Madagascar - Additional Financing for the Mineral Resources Governance Project

Page 1 PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB2901 Project Name Additional Financing for the Mineral Resources Governance Project Region AFRICA Sector Mining and other extractive (50%);Central government administration (40%);Oil and gas (10%) Project ID P104983 Borrower(s) REPUBLIC OF MADAGASCAR Implementing Agency Republic of Madagascar Madagascar Environment Category [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared February 21, 2007 Estimated Date of Appraisal Authorization March 23, 2007 Estimated Date of Board Approval May 22, 2007 1. Key development issues and rationale for Bank involvement While the originally identified project activities dealt with overall mineral sector issues (including promotion of large-scale operations in mining), there was a clear focus on field work related to artisanal and small-scale mining (ASM), which was then the main Government objective. A number of critical successes have been registered in relation to this issue since then, including an increasing formalization of the ASM sector. In June 2005 the sector strategy was redefined, and the project activities re-focused, to respond to the recent surge of large-scale mining projects in Madagascar, as a result of the favorable investment environment and to higher commodity prices. In addition, as a response to increasing oil prices, oil exploration in Madagascar surged. The overall mining and energy institutional structure was thus faced with more pressure and, in spite of earlier reform successes (i.e. the Mining Cadastre, Environmental Mining Cells and the Mines-Forest Committees), is currently in need of a more comprehensive restructuring, including the oil (upstream) sector and a reform strategy of a key parastatal entity (OMNIS). In response to evolving Governmental priorities, the Mineral Resources Governance Project developed a series of activities aiming at (i) updating the sector policy, i.e. support to the