Senegal - Phosphate Industry Development Engineering Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 8307 PROJECT COMPLETION REPORT SENEGAL PHOSPHATE INDUSTRY DEVELOPMENT ENGINEERING PROJECT (CREDIT 1360-SE) DECEMBER 29, 1989 Industry and Energy Operations Division Africa Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents mav not otherwise be disclosed without World Bank authorization.  FOR OMAL USE ONLY THE WORLD BANK WaShingion. D C 20433 U.S A Oice ni OiC .cw.Cf.I December 29. 1989 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Senegal Phosphate Industry Development Engineering Project (Credit 136C-SE) Attached, for information, is a copy of a report entitled 'Project Completion Report on Senegal - Phosphate Industry Development Engineering Project (Credit 1360-SE)" prepared by the Africa Regional Office with Part II of the report contributed by the Borrower. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment This document has a ratricted distribution .nd may be used by rfcipaent only in the perfonmance of their official duties. Its contenu may no ottlwise be disclsod without World lank authofization.  FOR OMCIAL USE ONLY SENEGAL PHOSPHATE INDUSTRY DEVELOPMENT ENGINEERING PROJECT (CREDIT 1360-SE) PROJECT COMPLETION REPORT TABLE OF CONTENTS Page No. Preface . ......................................................... i Evaluation Summary .............................................. ii PART I 1. Project Identity ...................................... 1 2. Background ............................................ 1 3. Project Objectives and Description .................... 2 4. Project Design and Organization ..... ........... . 2 5. Project Implementation .................... 3 6. Project Results ............................... 3 7. Project Sustainability .................... 4 8. Association Performance ............................. . 4 9. Borrower Performance ..................... 4 10. Project Relationships ....... .......................... 5 11. Consulting Services ...................... . 5 12. Prtject Documentation and Data ..... ........... . 5 PART II Borrowers' Comments ....................................... 6 PART III 1. Related Bank Loans and Credits ...... .................. 33 2. Project Timetable .................. ................... 34 3. Loan Disbursements .................. .................. 35 4. Project Implementation ....... ......................... 36 5. Project Costs and Financing ........... .. .............. 37 6. Project Results ................... .................... 39 7. Status of Covenants ................. .................. 42 8. Use of Bank Resources ....... .......................... 43 This document has a rstricted 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 authiodzaton.  i SENEGAL PHOSPHATE INDUSTRY DEVELOPMENT ENGINEERING PROJECT (CREDIT 1360-SE) PROJECT COtMPLETION REPORT PREFACE This is the Project Completion Report (PCR) for the Phosphate Industry Development Engineering Project in Senegal, for which Credit 160-SE in the amount of USS 7.7 million was approved on May 10, 1983. The credit was closed on March 31, 1988. US$ 0.04 million of the credit amount was cancelled and t:he last disbursement was on September 28, 1988. The PCR was jointly prepared by the Industry and Energy Operations Division of the Africa Regional Office (Preface, Evaluation Summary, Parts I and III) and the Borrower (Part II). Preparation of this PCR was started during the Association's final supervision mission of the project in July 1988, and is based, inter alia, on the President's Report; the Credit and Project Agreements; supervision reports; correspondance between the Association and the Borrower; and internal Bank memoranda.  - ii - S E N E G A L PHOSPHATE INDUSTRY DEVELOPMENT ENGINEERING PROJECT (Credit 1360-SE) PROJECT COMPLETION REPORT Evaluation Summary Objectives The project was designed mostly to provide new technical information to improve Senegal's vital phosphate industry. A series of technical studies were financed to look into ways to increase the amount of saleable materials recovered from the mining operations. In particular, a pilot plant was to be built to test the operability of techniques to recover phosphate from slimes that were being discarded. Although the emphasis was on such technical matters, one small component was a long term strategic study of the industry. Implementation Experience The project was well implemented, and went according to its design except for small changes to some of the studies which the Association agreed with. A novel arrangement was made for the implementation in which a special company was set up to execute the work which was owned by the ultimate beneficiaries - the two phosphate companies and the government. Two lessons emerged from the implementation that - with hindsight - would have improved the project. One is that expatriate technicians dominated the execution of the highly