Bolivia - Small-scale Mining Development Project

Document of The World Bank IFO OMCIAL USE ONLY Report No. 5712 PROJECT COMPLETION REPORT BOLIVIA - SMALL SCALE MINING DEVELOPMENT PROJECT (LOAN 1331-BO) June 17, 1985 Industrial Development and Finance Division I Latin America and the Caribbean Projects Department I is do_cment ba a restico dbutIon ad may be ued by recipiets ony im the pezfoumaee of tdeir oEfficd dutes lu mtas may nu otherwise be dscosed without Word Bank authoriaion.  CURRENCY EOUIVALENTS Date Sb per US$1. 11/76 - 10/72 20.00 11/79 24_51 02/05/82 43.18 11/05/82 196.00 11/17/83 500.00 04/12/84 2,000.00 08/24/84 2,000_00(for essential imports) 5.000.00(for all other foreign transactions) weighted average in 1982: 128-20 weighted average in 1983: 221.34 ACRONYMS BAMIN Banco Minero de Bolivia BISA Banco Industrial S-A. BCB Banco Central de Bolivia COMIBOL Corporacion Minera de Bolivia DEG Deutsche Entwicklungsgesellschaft ENAF Empresa Nacional de Fundiciones ERR Economic Rate of Return FNEM Fondo Nacional de Exploracion Minera GEOBOL Servicio Geologico de Bolivia GOB Government of Bolivia TDB Inter American Development Bank ITC International Tin Council HMM Ministry of Mines and Metallurgy NAMM National Association of Medium Mining UNDP United Nations Development Programme USAID United States Agency for International Development  FOR OMCIAL USE ONLY PROJECT COHPLKfON REPORT BDLVIA - SMAIL SCALE INN DEVELOPIET PROJECr (LOAN 1331-DO) TALE OF CONTENTS Page No. Preface ............... I Rasic Data Sheet ............... ......................... . ii Highlights . ... ..............._._. _____ iv I. INTRODUCrION ................1 B arkground ............... I Economic and Sectoral Environment .............................. 1 II. PROJECr DESCRIPTI0 AND O_ECfIVES ................................_ 2 III. TIPLEMENTATION OF THE CREDIT COMPONENT _ . _ 4 Project IW pl menttation ...................... _4 Subprojects Financed Under the Loan ............................ 5 Impact and Current Status of Subprojects ....................... 6 TV. INST-IUTW SAL PERFORMANCE AND DEVELOPMENT . . 6 Ceneral .. 6 Resource Mobilization and Operations........... ........ 7 Management, Staffing and Orgxnization........... ........... 8 Systems and Procedures. q Financial Performnee . .10 Loan Portfolio .. 11 V. THE TECHNICAL ASSISTANCE COMPONENTS .............................. 12 wI. CONCLwSIONS LESSONS LEARNED AND RECOMMENDATIONS .13 ANNEXES Annex I Financial Data Table 1 Actual and Projected Balanee Sheet .16 Table 2 Actual and Projected Profit and Loss Statement 17 Table 3 Finaneial Ratios .18 Annex 2 Lending Operatons .19 Annex 3 Portfolio Performance Table 1 Loan Portfolio, Arrears and Provisions ............ 20 Table 2 Principal affected by arrears ....... 21 Table 3 1983 Arrears by Agencies and Funding Sources. 22 Annex 4 Subproject Data Table la Subprojects financed under Loan (above free limit) 2 .23 Table lb Subprojects financed under Loan (below free limit) 24 .24 Table 2 Breakdown of subprojects by size, investment cost. etc ....... 25 Annex 5 Description of three mining subsector categories ........... 26 Anmex 6 Technical Assistance Component of Credit 455-BO and Loan 1331-BO ............................................... 28 Anmex 7 Consultant report on selected snbproject visits ............ 36 ATTACHMENT Borrower's Comaents .38 This document has an reswtred distnibution and may be used by reipients only in the performance Of L their oficia dutus. Its contents may not otherwise be disodbsed without World Bank authorization  PROJECT COMPEETION REPORT BOLIVIA - SMALL SCALE MINING DEVELOPHENT PROJECT (LOAN 1331-BO) PREFACE The following is a Project Completion Revort on Loan 1331-DO. This loan of US$12.0 million was approved in September 1976, signed in October 1976 and disbursed by December 1982. The Bank's Latin America and the Caribbean Projects Department has prepared this report on the basis of information gathered during a mission to Bolivia in July 1984. The report presents a factual review of the financial institution involved, its institutional development over time (including its current status), and its utilization of the loan proceeds. Comments received from the Borrower have been reflected in the report_ This project has not been audited by the Operation Evaluation Department.  -ii- PROJECr COMPLETION REPORT BOLIVIA - SMALL SCALE 4ININC DEVELOPMENT PROJECT (LOAN 1331-BO) BASIC DATA SHEET Key Project Data Appraisal Actual Item Expectation (USS millions) Loan Amount USS12.0 million 12.0 Disbursed 11.8 Cancelled 0.2 Repaid to 3/31/84 3.3 Outstanding to 3/31184 - 8.7 Financial Performance Improving Stationary Institutional Performance Significantly improving Insignificantly improving Other Project Data Item Original Plan Revisions Actual First mention in files - 01/03/75 Government's Application - - 04121/75 Negotiations 08/00/76 - 08/00/76 Board Approval 09117/76 - 09117/76 Loan Agreement 10/15/76 - 10/15/76 Effectiveness 07/15/77 - 07/15/77 Completion of Commitments 12/31/79 - 12/31/81 Loan Closing 12/31/80 - 12/31/82 Borrower GOB Executing Agency BAMIN, GEOBOL, FoJM Fiscal Year of Borrower ,Jan.1-Dec.31  -iii- Mission Data No.of No. of Item Date Weeks Persons Nanweeks Date of Report Preparation 03/75 2.0 1 2.0 04/18175 & 05/16/75 Preappraisal 08/75 3.0 2 6.0 09/19/75 Appraisal 12/75 1.2 7 8.4 09/01176 Postappraisal 02/76 1.0 3 3.0 Unknown Prenegotiation 08/76 1.0 1 1.0 08/11/76 Total 20.4 Supervision 121n6 1.5 1 1.5 12/23/76 Supervision 03177 1.0 1 1.0 04/15/77 Supervision 07/77 1.5 1 1.5 08/19/77 Supervision 05078 1.0 1 1.0 06/22/78 Supervision 11/78 1.6 2 3.2 12/19/78 Supervision 06/P9 1.5 1 1.5 07/19/79 Supervision 11179 1.3 1 1.3 12/05/79 Supervision 04/80 1.0 1 1.0 04/16/180 Supervision 08/81 1.3 1 1.3 09/09/81 Supervision 10/82 0.5 1 0.5 10/26/82 Supervision 04183 0.4 2 0.8 08/30/83 Completion 07/84 1.7 4 6.8 09/28/84 Total 21.4 FOLLOW-ON PROJECT A proposed project involving a loan of US$20 million divided equally between Banco Industrial S.A. and Banco Minero de Bolivia was appraised in 1981 but has been delayed pending agreement between the Republic of Bolivia and the International Monetary Fund.  -iv- PROJECT COMPLETION REPORT BOLIVIA - SMALL SCALE MINING DFVELOPMENT PROJECT (LOAN 1331-BO) RIGRlLIGRTS 1. This project, the Bank's third mining operation In Bolivia, assisted the development of small scale mining by: (a) financing to the national mining bank, Banco Winero (BAMIN), for the preparation, development and exploitation of specific small mining subprojects through subloans (including technical assistance to improve institutional development, especially management control and project appraisal capability); (b) assistance to the National Geological Service (GEOBOL) in continuing a survey and preinvestment studies of small mines (which bad started as part of an earlier Bank credit) and in strengthening GEOBOL's mineral analysis capacity; and (c) technical assistance to the Ministry of Mines and 'Metallurgy (MM) for policy plaaning and a cadastral survey (including the technical assistance component of a previous Bank mining operation, Credit 455-RU, the finance component of which had been evaluated earlier) (para 2.02). 2. The overall impact of BAMIN's subloans, which accounted for the major portion of the Rank loan, has been satisfactory. The majority of subborrowers utilized the loan resources efficiently to modernize and/or expand their mining operations (para 3.10). However, because of a lack of proper advice, technical assistance and followup, many small gold mining operations utilized inadeouate processing and concentrating technology, which resulted in poor recovery levels and, thus, in substantial losses of gold reserves to the Government of Bolivia. These subprojects, located in the remote Tipuani area, absorbed about 30Z of all subloans amounts (para 3.13). 