Argentina - Second Mining Development Technical Assistance Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No: 24362 IMPLEMENTATION COMPLETION REPORT (SCL-42820) ONA LOAN IN THE AMOUNT OF US$ 39.5 MILLION TO THE REPUBLIC OF ARGENTINA FOR A SECOND MINING DEVELOPMENT TECHNICAL ASSISTANCE PROJECT November 15, 2002 Oil, Gas, Mining and Chemicals Department Country Management Unit: Argentina, Chile, Paraguay and Uruguay Latin America and the Caribbean Region This document has a restricted 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 authorization.  CURRENCY EQUIVALENTS (Exchange Rate Effective September 30, 2001) Currency Unit = Argentine Peso AR$1.00 = US$ US$1.00 US$ 1.00 = AR$1.00 FISCAL YEAR January 1 -December 31 ABBREVIATIONS AND ACRONYMS BUD Unified Mining Information System CAS Country Assistance Strategy COFEMIN Federal Mining Council DPM Provincial Mining Directorate GPS Global Positioning Systems GIS Geological Information Systems NGO Non-governmental Organizations PASMA Mining Development Technical Assistance Project PCU Project Coordinating Unit PSR Project Status Reports QAG Quality Assurance Group SEGEMAR Argentine Geological and Mining Survey SINATEM National System of Mining Technology SRM Mining Registry System SSM Under Secretariat of Mines SUIM Unified Mining Information System UGAM Mining Environmental Management Unit (ex UGAN) UGAN National Environmental Management Unit (now UGAM) UGAP Provincial Environmental Management Units Vice President: David De Ferranti Country Manager/Director: Alex van Trotsenburg Sector Manager/Director: Peter van der Veen Task Team Leader/Task Manager: Gotthard Walser  ARGENTINA SECOND MINING DEVELOPMENT TECHNICAL ASSISTANCE PROJECT CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 6 5. Major Factors Affecting Implementation and Outcome 11 6. Sustainability 13 7. Bank and Borrower Performance 16 8. Lessons Learned 17 9. Partner Comments 19 10. Additional Information 19 Annex 1. Key Performance Indicators/Log Frame Matrix 20 Annex 2. Project Costs and Financing 23 Annex 3. Economic Costs and Benefits 25 Annex 4. Bank Inputs 26 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 28 Annex 6. Ratings of Bank and Borrower Performance 29 Annex 7. List of Supporting Documents 30 Annex 8. Borrower's Summary Report 31 Map IBRD 29348   Project ID: P055477 Project Name: MINING TA Team Leader: Gotthard Walser TL Unit: COCPD ICR Type: Core ICR Report Date: November 15, 2002 1. Project Data Name: MINING TA L/C/TF Number: SCL-42820 Country/Department: ARGENTINA Region: Latin America and Caribbean Region Sector/subsector: Mining and other extractive (50%); Central govemment administration (35%); Sub-national government administration (15%) KEY DATES Original Revised/Actual PCD: 10/20/1997 Effective: 04/30/1998 01/10/1999 Appraisal: 12/12/1997 MTR: 04/01/1999 09/20/1999 Approval: 02/10/1998 Closing: 06/30/2000 09/30/2001 Borrower/Inmplementing Agency: GOVT OF ARGENTINA/FEDERAL UNDERSECRETARIAT OF MINES Other Partners: STAFF Current At Appraisal Vice President: David De Ferranti Javed Burki Country Manager: Axel van Trotsenburg Myrna L. Alexander Sector Manager: Peter A. Van Der Veen Peter A. Van Der Veen Team Leader at ICR: Gotthard Walser Gotthard Walser ICR Primary Author: Gotthard Walser; Sati Achath 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: SU Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: No  3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: The objectives of the Second Mining Sector Development T.A. project (known in the country as PASMA II: "Segundo Proyecto de Asistencia al Sector Minero Argentino") were to develop and support, through institutional development technical assistance, the provincial governments' policy, regulatory and institutional reforms which encourage the expansion of private investment in mining in an environmentally sound way. The project was a repeater of the successful operation, the Mining Development Technical Assistance Project (PASMA I, Ln. 3927-AR; cf. ICR No 23368) initiated at the end of 1995 and carried out in parallel between January 1998 and June 2001. PASMA II aimed to help building the capacities of the following 17 Provinces, which did not participate in PASMA I: Buenos Aires, Chaco, Chubut, C6rdoba, Corrientes, Entre Rios, Formosa, Jujuy, La Pampa, Misiones, Neuquen, Rio Negro, Santa Cruz, Santa Fe, Santiago del Estero, Tierra del Fuego and Tucumnan (see Map). In particular, the project focused on: (i) improving the efficiency of these Provinces in the administration of mining rights and environmental management; (ii) developing their understanding and strengthening their capacity to address social impacts from mining; and (iii) linking the Provinces to the National Mining Information Network. The project also aimed to: (i) adjust the organization and work methodology of the Provincial public mining institutions in line with the new policy and legal frameworks, and strengthen their capacity; (ii) unify the mining concession and cadastral procedures for the entire country; and (iii) develop permitting procedures as well as environmental and social monitoring capacity of the provincial environmental management units (UGAPs), and establish environmental baseline information. The project objectives were clear and realistic. They were also consistent with the Bank's Country Assistance Strategy (CAS) discussed by the Board on May 15, 1997, which emphasized continued Bank support to Argentina for: (i) enhancing social development, including poverty alleviation and human resource development; and (ii) improving the performance and institutional capacity of government, particularly sub-national governments, to deliver key social, infrastructure and environmental services. Taking advantage of the implementation and political momentum generated by PASMA I, the project was relevant to achieve the overall objectives of the sector reform as it focused on the regulatory and institutional development of the provincial authorities, since the Provinces are responsible for the management of their mining resources, according to the Argentine Constitution, and thus represent the principal legal interface between the State and the mining companies (support to the Federal sector agencies was provided under PASMA I). The project was responsive to the needs of the Borrower. Through the implementation of the project, the State was expected to: (i) create an enabling environment for a socially and environmentally sound development of the sector; and (ii) strengthen its capacity as a regulator - in a transparent and non-discretionary manner- of mining activities. The project also supported the new role of the public mining institutions (PMIvls) as defined in detail under PASMA I, including the respective role of the public and the private sectors as well as inter-institutional relationships and mandates. The project envisioned the following benefits to Argentina, derived as a direct result of the project as well as induced by the project: (i) As a direct result of the project:(a) extension to the entire country of a modem, consistent and homogenous mining legal and regulatory framework; (b) improved efficiency of provincial public mining institutions (e.g. faster and non-discretionary administration of mining rights) and improved enforcement capacity of environmental, health and safety regulations; (c) improved security of tenure for mining rights -2-  through accurate geographical location of concessions; (d) introduction to and training in modem technology as a base for sustainable sector growth; (e) improved knowledge of existing environmental and socio-economic conditions, as a basis for improved management and participation of local communities; (f) protection of the environment from potential damages caused by mining; and (g) generation of baseline information that can be used by other sectors as well as for land use planning purposes. (ii) Induced by the project: (a) increased foreign and local direct investment in mining projects and increased export revenues; (b) development of private service capacity to the mining industry, such as exploration and drilling services, environmental impact studies, laboratories, mining construction works and earth removal, maintenance and others; (c) development of infrastructure related to mining and with a regional development impact (e.g. roads, energy, water); (d) increased income-generating opportunities in areas with high unemployment, increased education opportunities and reduced migration outflow; (e) contribution to the decentralization and to a better regional distribution of productive activities; and (f), sustainable development and fair benefits for local communities located around mining. 3.2 Revised Objective: The project objectives were not revised 3.3 Original Components: The components were closely related to achieving the objectives. The project design was well prepared and it had all necessary elements to achieve them, especially since, apart of the addition of socio-economic impact activities, it strictly adhered to the successful design and implementation of PASMA-I. The project consisted of the following components and sub-components: * Component A: Policy Implementation o A. 1: Institutional Capacitv Development. This component consisted of the following two activities: (i). Implementation and Adjustment of the New Institutional Model, aiming at re-organizing and strengthening the Provincial Mining Directorates (DPMs) to fulfill the provincial mandates and functions, in consistency with the reform policy. (ii): Institutional Infrastructure. Based on the results of the above activity, upgrade of facilities at the participating DPMs. O A.2: Unified Mining Cadastre and Re2istrv System. Based on the model developed under PASMA-I, the project financed the transformation of the physical registries of participating Provinces into proper mining cadastres. This sub-component included four activities: i. A national and Regional Coordination Team, responsible for the overall planning and works implementation supervision, to ensure consistency and homogeneity of the geodetic and cadastral surveys and of the cadastral and registry systems. ii. Topogeosic and Cadastral Survey Works: upgrading of the Argentina geodetic networks, and GPS-based survey of all existing exploration and mining concessions. iii. Equipment: purchase of modem hardware and software, topogeodetic instruments (including GPS instruments), vehicles and the provision and furnishing of adequate field and office facilities for the cadastre and registry functions. iv. Mining Cadastre Management System: Implementation and Training. Based on the experience of the PASMA I, implementation of the computerized Mining Cadastre System (SRM: "Sistema de Registro Minero") in the participating Provinces and on-the-job training. - 3-  o A.3: Environmental Management. The general objective of this Subcomponent was to extend to the participating Provinces sector environmental management capacity as well as develop the components of a preventive environmental protection system for mining activities, as already implemented under PASMA I. i. Strengthening of the National Environmental Management Unit (UGAN: "Unidad de Gestion Ambiental Nacional"). Strengthening the existing capacity of the UGAN (established under PASMA I) - as a federal coordinating unit responsible for the development of an adequate and consistent nationwide environmental policy and regulatory framework - to deal with the coordination of the institutional and management capacity development of the participating UGAPs, as well as the supervision of the baseline and socio-economic studies to be carried out under the Project. ii. Environmental Management Capacity Building of Provincial Environmental Management Units (UGAPs: "Unidades de Gestion Ambiental Provincial'). Establishment and capacity building of environmental management capacities related to mining in the 17 participating Provinces. iii. Environmental Baseline Studies. The program financed an environmental baseline study for each of the participating Provinces to (a) delineate sensitive areas and (b) to define a "baseline" level against which assess the impacts of mining operations. iv. Training and Institutional Strengthening in Assessment of Socio-Economic Impacts of Mining Investments. Considering the importance of mining development contribution to local and regional development, this subcomponent included conducting pilot baseline studies in selected provinces to: (a) identify the likely social, cultural, macro and