sophisticated studies. Although the technology derived from the studies is now being transformed to and absorbed by the Senegalese operators, it would have been better to have greater involvement of Senegalese technicians right from the start. Some sort of human development component should have been included in the project. The second lesson is that not enough attention was paid to the strategic study of the industry which were almost an afterthought. The study was managed directly by the government which did not have the requisite skills and experience. Better attention to the long term industry strategy is essential. It may have helped the industry withstand the trauma it experienced in the course of the project when the phosphoric acid iaarket collapsed. Implementation on the part of the Association was disrupted by the reorganization and the lack of budget resources when operations in Senegal had to be concentrated on new credits.  Results The project was very successful in demonstrating clearly that phoEphate can be recovered from the slimes, in directing future technical work to increase phosphate recovery elsewhere, and in dealing with the problem of cadmium removal. So successful was the slimes recovery pilot plant that it is to be douLled in capacity with IDA financing. Sustainabilitv The project was not specifically designed to be sustainable. It was thought of more as a shot-in-the-arm to assist the industry at a critical point in its development. Tnis is a pity, as Senegalese phosphate development will need outside assistance for some time to come before it is fully self-sustaining and IDA should be associated with that assistance. As things have turned out, IDA remains involved, but in an ad hoc way, responding to specific requests. Provision should have been made in the project design for the follow-up that is inevitable in projects like these.  S E N E G A L PHOSPHATE INDUSTRY DEVELOPMENT ENGINEERING PROJECT (Credit 1360-SE) PROJECT COMPLETION REPORT PART I: PREPARED BY THE ASSOCIATION 1. Project Identity Project Name Phosphate Industry Development Engineering Project Credit No. Credit 1360-SE z(VP Unit Africa Regional Office Country Senegal Sector Industry Subsectors Mining, Fertilizer 2. Background (a) Sector Development Objectives Pnosphate cock mining and processing is Senegal's major industrial activity and its products, which are almost entirely exported, are the single biggest earner of foreign exchange. The Project was to carry out a number of technical studies and trial operations (see list in Part III, para. 6) to find ways to ir?rove the efficiency of these operations, especially by increasing the recovery of phosphates from the mined rock. A niajor component was a pilot plant for the recovery of slimes produced in the process of beneficiating the rock. The slimes had been discarded up to the time of the Project and their use would increase the utilization of Senegal's natural resources. Other studies were to look at the problem of removing cadmium from the phosphate products, as this impurity is suspected of causing toxicity in the food chain and is becoming less and less acceptable by phosphate importing countries particularly in Western Europe, the main market for Senegal. Finally, studies were to be done on the long term development strategy for the phosphate industry. (b) Policy Context The Project did not include specific requirements for policy guidance  - 2 - as it was mostly concerned with the investigation and development of specific technologies. However, the long-term planning component was to provide general guidance for the future policies for developing the phosphate industry. (c) Linkages between Project, Sector and Macro Policy Obiectives Project, sector and macro policies were somewhat inter-linked as the Project was to provide the indispensable technical base on which to improve the operation of this vital ecoi'omic and export activity. However, the sector and policy aspects were regarded as secondary to the technical ones at the time the project was launched. 3. Project Objectives and Description The objectives of the Project were to: (i) establish technologies to maximize the overall efficiency of the phosphate mining and processing operations in Senegal and (ii) help oriet.. Senegal's development efforts for exploiting its phosphate resourLes in the most promising direction. The Project consisted of three components: (i) processing component to help establish the commercial scale viability of upgrading the phosphate slimes currently rejected by the mine into feed material for a phosphoric acid plant that was to be built. This component was executed in two phases, with the major second phase works carried out after the first phase had confirmed their techno-economic justification; (ii) mining/beneficiation component to help optimize the long-term phosphate recovery of the mining and beneficiation operations, taking into account the future phosphoric acid and phosphate fertilizer production capacity; and (iii) planning component to help define an overall integrated long-term development plan for exploiting Senegal's phosphate resources. 