3. While the results at the subborrower level have met the project's general objectives, one important obiective has not been achieved: BAMIN's development into a more modern, efficient banking organization for Bolivia's mining sector. BAMIN's overall performance has been weak throughout the project cycle. High management turnover, insufficently qualified staff and political factors have hindered its operational capabilities. Its supervision activities and technical assistance to borrowers continue to be inadequate (para 4.15). In addition, BAMIN's financial performance has been poor: because of several devaluations and unsatisfactory loan collection, its equity has been eroded substantially (paras. 4.21 - 4.25). As a result of these combined factors, BAMIN's resource mobilization capability has not been developed, limiting its ability to carry on efficiently and to expand its lending operations (para 4.08). However on the positive side, there have been slight improvements in RAMIN's organizational structure, external auditing, accounting Procedures and technical appraisal capability even though the originally expected standards were not reached.  4. The technical assistance component of the loan was a continuation of the technical asssitance (TA) under a previous wining credit to Bolivia. In their entirety, these components were multifaceted and resulted in a mixture of failures and successes. While a good portion of TA under Credit 455-30 was satisfactorily implemented, the TA components under Loan 1331-Bo bad a more complex conception. Few tangible results were achieved, chiefly because of unclear project designs, implementation responsibilities having been too widely spread and designed targets having been too long-term oriented. Additionally, and despite considerable Bank supervision, project implementation was influenced by a lack of political continuity and overall institutional weaknesses (paras. 5.01 - 5.05).  PROJECT COMPLETION REPORT BOLIVIA - SMALL SCALE MINING DEVELOPMENT PROJECT (LOAN 1331-RO) I. INTRODUCTION Background 1.01 This project completion report reviews Loan 1331-BO, which provided financing to assist the development of small scale mining in Bolivia and technical assistance (TA) to several institutions involved in the mining sector. The report also includes a review of the TA components of Credit 455-BO. 1.02 Bank Group involvement in Bolivia's mining sector goes back to 1972, at which time the investment priorities, as set out in the Mining and Metallurgical Sector Report (PI-14), provided a basis for a Bank lending program. A first USS6.2 million IDA Credit (455-RO), which was made in 1974, and which is fully disbursed, helped the Government in mining policy and administrative areas and assisted in financing medium mining enterprises through the private Banco Industrial S.A. (BISA). A followup sectoral mission, which visited Bolivia in early 1976, continued and updated the findings of the previous sector report. During the same year, two mining credit loans were made: a USS10.0 million loan (1290-BO) through BISA to finance medium mines and also industry; and the loan under review (1331-BC) of US$12 million to provide supervised credit to small mining enterprises through the Bolivian Mining Bank (BAMIN), and to finance technical assistance and equipment for the Ministrv of Kines and Metallurgy (NMW) and the Bolivian Geological Service (GEOBOL). In 1979, another IDA Credit (940-BO) for USS7.5 million was made to assist the National Mineral Exploration Fund (FNEM), in reducing the financial risk of exploration and mining development activities. The loan under review for small mining was thus an integral part of a continuous assistance program for Bolivia's mining sector initiated in the 1970s. Economic and Sectoral Environment 1.03 Mining is one of the most important sectors in Boliviats economy because of its significant contribution to the country's exports and to the fiscal revenues of the Government. In 1992, mineral exnorts, excluding hydrocarbons, were US$324 million, or 43.4% of total exports, and mining taxes amounted to 15% of the total fiscal revenues of the Central Government. The sector's share in GDP is rather low, 5.7% in 1982-partly due to the inclusion of metallurgical activities %ithin the industrial sector-and it has been falling in recent years as a result of depressed mining conditions.  -2- 1.04 The sector's contribution to the economy normally varies with the fluctuations of international metal prices. Over the past few years, however, depletion of ore reserves in the existing mines, lack of development of new reserves and discriminatory taxation -coupled with the slower growth in industrial countries and Bolivia's overall economic instability-have resulted in an actual decline of production of major minerals and reduced the relative sector contribution even when prices were favorable. As a consequence of the problems in the sector, investment has been grossly inadequate for the appropriate development of existing mines and for new exploration, while mining profits, instead of being reinvested, often have been channeled to other sectors. 1.05 Mining producers in Bolivia are classified in the following three main categories:l / (a) Corporacion Minera de Bolivia (COMIBOL), operating 14 large a..d medium-sized state-owned mining complexes; (b) about 24 privately owned medium mining companies; and (c) between 2,000 and 4,000 small mines operated either privately or by cooperative arrangements. COHIBOL's mining operations contribute to about 65Z of total mineral production and 35% of sectoral employment; the medium mines are respons'ble for 25-30% of the national mineral output and 9% of employment, while the small mines contribute to 10-15% of national production and 56% of employment. II. PROJECT DESCRIPTION AND OBJECTIVES 2.01 Bank lending for Bolivia's mining has been oriented toward medium and small mines with economic Potential and toward the building of financial institutions which could provide supervised credit and technical assistance. The main goal of the Rank program for the small mining sector was a gradual transformation of small mining units with development potential into efficient mining enterprises. The specific objective of the loan under review was the development of preselected small mining operations through the provision of supervised credit with complementary technical assistance. In order to ensure availability of development credit and technical assistance to small miners, and to induce improved sectoral policies, the project aimed at:(a) financing and strengthening BAMIN, the selected credit intermediary; (b) upgrading the technical capabilities of GEOBOL; and (c) providing assistance to MMM in sectoral planning, including a cadastral survey. 2.02 Specifically, the project originally consisted of finanzing the foreign exchange costs of three complementary components: (a) A credit program of US$9,000,000 equivalent to assist RAMIN in financing feasibility studies and subloans for the preparation, development and exploitation of small mining projects; (b) Assistance to GEOROL of US$1,900,0OO to: 1/ For a more detailed description of these three categories, see Annex 5.  -3- (i) continue the survey of small mines throtgh financing of related equipment needs and foreign experts, and to strengthen GEOBOL's capability for preparing prefeasibility studies of mining projects and for providing comprehensive technical assistance to BAMIN's credit beneficiaries; and (ii) strengthen its mineral analysis capacity. (c) A technical assistance program of US$1,100,000 composed of: (i) expert assistance to improve the planning capability of M4; (ii) equipment and expert assistance to carry out a cadastral survey of MMM; and (iii) consulting services for BAMIN to improve its project appraisal and supervision capability and its management control system, including accounting. 2.03 The initial allocation of loan funds was slightly changed when, in early/mid-1981, it became apparent that, due to several constraints and difficulties faced in the implementation of the technical assistance components,2/ it was unlikely that the amounts initially allocated for the two TA components would be utilized fully. Consequently, taking also into account the speedup of new subloan approvals by BAMIN at that time, the Bank decided to agree,3/ upon the borrower's request, to reallocate US$1 million from the technical assistance components to the credit component. The original allocation and the amended allocation of loan funds were as follows: Original Amended (USS) Part A - Credit Component 9,000,000 10,000,000 Part B - GEOBOL 1,900,000 1,275,000 Part C - Technical Assistance 1,100,000 725,000 Total 12,000,000 12,000,000 2/ Section V provides a detailed assessment of the implementation of the technical assistance component. 