ca- zc~ 3 7 - world bank · 2016. 7. 11. · bamin - banco minero bcb - banco central de bolivia sa...

Document of

The World Bank

FOR OFFICIAL USE ONLY

Ca- ZC~ / 3 7

Report No. 7630-BO

STAFF APPRAISAL REPORT

REPUBLIC OF BOLIVIA

MINING SECTOR REHABILITATION PROJECT

APRIL 17, 1989

Industry, Trade and Finance Operations DivisionCountry Department IIILatin America and the Caribbean Region

This document has a resticted dsibuto0v and may be used by oenpienls oly In the perdonnanoe oftheir official duties. Its contents may - A otherwise be disclosed wt World Bank authorizatin

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CURRENCY EQUIVALENTS

Currency Name - BolivianoUS$1.00 - Bolivianos 2.47

Bolivianos 1.00 - US$0.405

FISCAL YEAR

January 1 to December 31

WEIGHTS AND MEASURES

1 meter (m) G 3.281 feet (ft)1 kilometer (km) = 0.622 miles (mi)1 kilogram (kg) 2.205 pounds (lb)1 troy ounce (troy oz) - 31.: grams1 gram (g) - .032 troy ox1 metric tonne (mt) - S2,151 troy oz

| 2.205 lbs1 short ton (T) - 2,000 lbs

PRINCIPAL ABBREVIATIONS AND ACRONYMS

BAMIN - Banco MineroBCB - Banco Central de BoliviaSA - Banco Industrial SA. - Centro de Investigacion Minero MetalurgicaIMITBOL - Corporacion Hinera de Bolivia-'D - Development Credit Department (Central Bank)

,TAW - Empresa Nacional de FundicionesFCNEM - Fondo Nacional de Exploracion MineraFSE - Fondo Social de EmergenciaFSTMN - Federacion Sindical de Trabajadores Mineros de BoliviaGEOBOL - Servicio Geologico de BoliviaIDB - Interamerican Developi*ent BankIDM - Instituto de Desarrollo MineroINK - Instituto de Investigacion Minero MetalurgicaMMK - Ministry of Mining and MetallurgySTCM - Servicio Tecnico del Cadastro Minero

FOR OMFCIL USE ONLY

STAFF APPRAISAL REPORT

BOLIVIA


TABLE OF CONTENTS

Page No.

CREDIT AND PROJECT SUMMARY ............... .... ............. i

I. THE MINING SECTOR ................... ............. 1

A. Background and Recent. Developments .... .......... 1B. Mineral Resources and Reserves .................. 3

II. INSTITUTIONS, PRODUCERS, AND SECTORAL STRATEGY ...... 4

A. Government Institutions ........... ............. 4B. Private Producers ................... . ... 6C-. COMIBOL ... o.... ........... ..... ........ * ............ 7D. Health, Safety and Environment .................. 10E. Financing of Mining Investments ............. * ... 11F. Sectoral Strategy ............................... 13G. Outlook for the Sector .......................*...* 16

III. THE PROJECT ......................................... 17

A. Role of IDA ..................................... 17B. Project Objectives .............................. 18

1. Promotion of Mining Investment .# .... ......... 182. Rehabilitation of COMIBOL ................... 19

C. Project Description ............ .................. 201. Institutional Strengthening ........... **O..# 202. Financing of Private Mines and Cooperatives . 213. COMIBOL .............................. 23

D. Project Implementation Arrangements and Schedule 271. Project Coordination ..... .................. 272. Financing of Private Mines ................. 283. COMIBOL .................................... 31

IV. PROJECT COST, FINANCING PLAN. PROCUREMENT ANDDISBURSEMENT ............................ ................... 31

A. Project Cost ................................... 31B. Financing Plan .................................. 33C. Procurement ..................................... 35D. Allocation and Disbursement of IDA Credit ...... . 37

l ~~~~This document has a festricted distribution and may be used by recipients only in the porformaceof their official duties. Its contents may not otherwise be disclosed without Wofi et, authoroun.

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Page No.

V. FINANCIAL ANALYSIS OF COMIBOL ....................... 38

A. Financial Projections ........ ................... 38B. Breakeven Analysis . ............. . . 40C. Sensitivity Analysis ...... .. 41D. Financial Rate of Return and Sensitivity Tests .. 42E. Financial Covenants .... .... .... 43F. Auditing and Reporting Requirements ........ 43

VI. ECONOMIC ANALYSIS ..... . ..... 44

A. Economic Benefits of the Project ........ 44B. Economic Rates of Return ........ 45C. Risks ....... 46

V£II. AGREEMENTS AND RECOMMENDATION ..... .. . 47A. Agreements .. . . . .............. 47B. Recomendation . . .......... .......... 50

TABLES IN TEXT

Bolivia - Mineral Exports and Mining SectorContribution to GDP ....................

Bolivia - Value of Mineral Exports by Product ......Bolivia - Contribution of Mining Sector to Government

Revenues ....... ..... ....Bolivia - Employment in Mining .....................Bolivia - Estimated Mineral Reserves ...............Bolivia - Indicators of the Medium Mines ...........Bolivia - Production of Medium Mines ...........

Bolivia - Production by Small Miners ...............COMIBOL - Tin Production and Workforce .............COMIBOL - Production Costs ....................COMIBOL - Financial Results ........................Summary of Project Costs ...........................Financing Plan ....................................Procurement Arrangements ...........................Allocation of IDA Credit ...........................COMIBOL - Summary of Financial Projections, 1989-93COMIBOL - Breakeven Price for Tin, 1989-93 .........COMIBOL - Sensitivity Analysis of Cash Flow and

Profitability ..........................Switching Values of Critical Variables .............

-ANEXS

1-1 Bolivia - Production of Minerals 1973-1987 ........ 511-2 Bolivia - Estimated Mineral Resources and Reserves 52

2-1 Bolivia - Mining Sector Institutions ..... ......... 552-2 Bolivia - COMIBOL - Historical Cost Breakdown,

1979-1987 ........................................... 58

2-3 Bolivia - COMIBOL - Summary of Historical IncomeStatements, 1980-1988 ................. 59

2-4 BolivJia - COMIBOL - Summary of Historical Cash Flows,1980-1984 ............................ 60

2-5 Bolivia - COMIBCL - Summary of Historical BalanceSheets, 1980-1988 .................... 61

2-6 Bolivia - GOB Mining 3ector Policy ............... 622-7 Bolivia - Mining Export Projections, 1987-1997 ... 91

3-1 Bolivia - Institutional Master Plan Organigram ... 923-2 Bolivia - MMM Organizational Structure ........... 933-3 Bolivia - GEOBOL Organizational Structure ........ 943-4 Bolivia - Institutional Strengthening Program .... 953-5 Bolivia - New Institutional Relatione'hips ........ 1103-6 Bolivia - COMIBOL - Rehabilitation Sub-component . 1113-7 Bolivia - COMIBOL - Environmental Program . ....... 1133-8 Bolivia - COMIBOL - Management Strengthening

Sub-component..... .. ....... 1153-9 Bolivia - COMIBOL - Training Sub-component... 1163-10 Bolivia - COMIBOL - Management Development

(Training) Program Model ............ 1183-11 Bolivia - COMIBOL - Management (Training) Course

t ~~~~~~~~~~Outline ......... $ ...... 1193-12 Bolivia - COMIBOL - Training Manual Format... 1223-13 Bolivia - COMIBOL - Training Profile ............. 1243-14 Bolivia - COMIBOL - Project Implementation Scheaule 1293-15 Bolivia - Project Management .. ........... 1313-16 Main Elements of Credit Guarantee Scheme..... 1323-17 Guidelines and Operating Regulations of Credit

Line....... 137

4-1 Summary of Five Year Program .... ...... 1454-2 Detailed Cost Tables. ............. 1464-3 Flow Chart of Project Funding . ........... 1604-4 Procurement Packages . . ........ 1614-5 Disbursement Schedule for IDA Credit .. .... 162

5-1 Metal Markets . ..... .................. 1635-2 COMIBOL Assumptions for Financial Projections

and Projected Financial Statements. ...... 1715-3 Financial Rate of Return Calculations ............ 176

Documents in the Project File ......... ..... 181

MAP IBRD No. 21474

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REPUBLIC OF BOLIV$A

MNING SECTOR 1anBILIT&UION PROJECT

CREDIT AND PROJECT SUMNIRY

Borrowers Republic of Bolivia

Beneficiariess Ministry of Mining ana Metallurgy tMM)Geological Service of Bolivia (GEOBOL)Institute for Mining Deve3opmeut (IDMKSmall and Medium Miners and CooperativesState Mining Corporation (COMIBOL)

Amounts SDR 26.5 million (US$35.0 million equivalent)

Terms: Standard, with 40 years maturity

Onlending Terms: The Government will make available as grant up to US$3.7million to the Ministry of Mining and Metallurgy and itsdependencies. US$ 7.3 million would be onlent to theCentral Bank at IDA terms. The Central Bank wouldonlend these funds to financial intermediaries includingthe Minins Bank (BAMIN) at LIBOR + 12. Theintermediaries would in turn lend to subborrowers atLIBOR + 62, with maturities and grace periods adapted toindividual mining projects. The Government would onlendUS$22.7 million to the State Mining Corporation COMIBOLat LIBOR + 22, for ten years with five years grace, withthe exception of funds for studies and joint venturepromotion which would be passed on at IDA terms.

ProiectDescription: The project would assist the Government in the

im.plementation of its mining sector strategy bypromoting new private mining investment and supportingthe rehabilitation of COMIBOL. The project includesthree components: (i) strengthening of the Ministry ofHining and Metallurgy and its dependencies to improvethe basic public services to the industry, create areliable data base, and establish an attractiveenvironment for investors; (ii) financing of privatemines and cooperatives and provision of technicalassistance to small miners; and (iii) rehabilitation ofCOMIBOL by strengthening the viability of core miningoperations, improving management and technicalcapabilities, and supporting the preparation of jointventures with the private sector.

Project Benefits: Benefits of the project include increases in mineralproduction, exports and foreign exchange earnings. Theproject will help attract private foreign investors andincrease private Bolivian investment in the sector by

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(i) creating a conducive investment climate based on newmining, tax and joint venture regulations; (ii)strengthening the Government's institutions whichprovide services to the sector; (iii) providing fundsfor credit to private mines and cooperatives, andimproving the capability of financial intermediaries toevaluate and finance mining activities; and (iv)assisting COMIBOL in attracting joint venture partnersfor its mining prospects. Benefits will also be derivedfrom the rehabilitetion of COMIBOL which would earnforeign exchange and generate tax revenues.

tiskes The project faces several major risks. First,investment promotion in the sector and rehabilitation ofCOMIBOL depend on the success of the new economicpolicy, economic stability and the provision ofsufficient external financing to achieve the country'sgruwth targets. IDA and other external financingagencies are working together with the Covernment toassure a stable macroeconomic framework and thus limitthe macro risks for this and other projects. Second,the project includes an ambitious institution buildingprogram which may be more difficult and time consumingthan planned. Close monitoring by IDA and theappcintment of experienced consultants to assist inimplementation of this component will mitigate the risksinvolved. Third, the credit component faces risks ofdelay since commercial banking in Bolivia is still in arecovery phase and since the Mining Bank (BAMIN) has toundergo a thorough reorganization before becoming aviable financial intermediary. The project is designedto linmt these risks by providing technical assistanceto fina-icial intermediaries, building a reasonablespread into the onlending interest rate and assistingthe Minirg Bank in its restructuring. Fourth, CONIBOL'srehabilitation faces implementation risks if productionincreases materialize more slowly than expacted and ifmanagement improvement and skills upgrading are lesseffective than foreseen. Substantial technicalassistance has been built into the project to minimizethese risks. Another risk related to the COMIBOLcomponent is a return of Government pressure to reopennon-viable operations or keep non-viable mines Inoperation. To limit this risk, the Government willreview annually with IDA the status of miningoperations, particularly progress in joint venturing andIDA will closely supervise implementation of theseactivities.

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Foreign Local Total---------US$ million…-------

Estimated Proiect Costs

COMIBOL 49.4 41.2 90.6

Institutional Strengthening 8.9 7.6 16.5

Credit to Private Mines and Cooperatives 5.3 5.0 10.3

Total Base Cost 63.6 53.8 117.4

Physical Contingencies 3.2 2.7 5.9

Price Contingencies 1.9 1.6 3.5

Total Project Cost 68.7 58.1 126.8_= _

Financing Plan

IDA 28.4 6.6 35.0

ExiEstng Financing Arrangements 10.1 - 10.1

COMIBOL (cash flow) 10.9 34.6 45.5Government - 1.4 1.4Cofinanciers 15.2 9.8 25.0Joint ventures/commercial 4.1 5.7 9.8

Total 68.7 58.1 126.8

Estimated IDA Disbursements

IDA Fiscal Year-_____-----------US$ million------------------

90 91 92 93 94 95

Annual 6.0 8.0 9.0 5.0 5.0 2.0Cumulative 6.0 14.0 23.0 28.0 33.0 35.0

BOLIVIA


I. THE MINING SECTOR

A. Background and Recent Developments

1.01 Mining in Bolivia has played an important role in the economysince pre-Columbian times. After the exhaustion of the old silver mines,which formed the backbone of the sector for several centuries, tinproduction began to take off in the 1900s, peaking in 1929 at a productionof about 47,000 tons. During the first half of the century, tin miningcreated high rents for mine owners due to low levels of taxation, ore withan unusually high ;etal content, and low wages. The enclave nature of thesector, however, precluded any significant benefits to the rest of theeconomy. These factors explain in part the 1952 revolution, which had asone of its outcomes the nationalization of the three largest miningcompanies and their merger to form the Corporacion Minera de Bolivia(COMIBOL).

1.02 The two decades after the 1952 revolution represented a difficultperiod for Bolivia's mining sector, and particularly for COMIBOL.Technical problems had an increasing impact on the industry's performanceand exploration fell behind extraction of reserves, resulting in decliningore grades and low productivity. Depressed tin prices, high inflation andexchange rate distortions affected the performance of the sector. InCOMIBOL, the situation was aggravated by the introduction of workerparticipation in management, resilting in a labor force far in excess ofneeds.

1.03 The mining sector witnussed a significant recovery in the 19709 inthe wake of an increase in tin prices, a major adjustment of the exchangerate, and a general stabilization of the economic and social climate.Through the 1970s, tone mining industry maintained its key position as themain source of Bolivia's export revenues and produced a fairly stablestream (in constant terms) of foreign exchange income. The drop of themining sector share in export revenues from 902 in 1970 to 62Z in 1980 wasprincipally due to a sharp increase in exports of hydrocarbons. Export andGDP data of the mininb sector for the 1970-1987 period are summarized inthe following table:

Bolivia - Mineral Exports and Mining Sector Contribution to GDP

1970 1975 1980 1985 1986 1987

Mineral Exports 205 314 641 264 197 207(Millions of current US$)

Mineral Exports 589 500 641 275 174 166(Millions of 1980 USg) a/

Mineral Exports 90 59 62 39 3C 37(2 of Total Merchandise Exports)

Mining Sector Contribution tzGDP (Z) 9.3 8.2 10.3 6.8 5.2 4.0

Source: World Bank Economic Reports; Ministry of Mines and Metallurgy.a/ Manufacturing Unit Value (lUV) Index

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1.04 After 1980, the mining sector deteriorated rapidly. Between 1980and 1987, total tin production dropped from about 27,300 tonnes to 8,100tonnes, zinc production from 50,300 to 39,100 tonnes, tungsten productionfrom 3,400 to 800 tonnes and antimony production from 15,500 to 10,600tonnes (Annex 1-1). While mining remained a major source of foreignexchange, its significance has diminished progressively since 1980. Exportrevenues from mining, which in 1980 amounted to US$641 million, plummettedto US$197 million in 1986, and US$207 million in 1987 as shown in the tablebelow.

Bolivia - Value of Mineral Exports by Product(Current USS Million)

1980 1985 1986 1987 a/

Tin 378.1 186.6 104.1 68.9Zinc 36.7 29.5 28.0 32.8Tungsten 41.4 10.3 6.7 5.1Silver 118.3 10.2 27.3 33.4Antimony 26.4 15.9 14.5 22.8Lead 14.5 0.5 5.0 4.3Gold - 5.5 7.2 37.5Other Minerals - 5.3 4.0 2.4

Total 641.2 263.8 196.8 207.2

Source: Ministry of Mines and Metallurgy.a/ Preliminary and forecast.

Largely due to increasing gold production, mining export revenues areestimated at about US$275 million in 1988, about 502 of total exports.

1.05 Tin is the country's most important mineral. Its significance,however, decreased in the 19809. The share of tin in mineral exports was332 in 1987 and, with increasing production of other metals, has probablydeclined to about 20Z in 1988. Other important mineral exports are gold,zinc, tungsten, silver, and antimonv. Copper, lead, and bismuth make onlysmall contributions to exports.

1.06 The sectoral decline is also reflected in the contribution ofmining to Government fiscal revenues, shown in the following table. Thecurrent sector payments of taxes and royalties are negligible.

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Bolivia - Contribution of Mining Sector to Government Revenues(US$ million)

1980 1985 1986 19S7

COMIBOL 59.7 2.3 0.9 0.0Private Mining 28.9 0.6 0.7 2.5

Total Mining 88.6 2.9 1.6 2.5

Total Government Revenues 589.7 114.1 461.8 479.8

Mining as S of GovernmentRevenues 15.0 2.9 0.3 0.5

1.07 The contribution of m;ning to employment in Bolivia was about 52until 1980. During 1980-87, mining employment decreased by 452 to 47,000in 1987. Since then, employment in mining has stabilized, as COMIBOLcompleted the major part of its manpower reduction program and privatemining is experiencing a moderate recovery.

Bolivia - Employment in Mining

1980 1985 1986 1987

Number of Workers 86,000 8&,600 52,100 47,000

B. Mineral Resources and Reserves

1.08 Bolivia's mining industry is essentially confined to remoteregions of the Andes. Mines are generally located at high altitudes--insome instsnces above 5,500 meters--and access poses infrastructural andlogistical problems resulting in difficult working conditions. Most of themajor known deposits occur in a narrow belt of about 500 km extend.ngbetween La Paz and Potosi. The deposits are often low grade complex ores,located in narrow hard rock deep-seated veins, which require complextreatment during smeltinS and refining.

1.09 Although endowed with a favorable geological environment,inadequate exploration and reserve development in recent decades havehindered the realization of Bolivia's mining potential. Restrictive miningpolicies and political instability discouraged private investment. Largeareas of the country, designated as Fiscal Reserves, were only availablefor exploration and mining by Government institutions or state companies.COMIBOL, in particular, holds many promising mining properties andconcessions which have never been evaluated.

1.10 Apart from tin, Bc-.iuia has important resourcrs of many othermetals and minerals, notably gold, lead, zinc, silver, tungsten andantimony. The current estimates on mineral reserves of Bolivia are listedin detail in Annex 1-2 and summarized in the following taLle:

Bolivia - Estimated Mineral Reserves a8('000 tonnes of contained metal)

Bolivian Reserves I of World Reserves

Tin 394 12."Tungsten 76 2.1Antimony 105 6.4Zinc 555 i.2Lead 111 0.1Silver 1 1.2Bismuth 5 5.3Gold (tonnes) 220 n.a.

Source: Government Mining Sector Strategy; US Bureau of Mines.

a/ Proven and probable reserves. Estimates of Bolivian reserves partlydiffer from U.S. Bureau of Mines estimates (Mineral CommoditySummaries, 1988).

Bolivia also has large lithium and boron salt deposits in the Uyuni flat.'While the above estimates indicate a good potential (US$8.0 billl'on grossin-ground value) they are only tentative and further exploration work willbe required to define exploitable mineral reserves. Clearly defined plans,priorities and increased investment could enlarge the reserve base.

II. INSTITUTIONS, PRODUCERS, AND SECTORAL STRATEGY

A. Government Institutions

2.01 The key institution overseeing the Mining Sector is the Ministryof Mining and Metallurgy (MMM) which has overall responsibility for theGovernment's mining policy as well as sector regulation and supervision.The Geological Survey of Bolivia (GEOBOL) is responsible for country-widegeological investigation and thp Institute of Mining and MetallurgicalInvestigations (IIMM) provides support services for mineral extraction,beneficiation, metallurgy, assaying and mining methodology. The NationalMining Exploration Fund (FONEM) provides financing for prospecting andexploration and the Mining Bank (BAMIN) provides mine development financingand technical assistance as well as mineral purchasing services to smallmines for resale in marketable lots to traders. A description of thesevarious institutions is given in Annex 2-1.

2.32 Governiment services for the mining sector have seriouslydeteriorated over the past decade. The difficult economic conditions,Government budget constraints, and reduction of foreign assistance incritical areas made the basic Government presence in the sector (regionalgeological mapping and exploration, mining and metallurgical research,administration of the mining legislation and cadastral services withrespect to mining claims etc.) all but non-existent. Effective promotionrequires policy guidance, fair and prompt administration of legislation andcontinuous development of t i mineralogical and geological data base.Until such a support environment has been created the country will beunable to reap the benefits of its mineral resource base.

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2.03 The 10. has been seriously impeded in the implementation of itsfunctions because of the 'ack of sufficient budgetary allocations and lateor inadequate release of bidgetary funds. This has resulted indifficulties in hiring and retaining qualified staff, and ineffectivenessof the different Ministry departments. Since most of the limited budgetcovers salaries of staff. little is left for operating expenses. Country-wide supervision activities, including mine control and cadastral updatingand monitoring, are seriously affected by these funding problems. The MMMhas recently made considerable progress in its own consolidation. It hasformulated the main ideas of a program to strengthen critical areas such ascadastral services, mine control, coordination of technical assistanceprojects, project evaLuation, and formulation of mining regulations andfiscal legislation. In order to improve its efficiency the MMM plans tointroduce training programs for its staff, improve the incentive system,and reduce staff numbers over the medium term where possible.

2.04 Due to the economic decline after 1980 and the resulting budgetproblems, GEOBOL has been increasingly unable to perform its basicfunctions. Essential routine work is now at a standstill; no regionalgeological maps have been published since 1968 and little basic explorationwork has been accomplished since 1980. In part because of extremely lowsalary levels, staffing has been reduced from 370 in 1984 to approximately220, of which 90 are professionals. While GEOBOL has been seriouslyweakened, it is an institution which could and should be revived. Withadequate local funding for minimum operational requirements and increasedtechnical and operational assistance for essential activities, GEOBOL couldplay a useful role in sector development by providing key data baseinformation.

2.05 IIMM was previously funded substantially by a levy of 12 onmedium-scale private mineral sales. In 1986, this levy was abolished andthe National Treasury had to take fiscal responsibility for basic overheadcosts, with operational funding to be largely derived from contract work.Since revenues from contract work have remained minimal, and since foreignassistance has not been available, IIMM has remained largely defunct overthe past years. Professional staff has beenz reduced from 42 to 27 since1981; and, similar to GEOBOL, salary levels are inadequate to retainqualified and experienced staff and operating funds are grossly inadequate.The IIMM could also be reactivated with adequate local funding andincreased financing of essential activities by foreign sources.

2.06 By the end of 1988, FONEM had disbursed some US$10.5 million incredit. Only three projects could be declared successful and, therefore,to date, FOREM has not been able to generate significant income. Thissituation reflects problems in project selection, lack of private funds fordevelopment of successful projects, and the impact of the tin price crashon the viability of many projects. A basic issue facing FONEM is thevalidity of its role in the mine development and promotional process. Itplays no part in mine development financing after reserves have been provenand in many cases therefore property owners are left facing similarproblems to those which existed prior to FONEM activities; inability toobtain development financing because of credit unworthiness and th. highcosts of available credit lines. A further problem is that it both acts ashigh-risk financer and executor of its own projects, a situation which may

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lead to conflicts of interest. The attractiveness of the FONEM concept,its relationship to BAMIN and its value to the small-scale private sectorhave been reviewed during the project preparation process. FONEM'sinability to generate income has had the net effect of Governmentsubsidized operations. Strengthening of the private sector with directcredits and limited technical assistance by other mining sectorinstitutions may have more development impact than FONEM.

B. Private Producers

2.07 The private sector is composed of medium scale, small scale andcooperative mines. The performance of the private mining sector alsosuffered from the general deterioration in product prices and themacroeconomic conditi(ns in Bolivia. However, the private sector declinedless than COMIBOL during the crisis of 1980-85 and gained in importance.Output of private mining is currently larger than COMIBOL's production.

2.08 The medium-scale minin8 subsector traditionally contributed about25Z of mining production and employed about 102 of the sector's laborforce. Since 1980, the number of firms has declined from 29 tc 19. Twomedium mining firms are foreign controlled and five others have minorityforeign Darticipation. The table below presents key data for thesubsector.

Bolivia - Indicators of the Medium Mines(US$ millions)

1986 1987

Production Value 69.1 86.0Sales Value 67.7 95.7Taxes 0.1 2.5Number of People Employed ('000) 4,327 4,020

Source: Ministry of Mines and Metallurgy.

2.09 Production statistics for the medium-scale mines are presented inthe following table:

Production of Medium Mines('0008 tonnes)

Commodity 1973 1982 1985 1986

Antimony 8.1 10.1 6.7 7.2Tin 6.7 6.0 4.1 3.3Lead 0.5 4.0 1.8 0.4Tungsten 1.3 1.6 1.0 0.7Zinc 8.3 19.0 22.9 28.3Cadmium 0.05 0.02Gold (tonnes) 0.127 0.296Silver (tonnes) 27.5 35.6

Source: Annual Reports of the Association of Medium Scale Miners.

2.10 The medium sized mining companies are generally better managed andmore productive than the state-owned mines. Employment peaked at about8.500 employees in 1976 whereafter it decreased gradually to about 6,000 in1985. This reduction in personnel was part of an effort to reduce costsand avoid losses during a period of generally depressed metal prices. Thesharp drop in tin prices in 1985 accelerated the diversification from tininto zinc, silver, and gold. It also zesulted in a reduction of the numberof operating companies.

2.11 The rest of the private mining sector consists of small mines andcooperatives. While these subsectors traditionally have contributed 10-15Zof production, their share in mining employment has amounted to 60Z-70Z.About 5,000 small mines are registered, although probably only 2,000-3,000are in actual operstion. The bulk of the small mines typically employseven to eight people, the operations are rudimentary and labor-intensive.Many small mines have absentee owners who share production revenues withthe mine workers on a contract basis. Th, is typically littleexploration to increase reservas or expand okerations. Production figuresfo- the small scale mining subsector are summarized in the table below.

Production by Small Miners

1975 Z a/ 1985 S a/ 1986 Z a/(tonnes) Share (tonnes) Share (tonnes) Share

Antimony 6,62 42 1,755 20 2,915 29Bismuth 31 5 - - 2.3 5Copper 458 7 - - 132 4Tin 4,781 15 2,256 14 2,319 21Silver 11 7 4.4 4 15.9 17Lead 5,783 32 539 8 905 27Wolfram 133 6 436 26 417 30Zinc 4,555 9 153 - 1,086 3

a/ Share of small miners in total production in Bolivia.Source: Annual Report, Association of Medium Miners.

Cooperatives have grown substantially since 1985. They now employ about14,000 people and produce about 80Z of Bolivia's fast rising goldproduction.

C. COHIBOL

2.12 COMIBOL was formed in the early 1950s when the major private tinoperations were nationalized following the 1952 revolution. At the time ofnationalization the industry suffered from prolonged under-investment andconditions worsened by the departure of management personnel. Investmentswere made in the 1960s to improve COMIBOL's performance as part of a majorrehabilitation effort (the 'Triangular Plan") supported by the UuitedStates, France, Germany and the Inter-American Development Bank (IDB).COMIBOL recovered in the 1970s but renewed political instability initiatedanother difficult period for the state mining company at the end of thedecade.

2.13 Starting in 1980, COMIBOL experienced a substantial deterioration.Due to declining metal prices, mounting distortions between official andparallel exchange rates and runaway inflation between 1982 and 1985, thecompany's cash flow and financial situation worsened rapidly. COMIBOL'scapacity to _Jsure sufficient supplies of inputs for its operations wasseriously impaired. Labor unrest caused partly by declining real wagesexacerbated COMIBOL's internal difficulties. Moreover, the Government'scontinued interference in personnel decisions eroded the company'smanagement capacity and impeded effective decision making. The effect ofLaese developments was a rapid deterioration of working conditions, adecrease in productivity and production, and financial losses.

2.14 Tin production of COMIBOL declined from 18,600 tonnes in 1980 to10,100 tonnes in 1985. At the same time, the total labor force continuedto increase. These developments are summarized in the follaoing table:

COMIBOL - Tin Production and Workforce

1980 1981 1982 1983 1984 1985

Tin Production (tonnes) 18,621 18,586 15,492 15,970 12,533 10,060Workforce 26,525 25,728 26,109 27,744 27,746 27,566Production perEmployee (tonnes) 0.70 0.72 0.59 0.58 0.45 0.37

2.15 COMIBOL was unable to implement major cost-cutting measures andunit production costs rose rapidly (Annex 2-2):

COMIBOL--Production Costs a/

1980 1981 1982 1983 1984 1985

Production Costs(US$ million) 203.2 273.2 259.0 264.4 303.3 330.3

Share of Labor (Z) 39 41 40 46 55 49

Cost of TinProduction (US$Ilb) 3.1 4.5 5.0 5.0 8.0 9.8

London Metal ExchangeCash Price (US$Ilb) 7.6 6.4 5.8 5.9 5.6 5.4

a/ At minehead, excluding marketing costs and royalties.

The above table shows the marked increase in the share of labor inproduction costs between 1980 and 1984, mainly due to strong wageincreases. In addition to labor costs, rising inflation and the increasingovervaluation of the Bolivian currency contributed to rising productioncost. As a consequence, unit production costs for tin at the minehead morethan tripled from US$3.1/lb to US$9.8;1lb between 1980 and 1985. Tinprices, on the other hand, dropped from US$7.6/lb to US$5.4/lb during the

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same period. Unit production costs of other minerals produced by COMIBOLrose in line with the costs of tin.

COMIBOL's Financial Performance

2.16 COMIBOL's financial statements over the 1980-1985 period reflectthe drastic deterioration of the company's operations. COMIBOL's incomestatements (Annex 2-3) show a consistent deterioration in the company'soperational results' from a profit of about US$51 million in 1980 to a lossof US$248 million in 1985. Operational losses after 1981 were mitigated byfavorable exchange rate movements. The rise in operational losses istherefore more dramatic than the change in income after taxes.

COMIBOL--Financial Results a/(USS million)

1980 1981 1982 1983 1984 1985

Operational Income 50.8 5.3 (61.7) (60.6) (144.5) (248.0)Income after Taxes (30.0) (45.5) (51.9) (51.6) (68.4) (46.6)

a/ Figures in brackets are losses.

2.17 The deteriorating financial performance also had an impact onCOHIE-L's cash flow (Annex 2-4). Declining cash generation effectivelyimpaired the company's ability to fVnance a reasonable share of capitaloutlays, service adequately its debt, and pay taxes and royalties. Capitalexpenditures decreased from US$45 million in 1980 to US$6 million in 1984,interest payments declined from US$18 million to US$3 million, and tax androyalty payments fell from US$127 million to US$21 million.