micro economic, financial, fiscal, and other impacts of mining; (b) identify principal groups of local and regional stakeholders in the project, such as the workforce, suppliers and vendors to the enterprise, company owners and shareholders, non-government organizations, infrastructure, and the local and provincial govenmuents; (c) devise statistical and other performance indicators to objectively assess the costs and benefits of the impacts for each group of stakeholders; (d) evaluate and assess the key questions and issues to be addressed; and (e) make concrete recommendations and devise an action plan for subsequent activities. The baseline studies in the selected provinces were expected to serve as templates for subsequent work in other provinces. A.4: Unified Mining Information System (SUIM: "Sistema Unificado de Informacion Minera ", earlier known as BUD "Banco Unificado de Datos"). The Subcomponent aimed at: (i) set-up and strengthen the information management units in 17 provinces, systematizing the development of relevant data bases according to the norms and standards of the SUIM; and (ii) developing the existing Mining Information and Promotion program (MINPRO) in the participating Provinces. The Subcomponent included four activities: (i): Implementation of SUIM units at the Provincial Level: to set-up Information Technology systems and systematize the collection and interpretation of sector information in the 17 provinces, to link the provincial units to the nation-wide-SUIM, making use of state of the art technology, integrate the cadastral and environmental information systems into a DPMs-wide management information system (MIS), particularly with respect to permitting and monitoring functions. (ii). Works and Equipment. hardware and software specifically dedicated to the SUIM functions, communications devices and accessories. Software requirements included programs in administrative system and database management, processing, communications and editing, including GIS. -4 -  . (iii): Training. A training program, mostly on-the-job, aimed to the implementation and use of the provincial MIS and national SUIM. (iv): Mineral Markets and Statistics. Extension to the participating Provinces of the Mining Information and Promotion Program (MINPRO) implemented within the framework of PASMA I at the federal level. * Component B: Project Coordinating Unit (UCP). Strengthening of the PASMA I UCP in order to cope with the increased volume of work required to coordinate, manage and supervise the implementation of PASMA II. 3.4 Revised Components: The project components were not revised. However, in early 1999, due to budget restrictions, the Ministry of Economy and the Chief of Ministries Cabinet Office asked the project to strongly prioritize activities and reduce costs (see Section 5.4 and Annex 2). Overall, the project implementation objectives have not been significantly altered (see Section 4.2). 3.5 Quality at Entry: Since the project design predates the existence of the Quality Assurance Group (QAG), there is no official assessment of the project's quality at entry. Nevertheless, the ICR finds the quality at entry to be satisfactory. As mentioned earlier, the project objectives were consistent with the CAS and the government priorities and met the critical needs of the mining sector. The commitment of the Provinces to implement the reform actions supported by the project was ensured by the signing, as a pre-requisite to be part of the project, of the "PASMA Agreement". This agreement had been drafted and signed in 1995 by the federal govemement and the six Provinces of PASMA I to formalize the policy and implementation principles along which the project would be carried out. The project was straight forward, without additional complexity, since it was built upon the experience of PASMA I. It was also responsive to the Borrower's development priorities in the mining sector. The project was relevant to achieve the overall sector reform objectives, since it focused on the extention of the reform to the 17 provinces which did not participate in the first technical assistance project. The project was less demanding to the Borrower, as the coordination responsibilities and procedures were already in place and understood by all. The Sectoral Environmental Assessment (SEA) carried out under the preparation of PASMA I was up-dated, in particular taking into account the involvement of the Provinces participating in PASMA II. The actions identified in the SEA's Environmental Management Plan (EMP) were incorporated into the project (The project SEA can be found at: http://www-wds.worldbank.org/servlet/WDSServlet?pcont-details&eid=000009265_3980624143126). Since the project was based on the experience of PASMA I, the quality of project design was more refined and adequate to meet the project's overriding objective of improving the capacity of 17 Provinces. During preparation of the project, major risk factors and lessons learned from PASMA-I, other TA operations, in Argentina and from mining projects in other countries (e.g. Bolivia, Ecuador, Mexico and Peru) and from a Bank review on mining sector reform in Latin America: A Mining Strategy for Latin America and the Caribbean, 1996, were considered and incorporated into the project design. The project preparation also used a participatory approach by consulting and coordinating closely with the Provinces, as well as with industry branch organizations, trade associations, miners unions and NGOs for carrying out the basic - 5 -  environmental legislative work addressing mining activities. In addition, the design took into account major risk factors which could hinder project implementation, such as Provincial commitment to reform; condensed timing to build-up DPM's capacity to master new work methods; consensus building within and between individual Provinces to unify administrative procedures; continued DPM's staff ownership regarding project objectives; staff stability; political interference; procurement delays; and performance by contracted firms and consultants. In order to mitigate these risks, necessary measures were adopted into the project design. The project considered two design alternatives, viz: (a) Participation of a smaller set of Provinces (e.g. 6 to 10) instead of all Provinces (17); and (b) Implementation of a repeater operation at a later stage or after completion of PASMA-I. Option (a) was rejected considering that: (i) management and implementation complexity would not be significantly different; and (ii) the establishment of unified and modem procedures regarding administration of mining rights and environmental protection to the whole country would generate a greater synergy effect in terms of sector development, including for example Provinces with an important potential of non-metallic minerals. Option (b) was rejected considering the favorable momentum created by PASMA-I and on the assessment that it was highly likely that commitment to reform - a critical factor - and political support could be maintained at the then prevailing level, at least during the first two years of the project. With hindsight, the project design did not take into account sufficiently the following aspects: a) Implemention duration (2 years). Most of the implementation objectives could be achieved during the project life; however, the delays in getting the loan agreement actually signed - 8 months after Board approval - implied the need to extend the closing date by one year to complete the implementation plan. In addition, despite the synergies between both PASMAs, there was not enough time margin to consolidate some of the outputs, such as, for example, the links between the provincial and federal information systems. b) Lack of clarity on the implementation sequence of the socio-economic impact studies. While this activity seemed straight forward at the design stage, during implementation it turned out that the priorities, perspectives, and outputs were differently perceived by the Borrower and the Bank's team (see Section 4.2). c) A risk which was not foreseen was the country's economic deterioration which started in early 1999 and resulted in the deep economic and political crisis by end-2001 and so far still prevalent. 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: The project was successful in achieving its development objectives. It assisted the govemment to implement its policy, regulatory and institutional reforms with the goal of encouraging the expansion of private investment in mining in an environmentally sound way in the 17 Provinces. It also helped build the capacity needed at these provinces for the efficient administration of mining rights. Based on the key indicators described in the project appraisal document, the detailed outcomes of the project are as follows (see also Annex 1): 1. Encourage private sector investment in mining and ensure it contributes to a sustainable economic and social development in participating provinces: o Enabling environment: the project (as such as well as through its links to PASMA 1) contributed to increase mining investment and production in the PASMA II seventeen provinces through the extension to them of the regulatory and institutional reform. Mining investment increased from US$56 million in 1996 to US$75million in 2001(estimated; down from est. US$120 million in 2000) and mining production of metallic ore increased from US$40.3 million to US$112 million in 2000 (see also Section 6.1). -6-  o Consultative procedures: there is now a better appreciation in Argentina regarding the inter-relationships between mining development and local or regional development, and, as a result of the work carried out under PASMA II, of the importance of community participation at the early stage of mining development (see Section 4.2 below). However, consultative procedures remain largely at the provincial-federal authorities interface (COFEMIN) as well as between federal/provincial governments and companies. (The only Province implementing consultative processes for investments/infrastructure projects, including mining, is Mendoza.) o Improved awareness and/or knowledge of modem technology, environmental management and other matters (fiscal, institutional, services, administrative, etc.). Modem concepts and technologies related to sector management have been succesfully introduced, most efficiently through field and office on-the-job training (e.g. participation in the GPS-based cadastral surveys; participation in environmental baseline studies, etc.), as well as through formal workshops and seminars (e.g. fiscal workshops in nine provincial capitals; series of environmental courses). It has reached one way or the other all personel of the seventeen DPMs, according to their specialty and needs.This achievement represent a key factor towards the sustainability of the project results. 2. Extend the mining sector policy, regulations and institutional reform to all participating Provinces: o All 17 Provinces have adopted the reformed regulatory framework regarding environmental and mining rights management. Procedures are now basically similar from Misiones to Tierra del Fuego. o A mining rights management system has been established and is operational in all Argentine Provinces, which ensure properties' security of tenure, a key factor for investment in mining, as well as improved and homogenized procedures. o UGAPs - either under the DPM or under other provincial authorities (see below outputs) - have been created and established in all Provinces as environmental authorities reponsible for the granting of environmental permits and monitoring of the sector performance. 