3/ Bank's letter of 7/24/1981.  -4- ITI. TMPLEMENTATION OF THE CREDIT COMPONENT Proiect Implementation 3.01 The loan Faced several initial problems which delayed startup considerably. The loan did not become effective until ten months after Board approval, on July 1', 1977. The delay was mainly due to personnel changes in the Ministry of Mines and Metallurgy (4MM). In particular, there were delays in signing the subsidiary loan agreement (Section 6.01(b)), arranging for the Government's payment of the first capital iustallment to RAMIN (Section 6.01(c)), and in the selection of consultants for BAMIN's Technical Department (Section 6.01(h)), the responsibility of which rested with MMM. The closing date had been set originally for December 31, 1980, but had to be extended twice: initiallv to December 31, 1981, / and finally to December 31, 1982.5/ 3.02 The initially established disbursement percentages (100% of the cost of imports, 60% o goods purchased locally and 35Z of construction costs) were intended to result in the Bank financing, on average, 70% of the total project costs (the estimated foreign exchange component of mining projects) and about 80Z of BAMIN subloans. This arrangement was based on the expectation that BAMIN would finance fewer but larger projects. Since the average size of subp.cjects actually financed turned out to be smaller, direct imports were appropriate only in a few cases while, in most cases, imported goods were purchased locally. Thus, the existing loan disbursement procedures resulted in the Rank financing about 50% of RAMIN's loans, instead of 80%, as originally intended. Therefore, the Bank revised the disbursement percentage, increasing it to 80% of RAMIN subloans across the board without differentiating between local and foreign Purchases (Bank's letter of 5/16/1980). 3.03 The first suoproject was approved in November 1978, more than one year after effectiveness. Thereafter, loan utilization improved gradually, and, by December 1981, two years after the original closing date for subproject submission (12/31/79), all funds were committed. Disbursements lagged, partly because of lack of bridge financing, and also because of the unfamiliarity of BAMIN and its small mining clients with Bank standard requirements for disbursements and subproject appraisals. 3.04 As late as 1979, the pipeline of BAMIN subprojects was still very weak becauoe the demand for investment credit from small miners had been reduced becauss of political unrest and uncertainty. Consequently, few loan requests had been received, and less than USS2 million had been committed by the end of 1979. By that time, Bank expectations of the loan being fully committed by the en.d of 1981-as was then envisaged--were so low that a supervision mission tentatively recommended a partial reallocation of USS3 million from the crelit component of the loan to BISA. However, as a result 4/ Bank's letter of September 15, 1980. 5/ Bank's telex of Jecember 28, 1981.  -5- of intensified promotional efforts and BAMIN's special emphasis on gold mining operations, the project pipeline firmed up and commitments in the first half of 1980 increased considerably (by about US$4 million), making it then appear feasible that BAMIN could commit the entire amount of the credit component by the end of 1981. Consequently, the tentative previous recommendation to reallocate funds from this component was dropped. 3.05 Subsequently, and reversing the previous trend, an increase rather than a decrease in demand for BAMIN's subloan funds became apparent. On July 24, 1981, the Bank approved a reallocation of US$1 million from the technical assistance components to the credit component, based upon the difficulties faced in carrying out the technical assistance component for MM and GEOBOL (nara. 5.03 and Annex 6), and taking into account the continuous improvement in BAMIN's subproject pipeline. New subloans continued to be approved by BAMIN throughout 1981, and, by the end of that year, the full amount of the credit component has been committed. Subprojects Financed Under the Loan 3.06 A total of 40 subloans to private, domestically owned mining establishments were financed under the credit component, with a total cost of about USS13 million, of which the Bank subloans financed US$9.9 million. Twenty subprojects were small (below US$100,000), and subloans for them totaled US$1.11 million (112 of the total loan). The other subprojects, medium-sized, absorbed USS8.74 million of the Bank subloans (89% of the total) and included four which amounted to US$1 million or more. 3.07 Of the total 40 subloans, 28 (or 70% of the total number) were for financing new enterprises, while 12 (30x) financed expansions and modernization of existing mining operations. 3.08 Fifteen subprojects were for tin mining (amounting to 57.1% of the total approved subloan amo-unt), 16 for gold (29.5Z of total subloan amount), and the remaining for tungsten, limestone and lead/silver. It should be noted that BAMIN s orientation toward gold mining was not envisaged during loan preparation. While this change of focus was instrumental in helping to commit and disburse one third of the loan, it also caught RAMIN off guard with regard to the policy implications which arose within this area of mining (para. 3.13). 3.09 A complete list of the subprojects financed is presented in Annex 4, Tables la and lb. A detailed breakdown of subprojects by enterprise ownership, investment cost, and type of subproject is included in Annex 4, Table 2.  -6- Impact and Current Status of Subprojects 3.10 Based upon a sample of on-site visits to subprojects6/ (private and cooperative organizations, i cluding small and medium mines producing different minerals), it appeared that most investments financed under the project were sound and have been carried out successfully. The subborrowers have achieved their basic objectives of modernizing and/or expanding mining activities and strengthening their overall operations.7/ 3.11 A few subprojects, however, have faced difficulties such as unforeseen technical problems and implementation lagging behind schedule. This delaying factor has caused higher than anticipated costs and lower than expected returns. While these problems are being gradually worked out between BAMIN and the borrowers, the subprojects are nonetheless expected to remain basically viable. 3.12 Although. many of the difficulties could not have been foreseen at the time of the various subproject appraisals, some of them could have been avoided by a more thorough subproject appraisal on the part of BANIN. It should be noted that several of the smaller operations involved were able to survive only because they were bought by medium mining companies. 3.13 In addition, most of the gold mining subprojects which operate in the form of cooperatives with up to 100 partners, utilize Inadecuate processing and concentrating technologies, resulting in a high level of losses (estimated by different sources as amounting to 40-502 of the recoverable mineral amount). BAMIN had not, at the subproject appraisal stage, provided the necessary technical advice for the selection of adequate technology, nor has it at a later stage, provided technical assistance to remedy the problem. Since BAMIN is, by law, the only collecting agency for the gold mining proceeds in Bolivia, a much stronger interest in improved recovery ratios should have been expected, which would have resulted in a substantial increase of gold reserves to the Government. IV. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT General 4.01 BAMIN was established in 1936, as an autonomous public institution, to promote mining development in Bolivia. As an agency of MMM, it performs two major functions: provision of credit and marketing of minerals, both oriented to the small mining sector. Prior to the loan, BAMIN had a history of inefficient operations and, in the past, its operations had often been influenced bv political considerations, resulting in the deterioration of its loan portfolio and its decapitalization. 