2.18 In COMIBOL's balance sheet the above developments affected fixedassets, debt and equity (Annex 2-5). Net fixed assets remained essentiallyunchanged after 1981 at about US$235 million in current US dollars. Thecompany's inability to service its debt resulted in the accumulation ofsubstantial amDounts of arrears which were not rescheduled but added to itslong-term debt which increased from US$62 million in 1980 to US$267 millionin mid-1985. Net working capital declined and was negative at US$129million in mid-1985. Losses reduced the company's equity to US$35 millionin mid-1985 resulting in a debt/equity ratio of 92s8. The extremely lowquick ratio2 (0.2 in 1984 and 0.1 in mid-1985) shows the cash squeeze onthe company.

2.19 As part of the rehabilitation effort initiated in 1985 (see paras.2.20 and 2.21), the Government assumed COMIBOL's long-term debt. Therehabilitation measures have helped to achieve a rapid reduction ofCOMIBOL's operating losses. The company's cash deficit, which amounted toabout US$132 million in 1985, dropped to US$53 million in 1986, US$32million in 1987, and US$6.8 million in 1988.

1/ Operational income includes interest payments and depreciation, butexcludes exchange rate related profits/losses, royalties and taxes.

2/ (Current assets - inventories)/current liabilities

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COMIBOL's Rehabilitation Program

2.20 In 1985 the Government initiated the preparation of arehabilitation program for the mining industry. Supreme Decree 21060stipulated the reorganization of COMIBOL into a holding company with fiveindependent mining subsidiaries:

- Empresa Minera Quechisla in the south to operate the San Vicente,Chocaya, Tasna, and Tatasi mines;

- Empresa Minera Potosi to operate the Unificada de'. Cerro Rico dePotosi mines;

- Empresa Minera Oruro to operate the San Jose, Huanuni, Bolivar,Maria Luisa, and Poopo mines;

- Empresa Minera La Paz to operate the Colquiri, Caracoles andViloco mines;

- Empresa Minera Oriente to operate the Mutun iron ore deposits.

2.21 The Decree allowed COMIBOL to close non-profitable operations andlease other holdings to cooperatives. Through provision of financialincentives, COMIBOL's work force was reduced from 27,000 to about 7,000.COMIBOL operates currently eight mines; six mines are under evaluation todetermine their potential while eleven operations were leased tocooperatives. Two mines were closed permanently.

2.22 To alleviate the social costs of the economic adjustment program,the Government created the Social Emergency Fund (ESP). ESF wasestablished to provide employment through public work projects andexplicitly requires that certain projects hire ex-mirners. The effect ofthe ESP has been considerable and in view of the on-going activities of theESF programs, no additional measures will be required for inclusion in theproposed project.

D. Health, Safety and Environment

Health and Safety

2.23 General worker protection in underground mines and surfacefacilities is governed by legislation concerning occupational health andsafety. The national Ministry of Labor has regulatory responsibility forworker health and safety but has not been effective in applying regulationsdue to staff and budgetary constraints. In practice therefore there are noregulatory constraints on the mining sector relative to health and safetypractices other than the internal policies of the operating companies.

Environment

2.24 The mining industry in Bolivia operates with limited environmentalconstraints or regulation. This has resulted in operational practiceswhich have severe impacts on the environment to a degree that would not beacceptable in most industrial countries. The most apparent manifestationsof the lack of environmental constraints include the following:

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- discharge of untreated mill tailings into river systems;

- failure to apply geotechnical, hydrologic and environmental designprinciples to tailings and other waste disposal systems;

- discharge of untreated mine water and seepage to water coursesdespite high acidity levels;

- failure to monitor the quality of discharges or their impact onreceiving systems;

- water withdrawals from streams to the point of zero base flow;

- lack of reclamation requirements; and

- high dust levels at some of the operations.

2.25 While it is impractical to bring the environmental practices ofthe mining industry in Bolivia to industrial countries' standards on afast-track basis, it is feasible to achieve significant improvements. Inorder to initiate progress towards this objective, the project includesspecific actions to be taken by COMIBOL (para. 3.23). IDA is furtherpreparing an environmental issues paper which will be the basis fordefiuition of an environmental strategy for Bolivia jointly with theGovernment. In the context of this strategy, environmental regulationswould be developed and an environmental action program for the whole miningsector would be included into a follow-up mining project proposed for FY91.

E. Financin8 of Mining Investments

2.26 Bolivia's financial sector compriees the following institutions:the Central Bank (BCB); three specialized public banks, the State Bank(BANEST), the Agriculture Bank (BAB) and the Mining Bank (BAMIN); 13private commercial banks. of which 10 are domestic and three foreign; andthree private specialized development banks, of which only one (IndustrialBank-BISA) is active.

2.27 A sharp reduction in economic activity in the early 1980s (GDPcontracted by 16S between 1981 and 1985), accompanied by 'dedollarization"in 1982, and a rampant hyperinflation, (24.000 for the twelve months priorto August 1985), resulted in a weakened financial sector. The shrinkage ofeconomic activity reduced deposit levels and loan portfolios of banks. Bylate 1987, loan portfolios and deposits had returned to growth in realterms, but they are still below levels reached in the early 1980s.

2.28 Interest rates were set by the Government at strongly negativelevels until August 1985. Interest rates were freed in 1985 and rose tohigh levels in real terms. At present, real interest rates in bolivianosare around 20? p.a. for deposits and 40Z p.a. for lending. Interest ratesin US dollars are around 162 s.o 18? p.a. for deposits and around 24? p.a.for lending.

2.29 Under a recently approved Financial Sector Adjustment Credit, IDAis assisting the Government in carrying out a program with the purpose to

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increase confidence in the banking system through a strengthening of thefinancial condition of banks; to reduce the high cost of credit; and tostrengthen banking supervision through the recently establishedSuperintendency of Banks.

2.30 The Central Bank which has taken a lead in the implementation ofthe financial sector reform is also being strengthened. The Central Bankreceives support from IDA, the IMF and the IDB, including strengthening ofbanking supervision and improvements in Central Bank accounting, auditcontrols, management information system, economic study program and stafftraining. Of particular interest to the proposed project is thereorganization and strengthening of the Central Bank's Development CreditDepartment which receives technical assistance from the IDB. Thereorganization, which began with the appointment of a new DepartmentManager, is already well advanced in the streamlining and speeding-up ofoperations with commercial banks as well as in the organization of anefficient management information system. The Department is now equipped toeffectively handle its program of credit lines which it operates underconsistent and adequate Policies and Procedures.

2.31 The three major public sector banks (BANEST, BAB, and BAMIN), arein need of restructuring. BANEST and BAB are being assisted under theBank's Public Financial Management Operation and BAMIN's restructuringwould be supported under the proposed project. BAMIN is a majority GOB-owned institution, whose main activities include: (i) provision of long-term credit to small scale miners; (ii) purchase and resale of miningequipment, spare parts and materials; (iii) purchase of minerals from smallmines and sale of marketable lots of minerals to international traders; and(iv) limited technical assistance to miners; and (v) approval of investmentstudies. BAMIN operates with a staff of about 570 at headquarters in LaPaz and six branch offices. BAMIN has been for many years the only sourceof term lending for small scale mines, although its main activity (in termsof financial and human resources allocation) is trading in minerals andsupply of equipment. While BAMIN has not represented a drain on theGovernment budget, its efficiency is low and it requires improvement invarious areas (e.g., systems, accounting, financial planning, creditmanagement) to become an effective aining bank and mineral trader. BAMIN'sbalance sheet for 1987 shows total assets of US$62 million equivalent, ofwhich US$16.3 million (26Z) constitutes its loan portfolio (including debtsfrom sales of equipment), and the balance includes mineral inventories(US$13 million), accounts receivable for mineral sales (US$12.1 mill4on),equipment inventories (US$18.3 million), and other fixed and currentassets. BAMIN purchases concentrates from over 1,100 clients, but itscredit operations amount to only about US$2.5 million per year.

2.32 BAMIN suffered considerably from the collapse of the tin prices in1985 as well aa exchange rate distortions in the preceding years. Thecrisis caused a deterioration in its portfolio and arrears increased to 47Zby the end of 1987. After having been close to insolvency in 1987, BAMIN'sfinancial situation improved considerably because the government assumedmost of its debt in 1588. Reduction of arrears and non-performin, assetsrequire further efforts, however, because BAMIN has not had its accountsproperly audited since 1985 and has in store a considerable quantity ofoutdated equipment, its balance sheet is not reliable. Therefore neither

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its total assets nor its current equity can be correctly determined beforea complete evaluation of its equipment inventories has been carried out.Its present debt/equity ratio is 0.3. On the basis of the unauditedaccounts as part of recent economic reactivation measures, laid down inDecree No. 21660, the Government stipulated a substantial modification ofBAMIN's ownership and management through a 75Z representation of theprivate mining sector on its board and a gradual purchase of shares by theprivate sector to eventually reach the same percentage. Because of theprivate mining sector's lack of liquidity, the purchase of shares was to befinanced through a tax credit on mining exports, introduced by the samedecree. Because of severe Government budget constraints, however, the taxcredit was subsequently revoked. A small amount of tax credits wereaccumulated prior to their elimination. This amount will be allocated bythe Government to the private sector as BAHIN shares, but will not presenta majority of its capital. The majority representation on the board,however, will not be changed.

2.33 Bolivia's macroeconomic instability as well as sectoral andinstitutional problems have inhibited effective financing of private mininginvestments. Credit for new investments has been limited by the inabilityof the banking system to fulfill its function in a highly inflationaryenvironment, limited availability of long-term funds, and high realinterest rates of funds raised in the local markets. In addition, a majorobstacle to mining financing has been the inexperience of the bankingsystem with the sector and lack of appraisal capacity for lending to miningcompanies. Decapitalization of mining enterprises due to high inflation,exchange rate distortions, low metal price and the effects of the tinmarket collapse, has increased the perceived risks of lending to thesector. High collateral requirements (about 1.5:1 by BAMIN and 2-3sl bycommercial banks) have prevented financing of promising new investments.While some external credit lines have been available to the mining sectorin recent years, their use by private mining companies has been slow forthe above reasons, and some of these lines expired before they were fullydisbursed. Moreover, terms of external credit lines have often preventedurgently needed financing of free-standing working capital and procurementof inexpensive used equipment. Based on the surveys prepared among smalland medium mines during project preparation, and mining projects submittedto BAMIN and other banks, credit requirements for private Bolivian minesover the next three years have been estimated to range between US$95 andUS$120 million. Currently available credit supply amounts to about US$55million, which results in uncovered credit needs of at least US$40-65million for three years.

F. Sectoral Strategy

2.34 New Economic Policy. The Government, facing an economy that hadalmost reached a point of chaos, moved swiftly and decisively to implementa far reaching stabilization program. This program, named the 'NewEconomic Policy", was announced in August 1985. It contained not onlymacroeconomic stabilization measures, but also measures to liberalizetrade, reform taxes, revamp administrative procedures and deregulate andpartially privatize the public sector. It combined policy changes, such asfreeing most prices (including the exchange rate and interest rates),reducing the fiscal deficit and implementing a tight monetary policy. The

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'New Economic Policy' was supplemented by additional measures, notably acomprehensive new tax law, a freezing of employment and wages in the publicsector, elimination of quantitative import controls and implementation of a17Z uniform import tariff.

2.35 Because of the paramount importance of mining for Bolivia'seconomy, this sector was given specific emphasis in economic stabilizationand liberalization. The success of the Government's economic reactivationwill depend to a large extent on the recovery of mining production andexports. As part of its 'New Economic Policy" the Government adopted amining sector strategy which aims at a more efficient use of Bolivia'snatural resources. This would be achievea through a diminished role of thestate, promotion of private investment .hrough the creation of an enablinginvestment environment, rehabilitation and estaolishment of an efficientCOMIBOL, strengthening of the sector institutions, the formation of jointventures between COMIBOL and private investors, and the establishment ofsector specific lines of credit for private and cooperative miners.

2.36 Measures taken under the new economic strategy resulted in theabolishment of mineral purchasing monopolies of the National SmeltingCompany (ENAF), BAMIN, and COMIBOL, and the elimination of most of theFiscal Reserves (areas only available for exploration and mining byGovernment institutions and state companies). The Government thus openedup a vast potential for increased mining development through privateenterprise.

2.37 A major component of the Government's new mining policy ispromotion of private sector activities and investment. This is to b'"achieved through revisions of the mining and investment codes and taxregulations which would make the business environment more conducive toinvestment in mining. The legislative changes would introduce incentivesto private investors and would help create an investment climate comparableto other countries. The Government has prepared final draft legislationwhich includes modernization and simplification of licensing procedures,incentives for appropriate use of exploration and mining permits in orderto avoid blocking areas of high potential, lifting of remainingrestrictions for exploration and mining in areas adjacent to COMIBOLproperties and in border areas, reduction of royalties and introduction ofprofit based direct taxation and deduction of exploration costs and joint-venture regulations. These legislative packages are complete. The newmining code and taxation policy were presented to Congress. However,Congress did not act on it before the session closed prior to theforthcoming elections. At negotiations, the borrower agreed to take allappropriate measures to promote investment activities in its mining sector,including taking measures such as: simplification of mining licensingprocedures, improvement of cadastral services, maintenance of a conduciveframework for joint venturing, and liberalization of mineral explorationpolicies and regulations. Assurances were obtained that the borrower willresubmit to Congress the necessary draft legislation. The revisedlegislation would complete the transformation of the general framework formining development. The new framework should result in a substantialimprovement of the business climate for mining and should present a strongbasis for reactivation and strengthening of private activities in thesector.

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2.38 Additional measures to support private sector initiatives willconsist of strengthening the basic Government institutional services, theeffectiveness of which has declined over the last decade. These measuresinclude restructuring, rationalization and strengthening of the MMM so thatit is in a better position to regulate, coordinate and orient miningactivities in the country, thereby providing promotional support.Restructuring of the operational institutes and training of technicalsupport staff is aimed at minimizing overlapping functions and providingbetter focussed support in the areas of generating geological and mineraldata bases, consolidating mining development functions (e.g., mining andmetallurgical investigations) and providing specialized contracting serviceto the industry. Moreover, cadastral functions for the precise recordingof exploration and mining claims, now in a state of disorganization, willbe modernized using state of the art technology. The strengthening of allthese Government support functions is essential in creating the requiredenabling environment and providing an effective level of public services toattract private investment. It would also assure supervision of the sectorand collection of the sector's part in Government revenues.

2.39 A further element of reactivation of the private mining sector isthe provision of financing to the local mining industry at more competitiveconditions than in the past. The Government recently initiated a financialsector adjustment program which is expected to generally facilitate andaccelerate the flow of capital into productive rctivities and thus enhancemining finance. In addition, because of the special features and risks ofmining, the Government intends to strengthen the capability of the CentralBank and the banking system to evaluate and promote mining projects, and torestructure, modernize and partially privatize the mining bank (BancoMinero - BAMIN), the specialized but currently ineffective institution formining finance. Improved access to mining finance would complement theGovernment's efforts to attract private investment through inprovement ofthe investment climate.

2.40 Another important element of the Government's strategy is therehabilitation and complete transformation of CONIBOL. The Government isfirmly committed to this goal and has repeatedly elaborated on it iupublic. It is also laid down in detail in the Government's mining sectorstrategy document discussed during negotiations and attached as Annex 2.6.The basic objectives are an increase in efficiency to levels comparable tothe private sector, achievement of profitability and a reduction of theGovernment's direct participation in the sector through the transfer ofnon-operational properties and operating centers to the privat._ sectorthrough leasing, joint-venture or management contracts. The Government'sstrategy calls for a complete overhaul of COMIBOL's operations, creation ofa new corporate culture and value system which would permit independent andbusiness oriented management.

2.41 The long-term strategy for COMIBOL, as defined by the Governmentin its sector strategy (para. 2.40), calls for COMIBOL to develop from astate mining operation into a primarily promotional company. Under thisstrategy, COMIBOL would develop any new properties only as a partner injoint-ventures with private participation and under private management.COMIBOL would in the medium-term continue operating a maximum of eightmines (para. 2.21). These have been determined in COMIBOL's business plan

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(para. 3.17) as viable or potentially viable after additional studies andinvestments. Where justified by the results of the studies, potentiallyviable operations will be rehabilitated and returned to technical andfinancial viability. After their rehabilitation, these mines could thenalso be considered for joint-venturing, leasing or management contracts toreduce the Government's direct role in production. Six mines which are notcurrently operated but have not been closed or transferred to cooperativesyet, will be studied and, if viable. joint-ventured (paras. 2.21, 3.19)leased or otherwise managed.

G. Outlook for the Sector

2.42 The stagnation of production in the early 1980s, the inadequateexploration and development efforts since the early 1950s, and the limitedresources invested, raise the question whether the Bolivian mining sectorcan continue to play a major role in the economy as it has in the past. Onthe demand side, prospects are mixed. Following the minerals price boom of1980/81 and the subsequent decline, world mineral markets have beengenerally depressed for most of the decade; however, there has been astrong recovery fnr base metals such as copper, lead and zinc in1988/89--although tin prices have remained fairly sta:le. Hineral pricesare not expected to increase much in real terms over the medium term. Theinternational market for tin (which still accounts for more than 301 ofBolivia's mineral export and some 5? of world tin production) has beenoversupplied and is not expected to recover substantially. The supplyprospects are characterized by a promising but insufficiently exploredgeological base, good prospects for recovering lower grade ores by modern.processes, and by a substantial gap between what now exists and what isneeded in terms of supporting investment, institutions and policies. Insum, while there are indications of a large mineral resource base, themining sector can at best expect modest recovery in the remainder of thisdecade and early 19909. Although short-term recovery will come from tin,silver and zinc, major increased earnings of the sector over theforeseeable future will be derived from increased gold production, a sub-sector which has been largely overlooked until zecently. The potential isgood for the discovery of hard rock as well as derrital deposits and recentincreased interest, including new mining operations, by the private sectoris evident. The value of official gold productior. in 1988 was close toUS$60 million, representing a major increase over the last two years(production in 1986 US$7.2 million).

2.43 The extent of recovery will depend also on the design andimplementation of Government policies aimed at attracting high-risk privateinvestment. A realistic exchange rate, low inflation and interest rates,adequate availability of foreign exchange to producers and modestrehabilitation investment, could partially offset the decline in mineralproduction of the early 1980s in a relatively short period of time.Improvement of COMIBOL's operations will be a complex task, requiringexcellence in critical areas of management at both the headquarters andsubsidiary level, continuous dialogue with the unions and a major trainingeffort and change in staff motivation. An explicit, clear and consistentimplementation of Government intentions is an essential precondition forsuccess.

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2.44 Geological data suggest that Bolivia has sufficient mineralresources to sustain i.,. the long run a higher output than is currentlybeing achieved. To realize this potential, substantial investments will beneeded in exploration and, subsequently, mine development. Sirce thegeneral macroeconomic situation will limit the availability of :!vernmentinvestment in coming )ears, efforts should be directed to mobilize privatecapital, both foreign and domestic, ro participate in the development ofthe sector. The resource base is considered to be substantial and it isquite possible that mineral exports may approach US$1.0 billion annuallybefore the next century (Ministry of Mining and Metallurgy projections,December 1988, ref. Annex 2-7). Major alluvial gold reserve potential,particularly in the north of the country, is awaiting evaluation, mega-project potential (silver-tin) exists at Cerro Rico de Potosi and theBolivar zinc-silver mine, if financed and managed by the private sector,can be brought on stream within 3-4 years.

III. THE PROJECT

A. Role of IDA

3.01 IDA has given major support to the Government in the restructuringof the economy in recent years and has been actively involved in the r'ningsector of Bolivia since 1985 when the Government sought the Bank Group'sassistance to kee, the COMIBOL mines, which had badly deteriorated inoperation until additional funding could be found or alternative solutionsachieved. Under the IDA financed First Rehabilitation Import Credit (RICI-Credit 1703-BO) an amount of US$12.4 million was made available for theprocurement of urgently required spare parts, materials and equipment forCOMIBOL. During the preparation of the RIC I-COMIBOL component, theGoverument discussed with IDA the possibility of a COMIBOL rehabilitationproject and requested outside assistance to prepare it. A ProjectPreparation Facility was approved in December 1985 to finance consultantsfor project preparation. Because of the necessity to assist COMIBOLdirectly in the conduct of its operations and the consolidation andrehabilitation process, the PPF was complemented by a UNDP contribution andboth were merged into a Bank-executed UNDP project which started inOctober, 1986. During the supervision of this project variouspossibilities for rehabilitation of the sector were discussed with theGovernment and it was concluded that a comprehensive solution could befound only on the basis of a project which would address a broad range ofsectoral constraints. During 1987, the Government thus asked IDA during1987 to enlarge the scope of the project to include, in addition toCOMIBOL, the Government mining sector institutions as well as the privatemining sector.

3.02 Since that time, IDA has worked closely with the Government andCOMIBOL to formulate a coherent mining sector strategy/policy. As theproject scope expanded, IDA requested assistance from bilateral donors(Sweden) for the preparation of the project and started discussions withmultilateral and bilateral sources to coordinate the mobilization of fundsin addition to IDA financing.

3.03 In short, IDA supports and assists the Government in coordinatinga complex and wide ranging series of inputs for the effective

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implementation of the country's mining rehabilitation strategy. Directintervention by IDA in this critical sector will provide the impulse forcofinancers to participate. The proposed project will result in increasedmine production and exports, an increase in private sector participationand stronger sectoral institutions.

B. Pro3ect Obiectives

3.04 The basic objective of the project is to assist the Government inthe implementation of its m4.ning sector strategy, as outlined in theprevious chapter. As part of its strategy for the mining sector, theGovernment has initiated a US$151 million five year (1989-93) developmentprogram including (i) technical assistance and training to improve theservices of the Gcvernment mining institutions, including the MM and itsdependencies; (ii) establishing a line of credit for private mininginvestments; and (iii) rehabilitation efforts to increase COMIBOL'sefficiency. The project would support selected technical assistance andtraining components and high priority irvestments comprising about 852 ofthe five year program. It therefore covers a wide range of actionsdesigned to reactivate private mining, attract new investments, improveGovernment services to the sector, and rehabilitate the state miningindustry. Success is dependent on the creation of a conducive legal andregulatory framework. The project ultimately aims at making effecti'-e useof Bolivia's comparative advantages and restore the sector's vital role inthe economy.

1. Promotion of Mining Investment

3.05 The project would aim at promoting private mining investment, bothBolivian and foreign. It would support the Government in theimplementation and application of the new legal and regulatory framework.It would specifically be oriented towards:

(i) strengthening the capacity of the MMM4 to supervise and coordinatemining sector policy which includes determination of prioritiesfor mining sector institutions, interaction with external fundingagencies and guidance and advice to interested investors; and

(ii) reinforcing the cadastral service in order to effectively fulfillits function, and in particular to initiate the revised cadastreenvisaged in the draft legislation.

3.06 The project would also aim at alleviating financing constraintsand thus increase funding available to mining companies in Bolivia. Theproject would specifically:

(i) enhance the Central Bank's ability to promote mining credit withinthe banking system as part of the general strengthening of itsfunction as second fier for externally funded credit lines;

(ii) restructure and improve the operations of BAMIN to make it aviable channel of mining finance;

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(iii) provide substantial flexibility in the use of credit funds throughfinancing of locally purchased and used equipment, as well asworks, pre-investment studies and working capital; and

(iv) assist in the financial and technical restructuring of miningcompanies.

3.07 The project would also aim to support private mining investmentthrough strengthening cf the public mining institutions, which wouldimprove the geological and technological knowledge and thus make miningprojects less risky and more attractive. Specifically the project would:

(i) reactivate the operations of the geological service and initiateor complete high priority activities; and

(ii) reorient and streamline the mining/metallurgical institute inorder for it to render specialized sezvices and provide advice tothe mining community.

2. Rehabilitation of COMIBOL

3.08 The project objectives for COMIBOL are oriented towards thedevelopment of a healthy core of efficiently operated mines througheffective implementation of a rehabilitation program and the design andimplementation of a joint-venture strategy based on the evaluation andpromotion of non-operating holdings. The result at the end of the projectimplementation period should be a holding company managed in accordancewith sound buptness practices and guided by market forces.

3.09 Specifically the project would aim at:

(i) defining the role and functions of the corporate offices andequipping and staffing it adequately to fulfill itsresponsibilities, in particular in corporate planning andcoordination;

(Ii) improving in-mine exploration, reserve delineation, mine planning,mining methodology, and mineral beneficiation at the operatingmines;

(iii) designing and imu ,menting effective systems of accounting,reporting, budgeting, financial planning, and managementinformation;

(iv) upgrading or introducing methods of warehousing, purchasing andmaintenance of equipment and materials;

(v) strengthening of marketing capabilities including an evaluation ofany concentrate transportation bottlenecks;

(vi) strengthening of environmental and industrial health and safetycapabilities and standards;

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(vii) revision of wage and salary structure, introduction of adequateincentive schemes, initiation of training programs; and

(viii) enhancing COMIBOL's role as a joint-venture partner throughimplementation of priority projects in exploration, research andstudies.

C. Project DescriDtion

3.10 The project would finance high priority investments, technicalassistance, and training for the Government institutions, including MH0 andits dependencies, private mining companies and COMIBOL. It would consistof three componentss (i) strengthening of Government mining institutions,(ii) provision of financial and technical assistance to private mines andto cooperatives, and (iii) rehabilitation, management strengthening andtraining for COMIBOL as well as joint-venture promotion.

1. Institutional Strengthening

3.11 This component would include essential measures to improvemanagement, financial and technical skills, and to implement restructuringprograms in selected key areas. Important prerequisites for success ofthis component would be appropriate staffing and organization, and creationof a salarylincentive structure to assure adequate remuneration and staffmotivation. The principal cost elements would include additional equipmentneeded for drilling and laboratories, vehicles, technical assistance,including the execution of specific core projects, training materials, aswell as treining courses and study trips. The specific institutionalrequirements which are summarized below are based on an InstitutionalMaster Plan completed in January 1989 (Annex 3-1), which was reviewedduring appraisal and satisfactorily defines the revised functions of theMinistry and the mining sector institutions.

(i) The Ministry of Mining and Metallurgy (HMM) will be restructuredin accordance with a new proposed organization scheme (Annex 3-2).Key areas of MM will be strengthened under technical assistanceprovided through consulting assignments, training courses andstudy trips for key personnel.

(ii) GEOBOL will be maintained as a separate geological surveyinstitution under a new organizational structure (Annex 3-3). Aheavy emphasis will be placed on technical assistance through theprovision of both short- and long-term advisory staff. Salarylevels of core staff will be increased through salary supplementspaid for under a Government/co-financier arrangement for theduration of the project. Financing will also be provided forspecified infrastructural investments and specific prior4.typrojects;

(iii) a new Mining Development Institute, the Instituto de DesarrolloMinero (IDM), will be developed by Government under the auspicesof the project to consolidate support for the extractive side ofthe industry. IDM will include a Center for Mining andMetallurgical Research (CIMM) which will also provide services to

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the mining community. IDM will provide technical support,contract services and training facilities to assist the miningindustry. Similar to GEOBOL, technical assistance will beprovided through the provision of consultants, training and salarysupplements to key staff and financing of specific priorityprojects;

(iv) the Technical Mine Cadastral Service (STCM) is a new institute tobe created under the project. Financing will be provided for newmodern equipment and tec-hnical assistance for consultant supportand training of key staff. Project preparation for this sub-component was sponsored by IDB which is currently defining itsproposed financing contribution;

(v) FONEM will be disbanded and assistance to the small scale privatemining sector will be provided through IDM, BAMIN and commercialbanks;

(vi) BAMIN will be restructured to become more efficient and responsiveto its new status as a mixed-capital company. Technicalassistance and training courses would be provided for BAMIN underthe project.

A detailed description and objectives of the institutional strengtheningprogram including the main elements for the consultants terms of referenceis presented in Annex 3-4. The interrelationship of the new institutionalstructure which will be consolidated under this project, is shown in Annex3-5. Assurances will be obtained during negotiations through a datedcovenant that Government would by June 30, 1990 fully implement this newinstitutional framework, as laid out in the Institutional Master Plan andsatisfactory to IDA.

2. Financing of Private Mines and Cooperatives

3.12 Under this component of the project, funds would be provided tofinance investments, working capital, exploration, and pre-investmentstudies and restructuring workouts for the private mining industry.Focussing on the mining sector would contribute to institutionalstrengthening of the private banking system in the area of mining creditappraisal and would facilitate access of small- and medium-scale miners andcooperatives to such credit by introducing more flexible fundingprocedures, including free-standing working capital and financing of usedequipment (paras 2.33, 3.13 and 4.09). Since the medium-scale miningcompanies have better access to credit and IPC is preparing specificassistance to some of them, the credit component under the proposed projectwould focus primarily on support to small firms and cooperatives, while notexcluding medium-scale mining companies. Although the proposed project isoriented towards assisting the mining sector, it is also expected tocontribute to improvement of the financial sector in three ways: byreinforcing the long-term credit mechanism in the Central Bank, bystrengthening private banks' capabilities to handle long-term credit to themining sector, and by providing tecknical assistance for a completerestructuring of BAMIN.

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3.13 In addition to regular subloans for investment (includingassociated working capital, exploration, and pre-investment studies) orfree-standing working capital financing, the credit component would alsoprovide subloans to assist in the restructuring of those financiallystressed mining companies, which cau demonstrate their technicalcapabilities and potential for financial viability based on a soundrestructuring of their operations and of their short- and medium-termfinancial liabilities. A mining credit specialist within the DCD wouldadminister the credit line and provide advice to participating banks on itsuse. For technical assistance to participating banks and mining companiesthe DCD will hire specialized consultants to be financed from the spreadbetween IDA terms and the onlending rate to financial intermediaries.Financing of consultants, to assist in restructuring workouts or to prepareinvestment projects, would be considered eligible expenditure for subloansto be financed by the IDA credit proceeds. On the basis of their pastexperience, some specialized banks (e.g. BISA) are expected to play anactive role in financing restructuring workouts. The financial engineeringcapabilities of the Central Bank's Development Credit Department (DCD) andof participating banks would be strengthened under the proposed project.

3.14 An essential eligibility criterion for any firm to be financedunder the restructuring workouts would be to demonstrate its undisputedclaim on its mineral deposits and ownership of the fixed assets involved inits operations. Likewise, the firm would be required to demonstrate that,as a result of the proposed workout, it would become financially viable,and that no further claims could be leveled against the firm with respectto its liabilities at the time of restructuring. The financial workoutsmay require a change of the firm's ownership in which case such a changewould have to be completed before disbursement of the subloan although notnecessarily before its appraisal. In order to facilitate participation byfinancial intermediaries and access to credit of small mines andcooperatives, it is intended under the project to establish at the CentralBank a Guarantee Fund using Government contributions, possible recoveryresources from previous IDA credits and part of the spread that the CentralBank would receive from the operation of the proposed project. The CentralBank would prepare, by June 30, 1990, a detailed design of the GuaranteeFund and would review possibilities of its establishment and funding withIDA. The main features, which such a Guaran:ee Fund should include, havebeen discussed with the Central Bank and are summarized in Annex 3-16.

