improving the institutional linkages between the MMSD and sector agencies with other Federal Government of Nigeria MDAs; A1-3. Restructuring the institutional framework for the mining and metals sector; A1-4. Sector administration capacity building to assist the Government to build the required technical skills and managerial capabilities to service and develop the mining sector
Strengthening the existing regulatory framework for the industry by
A1. Strengthening Mining Governance, Transparency, Accountability, and Administration. A1-2. Updating the policy, legal, and regulatory framework to provide clarity in governing laws, improve performance of the sector
Ensuring regulatory alignments in the existing legal and regulatory framework of the industry
A1. Strengthening Mining Governance, Transparency, Accountability, and Administration. A1-2. Updating the policy, legal, and regulatory framework to provide clarity in governing laws, improve performance of the sector
Improving policy consistency and direction
A1. Strengthening Mining Governance, Transparency, Accountability, and Administration. A1-2. Updating the policy, legal, and regulatory framework to provide clarity in governing laws, improve performance of the sector; A1-6 Mineral Revenue Management
Improving the environmental sustainability of the industry
A4. Environmental, Health, and Social Performance
Improving enforcement of existing regulations
A1. Strengthening Mining Governance, Transparency, Accountability, and Administration B1. Developing Measures for Formalizing, Regulating, and Inventorying ASM
Ensuring stronger economic and political coordination of minerals and mining policy in Nigeria
A1. Strengthening Mining Governance, Transparency, Accountability, and Administration
Stakeholder Engagement
Improving the engagement of states with the minerals and mining sector, particularly around financial participation, revenue sharing, and coordinating oversight with the federal ministry
A1. Strengthening Mining Governance, Transparency, Accountability, and Administration. A1-7. Building independent oversight capacity and stakeholder consultation mechanisms including by providing support to non-state actors (civil society, NGOs, CBOs, media, academia, professional associations, and technical experts) to strengthen their participation in increasing transparency and disclosure in the mining industry
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 99 of 109
Road Map Objectives MinDiver Activities
Improving the engagement of communities through coordination of corporate social responsibilities, incentivized participation, and education
B1. Developing Measures for Formalizing, Regulating, and Inventorying ASM
Industry Participants
Stabilizing long-term minerals and mining policy and promoting investments in mining and infrastructure
A1. Strengthening Mining Governance, Transparency, Accountability, and Administration
Promoting junior explorers through sustaining favorable enabling environment for attracting high-risk exploration investments
B4. Addressing Access to Finance and Mineral Sector Investment Climate Constraints A2. Strengthening Geological Knowledge and Information Infrastructure
Promoting formal small-scale operators through expanding access to funding and supporting knowledge development to drive local content
B1. Developing Measures for Formalizing, Regulating, and Inventorying ASM. B1-2 Incentivizing ASM formalization and registration, including through the establishment of the MBCs and cooperatives
Effectively monitoring and regulating informal and/or illegal mining operations
B1. Developing Measures for Formalizing, Regulating, and Inventorying ASM. B1-3. Preparation of ASM regulations and strengthening the functions capacity of the inspectorate services.
Encouraging wider participation in beneficiation and downstream processing and refining through incentivizing forward integration by existing participants
B3. Implementing Steps to Enhance Value Addition
Improving the ease of transactions through the setup and formalization of metal exchanges and mineral certification authorities
B1. Developing Measures for Formalizing, Regulating, and Inventorying ASM
Geosciences Data and Information
Improving the quality and breadth of geoscientific data gathered in a cost-efficient manner that will adequately drive investment growth
A2. Strengthening Geological Knowledge and Information Infrastructure B5. Identifying and Advancing ‘Proof of Concept’ Investments
Adequately archiving and disseminating the information gathered in modern formats to ensure ready accessibility to investors and other interested parties
A2. Strengthening Geological Knowledge and Information Infrastructure
Enabling Environment
Strengthening the required technical and managerial skills and capabilities locally to ensure the supply of steady talent required by the sector in the future
A3. Skills Building and Education Support for Mining Sector Development
Ensuring social equity in the labor force by addressing issues of exploitation of women and children
A4. Environmental, Health and Social Performance. A4-5. Implementation of gender inclusiveness programs for the mining sector, based on preparation of a detailed assessment and action plan
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 100 of 109
Road Map Objectives MinDiver Activities
Creating the necessary ancillary infrastructure to accelerate the growth of the sector nationally and regionally
B2. Catalyzing the Mineral Sector for Regional Development
Broadening access to finance and improving the business climate in Nigeria to increase attractiveness of (foreign) investments in the sector
B4. Addressing Access to Finance and Mineral Sector Investment Climate Constraints
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 101 of 109
Annex 6: Resource Potential of Nigerian Geology and Inventory of Mining License
COUNTRY: Nigeria
Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver)
I. Resource Potential of Nigerian Geology
1. The most known economic mineral deposits in Nigeria are best grouped in accordance with the three broad geological provinces and age groups (figure 6.1). These are:
Pan-African basement rocks,
Mesozoic Younger Granites, and
Cretaceous-Tertiary sedimentary basins.