4.2 Outputs by coniponents: Component A: Policy Implementation A. I. Institutional Capacitv Development. With great success throughout the country, mining agencies have been restructured, work processes and methodologies streamlined to improve efficiency and quality, infrastructure modemized, and modem technologies and equipment introduced. Special attention was paid to the training and motivation of personnel, emphasizing the need to implement a cultural change, from closed and control-heavy mentalities to a more open and client-oriented behavior. More specifically, the outputs of the two activities under this Subcomponent were: i. Implementation and Adjustment of the New Institutional Model. This activity aimed at specifically adjusting the overall institutional model defined under PASMA I to the Provinces participating in the project, and then implementing it. The model was adjusted through a participative process (workshops and seminars) and implemented mainly through on-the-job training under the supervision of an institutional implementation team, operating on a nation-wide basis in order to ensure proper coordination and consistency. Work included detailed and ad hoc design of the institutional model in each of the Provinces, including organization, staffing, budget and identification of long term financial sources for core responsibilities; the setting up and implementation of efficient work procedures; and on-the-job training of staff on policy, legal and management matters. At start, work also included a detailed inventory of the infrastructure needs (facilities and equipment), which was then funded under the Institutional Infrastructure activity. -7 -  ii. Institutional Infrastructure. Based on the results of the above activity, facilities and infrastructure were upgraded at the participating Provincial Mining Directorates (DPMs). The project provided funds for office rehabilitation, purchase of basic core office equipment (including administrative hardware and software not included in other subcomponents) and furnitures, vehicles, and the publication of information and of legal and administrative procedures.Proper implementation coordination and timing between this activity and the previous one has been a key to success. A.2. Unified Mininiz Cadastre and Registry System. Based on the model developed under PASMA I, the project financed the transformation of the physical registries of participating Provinces into proper mining cadastres. All 17 Provinces adopted and are now applying the so called "Code of Unified Procedures", a set of reglamentary procedures to manage mining rights agreed by all Argentine Provinces. All existing mining concessions have been located within an upgraded geodetic reference network. A reliable and updated mining cadastre has been established in these Provinces, which includes the setting up of a complementary geodesic reference network in remote areas, the precise location of all existing mining rights using modem GPS technology, the elimination of legal problems of superposition and the establishment of a computerized mining rights management system. i. National and Regional Coordination Team. To ensure consistency and homogeneity in the carrying out and supervision of the geodesic and cadastral surveys and in the implementation of the cadastral and registry systems mentioned below, the Cadastral Coordination team (already working under PASMA I) has been strengthened to operate on a nation-wide basis in cooperation with the participating DPMs and under the supervision of the UCP. After project closure, a reduced team is continuing to work under the SSM to provide coordination and technical advise to DPMs regarding cadastral issues. ii. Topogeodesic and Cadastral Survey Works. Through a series of works contracts, a "mining" topogeodesic reference network was set-up (including construction of benchmarks) in areas with an insufficient density of reference points to which link the concessions. The existing mining concessions were then surveyed using the same up-to-date technology, benchmarks erected to locate the properties (according to the procedures defined in the law) and the data incorporated into the cadastral system. In addition, the mining topogeodesic reference information was transferred to the Military Geographical Institute (IGM: "Instituto Geografico Militar", the country institution responsible for the establishment and provision of geographic data and maps), and formally integrated into the official national network, contributing to the improvement of geo-data infrastructure of the country. iii. Equipment. DPMs have been equiped with the relevant equipments (including modem hardware and software, GPS instruments, vehicules, etc.) and the personnel trained in order to be in capacity to survey new concessions according to the same methodology. Field and office infrastructure were also upgraded. iv. Mining Cadastre Management System: Implementation and Training. The computer based management system (SRM: "Sistema de Registro Minero") developed by the national coordination team under PASMA I has been installed and is operating in every DPM of the country. On-the-job training was provided. A.3: Environmental Management. Pioneer results have been achieved regarding environmental management, considering that overall environmental awareness and management capacity was comparatively low in Argentina at project start. With the support of the project, mining environmental units have been created in the 17 Provinces and their personnel trained. Since February 1997, when the law became effective, 3640 Environmental Impact Assessments (EIAs) have been processed (all -8a-  country). Under the project, (i) the capacity of UGAPs for pernitting, monitoring and enforcement of environmental regulations has been strengthened; (ii) unified procedures for the processing of EIAs, as developed under PASMA I, have been adopted, (iii) the development of a shared federal/provincial environmental information and management system (EIMS) has been established; (iii) environmental baseline studies have been carried out over mining and potential mining districts, to provide an adequate reference framework to evaluate possible future impacts; (iv) socio-economic baseline studies over selected mining districts as a basis for development of methodology and capacity to assess and monitor social, cultural and economnic impacts of mining on local communities have been carried out over selected areas; it included: training of staff in environmental and socio-economic management related to mining; (v) infrastructure, field and data processing (hardware and software) equipment have been provided. However, the setup of legal and fiscal mechanisms to ensure an equitable sharing of mineral rents and develop consultation and participatory procedures were not achieved under the project and will require further work. i. Strengthening of the UGAN. Under this activity, the UGAN set up under PASMA I - as a federal unit responsible for the coordination of the environmental policy and regulatory framework - was strengthen in terms of multi-disciplinary staff and resources in order to be able to deal with the coordination of the institutional and management capacity development, including training, of the participating UGAPs, as well as the supervision of the baseline and socio-economic studies to be carried out under the Project. This unit, now known as UGAM (Mining Environmental management Unit), continues with a reduced staff, under the SSM, to provide coordination and technical or legal advise to the provinces. ii. Environmental Management Capacity Building of UGAPs. This activity was specifically directed at the participating UGAPs and included the establishment and strengthening of Provincial capacities to assess, in coordination with non-sectoral agencies, the EIAs prepared by the mining companies and to issue, when in cumpliance, environmental permnits. Monitoring of the sector performance and enforcement of the regulations, norms and standards was developed through the strengthening of a "Policia Minera" unit (in many Provinces, particularly the "mining" ones, two separate groups assess the EIAs/grant the permits and monitor cumpliance). Environmental training was provided, field and office infrastructure has been upgraded, equipment and vehicles were provided and an environmental management system developed. iii. Environmental Baseline Studies. The activity financed an environmental baseline study for each of the participating Provinces and proceeded on a schedule of priority areas which was determined by the location of environmentally sensitive areas to potential mining development. The studies included (a) the study and determination of natural resources in watershed areas (mineral, water, fauna, flora, weather, etc.), resource modeling, socio-economic data and others, (b) evaluation of the areas with environmental vulnerability, and (c), determination of mining impacts regarding existing or past operations. The data were input in the SUIM component related to environment. iv. Training and Institutional Strengthening in Assessment of Socio-Economic Impacts of Mining Investments. Two pilot baseline studies were conducted in the Bajo de la Alumbrera (Catamarca province) and of the scheduled Veladero-Pascua Lama (San Juan Province) areas of influence. These areas were selected on the basis that the former one was representative of an on-going large scale operation, developed under the environmental safeguards implemented by the federal and provincial governments, but without benefiting from a more defined social participatory framework; and the latter one was representative of a major project still to be implemented. The objectives are described under Section 3.3. Difficulties arose at implementation time (see Section 3.5). While the Borrower wished to focus on the preparation of a development action plan, the Bank's team felt it was still important to reach a better understanding with respect to the involved -9-  stakeholders, their interactions, as well as of the local and regional socio-economic, cultural and environmental factors in order to develop a proper analysis and identify remedies. As a result of a frank and fruitful dialogue, involving also representatives of local and regional authorities and communities, the latter approach was selected, and the studies carried out on a participatory basis (which included the design of the methodology as such). The key questions and issues for each of the stakholders groups were identified, including population expectations and perceptions, fiscal aspects, impacts on employement, developement of small businesses, potential infrastructure development, improved need of participatory mechanisms at an early stage of project development and others (reports are available in the project file and some of the results are incorporated in an unpublished MIGA assessment on its loan guarantee regarding the Bajo de la Alumbrera operation). The main result consist in the development of a methodology which can be implemented in the case of future projects in order to improve the positive contribution of mining to local economic and social development and manage properly expectations. Part of the concrete output of the studies consisted of recommendations and proposals pertaining to consultation procedures, training requirements, institutional strengthening, impact assessment parameters, and monitoring and feedback of performance of the operations.This methodology has been replicated after project closure in the case of a new mining project scheduled in the Esquel area (Neuquen Province). However, while awareness regarding the socio-economic impacts of mining has without doubt been increased, ownership by provincial authorities and companies has not yet been consolidated in order to implement systematically the designed process, due possibly partly to the political and social fragmentation which results from the present crisis in Argentina. There is certainly a need for the government to work further on this issue, including the drafting of a related reglamentory framework, in a similar way to the successful development of the environmental management capacity. A.4: Unified Miing Information System (BUD: "Banco Unico de Datos", now known as SUIM: "Sistema Unificado de Informacion Minera"'. The implementation outputs objectives of this sub-component have been achieved. A modem computer based information network was established to share geological, environmental, statistical, legal and other data between federal and provincial agencies.All personnel at the DPMs have now been introduced to and are in capacity to manage modem information technology tools. However, once the systems established, there has not been sufficient time to operate them under the project authority to identify and remediate some of the glitches, particularly with respect of the functioning of the SUIM as a global inter-mining agencies network. It could be said that the objective to fully link 17 Provinces and the federal agencies, starting from an almost complete absence of IT knowledge, was over-ambitious in such a short project implementation period (see Section 3.5). i. Implementation ofBBUD units at the Provincial LeveL BUD units are set up in the 17 provincial institutions participating in the project. Under the coordination of a nation-wide task force, the scope of the activity included the development and installation of computerized integrated administration management system (including the cadastral SRM) at the provincial mining institutions. Relevant sector information has been loaded in the mining web site, including mining concessions, environmental data and more. ii. Works and Equipment. The procured and installed equipment included: hardware and software specifically dedicated to the SUIM functions, communications devices and accessories. Software requirements included programs in administrative system and database management, processing, communications and editing. In addition, subscriptions to various local and provincial electronic databases, and Internet were also funded. Some rehabilitation work, in particular network cabling and connections, up-grading of electrical supply and computer security in government offices were also provided. - 10 -  iii. Training. A training program aimed more particularly to the implementation and use of the SUIM was carried out. iv. Mineral Markets and Statistics. Due to budget restrictions, this activity has been strongly reduced and mainly dedicated to the systematization of statistical data collection. * Component B: Project Coordinating Unit (UCP). The UCP played a pro-active and critical role in ensuring the achievement of the project objectives, through a well-organized, coordinated and consistent support to provincial implementing agencies. 