3.15 Beneficiaries. The proposed project would provide credit forsubprojects (in investments and working capital) to be implemer.ted by smalland medium mining firms. Small mining enterprises are defined in Boliviaas those private firms, or group of related firms, with less thanUS$100,000 equivalent in fixed assets (excluding mining rights orproperties) before project financing. On the basis of availableinformation, at the time of appraisal, it is expected that about 150 to 200firms would qualify as small mining beneficiaries under the proposedproject. Medium-size mining enterprises under the Bolivian legislation arethose private firms with more than US$100,000 equivalent in fixed assets(excluding mining rights or properties) which are r3gistered in the Chamberof Medium Scale Mines. By mid-1988, 19 firms were considered medium-sizemining enterprises and would have been eligible under the proposed project.Three of the largest medium miners were expected to obtain credits directly

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from IFC and BISA. Thus the number of potential beneficiaries is expectedto be around 16. Cooperatives would also be eligible if they operate assingle debtors with crossed guarantees through a participating financialintermediary. Since there is little experience in financing of miningoutside BAMIN, and the approach of this credit line is in some importantaspects different from previous credit lines to the sector (particularlyfree-standing working capital and used equipment), the component would beconsidered a pilot operation. In view of the pilot nature of the facility,and limited funding to establish the credit line, the volume of credit tobe initially financed under the project would be relatively small and lowerthan estimated credit demand (paras. 2.33, 3.39).

3.16 Limits and Terms. In order to avoid concentration of projectresources in a small number of firms the overall outstanding subloans toany individual firm, or group of related firms, would not exceed US$200,000equivalent, in the case of regular credits and US$500,000, in the case ofrestructuring credits. The overall outstanding subloans to any individualbank should not exceed US$2.5 million. A limit would also be establishedin relation to the existing equity and assets of the beneficiaries in sucha way that their maximum acceptable debt to-equity ratio would not exceed60:40, except for restructuring cases where the new credit can beappropriately justified by a rigorous cash-flow analysis and a detailedrestructuring strategy which would aim at reducing the company'sdebt/equity ratio to 60:40. Overall financing of free-standing workingcapital would not exceed an outstanding amount of US$160,000 per sub-borrower and an aggregate of US$3.0 million. Maximum financing throughcredit, including IDA resources and banks' participation with their ownfunds, would not exceed 901 of subproject costs and the maximum share ofIDA financing would be 80Z of the subproject. Appropriate maturitiesshould be established for each subloan on the basis of its own repaymentcapacity. However, such maturities would be limited to ten years,including up to three years of grace, for fixed investments and associatedpermanent working capital, and up to four years, including up to one yearof grace for free-standing working capital. Restructuring credits maybenefit from the maximum established maturities but subject to theagreement of the financial intermediary, as bearer of the risk, and to theproper justification of such maturity.

3. COMIBOL

3.17 COMIBOL, on the basis of the objectives formulated for thecompany, has prepared a five-year business plan. The plan, in addition tosetting annual targets for production, capital expenditures, operatingcosts and manpower planning, covers the physical investment needs forCOMIBOL's rehabilitation, training and technical assistance requirementsand a joint-venture plan. The idea to prepare a five-year business planwas first discussed with IDA in November 1987 and, after several revisions,was formally presented in May 1988 and revised further over the period July1988-January 1989. The physical part consists essentially of overdueinvestments, or replacement investments which would be part of a normalprogram to maintain production facilities in good operating condition.Technical assistance is concentrated in areas of most urgent need such asmanagement/technical skills, mine planning, environmental protection,geology, information systers, and human resource planning which are also

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the areas on which the training effort would be concentrated. The Planalso includes priority investments in exploration and studies in support ofjoint-venture activities with the private sector. The five-year businessplan (including the 1989 annual capital and operating budget) was reviewedin detail by IDA and is considered achievable and oriented towardsCOMIBOL's overall objectives.

3.18 The COMIBOL component of the proposed project will consist of thefollowing subcomponents:

- rehabilitation subcomponent- management strengthening and training subcomponent- joint-venture promotion subcomponent

(a) Rehabilitation Subcomponent

3.19 The rehabilitation subcomponent would consist of a large number ofsmall projects to maintain and improve the productive capacity of theexisting score mines, (Huanuni, San Jose, San Vicente, Chorolque, Colquiri,Caracoles, Viloco and Unificada). The proposed actions are described inAnnex 3-6 and are summarized below:

(i) the procurement and supply of operating materials, consumables andspare parts;

(ii) the procurement and installation of new equipment for the mines,concentrators and workshops;

(iii) the execution of mine works to improve and reduce operating costs;

(iv) the execution of exploration/mine development works;

(v) the execution of several technical studies including (a) a studyto joint venture, or operate profitably by other means such asleasing, six properties (Tatasi, Tasna, Chorolque, AnimasInocentes, Poopo and Santa Fe); (b) based on the results ofexploration work (to be carried out under item (iv) above),studies of the technical/financial feasibility of five properties(San Jose, San Vicente, Unificada, Caracoles and Viloco); (c) astudy of the expansion potential of the San Jose mine; and (d)studies regarding hydropower supply (Colquiri), leachingtUnificada, Animas Inocentes), and on the use of tailings(Catavi).

3.20 COMIBOL's investment program for the first year has been definedand consists principally of urgently needed equipment, materials and mineworks for the core mines as well as studies to define the potential ofmarginal mines. COMIBOL will present to IDA detailed work programs foritems (iii) and (iv) above for components to be financed by IDA for each ofthe individual mines and review them with IDA by September 30, 1989 andimplement the programs as agreed upon. COMIBOL will also prepare detailedterms of reference for the studies in item (v) above for review by IDA bySeptember 30, 1989, and undertake the studies using suitably qualifiedconsultants under terms and conditions acceptable to IDA. These studies

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would be reviewed with IDA by June 30, 1991 and C0I4IBOL would then,promptly thereafter, carry out the recomendations of these studies.

3.21 In addition to the above activities, COMIBOL prepared, as anintegral part of its five-year plan, an action program for social services,health, safety and environmental protection, in order to improveliving/working conditions which have deteriorated during the past years asa result of the crisis. The program calls for upgrading and improvement ofhouses, schools, medical units and recreational facilities. In the area ofhealth and safety, COMIBOL had, prior to the reorganization in 1986, aspecialized department respoasible for this area throughout theorganization. This department established comprehensive operational andreporting procedures for all COMIBOL operations including safety manuals,mine ventilation standards, personnel safety equipment requirements,explosives standards and accident reporting procedures. The 1986reorganization resulted in a reduction of central functions, transferringthe responsibility for health and safety to the decentralized companies.

3.22 Each of the new regional operating companies maintains a healthand safety engineer. These individuals are trying to maintain thestandards and procedures previously defined by the central department butlack the resources to address the issues or undertake detailed evaluationsof systems. Statistics for 1987 indicate that safety standards may havealready started to decline only a year after the abandonment of thedepartment. In order to alleviate the situation, COMIBOL will submit toIDA by June 30, 1990 an action plan to achieve adherence with the healthand safety regulations. COHIBOL will implement this action plan and reviewit with IDA semi-annually. It is further envisaged that under a follow-upFY91 mining project an institution would be set up to advise the Governmentin the definition of health and safety standards in mining and implementthem country-wide.

3.23 COMIBOL will execute a staged environmental protection program asagreed with IDA with five major phases (Annex 3-7). Phase One involvesestablishing adequate mechanisms for monitoring progress at COMIBOL'soperations. Phase Two involves identifying and setting priorities forcorrective action based on the results of Phase One including appropriateregulatory mechanisms. Phase Three involves further definition anddetailed design of the corrective measures. Phase Four is theimplementation phase and Phase Five on-going performance mcnitoring.Presentation of a detailed environmental program acceptable to IDA will bea condition of credit effectiveness. During the project, COMIBOL wouldimplement this program and review its implementation with IDA semi-annually. In addition GOB will prepare a national environmental miningaction plan acceptable to IDA. The submission of this plan for review byIDA will be affected prior to June 30, 1991..

(b) Management Strengthening and Training Subcomponent

3.24 In order that COMIBOL can meet its organizational andrehabilitation objectives, major changes are required in the manner inwhich the company manages its business. While many senior and middlemanagers have good technical skills, there is a general need to improvemanagement skills at all levels in the organization. Traditionally,

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COFI80L has not undertaken formal management development and trainingactivities. Managers have been developed on the job, depending on thecapability and competence of the supervisor (the same occurred forCOMIBOL's workforce at large). If COMIBOL's management team is going tofulfill its mandate as the agent for organizational change, formalmanagement development and train'tng will be required, taking a pro-activeapproach in developing management resources.

3.25 COMIBOL's management will be strengthened along the linessummarized below and described more fully in Annex 3-8. IDB has taken thelead In preparing the overall approach to management strengthening and ispreparing assistance to finance the expatriate staff and the technicalassistance noted below. First, about 17 experienced personnel will berecruited on fixed term contracts to fill a number of selected strategicpositions in COMIBOL, while COMIBOL staff are selected/trained to fillthese positions. Second, technical assistance will be provided to assistIn certain key areas such as strategic planning, human resources,marketing, industrial safetyienvironmental protection and mine projectevaluation. Third, COMIBOL will improve the competitiveness of itscompensation scheme in order to attract and keep competent, experiencedsenior managers. COMIBOL by June 30, 1990 will establish and, thereaftermaintain, a compensation scheme for its middle and senior level managersacceptable to IDA and consistent with the public sector compensationpolicies of GOB.

3.26 A fourth element of the management strengthening activity istraining. The training program would aim at upgrading and continuous)viproving the skills of COMIBOL9s personnel and would include the measuressummarized below and outlined in Annex 3-9:

(i) strengthening of COMIBOL's training capability through thecreation of a new training unit;

(ii) establishing new training programs for managerial and supervisorypersonnel. A senior and middle management program model isattached as Annex 3-10 and the course outline in Annex 3-11; and

(iii) a technical skills and development program for the workforce ispresently being prepared by consultants (Coopers and Lybrand)which mainly involves the preparation of manuals (for operations,electrical, mechanical, electronics skills etc.). An example ofthe manual format is attached as Annex 3-12 and of a typicaltraining profile (Annex 3-13).

COMIBOL will submit its detailed training program for IDA's comments andreview by Juw) 30, 1990 and implement said program thereafter.

(c) Joint Venture Promotion Subcomponent

3.27 This subcomponent of the project is a key element for thecorporate strategy of COMIBOL. The promotion of joint ventures will focuson three catagories of mining properties: (i) partially operationalCOMIBOL properties which are in the process of production reorientationfrom (old) tin mines to lead-zinc-silver production; (ii) non-operational

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properties for which technical information indicates a productionpotential; and (iii) explorational holdings with little or no recent work.

3.28 Pre-project packaging of the first joint venture category isalready underway by COHIBOL. Under the project this work will be refinedthrough technical studies to be performed under the rehabilitationsubcomponent resulting in promotional documents for those properties (e.g.,Tatasi, Animas Inocentes) considered to have joint venture potential.

3.29 The second category of non-operational properties (e.g., Bonete,Buena Vista) will be subjected to specific studies under the projectincluding limited testing and reconfirmation of known mineralization aswell as economic geology assessment and interpretation. Study work, similarto the first category, will result in promotlonal packages to attractprivate investment through divestment or joint venture. If promotion ofpromising properties of this category is successful and a joint venturecontract negotiated, the proposed project would finance up to 25 per centof COMIBOL's share in the costs of follow-up exploration and prefeasibilitystudies, with the balance financed by the private sector.

3.30 Approximately 50 prospective exploration holdings have beenselected for the third category. The project would finance additionallimited evaluation work by specialized consultants. It is expected thatapproximately 10X of these non-operational prospects would merit moredetailed exploration and evaluation. Similar to the first two categoriesof properties, promotional packages will be prepared for the promisingprospects in an effort to attract private investment through jointventuring. The remaining properties deemed to have limited potential willbe subjected to provisions of the Mining Law, particularly as set out inTitles V, VI and VII.

3.31 Joint venture contracting or leasing of all three categories ofproperties will be actively promoted under the project through a specialpromotional group which COMIBOL has agreed to set up, by June 30, 1990,using the services of specialized technical, legal and financialconsultants satisfactory to IDA. In addition to preparation of industry-oriented promotional documentation, the promotional activities will includethe identification of potential investors and organization of promotionalmeetings in major mining and banking centers. Meetings will also be heldin Bolivia to review and present detailed technical information and to giveinterested investors the opportunity of on-site visits.

3.32 It is expected that upon completion of this subcomponent COMIBOL'score mines" will be generating sufficient cash flow to permit financing offollow-up promotion and joint venture participation.

D. Proiect Implementation Arrangements and Schedule

1. Prolect-coordination

3.33 Due to the large number of project components, the differentsources of finance and technical assistance, the project will requirecareful coordination and supervision during implementation. Projectcoordination will require the services of an overall project co-ordinator,

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an institutional component co-ordinator and a COMIBOL component co-ordinator. Overall project coordination will be the responsibility of theMMM wb4 ch will appoint the Project Coordinator. This Project Coordinator,located within the Undersecretariat of Administration and Coordination,would monitor project implementation on a day-to-day basis, keep theMinistry informed about major developments, and resolve issues and takeappropriate initiatives as deemed necessary to ensure effective projectimplementation. In particular, the Project Coordinator will be required toliaise with the various 4MM departments, other ministries, the CentralBank, COMIBOL, mining associations, and IDA. At present, the ProjectCoordinator position is being filled on an interim basis by the coordinatorfor project preparation. Assurances were given at negotiations that theposition will continue to be filled until a permanent appointment can bemade. The permanent appointment of the Project Coordinator, acceptable toIDA, will be a condition of credit effectiveness.

3.34 Two project components--the rehabilitation of COMIBOL and thestrengthening cf mining institutions--will require separate coordinators(para. 3.33). The coordinator for COMIBOL will head a project coordinationunit within the headquarters of the company. The coordinator will beresponsible for ensuring the timely implementation of the various COMIBOLsubcomponents, mine rehabilitation, consultancy and middle-level managementinputs, training, ore reserve development works and contracts, joint-venture promotional activities, personnel and environmental matters.Furthermore, the COMIBOL coordination unit would coordinate all projectprocurement requirements; liaison would be maintained with COMIBOLsubsidiaries, the company's procurement agents and the overall ProjectCoordinator in MMM.

3.35 The coordinator of the institutional component (the MMM Sub-Project Coordinator) will be responsible for overseeing and coordinatingthe restructuring and strengthening of the various institutions (MMMitself, GEOBOL, IDM, CIMM, and STCM). He would also supervise theimplementation of the various technical assistance projects, consultancyinputs, training programs and relevant procurement. Furthermore, theinstitutional component coordinator would provide assistance to the MHK incoordination and integration of participating bilateral and internationalco-financing agencies. Principal areas of liaison would be with suchagencies, the Government's procurement agents and the overall ProjectCoordinator in the MMM. The appointment of the two Project Coordinatorsfor COMIBOL and the mining institutions will be a condition of disbursementfor these two components.

2. Financing of Private Mines

3.36 Second-Tier Mechanism - Central Bank. The main responsibleorganization for the credit component would be the Development CreditDepartment (DCD) in the Central Bank. The DCD, operating as a second-tierdevelopment bank is already managing other IDA credits as well as severalmultilateral and bilateral loans. Under its current operational proceduresDCD has established that participating banks, as bearers of the risk, arefully responsible for subproject appraisals and approvals. DCD does,however, a certain number of ex-post appraisals on a sample basis. Thesame system would be used under the proposed project. The first five

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subloans would require DCD review, as well as IDA approval, prior todisbursements. Furthermore, subloans for restructuring projects where theaggregate outstanding amount exceeds US$300,000 would require priorapproval by IDA. DCD review will be limited to the completeness ofdocumentation and furnishing of comments, and would not imply approval orrejection of a credit application. In view of the nature and small maximumlimits for subloans, banks would be required to analyze the repaymentcapacity of enterprises requiring subloans of less than US$100,000equivalent. For loans over that amount and up to the limit of US$200,000banks would be required to calculate financial rates of return of thesubprojects. DCD would process credit applications, superviseimplementation of the credit line and advise participating banks on its use(para. 3.13). DCD would, in particular, assist the participating banks inprocuring the necessary assistance to evaluate technical, financial, andmanagerial aspects of subprojects. While the line of credit would have itsown guidelines and operating regulations they would be designed to fitwithin the overall guidelines of the DCr (para. 2.30). Draft guidelinesand operating regulations have been prepared by the Central Bank, have beenreviewed by IDA and were discussed during negotiations (Annex 3-17). Theappointment of a mining credit administrator and finalization of theguidelines and operating regulations in accordance with IDA's commentswould be conditions of disbursement of this project component. No subloanapproval will be made by BCB after June 30, 1994.

3.37 Financial Intermediaries. Not all commercial banks are likely tohave an active participation as first-tier lenders. While BISA and BAMINare likely to channel a large part of the credit line because of their pastexperience with mining finance, some additional banks are expected to usethe funds of the credit line. Eligibility of commercial, as well asspecialized banks, would be determined by the BCB and by theSuperintendency of Banks in accordance with criteria applied by theseinstitutions, and satisfactory to IDA. In addition to the bank'screditworthiness, the eligibility criteria would include an assessment oftheir long-term credit appraisal capabilities and of past experience withmining sector operations. Based upon existing information, at the time ofappraisal of the proposed project, it is estimated that about 4 or 5 bankswould be eligible to participate. In addition to commercial banks, otherfinancial intermediaries qualified as such and being in good standing withthe Superintendency of Banks (e.g., financieras and FENACRE) may beeligible to participate. However, cooperatives would not be eligible toparticipate as financial intermediaries although they may participate ascredit beneficiaries, operating through other established financialintermediaries. As a condition for disbursement under the creditcomponent, BCB would present to IDA two or more participation agreementssigned by participating banks.

3.38 BAMIN as Financial Intermediary. Due to its specialized natureBAMIN is expected to play an important role as financial intermediary.However, due to its low efficiency and unresolved organizational and legalsituation (paras. 2.31-2.32), BAMIN's participation as a direct lenderunder the credit components would require, in addition to the othercriteria applied to banks (para. 3.37), the initiation of its restructuringplan as follows: (i) a policy statement by BAMIN's board indicating thetermination of all its equipment trade; (ii) a detailed evaluation of

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BAMIN's total equipment inventory and the unambigaous initiation of theprocess of liquidation of such inventories; (iii) reassessment of BAMIN'sassets and determination of the private sector's share of BAMIN's equity;(iv) completion of all necessary legal steps for the effectiveness ofBAMIN's new statutes; (v) preparation. and initial implementation of asatisfactory loan recovery plan, including a calendar of expectedrecoveries and alternative suggested actions, for BAMIN's largest 26debtors; (vi) the establishment of a basic management information system(MIS) satisfactory to IDA and a plan to complete such an MIS; and (vii) acalendar for execution of the program for technical assistance as agreedduring project preparation.3 Some of the above steps have been initiatedduring project preparation, and technical assistance under the project willhelp complete the remainder. IDA would review BAMIN's fulfillment of aboverequirements and, if satisfactory, approve its eligibility as a lendinginstitution under the project. BAMIN is expected to take advantage of itspast experience and play a particular role in providing the very smallmines and cooperatives with the necessary technical and financialassistance to facilitate the gradual entrance of the informal miners intothe formal credit markets, specifically when the support of the proposedguarantee scheme become available (part-. 3.14). Assurances will beobtained during negotiations that BCB will onlend funds to BAMIN only afterit has demonstrated to IDA BAMIN's fulfillment of the specific eligibilitycriteria above.

3.39 The Government, as the proposed borrower, would transfer to theCentral Bank, under IDA terms, US$7.3 million equivalent of the creditcomponent. According to existing laws and regulations (Decree 21660), theCentral Bank would relend those resources to the financial intermediariesin local currency but with a clause of adjustment to the parity of the USdollar, at LIBOR + 12. Thus the Central bank would assume the exch=ngerisk between the US dollar and the SDR but would retain the spread betweenIDA charges and its onlending rate, to cover administration, technicalassistance costs and possibly funding of the Guarantee Fund (paras.3.13-3.14). According to the same above-mentioned laws, the financialintermediaries would relend to final beneficiaries (also in local currencyadjusted to the parity of the US dollar), at LIBOR + 6Z. Thus finalbeneficiaries, in this case small and medium miners, would bear the dollarexchange risk and pal substantially positive real interest rates. Althoughhigh, such rates are still lower than current commercial lending rates(about 202 p.a. in US dollar equivalent), and would contribute to ease thecurrent financial shortage of small and medium firms. Onlending rates tofinal beneficiaries would be subject to periodic reviews between IDA andthe Central Bank in order to avoid distortions but also to avoidunnecessary delays in the comnitments under the proposed credit.

3/ Detailed terms of reference for this technical assistance are includedin a document prepared by a Bolivian consulting firm (CAEH) dated July1988, on BAMIN's assistance needs, which is available in the projectfile.

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3. COMIBOL

3.40 The COMIBOL component will be implemented by various COMIBOLsubsidiaries and departments. The overall responsibility would rest withCOMIBOL's General Manager who would be assisted by a coordinator (par&.3.34). Procurement would be handled by a Government-appointed procurementagen_y and monitored by the relevant procurement offices of COMIBOL. ThePersonnel Department of COMIBOL would be responsible for the trainingprogram. A training coordinator would be appointed to head the TrainingPlanning and the Managerial Level Training Units. Organizational andmanagerial strengthening, which would rely heavily on technical assistance.would be overseen by a technical assistance coordinator. The training andtechnical assistance coordinators as well as the chief of the procurementdivision would report to COMIBOL's project coordinator, who in turn wouldreport to COMIBOL's General Manager and liaise with the overall projectcoordinator in MMM. An implementation schedule is given in Annex 3-14 andan organization chart for project management in Annex 3-15.

IV. PROJECT COST, FINANCING PLAN, PROCUREMENT AND DISBURSEMENT

A. Project Cost

4.01 Project costs are summarized in the table overleaf. The projectcomprises about 85S of a US$151 million five year (1989-93) investmentprogram for the Mining Icstftutions and COMIBOL plus estimated creditrequirements for that period. A cost breakdown of the five year program isgiven in Annex 4-1. Detailed cost and sunmary tables for the program areattached as Annex 4-2. Project cost including contingencies is estimatedat about US$126.8 million equivalent. Of this total, approximately 541 isforeign exchange cost and 46Z local cost. About 772 of the funds will beused for rehabilitation of COMIBOL, 142 for institutional strengthening ofGovernment services, and 92 for credit to private miners and cooperatives.Financing sources have been identified for the balance of the five yearprogram (about US$24 million) from bi-lateral sources. These are notsufficiently advanced to be included as firm financing under the project.IDA will assist the Government in its efforts to finalize these additionalfinancing packages and IDA will also consider further support if requiredfor the program.

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S _ ry of Pro ect Cost !/cuss *1 moan)

S Sof TotalForeign Local Total Forelan Bsae Coat

A. COMI3OL

1. Upgrading of Mining and Plant Facilitles

Oruro 16.1 18.8 28.9 62Quechisi 6.7 4.1 9.8 68La Las 9.6 9.4 19.0 61Potosi 4.9 8.8 8.7 67Corporate Offtice and ServiceFacilities 2.8 1.6 4.4 64

Subtotal 88.1 82.7 70.8 54 60

2. Training Program 1.8 0.8 2.1 8a 2

8. Organizational and ManagerialStrengthening 2.9 1.4 4.8 67 4

4. Joint Venture Promotion 5.6 6.8 12.4 46 11

6. PPF Retinancing 1.0 - 1.0 - 1

Subtotal 49.4 41.2 90.6 64 77

B. Institutional Strengthening

mmD 1.7 0.2 1.9 89 2GEODOL 2.7 2.4 6.1 63 4IDM 0.8 1.1 1.9 42 2Cadastral Service 8.0 8.8 6.8 44 6SAMN 0.4 0.1 0.6 80 0PPF Retinancing 0.8 - 0.8 100 -

Subtotal 8.9 7.6 16.6 64 14

C. Credit to Private Minand CooRerative 6.8 6.0 10.8 62 9

Total Project Base Cost 63.6 58.8 117.4 64 100Physical Contingencies 8.2 2.7 6.9 64 6Price Contingenciea 1.9 1. _ 8.6 64 a

Total Project Coat 68.7 68.1 126.8 64 108

TT IncruaWt mn astemstd USSlO million In duties and taxes.

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4.02 Expenses under the COMIBOL component would serve primarily forprocurement of equipment, spare parts, materials, mine works, and fortechnical assistance. COMIBCL's cost estimates were prepared in the secondhalf of 1988 by COr4IBOL on the basis of previous procurement experience andupdated suppliers' quotations, and were adjusted to reflect price changessince then. Under the institutional strengthening component, expenseswould be primarily for equipment, training, and special projects designedas packages, to be carried out by GEOBOL and by IDM with externalassistance. For this component, cost estimates were prepared in 1988 bythe institutions concerned with the assistance of consultants, based onrecent procurement experience and suppliers' quotations and updated toreflect prices at the time of this report. Under the credit component,various types of mine equipment would be financed as well as materials,spare parts, works, and ronsultant services. The mining credit requirementestimates were derived from projects which have already been prepared, andassessments of potential credit demand from small and medium mines andcooperatives.

4.03 The cost of consultants for project implementation has beenestimated, on the basis of a per-month rate of US$9,000, with the exceptionof long-term consultants for COMIBOL's middle-level management whose costswere assumed to be in the range of US$4,000-6,000, depending on theposition. Physical contingencies of 102 have been added for equipment,spare parts, materials and mine works. No physical contingencies have beenassumed for technical assistance, studies, special GEOBOL/IDM projects andjoint-venture promotion. Price contingencies are based on equal escalationrates for both foreign and lociA co'ts; it is assumed that the exchangerate of the Bolivian currency will be adjusted to compensate for thedifferential between local and international inflation. Pricecontingencies are based on projected international inflation rates of 1.5Zp.a. for 1989, and 3.6? p.a. thereafter.

B. Financing Plan

4.04 A financing plan presented in the table overleaf has been drawn upas a result of discussions with the Government, COMIBOL, cofinanciers andIDA. As Bolivia experiences severe budgetary constraints, the proposedexternal financing woild cover approximately 60? of the project's totalcost, equivalent to 100? of the foreign exchange costs and 142 of the localcosts. The external financing includes in addition to the proposed IDAcredit of US$35 million, US$25 million identified parallel financing fromBITS (Sweden) and the Interamerican Development Bank for specific parts ofthe project. The Government's financing contribution for the institutionalstrengthening component would mainly involve routine operating costs, whileCOMIBOL on the basis of its financial projections would be in a position tomeet its share of the project costs from its cash flow.

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Financing Plan(US$ million)

Mining Credit toInsti- Mining PPF Re-

COMIBOL tutions Companies Financing Total

Internal

COMIBOL 45.5 - - - 45.5Government - 1.4 - - 1.4Mining Companies - - 1.5 - 1.5Banks - 1.5 - 1.5Subtotal 45.5 1.4 3.0 - 49.9

External

IDA 22.7 3.7 7.3 1.3 35.0Existing FinancingArrangement a/ 10.1 - - - 10.1

Cofinanciers 12.5 12.5 - - 25.0Private Investors 6.8 - - - 6.8Subtotal 52.1 16.2 7.3 1.3 76.9

Total 97.6 17.6 10.3 1.3 126.8-- - - __ __

a/ Consists of IDA (RIC I and II - US$7.8 million) and KfW (US$2.3million).

4.05 These funds will be sufficient to finance the proposed project,while it is envisaged that the balance between the full cost of the fiveyear program (US$151.2 million) and the project cost (US$126.8 million),will be made available through other presently identified sources includingadditional parallel financing. Available financing has been allocated toensure completion of the priority parts of the institutional program asfirst priority, while COMIBOL has prepared its investment program in sucha way that capital expenditures can be made in a phased manner according tothe available financing (from both internal cash generation and externalsources). Effectiveness of the IDA credit would depend on effectiveness ofthe Swedish funding and assurances from IDB that IDB intends to parallelfinance part of the project.

4.06 The proposed IDA Credit of US$35.0 million equivalent would beextended to the Government of Bolivia under standard terms. The Governmentwould on-lend US$22.7 million to COMIBOL at LIBOR + 21 for 10 years withfive years grace. US$5.1 million to finance studies and joint-venturepromotion would be passed on to COMIBOL at IDA terms since these activitieswould not be directly productive and would serve to help COMIBOL build upspecialized skills and increase the knowledge of its mineral potential forimproved decision making. US$3.7 million of the proposed credit would bemade available through NMM to its dependencies as grant for theinstitutional strengthening component. Grant terms appear appropriate

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since these are service institutions with praEtically Ao revenues, with theexception of BAMIN, for which grant terms are justified given the weaksituation of the institution (paras. 2.31-2.32) and the limitation offunding to technical assistance. Assurance has been obtained atnegotiations that the Government will make appropriate arrangements witheach of the agencies with implementation responsibility, providing forproject implementation and for transfer of appropriate resources. US$7.3million would be on-lent to the Central Bank for credit to small and mediummines under terms and conditions detailed in para. 3.39. Conclusion ofsubsidiary loan agreements between the Government and COMIBOL, and theCentral Bank acceptable to IDA would be a condition of crediteffectiveness. A flowchart for the funding of the different projectactivities is attached as Annex 4-3.

C. Procurement

4.07 COMIBOL and Mining Sector Institutions. Procurement of all IDA-financed items (equipment, materials, parts, and works) will follow IDA'sprocurement guidelines. Procurement of items financed by cofinanciers willfollow the respective procurement procedures of these institutions.Procurement of IDA-financed items will generally be done throughInternational Competitive Bidding (ICB). However, specific equipment andsrare parts amounting to about US$2.5 million, or about 7? of the proposedIDA Credit, will be procured through Limited International Bidding (LIB)from at least four suppliers from at least three different countries. Thiswould apply to packages costing less than US$200,000 and to packages ofequ'pment which can only be procured from a limited number of firmsproviding highly specialized services or equipment. About US$0.7 millionof computing and office equipment including maintenance/service of the samefor the institutions would be procured through local competitive bidding(LCB). In addition, approximately US$0.4 million will be used for directpurchase of proprietary equipment which would replace or add to proprietaryequipment already operating in the mines and plants. Equipment items willbe grouped into packages designed to achieve maximum efficiency and costeffectiveness. All procurement for COMIBOL and the mining sectorinstitutions will be handled by one of the procurement agencies hired bythe Bolivian Government.

4.08 Contracting of technical assistance, consulting and training stafffinanced under the IDA Credit will follow IDA guidelines for use ofconsultants. These services will include hiring of individual staff forCOMIBOL, using a spectalized employment agency, technical assistancecontracts and consultancy services for both institutional and COMIBOLstrengthening, the execution of studies, and joint-venture promotion.Contracting of training staff and organization of personal training abroadand in Bolivia will be handled by the HMM (for the mining institutions) andwill be implemented on the basis of annually updated training programsacceptable to IDA. MMM would submit draft annual training programs for themining institutions for IDA's comments by November 30 of each project yearstarting November 30, 1989.

