Announcement of Madagascar: World Bank Approves US8 Million Dollars for the Mineral Resources Governance Project on May 22, 2007

Madagascar: World Bank Approves US$8 Million for the Mineral Resources Governance Project Contacts In Washington: John Donaldson +1 (202) 473 1367 jdonaldson@worldbank.org; In Madagascar: Jocelyn Rafidinarivo (261-20) 225 6000 jrafidinarivo@worldbank.org WASHINGTON, May 22, 2007 – The World Bank Board of Executive Directors today approved an International Development Association (IDA) credit* of US$8 million to support the Government of Madagascar’s Mineral Resources Governance Project (PGRM). The PGRM objectives, which remain unchanged, are to strengthen accountability and transparency in the mining sector, promote key institutional reforms for the decentralized management of mineral resources and promote private investments and value-added in the sector. This additional financing will focus on five areas which fit into the three technical assistance components of the original credit: (i) policy, legal and regulatory framework changes to strengthen investment stability, transparency and governance in mining; (ii)institutional restructuring and strengthening of the Ministry of Mines for improved governance and capacity building; (iii) Improved government and management capacity of small-scale mining activities; (iv)support to integration of large-scale mining projects (ilmenite in Anosy, nickel in Ambatovy and ilmenite in Tulear) and to regional development, in cooperation with the IDA-financed Integrated Growth Poles Project (IG2P); and (v) Management of potential conflict between environmental protection and small- and large-scale mining. “The Government of Madagascar recognizes the importance of the extractive industries sector. The mining sector features prominently in the Madagascar Action Plan (MAP) 2007-2012 and its Challenge 7 ambitiously specifies that the sector’s contribution to Gross Domestic Product should very significantly increase until 2011, up from the estimate of 4% in 2005”, said Gothard Walser, Task Team Leader of the project for the Bank. Walser added: The MAP also states that Madagascar will help current mining projects enter the production phase while respecting the communities and the environment.” The sector regulatory framework will be further developed considering the separation of the Ministry of Mines and the Ministry of Energy in January 2007 and including a reformulation of the hydrocarbon laws and model production sharing contracts and adjustments to the mining legal and regulatory framework. “Madagascar had already registered a number of critical successes like the Mining Cadastre service which is considered currently the best in Africa and the increasing formalization of artisanal and small-scale mining “ says Robert Blake, Country manager for Madagascar who added: “But with the recent surge of large-scale mining projects and oil exploration in Madagascar, the overall mining and energy institutional structure thus faces more pressure and despite those earlier successful reforms, currently needs more support.” Madagascar stated its intention to join the Extractive Industries Transparency Initiative (EITI) in October 2006 in Oslo, Norway. Norway NORAD will be a partner in the project. ### For more information on the World Bank’s work in sub-Saharan Africa visit: http://www.worldbank.org/afr For more information on the World Bank’s work in Madagascar visit: www.worldbank.org/mg For more information about this project visit: http://web.worldbank.org/external/projects/main?pagePK=64283627&piPK=73230&theSitePK=356352&menuPK=356386&Projectid=P104983 *The credit is on standard International Development Association (IDA) terms, with a commitment fee of 0.5 percent and a service charge of 0.75 percent. The period of maturity is 40 years, including a 10-year period of grace.