4.3 Net Present Value/Economic rate of return: While the calculation of NPV or ERR figures is difficult to apply to a technical assistance project, it is useful to summarize some of the macro-economic results for the mining sector in Argentina and to compare them to what was predicted in the original appraisal document: Macro-economic Impacts (US$ million) Low Case Medium Case High Case} Gross Exmorts Gross Exports Gross Exgorts Situation 1994 496 70 Actual 2000 1,114 692 Predicted 2004 1,045 457 1,657 1,032 2,056 1,312 Projected 2006 2,240 1,635 Table 1. Mining gross production and exports values in 1994 and 2000 compared to project initial projections The predictions in 1994 were based on a ten years time horizon for a low, medium and high case scenario. As can be seen, five years after the project has started the gross production and exports figures already exceed the low case projections. The predicted figures in 2006 could exceed the high case scenario, providing the mineral market prices stay around reasonable levels. The project did not directly invest in these projects, however the progress made on the cadastre, information systems, mining and environmental laws has made these investment possible. 4.4 Financial rate of return: Not applicable 4.5 Institutional development impact: The project's institutional development impact has been significant, especially in terms of strengthening the institutional capacity at the provincial level. Each of the 17 Provinces has now a well-functioning provincial mining directorate, with sufficient administrative capacity, responsible and responsive to the needs of the private sector. The staff in these offices interface regularly with private sector for activities such as processing applications and issuing permits. The project has also equipped these directorates with GPS and GIS, with trained staff for using them and also with the capacity to assess environmental impact and environmental management. In addition to enhancing facilities for infrastructure and training, the project also succeeded in creating an awareness on new concepts of mining management and technology. 5. Major Factors Affecting Implementation and Outcome 5.1 Factors outside the control of government or implementing agency: Change in intemational economic conditions such as decline of global commodity prices since 1998, and - 11 -  the fall in funding for mining exploration (from US$5.2 billion in 1997 to US$1.9 billion in 2002, worldwide; see Fig.1) has been detrimental for Argentina's mining sector and affected to some degree the outcome of the project. Consequently, some major mining development projects, which were expected to be developed, did not materialize until project closure. However, on balance, mining exploration investmnents are, after exceptional years (e.g. 2000: US$140 nillion), so far kept at a reasonable - if not optimum - level for Argentina of US$40 million for 2002 (compared to about US$4 million/yr before the reform; see Fig.2), of which about half were spent in PASMA II Provinces. World - Exploration Expenditures Argentina - Exploration Bapenditures 1993 1994 1995 1996 1997 1999 1999 20D0 2001 2002 1993 1994 1995 1999 1997 1998 199 2000 2001 2002 Fig. 1 Evolution of exploration expenditures Fig. 2 Evolution of exploration expenditures worldwide. Note the abrupt reduction after in Argentina. Note (i) growth as a result of the 1997 as a consequence of Asian crisis and sector reform; (ii) investments not strongly the so-called Bre-X scandal which strongly affected by the international crisis but (iii) affected financing sources for exploration by probably tending to an equilibrium level junior companies. (around US$50 milli./yr) 5.2 Factors generally subject to government control: Because of the delay in signing the Presidential Decree regarding 'PASMA II Agreement' which set the policies and procedures to be implemented under the project, the signing of the Loan Agreement was delayed by eight months and project effectiveness by eleven months. Implementation was further delayed in the initial stages because of the difficulties to ensure a consistent commitment from the Ministry of Economy with respect to the quarterly assignation of adequate funding both from Loan and Government sources. Project activities also slowed down during the political transition period - which extended from October 1999 to March 2000 - corresponding to the change of administration in Argentina, to pick up thereafter. Deteriorating macroeconomic conditions since early 1999, and the resulting financial crisis severely affected project implementation. For instance, the availability of counterpart funding was a major problem in 1999, and became acute in 2000 even though it slightly improved in 2001. While the federal government commitment was still strong after 2000, the administration which came to power in 2000 was more centralist and the dialogue with the provincial states became more difficult and this affected some of the project outcomes, such as the creation of an adequate mechanism to ensure the financial sustainability of the DPMs (see Section 6.1). Project implementation was not affected per se, but became more complex. 5.3 Factors generally subject to implementing agency control: The project performed well from the technical and operational perspectives. However, management effectiveness was reduced, for a number of reasons. In spite of the firnly expressed commitment of the administration to maintain the objectives of the reform, a mistrust developed between the federal SSM and the provincial DPMs political leaders, following the change of administration in 2000. This in turn generated difficulties for smooth project implementation. - 12 -  Budget constraints caused also difficulties: procurement problems (e.g. regarding the awarding of contracts for environmental base line studies; preparation of a few bidding documents for goods such as GPS equipment). While these difficulties could be solved, more serious problems arose regarding financial management, as described in Section 5.4 below. Overall, the combination of worsening macroeconomic conditions and the change in administration, made implementation harder. 5.4 Costs andfinancing: The total cost of the project executed at closure amounted to US$ 28.7 million. This is about US$ 17.8 million (-38.3%) less than the US$ 46.5 million estimated in the PAD. The Bank financed about US$ 24.12 million (84.0%), and the Government contributed about US$ 4.54 million equivalent in local costs (16.0%). The difference in project costs, compared to the estimation at appraisal, are due to two main reasons: (i) The costs of the topogeodesic and cadastral survey works were much lower than expected. These costs had been estimated, at appraisal, on the basis of the costs of identical works carried out under PASMA I. However, taking into account the lessons learned regarding the implementation of these activities, the work plan and sequence design were optimized and resulted in a significant reduction of costs. (ii) National economic and budgetary constraints. In early 1999, as a consequence of a worsening economic situation, the Ministry of Economy and the Chief of Ministries Cabinet Office told the project that the government would not be in a position to commit the amounts defined under the loan agreement, both in term of loan proceeds and govermment counterpart funds. As a result, they asked the project to reduce the scope of activities without altering significantly the overall project objectives (see Sections 3.4 and 5.2 above). This was done through, i.e., a reduced total area coverage by baseline studies; lists of equipements to be provided reduced to basic needs; increased synergies between PASMA I and I in terms of training and coordination, etc.. To face the severe restriction in counterpart funds mentioned above, and in order to achieve the implementation and development objectives, the project implementing unit incurred during 2000 in a misuse of Bank funds, using loan proceeds to finance part of the government share of expenditures. As the economic situation continued to worsen during 2000 and 2001, the project could not balance the accounts. The problem was identified in July 2001, when the audit report for year 2000 was delivered. Due to the prevailing budget constraints, the project was not in capacity to solve the situation and refund the referred amount. An action plan was prepared to address this issue during the course of implementation, as had been done in a similar case for another project in Argentina. However, due to the proximity of the closing date (September 30, 2001) and the fact that an extension request was not granted, the situation could not be solved before project closure. The outstanding amount at project closure represents US$2.45 million, to be refunded to the Bank by the Government of Argentina (in addition to US$0.79 million not used until project closure, but still on the UNDP account and to be refunded as well). This situation explains the difference between the Bank financed total and the Bank disbursed amount of US$27.36 million, as shown on the Integrated Controller's System database. 6. Sustainability 6.1 Rationalefor sustainability rating: The sustainibility of the project is rated Likely or, perhaps better said, "not unlikely", taking into account the present difficult economic and political situation of Argentina and hoping it will improve within a not - 13 -  too remote future. As in the PASMA I ICR, this rating is applied because the federal and provincial governments have adopted and maintained a policy conducive to mining sector development - as shown by the continued support to the Federal Mining Agreement as well as by the commitment of the Federal Mining Council ("COFEMIvT"), still under the difficult present circumstances -; and because they made significant progress towards the establishment of an enabling legal and institutional framework and are demonstrating commitment to follow-up on the results and recommendations of the project. Institutional sustainability. However, the long term funding in many of the Provinces of all the functions established under the project still needs to be strengthened through the definition of reliable financing mechanisms such as those developed in other Latin American countries (for example in Bolivia, Ecuador and Peru, where the law defines that a percentage of the proceeds from land fees and services are allocated to the institutions responsible for the sector administration and the provision of the information infrastructure). The total amount needed to implement all functions defined and developed under the project to properly manage the sector is estimated at no more than about US$ 2.8 million per year for the 17 provinces involved under the project (and about US$ 4 million for all 23 Argentine provinces), including operational costs, maintenance and renewal of infrastructure (but not salaries), which broadly corresponds to the annual mining-related proceeds from services and land fees. However, while the sources of resources have been identified, proper regulatory arrangements have yet to be made to ensure the