Announcement of Bolivia Borrows Twelve Million Dollars for Small Scale Mining Development on September 23, 1976

•World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. • Telephone: (202) 393-6360 Bank News Release No. 77/24 September 23, 1976 BOLIVIA BORROWS $12 MILLION FOR SMALL SCALE MINING DEVELOPMENT The World Bank has approved a loan of $12 million for a project in Bo1ivia designed to benefit many of the country's sma11-sca1e rr.ining firms. This is the Bank's third mining credit project in Bolivia but marks the first Bank loan for the development of the smal1 mining subsector. Mining of non-ferrous metals has traditionally been an important part of the Bolivian economy. Despite very slow growth in recent years 1 ,mining today accounts for 11% of the country's gross domestic product (GDP), about 2/3 of merchandise exports, and 1/4 of the Central Government's current revenue. Although m1n1ng is a capital-intensive activity, several hundred thousand Bolivians depend on it for their 1 ivel ihood·. Mining in Bolivia is carried out by both public and private enterprises. The principal enterprise, i.e. the state-owned Bolivian Mining Corporation (COMIBOL) operates the largest mines. 11 Medium 11 mining consists of 31 i->rivate firms, each of wh.ich have a share capital of at least $100,000. There are between 2,000 and 3,000 small-scale mines (some are so small • that they consist of one family activities) and as many as 40,000 people are employed in them, extracting mostly tin, antimony, tungsten, and lead. In general, productivity and technoi\,gy levels in small-scale m1n1ng operations are low and 1 ittle capital is employed. The Bank loan, which is based on an I DA-financed survey of small mines, is an attempt to develop their productive potentlal. The project consists of a program of supervised loans which will be channeled through the Banco Minero de Bolivia (BAMIN), a Government-owned institution, established in 1936 as the principal credit and marketing institution for private mining. Borrowers from BAMIN wi 11 receive obligatory technical assistance during project implementation. Under the technical assistance component of the project: a) BAMIN's professional staff of 36wi11 be upgraded, and its management control system will be improved; b) the Ministry of Mines and Metallurgy's sector planning and preparation of cadastral surveys wi l 1 be improved; and, c) the Geological Service of Bolivia's survey capabilities will be strengthened. Small-scale-mining investments are expected to contribute about $110 million to the country's net foreign exchange earnings from project inception through 1985. In addition, workers' incomes in the participating mines should improve, and health and safety standards in the mines are expected to rise as well. The Bank loan to Bolivia wi 11 carry interest at 8.9% and wi 11 be for a period of 15 years, including 3 years of grace. The Government of Bolivia wi 11 re-lend $9 million to .AMIN at the same interes,t rate. BAMIN, in turn, wi 11 re-lend the loan proceeds to miners for small-scale mining projects. NOTE: Money figures are expressed in U.S. dollar equivalents. FORM NO. 1121 (5-76) T EC HN I CAL DA T A PROJECT: COUNTRY: TOTAL COST: Small-scale Mining Development Bo 1 i vi a $18.2 mi 11 ion • BANK FINANCING: $ 12. 0 mi 11 ion OTHER FINANCING: Government of Bolivia -- $2.05 million BAMIN -- $2.09 million Participating mines -- $2 I' million IMPLEMENTi.NG ORGANIZATION: Banco Minero de Bolivia La Paz , Bo 1 i v i a PROJECT DESCRIPTION: Credit wi 11 be made available to the country's small mining subsector so that potentially viable small mining units can modernize and expand. In addition, technical assistance will be extended to Banco Minero de Bolivia, and to the Ministry of Mining and Metallurqy and the Geological. Service of Bolivia (GEOBOL). PROCU.REMENT: Procurement of m1n1ng machinery and equipment for subprojects wi 11 be in accordance with standard practice for DFC projects, i.eq on the basis of quotations from several suppliers. Equip- ment leasing and service contracts are eligible for partial financing under the loan. Equipment for survey of small mines and technical assistance wi 11 be procured on the basis of international shopping with the exception of diamond drills to be procured through inter- national competitive bidding. CONSULTANTS: a) Assistance to GEOBOL: 72 man-months; b) Planning Assistance to MMM: 5.5 man years; c) Cadastral Survey: 18 man-months; d) Technical Assistance to BAMIN: 52 man-months • ECONOMIC RATE OF RETURN: ESTIMATED COMPLETION DATE: at least 20% (for sub-loan component) June 30 , 19 80 - 0 - •