4.09 Mining Credit. Procurement of goods and services financed underthe credit component would follow standard practices for Bank/IDA secondtier type projects. The Central Bank/DCD and participating financial

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intermediaries would be responsible for ensuring the competitiveness inprice and quality, of items procured. Credit to mires and cooperativeswould finance the approximate foreign exchange costs and local costs ofimported and locally procured machinery and equipment, materials, civilworks and services, as well as the costs for reconditioned or usedequipment procured locally (for which the aggregate amount of IDA financingshould not exceed US$2.0 million). The condition, value and useful life ofthis equipment will be certified by independent and qualified experts,satisfactory to IDA to be selected from a roster maintained by the DCD.For goods and works (except for packages under US$50,000), participatingintermediaries would require comparative shopping, (i.e., at least threequotations). In cases where it may be impractical to obtain threequotations because of the limited size of the order, this requirement couldbe waived if adequate justification is provided. For packages belowUS$50,000, procurement would be done following established commercialpractices, acceptable to IDA. Participating intermediaries would satisfythemselves that procured items are su .ble for the respective subprojects,are reasonably priced, and that the beneficiaries are purchasing from themost advantageous source. Consulting services or technical assistance forsubprojects will be contracted in accordance with IDA guidelines for theuse of consultants. All subproject appraisals would include a discussionof procurement procedures used, responses received, prices quoted andcriteria for selection of suppliers. It is not expected that any singlecontract would exceed US$300,000.

4.10 Contract Review. On the basis of the list of procurement packages(Annex 4-3), IDA would do a prior review of bidding documents for equipmentpackages estimated to value more than US$300,000 or works contracts valuedat more than US$500,000 each (representing about 80? of the equipment andcivil works categories). Packages valued below the above stated limitswould be subject to post review by IDA. Procureomnt arrangements aresulmarized in the following table:

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Procurement Arrangements a/(US$ million)

Procurement Method TotalProject Element ICB LID LCB Other Cost

Civil Works 17.4 - - 42.5 59.9(14.8) (-) C-) I-) (14.8)

Equipment 6.3 2.9 - 26.7 35.9(4.0) (2.5) (-) (1.3) (7.8)

Services - - - 14.5 14.5C-) t-) (-) (2.3) (2.3)

Specific Projects - - - 6.2 6.2(GEOBOL, IDM) (.) (-) (-) (1.5, (1.5)

Mining Credit - - 5.0 5.3 10.3(-) (-) ~(2.0) (5.3) (7.3)

Total 23.7 2.9 5.0 05.2 126.8(18.8) (2.5) (2.0) (10.4) V43.7) bl

al Figures in brackets indicate the amounts to be financedby the IDA Credit.

bi Excludes refinancing of PPF (US$1.3 million).

D. Allocation and Disbursement of IDA Credit

4.11 The IDA Credit of US$35.0 million would finance goods and servicesin accordance with the allocation summarized in the table below:

Allocation of IDA Credit(USS mililon)

Credit toInstitutlonal Mining Unal- Dieburaseent

Catesorles COMIBOL Strenothenlno Coan located Total X Porcentage

1. EquIpmnt,Spare Parts 100I of foreign costand Materials 6.6 1.2 - - 7.7 22 and 00X of locel cost

2. Wtrks/Studi.s/ 100X of foreign costJV Promotion 14.0 1.5 - - 16.5 44 and 903 of local cost

3. TechnicalAssistance/ 100X of foreign costTraninng 1.0 1.1 - - 2.1 6 and 90X of local cost

4. Credit - - 7.8 - 7.8 21 7O3 of total cost

S. PPF 1.0 0.8 - - 1.8 4

6. UnaIloc ated -- 1.1 1.1 8

Total 22.5 4.1 7.8 1.1 85.0 100

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4.12 All expenditures will be fully documented except expenditures inrespect of contracts, purchase orders, or training programs valued at lessthan US$200,000, as well as for expenditures under the Credit Componentwhich will be covered by Statement of Expenditures. Expenses for specificGEOBOL projects funded under the Credit would also be covered by Statementof Expenditure.

4.13 The disbursement schedule for the project (Annex 4-4) is based onestimates of order placements, payment schedules, and expected deliverytimes. It differs from the standard country and industry profiles as theproject is a rehabilitation project with limited construction work. TheCredit is expected to be fully disbursed by December 1994.

V. FINANCIAL ANALYSIS OF COMIBOL

A. Financial Projections

5.01 Financial projections for COMIBOIJ have been prepared in current USdollars covering the period of COMIBOL's five-year plan. The projectionsare based upon the aggregation of cost and revenue forecasts prepared inconstant 1989 US dollars by COMIBOL's headquarters and subsidiaries (LaPaz, Quechisla, Oruro, and Potosi). COMIBOL's forecast was adjusted diuringthe initial two years, 1989-90, ta allow for an increase in productiontoward full capacity utilization in 1991. The projections in current USdollars assume that Bolivia's current exchange rate policy will continueand that exchange rate adjustments will reflect the differential betweeninternational and domestic inflation. COMIBOL's financial forecast inconstant US dollars was therefore inflated with the Bank's forecast of theManufacturing Unit Value (MUV) Ind'x.

MUV Index Forecast, 1990-93

1990 1991-93

MUV Index Change (Z p.a.) 1.5 3.6

5.02 COMIBOL's sales forecasts are based on its adjusted projections oftin, silver, lead and zinc production. Closing and joint venturing ofmines during 1989/90 will cause an initial decline in the output of silver,lead and zinc, while tin production is expected to increase moderatelyduring 1989/90. Metal sales proceeds are the result of projectedproduction and the Bank's latest commodity price forecast.4 The generaloutlook for metals produced by COMIBOL is presented in Annex 5-1 anddetails of the metal price forecast used are given in Annex 5-2. Theprojections of operating costs of COMIBOL have been based upon thecompany's recent cost structure adjusted by the expected impact of theproject.

5.03 The assumptions for the f-.nancial forecasts and detailedprojections of the income and cash flow statements for COMIBOL and itssubsidiaries are given in Annex 5-2. The financial projections for COMIBOL

4/ Report 814/88 Price Prospects for Major Primary Commodities.

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are presented below. Financial projections were performed only for theincome and cash flow statements. COMIBOL's balance sheets for the recentyears, are unaudited and not considered a realistic basis for estimatingthe value of COMIBOL's assets and liabilities. The lack of a projectedbalance sheet is a weakness in determining COMIBOL's future financialviability. However, since the Government absorbed COMIBOL's total long-term debt in 1986, the debt-to-equity ratio of the company is satisfactoryand will remain satisfactory durinp the project implementation period.Moreover, COMIBOL has started a program to determine realistic book valuesof their equipment and materials inventories as a first step to a completeasset evaluation and full audit. COMIBOL has agreed to submit to IDA afull set of audited financial statements for 1987, 1988 and 1989 not laterthan Jur.3 30, 1990 and, thereafter, audited financial statements not laterthan six months after the end of each fiscal year. The projected incomestatements demonstrate that COMIBOL's operations during 1989-93 would beprofitable except for 1989, when low capacity utilization reduces salesrevenues. With the exception of 1989, when the Government is committed totransfer to COMIBOL an amount of about US$9.0 million to cover expendituresfor closed mines and other inoperative plants, COMIBOL would be in a strongliquidity position.

COMIBOL - Summary of Financial Projections, 1989-93(US$ million - current terms)

1989 1990 1991 1992 1993

Sales (gross revenues)Tin 43.9 60.7 66.8 73.2 77.2Silver 25.7 26.6 20.0 21.1 21.9Lead 1.3 1.1 0.6 0.6 0.6Zinc 16.2 21.3 17.7 19.5 20.4

Total 87.2 109.8 105.1 114.4 120.1

Marketing Costs 27.2 37.1 32.3 35.0 36.1

Net Sales Revenues 60.0 72.7 72.8 79.4 84.0

Operating Costs 60.1 57.8 49.5 51.3 51.9

Operating Income (0.1) 14.9 23.3 28.1 32.1Financial Charges 1.1 3.1 3.9 4.3 4.6Royalties 2.7 3.6 3.6 4.0 4.2

Net Income A.R. (3.9) 8.3 15.7 19.9 23.4

Cash FlowInternal Cash Generation 3.7 19.1 27.2 32.3 36.6Capital Expenditures 16.8 22.9 14.0 11.1 9.9

RatiosOperating Income/Net Sales -02 20X 32Z 352 38ZNet Income A.R./Net Sales -7? 11? 22Z 252 282

Debt Service Coverage 0.6 4.0 5.5 5.3 6.0

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5.04 COMIBOL is expected to be profitable during the period 1990-93.Net income after royalty payments to the Government would initialty benegative at -US$3.9 million in 1989 (-7Z of net sales revenues), but wouldrise rapidly thereafter to US$23.4 million (28Z of net sales revenues)during 1993, the last year of the rehabilitation period. Internal cashgeneration would rise in line with the growth of net income from US$3.7million in 1989 to US$36.6 million in 1993. The proposed project wouldcause the financial charges to rise from US$1.1 million in 1989 to US$4.6million in 1993. Since COMIBOL has a low long-term debt burden, theincreasing financial charges would not impair, to any major extent,COMIBOL's profitability. The debt service coverage ratio would be low in1989 at 0.6 and would increase thereafter to 6.0 in 1993. These ratios arethe result of a negligible initial debt burden and considerable cashgeneration during the period of rehabilitation.

5.05 COMIBOL is expected to accummulate considerable amounts of cashduring the rehabilitation period. At the end of 1993, COMIBOL's cashreserves would be US$54.9 million. During 1989, however, COMIBOL will facea cash deficit of US$11.8 million. In 1989, COMIBOL faces exceptionallyhigh expenditures for maintenance of inoperative mines and plants;continued severance payments to displaced workers; reduction of accountspayable (mainly arrears of power and fuel bills); build-up of stocks ofmetal concentrate and low production from some mines which are still in thestart-up phase. The major outflov of cash in 1989, however, is planned forinvestments amounting to US$16.8 million. However, given CONIBOL's pastimplementation performance, limited existing external financing available(US$10.1 million from KfW and RIC I and II), and the initiation ofdisbursements of funds from the proposed credit only during the second halfof 1989, would reduce the investments, and therefore the projected cashdeficit, would be smaller than currently projected. Furthermore, theGovernment, which has covered COMIBOL's cash deficits in recent years, iscommitted to provide a subsidy of US$9.0 million equivalent to COMIBOLwhich would cover the maintenance costs of inoperative mines and plants aswell as the costs of reducing the work force. During negotiations,agreement has been reached that the Government provide the fundingnecessary to cover COMIBOL's cash deficit in 1989. Such deficit wouldprobably be less than the currently allocated subsidy amount of US$9.0million equivalent. The cash flow forecast indicates that COMIBOL'srehabilitation would permit the initiation of dividend payments by 1991.Such payments would be in addition to royalty payments which are in lieu ofcorporate tax payments and compensate the Government for the value of themineral extracted in COMIBOL's mines. Based on appropriate policies ofcapitalization and liquidity reserves, the Government and COMIBOL willagree on a dividend and policy, satisfactory to IDA, prior to December 31,1990.

B. Breakeven Analysis

5.06 The breakeven price (the price required for COMIBOL to cover itstotal production costs) has been calculated for tin which accounts for 50Z(1989) to 642 (1993) of COMIBOL's gross revenues from metal sales.

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COMIBOL - Breakeven Price for Tin, 1989-93(US$Ilb. - current terms)

1989 1990 1991 1992 1993

Breakeven Price 2.55 2.33 2.25 2.26 2.30Projected Price 3.65 4.20 4.42 4.65 4.90

The breakeven prices are consistently below the projected price for tin,COMIBOL's main product. In addition, COMIBOL receives an important,although declining share, of its sales from silver, lead and zincproduction.

C. Sensitivity Analysis

5.07 COMIBOL's cash flow and profitability projections during the1989-93 period are sensitive to alternative assumptions with respect tocapital costs, operating costs, production levels, and metal prices. Thetable below indicates that COMIBOL's financial viability is not verysensitive to variations in project costs. Profits and cash flow, however,are sensitive to changes in operating costs, production and tin prices.COMIBOL has no influence over the tin price, which generates 50Z-601 of itsrevenues. The analysis indicates that COMIBOL needa to maintain closecontrol over its operating costs, as relatively small increases wouldresult in sharp reductions in profitability and cash flow. A major shareoZ operating costs is labor and overhead. During negotiations. agreementhas been reached that COMIBOL will adhere to employment and wage policieswhich will be consistent with the company's financial viability and wouldnot increase its total personnel to more than ten percent above thestaffing level as it stood on December 31, 1988.

COMIBOL - Sensitivit Anallsi: of Cash Flow and Profitabilityw5; mi I I i on and Percent)

Cash at1989 1990 1091 1092 1i9 End 1998

Base ForecastNot Income a.R./hNt Sol" -71 11X 22S 256 28X -Change In Cosh (11.8) 18.1 14.0 17.7 21.9 U4.9

CODItOl COS + loXNO Incoms.K./ot Sales -6X 16X 221 25X 28X -Change In Cash (12.9) 9.8 11.8 16.6 19.5 48.7

Ope:rtlna Cos # lOxt.Not Inhme *.R./fNttS le" -15X eX 1i1 19X 21X -Change In Cash (17.2) 0.8 6.2 11.6 16.8 24.1

Production Decline IL9:-lU: 90:-SX)Net Incom a.R./Net Sale -141 18X 22.10 28X 28X -Change In Cash (16.5) 9.2 18.2 16.7 20.5 44.0

Reduction of Tin Price (90-90: 7X-11X)Not Incom *.R./7 t Sales _-X 10X 151 18X 20X -Change In Cash (11.2) 7.1 7.2 9.6 12.8 26.0

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D. Financial Rate of Return and Sensitivity Tests

5.08 The financial rate of return for the proposed project has beencalculated on an incremental basis. It was assumed that the effects of theproposed project would be: (i) to prolong mine life by establishing ahigher volume of proven reserves, and (ii, to permit operations of themines at their rated capacities beyond 1990 until the end of the prolongedmine life. Without the project, it was assumed that all operations ofCOMIBOL would have to discontinue at the end of 1990. (Alternatively, theassumption of scaled-down operations after 1990, which would result in azero net cash flow, would generate the same result as a discontinuation ofoperations). The rate of return calculations were performed for each ofthe eight mines operated by COMIBOL (para. 2.20, 3.19), for the foursubsidiaries (Oruro, La Paz, Quechisla and Potosi), and for theconsolidated operations of COMIBOL. The incremental cost and benefitstreams and the results of the calculations of the financial rates ofreturn are in Annex 5-3.

5.09 The average rate of return for the project is high at 42.2Z, whichis not atypical for a rehabilitation project. The project adds neededworking capital and replacement equipment to an already existing productioncapacity, which would however discontinue to function without the project.All production which occurs after implementation of major parts of theproject in 1989-90 is attributed to the project, thus generating a highrate of return. A major factor determining the financial rate of return isthe severance pay which would have to be paid to employees, if COMIBOLwould discontinue operation in 1990. In addition to the high social costrelated to the displacement of a large number of workers, the terminationof COMIBOL's operations would involve financial expenditures ror severancepay of about US$22.8 million. The financial rate of return varies widelyamong different subsidiaries and mines. The large mines which operate inthe subsidiaries of Oruro and La Paz have high rates of return of over 502,while the smaller mines in the subsidiaries of Quechisla and Potosi havegenerally low rates of return of around 52. The low rates of return havebeen made under assumptions based on the current low reserves and pooroperating methods. For these mines, the project provides for studies inthe first two years to determine possibilities for extending reserves andimproving operations. Mines, for which this is the case, would then havehigher rates of return, while investments in mines without possibilitiesfor improvement would not be carried out and arrangements will be made tojoint-venture, lease or discontinue any such unprofitable operations inaccordance with its mandate (paras. 3.19 - 3.20).

5.10 The financial rate of return for the project is sensitive tovariations in metals prices, production costs, and investment costs.

Switching Values of Critical Variables

Variable Switching Value a/

Metals Prices -132Investment Costs i882Operating Costs +292

a/ The percentage change that reduces the financial rate of return to122.

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The rate of return is most sensitive to variations in metals prices. Afall of 132 in the prices (gross sales revenues) below the levels projectedwould reduce the financial rate of return to 122. The rate of return isnot very sensitive to the cost of the project (investment cost), butoperating cost variations have a relatively high effect on the return. Anincrease of 291 over current projection of operating costs would reduce therate of return to 12X. COMIBOL has no influence on metal prices, but itsdiversified product composition reduces the downside risk of metal pricechanges. Another critical variable for the rate of return is production.A fall in production below currently projected levels would havepractically the same effect on the rate of return as a drop in metalsprices, since COMIBOL's marketing and operating costs would change onlymarginally. The sensitivity tests indicate that COMIBOL's financialviability does neither permit major reductions in the targetted productionlevels nor large increases in operating costs.

E. Financial Covenants

5.11 In order to ensure the necessary financing for the Project and itscompletion in a sound manner, agreement has been reached on the followingfinancial covenants:

(a) from the Government

(i) that it will ensure that COMIBOL and the institutions have accessto sufficient funds, including foreign exchange to complete theProject;

(ii) that it will abide by the financial covenants to ensure COMIBOL'sviability and ability to implement the Project.

(b) from COMIBOL

(i) that, by December 31 each year, for the next five years it willprepare and submit to IDA for its review a proposed annualoperating and investment budget for the next year and submitapproved budgets, as soon as possible thereafter, plus financialprojections, including its foreign exchange and local currencyrequirements and planned expenditures on an annual basis;

(ii) that, in any given year, it will not make capital investments inaddition to the previously reviewed Investment Program exceedingin aggregate US$5 million without prior IDA's approval;

(iii) that it will maintain a current ratio of at least 1.2 to 1 from1989 onwards; a ratio of uebt to equity of not more than 50:50,and a projected debt service coverage ratio of at least 1.3.

F. Auditing and Reporting Requirements

COMIBOL Component

5.12 CONIBOL will submit annual financial statements to IDA audited byindependent auditors, within six months of the end of the accounting year.

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COMIBOL is currently not audited by independent auditors, but has agreedthat it will use the services of auditors acceptable to IDA. In addition,(i) COMIBOL will submit monthly progress reports within 30 days of the endof each month; (ii) COMIBOL will submit quarterly procurement reportswithin 45 days of the end of the quarter; and (iii) within six months afterthe closing date of the Project, COMIBOL will prepare and furnish to IDA acompletion report on the Project dealing with its implementation, and thecosts and benefits derived and expected to be derived therefrom.

Institutional and Credit Components

5.13 GEOBOL, IDM, STCM and BAMIN will submit their annual financialstatements to IDA, audited by independent auditors. The Central Bank willalso submit annually audited financial statements for its part of theproject. Such audited reports would be furnished to IDA not later than sixmonths after the end of each financial year. Auditing would be done byindppendent auditing firms acceptable to IDA and would include an audit ofthe statements of expenditure. Accounts for the project components wouldbe kept and made available by the MHM for inspection by IDA at any time.In addition, the MHM will submit quarterly revorts on progress of theproject (including procurement) within 45 days of the end of the quarterand finally the MHM would provide a project completion report not laterthan six months after the closing date of the Credit.

5.14 In addition, it has been agreed that IDA and the Government willperiodically review the project implementation performance. Suchperformance reviews would, among others, determine the banking institutionswhich would be eligible for participation in the Credit operated by theCentral Bank aud review the progress made in privatizing and jointventuring of COMIBOL operations. Concurrently with the preparation of theannual budget, the MMK would prepare a detailed work program for theproject for the following year, taking into account the likely budgetaryallocation. The entities responsible for implementation of the componentswould prepare annual work programs, which the MMM would consolidate foroverall execution of the project. The consolidated annual work programswould be submitted to IDA for approval by November 30 each year startingNovember 30, 1989. Starting not later than January 31, 1990, COMIBOL willreview annually with IDA the status of the inoperative mines, the mines tobe joint-ventured or leased as well as the unoperational explorationconcessions and properties.

VI. ECONOMIC ANALYSIS

A. Economic Benefits of the project

6.01 The proposed project forms an important component of Bolivia'sdevelopment program for the five-year period 1989-93. A success of theproposed project would not only re-establish the viability of the country'slargest mining enterprise, but would have also major macroeconomic effects.The mining sector provides employment to about 47,000 workers. COMIBOL has7,000 employees who would not easily find alternative employment if thecompany would discontinue operations. The mining sector's ability togenerate net foreign exchange earnings is an essential component ofBolivia's economic program. Mining exports are expected to generate

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approximately US$1 billion in net foreign exchange earnings during 1989-93(US$200 million per year on average). COMIBOL's net foreign exchangecontribution would be about US$250 million during this period. Afterseveral years of representing a burden to the Government's budget, astrengthened mining sector would provide substantial amounts of tax/royaltyand dividend payments to the Government. Tax/rsyalty payments from miningmay reach US$100 million for the 1989/93 period (including US$20 millionfrom COMIBOL). In addition, COMIBOL would be able to pay dividends to theGovernment of up to US$50 million (US$10 million per year on average)without impairing the company's financial viability.

6.02 The proposed project would have other important effects onBolivia's economic performance which cannot be quantified. First, thesuccessful rehabilitation of Bolivia's largest mining enterprise wouldprovide an important signal, both in Bolivia and outside, that the economyis returning to normal levels of activity and growth. Thus, COMIBOL'ssuccessful rehabilitation could contribute to increased levels ofinvestment arl growth in other sectors of Bolivia's economy. Second, theproposed project would support joint-venturing, leasing or other forms ofprofitable mining involving the private sector of mines which are now inthe public sector. The successful execution of COMIBOL's joint ventureprograms would provide strong signals to domestic and foreign investorsthat the Government's policies of reducing public involvement in theproductive sectors are pursued in an effective way. Again, confidence ofdomestic and foreign investors in the Bolivian economy would bestrengthened and the environment for investment and economic grSth wouldimprove. Such signals of a private sector oriented development strategywould be further strengthened by the successful implementation of theproject's institutional and credit components. The technical and financialsupport which would be provided by more effectively operating mining sectorand financial institutions is an essential component of the Government'spolicy to attract foreign and domestic resources to a sector with a highdevelopment potential. Finally, the agreements reached with COMIBOL onenvironmental aspects of mining would contribute to improved livingconditions in the mining areas.

B. Economic Rates of Return

6.03 Economic rates of return have been calculated for the COMIBOLcomponent of the project and its main subcomponents. The method applied inthe calculation of the economic rates is the same as the one used for thecal:ulation of the financial rates which involved basically a comparison ofcosts and revenues for the scenario with the project and the scenariowithout the project. The incremental financial cost and revenue streamswere adjusted for the economic analysis by eliminating transfer payments(taxes and duties, and payments to displaced workers). No otheradjustments to the financial costs and revenue streams were necessary,since current economic policies in Bolivia have eliminated most distortionsin wages and prices.

6.04 The economic rate of return of the COMIBOL project component is34.32 which is less than the financial rate of return (42.22) but stillattractive. The difference in thb two rates results mainly from theexclusion of the severance payments to displaced workers from the economic

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analysis which tends to reduce the net benefits resulting from the project(i.e.. the costs that are avoided by implementing the project are reducedin the economic analysis). The economic rates of return for the differentsubsidiaries show a similar structure as in the financial analysis. Thesubsidiaries of Oruro and La Paz which have large mines show high returnsof 46Z-48Z, while the economic rates of return in the subsidiaries withsmall mines are marginal at between 52 and lOZ. These results againindicate the need to review the longer term viability of the Quechisla andPotosi groups at an early time during project implementation.

C. Risks

6.05 The technical risks of the proposed project result largely fromthe considerable number of development, exploration investment and trainingprograms which have to be implemented at COMIBOL's headquarters andsubsidiaries. A major part of these programs are scheduled for initiationat about the same time in late 1989 and early 1990. The simultaneousinitiation and supervision of a large number of programs may be difficult.On the other hand, major components of the rehabilitation program, inparticular mine development and replacement of equipment, arestraightforward in their implementation. They would largely be routineactivities which form part of on-going operations at the mines/facilities.Therefore, the development and replacement investment program shouldproceed largely as scheduled, while exploration, training and studyprograms face the risk of some initial delays.

6.06 Effective implementation of the overall project requ_res therealization of an ambitious program of institution building, both withrespect to the support institutions for the sector and the financialinstitutions providing credit to tte private mining enterprises. Themining sector support institutions have been in a state of disarray inrecent years. Their rehabilitation will be difficult and time consuming,while the benefits reaped from the4r effective functioning would onlymaterialize in the longer term. Close monitoring by IDA and theappointment of experienced consultants who would assist in theimplementation of this project component are important to maintain therisks related to the rebuilding of mining institutions at acceptablelevels. The credit component of the project faces also institutionalrisks. Commercial banking in Bolivia is still in a recovery phase andcannot be expected to move aggressively toward h.gh risk lending to smalland medium mining without strong incentives. BAMIN which was traditionallythe main lending institution for small mining will undergo a thoroughreorganization. The proposed project would provide assistance for therehabilitation of BAMIN, but there is the risk that it may take more timeand effort than currently envisaged for BAMIN to resume effective lendingon a larger scale to small mining enterprises. The proposed projectattempts to reduce the risks related to the credit component by (i)limiting the amount of the component to US$7 million; (ii) providing areasonable spread to the first tier financial institutions; and (iii)providing broad-based technical assistance to BAMIN which would improve theprobability of timely rehabilitation of this institution.

6.07 Inspite of the strong financial performance of COMIBOL which isprojected for the program period 1989-93, COMIBOL could face serious

- 47 -

financial risks. On the revenue side, the risks result largely fromCOMIBOL's ambitious production program during the period of rehabilitation.COMIBOL's original assumptions were that, with the exception of theColquiri mine, all mines would reach their rated production capacity asearly as 1989. Colquiri would be at full production in 1990. Given thefact that COMIBOL is still in a recovery and consolidation phase, theseprojections were considered over optimistic and adjustments were made tostretch the expected production increases. The assumptions used in thefinancial projections are therefore considered feasible and realistic.Another risk may arise from Government interference in COMIBOL's actions toclose inefficient mines and plants. Insistence by the Government tomaintain mines and plants in operation, irrespective of their viability,would impair the overall profitability of COMIBOL during the program. Inorder to mitigate this risk, it has been agreed that IDA will review withthe Government on an annual basis the status of inoperative mines,exploration properties and joint venturing. Close supervision and follow-up during the initial period of project implementation will help tominimize the above risks. Particular attention would be paid to theperformance of the mines in the subsidiaries of Potosi and Quechisla, whichare particularly sensitive to relatively small variations in cost andproduction levels. Finally, COMIBOL's operating estimates ma: proveunrealistic if labor problems would recur. Renewed labor problems couldinduce COMIBOL to abandon its policy of reducing its workforce to levelsneeded for effective operation of the mines. Furthermore, the restraintimposed on increases in wages and benefits, which is crucial for thefinancial viability of COMIBOL during the program period, might be relaxedif labor strife would resume. This risk would be mitigated by amacroeconomic policy directed to reactivation and by the positive internaleffects of CONIBOL's rehabilitation.

VII. AGREEMENTS AND RECOMMENDATION

A. Agreements

7.01 muring negotiations the following agreements were reached:

(a) with the Government

(i) The Government will take all appropriate measures to promoteinvestment activities in its mining sector, and will resubmit thenecessary draft legislation to the New Congress (para. 2.37).

(ii) The Government will by June 30, 1990 fully implement theinstitutional framework for the mining sector institutions, aslaid out in the Institutional Master Plan (para. 3.11).

(iii) The Government will prepare a national environmental miningaction plan for review by IDA before June 30, 1991.

(iv) The Government will make appropriate arrangements with each ofthe sector institutions providing for project implementation andtransfer of appropriate funds as grants (para. 4.06).

- 48 -

(v) The Goverment will ensure that MMM submit draft annual trainingprograms for IDA's comments by November 30 of each year startingNovember 30, 1989 (para. 4.08).

(vi) The Government will provide the funding necessary to coverCOMIBOL's expected cash deficit in 1989 ',ara. 5.05).

(vii) The Government and COMIBOL will reach agreement on dividendpayment policy, satisfactory to IDA, prior to December 31, 1990(para. 5.05).

(viii) The Government will ensure that COMIBOL have access to sufficientfunds including foreign exchange and ensure COMIBOL's viabilityand ability to complete the project (para. 5.11(a)).

(ix) The Government will submit to IDA annual audited financialstatements for GEOBOL, IDM, STCM, and BAMIN and would submit toIA quarterly reports and a completion report (para. 5.13).

(x) The Goverment will periodically review with IDA projectperformance and will ensure that M49 submit annual detailed workprograms for the project by November 30 of each year startingNovember 30, 1989 for IDA's approval (para. 5.14).

(b) with Central Bank

(i) Central Bank will prepare, by June 30, 1989, a detailed design ofthe proposed guarantee fund (para. 3.14).

(ii) Central Bank will not approve any subloans after June 30, 1994(para. 3.36).

(iii) Central Bank will onlend funds to BAMIN after it has demonstratedto IDA BAMIN's fulfillment of specific eligibility requirementsas agreed upon with IDA; (para. 3.38), and

(iv) Central Bank will periodically review with IDA onlending rates tofinal beneficiarier (para. 3.39).

(v) Central Bank will submit annually audited financial statementsfor its part of the project (para. 5.13).

(c) with COMIBOL

(i) COMIBOL will submits

(a) detailed work programs for its operating mines for review byIDA by September 30, 1989 (para. 3.20); and

(b) by September 30, 1989 for IDA's review detailed terms ofreference for various technical studies, will undertake thesestudies and review their results with IDA by June 30, 1991(para. 3.20), and promptly thereafter carry out work inaccordance with the recommendations of these studies.

-49 -

(ii) COMIBOL will submit by June 30, 1990 to IDA an action plan toachieve adherence to the health and safety regulations (para.3.22), implement it thereafter and review implementation with IDAsemi-annually.

(iii) COMIBOL will implement the environmental program as agreed uponwith IDA and review its implementation with IDA semi-annually(para. 3.23).

(iv) COMIBOL will, by June 30, 1990, establish and thereafter maintaina compensation scheme for middle and senior level management asagreed upon with IDA and consistent with the Government's publicservice compensation policy (para. 3.25).

(v) COMIBOL will present a detailed workforce training program,including a schedule for establishing a training unit, not laterthan June 30, 1990 for IDA's comments and implement this programthereafter (para. 3.26).

(vi) COMIBOL will by June 30, 1990, set up a special unit for joint-venture promotion (para. 3.31).

Cvii) COMIBOL will submit to IDA audited financial statements for 1987,1988 and 1989 by June 30, 1990 (para. 5.03).

(viii) COMIBOL will adhere to employment and wage policies which will beconsistent with the company's financial viability and will notincrease its total personnel beyond an agreed level (para. 5.07).

(ix) COMIBOL will follow prudent financial practices and maintainfinancial covenants as described in para. 5.11(b).

(x) COMIBOL will follow agreed upon auditing and reportingrequirements (para. 5.12).

(xi) Starting in January 1990, COMIBOL will review annually with IDAthe status of the inoperative mines, mines to be joint-venturedor leased and unoperational exploration properties (para. 5.14).

7.02 The following are Conditions for Credit Effectiveness:

(i) COMIBOL will submit a detailed environmental action programacceptable to IDA (para. 3.23).

(ii) The appointment of a permanent overall Project Coordinatoracceptable to IDA at the Ministry of Mining and Metallurgy (para.3.33).

(iii) Effectiveness of bilatera1 cofinancing arrangements (para. 4.05).

(iv) Conclusion of subsidiary, loan agreements acceptable to IDAbetween the Government and COMIBOL and between the Goverment andthe Central Bank (para. 4.06).