channeling of those resources to finance functions such as (i) environmental monitoring - in the case of all Provinces; and (ii) basic functions (mining rights administration and environmental permitting) in provinces with less resources. Work on the development of suitable mechanisms to finance the institutions and support the fulfillment of their functions was initiated in 1999 and different options considered, including the creation of a "Mining Fund" supervised by COFEMNN and based on the mining-related proceeds from services and land fees. At the change of government at the end of 1999, the new federal authorities opposed the concept of a dedicated fund and no overall satisfactory solution could be found until now. So far, the sustainability of functions at the provincial level depends mainly on the reasonable availability and allocation of resources by the provincial govemements to their respective mining administrations. Due to the prevailing economic crisis in Argentina and the resulting budget cuts, sustainability is doubtful in certain provinces, particularly in poor ones or those where mining is not a critical activity (see also Section 8). Environmental management. An important issue analyzed at the project design stage was the "sectoral" versus "integral" approach to environmental management. As a rule, the integral approach through an independent environmental government institution notified to a specific sector and which forms part of a the overall development planning scheme is the preferred solution. However, in a country like Argentina at a time, when (i) there was (and still is) no overall environmental law, (ii) the capacity of the federal and of most of the provincial environmental agencies had (and still have) a poorly developed or, in many cases, no capacity, (iii) there was an urgent need to establish a capacity to provide a timely response to the on-going rapid mining sector development, a sector-oriented approach was selected and the project provided support to the drafting of an Environmental law for Mining Activities (passed in 1995) and to the creation and strengthening of "mining" UGAPs. Once the basic instruments and capacity in place, movement towards an integral or a mixed approach can be implemented. In that sense, it is important to note that the provincial procedures include already the participation of non-sectoral agencies in the process of EIAs evaluation. And the environmental permitting responsibility in 10 Provinces is shared by the provincial environmental and mining authorities. Also important to observe, in the case of the Mendoza Province where the overall environmental management capacity was already well-developed, the authority responsible to apply the Environmental Law for Mining Activities is the Environmental Directorate, the DPM's UGAP providing technical support regarding the assessment of mining projects. While the sustainability of some of the activities implemented under the project still is uncertain - such as the continued monitoring of the regional - 14 -  networks -, there is little doubt that a consistent regulatory and institutional environmental management framework has been established and will not be reverted. Sustainability of the mining sector in Argentina. The sustainability of the project achievements will also depend on the sustainability of mining in Argentina. The "boom" of the period 1995-2000, with a peak in exploration investments and number of foreign companies active in Argentina, has passed. Production and export revenues seem to have reached a plateau (see Fig. 3). Also, investors are probably cautious with respect to the evolution of the political situation. However, while a number ofjunior companies did not survive the high risk financing crisis of 1997-1998 (see Section 4.1), all major mining companies are presently active in Argentina (i.a. BHP Billiton, Rio Tinto, Barrick, MIM Holdings, Anglo Gold, Anglo Base Metals and others). Three new large mines have started operations since 1997 (Bajo de la Alumbrera, copper and gold, Salar del Hombre Muerto, lithium; Cerro Vanguardia, gold and silver). Also, serious, small to mid-size silver and gold producers are now at the feasibility stage for a number of high-grade deposits in southern Patagonia. (i.a. Martha, Esquel, El Puma/Cerro Saavedra, Manantial/Espejo, Martinetas). Operating mines are investing in expansion (Alumbrera) or modernization (Aguilar, zinc lead, silver and tin) of their facilities. If the present price of gold is maintained, Barrick could take a decison to go ahead with the major projects of Veladero (gold and silver, a US$600 million investment) and Pascua Lama (gold and silver, a US$ 1.25 billion investment) as announced recently. Both these deposits, as well as the huge El Pachon copper project, all located on the Chilean-Argentine border, would benefit of the Mining Treaty signed between both countries. The floating of the peso will also bring exploration and development costs in line with Argentina's neighbours and further increase the competitivness of the country. If the government continues to honor the tax stability agreement under the Mining Investment law, and considering the regulatory and institutional frameworks established under the sector reform so far, the conditions for a continued development for mining production seem positive. However, while the establishment of conditions to sector growth is a pre-requisite, the real sustainability of mining in Argentina will be measured by the contribution each and every mine will make to the development of the local and regional communities and to their economies. Issues related to revenuelbenefit sharing, to social participatory processes and to mine closure need to be addressed. Argentina - Mining Exports Value (US$ Million) 1000 800 600$5 400 200 0 n 1991 1993 1995 1997 1999 2001 Fig.3 6.2 Transition arrangement to regutlar operations: At the provincial, and in a number of cases at the federal level as well, the project focused its activities on the development of on-the-job capacities and procedures directly linked to the fulfillment of core functions related to the application of laws and regulations, functions which will continue beyond closure. In that aspect, the transition from project supported to regular operations has been smooth and work plans are well-established for the long term. In addition, a detailed operation plan was prepared for each of the - 15 -  provinces, including activities, maintenance of the infrastructure and budget. However, as discussed under 6.1, arrangements remain to be made to ensure the full financial sustainability of all functions in all provinces. 7. Bank and Borrower Performance Bank 7. 1 Lending: The Bank's performance in the identification, preparation, and appraisal of the project was satisfactory. Since the project could benefit from the successful preparation and implementation of PASMA-I, all activities related to identification, preparation, and appraisal were completed within a short time span of three months. During preparation and appraisal, the Bank took into account the adequacy of project design and all major relevant aspects such as technical, financial, economic, institutional, including procurement and financial management, environmental, sociological, and consistency with the Bank's safeguard policies. In addition, during the appraisal, the Bank assessed the project's risks and benefits. The Bank had a consistently good working relationship with the Borrower during preparation and appraisal. 7.2 Supervision: The Bank's performance during the implementation of the project was, on balance, satisfactory. Since the Bank had allocated sufficient budget resources, the project was adequately supervised. Over the three year project implementation, there were eleven supervision missions. Supervision teams included specialists in environment, mining economics, mining law, private sector development, institutional development and procurement. The Bank took a firm and dynamic role in the supervision of the project implementation. Aide-Memoires were regularly prepared and transmitted. The PSRs realistically rated the performance of the project both in terms of achievement of development objectives and project implementation. Whenever delays in implementation occurred, the Bank was able to define concrete steps and a timetable for putting the program on track. The Bank paid sufficient attention to the project's likely development impact. The quality of advice and the follow-up on advice and agreed actions was adequate. The staff also showed flexibility in suggesting needed modifications in implementation. External consultants were used for specific aspects of certain project components. Bank staff worked closely with the government and the implementing agencies and had good relationship. However, while policy and technical aspects, including procurement, were closely monitored, the team would have benefited from including a financial management specialist as a regular member of the supervision missions at an early stage. This would have helped to identify and address sooner the type of issue described under Section 5.4. 7.3 Overall Bankperformance: Overall, the Bank performance was satisfactory during project preparation, appraisal and implementation. Borrower 7.4 Preparation: The Borrower's performance in the preparation of the project was satisfactory. During the preparation stage, the Borrower displayed an adequate level of commitment to the objectives of the project and covered the adequacy of design and all major aspects such as technical, financial, economic, institutional, - 16 -  environmental and sociological factors, including stakeholder comniitment. The government officials and staff of the implementing agencies both at the federal and provincial levels worked closely with the Bank's project team on a continual basis, with full cooperation and enthusiasm. 7.5 Government implementation performance: The government's implementation performance was generally satisfactory. Commitment of the government was shown by the impressive continuity in both policy implementation and staffing of the institutions and the UCP, since the preparation phase of PASMA-I in January 1994. The government also took the initiative in requesting the preparation of a repeater operation extended to all Provinces which did not participate in PASMA-I. With respect to the Provinces, their commitment to implement the policy and institutional reforms which were supported by the project was reflected by their signing of the "Federal Agreement for the Implementation of the Second Mining Project". Ownership by the Provinces was indicated by the seriousness of their participation in the preparation of the project, including a four day workshop dealing with in-depth analysis of sector reforms to be supported by the project. The government commitment was consistent until a new administration came to power in 2000 and was less so thereafter. As mentioned earlier, the new administration was more centralist, and, as a result, the relationship between the federal and provincial governments was strained, which led to a slowing down of the pace of project implementation. 7.6 Implementing Agency: Performance of the SSM was, on balance, (moderately) satisfactory. The capacity of the Federal Undersecretariat of Mines (SSM) was satisfactory on technical andoperational terms.In the initial stages of implementation, the federal PCU was well organized and effective in dealing with procurement, disbursement, progress reports, maintaining proper records and audits of the project. However, as mentioned in the first Mining TA ICR, on administrative and financial levels, the capacity deteriorated in paralell with the worsening financial situation of the country, and with respect to financial management, the performance was unsatisfactory. The capacity of provincial implementing agencies varied from province to province, but was on balance satisfactory. The fact that all provinces followed a single model made the implementation easier. 7.7 Overall Borrower performance: The overall performance of the Borrower was satisfactory during project preparation, satisfactory as well during implementation from an operational perspective, but unsatisfactory regarding financial mangement. 