4. Project Design and Organization The Project was well designed and organized as a result of extensive discussion among the three sponsors - the mining company, CSPT; 1/ the phosphoric acid and fertilizer company, ICS; 1/ and the Government - and the Association during preparation. An innovative approach was used in having the three sponsors create a new commercial entity - Promophos 1/ - to execute the Project, and in having Promophos give the technical management of the Project to EMC, a capable French company which is one of the main shareholders of ICS. 1/ The autonomy and technical competence of Promophos ensured the sound and timely execution of the Project, which was itself timely and of the appropriate scope and scale. 1/ CS"T - Compagnie Senagalaise des Phosphates de Taiba EMC - Enterprises Miniere et Chemique ICS - Industries Chemiques du Senegal PROMOPHOS - Societe de Promotion des Phosphates du Senegal.  One drawback of :he design is that most of the management and operation of the Project was heavily in the hands of senior expatriate technicians, and as a result there was little technology transfer during the Project to the Senegalese staff of the sponsors. By now however, all the technologies developed by the Project have been transfered to Senegal. In retrospect, another problem of the Project design is that it paid insufficient attention to the overall strategies for developing the industry, and perhaps too much to solving technical problems. Management of the strategy plan was left to the government which did not have the depth of technical and sector expertise to give it the same attention as EMC was able to give to the technical aspects. 5. Project Implementation There were practically no variances between the planned and actual project implementation, except for some minor changes in the scope of the studies, which became clearly needed as the Project developed, and which were fully supported by the Association. The project risks were carefully and correctly assessed, in that the most costly part - the installation of the slimes recovery pilot plant - was done step-by-step with a thorough analysis of the situation between steps. During project implementation major changes occurred in the global phosphate market and the price of phosphoric acid dropped considerably. This cauged ICS to become practically bankrupt, while CSPT remained in good shape financially as phosphate rock prices did not decline as sharply. The result is that the industry is now unbalanced with one healthy and one very sick company dominating it - something which needs to be corrected before the industry can develop soundly. This could not have been foreseen at the time of launching the project, but one of the lesson learned is that more resources should have been devoted to the overall planning aspects, with more specific attention to policy and institutional arrangements. 6. Project Results The Project achieved its specific objectives of proving technologies to recover the slimes - which now form 10-20% of the feedstock of the phosphoric acid plant - and to improving recoveries in the beneficiation plant at the mine. But as indicated above, it fell short of meeting the broader objective, namely the preparation of the intellectual basis for sound future development of Senegal's phosphate industry. In a sense, the priority objectives for the sector changed during Project implementation from improvement of technologies to survival and growth in the erratic international fertilizer business. Again, this could not have been anticipated, but perhaps room should have been left in the design for a degree of flexibility to adapt the Project to changing needs. Despite this shortcoming - which can easily be corrected by a suitable, low-cost follow-on project - the Project had positive impacts on macro and sectoral growth and policies as it has demonstrated sound technologies to recover more of the phosphate, and to overcome the cadmium problem. There were also positive impacts on human resource development and  -4- the technological environment as the technologies developed are slowly being absorbed in Senegal, and on the physical environment because of decreased slimes disposal and increasing water recovery. The Project had little or no direct impact on the social environment and national and local institutions. 7. Project Sustainability The Project as defined had a fixed term and has been closed. However consideration is being given to replicate it in soae form. The idea is both to carry on the vital technical studies that are always needed in these types of operations, and to find ways to move more determined!.v into the policy and institutional areas. Serious proposals have been made to the Association by all three sponsors of Promophos for a follow-on project. For the moment, IDA cannot entertain such ideas given the other priorities in its lending programs - which stress seeking solutions to the macro-economic and financial problems of the country - and the limited staff and financial resouzces available. 