6/ Twelve subprojects were visited, comprising 30% of the total number of subborrowers, and 80X of the total subloan amounts. 7/ A separate consultant report includes an assessment of a sample of subprojects.  -7- 4.02 In late 1972, the Government decided to rehabilitate BAMIN and asked the Bank for assistance. Over the following three years, the Bank maintained close contact with RAMIN's management and, as part of the project preparation, provided it with technical and administrative advice. As a result, several steps were taken to strengthen RAMIN's financial position and organization. However, in spite of substantial improvements since 1973, further financial and administrative adjustments were needed before BAMIN could be able to establish itself as a financially sound and efficient development credit institution. It was therefore agreed, for project purposes, that BAMIN could start serving in a limited role as a channel for Bank funds, mainly because, with some technical assistance, BAMIN was expected to gradually develop satisfactory appraisal standard for mining subprojects (Annex 6, para. 24). Considering the unique role of BAMIN in the small mining sector and the Government's determination to strengthen BAMIN's development banking function within the framework of the mining development policies, the institution-building program was a key aspect of the project. 4.03 Following the Bank's involvement in the small mining sector through this loan, BAMIN's performance began to improve slightly. Banking and mineral warehousing functions were separated, long-term investment loans were added to working capital and mediuw-term equipment financing, and external audit and better appraisal standards were introduced. 4.04 However, in spite of some progress, the institution remained undercapitalized, the loan portfolio continued to be poor, and the banking function remained underdeveloped while BAMIN's management concentrated mainly on buying and selling minerals through the trading department. At present, BAMIN still needs to make substantial improvements, particularly in reducing its loan arrears (para. 4.27), and in upgrading its financial planning and controls (para.4.17); significant efforts toward institution-building continue to be required. Resources Mobilization and Operations 4.05 As a result of Loan 1331-RO, BAMIN was able to provide term lending to the mining sector, in addition to working capital loans. Transactions with medium-scale mining establishments have consequently increased. The total lending orogram today includes loans for working capital, production equipment and mining development, each with different terms and conditions. 4.06 During the period 1977-1981, BAMIN made about 2,700 loans for b$ 715 million. Most of these loans were small, about 46% were in amounts below $b 50,000 and only 5.2% exceeded $b 1.0 million. About 25% of the loans were for working capital, 69% for production equipment loans, and 6% for development project loans. About 90% of all loans were made to the small mining subsector, including cooperatives, accounting for 92% of the total loan amount; the remaining 8% was absorbed by 270 loans to medium miners. A comparison within the five-year period shows that the lending pattern and volume changed considerably, once the Bank-financed subprojects were under way, toward larger subloans with greater emphasis on investment financing.  4.07 As of August 31, 1984, BAMIN had about US$5 million equivalent of uncommitted resources from credits of Poland and the USSR available for new development projects, to be utilized exclusively for the purchase of machinery and equipment from these countries. In addition, RAMIN, together with other participating financial intermediaries, has access to a US$35 million IDB line of credit (rediscounted through the Central Bank) available for fixed asset and working capital financing in the mining sector. 4.08 BAMIN's inability to mobilize additional resources stems from: (a) its poor loan recovery practices; (b) the overall deterioration of country economic conditions, which limits the possibility of raising loans from foreign commercial banks; (c) BAMIN's own low standing vis-a-vis domestic financial institutions combined with a general lack of domestic term funding; and (d) statutory limitations which do not allow BAMIN to take term deposits from its credit and trade departments' clients. 4.09 These constraints are seriously limiting RAMIN's capability to carry on a continuous-much less increased-lending program, and its credit department has been practically inactive ever since Bank funds were committed. Management, Staffing and Organization 4.10 A reorganization process was started in 1972, upon the Rank's recommendation, to separate the commercial activities from the banking operations, and BAMIN was divided into two operational units, the Trading and the Credit Departments, with capital resources being separated. In 1981, a third operational unit was created the Finance and Administration Department, which provides accounting and administrative services to the other two departments. 4.11 As of December 1983, BAMIN employed a total staff of 523 (including branches and field offices), of which only 31 were professionals. The Credit Department has only four engineers and three economists at present. Two of the economists handle the financial and economic snalysis of larger subprojects, whereas small subprojects are reviewed solely by engineers who have some background in financial analysis. 4.12 The Drofessional staff in La Paz has increased its technical capacity, and its performance has been slowly but steadily improving over the period of the loan. However, the department's capability to adequately carry out the appraisal and supervision work involved in the loan operations has been constrained by the limited number of professionals, as well as a strong union inside BAMIN which continues to resist any outside appointments, making it very difficult to hire new qualified staff and to manage recruitment on a professional basis. 4.13 Management turnover has been verv high (BAMIN has had five general managers over the past three years), with a negative impact on staff morale ana on the continuity of personnel and administrative policies.  -9- 4.14 In summary, there have been some improvements in BAMIN's staffing and organizational structure, but major difficiencies still persist, and the strengthening of staffing (both quantitative and qualitative) and managerial capability as well as managerial continuity continue to be required. Systems and Procedures 4.15 Appraisal and Supervision. Considering that hardly any appraisal work existed before, the quality of BAMIN's subproject appraisals has gradually improved over the period of the loan. However, some appraisals are still not fully satisfactory, sometimes failing to address relevant technical or financial-economic issues specifically. SuDervision is being carried out through a special division in the Credit Department. Because of inadequate staffing and budget resources, supervision activities are seriously constrained. Only four vehicles and five staff were available in the central La Paz office for coordinating and partly carrying out field supervision. This existing situation is not compatible with the large loan portfolio under implementation, and it has resulted in cases in which some borrowers have not been visited for more than a year, even though additional supervision staff is available in the field offices. 4.16 Procurement and Disbursement. BAMIN's procurement and disbursement procedures have been satisfactory.'/ BAMIN requires its clients to obtain quotations from at least three suppliers. Loan funds are disbursed by issuing a check directly to the local supplier or by arranging for direct payment abroad for equipment imported by its clients. 