Figure 6.1. Geologic Map of Nigeria)
Source: Nigerian Geological Survey
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 102 of 109
2. Each of these is discussed in detail below.
Resource Potential of the Nigerian Pan-African Basement
Gold. Associated with the schist belts of western Nigeria, mostly in the Northwest. There has been widespread small-scale mining targeting rich veins and associated eluvial and alluvial deposits.
Tin-tantalum-niobium. A broad belt of tin-tantalum-niobium bearing pegmatites extends northeastwards for about 400 km from near Ile-Ife (Osun State) to the Wamba-Jema’a areas (Nasarawa and Kaduna States) just southwest of the Jos Plateau. In addition to the main economic minerals cassiterite, columbite, and tantalite, there are a host of accessory minerals, including scheelite, wolframite, beryl, apatite, monazite, micas (muscovite and lepidolite), and tourmalines.
Iron ore. There are widespread occurrences of iron formations in the schist belts, but they are much smaller and leaner than the itabirites of the Archaean terranes, with grades seldom exceeding 40 percent Fe. However, there are purer iron ores interbedded among basement gneisses in the Okene-Lokoja area (Kogi State). These are probably older metasedimentary or magmatic relics and could be as old as the Archaean and perhaps can be correlated with the iron ores in Liberia and Guinea. About 200 million tons of 30−50 percent Fe has proven to provide the main raw material feed for the Ajaokuta and Aladja steel plants.
Chromite and nickel. Small chromite deposits are known to be present in some ultramafic (serpentinite) masses associated with fault structures in the schist belts, especially in the Northwest. Such bodies are also found to have economic quantities of nickel, talc, asbestos, and magnesite.
Uranium. A possibility of vein-type uranium mineralization in the basement granites of the Northeast has stimulated exploration in the past, mostly driven by the success in northern Cameroon, east of the Mambila plateau.
Industrial minerals. In addition to talc, asbestos, and magnesite, other industrial minerals such as kyanite and sillimanite, known in some schist belt locations are found in the Pan-African basement in Nigeria. Additionally, feldspar and kaolin are found in granitic rocks.
Marble. Major industrial mineral known in a number of locations in the basement, especially in central Nigeria (Kogi-Kwara States and FCT). A large deposit near Lokoja (Obajana) is now host to one of the largest cement plants in Africa.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 103 of 109
Resource Potential of the Sedimentary Basins
The Cretaceous-Tertiary basins of West Africa are of great economic importance to the countries in which they occur. Virtually all of West Africa’s energy resources are present in these basins.
Oil and gas are of greatest importance and are dominated by the enormous reserves of the Niger Delta Basin; other coastal basins are also in the interior basins. There are similarly enormous reserves of coal in Nigeria, while uranium deposits discovered in the Republic of Niger are some of the world’s largest.
Tar sands/bitumen. The huge deposits of tar sands in Nigeria consist of sand, heavy oil (bitumen), mineral-rich clay, and water in varying proportions. This heavy oil in tar sand is commonly referred to as bitumen. It is a viscous and complex mixture of hydrocarbons and other heterocyclic substances. Extensive seepages of bituminous sand are known to occur along an East-West belt stretching over an area of about 120 km × 6 km across Lagos, Ogun, Ondo, and Edo States in Southwestern Nigeria. Many attempts have been made, mostly by the Nigerian Government, to explore the commercial viability of the resource and reported resources equivalent up to 13 billion barrels of oil.