- 50 -

7.03 The following are Conditions for Credit Disbursement:

(i) For the CONIBOL and institutional strengthening components, theappointment of the Project Coordinator in COMIBOL and the 1MMSub-Project Coordinator (para. 3.35).

(ii) For the Credit component, appointment of an administrator in theDevelopment Credit Department of the Central Bank, finalizationof guidelines and operating regulations as agreed with IDA, andpresentation to IDA of at least two participating agreements withparticipating banks, (paras. 3.36, 3.37).

B. Recommendation

7.04 On the basis of the above actions and agreements the proposedProject would be suitable for an IDA Credit of SDR 26.5 million (US$35.0million equivalent) on standard IDA terms.

NMD SBnZ D8AS1^TAna Rgjr

P ul d " 11-. 1978-87

CKMIL'S8 PNUOIITI

Tin 90.601 19,818 20,272 20.540 28,251 21.448 19,010 18.62 20.628 18,479 16,090 18,005 10,060 4.249 884Stlver 160 148 148 14" 164 177 1n 189 170 180 147 I11 75 41 40Lead 14 068 12,00W 11,881 12576 14,984 12,7 9.826 10,158 9.897 7,22 7,489 8488 4,006 1.872 1.005

Cappor 8,845 82667 8,404 8.416 960 2.788 91.76 1,79 2.622 2,266 1."91 15B10 1.45 165 -

DIP""th 661 59 591 Su 602 806 to 11 9 51 6 3 155 41 -

Wolfram 99 77 1112 121 ,006 989 1.840 1.60 1,424 1 262 1,809 94 84 77 W.f 1 9 - 7 - 8 6 .121 I -" - -

Zinc 40,760 82,590 81,656 84,809 85.144 88,689 27.418 2e95,8 27,218 2.S725 22,065 15,298 18.677 4,01 2,900GDid (hgm) 19 17 i8 11 16 14 2 - - - - - 6 1 -

FROOJIO O "MR" SAE NODD

Tin 7,000 6,989 6,899 5,575 6,83 6,62S 8,987 5,900 8.854 6,026 6.204 4,447 S,772 8,2e8 2,287Si 1v, - 2 a 12 17 28 20 24 24 28 17 28 as 78Lead 899 26s as8 560 817 8,897 8,847 8,994 4,859 4,018 8,814 1,284 1,585 182 8.54Copper 8,065 2,878 2,856 1,220 - 20 -8iVAStih I - - 89 42 - - - - --- --

Antimony 9,122 8,80 9 407 10,488 9.987 9,481 10,498 11.800 12,154 10,181 7,808 6,9 5,665 7.190 6,627Voifreg ~19,208 1 200 1,O066 IN 1,82 164 1,76 1,519 160 1,765m 1,577 1,850 61.80 109 10

Zinc 10,414 11,796 12 ,56 11,769 24,488 20,975 1:,72 6 °16,70 17 .7S1 19,068 20961 18,638 22,882 798,25 85,276Gold (kg*) - - 88 488 824 801 278 - 0 152 12 10 184 296 488

PRDJCTIION OF SMALL SCALE "D1 NDUM NAD OtHES

Tin 8.582 8,896 4,781 8.100 8,656 2,818 2,812 2,800 2,687 2,086 38,04 2,458 2.826 2,947 S,507S1Ilvor 12 10 11 12 5 I 6 10 10 16 17 is 10 19 27L"d 9,781 7,106 5,788 6.064 4,166 1.995 2,899 8,078 2.79 1,189 1,068 782 6S6 1,067 1,804cappr 1.972 1,481 468 488 291 100 91 8s 16 40 - - - 17 9sismatl 28 27 81 1.7 7 2 - - 21 - -- 4 2 1Antimany 6 ,60 6,112 6,66S 6,557 6,404 3.87" ,927 8,914 8,14 38.429 2,5888 2,482 2.2S2 8,088 8,708Wolfram 400 880 i38 486 418 888 271 228 818 866 280 188 459 585 803Zinc 2,209 8,048 4,885 8,785 8,881 n.m. 2,665 8,600 2 079 2,8 7 4,107 2 ,88 1,882 1,006 947cold (kgm) - - 955 79 416 473 678 - 1,564 1,098 1,404 1,140 392 466 2,268

TOTAL PRDIJCTD0m

Tiln 81,108 80,180 181,898 50,318 85,740 80,881 27,759 27,271 29,829 24,341 28,306 19,911 18,188 10,479 8,12nSiIvor 171 185 150 189 le1 195 182 189 204 169 187 142 189 95 140L"d 24 218 19 472 17 967 19 200 18,987 1s o09 1S895 17 ,228 18,785 12,482 11,888 7,449 6,242 3,121 9,048

Capper ~~8,054 7,222 6,218 5,101 8,191 2,852 1,886 1,882 12,888 2,806 1,981 1,610 1,668 8838 9Biemetlat591 622 622 612 681 807 10 11 30 a a 8 159 48 1Antimony 1S 818 14,912 16,089 17,018 p6,341 18,835 14,420 18,500 6s,728 18,976 9,9s5 9,281 8e2 10,248 10,688Wolframy 2,590 2,508 2,811 8,182 8068 8,078 8,180 428 8,504 8,195 08,09 2,887 2,072 1,380 604Zinc *40591 49,486 4B,74 Ea,014 68,508 59,619 46,804 80,260 47 028 45,666 47,18 0 9877 28.1 84 3,Gold (has) 1,152 1,807 1,849 1,292 756 1,088 948 1,620 2,064 1,248 1,581 1,270 S62 768 2,7S5

TOTAL PRO0'USM -OE

Tin 108.4 100.0 106.0 100.6 112.0 102.5 92.1 98.8 99. 60.7 83.9 66.0 88.5 84.8 27.0SilIvor 110.4 100.0 108.2 109.0 116.7 12.7 117.8 12.9 181.6 109.0 12.8 91.6 182.8 81.3 90.8Lead 124,4 100.0 92.8 98.6 97.2 92.8 79.0 88.5 66.0 65.8 60.8 88.5 82.1 16.0 48.4copper 19.61 100.0 66.1 70.6 44.2 89.2 25.7 26.1 86.5 81.9 27.4 22.8 2a.1 4.7 0.1BiematI 95.1 100.0 99.9 98.4 104.7 49.4 1.6 1.8 4.8 0.8 1.0 0.5 25.6 6.9 0.2Antimn 106.0 100.0 107.9 114.1 109.6 09.4 98.7 106.9 112.1 98,7 66.7 82.2 89.9 68.7 71.8Wolf 188.6 100.0 92.1 124.9 122.1 12 124.8 186.5 1.7 127.4 28.2 95.2 82.6 55.0 82.1Zinc ___106.0 160.0 98.7 187.2 2128.8 120.6 94.7 101.7 95.1 92.4 95.8 78.4 77.1 67.7 79.1aold Chum) 089.1 100.0 126.2 96.9 57.8 88.2 72.5 1283.9 157.9 95.5 117.1 97.2 45.0 86.4 210.6

SUmwee: linle. of Mining en Vtionl Statistical ettute. I/ Pelieinasi.

- 52 - ANNEX 1-2

Page 1 of 3

BOLIVIA


Estimated Mineral Resourcer and Reserves

A. Tin ('000 tonnes of contained metal)

Provenand Probable Possible

1. Reserves

COMIBOL 143.7 66.0Medium Mines 190.0 230.0Small Mines 60.0 100.0

393.7 396.0

Average Grade: 1.22

2. Resources

COMIBOL 26,390Medium Mines 120Small Mines 230Precambrian 2,000

B. Tungsten (tonnes of contained W03)

1. Reserves

COMIBOL 10,500 6,000Medium Mines 55,000 20,000Small Mines 10,000 6,000

75,500 32,000

Average Gradet 0.85?

2. Resources (Eastern Cordillera)

150,000 tonnes

- 53 - ANNEX 1-2

Page 2 of 3

C. Antimony (tonnes of contained metal)

1. Reserves

Medium Mines 75,000 90,00030,000 55,000

105,000 145,000

Average Grade: 2.9Z


200,000 tonnes


D. Zinc ('000 tonnes of contained metal)

1. Reserves

COMIBOL 210 1,090Medium Mines 167 606Small Mines 178 404

555 2,100

Average Grade: 11.5Z Zn and 110 g/tonne Ag.


10,000

E. Lead (tonnes of contained metal)

1. Reserves

COMIBOL 72,000 85,000Medium Mines 24,000 15,000Small Mines 15,000 6,000

111,000 106,000

Average Grade: 3.92 Pb and 130 g/tonne Ag


350,000 tonnes

54 ANNEX 1-2

Page 3 of 3

F. Bismuth (tonnes of contained metal)

1. Reserves

CONIBOL 4,500 5,500Small Hines 300 100

4,800 5,600

2. Resources 10,000 tonnes

G. Gold (tonnes of contained metal)

1. Resources

Western Region

Primary 18.3Alluvial 140.0

Eastern Region 64.0222.3


H. Silver (tonnes of contained metal)

1. Reserves

In zinc ores 530In lead ores 360In gold deposits 410

1,300

2. Resources 120,000

I. Sulphur (gross tonnes, Western Cordillera)

Resources 1,150,000

- 55 - ANNEX 2-1

Page 1 of 3

BOLIVIA


Mining Sector Institutions

1. The key institution overseeing the mining sector is the Ministryof Mining and Metallurgy (MMM). MMM's main functions are to (i) formulateand supervise implementation of the Government's mining policy, (ii)initiate, orient and evaluate developments in exploration, mining,concentration and metallurgical processing, and define and supervisepolicies of internal and external marketing of minerals, (iii) guide andpromote the development of the mining and metallurgical sector overall;(iv) define and present Bolivia's position in international mining-relatedinstitutions or study groups, (v) develop and maintain a centralizedmining/metallurgical statistical data base; (vi) supervise the activitiesof the mining sector institutions, and (viii) formulate and process allmining related legislation. The Ministry is headed by the Minister, to,whom report two Subsecretaries. The Administration and CoordinationSubsecretary supervises three directorates: mining (administration andlegal). The Planning and Development Subsecretary supervises a Plans andProjects Committee, a Planning Directorate and the documentation/data basecenter. Apart from these areas, the Minister has several advisory boards,and the mining superintendency reports directly to him. The Ministry isalso the supervising authority for the state mining company, COMIBOL, themining bank, BAMIN, the National Exploration Fund, FONEM, the geologicalservice, GEOBOL, the Institute for Mining and Metallurgical Research, lIMNto be renamed the CIMM under on-going restructuring and the new TechnicalNine Cadastral Service (STCM) which is to be developed under this project.The future of the promotional unit for the Uyuni (lithium) salts project,CIRESU is under review.

2. The Geological Survey of Bolivia (GEOBOL) was created in 1965.Its basic functions are country-wide geological investigations includinggeological mapping, prospecting, exploration for metallic and nonmetallicminerals, remote sensing and hydrogeological and industrial materialinvestigations. Indirectly GEOBOL performs a basic practical trainingfunction for geological graduates. It has continued to perform acoordinating role for international and bilateral technical assistanceprojects that fall within its field of competence. In addition to thecentral office in la Paz, GEOBOL has regional offices in Cochabamba, SantaCruz and Tarija. Presently there are 190 permanent employees. Theorganization is elaborate with too many chiefs at different levels andalthough it has a variety of equipment at its disposal (mineral explorationand water drills, mining equipment, geophysical and geological equipmentand support vehicles etc.) much is out of order because of poor maintenanceand lack of spare parts. Building space can only be described as adequatebut considerable improvements are necessary for laboratory housing.Largely due to inadequate budget support there has been a general declineof activities over the last few years, it no longer attracts bilateral andinternational support and has lost the prestige it once enjoyed.

56 ANNEX 2-12Page 2 of 3

3. The Institute of Mining and Metallurgical Investigations (IM)was created in 1965 as a counterpart institution for a UNDP-financedproject. Based in Oruro, the center of a major mining district, the IIMMhas been operating independently as a Government institute under thegeneral guidance of the MMM. Its board, chaired by the Minister, has notmet for several years. With a permanent staff of 82 employees (reduced byabout 502 from the previous decade) it is still overstaffed in relation toits present level of activities. The five major departments areAdministration, Mining, Mineral Concentration, Metallurgy and Services.Buildings are in a major state of disrepair but the IIMM possesses aconsiderable amount of useful equipment; mining equipment, concentrationplants and a concentration laboratory, pilot plants, ovens, chemicallaboratory etc. There is a varied degree of deterioration and upgradingand replacement is required. The basic objectives of the organization areto carry out research and to provide support services and assistance to theextractive side of the mining sector; mineral beneficiation, metallurgy,assaying and mining methodology. The present level of Government fundinghardly permits any meaningful activity to be performed. As of 1973 amining tax collected from the medium scale miners (12 of mineral sales)supported about 60X of IIMM's activities but this shrunk during the 1980'smining crisis and was abolished altogether in 1986. In a similar situationto GEOBOL, the IIMM has found it more and more difficult to attract aidfinancing and also with decreasing capability there has been a decreasingdemand for services.

4. The National Mining Exploration Fund (FONEM) was created in 1977as a dependency of the MMM. Its objective is to promote the economicdevelopment of non-renewable mineral resources through financing ofprospecting and exploration programs. FONEM has the legal status of anautonomous public development company financed by the Government, throughgenerated replenishment income as well as through additional funding whichit is able to acquire from other sources. Mines developed from successfulprospects are required to pay an 82 gross production royalty until suchtime as loans have been repaid at a 102 p.a. interest, as well as a specialbonus of 1.5 times the principal of the loan. This 'revolving fund' hasbeen supported by the Government, the World Bank (Credit 940-BO) and German(FRG) bilateral assistance and although it has accomplished a considerableamount of useful work it has not lived up to expectations, has not producedprojected revenues and shortcomings in project selection and execution areevident.

5. The main activities of the Mining Bank (BAMIN) include: (i)credit to small-scale miners for investments and working capital; (ii) saleof mining equipment, spare parts, and materials; (iii) purchases ofminerals from small mines and sale of marketable lots of these minerals totraders on international markets; and (iv) technical assistance to minersboth for operations and for preparation of investment studies. BAMIN is aGovernment institution employing about 570 people in its La Paz main officeand in six branch offices around the country. It purchases concentratesfor about 1,100 clients and has in recent years extended mining creditranging between US$1.9 and 3.7 million per year. Other public institutionsof some importance to the sector are the Planning and Finance Ministries.They decide on the investment and operating budgets of the public entities

_ 57 - ANNEX 2-1

Page 3 of 3

and handle their disbursement. The Central Bank is responsible for importlicences and foreign exchange administration and manages external creditlines.

6. The productive part of the sector consists of COMIBOL (whichincludes the state-owned smelters), the medium and small mines, andcooperatives. COCIBOL (after a drastic staff restructuring and reductionprocess, Chapter II) operates ten mining centers, employs about 7,000people and is also responsible for running the Vinto tin smelter andmaintaining the Karachipampa lead/silver smelter, which has yet tofunction. The medium mining subsector consists of 19 mining companiesdominated by three large, private groups, while there are several thousandsmall mines and cooperatives. Other institutions of significance for thesector are the Industrial Bank (BISA), which has financed medium mines,private Bolivian and foreign metal traders, and the Mine Workers' Union,which has played an important role in the past, particularly in decisionsrelating to COMIBOL.

"Ns w ^orinMINDIS SECTOR BEHBZLITATION PROJECT

COMIDOL - Historical Cost reakdown

1909 1960 1961 1962 1968 1984 1965 1986 1907 1986usM g- x usM w- us. u us 5 M us, U I us. 1--$ uso bs us$ v u u r- s us$ r- g

Labor 76.7 40 80.0 89 118.8 41 103.2 40 122.8 46 167.2 66 162.8 49 )Materials 29.9 16 81.1 15 45.8 17 48.2 19 46.1 17 46.1 15 ".7 14 64.0 89 10.8 59 ) 24.1 74Energy 6.9 J 7.2 4 14.6 5 18.4 5 18.3 7 15.5 5 20.90 ) ) )Mineral Purchase 84.0 18 86.1 17 42.6 16 86.9 16 42.2 16 A.6 12 34.6 10 ) ) )Overhed 12.8 7 11.4 6 9.6 a 4.s 2 4.9 2 9.2 8 7.8 2 3.6 6 3.0 17 2.7 6

interest 10.1 8 19.0 9 27.4 10 a5.7 14 9.8 4 8.6 3 80.5 9 0.4 1 0.7 4 0.0

Depreciation 7.2 4 7.9 4 10.0 4 12.4 4 14.0 5 14.8 5 18.6 4 1.8 8 1.9 11 4.8 16Others 7.2 4 11.6 6 9.9 4 2.7 5 6.7 a 6.9 0 16.8 6 0.9 1 1.6 9 _ -

Total 190.t 100 208.2 100 278.2 100 259.0 100 264.4 100 808.8 100 880.$ 100 61.5 100 17.4 100 82.4 100

U'

- 59 -

ANNEX 2-8

SIOUVIA

MINING SECTOR REAILITATION PROJECT

COMIBOL - Summary of Hiltorical Inco.. sttemntu(US4 millon)

Income Statm ien 1980 L 1982 1088 1984 1063 198 1087 1988

Ses 352.8 378.1 278.0 280.8 224.0 185.1 50.7 17.9 42.0of which tin 239.9 258.8 198.7 188.8 168.7 n.a. 20.1 6.0 16.1other metal. 112.9 119.8 96.1 92.0 60.9 n.s. 24.6 11.9 20.9

Markeaing Cost. 88.1 102.0 81.1 76.5 06.9 52.8 10.1 5.2 14.6Production Costu 20B.8 278.2 259.0 264.4 803.8 880.8 01.5 17.4 82.4Participation . 16.0 4.2 0.8 - - - - - -Operational Result. 60.8 5.8 (61.?) (60.6) (14,.5) (248.0) (20.9) (4.7) (4.9)Other Coet./(Rwoenu.s) / 8.2 8.8 (48.7) (46.2) (99.7) n.a. 10.7 1.8 1.2Incom before Taxem 42.6 2.0 (18.0) (16.4) (44.8) n.s. (10.2) (8.0) (8.7)

Royalties 72.5 47.6 88.9 86.2 28.6 n.e. 0.2 0.1 2.2

Net Incme (30.0) (46.6) (51.9) (61.6) (68.4) n.a. (10.4) (8.5) (6.9)

Operational Result/Sales (X3) 14 1 (22) (22) (64) n.a. (41) (28) (12)Net Ineose/Saloo (5) (9) (12) (19) (18) (80) n.e. (21) (20) (14)

*MWorker c' n r t.cipetlon.Most ly rahng tet r-lnted.

- 60 -

ANNEX 2-4

BOLIVIA

MINING SECTOR REWABILITATION PROJECT

COMIBOL - Summary of Historical Cash Flows(US$ million)

1980 1981 1982 1983 1984

Cash Revenues 387.8 289.6 213.9 218.3 173.8of which Sales 346.5 258.7 186.9 197.4 156.1

Cash Operating Expenditures 422.0 347.7 223.1 273.4 256.8of whichPersonnel Expenses 96.8 80.8 55.7 69.8 85.3Consumables 96.8 102.8 61.3 109.5 97.3Mineral Purchases 45.8 37.6 22.3 23.2 24.4Services 36.9 38.7 23.3 31.8 25.2Taxes and Royalties 127.2 58.4 55.3 32.9 21.4Interest 18.3 29.5 5.2 1.2 3.3

Capital Expenditures 44.5 56.0 10.0 9.3 6.3

Loan Repayments 2.1 1.2 0.3 0.7 0.7

Cash Surplus/(Deficit) (80.8) (115.4) (19.5) (65.1) (90.0)

FinancingCash on Hand andin Bank Accounts 12.8 9.6 14.1 10.3 30.8Disbursements 77.7 113.9 29.3 60.5 97.6

Total Surplus 9.6 8.1 23.8 5.7 38.3

Payments Due at End of Year 82.4 119.1 113.1 91.1 47.8

BOLIVIA


COMIBOL - Summary of Historical Balance SheetstUS million)

1980 1981 1982 1988 1984 '386 / 1986 198 1988

Assets

Current Assets 225.0 260.8 212.8 218.4 258.2 294.6 194.4 186.2 168.9

of which stocks 152.6 182.7 164.9 168.2 189.1 268.7 162.1 146.6 103.4

Fixed Asse's 220.4 280.5 237.4 284.7 286.4 286.8 249.2 240.4 281.9

Other Asset. 80.4 87.4 89.8 48.7 41.8 42.8 88.9 92.7 82.9

Total Asset 475.7 628.2 490.4 600.0 529.6 673.5 680.6 519.8 628.7

Liabilities and Equity

Current Liabilities 202.2 204.6 196.7 270.0 886.6 428.6 78.6 45.2 92.0

of which Current Portionof Long-Term Debt 61.7 50.4 118.4 170.2 269.2 268.9 - - -

Debt and Provisions 165.9 251.1 192.1 173.7 119.4 116.3 11.0 18.9 11.6

Equity 117.6 72.7 101.6 68.8 28.9 84.7 441.0 460.2 485.1

Total Liabilitiesand Equity 476.7 628.2 490.4 500.0 659.9 573.6 630.5 619.3 528.7

Indicators

1. Working Capital 22.7 66.8 16.1 (51.8) (138.4) (128.9) 115.9 141.0 81.9

2. Ratios

Current 1.1 1.3 1.1 0.8 0.7 0.7 2.6 4.1 2.0

Quick 0.4 0.4 0.8 0.2 0.2 0.1 0.6 0.9 0.7

Long-Torm Debt/Equity 67:48 77:23 86:36 76:24 83:17 77:23 2:98 3:97 3:97

Indicators with Current Portion of Lona-Term Debt Accounted for as Long-Torm Debt /

1. Working Capital 64.4 106.2 182.5 118.8 186.8 186.0

2. Ratios

Current 1.6 1.7 2.7 2.2 2.2 1.9

Quick 0.6 0.6 0.7 0.6 0.6 0.8

Long-Term Debt/Equity 865:36 81:19 76:26 86:14 94:8 92:8

a/ As of June 80, 1986.In 1986 the Government absorbed all of COMIBOL's long-term debt. The financial indicators therefore do not change any longer

depending on how the current portion of long-term debt Is accounted for.

ANX2-6

ESTRATEGIA PARA EL

SECTOR MINERO

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CAPITULO VT

ESTRATEGIA PARA EL SECTOR MINERO

V.1 EL SECTOR MINERO Y METALURGICO EN LA ECONOMIA NACIONAL

1.1 El Desafio

Reactivar la min2ria tradicional y crear una nueva mineria quesea competitiva internacionalmente, c'onsolidar y fortalecer iacapacidad empresaria.l del Estadto en la miner'a nacional, y gene-rar un gran flujo de inversiories privadas hacia ese sector: estosso5n los mAs grandes desafic que confrontarA la politica minero-metalcirgica en los doce anio¢Ie la Estrategia. En terminos cuan-titativos, para aprovechar ol potencial mineral6gico del pais aun nivel compatible con los requerimientos de un crecimiento eco-nomico nacional del 4.9% anual. serA necesario invertir en elsector una suma cercana a 1os US$ 13003 millones. Si se toma oncuenta tanto las restricciones fiscales como los requerimientosen inversiones pCblicas de otros sectores eton6micos, rApidamentese podrA constatar que esta suma es muy superior a la capacidadde inversi6n del Estado. La omprosa estatal, COMIBOL, podrA con-tar con financiamientos para realizar inversiones cercanas a losUS$ 150 millones. Es .docir, la mayor parte de las inversionesreque-ridas para hacer nuevamente de 8olivia un pais minero corM-petitivo, deberA ser de car.Sctr. privado.

Si la minerC) bdliv-iana vuelve a tornarse atractiva a la inver-si4n privada, el.. sector podria generar grandes recursos. Lasproyecciones de la Estratwgia de Desarrollo muestran un potencialde exportaci6n superior a los US$ 770 millones anualas, pudiendo,bajo condiciones favorables de precios, superarp en el aRo 2000*las US$ 1,100 millones anuales. Esto se traduciraa *n. vat'riosmiles de empleos adicionales, en un sustancial aporte del sectora 'os ingresos fiscales, y en una gran contribuai6n al aumento'dJel nivel de ingresos de la poblaci6n boliviana. Analizaremos m6sadelante los detalles de este desaf o y estas proyecciones.

1.2 Bolivia: Pa;s de Grandes Recursas Mineral6gicos

Bolivia cuenta con importantes recurcor mineral6gicos. En el sec-tor occidental del territorio boliviano convergen varias de lasprovincias metalogendticajn mAs importantes de lo Andes Ce*tra-les. Existen yacitnientos vetifor- :es d? estanFo, zinc, ploma-plata,estano-tungsteno, bismuto, plomo--zinc, oro, antimonio-oro y azu-fre. Los Yacimientos vetiformen de estaRo y plata son mundial-mente fafrozos, siondo el mi5s iniportante el Cerro Rico de Potosi.Estudios recientes domuestran quc- vl Cerro RFico de Potosi cons-tituye uno de los mAs atracti>ros prr,scoctos de baj.a ley para ex-

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_plotaci6n masiva de plata, Tstafio y otr-os yacimientos auriferosepitermales on el Altiplano. f'diicionalmonte, las dos cordillerasofrecen ex:pectables oportunidin.dl.. El Salar do Uyuni, el mAsgrande del mundo. y otros salares do los Andes Centralesq con-tienen concentraciones importantes do ;:alos de litio, potasio,boro, magnesia y otros element6s evacoi-iticcs. En la CardilleraOccidental so ha detecLado mAs dc qU pros-pecbos de azufre. En elsector oriental del ter-ritorio boliviano atfloran rocas del EscudoPrecambrico Brasilero. con prospecton *similares a los yacimientosen actual explotaci6n en el Eiramil, CanindA y SudAfrica, de pine-rales de fosfatom, tierras raras y toy-ia asociada§ a compYe.ogalcalinos; niquel y plEtino, unidas a rocas ultrabAsicas; estanoy oro aluvial; piedras preciosas y semipreciosas; y yacimientosde plomo. plata y zinc. Los sistemas fluviales que drenan la Cor-dillera de 5ls Andes contienen importantes yacimientos aluvialesde oro y esta-o.

1.3 Proyecciones de Producci6n

Una adecuada politica minera puede tener resultados muy satisfac-torios, quizAs incluso, sorprendentes para quien haya dado casipar terminado el ciclo hist6rico de la mineria boliviana. Paraformular la Estrategia, se hi:o una estimaci6n del potencial co-r:er i.aI-- -condmico de los minerales en Bolivia, establecidndoseuna reserva base nacional dc minerales en funci6n de la infor-maci6n .existente. Esta rpo-erva ba u: aglutina s6lo la informaci6nde las reservas positiv&z y probables de.minerales existentes enmina. En cuanto a las reservas auriferas7' para lai cuales noexiste una evaluaci6n y cuantificaci6n .a'sta; '5e ha consideradolns recursos estimados an vol6menes de material sedimentario concontenidds prtmedio de cre. Trmbij.n ._se ha hecho una estimaci6n del.as.reservas positivas y 'probables de plata y de los recursusexisten.tes en minerales dv plata, cn antiquos y nuevos yacimien-toe argentiferos. Los resultados se presentan en el luadro V.1.,que muestra -a precios de webroro tic 1998- un valor bruto totaldo la reserva base de minurFtle= de Polivia do US$ 7.1 mil millo-

.nes, a los que habria quo agregar los rccursos en plata, estima-dos en mAs de US$ 38 mil millones.

Explotar estas rocursos naturales en forma bene+iciosa para elpais, supone srealizar U. grz.n 0- fUerzo. tanto por parte de laCMIBtOL como par la emprecsa privada. Crear el marco adecuado paraque este esfuerzo pueda materiali-:rso. es el objetivo de las

e iniai z'tivias srct;- ri5r 1 F F7-teia.

V.2 PROBLEMAS PRINCIPALES DEL SECTOR

2.1 Dimensi6n Cuantitativa de la Criisis de los Anos Ochenta

I . .

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Desde comienzos de la pres,nt.e ta-*~cztda, ol sector minero-metalur-cico se encuentra en unat prof nd-a cr-ist. qute sei observa a travesde las siguientos cifrao . La contribuait5n del sector al PIB cay6,entre IiO0J y 1997, de 1U..5 % z 4.tJ 7%. Li valor bruto de la pro-ducci6n cay6 de US$ 75i6 iiillones en 14?BU a US$.1.39 millones en1986, cor: una leve recuperaci6n en lt97 (ver Cuadro V.2).. Con lasola excepci6n del orc. la proditcci6n de los principales minera-les se redujs considerablemente (ier Cuadros V.3 y V.4; y GrAficaV.1). Espocialmnonte drAstica fue la caida de la producci6n en elsector estatal (vvr Cuadro V.X). Las e::portaciones descendieronde US$ 641 millones ean 1990 a US$ 207 millones on 1987 (verCuadros V.6 al V.9% y GrA.Fico V.2). La contribuci6n del sector. alos ingresos fiscales pr-tcticamente cay6 a cero (Cuadro-V.10). El

empleo sectorial tambi6n se redujo, de 86.000 a 47.000 personas(Cuadros V.11 y V.12).

2.2 Factores de la Crisis Estructural

La enumeraci6n anterior de los datos estadisticos mAs reveladoresde la crisis, muestra que en el pasado. pese a la riqueza minera-lgica boliviana, una serie de factores negativos no s6lo difi-cultaron, sino bloquearcn el desarrollo del sector. No todo fueresponsabilidad de la mala politica seguida en el pa;s. Una fuer-te influencia tuvieron tambian 15s factores fuera del alcance del,gobierno. Analizaremos brevemente los factores end6qenos y ex6ge-nos quo participaron en este hocho.

Entre los factores endogenos debe contarse:

- La inestabilidad politica, que impidib la creaci6n de con-diciones adecuadas para la inversi6n. Mientras en los paLsesvecinos las g-andes empresas re4li_aban cuantiosas invor-siones5 que permitian conquistarL una importante participa-ci6n en el mercado mundial de determinados minerales, Boli-via se convirti6 en un "freezer" de la inversidn privada,quedando marginado, incluso..d.i aqltel.los, emrcados - en'los quosu part.icipaei6n era signiiticativa.

- El contexto macroecon6mico desfavorable, expresi6n de un ex-cesivo intervencionismo estatal., se manifesto, entre otrasrazones, por la obligatoriodad deoentregas de minerales alas fundiciones ostatales an condiciones desventajosas paralos productores; por el mantenimiento de extensas Areas enreservas fiscales, vedadas a lla actividad minera; por lavigencia de un sintema tributario basado en regalias, que sotomaba en cuenta las reales utilidades o pdrdidas en lasoperaci.ones mineras; per un-a politica cambiaria discriminia-toria del' sector; v pcr las condicioner financieras y credi-ticias inadecuadas pD.ra La actividad minsera.