4.17 Financial Reporting. As required under the loan, separate financial statements for BAMIN's Credit and Commercial Departments have been prepared annually. However, such statements have basically been prepared to mechanically fulfill a loan condition, rather than to create a needed operational management tool which could have provided an independent assessment and control of costs, operations, funding and profits/losses. This type of reporting was especially recommended because the profitable warehousing operations9/ are included in the Credit Department and its profits offset the continuous losses incurred by lending operations. With constant changes in managerial positions, several incumbent finance managers indicated to supervision missions that they were unaware of a separation of financial statements, and such information had to be prepared retroactively (by assigning costs and revenues to the pertinent operations after the overall statements had been prepared). 4.18 Auditing. BAMIN's operations have been subject to external auditing only since 1975. Different auditors have been contracted every year because of a regulation which requires the auditing contract to be awarded to 8j Apart from tIne fact that the former manager of finance has been indicted of wrong doing. The court case is still pending. 9/ Retail sales of inputs for small mines, such as explosives, small equipment, etc.  - 10 - the lowest bidder. It would have been such more beneficial to both auditor and BANIN if there had been more continuity in the annual auditors' assessments and recommendations. 4.19 Loan Administration and Controls. BANIN does not have in place a suitable system to monitor loans. Its recording and followup of overdue loans, and the related loan recovery procedures, are inadequate. Information on loan arrears has been incomplete and not up-to-date, and a clear arrears position has usually not been available to management. 4.20 Only now, following continuous recommendations from several Bank supervision missions, has BAMIN's management finally agreed to carry out a special portfolio audit at a cost of US$91,050, financed under the loan. Once completed, this special audit could provide the basis for a corrective action program. Financial Performance 4.21 Financial and Operational Status. The following assessment is restricted to BAMIN's Credit Department, which is financially independent from the Trading Department, and which was responsible for channeling the loan proceeds. 4.22 Total assets of rhe Credit Department exDanded significantly, in dollar terms, between 1977 and 1983, having increased by 3.4 times in relation to 1977. This increase was due to an expansion of total outstanding loans (which augmented 2.3 times) and, more important, to an even larger increase in the value of inventories carried by the warehouse operation (which increased 3.9 times). The loan increases were funded mainly by the Bank loan, credits from Poland and the USSR for the purchase of machinery and equipment, and increases in resources provided by or through the Central Bank. 4.23 The debt/equity ratio varied between 3.1:1 and 3.6:1 in the period 1977-1981, well below the 4:1 limit agreed to under the loan. Equity increased by 38Z to USS8 million at the end of 1981. In 1982, however, due to dedollarization- policies implemented by the Government, BAMIN's Credit Department suffered heavy currency devaluation losses (to be capitalized over a four-year period), which had a substantial negative impact upon equity, which was reduced to USS1.7 million. BAMIN as a whole, however, has not incurred losses, since its consolidated balance sheet also reflected exchange gains of the Trading Department derived from the increased valuation of its inventories due to exchange rate changes. New loan regulations, effective since early 1983, provide that all of BAMIN's loans will be denominated in foreign currency or have a maintenance of value clause. Thus, RAMIN's Credit Department will not be exposed further to any significant foreign exchange risk in its operations since funds are lent out either in the same currency in which they were obtained or are lent out under a maintenance of value clause.  - 11 - 4.24 At the same time that the Credit Department's equity suffered such negative impact, total liahilities increased significantly from US$24.0 million on December 31, 1981 to US58.4 million on December 31, 1982 and to US$89.9 million on December 31, 1983. This increase was mainly caused by an expansion of the use of foreign loans (IBRD, Russian and Polish credits, IDB) and by a substantial increase in liabilities and provisions related to the warehouse operations (for replenishment of inventories, unrealized sales and profits and foreign exchange variations). As a consequence, and directly linked to the eauity erosion as stated previously, the debt/equity ratio increased to an extremely high level of 35:1 in 1982 and even further to 78:1 in 1983.Currently, there are no indications that the Government will increase equity funds to strengthen RAMIN's eroded capital structure. 4.25 Profitability. The Lending Operations Division of the Credit Department had losses every year throughout the lifetime of the loan, except in 1980. Rowever, these losses were more than offset by profits from the warehouse operation, which is, for accounting purposes, also included in the Credit Department. Therefore, for the Credit Department as a whole, the overall net profits over equity were very low, but still positive during the period 1977-1979 (1.2%, 3.0% and 0.7%), and increased in subsequent years (34.5% in 1980, 5.8Z in 1981, 13.4% in 1982 and 24.0% in 1983). Loan Portfolio 4.26 Administrative costs followed an inconsistent pattern, alternatively increasing and decreasing as a percentage of average total assets (having varied between 1.6% and 6.1% of average total assets). Over the 1978-1983 period, the level of arrears was very high. Principal affected by arrears varied between 24% and 40% of total loans. Between 1978 and 1981, the affected total principal increased by 56% from US$5.1 million to US$8.0 million. In 1982, however, it decreased to USS6.1 million, increasing again to US$7.9 million in 1983. As of December 31, 1983, 40% of BAMIN's loan portfolio was affected by arrears (RAHIN defines a loan as in arrears once a borrower is overdue on three repayments). The breakdown of arrears by credit lines indicates that, if it were not for the Bank loan with 25% in arrears, the overall ratio of arrears would have been higher than 40% since the loan arrears of various other credit lines average about 52%. Only the forthcoming detailed portfolio review will provide a more realistic assessment of the actual status of the many loans ia arrears since BAMIN itself was unable to undertake suclh a review. A detailed breakdown of loan arrears is shown in Annex 3. 4.27 The high levels of arrears have been due to (a) recurrent problems in the mining subsectors (e.g., high operational cost, low recovery ratios and low international price levels for tin); (b) specific problems in some enterprises (e.g., low demand and low historical vrices for some minerals, transport difficulties and labor problems), and (c) poor collection and inadequate loan supervision by BAMIN. In addition, collection is hindered by delays in the judicial system in processing court cases and by political pressure from strong mining unions.  - 12 - 4.28 BAMIN has never made a detailed analysis of its loan portfolio, and it is not possible to state with accuracy the number of bad loans, nor what should be the proper level of provisions for doubtful accounts. In addition, the rescheduling of several loans over the past two to three years has further prevented a clear assessment of the arrears position. After continuous recommendations from the Bank, BAMIN has hired independent auditors to carry out an internal portfolio review, which is to include an analysis of all overdue loans, outstanding loan amounts affected by arrears, and an analysis of arrears by credit line, branch office, and age. Findings of this review will serve as a basis for determining the adequacy of provisions for doubtful loans, the extent of loans to be written off and other corrective actions. V. THE TECHNICAL ASSISTANCE COMPONENTS Introduction I0/ 5.01 Even though formally divided into two projects, the TA of loan 1331-BO was a natural continuation of the TA under Credit 455-BO; the two are, therefore, for practical purposes, evaluated as one single operation. 