8. Lessons Learned Several of the lessons learned have already been included in the ICR of the first Mining Sector Development TA project (ICR No. 23368). Only those particularly relevant to the achievements of the second project or additional ones are included here below: * Creating the right enabling environment is very important. The major lesson of the project is that, by creating the right enabling environment and responsive institutions to interface with the private sector, is a necessary condition which would result in a positive response for investment making a significant contribution to the country in terms of mining exploration and development (but not per se sufficient, as other extemal factors such as intemational commodities prices are influencing too). * Integral approach to sector development. The Argentina mining TA provides yet another example of the importance to approach sector reform in an integrated, instead of a piecemeal way. This lesson - 17 -  applies both to the project as well as to the component levels, as discussed under the development of mining rights and environmental management capacity, respectively. * Government commitment is essential to success. The success of the project was mainly due to the continued political support from the highest levels of the government, both at the federal and provincial levels.Another key factor for the project's success was the consistency of the sector reform with the general economic reform. * Consistency in the political agenda is a key factor for the project's success. In a country like Argentina with a strong federal system, consistency in the political agenda of federal govemment and provincial governments is a crucial factor for the project's success. By signing an upfront agreement between the federal government and provincial governments, the project could maintain continuity in sector policy - and project implementation - despite changes in administration both at the federal level and the provincial levels. In that sense, the example of Argentina could be applied to other federal countries or to countries where decentralization constitute an important component of the development agenda. * A well-defined interface ensures smooth project implementation. Establishing a well-defined coordination between the federal and provincial implementing units, strong leadership and active participation of provincial implementing agencies and stability are also important factors for a project's success. * The geodetic and environmental (and geological under Pasma I) data infrastructure developed under the project is useful not only for the mineral sector development but even for other areas like infrastructure development (road construction, etc.), national hazards mitigation measures and land use planning in general. By taking an integrated approach - and with better coordination - other agencies are able to make use of this information for their needs. * Sustainability ofpublic mining management functions. Sustainability of some of the project's institutional achievement might be jeopardized by the adverse macroeconomic situation of the country. However, core administrative functions - e.g. administration of mining rights and environmental permitting - are, as a rule, sustainable after closure of the project. Such situation does not apply, in general, to support and information activities related to an improved management and monitoring of the sector performance - e.g. mapping and monitoring; information systems -, which tend to be less sustainable, in particular in the case of a continued economic crisis. An obvious factor is the availability of resources and lower costs activities would be more likely supported when a choice of scarce resources allocation has to be made. However, other important factors are also involved which would control sustainability likeliness of functions, such as whether it is defined in a law and the responsibility to fullfil it clearly attributed to an agency (see Table 2 below). Another important factor is the perception by budget allocation decision makers of the importance of the function. For instance, in many cases, the geological data infrastructure is - wrongly enough - not perceived as being a pre-requisite to a country's development goals achievements. An important lesson to enhance the likeliness of functions sustainability is to deal with the issues at the earliest possible stage of the reform and (i) to identify very clearly the mandate and corresponding key functions and responsibilities of the PMIs; (ii) to incorporate both mandates and functions within the legal/regulatory framework and (iii) identify reliable source(s) of funds (e.g. a percentage of mining cadastral fees - as in Bolivia, Ecuador and Peru - and/or of royalties) and specifically allocate these funds to sustain the identified key functions. - 18-  Operational costs Lower Higher - Cadastral registration - Geological Data More Likely Yes and administration Infrastructure Sustainable Mandate and - Environmental function defined permitting in a law No - Information systems - Environmental and social monitoring Less Likely I___ _ __ __ _ _ __ _ __ __ _ __ __ _ Sustainable More Likely Less Likely Sustainable Sustainable Table 2. * Social strategy. The preparation and implementation of mining TA programs require the design of a consistent social strategy, anchored in a sector development policy, in order to clearly identify the goals and concrete outputs, and fully integrate social issues. The social strategy should include the definition of actions to be carried out jointly by government authorities, civil society organizations, companies and, during its implementation time, the project. The ultimate goal would be to optimize stakeholder participation and consensus with respect to sector development objectives and outcomes, and consequently ensure a more sustainable and improved contribution of mining to society. * Continuity of Bank involvement is important to achieve sustainable results. The continuous WB participation in the Argentina sector reform since inception and through the main implementation phase has certainly be an important factor to success. In that sense, the abrupt termination of formal support - particularly considering the crisis which coincided with project closure - may consitute a factor of non sustainability of some of the results. The support of the Bank after TA project closure should include a continued dialogue at the sector level, as the provision of advice and the role of facilitator played by the Bank are often felt as a contribution as important as the provision of financial support 9. Partner Comments (a) Borrower/implementing agency: Detailed contribution from the Borrower can be found in Annex 8 (b) Cofinanciers: Not applicable (c) Other partners (NGOs/private sector): Not applicable 10. Additional Information Not applicable - 19 -  Annex 1. Key Performance Indicators/Log Frame Matrix Outcome / Impact Indicators: :Indicator/Matrix Projected in last PSR Actual/Latest Estimate 1. Encourage private sector investment in mining and ensure it contributed to a sustainable economic and social development in particpabng provinces: * Improved enabling environment for sector * Mining production has increased both a the development: national level and within the Pasma II region. - increased mining investment in participating Estimated figures for the Pasma II region are: provinces by - 20% (1996 level:US$56 - Mining investments: US$75 million (est. million) by year 2001 2001) - maintained/increased exploration - Mining exploration investments: US$25 expenditures in participating provinces (1996 million (est. 2001) level: US$28 million after the end of the - Mining production US$112 million (metallic) project. and US$260 (non-metallic) (2000) - Exports: US$130 million (est. 2000) l Improved consultative procedures among Parbally achieved: consultation between stakeholders for decision making (private federal and provincial govemments has been sector, public authorities and local, provincial institutionalized (COFEMIN). It has improved and/or national communities) at the end of also between companies and authorities, the project (EoP) through a formalization and unification of companies chambers. Awareness of the importance of social participatory processes as part of mining development was increased. ^ Improved knowledge and/or awareness of * Achieved. The improvement of existing modem technology, environmental (cadastral) and development of new management and other matters (i.e. fiscal) at (envimonmental) funcfions on the basis of EOP modem technology and concepts, integrated to the daily workflow of DPMs' staff, has resulted in a significant improvement of knowledge and awareness. Fiscal: >1,000 persons (provincial authorities, companies and students) participated to the fiscal training. 2. Extend the mining sector policy, regulatory and institutional reform to all parficipating provinoes * Signing of the Federal Agreement for the 'Achieved. The 'mining" provinces had Implementation of the PASMA II Project signed about 4 months AE. However i took (Second Mining Development TA Project) by about 12 months AE to get the signature of 17 Provinces six months after effecfiveness all provinces (AE) * All participating Provinces have adopted the Achieved. At EoP, all provinces have reformed sector regulatory framework at EoP adopted and are applying the reformed sector regulatory framework. Procedures are now basically similar from Missiones to Tierra del Fuego. ^ The unified mining cadastre system is ^ Achieved. A unified mining rights established and operational in all parficipating management sytsem ("SRM') has been Provinces 21 months AE established and is operational in all Argentine Provinces, improving the conditions for property rights security of tenure, comerstone of mining investment and development. This goal was achieved 33 months AE, instead of 21. ^ UGAPs and environmental management ^ Achieved. UGAPs were created and in system established and operational in all capacity to process ElAs, grant participating provinces 21 months AE environmental permits and monitor the sector performance. This goal was achieved about - 20 -  24 months AE, instead of 21. However, continuity of sampling the regional monitoring networks (not part of the UGAP functon according to the Law) is not ensured. * Information management system * Achieved. Systems installed and operational established and operational in all participatng at EoP (33 months AE) instead of 21 months provinces 21 months AE AE. But sustainability varying from province to province. * Trained personnel in all participating * Achieved through intensive on4he-job provinces: land, environmental, fiscal and training, supported by specific courses, information management at EOP. workshops and seminars. * Mining funds' and dedicated budget * Work in progress. Provincial budgets established in all particpating provinces ensure the futfillment of the core functions: mineral rights and environmental permitting. However, the set up of a more reliable mechanism, drawing from fees for services provided by DPMs could not be finalized. Output Indicators: ,, IndcatorlMatrix , Projected in last PSR Actual/Latest Estimate, A.1 No backlog of unprocessed concession A. 1 As a rule, requests for mining rights and applications or EIS in paricipating DPMs at EIAtEIS reports are processed in a timely EoP manner; the pre-reform major mining rights backlogs have been solved. A.2 (a) (i) Cadastral management system A.2 (a) (i) The cadastral management system operational 21 months AE ("SRM") was operational 33, instead of 21, months AE. (ii) No significative procedure differences (ii) All provincial procedures are based on the between Provinces at EoP "Unified Code of Procedures". A.2 (b) >95% of mining concessions A.2 (b) 100% of mining concessions have surveyed and integrated to the mining been surveyed and integrated to the geodetic geodetc reference system 21 months AE based cadastral system. A.3.