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El ranri eo ineficiertLe de 1 a§ empresas minero-metalcirgirasostatsales se e:presa cr: la carcricia do, objetivos einpresa-riales racionales-, la ingurcnrcia dc-o intereses politicos co-y untLtrales en eI ma:.eOo d e 1:c tmpr-esas, la formaci6n de unestamnento bu-ocrAti:o incficiento. la contratacion excesivade empleados alej:dos: de la producci6tn. la realizaci6n deinversiones no rentrtble_ y _abredifriensionadas. Asi, per tz -jemplo, las o6rdidas acum,uladas entre 1961 y 1985 en la CO-MiIEoL sLuperaron los US$ 700 n:il lones. La deuda externa act.-mnulxada por estai eiapres-.x a=zendi6 a USs 400 mil lones, sinincluir la deuda flotanLe do US$ 40f mil'lones, y el almacc-hamier7to de repuLostos por mt-s do US$ 100 millones. Las fun-diciones estatales. por su parte, acutmularon durante esteperiodo una deuda e,: terna de rrAs de US$ 400 millones y unaptrdida de alrededor de LUS$ 180 millones.

Entre los factores ex6qEonos destacan los cambios tecnol6gicos enlos paises inrdustrializado-- qcuo 'indujeron un mayor ahorro delas materias primas y un reciclaje m&s intensivo de las ya utili-zadas, y la recesi6n ocon&n-cat mundlal de los anos ochenta, qtiedeterminaron la caida de la drnmanda y de los precios. A ello sesum6 el colapso del mercado irnternacional del estano a fines do1985.

2.3 Respuestas a la Crisis

En respuesta a la situaci6n descrita3 junto a las medidas de ca-rActer coyuntural destinadas a atenuar el costo social de la cri-sis, el Gcbierno adopt6, desde 1986, una politica minero-meta-l:rgica de largo alcance, con profundos efectas de ajuste estruc-tural. Esta politica, que se onmarc6 en la Nueva Politica Eron6-mica (NPE), est-uvo diseFada de manera que pudiera generar un pro-ceso de oe:pansi6n y fortalecimiento del sector, bbjo condicionesde rentabilidcad y competitividad de .las operaciones mineras. Losprimeros frutos de esta politica se manifestaron en la leve recu-peraci6n del ano 1987,!- quo fue seguida par un crecimiento mAspronunciado en 1988. Las medidas mAs destacadas. tomadas en el-marco de esta politica, fueron las siguient.-

- Decreto Supremo 2106G, quo permitib el establecimiiento de untipo de cambio real, tnico y fle::ible; la eliminaci6n del

% monopolio de las fundiciones y su reemplazo por- la libre co-mercializaci6n y exportL.ci6n de minerales; y la liberaliza-ci6n de precios y de contrataci6n de mano de obra. Este De-creto creb condicione5 fav.orables para el desarrollo delsector.

RF:servas Fi;calas. t!odiar-trc el Dc-reto Gt.ipremo 21298 se le-vantaron lais zonaLs de rcsor.ra f i.:cal que cubrian mAs del00% de las zanas minoralizada!z del pais. abri6ndolas Allibre desarrallo de la actividad niinera.

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- oa¢l :incenticcin itr-a fra. Li. Loaiorria e5t.tbloci6 una politic:aauri+era de f 4.cil aplicaciCn. oriantada fundamentalmente ala generaciOn de divisas, a la absorci6n de mano de obra yal aprovechamiunto racional de los recursos auriferos deltorritorio. Esta politica se basa fundamontalmente en lalibortad do comer-cializzici6n del oro y en-el pago de unaregalia u nica del 1.5 % sobre..al valor bruto del aro explo-tado.

Rzhabilitaci6n de la Corcorac36n Ilinera de Efoli%oia. El Go-bierno procodi6 a una profunda reestructuraci6n de la COMI-VOL, con ei objeto dC adacL'arla a las nuevas condicionesecor6mic.s, tanto internas como externas; e.liminando suscLuantioso§ deficits y buscando establecer empresas eficien-tes y rentables. La nueva estructura de la COMIBOL descen-traliza sLts operacianes con una administraci6n de tipo "hol-dlin". Las minas sin posibilidades de rentabilidad fueron.erradas. Utras minas han sido arrendadas a sociedadescooperativas integradas, preferentomente, por ex-trabajado-res. La fuerza laboral de la COIMIOL y de las fundicionesestatales, se redujo de aproximadamente 30.000 a 7.000 tra-baj adores.

El Estado comenz6 a invertir importantes recursos para larehabilitaci6n de todos aquellos centros mineros cuyo poten-cial mineral6gico permita la e:plotazi6n racional y rentablede sus recursos. La expansi6n futura de la COMIEOL estAconcebida sobre la base de la captaci6n de invorsiones pri-vadas a trav6s de "Joint ventures". para desarrollar loisnumerosos yacimientas quo osta cmpresa posee.

Politica de _undiciones.' La politica del Gobierno elimin6el intervencionismo y monopolic estatal sobre las fundicio-nes. La Estrategia contempla la.liberalizaci6n en el esta-blecimiento de fundiciones privadas. y el libre juego demercado dentro del cual debon competir las 4undiciones delEstado. La fundici6n estatal -. de A'into fue redimensionada yrehabilitada en condiciones do libre competitividad, habidn-dose logrado durante el ago 1988 rovertir su situaci6n defi-citaria cr6nica.

- Forta leciminto institucional. Con el apoyo t6cnico y finan-ciero de fL'ontes bilaterales y multilateralos, se comenz6 aaplicar un prcgraz. de fortalecimien-to institucional delsector tninero-metalCirgico. diriqido a reordenar y fortalecerlas instituciones del s ectot-. Este programa estA concebidopara ser ejecutado durantc el cuatr-ieitio 1989-1992.

V.3 POLITICAS PARA EL SECTOR

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3.1 Lineamientos Estrat6gicos de la Politica Minero-Metal(irgica

Las niedideis tomadas, ci re-,puett.t. a la crisis, tienen una orien-taci6n a largo plazo. us5 lineamientos bAsicos, que describen laconcepci6n estrat6gica propuesta en el presente documento, sonlos siguientes:

a) eliminaci6fna del intvrvancicnismo.estatal y disminuci6n delrol del Estado como administrador directo de operaciunoesmineras y metalWroicas;

b) creaci6n de condiciones atractivas para las inversiones pri-vadas en el sector;

c) reestructuraci6n, redimensionamientq y rehabilitaci6n de laindustria minero-metal6rgica estatal! con decisiones orien-tadas al desarrollo de empresas estatales eficientes y ren-tables;

d) fortalecimiento de las instituciones del sector minero, ade-cuando sus funciones a la nueva polUtica del sector;

e) atracci6n de capitales de riesgo, tecnolog;as y capacidadempresarial al sector, mediante la formaci6n de asociacionesempresariales mixtas, entre capitales privados y las empre-seas minero-metalUrgicas estatales;

f) diversificacion de la produccibn minera;

g) establecimiento de l{neas de financiamiento para capital detrabajo y proyectos de invorsi6n. en condiciones adecuadas 2.las caracteristicas -de la actividad minera;

h) mejoramiento de la infraestruciura y rebaja deolos costos delos servicios;

i) promoci6n intensiva de las actividades de prospeccimn y exploraci6n.

3.2 Proposiciones.Estratqgicas Adicionales

Para garantizar un adecuado desarrollo del sector metalargicosora necesario tomar medidas de carActer legislativo, que crVpnun marco juridico estable par-a la actividad minero-metaldrgica.Este marco debera reflejarso en la modernizacjin del C6digo deMineria y en una nueva legislaci6n tributaria parael sector mi-n.ero. Al respecto, la Estrategia propone:

a) Modernizaci6n del Cbdigo de Mineria

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El C6digo de liineria vigeLtc-. rofleja la tradici6n mineradel pais y puede Ler considorado. Lin t6rminos genereles,como un cuerpo lenal apr-opiado para el desenvolvimiento mi-nero. Sin ombargo, la EsLraLegia cintempla la introducci6nde algunas modificufiaonc* dc-stinadas .a hacer mAs atractivasy Agiles las invvrsior,s en il .ector. Estas modificacionesson bAsicamente la s siguientes:

i) introduccion dr un sistema moderno y eficiente de peti-ci6n y registro de La propiedad minera;

ii) apertura a la inversi6n privada extranjera en operacio-nes de "joint venture" de las Areas, hasta ahora res-ttringidas, dentro de ls0 50 K(m de las. fronteras inter-nacionafes oen las quo se encuentran muchos de losprospectos mAs atractivcs del pais;

iii) estableciiniento .de un marco juridico apropiado- paraIa lconformaci6n de operaciones rnii.tas ("joint ventures")entre emnpresas mincerc-metalCtrgicas estatales y priva-das, nacionales y o:tranjcras, para un desarrollo ra-cional de los recursos mineral6gicos del pals.

b) Sistema Tributario Minero

Un nuevo sistema, elaborado en base a una comparaci6n de lozsistemas impositivos de los paises minercs mAs exitosos po-dr4a presentar una alternativa al sistema de regalias en ac-tual.vigencia. Este "sistema impositivo opcional" tiene lassiguientes caracteristicas:

- manteniendo el sistema de regalias. se ofrece la alter-nativa de acog,erse al sistema de tributaci6n sobre r-e-sultados (o ganancias) notas a quienes realicen nuevasinversiones en el sector;

- las tasas de contribttci6n son bajas durante el periodode recuperaci6n del capital ihvertido en proyectos mi-neros. Estas tasas bajas se mantienen si el operadorminera decide reinvertir las ganancias en su propio oen otrcs proyectos mineros durante el periodo.en-que,con sus ganancias, recuperf la& (nversicn Co reinver-si6n) ejecutada. En caso contr-aria, la tasa se tripli-ca.

La tributaci6n de este sictzma :pcional es neutra en t&r-*minos de la asignaci6n do recursos minercs, sLuperando elsiste.i.ia de r-jalias!, quo al nravar la producci6n estimula laesplotaciern irracional y solcfLiva de las Areas. mejor mine-ralizadas en las reservas o:;istentes. Esta alternativa es-

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timLularla la invorsi6n. cvit.ii~do La deprcda3ci6n de los re-curcos mineral6gicos del pa 4s.

3.3 Los Esfuerzos de Producci6n e Inversi6n

Ya *e ha inr:ncionado 12 r1c;abi itaci ! l,a LO(11EOL conno uno delou oeje cuntra!oc de ia politica iminoro-luetalCtrgica llevada acabo pzr el Gobierno a partir de fines do 1965. Sin embargo, aunconsider-AndQ la 1-.r ;e's de esta politica, los planesd- inversi6n de la COMIDCLL _;61o lograr,.n la integraci6n. en elciclo do produccion rcntable.. de. aquellas operaciones que presen-tan su+icientes reservi.a winer4 aldicas, infraestructura operativaadecuada y un plan de operaciuries eficiente. A corto plazo, estalimitaci6n no permitir6 una expansi6n productiva significativa. Amediano plazo, la producci6n se verA incrementada con el ingresode nuevas unidades productivas do los subsectores estatal y pri-vado. Hasta finales do siclo, la producci6n se incrementarA sus-tancialmente con nuevas y significativas inversiones privadas, ycon el ingres5 de operaciones mi::tas ("joint ventures") en yaci-amientcs masivos de baja ley de plata y oro.

Las proyecciones de prodLcci6n do la Estrategia se reflejan en elCuadro V.13. Se observarA. que duranto los doce anos, el valorbruto podria alcanzar entre US$ 7,300 y US$ 9,900 millones, des-tacAndose la plata, el oro v el estano como los minerales.de ma-yor valor de producci6n.

El Cuadro V.14 muestra la proyecci6n de'produccThn par'subsec-tores de la_mineria. De 61 se des_pronde claramente que la COMI4OLseguira teniendo 6ira-gran iinportancia en la produccion de estano,zinc, cadmio'y tam'biben. d plata (en "joint venture" con capitalesprivados). La mineria mediana., junto con. la mineria chica y lascooperativas, tendrAn ena importancia relativamente mayor.a la dela COMIBOL en casi todos los mineralos.

Sin embargo todo dependerA de que en Bulivia, realmente se lo---,grara generar un flujo de inversiones hacia el sector minero tan

'grande como para permitir la utilizaci6n de los recursos en los* voltirenes mencionados. Las proyecciones de las posibles inver-siones en el sector se detallan Lri ttl. Cuadrcz V.15 al V.17, Ol*acuardo a tres difererites "escenarrios". Estos cuadros se distin-guen, fundamentalmente. por el montc: de capital privado inrverti.ioen las diferentes regianeP del Pais. Comparando estos cuadros conlaz proyeccionesi de ;rOu.LciOn e-egOn el subsector de la miner;a(Cuadro V.14), s-e const:ata fAcilrtiente que no podria existir unaadecuada explotaci6n de los recursas do plata y de las reservasde oro, azufre, etc., si no SC n.oviliza una gran cantidad de ca-pital privado hacia la produc:ci6n do estos minerales. La mismacomparaci6n de cuadros permitt eLtifvtar las graves consecuenciasderivadas de la. incapaciiad del tsutc:iJro de? fortalecer. de tal ma-nera a la COMII?.L COi!O para haterla Lina emipresa atractiva parala formaci6n de "icint vwntur2s'l con c:pitales privados.

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Volviendo. por Ciltimo, n 1xAn proyoccionos del balance de la ro-serva-base y I1 mxplotaci6n en V--perrlodo 1989-2000, las cifrasrespectivas so detallan en el Cuadro V.18. La explotaci6n de losmninerales estano, wolfr.m, cro y bismuto no acabarA su reservabase calculada. En cambio para joder arribar al final del perio-do de la Estrateqia con las proyocciones de prodUcci6n de losminerales antimonia. zinc, plqmo, plata y azufre, dotalladas an-,teriormente, se ve la necesidad de desarrollar nuevas reservas deestos minerales.

3.4 La Creacion de "Joint Ventures"

El Estado Poliviano pro-mocionarA y alentarA, en' el futuro, lacreaci6n de empresas de sociedad mixta, en base a contratos deoperaci6n, entre las entidades estatales productivas.y las empre-sas privadas nacionales a e::tranjeras. Para ello, la COMIBOL yaha identificado dentro de suts concesiones variot prospectos deoro, plata y estano de baja ley y gran tonelaje, susceptibles deexplotaci6n masiva. Estos prospectos serArn objeto de exploraci6ny evaluaci6n oara establecer la magnitud y calidad de sus reser-vas mineotalgicasv la viabilidad de su extracci6n rentable, suposibilildad de concentracion y beneficio con sistemas metalar-gicos de lixiviaci6n.

3.5 La Exportaci6n y el Desaflo a Crear Adecuados Instrumentosde Comercializaci6n

Tanto la producci6.. de concentrados de minerales provenientes delas empresa mineras, como la de los metales y aleacjones-* de or'-'gen en las fundiciones. se destirarSn casi en su totalidad, a laexportaci6np ya que el consumo interno de ostos productos as muylimitado o casi inexistente, con ex:cepci6n de algunos usos indus-triales en peltre y soldaduras. Los vol:menes y' valores proyec-tados de las exportaciones estAn conteridos en el Cuadro V.19.(Las diferencias de valores entre el cuadro V.19 y I1I.2 se ex-plican por uso de definiciones diferentes_. Las primeras eutAndadas en valores CIF; las Oltimas en valores FOB).

Lograr estos vol:menes de exportacion no depende s6lo de la pro-ducci6n, sino tambi6n de l comercializaci6n adecuada. La poll-tica implicita'en la concepcl6f de la Estrategia de Desarrollo seorienta, por lo tanto. a crear un marco para que la venta de losproductos inineral6gicos bolivianos en los mercados internaciona-los se realice en condiciones ventajosas y beneficiosas para elpals. De alli que la politica deberA contemplar:

- la libre, amplia e irrestricta comerciali:aci6n de metales yminerales, condicionando las mismas al fiel cumplimiento delas leyes tributarias en vigen'.:ia;

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- la prornoci6n de la I.ncmarciali:aci6n de productos que conten-qan el mayor valor agrcgado y que hayan sido sometidas almejor control de calidad posible, bajo un r6gimen de mercaltolibre;

- la promoci6n y el fortalecimiento coordinado de las unidadesde comercializaci6n interna y externa de las empresas esta-tales, para lograr un Agil y din&mico servicio en suS opera-ciones con una mayor rentabilidad y, fundamentalmente, capa-citar, mediante planes do,entronamiento especifico, al per-sonal boliviano de alto nivel encargado de las empresas es-ctata13s;

- la creaci6n de una fuerte capacidad tdcnica de negociaci6ndel Estado con las emprosas privadas,interesadas en las'for-macion de "joint ventures" con la COMIPOL.

3.6 Instrumentos Adicionales de Pol.tica Minero-Metaliirgica

Debe quedar clara, que los instrumentos'de intervenci6n directadel Estado en el desarrollo rninero-metaltirgico del paA5s, nece-sariamente, van a ir perdiendo peso relativo,-en la medida en quoel volumen de la inversion privada vaya superando ampliamente lainversion pwXblica. Si esto fen6meno se produce, de acuerdo a lasproyecciones de la Estrategia', serb labor fundamental del Estadomantener y perfeccionar el marco -c.lobal dentro del cual se desen-vuelvan los diferentes subsectsreps ineros, mAs que la de reali-zar programas especificos de produccibn, y fomento. La orientari6nbAsica de esta politica se halla brevemente descrita en el pA-rrafo 3.1.

Ello no quiere decir, que el Estado pueda o deba renunciar a lautilizacidn de recursos financieros y crediticios para fortalecczry apoyar la capacidad de modernizaci6n y expansi6n del sectorprivado de la mineria. Es necesario reali:ar un programa de pros-pecci6n y exploraci6n minera, quo tenga altp prioridad en la biis-queda y ubicaci6n de nuevos yacimientos, y que permita elaborar*una Carta Geaol6gica Nacional. Esta Carta deberA ir acompaRada porun banco de datos geol6gicos y geoecon6micos de las zonas mapea-das, para que el sector productiva pueda hacer la interpretaci6ngeol6gica del comportamiento de la mineralizaci6n, de la de'lim4-ta~ci6n de yacimientos y de La evaluaci6n de reservas, favorecien-do,, aWs su posterior racional explotaci6n. IguaTmente, el Esta-do?. deberA tomar iniciativas tendientes a apoyar la integraci6nde la exp-lotacidn com la concentracion y beneficia de minerales,a impulsar la'investigaci6n bAsica y aplicada de todas las t6cni-cas de concentraci6n de minerales, etc. AdemAs. el sector de lapequena mineria y de las cooperativas deberA contar con un accesodirecto a la asistencia tdcnica y crediticia del Estado,. para-locual los instrumentos e:tistentes doberAn ser perfecorioados. Pordltimop es urgente realizar un programa estatal des,tinado a mejo-

.

- 72 - ANEX 2-6- ~~~~~Page 11 of 29

rar la seguridad y la in+raewatructura s3ocial y las posibilidadesde.ccapacitacibn da todas las personas, hombres y mujores, de to-das las edades, cuyo ingreso y bienevstar social dependa de lamineria.

V.4 PROGRAM( DE INVERSIONES PUBLICAS PARA EL SECTOR

La inversi6n pablica proybctada para el sector, durante los doceanos de la Estrategia de Desarrllo, asciende a aproximadamenteUS$ 158 millones.

En un parrafo anterior se ha hecho menci6n a la inversi6n reali-zada por la COMIBOL, quo permitirA.a esta emprosasenfrentAr iosproyectos de rehabilitaci6n y redimensionamiento - de nievas ope-raciones, muchas de Ollas en asociaciones contractuales mixtas.

El Cuadro V.20 muestra aeI ndtmero de yacimientos, tanto primarios,como secundarios y masivos, que se protende encontrar con lostrabajos de prospecci6n y exploraci6n quo se deberlan ejecutardurante los doce afos contemplados en la Estrategia. Se-calculaque este programa demandarA -una suma aproximada de-USS 48.4 mi-Ilones que serA invertida tanto por el sector ptblico como por clprivado.

El total de la inversi6n pitblica y los gastos de operaci6n en lospr6ximas doce anos, puede ser resumida de acuerdo a la actividada realizarse en:

a) Prospecci6n y E::ploraci6n US$ 16.10 millonesb) Explotaci6n US$ 67.10 millonesc) Concentraci6n US$ 63.50 millonoesd) Fundiciones US$ 46.00 millonese) otros. US$ 4'.40 millones

T U T A L US$ 197.10 milloones

De esta sum& total, US$ 39.4 millones son para "apital de opera-*clones.

I,

-73-ANNEX 2-6Page 12 of 29

CUADRO V.1

VALOR DE LOS HINERALES IN SITU

nczan:zuuuu-aunuua::usa:ua2:-a:sauu:u::::::u s:;u:B:~2:uu:32Sa :: U:UUS::::: U: 233:S UUU:S-3UUS8DI S

MINERAL RESERVA I PRECIO VALOR IN SITU IBASE (ThF) US, (1) I (en USS) I

ESTA'0: 394,000.0 3.10 ILb 2,692.7 millones IWOLFRAH 75,500.0 44.00 /UIF 331.1 sillones IiANTInNIO 1 105,000.0 1 19.50 lULF 201.5 eillones:ZINC 555,000.0 0.35 /Lb 428.1 sillones,PLONO Ill,OO.O l 0.22 /L.b S3.9 eillones!ORD IRecurso) 222.3 1 450.00 /onza troy! 3,126.0 eillones'PLATA 1,300.0 I 6.10 /onta trori 247.9 sillones IIPLATA (Recurso) (1) 200,000.0 1 6.10 Ionza troyS 38,125.0 millones (1119BISIUJO ' 4,800.0 3.20 /Lb I 33.8 millones IAIUFRE : 100,000.0 88.00 /TNB 9.9 oillones I

- 3-;==: 3_-:-:t5:SS:SS::::::===::3::X:t. gS::::XS:gSS::::u:S:2 :z::2==2tu:3*glnu

I t TO t L 7,123.6 silones I3281 22:3:88s=:8882s=8 2-=2ss3:8332:sz:2:::32:32222u328823333883382*2333253355L3U83382

NOTA: (1) 39,125.0 nillones no estan incluldos en el total.124,000 TKF del Cerro Rico de Potosi : (US) 23,63? illneus).

(1) Precios a febrero, 1983.

FUENTE: ESTRATE61A DE DESARROLLO ECONONICO Y SOCIAL, 19R9-2000.

CUADRO V.2

VALOR DRUTD DE-LA PRODICCION 1980 - 1987

(En sillones de US$)i 132:S::-:s=:: V::::t::%SSg--SSSggAS5

I VALOR DE LA t VARIACION PORCEH- V VARIACION PORCEN- IAODS I PRODUCCION H TUAL RESPECTO AL t TUAL RESPECTO AL 1

(EN US$) I ANO ANTERIOR I Agg BASE (1980) 1

11990 : 75 6 50.1: .. ---t 1981 : 660 t -12.7: -12.7 t1 1982 1 500 1-24.1 2 -33.9 11 1983 .1 496: -0.7 -34.2 S: 1994 1 .374 ' -24.6 -50.5 iI195 Is 290 1 -22.6 *-1.62 1996 1 139 : -52.2 : -91.6:1t 1987(p)l 196 I 33.9 1 -75.4 1

NOTAi (p) Datos prelisinares.

fUENTE: SOLETIN ESTADISTICO HIhiERO-IETALUR61CO,- NINISTERI DE NINERIA V NETALORQIA

ASOCIACION NAC!O!IAL DE NINEROS nEDIANOS. -

- 74 ANNEX 2-6Page 13 of 29

CUADO V.3

PRODUCCIE1 DE LOS PRINCIFALES IIttERALES EN BOLIVIA

(En toneladas eAtricas finas)

A,.DS o ESTARO I WOLFRAM 1 ANTIMONHI: FL(O 1 ZItIC : PLATA COERE I DISIWTOD AlUFRE 1 OR0 * a ,~~wu,,,m3 i 1 1TK9) 1t(,F) t)1

191' t 29,997 1 1,315 1 18,776 22.173: 43.e8 i 151t 8,523 I 615 9 I -13t- 062-::liiS 31.898 : 2,319 1 16,98 1 17,967 1 49,774 1: 169 S 6.218 I 621 21,929 : ,649 :19a9 1 27,271 1 3,359 1 15,465 1 17,225 1 58.261 : 189 t 1,84 1i . 11 11 244 1,629 1

: 1981 : 27,62 1 3,449 1 15,296 : 16,756 : 47;82 8 218 : 2,636 1 10 1 19292 1 1,564 S: 1982 : 26,689 3.171 ; 14,061 t 11.943 : 45.667 1 170 1 2,269 1 4 5,914 1 1,096 1

1983 : 25,279 1 3,987 : 9,443 : 12,992 1 46,919 I 192 I 1,991 I 6: 39111 1 1,531 11 1984 1 19.919 1 2,571 : 7,ES4 : 7.325 1 37,8S 1 144 ' 1,251 1 3 1 1l978 I 1t278 :1 1995 1 16,136 : 2,128 : 8,419 : 6,297 : 36.591 : 197 1,665 r 159 : 2,741 1 561 1: 1986 : 1s,479 1 1,390 t 19,243 : 3.121 :33,472 : 96 : 337 43 : 4,739 I 763 1: 1987 1 8,129 9 904 19,635: 9,943 1 39,122 1 149 7: - 1,7461- 2,759 :

NOTAs (1) Registro oficial de producci6i. Se estioa cue la produccitn real es sayor.

FKUNTE: ANUARIG ESTADISTICO flINERO, 1979. HISISTEFaO DE tIINERIA Y tETALUS8AlBOLETINES ESTADISTICOS ANUALES. MINISTERIG DE 4I1NERIA Y METALURSIA.

LtJADRO V.4

IhDICE BE QUANIUH

(Base: aRa 1988 z 198)

: lliNERAL 1 19E8 1 19al 1 1982 1 198.3 1 1994 t 1985 1 19.6 . s9INI22:3:iS::2s==::::2222:2=2:82 ::= z:s:::2:::::::::N:2::zz::::=: :5:a:,uz::u ::ssuhaaj ,ut2, 1

iESTA.O : 18O 19: 1Q51 98: 79 I 6t 4U 1 289!VOLFRAt : l19 I I95: 951 931 771 691 49 :. 2211ANTItON1I t lOO: 1961 981 66' 55: 591 711 .I 78 IIPLONO : 1OO .9 971 _.6 791 43: 341 191 is3tiZNC I 10 1 94 t Sl 1. 94:1 74 1 14 1 -674 - 791ICOIRE 1 1e3: 1461 1261 11:1 7t1 931 9 1 1 1IPLATA .109 I t111 9s-:1 82 761 t 57 1 501 n 7IDISnUTO ... 1 -I9 -. 961 771 92 : 711 63 201 9 I!AZUFRE :. 198-: 1461 821 131 1941 371 59 165 1IOTROS I laI 109 9 99* 97 771 611 441 4 1

FUENTEt USTITUTO NACIONAL BE ESTADISTICA.

-75 ANNEX2-6

Page 14 of 29

CUADRO V.5

INDICE DE QUANTUN POR SUBSECTOR

(Base: ago 1980 210)f5-S~~~ ~~~ 3mS22:t::22f=222:::7:::: :=:::::8:zt:S::a:zs:::tX2aaas2s3u2:2gm,Ju83"33a2S3

r SUBSECTOR 1980 : 1981 1982 1903 : 1984 1 1985 1 19t6 1 I

kCONIBOL : 100 : 108 981 92: 661 15S 22 1 9 I:NINERIA NEOIANA 10000 111 -. too 94 1 751 74I1 9 31i:i,nERIA CHICA : 100 107: 102: 111: 99 63 1 92 1 159 1IOTROS EIPORTADORES 100: 109: .99 7 1 77 1 11 44 1 4& 1

FUENTE: INSTITTO NACIONAL BE ESTADISt1CA.

CUADRO V.6

PARTICIPACION DEL SECTOR DE NINERIA V NETALUR6IAEN EL TOTAL DE LAS ElPORTACIONES

(Valor CIF - en uillones de US).

* : AOS : EXPORTACIONES i TOtAL BE I PARTICIPAC10|t:: MOS : gNEkAs E EPORTCIONES I PORCENTUlL I

1 1970 : - 204.7 1 229.6 1 89.5 1: -1975 1 304.5 1 521.4 1 58.4 1

1990 : 641.1 1 1,035.91 61.9 11 1981 1 556.0 1 995.3 1 55.9 1 -.1 19B2 1 419.4 1 89B.2 1 46.71 - -1 1993 1 3473 1 917.5 t 42.5 11 1984 1 364.0 1 792.1 1 44.5 t| .19B5 t 263.81 672.5 1 39.2 1I 1a6 (P)l: 196.8 : 649.7 1 30.3 11 1997 (p)1 207.2 1 561.5 1 36.9 t

NOTAt Ip) Datos prelieinares.

FUENTEs BOLETINES ESTADISTICOS ANUALES, IINISTERIO D--NINERIA Y NETALUR61A.0OLETINES, BANCO CENTRAL DE BOLIVIA.

-76- -76- ~~~AMNE 2-6Page 15 of 29

CUABRO V.7

EIPORTACION POR ItIkERL V NETAL DE BOLIVIA

(Valor CIF en millones de USS voiueen en miles de toneladas mttricasy precios unitarios-en US, por libra, o indicado)

:uuuu:a*t:uz3u:z;z:33uS:s8s:sn3z::z:ss:at:z ::U::=S:1:::s2:ZZ:ZS:Z::: Z::g::SU3SZ U8UJ t a .:uuausa-stauu

NINERALES 1 1993 1984 1 1905 1 1986 19873a::::zs:2S2 :::::z:s:::z:::s:::a3g:8:2:g:2.:3s::5ssl-3ssgga:s32::38u :322:::z:3-z3 lguuu.a 8 I saM"Wl

ESTMO (concentradol I :valor 32.40 56.90 52.90 49.90 1 56.20 tvolunen 2.50 4.70 1 4.40 9 8.60: 820 1precio unitario i 5.e2 : 5.54 : 5.39 2.57 3.00

1ESTA9O laettlico) : 1 Ivalor I 175.50 190.70 I 133.90 55.30 : 12.60 :volunen 1 13.50 15.60 11.70 B.20 I 1.80 I

I precio unit-j ! 5.98 5.54 ! 5.19 ! 3.05 s 3.10:I'OLFRAN (1O31 I j S

valor 1 20.00 1 18.90 : 10.30 1 6.60 -5.9" volumens 2.60: 2.501t 1.60 1 -1.50 1.20 1

s S ~~~~~precio unitario 3.51 i 3.47 1, 2.84 -2.00 1 1.9n.s1ANtinHloR . : I - : : t1I valor 1 16.30 1 22.60 1 15.90 1 14.50 1 22.70 1: volunen ., .12.90 10.90 1 7.70 1 9.60: 12.50 t

precia unitario 0.57 ! 0.95 1 0.93 t 0.77 1 0.82 t

IPLONO i t ..I valor : 4.00 1 1.001 0.50 1 5.001 - 4.20 1

nvolumen 1 9.30 2.40 1 1.40 1 1290 1 -7.40*1t prucio unitario 1 0.19 1 - 0.20 1 0.17 1 . 0181 0.23 1:IINC I t 1t 1 I valor - : 33.40 37.30: 29.50 1 28.0. 1 32.80 I

.I volumen 1 41.30 1 36.90 i 33.90 1 35.60 1 39.60 11 precio unitaraj 0.37 1 0.46 1 0.39 1 0.36 1 0.31,1IPLATA I 5 3 t1 valor 1 9.30 1 21.40 1 10.?0 1 27.30 1 33.30 1t volusen (TNF? 1 157.90 1 80.00 1 51.60 1 157.20 151.90 1I precio unitaruio : 11.41 8 1.16 : 6.12 1 5.44 6.53 11 IUS$ por onza troy) I i 1 t I

ICOIRE I : 1 t SI valor 1 3.00 1 1.80 t 1.70 1 0.80 I 0.01 It voluen I 1.90: 1.30 1 1.201 . 0.60 0.011I precio unitario 1 0.70 ' 0.62 1 0.63 1 0.61 1 0.63 I

- ~ t1St t i tt 1 il II valor I 0.00 1 0.00 I 0.00 0.20 1 0.00 II volumen I 0.00 I 0.00 I 0.00 1 0.04 0.0 II preclo unitaris 1 1.57 1 3.57 1 4.94 1 2.70 t 2.39 1ItRO I I i 1I valor I 0.50 9.79 1 5.40 1 7.20 1 37.50 1I volusen (KF) 1 44.10 1 -910.00 1 533.90 1 609.g0 1 2,596.20 1

1 recia unitario I 6.51 478 1 tlU5S por nonza troy) I 1 1 | 5 1 !IAlUFRE I I tI valor 1 0.201 0.20:1 0.30 1 0.50;1 0.90 Ivolumen ITMB) 3.00 11.90 1 2.70 1 4.70 1 ..8JO.701

precio unitariao (tnf I 54.00 1 9200+ _ 97001 t 101.00 I 90.101 1OTROS NINERALES t t tt valor 1 3.70 1 3.30 i 3.20 1 1.60 1 1.19 1

TOTAL YALOR 1 3;4.30 . 63.99 ' 263.90 1 195.90 t 207.20 1FUEIITEc Fi.lSTERIO DE nINERIA Y VETAdLUAGIA.