5.02 The overall objective of both TA components was to assist Bolivia in the development of the small-scale mining sector and to improve the efficiency of several public mining institutions, such as MMM, GEOBOL and BAMIN, through the implementation of seven main TA components: (a) the survey of small mines, (b) the strengthening of MMK, (c) a sector tax system study, (d) a mineral resources exploration fund study, (e) a review of the Mining Code, (f) the cadastral survey, and (g) the strengthening of BAMIN. 5.03 These TA components were implemented only partially and resulted in a mixture of failures and successes. A good portion of the TA under Credit 455-BO was implemented satisfactorily and resulted in some successes, whereas the more complex TA components under Loan 1331-BO proved to be a failure. They had too many overly ambitious objectives. Responsibilities for implementation were only loosely defined and assigned to different agencies under the overall coordination of MMM. The project had a successful start but suffered from lack of political support and continuous changes in executing personnel. Poor coordination resulted in serious misunderstandings, overlapping of functions, and disputes among the institutions. 5.04 Since IDA Credit 455-RO was negotiated, a total of 12 individuals have held the office of Minister of Mining and Metallurgy, averaging more than one change per year. 5.05 Some TA components, such as the sector tax study, the survey of small mines, and the study which led to the creation of the National Exploration Fund, have had a significant impact in planning the strategy for 10/ For a full description of the TA components, refer to Annex 6.  - 13 - future development of the sector. Other technical assistance components were only partially implemented. MMM and GEOBOL's original plans to hire about 20 consultants for strengthening their capabilities were considerably reduced in number and scope, thus limiting the success of these components. The commitment to review and promulgate a new Mining Code was not fulfilled. VI. CONCLUSIONS, LESSONS LEARNED AND RECOMMENDATIONS Conclusions 6.01 The overall impact of the loan has been positive as far as subproject financing is involved. Most subprojects utilized the loan resources well and were able to modernize and/or expand their operations. Regarding specific subloans in the gold mining sector, the lack of technical assistance caused most gold mining cooperatives to utilize inadequate processing and concentrating technologies, resulting in poor recovery and high mineral losses. In addition, inadequate pricing policies and insufficient funding from the Central Bank during certain periods seriously limited BAMIN's ability to purchase the gold production from the miners, which resulted in increased sales through unofficial channels. This situation, combined with the high level of mineral losses, had a significant negative impact in limiting the potential benefits to the economy, in terms of lower recorded outputs and lower additions to the gold reserves held by the Central Rank. 6.02 The project has not achieved one other of its major objectives: BAMIN's institutional development. There have been a few improvements in BAMIN's organizational structure, appraisal capability and accounting procedures, but BAMIN has not been able to evolve into a more modern, efficient banking organization. Its overall performance has been weak. High management turnover led to inconsistent policies and poor staff morale. It still has insufficient qualified staff and lacks physical resources such as adequate central office snace and vehicles. BAMIN's supervision activities continue to be uncoordinated, and it has not provided adequate technical assistance to its borrowers (e.g., to improve gold recovery and minimize losses). BAMIN's financial performance has been poor. Because of foreign exchange losses and poor collection practices, its ecuity has eroded substantially. In addition, its arrears position has worsened. Financial controls are inadequate, loan administration remains deficient and monitoring and followup action on arrears have not been carried out on a systematic basis. Also, the envisaged separation of trading and lending operations 'a not been fully achieved at the operational level. Finally, BAMIN's resource mobilization capability has not been developed, limiting its ability to carry on efficiently and to expand its lending operations. Bank supervision missions have repeatedly raised and discussed BAMIN's deficiencies with Government officials and BAMIN's management. However, there has been little corrective action, and relevant policies and/or procedures have not been changed or improved.  - 14 - Lessons Learned 6.03 The project goal of gradually transforming small mining units with development potential into efficient mining enterprises was, in retrospect, too ambitious a task. The specific objective of developing some 20 preselected small mining operations through the provision of supervised credit with complementary technical assistance proved to be too inflexible. Because of loan effectiveness delays, none of the preselected mines actually received Bank funds. Also, the separation of subproject preparation (through GEOBOL) from actual financing and supervision (through BAMIN) was not effective because of the lack of coordination between the two entities. 6.04 As a result of the above-stated shortcomings, a change in focus became inevitable. Fifty percent of the loan proceeds, finally went to rather healthy medium mining entities, which were normally clients of the private Ranco Industrial, S.A. (RISA). The timing of the loan was such that BISA had committed all of its Bank funds while RAMIN still had a large part of the Bank loan uncommitted. The miners and BAMIN reluctantly agreed to accept each other, which substantially helped to commit the loan. Setting a strict limit to subproject size might have prevented this substantial change. 6.05 Regarding institutional development, the expectation that RAMTN could be transformed into a sound mining bank relied heavily upon the provision of technical assistance to that institution. However, neither form of assistance--a long-term consultant contract and a short-term revision of procedures contract-had any lasting effect, mostly because of the many personnel changes throughout the time of the loan in MMM, and in BANIN itself. Ten different ministers and seven general managers could not provide the continuity necessary to implement the changes that were suggested. Tn additon to the fact that no member of RAMIN's higher management had ever had professional banking experience, the strong unions inside BAMIN, which forbid any outside appointments above a certain level inhibited any major change of professional attitude. If this situation had been foreseen more realistically, stronger loan conditions might have been established, allowing for loan suspension. Otherwise, it should have been made clear that expectations of change were very limited and that the project would be considered satisfactory as long as funds were channeled effectively to the small mining sector. This alternative, however, would not have been acceptable because aid to the small mining sector in Bolivia involves effective supervision, provision of technical assistance and an overall adequate sector framework as well as the effective channeling of funds. 6.06 Whenever TA components complemeLLt a project, it is essential to coordinate the various activities involved. In the case under review, it would probably have been best to center the responsibility for coordination within the institution to which the major share of funds was allocated. If ministers change ten times, however, within the course of a project, a continuation of coordination cannot reasonably be expected.  - 15 - Recommendations 6.07 Considering the weak financial and organizational situation of BAMIN, future loans to the mining sector should preferably also include other qualified financial intermediaries, such as BISA, as has been envisaged in a preliminary appraisal report for a potential Fourth Mining Credit Project. In addition to diminishing the risk factor, this approach would provide the participating institutions with an opportunity to compete with each other. The competitive aspect would potentially result in a more effective handling of loan applications by the participating banks and in better arrangements for meeting the borrowers' financial and technical assistance needs. 6.08 In order for BAMIN to be included in future lending operations, its capital structure would have to be strengthened substantially by a Government equity contribution. A revaluation of its assets would have to be recommended, and additional institutional strengthening would be required. 6.09 Within the Credit Department, separate costs and income allocation for the warehousing and lending operations should be enforced more strictly. A more adequate accounting system and improved financial controls should be established to permit an accurate, independent assessment for proper management action related to the covmercial and lending operations.  PROJWc CO(PLUTION REPORT BOLIVIA - S_RLZ SCALE HHINIOG DEVRWPEnT PROJECT (LOAN 1331-30) latence Shet 1971-1903 00O Ibl 1977 1978 1979 1960 1961 1911 2963 ProJected Actual Projected Actual Projectsd Actual Actual ProJechd Actual ProJewted Actual Projected Actual Assets CaN and banh. 13,330 15,376 16,054 4,923 16,852 71510 17,570 10,324 10,262 11,000 73,09 11,000 117,000 Loaen outstanding current 101,350 110,376 50,770 94,019 63,600 105,362 72,998 161,225 147,982 161,471 1,064,04 1461,N 2.*77663 tllsm llneus rcleIvabes Il.100 55,793 11,300 33,921 11,400 33,070 135,492 123,575 107,909 129.904 997,62 ff,268 3,031,63 lnentory 60,468 1138944 76,836 111,744 91,652 138,647 157,647 143,153 178,520 239,933 1 904 1K 310,099 4,819,436 Total Current Asset 206,248 331,493 154,960 244,609 183,704 324,649 483,707 436,277 444,701 342,310 4,060,01 363,202 11,305394 Loans Outstading Ingtl 112,271 198,102 192,106 176,093 233,692 195,675 152,909 433,973 274,824 407,479 2.014,079'/ V7,229 3,064,232 Flxed I other eoats 0804 14,036 7,822 107,265 7,601 38,335 134,239 130,677 65,963 2471719 1,626,491 152,401 3 ,71 St0 TOTAL ASSE1S 328,362 343,633 334,680 527,967 426,997 3786,67 770,855 1,002,927 765,510 1,197,308 7,700,621 1,113,632 20,140,64 ._~~~~ . . . . . . . . . . . , _ ._ * ...... ...... .. .__ w .. .... . . - - _ .... .._ ..... . ....._ __ _ t. IalIItles Accounts payable A other current ilbdllittle 19,000 3,938 20,000 6,062 20,500 6,653 131,905 213,531 11,614 143,110 6,766 144,660 111,313 1 Short-tsr debtb 64,269 2M,M9 ,649 3,040 4,119 4,030 19,4235 116,562 6,904 144,370 118,792 163,196 271,741 Total Crretnt Lit ilItla 65,269 29,497 20,849 9,102 24,679 t0,663 1511,330 330,113 20,16 N7261,40 177 1,0 30,066 357,054 Waedluo- and Long-ttre eobt USAID 26,339 31,639 76,910 30,179 3, 481 32,434 30,839 271,47 29,253 25,988 161,012 24,417 39, 739 1BRD 185000 86,000 1,7l5 133,400 6,680 47,956 123,825 79,849 423,246 813,135 33, m3 3,909,019 Ruslesn A Polish Credits 52,424 72,486 43,004 77,305 44,854 93.656 111,350 190,88H 10,307 139,144 796,676 98,139 1,378,142 Others 171,76 - 106,392 - 107,367 73,330 29,17 65,360 17,507 429,533 3,636 1,346,071 Total medlum & long-term Oebtbi 97163 216,886 1537i94 212,626 225 2S 242,193 263,693 431,433 2441,79 607,887 2,291,336 463,797 7,022,996 Oiher LIaliltlee lIncluding Provlsionsl 31,563 119,226 39,711 101,192 42,119 160,661 168,944 62,326 322,915 92,604 S,103.286 94,733 12,4717043 Equlty Pald-In Capital 64,000 113,061 100,000 113041 100,000 113,062 134,360 164,630 1468,6 203,132 148,668 223,775 148.668 Retained earnings 4 revenus 22,675 4,961 28,414 3,43 34,464 6,132 32,324 24,403 48,610 4,403 67,131 3,439 1053083 Exlhenge-rete dIfforeone 36,926 -.:- Total Equity 106,645 118,022 126,414 116,511 134.464 160,120 16ii11 289,053 IY7 278 209,537 216,491 229,214 233,T11 TOTAL LIABILITIES I EQUITY 3285,62 343,633 354,688 321,967 426,997 5716,67 770,135 1,002,927 7535,10 1,197,08 7 7,700,621 1,115,632 20,140,646 ..fl * . *5. ** .. . . S. . * . . _ . _ _.. _*_ .1 Now bulIding for Potosl agency. bP Includs currant porlen of adlue and long-tru debt. LCPII 9/84  PROJECT COMPLETION REPORT BOLIVIA - SMALL SCALE MININO DEVEDOPIENT PROJeCT (LOAN 1331-BO) Banco Hinera (UA)fN) Credit De2ewt.ant PROPIT AND LOSS STATD0ITS - 197611983 (000 $b) 1976 1977 1978 1979 IN) KIcL IEXIt D WmIC l PNM1AL WmFtD CL m p CIL R IC II I Ai W14I BrAc Sale of *tarals 2D.973 - 17,332 - 31.,16 - 37.70 - 78.196 64.976 101.870 1M.a116 127.6.99 1 1956M. .A. cost Of OXh Gold) (14.671) - - 2.25 5.09 p 8.9 8430 0211( Profit twor warehouse 6.3 792 9. (2 5 9W 84 LUDC l}ATIQI6 Intwit inm 7.884 29.991 9.002 30.130 28.420 28. V7 44.042 31.150 61.837 p6.473 99n.13 653.1Pi 117.435 1.369.173 145U032 (Of qodiht pa&ity 1iteru) - - -1.055 - 3.610 8.570 5.736 6,632 26.3% 3.588 133,269 2.4 %I OANd Ordu Ity inte457 215 2.706 1.050 5.6Z0 1.14) 5.214 873 5.69% 9.423 15,342 16.309 12.230 ' 11.297 M&mLL41- bs_ 1.257 - B14 - 3.61E - 3.018 - 526 5,252 IB 6,Z 91 5.072 39 bTIw f* Iowa..) 3 _ - 55 - _ - 263 - - 32I09 12Ul 1.019 (4.7L 59' 8 Ise ro~~a1 1no~~ I~tu LmvllzU ~~~73~~ ~ I2.~~Ya 31.1W ~ ~ Wi 1M ___ ___2 40qIII1.59 Irntret 450 17.478 3.672 16.795 2.,9 12.135 13.397 13.260 18.521 20.201 39.931 97.149 75.402 158,492 9.529 CitW 1lwira1 amp - - - - 92 - 1.721 - 1.637 s.s23 30 7.m3 30 B.M4 I salarlSo 7.809 11,7L O 9.921 12.600 12.166 13.6W 26,825 14.700 38.364 41.663 40.995 104.596 45.163 MASL 54g91 Othwg shnLstw.tive .3puu 4.68 2.750 2.309 3.179 28.579 3.524 5.20D 3.96A 2.219 8.104 14.358 15.617 14 954 941.552 m ToW IDPw ;i 12.W 31. _ VW57 [ 13K 2.3 5-9 =.I 31.i5i 64 W3*, N M Profit (tn 1aud1*s h Dpciatti ond WPra1s l (3.191) (1.1722) (3.00) (1.394) (4.253) 8e 9,095 2.099 47.,94 14,614 25.582 49.23W (1.027) 185U.O (7,406) DWwAtttan WIt&-doa (1.948) 1,696 356 1.551 576 2.121 19.182 4.121 16.031 19.751 16.521 94.912 16.521 448.160 16,521 Witt (no 7NW ABEz Dw nldt k r 1 .L. (.4 (.356) 2,2 SU.03 (10.057) (2 2 3.563. (55137 10.61 (45.679) 7 ) 1 2.92 ThIAl 3woIIt (MO) 1.201I 4.01 Liu4 6,115 ___ Li 4.. -I 6* 30.35 457 __  PROJECT COMPLETION REPORT BOLIVIA - SHALL SCALE MINING DEVELOPMENT PROJECT CLOAN 1331-BO) Banco Hinero (BAHIN) Credit Deoartment Projected and Actual FIliaTt-l Ratio. 1977 - 1983 1977 1978 1979 1980 1961 1962 163 Prolt. Actual Projt. Actual Projt. Actual Projt. Actual Priot. Atl Prl it. tual Froitei L.T. Debt/Equity Ratio 1.3 3.4 1.5 3.4 2.0 2.5 - 3.1 2.6 3.0 3.3 38.5 2.5 95.2 Total Debt/Equity Ratio 2.1 3.6 1.8 3.5 2.2 2.6 - 3.1 4.3 3.1 4.7 34.6 3.9 78.3 Current Ratio 2.4 11.4 5.3 27.2 7.5 30.6 - 3.2 1.3 21.7 2.9 31.8 1.8 3.9 Debt Service Coverage Ratio 9.3 1.9 7.9 2.9 7.1 28,0 - 9.6 9.6 20.1 8.3 9.0 14.8 6.6 Profit Before Taxes an 2 of Average Total Assets 5.73 1.15 5.77 2.95 5.78 0.65 - 34.45 12.90 5.79 2.10 13.40 2.37 23.98 Profit After Taxes as 2 of Average Equity 5.73 1.15 5.77 2.95 5.78 0.65 - 34.45 12.90 5.79 2.10 13.40 2.37 23.98 Financlal Expenses as % of Average Total Asset. 5.1 0.6 3.4 0.46 0.31 2.6 - .2.6 5.18 3.27 6.29 1.36 8.38 0.83 Administrative 6 General Espenxed an X of Avg. Total Assets 4.8 2.24 4.85 7.7 4.37 5.5 - 5.3 5.5 6.3 5.0 1.56 6.68 6.06 Income from Loan Portfolioe as 2 of Avg. Loan Portfolio 18.9 4.2 17.6 17.6 14.8 22.8 - 19.8 40.9 35.5 17.4 11.5 24.3 16.1 August 14, 1984 9 I , .  PROJECT COMPLETION REPORT BOLIVIA - SMALL JCALE MIINING DEVELOPIIENT PROJECT (LOAN 133 1-BO) Banco Minero (BAMIN) Credit Department LENDING OPERATIONS - 1977/1983 amount amount Year no. of loans ($b) (USS) 1977 499 114.907.780,89 5.632.734l36 1978 0ao 86.349.168,23 4.232.802j36 1979 503 60.244.363,81 2.457.950,38 1980 608 157.755.131,77 6.436.357,89 1981 563 190,335.226,6o 7.765.615,12 1982 214 355.355.242,22 2.771.881,76 1983 362 2.061.262.248,5o 4.122.524,5a  PROJ8CT COHPLETION REPORT BOLIVIA - SMALL SCALE MINING DEVELOPHENT PROJECT (LOAN 1331-lO Banco Minero (BAMIN) Credit Department LOAN PORTFOLIO: ARREARS AND PROVISIONS - 1977/1982 CREDIT LINE 1 7 7 t 137 * t 37 t 59O0 9 11 1 I62 9 MWII 23.531.5".13 7 1*.@i5o.- 7 26060.0*1. 