(a.) (i) Environmental permitting system A 3 (a) (i) Environmental permitting operabonal 21 months AE functons/system operational about 24 months AE (instead of 21). (ii) Baseline data in participabng Provinces (ii) Baseline data in partidpabng provinces available 24 months AE were available 33 months AE (or EoP), instead of 24. (iii) Monitoring system operabonal 21 months (iii) Monitoring network were established AE under the baseline studies and operational 33 months AE, instead of 21. Sustainability of operations will vary according to provinces and respective resource A.3 (b) (i) Socio-economic pilot baseline A.3 (b) (i) Socio-economic pilot baseline studies available 18 months AE. studies were carried out in the area of influence of Bajo de la Alumbrera (Catamarca) and Pascua-Lama (San Juan). Results were available 33 months AE, ii) Consultative procedures implemented 21 instead of 18.. months AE (ii). Work in progress. Awareness has increased and needs identfied. However, regulations based procedures remain to be drafted; and implemented. A.4 (a) BUD system operabonal 18 months A.4 (a) The 'Banco Unico de Datos", now AE known as "Sistema Unificado de Informacion Minera" (SUIM) was operational about 24 months AE (varying according to provinces), Sustainability of operations will vary according to provinces and respective resources. A.A (b) Mineral markets and statistics A.4 (b). Partially achieved. Statstcal information available 21 month AE. information and presentabon was - 21 -  systematized in all provinces, and are available through SUIM. However, sustainability of the link between provincial and federal units varies from province to province. End of project - 22 -  Annex 2. Project Costs and Financing Project Cost by Component (in US$ million equivalent) Appraisal Actualliatest Percentage of Estimate Estimate Appraisal Project Cost By Component US$ million US$ million A. Policy Implementation A. 1 Institutional Modernization and Strengthening 6.50 5.89 90.4 A.2 Unified Mining Cadastre and Registry System 18.05 9.00 49.9 A.3 Environmental Management 14.98 8.88 59.3 A.4 Unified Mining Infornation System (BUD) 3.48 3.82 109.9 B. Project Coordination Unit 1.79 1.07 59.9 Total Baseline Cost 44.80 28.66 Physical Contingencies 1.10 0.00 Price Contingencies 0.60 0.00 Total Project Costs 46.50 28.66 Total Financing Required 46.50 28.66 Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) Procurement- Method Expenditure, Category ICB NCB Other N.B.F. Total Cost 1. Works 0.00 3.60 13.00 0.00 16.60 (0.00) (3.00) (11.10) (0.00) (14.10) 2. Goods 5.90 0.90 0.80 0.00 7.60 (5.90) (0.90) (0.80) (0.00) (7.60) 3. Services 0.00 0.00 14.60 0.70 15.30 (0.00) (0.00) (13.00) (0.00) (13.00) 4. Miscellaneous 0.00 0.00 7.00 0.00 7.00 (0.00) (0.00) (4.80) (0.00) (4.80) 5. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 6. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) Total 5.90 4.50 35.40 0.70 46.50 (5.90) (3.90) (29.70) (0.00) (39.50) -23 -  Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) Procurerment Method Expenditure Category ICB NCB Other2 N.B.F. Total Cost. 1. Works 0.00 1.70 6.72 0.00 8.42 (0.00) (1.42) (5.68) (0.00) (7.10) 2. Goods 3.24 0.68 0.43 0.00 4.35 (3.24) (0.49) (0.30) (0.00) (4.03) 3. Services 0.00 0.00 13.11 0.36 13.47 (0.00) (0.00) (10.89) (0.00) (10.89) 4. Miscellaneous 0.00 0.00 2.43 0.00 2.43 (0.00) (0.00) (2.10) (0.00) (2.10) 5. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 6. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) Total 3.24 2.38 22.69 0.36 28.67 (3.24) (1.91) (18.97) (0.00) (24.12) "Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies. 2' Includes civil works and goods procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local govemment units. Project Financing by Component (in US$ million equivalent) I I i Percentage of Appraisal Component ApE raisal-Estimate [ Actual/Latest Estimate .___________ _ . Bank 'Govt. CoF. Bank- Govt. CoF. Bank Got. CoF. A. Policy Implementation A.1 Institutional 5.80 0.90 4.79 1.10 82.6 122.2 Modernization and Strengthening A.2 Unified Mining 16.00 2.80 7.64 1.36 47.8 48.6 Cadastre and Registry System A.3Environmental 13.80 1.80 7.78 1.10 56.4 61.1 Management A.4 Unified Mining 3.00 0.60 3.33 0.49 111.0 81.7 Information System (BUD) B. Project Coordination 0.90 0.90 0.58 0.49 64.4 54.4 Unit Under "Actual", the Govt. figures include the US$2.45 million to be refunded to the Bank (see Section 5.4). -24-  Annex 3. Economic Costs and Benefits Not applicable - 25 -  Annex 4. Bank Inputs (a) Missions: Stage of Project Cycle No. of Persons and Specialty Performance Rating (e.g. 2 Economists, I FMS, etc.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation September/97 4 1 Planner, I Mining Economist, IMining Specialist, I Environmental Specialist November/97 I I Mining Specialist Appraisal/Negotiation December/97 4 1 Mining Economist, 1 Mining Specialist, I Country Economist, I Environmental Specialist Supervision April/98 3 1 Mining Economist, I Mining Specialist, 1 Environmental Specialist July/98 3 1 Mining Economist, I Mining Specialist, I Environmental Specialist October/98 I I Mining Specialist S S December/98 4 1 Mining Economist, I Mining S S Specialist, I Environmental Specialist, I Procurement Specialist April/99 4 1 Mining Economist, I Mining S S Specialist, 2 Sector Managers (FPSI) October/99 4 1 Mining Economist, I Mining S S Specialist, I Environmental Specialist, I Procurement Specialist December/99 I I Mining Specialist S S July/00 3 1 Mining Economist, I Mining S S Specialist, I Environmental Specialist August/00 2 1 Mining Specialist, I S S Procurement Specialist December/00 4 1 Mining Economist, I Mining S S Specialist, I Environmental Specialist, I Procurement Specialist May/01 I I Mining Specialist S S ICR August/2001 4 1 Mining Economist, I S S Mining Specialist, I Manager, I Financial ManagementSpecialist December 2001 2 1 Environmental Specialist, I S S Mining Specialist - 26 -  May/02 I I Mining Specialist S S (b) Staff: Stage of Project Cycle [ Actual/Latest Estimate No. Staff weeks US$ ('000) Identification/Preparation 15.4 75.2 Appraisal/Negotiation 7.5 38.5 Supervision 85.1 341.2 ICR 12.4 52.3 Total 120.4 507.2 - 27 -  Annex 5. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating L Macro policies O H OSUOM O N * NA L Sector Policies O H *SUOM O N O NA O Physical OH *SUOM ON ONA L Financial O H * SU O M O N O NA I Institutional Development 0 H O SU O M 0 N 0 NA FII Environmental O H *SUOM O N O NA Social O Poverty Reduction O H OSUOM O N O NA L Gender O H OSUOM O N * NA L Other (Please specify) O H OSUOM O N * NA LI Private sector development 0 H O SU O M 0 N 0 NA L Public sector management 0 H O SU O M 0 N 0 NA L Other (Please specify) O H OSUOM O N * NA - 28 -  Annex 6. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6.1 Bankperformance Rating E Lending OHS@*S Ou OHU O Supervision OHS OS O U O HU El Overall OHS OS 0 U O HU 6.2 Borrowerperformance Rating fI Preparation OHS *@S O u O HU O Government implementation performance O HS I S 0 U 0 HU O Implementation agency performance O HS O S 0 U 0 HU O Overall OHS OS O u 0 HU - 29 -  Annex 7. List of Supporting Documents 1. Sectoral Environmental Assessment (December 1997) 2. Project Appraisal Document for Argentina Mining Development Technical Assistance Project dated June 29, 1995 (Report No. P-6617-AR) 3. Aide Memoires, Back-to-Office Reports, and Project Status Reports 4. Project Progress Reports 5. Consultant Study Reports financed under the Project 6. Borrower's Evaluation report, dated December 28, 2001. - 30 -  Additional Annex 8. Borrower's Summary Report This document summarizes the evaluation of the Second Mining Sector Development Technical Assistance Project (PASMA II: "Segundo Proyecto de Asistencia al Sector Minero Argentino") prepared by the Argentina federal Under-secretariat of Mines. Part of the background information, comments and lessons leamed are similar to those included in the report referred to the evaluation of the PASMA I project. The reform of the Argentina mining sector was initiated in 1992, with the support of the World Bank (WB), and by 1993 the policy and legal frameworks had already been modernized and considerably improved. To support and implement the reform in terms of institutional capacity building of the sector federal and provincial public agencies, the Government of Argentina requested in 1994 a loan to the WB, which became effective in 1995. This project, PASMA I, involved the federal Undersecretariat of Mines (SSM) and the Argentine Geological and Mining Survey (SEGEMAR) and six pilot Provinces (Catamarca, La Rioja, Mendoza, Salta, San Juan and San Luis), located in the mineral rich but, from a mining point of view, poorly developed NW of Argentina. The reason to limit the provincial scope was to test the selected modemization methodology, before extending the experience to the rest of the country Considering the successful experience of PASMA I, the Govemment requested in 1997 a second loan to the WB to extend to the whole country the development of capacities and infrastructure needed to put into practice the reform.. The 17 Provinces that participated to PASMA n1 are: Buenos Aires, Chaco, Chubut, C6rdoba, Corrientes, Entre Rios, Fortnosa, Jujuy, La Pampa, Misiones, Neuquen, Rio Negro, Santa Cruz, Santa Fe, Santiago del Estero, Tierra del Fuego and Tucuman. Background Ten years ago, in spite of a favorable geology and well-established mining neighbors such as Brazil, Bolivia and Chile, there were only a few mines, most of them small-scale operations in the non-metallic (industrial minerals) sector. In 1992, with support of the World Bank, the Govemment of Argentina assessed the mining sector's deficiencies and the country's geological potential. The sector's historical pooi performance was due to a number of factors, including: * Long term macroeconomic instability; * Interventionist role of Govemment in the sector; * Weak administration by provincial governments; * Conflicts between the Federal and Provincial authorities regarding mining development policy; * Huge differences regarding regulations and enforcement between provinces; for example, different type, and rates of royalties; * Difficult access by private investors to large potential mining areas held by federal or provincial state agencies; * Outdated legal frameworks and cumbersome, unclear or discretionary concession and cadastral procedures; * Lack of security of tenure for mining rights; * Outdated and inefficient institutional framework; and, * Lack of a basic geological information. Objectives of the reform. Based on the sector diagnostic, as well as on the recognition of the worldwide application of the marke economy and of the globalization of the industry, in 1993 the Govemment formulated a mining policy ir line with the broader national economic policy reform-initiated in 1990-and started a reform strategy foi environmentally and socially sound private mining development. The strategy aimed to: -31 -  * Encourage private investments and stability, while avoiding earlier wasteful promotion schemes or subsidies; * Ensure that the sector contributes to sustainable economic and social regional development; * Promote consensus regarding mining policy between federal and provincial authorities, through the creation of a Federal Mining Council; * Better define the respective responsibilities of the provincial and federal mining authorities and of the private sector; divest state owned mining interests and restructure and modernize the sector agencies - emphasizing the role of the State as a regulator - and improving access to mineral land; * Modemize the legal framework by amending the Mining Code and promulgating complementary legislation, establish procedures and non-discretionary administration for the granting of mining rights and enforcement of environmental regulations, and homogenize regulations and enforcement across provinces; and, * Create an autonomous geological service to produce the required base line data and establish an easily accessed nationwide information network. The objectives and content of the reform, as well as its implementation process, were designed on the basis of a policy framework agreed between Provinces and the Central government, and formalized under the 1993 Mining Federal Agreement, and with the support of most stakeholders. The close involvement and participation of the provinces authorities was a pre-requisite to success, as they are the constitutional owners of the mineral resources and responsible for their administration. Implementation and achievement of objectives The project design was based on the extension to the 17 Provincial Mining Directorates (DPMs) of the Provinces involved in PASMA II of 1) the unified regulatory framework; 2) the strengthening of the institutional; 3) the improvement of the administration of mining rights, 4) the development and set-up of an environmental management system, and 5), the set-up of a publicly available information system. In addition, studies related to the improvement of knowledge regarding socio-economic, cultural and environmental impacts of mining operations were included to be carried out in any of the Argentine Provinces. Regulatory framework One of the main achievement under PASMA II was the unification of provincial regulations and procedures regarding the