- 77 - .NM Al.-6Page I6 of 29

CUACRO V.8

- EXPORTACIOIES HINERAS POR SU9SEC7ORES

(Yalores CIF en sillones de US$)

I SUISECTOR 1 1982 : 1983 1984 1 1985 1 119B ' 197 1

ICOHIDOL : 93.6 99.5 75.2 24.7 1 26.3 1 12.6 . -

IHINERIA NEDIANA 1 51.5 1 42.9 1 50.6 1 61.3 1 * 63.3 1 95.2 1ININERIA CHICA 1 19.4 1 19.2 I 34.0 1 34.9-1 35.1 1 12.6 tIOTROS ElPORTADORESI 7.1 1 10.6 1 8.8 I 3.9 1 12.2 1 49.1 11FUNDICIONES 1 247.5 1 195.1 1 195.3 1 139.6 1 59.9 1 .17.7

I t OT A L 1 419.1 1 347.21 363.9 1 ,263.6? 196.81 207.2 1

FUENTEt IIIIISTERIO DE IINERIA Y METALUR61A.

CUADRO V.9

EXPORTACIONES I VENTAS BE IIINERALES POR SUBSECTOR A LAS FUNDICIONES NACIONALES (1)

(Em aillones de.USS)

mu8auaSglUUaUauauagauuaucuuauaasususa: uFllll-lllllll*lguagaJus au-asu uaau|taaauu.uUUaaaUsu

I SUBSECTOR 1 1982. 1 1983 1 1994 1 1995 1 1996 1 1987 11 1 : 1F t I -t (i)' IJ mltsssssauuuuuuuuuuusuuauuunajltslatlsauua*88asaeauuanadas.gaauauuaugasuama # *guuau # lSllo"r

I Exportacion 1 93.6 1 89.5 1 75.2 1 24.7 t 26.3 i 12.6 1IC01ni1L Vents 1 182.8 1 172.2 1 123.3 1 50.4 1 28.9 1 8.5 II I---- - --------- .t.....I Total : 1 276.4 1 261.7 1 198.5 1 83.12 .551 .- 21.

I EEpartac1Hn 1 51.5 1 42.8 1 50.6 t 61.3 1 63.3 1 95.2 1ININERIA NEDIANA Venta I 65.6 1 44.9 1 29.6 1 9.9 1 21.9 1 0.5 II I---z--------*1--*.---------- I t

I Totel I 117.1 1 87.7 1 80.2 1 71.1 1 95.2 1 95.7 1I _..0.ee... ............................. .. . ........

It Exportacln 1 19.4 1 19.2 1 34.0.1 34.91 35.1 1 32.6 1§ INIIIERIA CHICA Vent& 1 1S.8 1 20.2 1 15.9 t 13.0 1 29.9 1 0.5 I

l ....................... | ..I------------- I............................ .._

I Total 1 35.2 I 39.4 1 49.91 47.9 I 65.0 1 33.1

I ExportaclHn 1 7.1 1 10.6 1 8.8 1 3.9 1 12.2 1 49.1 1IOTROS EIPORTADORES Vent I - 1.8 1 1.7 1 0.8 1 0.8 1 22.8 1 6.5 II ..........I........ .. . ............ ............ . _ _

Total I 8.9-1 *12.3 1 9.1 1 4.7 1 35.0 1 55.6 1

NOTA (l) Incluye ventas de concentrados di *stano y de antimanlo.1IDato nstiuadas.

FUENTE:ESTRATEBIA BE DESARROLLO ECCNON1CO Y SOCIAL, 1989 - 2000.

-78-ANNEX 2-6Page 17 of 29

CUAMO V.1I

PARTICIPACION DE LOS INGRESOS FIS8ALES POR EL SECTOR DE tINERIA V NETiLURtIA

(En sillones de UMt

a:ag8::SzzSS:::::3:St:g55s:zn:s::s::SSS::=:82e.taz::::23asaus8:zu5::uszs::nst3zSt3m

* : a 2I PORCENTAJE IARO : SECTOR : SECTOR I TOTAL DEL (TOTAL INGRESS DE* .

: ESTATAL I PRIVADO 1 SECTOR T.B.N. 1 CONTRIBUCIONIuns g3afuuaSauu3s:u23auu3taza38zau:S5:u3:ug.3l2u3gs3uw.suu3lau3a8tuszu,8 t ts

1 199 S .59.78 1 29.95 1 e9.55 : 589.67 1 15.0 I

11991 i1) : 26.58' 17.94 44.44 : 59.119 I 7.61

,1992 (1) 15.99 : 1.70 12): 26.59 1 289.16 : 9.2 S

11993 : 4.18 : 2.35 12): 6 6.45: 15?.59 4.1 S

11984 1 5.28 : 3.D5 (2)t 9.25 1 62.21 : 13.3 :

11995 : 2.88 1 0.59 l2i '2.99 : 114.9 1 2.5 S

11996 : 9.98 8 .74 (2U 1.64: 461.90 : 9.4

11997 Ip) 1 9.9D 2 2.47 12): 2.47 479.82 1 O.5 I

NOlA: (1) lncluyen regallas devengadis.12) Incluyen regallis auriferas.Ip) Datos prelisinares.

FUEtITE: TESORO SENERAL BE LA NACION, 1929.

.

-79 ANNEX 2-6Page 18 of 29

MEUA~~ V. 11

PARTICIPACION DEL SECTOR BE IIINER8A Y HETALURSIA EN EL E8IPLEO TOTAL

(En 2iles de cersonas)

: AROS : EOPLEO TOTAL : OTROS t SECTOR ItNERhO- PARTICIPACION: EN BOLIVIA : SECTORES t ETALURGICO t PORCENTUAL t

= == ========= = = = :===z-======--=z::==x:z:=:=:s 1980 : 1,719.6: ,633.6 96.9 - 5.9:1981 : 1,694.5: 1,692.8 82.5 4.9:1 982 1,799.9: 1,623.4 a 4.6 4.9:

: 1993 : 1,678.6: 1,571.3 97.3 .5.2:1: 1984 ' 1,795.5: 1,619.6: 95.9: 5.9 1: 1985 : 1,695.9: 1,695.2 89.6 I 4.9 11 1996 1 1,6SI.3: 1,627.2: 52.1: 3.11: 19871e)l 1,999.9: 1,933.e9 47.9 I 2.4 1NOTA: (e) Datos estisados.

FUENTE: NINISTERI DE TRABAJO Y OESARROLLO LADORAL.

CUADRO Y.12..~~~~~~~~~~. .

PARTlCIPACION OE LOS SUB-SECTORES EN EL EIfLEG GENERAD P0OR EL SECTOR SE NINERIA V NETALURGIA

(En tiles de personas)

g:=SS uat:5zg:z-:z:::sn===:st-:z:su:==:=gs=:gz::::t::unuuz gug Su:aau::=t:usg:.a:maag,,sg:asusa:*

I AOS I TOTAL : CONIBOL MINERIA I NINERIA It OPERAtIYAS : ENAF I1 . NEDIANA I CHICA I NINERAS I ISS 5355S:SS:-:--:---S2:S::SSSzS:SSSCS::S:a:staS=:===:SSS:S3Ss::S:S:5S3::tgSS:SSugSS.S3SuUNI885*UaS 1 1981 96.9 18 26.5: .7.6: 2.0 29 22.81. 2.1 SI 1991 1 82.5 : 25.7 : 7.5 26.2.S 21.9 1 2.1 11 1992 : 84.61 26.11 7.11 24.0 *24.7 1 2.1 tI 1983 : 97.3 1 27.9: 7.51 23.5 1 26.2 I 2.2 11 1994 1 95.9 1 27.9 : 6.2 1 22.9 1 271.:1 1.9 I1 1995 : 98.6 1 25.9 t 5.7 19.4 1 28.9 1 1.6 I1 1996 1 52.1t 7.5: * 4. 1 11.81 28.7 111) 1.1 I1 1997.1 47.8. 7 I - 4.5: 19.9 1 25.5 l(1 1.3 1ua:Sszua::uussu::::=s:::::n::::::z:::.g:suz:u::::Sz::sssa:::a:g:;s.:z.st:g # a::msa5S I 8ShZ3UUS2I INOTA: (1) La Eopresa National de Fundiciones (ENAF), i partir de enero de 1996,

paso a formar parte de CONIBOL.

FUENTES: CONIDOL.ASOCIACION DE NINEROS NEDIANCS.CANARA NACMONAL DE NINERIA.FESERACION NACIONAL DE COOPERATIVAS MINERAS.

I s~~~~~~~

- 80- A1NN 2-6Page 19 of 29

CUADRO V.13

PROVECCION DE FRODUCCION HiN(ERA: 1969 - 2000

(Volusen in toneladas altricas finas I valores en aillones de US$1

' IIIHEE '. 1988 I 1989 - 1992 2 1993 - 1996 1997 - 2000 1 TOAL I(ANUAL) (AKUAL) -1 !"AL) I I

VOLWIEN (1) 1 10,650.00 14,600.00 15,900.00 I 17,000.00 20,000.00 1 20,000.00 1 215,000.00 lI)S2ESTAaO VALOR 12) 1 72.761 99.75 a 108.64 2 116.15 a 136.65: 13.65 1 1,41.91 211:_________ VALOR 13) 72.76 2 112.62 140.17 : 164.86 200.56: 207.16 1 2,0S.06 13)1

_-_ ______-___.__ _ _ ______ __--- _ _ -_____ -- ---- - --

VOLUlEN (1) 1 1,500.00 1 2,000.00 3,200.00 : 3,300.00 4,500.00 4,500.00 1 44,000.0 11)12VOLFRA (1103) VALOR (2) 1 6.48 9.64 a 13.82 : 14.26 a 19.44 1 19.44 190.09 12)1: VALOR (3) 1 6.48 I 9.83 18.90 : 24.36 36.55 I 39.97 S 38.76 1011 VOLUIEN (1) -*9,500.00 1 11,500.00 12,500.002 --43,OO.00 16,000.00 1 16,000.001 IN,OO.OO 1 fll)SIANTINONI VALOR (2) 1 15.24 1 22.08 a 24.002 24.96 a 30.72 1 30.72 1 326.0 12)1

VALOR 13) 1 18.24: 23.23 25.25 1 28.08 34.56 1 34.56 1 36.4 4311:- ------ * ------- - - - - -

VOLUIIEN (1) 152,220.00 : 62,490.00 95,040.00 I 95,500.00 100,000.00 1 100,000.00 :1,106,060.00 111-hIINC. VALOR (2) 1 40.28 71.35 a 73.31 73.67 a 77.14 1 77.14 1 999.50 121: VALOR (3) 1 40.281 52.33 83.79 1 98.40 95.97 1 99.18 1 1,037.50 13)1

: ~~~~~~~~~~~---- ---------------------------.-.- VOLUJEN (1) 214,000.00 1 14,130.00 16,700.00: 17,000.00 24,500.00 1 24,500.00 1 242,60.00 M111tPUU10 VALOR (2) 1 7.10 : 7.25 a 8.47 2 8.62 a 12.42 1 12.:42 1 123.20 12)1:__________ VALOR (3) 1 7.10 5 9.10 10.31 I 10.49 15.66 1 16.20 1 153.92 13)1I --------- ~ ~~-- -----------------------

VOLUIIEN 11) 1 260.00 1 270.00 -- 359.00 : 500.00 2,000.00 S 2,000.00 1 14,258.00 (I)tIPLATA VALOR (2) 1 51: 53.00 a 70.40 : 99.01 392.22 1 392.22 1 2,796.14 1211S VALOR (3) 1 51.001 58.16 60.79: 120.56 546.55S 610.86 I 4,055.56 (3)1,.,~~~~~~~~~~~~~ - - -_ - - _- _- - -, -......................................... - -T-- - -- -- - -- - - -:

VOLWIEN l1) 3.70 4.20 5.50 7.50 10.40 1 10.401 96.60 fi)1IDRO VALOR (2) 1 53.53 1 60.76 a 79.57 2. 108.51 a 150.46 1 150.46 1 1,400.44 12)1S VALOR (3) : 53.53: 63.46 69.41 2 127.80 198.91I 200.62 1 1,739.44 1311I VOLUIIEN 1) : 1 30.00 100.00 i 200.00 300.00 1 300.00 1 2,460.00 (I)IIBISIWTO VALOR (2) 1 -- 0.21 a 0.71: 1.41 a 2.12 1 2.12 1 17.38 211VALOR (3) : --- 1 0.21 0.69 2.12 3.31 1 3.44 26.80 3)S

1* :VOLUEN 1) I118,000.00 I 60,000.00 70,000.00 90,000.00 100,000.00 1 100,000.00 11,02u000.00 fll)IAZ FRE VALOR (2) 1 1.598: 5.28 a 6.16: 7.04 a 0.80 I 6.80 1 89.76 (21)S VALOR (3) 1 1.58 1 6.00 7.70 12.00 16.00 I 17.00 1 151.40 13)1S -- -------- ----- - ---------- _ _ _ _ _ ._ _ _ ........... _ _ _IVALOR 3RUTO (2) 1 250.97 1 326.32 a 385.08 : 452.63 a 929.97 I 929.97 1 7,311.98 1

| t_.___I -------------.------ ----- --------- - ----- S ----- IVALOR BRUTO (31 I 250.97 : 333.94 a 456.20 : 578.67 a 1,137.97 1 1,229.89 1 9,929.12 1NOTA: 1 Voluaen Total produCido en los doCe *AOS 11989-2000).

121 Valor Bruto de Produccifn a precios de ftebrro 19E8. en sillones de Ut.(3) Valor Bruto de produccien a precios proyectados, in sillones de USS.

|FUEIE: ESTRATE6IA DE DESoRROLLO ECOMORICO Y SOCIAL, 1989 - 2000. -

AN$NEX 2-6-8 1 - Page 20 of 29

CUAfRO V.14

PRODUCCIOII DE NINERALES, PROVECCION POR SUBSECTORES

(E4 toneladas *etricas finas)

.IINERAL SUBSECTOR 1988 1598 - 1992 1993 - 1996 1997 - 2000 1

==:==:::::::: :=====:=:: 5: =:::aS::=:===S::::S::S=::S::S::: :Z: :::::::5S:SSS:: I5tS'CONIDOL 3,840 6,700 a 7,000 9,000 a 10,000 10,000 I

:ESTARD B IUN. NEODIAlA : 2,500 2,800 a 3.000 3,900 a 4,900900 00 1'lNl. CHICA V COOPERATIVAS 1 4,310 5,lOO a 5,900 5,100 a 5,100 5,100 i

I : : b10,650 14.600 d 15,900 17,000 a 20,000 20,0000- - - -- - ---------------- …- --- -- - __- ___--_,

Is : 0aCDNIBOL 0 0 0 a100a 700 700::NOLFRA 1 NIN. PEDIANA . 1,200 1,500 a 2,500 2,50 a 2,000 2,900

:KIN. CHICA Y COOPERATIVAS : 300 500 a 700. 700 a 1,000 1,000 I

i ii 1,500 2.000 a 3,200 3,300 a 4,500 4,500 I… ---------------- ------ - ----- --

:CONIOOL I 0 Oa 0 O a 0 0O!ANTInONIO :BIN. nEDIANA 1 6,000 5,900 a 6,300 6,700 a 9,200 9,200 S

:MNI. CHICA V COOPERATIVAS : 3,500 5,600 a 6,200 6,300 a 6,800 b,B00 II * … … …- ~~~~~~~~~~~~~~~~--------------

| I - : 9,500. 11,500 a 1 12,500 13,000 i 16,000 16,000 I: :

I :ICORIBOL . 1 15,170 . 23,590 a 54,540 55,000 a 57,000 57,000 I1ZIlIC g NIH. NEDIANA . - 1 36,200 38,000a 39,000 39,000 a 40,000 40,000 ;

: :DN. CHICA Y COOPERATIVAS -: 950 900 a 1,500 1,500 a 3,000 3,000 I: :_--_ _____-_ -__ _ _ __ _1

I : : 52,220 62,490 a 95,040 95,500 a 100,000 100,000t

I COIIDOL I 3,400 2,930 a 4,000 4,000 a 9,000Q 9,000 IIPLOIIO MIlN. NEDIANA : 9,000 9,500 a 10,500 10,500 a *11,500 l . 1,-500 L

I HIlN. CHICA Y COOPERATIVAS: 1,600 - 1,700 a 2,200 2,500 a 4j000 4,000 I|~~ : - ------- -------- ----- ------__

S : . :1 14,000 14,130 a 16,700 17,000 a 24,500 24,500 1 .

1 :~ ICONImUL 11) 1 130 127 a 1 e 250 a 1,600 1,600 1'PLATA ItIN. tEDlANA : 95 103 a 120 130 a 250 2501: S1IIN. CHICA V COOPERATIVAS 1 35 40a 55 70a 150 1501

- .a I - ----- ----- ----- ----*- - --- I1: I 260 270 a 369 . 450a 2,000 2,000 1

--------------------------------------- ----

i CORIBOL 0.0 0.2 a 0.5 0.5 a 0.7. 0.71:ORD (gr.f.): MIN. nEDIANA I 1.7 2.0 a 2.5 3.2 a 4.6 4.6t

I NIN. CHICA Y COOPERATIVAS 1 2.0 2.3 a 2.5 3.9 a 5.1 5.1 1, . I |___ _ _ _ _____ ________ __ _----- - -^-----........-.-- . :.

1 3.7 4.5 a 5.5 7.5a 10.4 10.4 1

I |ICO:I11OL: I 0 25a 90 180a 260 2601IPISHUTO IMIN. NEDIANA O Oa 0 Oa 0 01t ::IN. CHICA Y COOPERATIVAS I 0 5a 10 20a 40 4011 - 1---- -------- - --- - -- ____ .__1___

I*I I 0 30 a 100 200a 300 3001…_---------------___ _-_ ________ - __. - |

ICONISOL :0 0a 0 0a 0 01 SlAUFRE I BIN. IEDIANA I 0 0 a 0 0 a 0 0 1I I nIN. CHICA Y COOPERAI1VAS I 19,000 60,000 a 70,000 90,000 a 100,000 100,000 1

|~~ . 1… ----------------- _ -I............... *_____._____ ....

I:I : 19,000 '60,000 a 70,000 90,000 a 100000 100,000 I

I COWIBOL 1 41 60a 80 90a 100 100 :CADMIO 1 HI . IEDIANtA I 5 a 10 10a 20 20 1I MI nl. CHICA Y COOPERATIVAS :1 0 0a 0 0a 0 0: 1 -.---- ------ ------ _ _______ _ _ _ _ _ _,,_l .-.-.

.1 1: 1 41 . $5a.- 90 9 . 90 a- 120 10

NOTAS 11) Protducion de Joint-Ventures a partir te 19'2.-1 *-- TV *r -,A I . -mna -arrI n v qf-?'i ^ A

-82- ANII X2-6ag-e 21 of 29

CUAL.FO V.15

INVERSIONES 1¶G9 - 20O0 0 ESCENARIO I

(En silfonet de USSI

1 C A P I A L DE I N V E R S I O N E S CAPI1AL OE OPERACIONES 1OlALES PORrtt1AJE1a a~~~~i--- - -------------------- - ------- -- 1--------a

R E P O S I C Io 1 0 t N E V A S ESYATAL PRIVADO

I E5TATAL I PRIVADO i ESTATAL 1 PRIVADD S

la) PROSPECCION: I 1 23.71 9.221

RE610 OCCIDENTAL I-- . a-- 6.7 1 10.0 I 16.7 IREGION ORIENTALI --- 1a--- - 0.5 6.51 7.0 1

I - --- _ -. -------- …---- ---- I I sIb) EIPLORACION: I 21.7I 6.421

I REGION OCCIDENTALI 1.0 I 1.5 - 4.5 I 6.0 I 13.0 II RE61ON ORIENTAL : - I ... I 0.2 3 I 3.7ISALARES --- a --- --- -- 5.0: 5.0 Ia ._ _ - -…---_-- --- …--…-…-: -:

tc) ESPLOtACIONt i a 106 .5aREGION OCCIDENtAL: 30.0 25.0 25. 0 - 7.5 1 16.01 103.5 1 II RE610N ORIENTAL I - --- --- --- - 3.01 3.0S

I SALARES I --- --- I --- _ L --Id) CONCENTRACION :I aa 1 78.5 1 30.62I~~~~~ I I 1~~i II REGION OCCIDENTAL' 40.5 1 15.0 I 23.0 I I -- 1 1 78.5 1 1S REGION ORIENtAL - -- I ---- --- II I I S

a : , 7: ale) FUUDICIONESs a 1 22.0 1 8.62SI VINTO S 2.0 1 -- - -: 10.0 t --- -' 12.0 I II KARCIPAA I - 10.0 A -- I 10.0 II I PRIVADAS I -- I --- I __I I- ---- If) OlROS: I 4.5 1.82SI VARIDS 1 3.0 1 1.51- --- S --- --- i 4.5 1I I

tO T A L E S 1 76.5 43.0 43.0 -- 39.4I 50.0 I 256.9 1 100.02

MORCENTAJE 29.1 16.72: 18.71 I- 1 15.321 19.521 100.021

FUENTE: ESTRAIEGIA DE DESAPROLLO ECONOIICO Y SOCIAL, 18? - 2000.

83 A~~~~MI 2-6- 83 - Page 22 of 29

iINVERSI'E.E 13IM - ;') s EStENARIM 11

(En silines de USI)

C A P I t A L DE I N V E R S I OHES WCAPITAL DE OPERACIONES I TOtIES PORCENTAEI------~- - ------------------ -- ------ -- --- --- I--1 I a: E p a REPOSICIOH N ?IUEVAS I ESTATAL PRIVAOO I I t

I S ----____ _____ ____ ~~~~~~~~-------------------- - -- I~- ~- -r--- -___ t-SS-I I : ESIATAL IPRIVADO ESTATAL P IRIYAOO I - I I

: : .~~1-- - . . : t) PROSPECCION: 23.7 1 .4.01,

I REGION OCCMIDNLA -- --- I--- --- 6.7 I 10.0 S 16.1 .71I REGIGOORIENTAL 1 --- --- , I 0.51 1.51 7.01 :

lb) EXPLORACIO: : : :1 24.1 4.2Z:S ~ ~~~~~ ~~ ~~ ~~ ~~~~~~~~~~~~~ : : :S

I RE6ION OCCIDENTAL: 1.01 1.5 --- 3.01 4.5 1.0S 11.0 Ii RE611N ORIENTAL I -- 1 --- --- --- .0.21. 3.I I 3.7 SS SAIMES --- _ ---1 --- - - -1 5.0 1 5.0 I I

a ~~~~~~~~-------; - I!I) EIPLOTACIONs I:I 1a I 1 1 223.5 1 37.92I I Is :I szI REGIGN OCCIDENTAL5 30.0 250 25.0 102.0 I.5 U.0 S 205.5 1 SI REUION ORIENTAL : -- ---I --- 15.0 -- 1 3.0 1 16.0 I II SNARES I -:to . S

Id) CGlClUCION: I I S 217.51 4S.lJtI I a aIta1I- I REGION OCCIDEHTALI 40.5 I 15.0 1 23.0 J177.0 1 1 -- I 25. 1 I RE610W ORIENTAL I -- --- --- 12.0: I -1 12.0 I I

I * . :- ---- ------ -

:el. FWUDICIGIESs a1 41.0 1 7.tU1OIs : : - : : I-sI VIltO 1 2.01 -- - --- I --- : 10.0 1 -1 1 2.0 1 tI KARACHIPAPA -I --- :l I --- 1 10.0 -1 34.0 1 1I P-I-VADS _ - --- : --- - ----

If) AtROS t '

VARIGS I .1 -: S|~ ~ ~~~30 :1: : :- 0.: *-: ' t.0t1 1 a aI I Baa:sgunaugzuaas Bsauzll:uzaC2 l33:Ssu-:zzuu:s*::::*::::uzzzsS::2383_::833288:u rnuzaau,uu,uai:sJ" aIT O t A L 7 S 1 J^.5: 43.0 72A 309.5I 39.41 50.02 590.41 100.0:i3uzszs:s8::u2mss sss2zs8=3::m::sz::s::::z:ss:.~ :::zs-* - S::::~~:uazuuuguuzagzaasassass-glaua....a UUUSUU-UU3EWUJu IsIPORCENTAJE 1 l3.01S 7.31; 1.:": "2.411 6.721 6.511 100.0:1 I

szznzz :az:zzzzz2:z:zasaastzs::z5s:z s:z.::.:.:....:::: .....: J

FUENTE: ESTRATESIA GE tESARROLLO ECONONICO I S5CIA1, 19s - :Ot5.

p

-84- AM 2-6Page 23 of 29

CUADRO V.17

INJVSlIOKES 1989 - 2000 : ESCEENARI III

(En millones de USI)

C A P I t A L DE I N V E R S I O N E S CAPL OE OPERACIUES' TOIALESIPORWIJAJE:.._ _ _ _ ___ _ _ _ ______ --- _------------ :- -:

R E P O S I C I O N : N U E V A S : ESIATAL 1 FRIVADO I I :

1 : : ESTATAL : PRIVADO : ESTATAL : PRIVADO I . t

) E PROSPECCIONs : : : : : 1 23.71 1.7 2

I RESIN OCCIDENTAL: : --- : -. 7 : 10.0 1 1*.7 : aRE6BION ORIENTAL : - I - : 0.5: 6.51 7.0 I

lb) EIPLORACION: I : : 1 27.9 1 2.01:

I REION OCCIDENALI 1.0 1 1.5 1 3.2 I 3.01 4.51 6.01 19.2 11 RE6I1 ORIENTAL 1 - Is : I --- -: 0.2 1 3.5 1 3.71 11 SLARES : : l Is --- Is - 5.0 I 5.0 I I1 S-*--- ---- ** ------.-- *------ 1 SWIc EIPLOTACION: S i i629.11 45.

I RE1GN OCCIDENTALO 30.0 1 25.0 29.5 1 306.0 1 7.5 1 16.0 1 414.0 1 :I 61ON ORIENTAL 1 -- I - t- e.0 - 3.0:; 45.0 1 :I SNARES I Is - 0.11 170.01 -- I -1 170.11 I

Sd) CLOfiENRCION: I I 6 657.5 1 47.115

S RE6Il OCCIDENTAL 40.5 1 15.0 S 23.0 1 531.0 I -S1 6S09.51 1I RE61i ORIENTAL I -: - - 4.0 -S 48.01

I) FIUDICIOES: I : . : . 1 I 1 52.0S1 3.71I I S a . . . I~~I

i. YVIITO 1 2.0 i 1 -- I0 -1 12.0 1 1S ARIIPANPA I -: ---. S 24.0 1 -- 10.0 -1 34.01 1I PRIVADAS 1 - --I --- 1 6.0 - -- S -1 6.0 S..- I I :. II---

I0) TROS: I I : -: - I 6.4 1 0.52I I I I 1 -1l II VARIOS : 3.0 1 1.5 1 1.41 0.51 - I --I 6.41 11 1 : : : I S. 1 S :.

IT O t A L E S i 76.5 1 43.0 U 1.2 1,106.5 1 9.4 1 50.0: 1,396.6 100.0l:

IORCEIITAJE 1 5.521 3.11: 5.92: 79.2u1 2.IU 3.U1 100.021 I

fUENTE: ESTRATEGIA DE DESARROLLO ECUNONICO V SOCIAL, 19" - 2000.

ANNEX 2-6Page 24 of 29

CUADRO V.18

BALANCE RESERVASIEIPLOTACION: 199 - 2000

(En toneladas uitricas finas)

NI IIEAL : RESERVA I PORCENTAJE : EEREMVA PRODUCCION I DlIFUMCIA I1 BASE I RECUPERACION A: VIMCDE LE I PROYECTADA I I

* a a a a a

IESTAR S 94,000 a 50.002S 197,000 1 244,150.00 1 l (4T,150I

WOLFiRAM 5?,500 70.01: 52,85S 49,400.00 3$450 1

IANTIKOVIO I 105,000 I 80.001j 84,000 a 194,000.00 1 (110,000)1

-lIINC 555,000 80.001X- - 4440 1 1,256,030.00 1 1812,0s0)1

*PLON0 : 111,000 S 80.00X. 88,800 1 243,410.00 1 (154,61011

10R0 (Recurso) : 222.3 . 60.002N, 133.4 1 15,780.00 1 (15,655)1

IPLATA 1 1,300 70.0021 910 n i.45 I 801 t . ; t I |It

1BISNJTO : 4,600 1 70.0021 3,360 1 2,710.00 i 650 1a *~~laII 4 a a AZUFRE I 100,000 1 85.0021 85,000 1 1,128,000.001 (1,043,00011

SENYE: ES= _ATE23IA:: :BE: ::8Et:LO:Et:N:C_SCIAL,_89 - 2000

FUENtE: ESTRATEBIA OE DESARROLLO ECUONI"CO Y SOCIAL, 1989 - 2000.

- I ~ ~ ~ ~ ~ ~ _

- 86 -ANNEX 2-6Page 25 of 29

CUADRO V.19

PROYECCION DE VALORES CIF DE EIPORTACIOII HINERA: 1968 - 2000

tVolu.en on tonsladis a*tricas lins y vlaores en sillones do US$1

NINERAL : 1968 1 1989 - 1992 1993 - 1996 119 - 2000: I TOT.