67 33.93.302.35 9 n.0.".U 6 s 4.U0. a VIA 42.3.5f593,7I 13 46.207.000 is 65.36.1l 5,l 13 *.715.168.13 17 139361230,U 17 566 S* SU Is FRil 33.6.006,60 11 63.727.00 is 117.57.683,65 1 45 SAS44.6"11 I AI6"A.671 too I 266.567.111 7 MA 7*.109"40 15 s 55.3.O0 13 63.326.9146,3 I5 65s.65.n, 21 I0I.66.6l6.1 20 7164L0M U as 40.4100.W09 Is * 1I.338. we12.653.0*.,00 12.3S6.716.16 3 7.3.0.67 I 37.gS.WS I A1WIIC 61.719.102,0. 19 * 61.730.700 21 71.963. 353.16 20 61.736.683.67 15 50.67.73. 4 10 311. .0 9 In" 54.273.65,54 17 * St.546.000 17 P.565.995.So0 Is 34.I@0.023, 9 35.643.160.34 7 211.214.006 6 *IIF 5.261.274 .6 2 60.755.54.6t7 lS 132.476.709 17 26 I.266.83606M 36 NIN. Fl. 1143 2.791,87 6 173.09.W 6 32J.673.24675 100 tooo l.n..o 140 3o 6.16V .262.95 100 610.740.1@6,65 In 5l3.76.274 S 1 GO 32.n12.oo 1N Current ,240142.703 l 133.1110.00000 652 22.15.5 3 6 3.l0.3l3OO 74 314.33.916 *3 1.67.6n.00 G In Arrears 35.5)0.575 12 162.000 352 t1S766.4 362 96.579.70.00 262 187 n3.6 7 I.12 .0 A0 3s TOTAL 323.6".2 10 100 3W.f.W0 too 36.1I6.26) I" 410.70.104 100 S0.766.275 100 3.602.51tNs of Provision for loan losses 20.761.333 27.10.000 65.I"."7 3.p0.311 60.9500 50J.2637 NET PORTFOLIO 0L.911.951 270.91.000 301.035.14 I.AnU 622.1066.5 3S.01.U 5 Provisions/Total 6.4% 3,12 13Ai% 22n0t 16.12 1360e Provisions/Arrears 52SIX 26.@ 2 .U x t3.25 X UX 00~~~~ ~~ . .. ._ " bt1_^ .~~~9  PROJECT COMPLETION REPORT BOLIVIA - SMALL SCALE MINING DEVELOPMENT PROJECT (LOAN 1331-BO) Banco Ninero (DAHIN) Credit DePartment PRINCIPAL AFFECTED BY ARREARS - 1977/1983 (000 Sb) 1977 1978 1979 1980 1981 1982 1983 beginning of fiscal year 39.530 104.142 117.588 101.011 195.577 1.203.591 end of fiscal year 39.530 104.142 117.588 101.011 195.577 1.203.591 3.970.979 (000 US$) beginning of fiscal year - 1.938 5.105 4.798 4.121 7.979 6.141 end of fiscal year 1.938 5.105 4.798 4.121 7.979 6.141 7.942 NW  - 22 - Anz 3 PROJT CPLE=O0 REPORT Table 3 BOLIVIA - SALL SCALE DR;IN DEVELWAEVT PROJECT (LQUi 133L-BO) Banco HIfaro AMA) Credit Dpardift LO pORTfoO: ARREAS BY AGIES - 1983 JGENCIES CU2RRT Z IN ARREAtS z TOZAL (Sb) (Sb) LA PAZ iiiro- 3.014.425.63 68 1.410.0W.7 32 4.424.675.90 Usaid 39-59.230.00 69 - 174.957.46B.14 30 574.55.69.14 Aluca_s 320 .89.630.00 45 385.455.315.00 55 706.304.9.00 low 177.214.210.00 38 2S.403.815.00 62 472.6.0-.0O RefIUto. 607.402.545.08 93 42.1.m.o0 07 650.01.705.U Sod1o 107.064.590.00 100 - - 107.064.590.00 Atlant c 8ant 74.159.620.0 09 753.004.870.00 91 827.244.490.00 Sir? 993.497.970S00 62 609.129.505.0O 38 1.602.617.47S.60 2.68Z.S71.Z0.71 5C4 2.262.042.383.41 46 4.944.g13.604.1z 0Om0 1~- g910.072,82 40 1.366.995.79 -60 2.277.06B.61 Usaid 334.028.980.00 57 250.042.310.00 43 584.071.290.00 Almcees 23J.474.305.00 41 348.040.813.65 59 5S5.515.118.65 lawe - -- 77.670.100.00 100 77.670.100.00 Birf 1.62S.294.855.00 92 124.30D.60.00 08 1.653.602.S5.O00 Refincto. - . - 5.300.865.00 100 5.300.865.00 2.101.70S.21Z.SZ J7Z 806.725.744.44 28 2.90.435.957,M POOI w - . - 378.675,26 100 378.675.26 fluid 19.823.915.00 10 187.176.412.50 90 207.000.327.50 AlmaCER z7.724.850.00 25 83.376.415.00 75 111.1O1.265.OD low - - - 1.781.470.00 100 1.7E1.470.00 Sirf 77.674.020.00 88 10.751.51000 12 88S432530.00 325.222.785.-C 31 283.471.462.76 69 408.694.267.76 IUPIZA iiWJn - - - 7S.121.544.69 100 75.121.5S4.59 Uslid 12.560.660.a0 13 82.503.307.88 8 95.063.97.18 Aivacenes 19.282.515.00 21 72.581.720.00 79 91.864.235.00 lodef - - -- 979.610,00 100 979.610,00 31.843.175.00 12 231.186.182.57 88 z63.Mq9.51.S ;anir. - - - 1U.362.56 100 11.362.56 tsaid 4.445.610.00 47 5.005.755.00 53 9.451.365.00 Almcmms 8.040.405 00 51 7J749.770.00 49 15.790.17500 U.486.515.00 49 12.7Z.8U.56 51 25.252.902.56 UB Ii- - . - 494.858.73 100 494.858.73 Usid 2.453.645.00 18 11.365.920.00 82 13.819.565.00 Alvacenes 21.500.000.00 42 30.293.290.00 58 51g793.290.00 Ipie? - - - 6.495.040.00 100 6 495.040.00 23.953 650 33 48.M4.10.7.3 67 iZ.60553.53 TIPUAI Bsin- - . . - 2.3D6.355.46 100 2.306.356.46 Ufld 26.918.820.00 97 844.405.00 03 27.763.225.00 Alieenes 159.592.600.W 66 B0.966.980.00 34 z40.569.S5O.OO Sirf Snl.47fl0.%r 67 24?_mc. "n-m 3? M.485.260.0 MIn. Finanzas 195.62.Z.W 00. 1950682.SZ5000 883.663.90 oO 73 .132.960.4S 27 1.209.796.24 5.861.749.013.53 6s 3.970.977.749.93 35 9.93z.71z.763.96 $mmin 3.924.49C.45 05 81.1!O942.76 95 85.014.541.21 Usaid 799.829.860.00 53 711.895.578.52 47 1.511.725.438.52 A1ncunes 79_...64.305.00 44 1.008.464.303.65 56 1.802.928.60S.65 lnW 17.284.210.00 32 382.330.035.00 68 559.614.245.00 Nefincto. 607.402.545.08 93 47.912.025.00 07 655.314.570.08 Sudmeo 107.064.590.000 0 0 - . - -- 107.064.590.00 Atlantic Bank 74.159.620.00 09 753. 04.870.00 91 827.244.490.0r Birf 3.101.936.885.00 76 916.200.895.00 24 4.018.137.780.00 Min. Fina1zas 195.682500.00 1OD 195-682xL00.00 5.861.749.013.53 60 3D970.9717749.93 40 9.832_7!Z6763.46 a/ With breakdown per agency into various funding sources.  PROJECT COMPLETION REPORT BOLIVIA - SMALL SCALE MINING DEVELOPMENT PROJECT (LOAN 1331-BO) Banco Minero (BAMIN) Credit Department List of Subprolectu Financed Under the Loan i Subproject Loan Approved IBRD Loan BAMIN Loan Type of Ownership Location No, Sub-Borrow'er T1RA) (U1SS). (11SS) Mineral Proiect --------- 6-4o Al Pr6digo 855.394,oo 204.315,20 71.078,80 SN Expansl6n Privado La Paz A2 La Reyno 335.270,oo 193.346,86 67.054,oo Sn Oruro A3 Mortha 2.653.000,oc 2.122.400,oc 530.600,oc Sn Nuevo " Oruro Au URKO 180.000,oo 124.481,28 36.O000,oo Sn Exponsi6n La Paz A5 Canzhla 1.000,000,oo 653.051,59 -,- Sn Nuevo Oruro A6 Coop.Piscint 134,870,oo 147.896,oo 36.974,oo Au Nueva " La Paz A7 EnsueRo 134.700,oo 107.760,oo 26.940,oo W03 Exponvi6n Lo Paz A8 Son Cosme 155.308,oo 102.558,68 31.061,60 Au Expor.si6n " La Paz A9 Coop.Rosario Colifornia 164.526,oo 131.620,8C 32.905,20 Au Nuevo La Poz AII tu ;r.inor (cancelled) =.=. C,_ _.. -.- All Gr6n Poder 2Hnos. 412.659,oo 318.576,44 82.531,80 Au Nueo,n La Paz A12 Cocp. Cotoca 180.000,oc 144.000,oo 36.000,oc. Au Nuevo La Paz A13 Espoaola 1.00C.ooc,oo E00.000,oo 200.00C,oo Pb-Ag Nueva Potosi A14 Kumuroao 1.888.255,oo 1.510.604,oc 377.651,oo Sn Potosi A15 Coop.Soccso 500.0CO,oo 337.69,62 100.000,oo Au n La Paz A16 Cocp.19 de Moyo 434.000,oo 294.317,39 06.800,oo Au La Pce A17 Gr6n Poder 1 513.823,oo 411.058,40 102.764,60 Au La Poazx A18 Cocp.F6tima Dos 480.000,oo 314.145,94 96.000,oo Au n La Paz A19 Coop.Colmarco 367.000,oo 296.681,72 73.400,oo CaCo3 Expor.ul6n Privado La Paz A20 Coop.San Jose Unutuluni 304.000,oo 201.778,21 102.221,79 Au Nuevo La Pa z A21 Tiwonacu 307.400,oc 245.920,oo 61.480,oo Sn Expansi6n n Oruro g SubtotaL 11.461.361,86 0.742.202,13 2.351.462,79 - - Above free ==limit of US$100000equivalent. _/ Above free limit of USSlOO,000 equivalent.  PROJECT COMPLETION REPORT BOLIVIA - SMALL SCALE MINING DEVELOPMENT PROJECT (LOAN 1331-BO) Banco Hinero (BAHIN) Credit Department List of Suboroiseta Financgd Under the Loan (Continatia;L b Subproject Loan Approved IBRD Loan DAMIN Loan Type of Ownehip Location No, Sub-Borrower (US$) (US$) (US$) Mineral- Project B1 Coop.Unificada Seis 50.OOC,oo 38.398,58 11.601,42 Au Nuovo Privado La Paz 82 Negro Poboll6n 42.983,oo 34.386,40 0.596,60 Sn - Oruro 83 Austria 43.419,oo 34.735,20 8.683,80 WC3 La Foz 84 Roncoles 22.058,85 17.647,00 4.411.77 a La Paz B5 Dioblo 6.000,oo 4.000,no 1.200,oo 86 Son Alberto 150.000,oo C2.011,23 30.000,oo Sn La Faz B7 Coop.16 do Cctubre 88.751,oo 64.477,21 6.944,79 Sn a La Paz B8 Coop.chime 60.000,oo 48.000,oo 12.000,oc Au ' La Paz B9 Copocabono 40.000,oc 32.000,oo 8.000,oo Pb/A 810 Ambo Mining 116.683,oc 93.346,40 23.337,oo W03 ExAansi6n La Paz 811 Coop.Soyauoni 150.873,oo 120.698,64 30.174,36 Au Nudva ' La Paz B12 Coop.Untficodo Soes 68.606,oo 54.556,29 13.639,71 Au ' La Paz B13 Mcrmcs 154.369,oo 110.963,73 12.931,47 Sn Nuevo Oruro B14 OrlanCini 120.OOC,oo 25.700,oc -.- Sn Nuovo a Oruro 215 Coap.Chi mG 153.606,oo 99,684,96 30.721,20 Au Nuevo a La Paz B16 Son Sobastian -.- -.- B17 Carlos y Vlctoria 28.770,oo 23.016,oo 5.754,oo Sn Exponsi6n ' Potosi B13 Forrecc 100.0Co,oo 80.000,oo 20.OCO,oo - ' PotosL B19 Solterito -,- -.- B20 Martha 48.000,oo 22.536,08 96.600,oo Sn Exponsi6n ' Oruro B21 Nolly 50.000,oo 40,0C0,oo 10.00G,oo Au a La Paz B22 Lot Mbchcs 100.000,o o 80.000,oo 20.000,oo Sn ' Oruro Subtotal 1.594,582,85 1.106.958,50 354.606,12 Total l32Q&2aZ1 2ai2a1