8. Association Performance The Association performed well during Project preparation and appraisal, and played the leading role in establishing the sound project design. The early parts of supervison also went smou hly, dealing well with :.t-! slight changes in project scope. The last part of supervision was upset - . by the 1987 Bank re-organization which caused disruptive staff changes and diluted responsibilities, and because what little remained of the staff resources was concentrated on new lending. Largely as a result, the Association now has little direct association with the vital Senegalese phosphate industry. There is perhaps little that the Association could do in the circumstances, but there is a lesson to be learned. While the macro- problems of IDA client countries must receive priority, vital productive sectors cannot be neglected, and suificient staff and budget resources must be allocated to assure their growth and good health. -t is not too late to reverse the poor position of the Association in the Senegalese phosphate industry. 9. Borrower Performance The ultimate Borrowers were Promophos, CSPT and ICS and their performance was good at all stages of the project cycle, and especially that of Promophos during Project implementation. Deployment of staff and consultants went well. The chief weakness of the borrowers, and especially ICS - as indicated above - was their tendency to keep most of implementation at the technical level and in the hands of expatriate technicians. The Government might have asserted itself more forcibly in this regard, especially as it is a shareholder in Promophos and in CSPT and ICS. The two lessons to be learned are that more direct participation of Senegalese staff should have been provided for in the Project design and execution possibly by including a human resource development component and that more institutional and policy work should have been included in the Project design.  10. Project Relationship The Association-Borrower relationship was generally good throughout the Project. There was a remarkable degree of cooperation and mutual development during Project preparation. The relationship deteriorated somewhat at the latter stages of the Project when the external disruptions referred to earlier occurred. The forward momentum was lost as responsibilites and priorities changed. The relationships of the Association and the Borrower with others were also generally good - although those with the Government were somewhat peripheral and could have been screngthened. 11. Consulting Services Consultants played a major role in the Project, carrying out most of the studies, providing technical support for the trial operations of new technologies, and executing the overall strategy plan for the industry. Generally they performed well, meeting cost and schedule targets, and producing the expected results. Th.is in turr. was largely due to the tight Project management exercised by Promophos. The lesson to be learned is that consultants perform well when the task they have to do is well defined and properly managed. There is some justified criticism that the overall strategy plan was rather thin and overly general. However, this part of the work was managed directly by the Government which was lacking in staff resources to adequately plan and supervise the work, and the budget was relatively meager. 12 Project Documentation and Data The legal agreements and Staff Appraisal Report appear to have provided a good framework for dealing with the Project during implementation. Their major strength is that they rightly anticipated the logic of the steps to be taken, and that they allowed for changes to take place. For instance the legal agreements are proving useful in settling a small dispute which has arisen after Project closing. Data for the PCR was available, although unnecessary digging was needed, especially to get some of the quantifiable data - such as the cummulative disbursements and the staff resources needed. It would help in the preparation of the PCR if the data required for Part III and that for supervision missions were identical and were kept up-to-date in one place on the MIS.  -6- j S E N E G A L PHOSPHATE INDUSTRY DEVELOPMENT ENGINEERING PROJECT N (Credit 1360-SE) I PROJECT COMPLETION REPORT PART II: PREPARED BY THE BORROWER The following report was prepared by the Borrower in July 1988 as activities under the Project came to a close. As the Project was mainly for a Technical Assistance most of the report is descriptive. However, the part that deals with the slimes recovery pilot plant is an analytical from both an engineering and economic point of view. The Association agrees with the views expressed in this report. rm  PROMOPHOS Senegal Phosphates Promotion Company Limited Liability Company with a capital of 1,500,000 F CFA Headquarters: Residence Seydou Nourou Tall - DAKAR The World Bank 1818 H St., Washington, D.C. 20433 United States our ref. IK/HL 88-25 your ref. 13 July 1988 To the attention of Mr. Jean Francois BAUER Industry & Eneray Division - Sahel Dept. Africa Region Credit Seneaal No. 1360 - SK / Proiect Comnletion Report Dear Sir, As per the project agreement signed between the World Bank and PROMOPHOS, I.C.S. at C.S.P.T. on 29 June 1983, PROMOPHOS must provide the Bank with a report analyzing the results of studies and tests carried out in Senegal on the phosphate subsidiary. Attached are three reports of activities covering parts A, B and C of the project. We hope the Bank finds this data satisfactory; please contact us if you need further information. Moreover, we expect to finish the second stage of development for Taiba slimes recovery as part of a new agreement which we have called "PROMOPHOS 2". We maintain that release of funds which would enable Senegal to considerably increase its phosphate reserves is a matter of great urgency. Sincerely, Manager, PROMOPHOS Igor Kotlarevsky /s/ I. Kotlarevsky  - 8 - Copies of this item dated 13 July 1988 and addressed to the World Bank will be mailed to: .M.D.I.A.: Mr. Famara Ibrahima Sagna, Minister .World Bank: Mr. Glenshaw Mrs. Chassard Mr. Borin .D.M.G.: Mr. Baidy Diene .I.C.S.: Mr. Kama Mr. Peix .C.S.P.T.: Mr. Sy, Dakar Mr. Gabriel, Paris .S.S.P.T.: Mr. Ducret, Dakar  -9- Part A Analysis of part A of the I.C.S project - PROMOPHOS Please refer to the terms of article 305 b in the Project Agreement. PROMOPHOS, with the assistance of the I.C.S., must - by 30 June 1987 or on any other date acceptable to the Association - supply the lender and the Association with a detailed report analyzing the results of studies and tests carried out in part A of the project, and making recommendations for investment in a sludge recovery industrial organization. The Association accepted that this report would be provided on 30 June 1988. Part A of the project would comprise the following chapters: I/ Laboratory tests on extraction of cadmium from phosphoric acid. - II/ Laboratory studies and tests for: * a) selecting the optimum microhydrocyclone; * b) producing phosphoric acid from slimes; * c) determining the characteristics of recovered slimes; * d) finishing the plans for the quarter-scale pilot plant. - III/ Carrying out the studies scheduled in section 3.05 of the project agreement. - IV/ Construct and operate the '/4-scale pilot plant.  - 10 - Part A Chapter 1. Tests for extraction of cadmium from phosphoric acid The I.C.S. carried out four studies with the WARREN SPRING Research Laboratory under the British Ministry of Industry. * 1/ The first contract No. CR 2059 (MB) was signed on 7 July 1983. It provided for laboratory studies of different current procedures for extracting cadmium from phosphoric acid. * 2/ The second contract No. CR 2645 (ME) dated 31 July 1984 called for studying the three procedures which would be most effective in the preceding report. 3/ Contract CR 2800 (MM) dated 24 April 1985 provided for all-laboratory development in full detail of the procedure chosen as agreed with the WARREN SPRING Laboratory. 4/ Finally, contract CR 2941 (MM) dated 19 May 1988 optimized a procedure for extracting cadmium from Taiba phosphoric acid which appeared to be simple and inexpensive and which would make it possible to extract 99% of the cadmium present in the acid.  - 11 - PART A CHAPTERS II AND III LABORATORY STUDIES AND TESTS ON SELECTING A PROCEDURE AND EOUIPMENT FOR RECOVERING PHOSPHATE IN TAIBA SLIMES These sections were the subject of a special report sent 20 March 1985 to the World Bank.  - 12 - PART A j CHAPTER IV I CONSTRUCTION AND OPERATION OF THE 1/4 SCALE PILOT PLANT I I A report was drawn up by the I.C.S. and is appended.  - 13 - BALANCE SHEET FOR THE 20 T/H PILOT PLANT AFTER 6 MONTHS OF OPERATION 1. General results The results for the mnnths of October and November are of great importance and can serve as a diagnostic base for studying the slimes plant. Table 1 summarizes the group of results, the main values for which are reported below: October November Hours the plant was in operation 461.2 h 535.3 h Tonnage processed 43134 t 54227 t % P205 22.38 % 22.08 % Tonnage produced 7420 t 10356 t % P205 28.56 % 28.54 % % feral 5.70 % 6.11 % % SiO2 17.16 % 17.69 % Tonnage P205 Added to the reactor 2119 t 2955 t Restoration of water in CSPT in 1/m3 332 1/m3 396.3 l/m3 Consumption of flocculent (g/t effluent) 80.8 g/t 64.7 g/t ___________________ (*) in liters of water recovered per m3 of raw sludge pulp at 120 g/l supplied by the sludge predensifier.  - 14 - Table 1: Results from the sludge factory Tabeau I 1 Tonnage Volume pulpe Volume eau Coac. ODbis traites P2 Ie2