Coal. Major occurrences of coal are known from the Lower Benue Trough where several seams occur among the Lower Coal Measure. The exploitable parts of the coalfield are on the gently west-dipping eastern limb of the broad synclinal structure (the Anambra Basin) of the Lower Benue Trough. Coal is best developed around Enugu with seams 1–2 m thick and more than 300 million tons of estimated resources. The coal is sub-bituminous with average calorific value about10,000 kcal/kg. There are other coalfields in the Middle and Upper Benue Trough, with some relatively thicker seams and shallower coal seams being developed in recent times. Deposits of lignite occur in the tertiary sediments of the Niger Delta Basin, notably in the Ogwashi-Asaba Formation, where seams up to 6 m thick are reported with total resources estimated to be some 60 million tons. Lignite is also known to be found in the Sokoto and Chad Basins.
Metallic minerals. Lodes and veins containing economic quantities of lead and zinc (galena and sphalerite) with small amount of copper (chalcopyrite) have long been known in many locations in the Benue Trough, from Abakaliki area (Ebonyi State) to the Gombe area (Gombe State). This region has attracted some exploration and mining activities in recent times. Iron ore in the form of plateau-forming oolitic and pisolitic ironstones of the cretaceous sequence of the Niger (Bida) Basin have long been recognized as potentially huge iron ore resources with grades up to 60 percent Fe. They, however, remain unattractive because of the relatively high phosphorous (2 percent P2O5) and sulfur (1 percent) as impurities, even though the quantities are large, perhaps as much as 2 billion tons.
Industrial minerals. Limestone, suitable for cement manufacturing occurs in a number of places in the sedimentary basins of Nigeria, and cement industries have been established near several of its reserves. An additional resource in some of the associated shales is gypsum, which is also used in the manufacture of cement and occurs in exploitable
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 104 of 109
quantities in a number of locations. Baryte and fluorite are commonly associated with the lead-zinc veins and occur in exploitable quantities in a number of locations. Phosphate, kaolin, and other clays (including refractory Fireclay) and diatomite have been reported, explored, and even exploited in a number of localities within the sedimentary basins.
Resource Potential of the Nigerian Mesozoic Younger Granites
The Younger Granites of Nigeria are famous for their tin (cassiterite) and niobium (columbite and pyrochlore) mineralization. The uranium content of the pyrochlore is believed to probably be the primary source for the sedimentary uranium deposits in Niger Republic. This scenario presents an exploration challenge for sedimentary uranium deposits in the closely associated sedimentary basins in Nigeria.
Other economic minerals associated with the Younger Granites are lead (galena), zinc (sphalerite), wolframite, topaz, molybdenite, scheelite, zircon, monazite, thorite, cryolite, and gem-quality beryl.
II. Inventory of Mining License
Analysis by Title and Type of Mineral Classification
3. Of a total of 3,383 MCO licenses currently listed, the most significant proportion (42 percent) represents Exploration Licenses (ELs). Of those licenses indicating potential production, the most significant proportion is Small-Scale Mining Licenses (SSMLs), accounting for 22 percent of the total number of licenses granted. The record indicates that 195 Mining Licenses (MLs) and 656 Quarrying Licenses (QLs) are granted to date. There are a further 363 Small Quarry Licenses granted (see table 6.1).
Table 6.1. Mineral Licenses According to Mineral and Type
Mineral Type Licenses
Total No EL ML QL QLS SSML
Construction and dimension stones 1,173 33 20 580 327 213
Energy minerals 119 98 19 0 0 2
Industrial minerals 489 217 42 59 32 139
Metallic minerals 1,401 974 107 15 3 302
Precious minerals 201 96 7 2 1 95
4. When looking across sectors, the majority of licenses (1,401) are for metallic minerals operations, with 974 of these representing ELs and 302 being SSMLs. Currently, only 107 of the total for metallic minerals accounts for MLs. The same trend is true for precious minerals, where of a total of 201 licenses, 96 are ELs, while 95 are SSMLs. Only seven of these are MLs, with the remaining three being Quarrying (QL), or Small-Scale Quarrying Licenses (QLS).
5. A total of 489 licenses have been issued for industrial minerals, with the majority of these (217) being ELs. A total of 139 SSMLs were issued, with only 42 MLs, 59 QLs, and 32 Small-Scale Quarrying Licenses. For energy minerals, a total of 119 licenses were issued, with 98 of these being ELs, and 19 being
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 105 of 109
MLs. Two SSMLs were also issued.