management of mining rights and environmental permitting. Regulations and application norms for environmental management had already been developed under PASMA I, but their adoption and enforcement by all Provinces was completed under PASMA II. In addition, under the umbrella of the project, all provincial mining authorities (six from PASMA I and 17 from PASMA II) have established unified mining procedures for the granting and management of mining rights. As already mentioned under the PASMA I evaluation, the current legal framework has proved to be efficient in attracting private investment and supporting the development of environmentally sound mining activities. Since reform inception, nine laws were prepared and passed by Congress. Yhe most important ones include: the Investment Law (1993), improving investment conditions within the sector and providing fiscal stability; the Federal Mining Agreement Law (1993), defining the consensus and commitment between Provinces and Nation regarding sector development policies and management; the Environmental Law for Mining Activities (1995), incorporated as part of the Mining Code and establishing clear rules for investors regarding EIAs, norms and procedures; and the Mining Treaty (2001) with Chile, setting the rules for the development of the many ore deposits lying close to the border of both countries. Institutional capacity development. The project completed the modemization of the 17 provincial mining agencies in terms of streamlining the organizations with the new functions, introducing modem technologies, training staff and improving infrastructure and equipment. - 32 -  Institutional strengthening traditionally constitutes a challenging process and the main constraints included (i) the traditional lack of trust from the agencies staff with respect to the federal government's as well as (ii) resistance due to the fear that such reform would be linked to staff reduction. However, the demonstration effect of PASMA I, together with the implementation of a methodology based on the first project experience - in-depth dialogue from an early stage to promote ownership with the reform objectives, combined with the timely and coordinated implementation of the different components - design, training, infrastructure, set-up of operational procedure and follow-up - strongly reduced the mentioned constraints as well as implementation time, and were key factors towards the changes of attitude already achieved in the PASMA I provincial agencies: from defensive to service oriented and more efficient sector administration. As under PASMA I, flexibility in adjusting the overall institutional model to the customary and, to some extent, regulatory particularities of the different provinces has been an important factor to success. Unified mining cadastre system. The precise positioning of properties, transparent granting and cancellation procedures and public availability of the related information enhance security of tenure and represent fundamental conditions to attract investments as well as for the orderly development and sound management of the mining sector. Based on the same scheme implemented under PASMA I, the scheduled mining cadastre works have been completed in the 17 Provinces. They included (i) the extension of a complementary mining geodetic network, linked to and strengthening the national network; (ii) location and GPS measurement of all mining properties; and (iii) set up of a computerized mining concession granting and management system, using off-the-shelf software applications. The relevant information is available on the internet. All involved staff have been trained in GPS technology and use of GIS and of related databases, both at workshops and on the job, using the infrastructure and equipment purchased under the project. The application of the implementation lessons learned under PASMA I contributed to strongly reduce the expected costs of the works and, in most cases, works difficulties (of the four firms contracted to carry out the works, three delivered the expected quality products on schedule; the fourth one also complied but with delays). Key lessons learned under PASMA I do apply as well to this project: (i) a critical prerequisite consists in the detailed inventory, clean-up and updating of the existing cadastral information, before starting the set up of a new system; (ii) computerized cadastral management systems improve the strict and transparent application of the mining law and its procedures and enhance secuiity of tenure; (iii) a particularly systematic planning effort and a rigorous supervision of contracted works to be carried out in such remote and difficult terrains as the Andes reduces the risk of failure in location calculation or building up of reference benchmarks. Mining environmental management system. The regulations and norms to enforce the Environmental Law for Mining Activities (1995) have been enacted in all seventeen provinces. Seventeen provincial environmental management units (UGAPs), responsible for the evaluation and approval of ELAs, as well as for the monitoring and the enforcement of the law and regulations, were established. Within the PASMA II area, the environmental authority is shared between environmental and mining public provincial institutions in 10 of the Provinces; in 7 of the Provinces, the UGAP respond to the DPM. However, in all cases, the review of ELAs involves in all provinces the participation of authorities from other involved sectors. Environmental baseline studies in selected mining areas of every seventeen provinces were completed, and the data input into a GIS based information system, available through intemet. Monitoring environmental programs to be carried out periodically by the UGAPs have been set up, the data entered in the databases. These monitoring components should provide an efficient tool, quite unique so far in Argentina, to assess the sector environmental perfommance. However, they are probably the most sensitive to financial crisis and their sustainability will depend more than other systems (including the environmental permitting - 33 -  procedures) established under the project on the availability of sufficient resources. In addition, as part of the PASMA II project, activities and studies on the socio-economic, cultural and environmental impacts of large scale mining operations on communities have been carried out in the Catamarca and San Juan provinces. A methodology has been developed regarding (i) how to assess such impacts and (ii) how to approach from the point of view of the different stakeholders the development of such projects. Important lessons include: (i) the development of an environmental legal and institutional framework is an important pre-requisite for mining investment as it established clear rules; it has been widely accepted by all stakeholders and contributes to the development of the sector without environmental conflicts; (ii) to prevent environmental conflicts and impacts, it is critical to involve all stakeholders (state, private sector, the communities with mining activities and NGOs), with clearly defined roles and methodologies; and (iii) the dissemination of information and communication with the involved communities is critical for the development of mining operations and their contribution to local development.. Unified mining information system (SUIM). The project completed the design and set-up of the SUIM linking, through intra-/intemet, federal and provincial databases, such as legal, geological, cadastral, environmental, statistics, promotion and others, related when relevant to GIS based on a unified digital map of Argentina, developed in cooperation with IGM. This component provides an excellent tool for land management, including but not limited to mining development, to the government, to the private sector and to all sectors of the society. While transferred from the project to the respective authorities, SUIM requires a strong coordination which could not be fully consolidated during implementation. The operation of this system might also be more sensitive than others developed under the project to the availability or not of sufficient resources. It represents an essential factor for success in attracting investors, achieve transparency and sustainability of mining sector development. Support of the World Bank As under PASMA I and since reform inception, The World Bank (WB) has played a critical and positive role in the implementation and success of the mining reform in Argentina. It provided an in-depth assessment of the mineral sector at start, on the basis of which the federal and provincial authorities could design an effective development policy. The WB then provided policy, technical and financial assistance to implement the sector reform in an effective way, in a constant and open dialogue with the implementing agencies, with the Ministry of Economy, the Chief of Cabinet Office, the provincial authorities, representatives of the private sector and of the civil society. Visits to the DPMs and meetings with representatives of COFEMIN were held during the supervision mission and contributed to build the necessary trust. Performance of the federal and provincial authorities The successive federal and provincial governments have been supportive of the sector development policy and reform, and, as a consequence, of the project implementation continuity. Such support is a key factor in the successful achievement of the reform, and of the PASMA I project objectives. The deterioration of the economic situation during the last couple of years of project implementation resulted in a lack of availability of counterpart funds, and has affected the pace of activities and the scope of a few components - mainly the geographical extension of environmental and socio-economic baseline surveys. Contrary to the case of PASMA I, this situation did impact negatively the outputs of the project. The impact of the present crisis on the sustainability of some of the achievements, such as the seasonal environmental network monitoring and the maintenance of the information system, remains to be seen. Conclusions - 34 -  The success of the Argentina mining sector reform is based on several factors, including, (i) a continuous political support from all stakeholders; (ii) the initial in-depth analysis of the sector problems; and (iii) the selected approach integrating the legal, institutional and information infrastructure aspects. At the level of the project as such, success was due to (i) a strong link and support between the political authorities and the teams responsible for the coordination and implementation of the activities; (ii) clear and concrete objectives and tasks easy to monitor; (iii) efficient planning, management and monitoring; and (iv) open and constant dialogue between stakeholders. The main issue for the future is related to the sustainability of the project achievements and to the needed continuity to further deepen the reform. A most important requisite will be a strong political support which would allow a clear leadership and consensus based actions through plans and programs to maintain and continue to develop the changes initiated under the project. As part of such plan and programs, is the definition of reliable financial mechanisms to support critical functions of public mining agencies. The completion of the mining code reform is also strongly related to this issue. Most important would be to continue the work initiated under PASMA to develop activities aiming at improving the integration of mining projects to the socio-economic development of communities, including, among others, the development and implementation of improved consultation and participatory mechanisms, community driven development linked to mining, mine closure mechanisms, coordination with other sectors (e.g. infrastructure development and others) in order to optimize the economic benefits from the mining sector development, particularly at the local and regional levels. We express our wishes that the World Bank can continue to provide its support and help our country to deepen the social aspects of the mining reform. Buenos Aires, December 21, 2002 Dr. Carlos Saravia Frias Undersecretary of Mines - 35 -   MAP SECTION   IBRD 29348 20' 70 BOl0VIA 0 50 20'- lPARAGUAY I~~ f .Sl BRAZILq ODSolloydo SA LTAJ \",PFormosa I' '1*t 0Tu(pm6n 1CHACO "NIl 0 14 TUCUMAN TIAGO Resistencioa osadas f / 1_ {8 \I 05 sSnltiogo del stero _ orrientes\r / tt ' l (03Colamorco 1 1 t LoR / IO I'ESTERO J 9\o/ _ J Lo Rioj