6. Construction and dimension stone licenses were the second largest number of licenses issued after metallic minerals, with a total of 1,173. In this sector, the majority (580) accounts for QLs and SSQLs (327). A total of 213 SSMLs were issued for this sector, with a total of 20 MLs and 33 ELs.
Analysis by Location
7. With regard to geographical location, the state with the highest number of licenses issued is Nasarawa, with a total of 262. The majority, 121, of these are for metallic minerals, with 85 being for construction and dimension stone, 6 for energy minerals, 24 for industrial minerals, and 26 for precious minerals. The smallest number of licenses was issued by Akwa Ibom, with only five licenses, all of which were for construction and dimension stone.
8. The state with the highest number of licenses issued in construction and dimension stone was Kaduna, with 153. The lowest number was issued by Borno State, with none. Enugu and Kogi issued the most licenses for energy minerals, with both states issuing 48 licenses. A number of states did not issue any licenses, and in fact energy licenses only represented 6 percent of the total overall licenses issued.
9. The state that issued the most licenses for industrial minerals was Ogun with none being issued by Akwa Ibom, Delta, or FCT. Zamfara State issued the most licenses for metallic minerals—a total of 198. No metallic minerals licenses were issued by Akwa Ibom, Delta, Imo, or Rivers States. The highest number of precious minerals licenses were issued by Oyo State, while a number of states did not issue any precious minerals licenses.
Table 6.2. Distribution of Licenses by State
State
Total Number of Licenses by Type
Total Construction and
Dimension Energy
Minerals Industrial Minerals
Metallic Minerals
Precious Minerals
Abia 20 1 13 2 36
Adamawa 11 4 15 1 31
Akwa Ibom 5 5
Anambra 30 1 5 3 1 40
Bauchi 22 24 89 5 140
Benue 6 5 54 32 97
Borno 5 4 9
Cross River 41 25 16 2 84
Delta 20 2 22
Ebonyi 30 27 65 122
Edo 91 7 58 13 1 170
Ekiti 22 2 3 4 31
Enugu 2 48 5 2 1 58
FCT 64 1 9 1 75
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 106 of 109
State
Total Number of Licenses by Type
Total Construction and
Dimension Energy
Minerals Industrial Minerals
Metallic Minerals
Precious Minerals
Gombe 9 8 21 3 1 42
Imo 11 2 1 14
Jigwa 10 4 12 1 27
Kaduna 153 1 6 60 22 242
Kano 56 6 24 4 90
Katsina 19 3 30 3 55
Kebbi 4 2 47 53
Kogi 33 48 49 81 9 220
Kwara 23 5 27 9 64
Lagos 78 1 1 80
Nasarawa 85 6 24 121 26 262
Niger 38 4 180 12 234
Ogun 118 4 60 6 1 189
Ondo 44 4 5 5 1 59
Osun 21 1 43 13 78
Oyo 51 6 41 69 167
Plateau 7 9 184 3 203
Rivers 4 2 6
Sokoto 1 34 41 76
Taraba 5 7 34 10 56
Yobe 2 15 9 1 27
Zamfara 12 1 198 3 214
Total 3,378
Analysis by Commodity
10. Turning to a subdivision of commodities and starting with the construction and dimension stones license sector, the highest number of issued licenses were for granite (706), with only 1 license being issued for feldspar, limestone, manganese and gold, molybdenum, and refractory clay, respectively. Sand extraction accounted for 313 licenses.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 107 of 109
Table 6.3. Target Mineral Types Identified in License Application
11. In the energy sector, the most licenses were issued for coal, with a total of 103, with the fewest being issued for limestone—4 (it should be noted that there are a number of instances of misclassification in the datasheets). With regard to industrial minerals, 150 licenses were issued for limestone and associated minerals, while only two were issued for brine. Barite licenses were the second highest with 111 being issued.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
Page 108 of 109
12. With regard to metallic minerals, the most licenses were issued for gold, with a total of 484, with the second highest number being issued for lead and zinc (250). The lowest numbers were for cobalt, magnesite, nickel, and silver, with only one license issued for each. In the precious minerals sector, the most (19) licenses were issued for beryl, with aquamarine in second place with 17 licenses. The fewest were issued for antimony and diatomite, with only one each.
The World Bank Nigeria: Mineral Sector Support for Economic Diversification Project (MinDiver) (P159761)