VOLUHEN 10,330.00: 14,010.00 15,260.00 16,320.00 19,200.00 t 19,200.00 216,710.00 I:ESTAA0 VALOR 11) 70.60: 96.30 a 104.30 2 111.50 a 131.20 1 131.20 1 1,412.00 2

VALOR (21: 70.60 105.80 134.50 Is 15.30 -.192.0 1 M.90 1 2,031.20 11 - - _ - - _____________________ _ - _________-____-_____- -____ I

I VOLUNEN : 1,425.00 1,900.00 3t04O.004 - 3,135.00 4,275.00 1 4,275.00 1 43225.00 2OLFRM (11031 VALOR (1) 6.20 9.20 a 13.10 13.50 a 18.50 16.50 1 186.80:

I VALOR (21: 6.20 9.30 18.00 2 23.10 37.90 t 37.90 334.40 1: SIs------- ------ -- -- …-----.----------------------

I VOLUIEN I 9,025.00 : 10,925.00 11,970.00 2 12,350.00 15,040.00 1 15,040.00 I 169,555.00 2SARTIIIONIO VALOR (1) 17.30 : 21.00 a 22.80 q 23.70 a 2.90: 28.90: 325.70 1: VALOR (2) 17.30 : 22.10 24.00 2 24.70 32.50 S 32.50 : 357.90

VOLUWEN I 49,610.00 : 59,360.00 90,280.00 : 90,720.00 95,0 0.00 9!000.00 11t100,330.00 2IZIUC VALOR t1) 2 36.30 : 45.80 a . 69.60 : 70.00 a 73.30 t 73.30 1 849.90 2I VALOR (2) 2 36.30 _ 49.70 79.60 2 94.00 94.20 1 94.20 1 1,030.10 2

:~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ :2

VOLUNEN 2 13,300.00 2 13,420.00 15,860.00 : 16,150.00 23,300.00 : 23,300.00 t 243*960.00 :,IPLOQN VALOR I1) : 6.70 : 6.90 a 6.00 : 8.20 a 11.80 11.60 1 123.50 :

VALOR (2) : 6.70 7.70 .9.60 0 10.00 15.40 : 15.40 S 154.10 :

VOLUNEN : 247.00 --256.00 350.00 : 475.00 1,700.00 : 1,700.00 : 12,609.00 :IPLATA VALOR (1) : 48.40 50.20 a 60.60 : 93.10 a 333.40 : 333.40 I 2,472.60:I VALOR 12) t 48.40 55.10 78.80 114.50 519.20 519.20 : 3,640.40 1

VOLUIIEN 2 3.70 4.20 5.50 2 7.50 10.40 : 10.401 100.50 :'ORO VALOR (1 : 53.50 : 60.80 a 79.60 2 108.50 a 150.50 : 150.50 1 1,454.30 :

VALOR 12) 2 53.50 : 63.50 98.40 2 127.80 200.60 : 200.60 1 1,816.50 2

I VOLUJEN : 0.00 : 27.00 90.00 : 190.00 270.00 : 270.00 1 2,214.00 2t815tlUTO VALOR (1) I 0.00 0.10 a 0.30 : 0.70 a 1.10 1.10 9 8.80 :I VALOR 12) 2 0.00 2 0.10 0.40 : 1.10 1.70 : 1.70 1 13.40 2

VOLUEN I 18,000.00 2 -40,000.00 70,000.00 : 80,000.00 100,000.00 2 100,000.0 2 1,038,000.00 tIAZUFRE VALOR (1) 2 1.302 1.80 a 4.40 : 5.30 a 7.00 7.00 1 4.30 1I:- VALOR I2) : 1.30 2 2.00 5.50 : 9.00 13.40 2 13.60 1 115.90 1

IVALOR CIF TOTAL 11) : 242.30 : 291.00 a 370.70 2 434.50 a 755.70 2 755.70 1 6,946.90 :I -.-.---- …---.------.......…… ...----.-.-..-......... _--_..

IVALOR CIF TOTAL (2) 1 242.30 1 318.30 a 439.00 2 554.50 a 1,108.00 2 1,108.00 S 9,513.90 2

NOTAs (1) Valor CIF con precios de febrero de 1985;(2) Valor CIF con precios proyectados.

FUENTE: ESTRATE6IA DE DESARROLLO ECOIlGNICO Y SOCIAL, Ii - 2000.

- 87 -

ANNEX 2-6Page 26 of 29

PKOVECCION DE POIJCCIUN NlldA 1MS3-ZUS135U

30 MA mCIOS ,E O 1988 * ?ECIOS FnRoM Sl

88

ea

I . -. -. - /

1!18 1n85 1598 1991 1992 1993. 1594 1395 l9S Ild? 15S8 1952.

0OS 1'5

-88- Am 2-6

Pagi 27 of 29

zSxo CIacEs Nir I POR SUBSeCos

25 ACONIhOL (3NIH.NUIB23 * MHIN.NIlCA I OTROs U?. * UNDICIUhEU2a

154

Il

Be

82 li153 1584 18 AOH .

- 89 -ANN1X 2-6Page 28 of 29

PAITICIP?AIOH DI SECIOR Bi ELT IOAL DOROACIO-

DfORINACIIES Rios m TOTAL Di DlilCIoS

N

A~~~~A

14.

1~~ ~ 188 188 188 138 188 198?-., " i __ m R I

R m m m ,~~~~~~~~~~~~~~~~~~~~~~~'

Z I,

o m.i

90° AN= 2-6Page 29 of 29

CUAPRO V.20

RESULTADOS ESPERADOS 1989-'000

!YACIRIENTOS PRIARIOS S

ESTARO 3 YACIIIENtOS 200 IND

IOWLFRAN 1-2 YACInIENtOS 100-500 1ND

IANTIMONWI 2 YACINIENTOS 200 IND

ZINC 3-4 YACINIENTOS 500-1,000 IND 1

1PLOIO 3 YACIRIENTOS 300-500 IND S: :

PLATA (Disesinado) 3 YACIR'ENTOS 6,000-30,000 IND1

ORO (Disesinado) 8 YACINIENTOS 1,000-6,000 t1D1

'RO (Yetiforee) 4 YACIHIENTOS 20-200 11D1. :

YACINIENTOS SECUNDARIOS :: :

ORO (Regi6n Occidental) 1 IRASA 300,000 a3/Ies15 VASHING PLANTS 40,000 W3/3es

|RO (Regi6n Oriental) 2 DRAGAS 300,000 a3/ses S12 VASHING PLANTS 40,000 03/mes I

|ESTARO (RegibnC;cidental) 4 VASHIYG PLINIS 4fOOO S/i-- S

iESTAnO (Regi6n Oriental) 1 DRAGA 300 000 *31es S10 WASHINS PLANTS 40,000 W3/oes30 DDHDAS-DRAOAS

!YACI1iENTOS NASIVOS Ij ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~S

iIWUEL - CO0ALTO 1 YACINIENTO i

IAZUFh,E 3 YACINIENTOS 5,000-10,000 TDlS

IYACINIENTOS EVAPORITICOS

ISALARES SS---- :

11 PLANTA PARA LA PRODUCCION DE:! LITI 4,000 - 6,000 tn LiCO3

I POTASID 500,000 - 600,0040 IN KCI

POTASIO 150,000 TN K2So4

EORO 20,000 - 40,000 TN HH303

NAGNESIO 600,000 TN ("9g

FUENTE: ESTRATEEIA DE DESAPROLLO ECUNONICO Y SOCIAL, 1989 - 2000.

BOLIVIA


Mining Export Prolections

1350 *1300 ,

A PRECIOS FEBEO 1988 0 PRECOS PRDYECTAD00

100 .

900 .

Soo .800

3w~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

aw~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-

700

6001

ar

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Source: Bolivia Ministry of Mtulza anad Metallurgy.

BOILI'T-


Institutional Master Plan

ORGANIGRAMA GENERAL Y FUNCIONES DEL SECTOR MINERO ESTATAL

CABIZA KUL ICTOR

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BOLIVIAMINING SECTOR REHABILITATION PROJECT

Ministry of Minins and Metallurgy-Organizational Structure

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BOLIVIA

MINIG SECTOR REIABILITATION PROJECT

GEOBOL-Organiaational Structure

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-95 - ANNEX 3-4Page . of 15

BOLIVIA


Institutional Strengthening Program

(i) The Ministry of Mining and Metallurgy (MMK) will be restructuredin the overall context of an umbrella institutional master plan(Annex 3-1). A project coordination unit to oversee andcoordinate project execution will be established within anUndersecretariat of Plenning and Development within theDirectorate of Planning. The principal functions of the Planningand Development Undersecretariat will be to further the design ofmineral policy, the promotion and coordination of miningdevelopment, the development of plans and projects, thecompilation of mine statistics, the management of a centralizeddocumentation and information center and the coordination offoreign investment and technical assistance programmes. AnUndersecretariat of Administration will administer defined miningpolicy and provide a coordin-ting function for mining activitiesof both the private and public sector. Legal and generaladministrative functions will be concentrated in thisAdministrative Undersecretariat. The organic structure of MMK isattached as Annex 3-2. Cadastral functions for the recording ofexploration and mining claims will be divested from Ministerialfunctions and will be handled by a new Technical CadastralService. These key areas of MMM responsibility will bestrengthened under technical assistance provided throughconsultancy assignments, training courses and study trips for keyministry personnel. The institutional strengthening componentwill be coordinated from within the MMM by a longer termconsultant. Equipment requirements will be largely limited tocomputer hardware and software as well as office and reproductionequipment. Priority areas for improvement will be associated withthe development of the statistical and information data bases, thedevelopment of joint venture strategy, project analysis andpromotion, planning, 'ieneral management and coordination.

!(ii, Under the new Institutiona.1 Master Plan GEOBOL will be maintainedas a separate geolcgical survey institute with four principaldepartments; Regional Geology, Economic Geology, Hydrogeology anda Service Department. Core staff will be reduced from the presentlevel and contract staff will be hired for specific projects asthey are developed and financed from a variety of sources,including the present project. The new organic structure ofGEOBOL is attached as Annex 3-3. The principal functions ofGEOBOL will be acquisition and distribution of geological data,the exploration for mineralized areas using modern concepts withthe aim of promoting discoveries for private investment and the

- 96 - ANNEX 3-4Page 2 of 15

obtention and evaluation of relevant geological (includinghydrogeological, geothermal etc.) data through a data base system.Every effort must be made to develop consulting activities withthe goal being that this type of work, outside the essential coreactivities of geological mapping and mineral exploration, willaccount for a substantial part of the work load hence generatingincome and easing the burden of Treasury financing. A key tosuccess will be staff salary levels so that good professionalswill be attracted back to work on stimulating and challengingactivities. Project financing takes this into account throughsalary suipplements to senior core staff and through the projectcontracting process. Infrastructural investments under theproject will cover building rehabilitation and laboratoryconstruction, laboratory installations, equipment and stock.Geophysical, workshop, map preparation, instrumentatiorn includingcomputer hardware/software equipment as well as support transport.A heavy emphasis will be placed on technical assistance tk;roughthe provision of both short- and long-term advisory staff in thefield of regional geology, economic geology, laboratory assayingand geophysics. Specific priority projects have been identifiedfor financing. These include the revision and publication ofgeological maps, mineral inventory work with the resultingproduction of thematic maps. The results of this work will guidethe direction of mineral exploration activities and thedevelopment of a mineral resource data-bank. In addition to onthe job training, specialized training courses will also beprovided through overseas diploma work and attendance at keyinternational seminars.

(iii) In accordance with the Master Plan, a new institute will bedeveloped to consolidate support for the extractive side of theindustry. The core of this new Mining Development Institute (IDM- Instituto de Dersarollo Minero) will be the present IIMM (to beknown under the new structure as the CIMM - Centro deInvestig&ciones Minero Metalurgicas). The principal functions ofCIMM will be the investigation of mining methods suitable for thespecific mining environment of Bolivia, the development,refinement and research into priority metallurgical processes forthe extraction concentration and refining of ore minerals and theoffering of competitive contracting and assistance services to theindustry. These services will include the design of both minesand concentration plants with flow sheets, chemical andmineralogical assaying work, method_ for improving concentration,optimization of equipment requirements and technical assistanceorientated toward the small-scale mining and cooperative sub-sectors. A second branch of the new IDM is a Mining CooperationGroup (GCM - Grupo de Cooperacion Minera) where expertise inactual mine evaluation and reserve development work will beconcentrated. This strictly operational arm of IDM will probablybe formed from core operational staff of the present FONEK who arepresently finalizing a German bilAteral assistance small minedevelopment program. The future role of GCM will be predominantlyin the contract services area. Apart from general assistance inthe structuring of the new IDM the project will not address GCM

- 97 - ANNEX 3-4Page 3 of 15

activities either through technical assistance or investment. Thethird arm of IDM will be the development of a technical trainingcenter to service the requirements of both the public and privatemining sector. This technical training school will both upgradepresent mine staff and prepare new technicians in the fields ofmining geology, laboratory techniques, mineral beneficiation andmetallurgy, drilling, blasting, surveying, workshop methodology aswell as small business management. It will have full access toCIMM laboratories and testing facilities and some of CIMH staffwill be used in course preparation and supervision. One goal ofthis training center will be the development of a training mine sothat there is a direct linkage to on-site practical instruction.Discussions are presently underway with the Japanese Governmentfor the financing of this new technical training center.

(iv) As far as the new IDM is concerned the project will largelyaddress the requirements of the CIMH. Infrastructuralrequirer'ents will call for the construction and rehabilitation ofbuildings, repairs of serviceable equipment and the provision ofnew equipment for the laboratories, beneficiation laboratories,pilot plants and to beef up mine equipment stocks. New supportvehicles are required as well as office equipment (includingcomputer hardware/software) to support the technical programmesand overall management needs. Technical assistance will beprovided through the provision of short- and long-term consultantsin the fields of mining methodology, metallurgy, mineralbeneficiation (concentration) and laboratory assaying. Apart fromon the job training, study courses, attendance at seminars andsymposia and literature will be provided under the project.Similar to GEOBOL, core staff will be retained but most operativework will be carried out through specific projects. Supplementalsalaries will be provided to key core staff. Those projects to befinanced under the context of this pro!ect include work on tnerecovery of tin and precious metals from tailings and low gradedeposits, the recovery of silver from complex ores the recovery ofgold from old tailings and alluvial deposits and improved recoveryof tungsten. Technical assistance that will be provided throughconsultants will be particularly required at the departmentalmanagement levels for leadership, on-the-job-training and thedevelopment of a dynamic working organization.

(v) An important new department which will be created through theproject under the Master Plan will be the Technical Mine CadastralService (STCM - Servicio Tecnico de Catastro Minero). Previouslythis work has been inappropriately handled by the HMM itself.Substantial modifications to the mining code over the last 60years including the manner in which concessions and titles havebeen awarded and registered has led to a chaotic situation wherebythere are no clear definitions between properties, accidental anddeliberate overlaps as well as the improper awards of titles. Amodern system of claim recording will be affected using satellitepositioning technology. Initially the confusion will be rectifiedby transfer of old claims to the new system and new titles will beawarded under the new system once it is in place. The principal

- 98 - ANNEX 3-4Page 4 of 15

functions of this new STCK will be the development of a miningcadastre for the entire country, the verification of measurements,positioning and boundaries of concessions based on anunquestionable UTH system, advising the Mining Superintendency onclaim statutes from the legal point of view, be responsible forthe compilation and computer-based storage of technical plans andreports, the maintenance of Government's concession registry andthe application of the requirements of the new mining legislation.The project will provide new modern equipment including electronicand geodetic recording/receiving instrumentation, topographic andmeasuring instrumentation, a computer center including plottersand digitizers for map production as well as general managementand service equipment and vehicles. Technical assistance will beprovided through specialized consultancies particularly for thesetting up and management of the new systems. Training will beprovided at specialized national and overseas institutions for keystaff. Project preparation work for this component was recentlycompleted with IDB financing.

(vi) FONEM, the special revolving mining exploration fund, will bedisbanded once its present work program has been completed. Asmentioned under Para. (iii) above, the present GCH arm of FONEMwill probably form a unit of the new IDM. Assistance to the smallscale private mining sector will now be provided moreconventionally through IDM, BAMIN and commercial banks.

(vii) BAMIN would be restructured to become more efficient and torespond more effectively to its new status as mixed-capitalcompany. The principal areas of improvement would be managementinformation systems, budgeting, financial planning, accounting,portfolio management, portfolio analysis, warehouse and inventorymanagement, project evaluation and supervision, and mineralmarketing. Technical assistance and training courses would beprovided un'4er the project to assist BAMIN in this restructuringeffort.

- 99 - ANNEX 3-4Page S of 15

BOLIVIA

MINING SECTOR REUABILITATION PROJECT

Institutional Strengthening ComPonent

A. Summary of Sub-Components with Line-Item Base Costs and Financial Source

Sub-Component mount Source$000.

1. Investment

1.1 Ministry of Mining and MetallurgyLinked PC System plus software, etc. 200 IDA 11Office, reproduction, telephone,telefax-, etc. 50 IDA 1/

1.2 GROL3LConstruction of laboratory,installations, instruments and chemicalstocks, etc. 400 BITS 21Geophytical workshop and equipment. 50 BITSManagement PC system, cartographicequipment and supplies. 50 IDA 1tNew Vehicles (8) plus spares. 200 IDA 1/

1.3 Mine Cadastral Service (SToI)Geodesic and topographic equipment. 1,240 IDB 21New vehicles (18). 520 IDB 21Office equip. base maps etc. 60 IDB 21Upgrading computing system, digitizer.plotter, programs etc. 100 IDB 21

1.4 CIMiRepair of buildings and labs. A0 BITS 21Upgrading (equipt.spares) Pranckeitapilot pl.'t. 130 BITS 2/Equipment, instruments and supplies forlaboratories and installation. 245 BITS 21Equipment and spares for concentration. 450 BITS 21Mining equipt. supplies etc. 20 C$DAOffice and computer equip. 20 CIDANew Vehicles (5), spares and repairs. 125 CIDA

1.5 Mining Development Institute (UDK)Computer hardwarelsoftware for MIS 25 IDA 1/Office equipments telephones, copiers,telefax, typewriters etc. 75 IDA 1/

Investment TOTALt 4,000

1/ Denotes component financed under this project.2/ Denotes cross-effective parallel financing.

- 100 - ANNEX 3-4

Page 6 of 15

Technical Assistance Proiects

2.1 GEOBOLRevision/publication of geologicalmaps.a)Vehicles(2),field equipment,supplies. 250b)Operational and support costs. 650c)Project staff salaries (contract). 650d)Ktscellaneouslcontingencies. 100

Total Proiect # 1. 1,650 IDA 11

Compilation/production of mineralresource maps.a)Vehicles(2),field equipment,supplies. 50 USAIDb)Operational and support costs. 225 USAIDr)Project staff salaries (contract). 185 IDAd)Miscellaneous/contingencies. 40 USAID

Total Project t 2. 500

Investigation of epithermal preciousmetal deposits.a)Vehicles(2),field equipment,supplies. 90 USAIDb)Operational and support costs. 200 USAIDc)Project staff salariee (contract). 165 IDAd)Miscellaneous/contingencies. 45 USAID

Total Project # 3. 500

Resource evaluation of other preciousmetal deposits.a)Vehicles(2),field equipment,supplies. 80 USAIDb)Operational and support costs. 300 USAIDc)Project staff salaries (contract). 300 IDAd)Miscellaneouslcontingencies. 70 USAID

Total Project # 4. 750

Resource evaluation of placer golddeposits.a)Vehicles(2),field equipment,supplies. 60 USAIDb)Operational and support costs. 350 USAIDc)Project staff salaries (contract). 300 IDAd)Miscellaneous/contingencies. 40 USAID

Total Proiect # 5. 750

Resource and geological/geophysicalevaluation of the Precambrian Shield.a)Vehicles(2),helicopter supportcontract,field equipment, supplies. 250

b)Operational and support costs. 200c)Project staff salaries (contract). 250d)Miscellaneous/contingencies. 50

Total Proiect # 6. 750 CIDA

1/ Denotes core project (see p. 5 of this Annex).

- 101 - ANZX 3-4Page 7 of 15

Resource evaluation of lead (zinc-silver) deposits.a)Vehicles(3),field equipment,supplies. 80b)Operational and support costs. 400c)Project staff salaries (contract). 350d)Miscellaneous/contingencies. 70

Total Prolect t 7. 900 KfW 31

Formation of mineral resource data bank(compilation, review and interpretationof mineral resource data).a)Equipment including computer hardwareand software, supplies. SO USA )

b)Project staff salaries. 135 Govt.c)Hiscellaneous/contingencies. 15 USAID

Total Proiect t 8. 200

2.2 Technical Mine Cadastral Service (STCW)

Costs to support 3-phase project;fuels, maintenance, per diemsta) Stage I (5-years). 980b) Stage II (5-years). 1,445c) Stage III (5-years). 75d) Contract to support above (IGM). 500

Total Proiect. 3.000 IDB 21

2.3 Center for Mining and MetallurgicalInvestigations (CI)lRecovery of cassiterite from oldtailings and flotation testing.a)Project staff salaries (contract). 425b)Miscellaneouslcontingencies. 25

Total Project t 1. 450 BITS 21

Recovery of tin and silver frompolymetallic ores.a)Project staff salaries (contract). 260b)Miscellaneous/contingencies. 2

Total Proiect 1_2. 28) ClDA

Recovery of gold from old tailings.a)Project staff salaries (contract). 625b)Miscellaneouslcontingencies. 35

Total Project 1 3. 660 CIDA

2/ Denotes cross-effective parallel financing (see p. 5 ofthis Annex).

31 Financed by FRG technical assistance.

- 102 - ANNEX 3-4Page 8 of 15

Recovery of fline gold from alluvlals.a)Project staff salaries (contract). 420b)Miscellaneous/contingencies. 30

Total Prolect # 4. 450 CIDA

Improved recoverylgrade of tungsten(wolfram) concentrates.a)Project staff salaries (contract). 55b)Miscellaneous/contingencies. 5

Total Proiect # 5. 60 BITS

Alloy research investigations (bronze,pewter.gold,:inc,silver,antimony etc.).a)Literature, market. feasibilityinvestigations. 20

b)Follow-up research. 80Total Proiect # 6. 100 BITS

3. Expert Technical Assistance andIn-service Training.

3.1 Ministry of MinLing and Metallurgy (NM1).Economic Geologist: PlanningUndersecretariat (3.6 manlyrs). 400 BITS 21Mining Economist: Planning andCoordination Undersecretariat. (2.7manlyrs). 300 BITS 2/Systems Analyst: PlanningUndersecretariat (2.7 manlyrs). 300 BITS 21Data Treatment Expert: PlanningUndersecretariat (1.8 manlyrs.). 200 BILATMining Engineers CoordinationUndersecretariat (1.8 manlyrs.) 200 BnLATCoordinator; Institutional Component(5.0 manlyrs.). 550 IA 11

Total MM0 Component. 1,950

I1 See p. 5 of this Annex.21 See p. 5 of this Annex.

- 103 - ANNEX 3-4

Page 9 of 15

3.2 GROBOL.Co-Manager, Regional Geology Dept. (4.0man/Yro.). 440 BITS 21Co-Manager, Economic Geology Dept. (4.0maulyrsd.. 440 BITS 2/Co-Manager, Laboratory (Services Dept.)(4.0 man/yrs.). 440 BITS 2/Co-Manager (Chief), Geophysics Division(4.0 man/yr..). 440 BITS 2/Co-Leader, Project J 7 (4.0 man/yrs.) 440 BITS

Program Coordinator (USAID) for Project#'s 1;2;3;4;5 and 8 (5.0 manlyrs.). 55C USA-,Economic Geologist (5.0 man/yrs.). 550 USATDGeochemist (5.0 man/yrs.). 550 USAIDGeophysicist (5.0 man/yrs.). 550 USAIDCartographer (5.0 manlyrs.). 550 USAIDPublication Expert (5.0 manlyrs.). 550 USAIDShort-term Experts to support Projectl's 1;2;3;4;5 and 8 (e.g. epithermalgold, placer gold, mineral economist,mineral resource experts. (7.0man/yrs.). 770 USAID

Total GEOBOL Component. 6.270

3.3 Technical Mine Cadastral Service (STCM)Mining Cadastre Expert (ProjectCoordinator) (4.0 man/yrs.). 440 IDB 2/Cadastral Coordinator (4.0 man/yr..). 440 IDB 1/GPS Expert/Instructor (1.8 man/yrs.). 200 TDB 2/Data Treatment Expert (2.9 man/yrs.). 320 IDB 2/National Consultants (5.0 man/yrs.). 100 TDB 2/

Total STCM Component. 1.500 IDB 2/

3.4 Mlning Development Institute (ID)Systems Analyst (approx.4.0 m/mnths.). N/A BITSData Treatment Expert (approx. 4.0mjmnths.). N/A BIT-'Mining Economist/Engineer (approx. 6.0m/mnths.). N/A BITSAbove services to be supplied fromexperts to NMM under 3.1 above. N/A BITS

Total IDM Component. N/A BITS

21 See p. 5 of this Annex.

- 104 - ANNEX 3-4

Page 10 of 15

3.5 Center for MLning and NMtallurgicalInvestigatLons (CB"HChief Adviser, MJ.neral ProcessingEng. (4.0 manlyrs.). 440 CIDACo-Manager, Dept. of Mining (3.0manlyrs.). 330 CIDACo-Manager, Depts. of Concentration andMetallurgy (2.0 man/yrs.). 220 CIDASenior Advisor and Co-Manager(Analytical Chemist), Laboratory (4.0manlyrs.). 440 BITS 2/

Total CIMM Component. 1.430

4. Formal Technical Training.

4.1 ILustry of MinLng and Metallurgy (301)Overseas (diploma) training in MiningCode Administration, attendance atseminars. 120 IDA 11

4.2 GEOBOLSeminar Attendance (2 staff per yr.over 5-years e $4,500 per trip). 45 IDA 1/Diploma Courses (3 staff for 1-yr.duration specialized courses e $35,000all-in costs per course). 105 CIDA

4.3 TecbnLcal Mine Cadastral Service (STOC)Training of Topographers at IGM La Paz. 200 IDB 2/Scholarships at SME. 50 IDB 21Training in use of GP3. 25 IDB 2/Postgrad (M.Sc) courses (2 staff for 2-yr. duration courses e $25,000 all-incosts per year). 100 IDB 2/

4.4 Center for Mining and MetallurgicalInvestigations (CnII)Seminar Attendance (2 staff per yr.over 5-years 6 $4,500 per trip). 45 IDA 1/Diploma Courses (2 staff for 1-yr.duration specialized courses Q $35,000all-in costs per course). 70 CIDA

5. Supplemental Salaries.

5.1 MinLstry of Mlning and Metallurgy------EMSOIDA Program------

_/ See p. 5 of this Annex.2/ See p. 5 of thiLc Annex.

- 105 - ANNEX 3-4

Page 11 of 15

5.2 GEOBOL Govt./Director. (5 manlyrs I $12,000/yr.). 60 BILAT.Department Chiefs. (25 manlyrs * Govt./S9,600/yr.). 240 BILAT.Project Managers. (40 manlyrs 0 Govt./$6,000/yr.). 240 BILAT.

5.3 Tecbnical Mine Cadastral Service(STCK) Govt.!Director. (5 manlyrs I $12,0001yr.). 60 BILAT.Department Chiefs. (10 manlyrs I Govt.!$$9,600/yr.). 96 BILAT.Managers.Computing,Surveying,Cadantral. Govt./(25 manlyrs. 0 $6,000/yr.). 150 BILAT.

5.4 Center for Mining and MetallurgicalInvestigations (CINO) Govt./Director. (5 man/yrs I $12,000/yr.). 60 BILAT.Department Chiefs. (25 manlyrs 0 Govt./$9,600/yr.). 240 BILAT.Project Managers. (25 man/yrs 0 Govt./$6,000/yr.). 150 BILAT.

TOTAL; Institutional Component 28,206

6.0 Total by Institution.MM0 s 2,320GEOBOLt 13.660STCM s 7,101CIMK s 5,025IDM s 100

28,206

7.0 Total by Sub-ComDonent.Investment (equipment). 4,910Technical Assistance Projects s 10,090Technical Assistance (in-servicetraining) Experts. 11,150Formal Training. 760Salary Supplements 1,296

28,206

- 106 - ANNEX 3-4

Page 12 of 15

8.0 Total by Fundiza Source.IDA 4,120USAID 5,685BITS 4,965IDB 6,795CIDA 3,470BILATIGOVT.s 1,831KfW s 1,340

28,206

It should be noted that USAID/USGS are presenting a possiblecountry-wide mineral resource inventory program which would in effectreplace Technical Assistance Projects 2;3;4;5 and 8, and include the Expertcomponent as given above under 3.2 at a total estimated cost of US$12.8million. This is still under discussion.

B. Objectives of Specific Institutional Projects and Outline ofConsultancy and Advisory Staff Terms of Reference

1. Introduction

Infrastructural strengthening will be concentrated in GEOBOL, thenew STCM and CIMM (principal subsidiary operating organ of the new IDM).The construction of new laboratories, workshops, upgrading of installationsand the provision of new equipment and suppliss for both GEOBOL and CIMwill permit these institutes to effectively support their operational workload and hence provide meaningful services to the mining sector inaccordance with their mandates.

All advisors and consultants to be provided for support ofinstitutional infrastructural development and project work will in thecourse of their assignments provide in-service training and transfer oftechnology functions to Bolivian staff of the respective institutions anddepartments in which they will be working.

2. 1.MM

Scope of Work. Within the MM, the Economic Geologist, MiningEconomist and Mining Engineer will support and advise on the work of thePlanning and Coordination Undersecretariats in policy formulation for theoverall mining sector, the development of strategies for the successfulimplementation of Government policy particularly with respect to the newmining legislation, and the coordination, planning and orientation of workof the various institutional dependencies, including COMIBOL. They willalso provide assistance to the promotion of new mining ventures and inparticular advise on joint-venturing negotiations. The Systems Analystwill be responsible for establishing computer,based management, planning,personnel management, account and, in particular, information systemswithin the 0M0 documentation center. This team of advisory staff withinthe NMM will also provide direct assistance in the establishment andorganization of the new IDM (ref. para. A, 3.4).

- 107 - ANNEX 3-4Page 13 of 15

3. GEOBOL

Objectives. With respect to specific GEOBOL projects (A, 2.1 ofthis Annex), Project #1 will revise, compile and update approximately 100geological map sheets which have been prepared in draft over the last 25years but which have never been issued. This "hidden, information willthus be made available to the public and other concerned Governmentinstitutions and will be particularly important to provide an availablegeological data base to the minerals industry. The order in which mapswill be revised and printed will be in accordance with market demands.Projects #2 through 7 will have -.he overall objective of developing asystematized mineral inventory of priority mineralized belts. Theseprojects are specifically designed to the needs of the mining industry.Information, using new concepts and ideas with respect to the nature andoccurrence of precious metal deposits, placer gold (including fossilglacially-derived placers), chrome-platinum ultra-basic associations of thePrecambrian shield area and lead-zinc-silver deposits will be researched inthe field, evaluated through the laboratories and services to be providedunder the infrastructural strengthening component and combined with thegeological work to be developed through Project #1 to provide valuableinformation to the mining industry on prospective zones for the discoveryof new economic mineral deposits. The combined information obtained fromProjects t1 through 7 will be used in the development of a computerizedmineral/geological resource data bank through Project #8 which will alsoassemble all data presently on record. This will provide industry withimmediate and systematic access to information for use in orientation ofexploration work.

Scope of Work. As far as GEOBOL is concerned four Co-Managerswill be provided for the three most important departments, RegionalGeology, Economic Geology and Services (ref. Annex 3-3). These consultantswill assist in the reorganization of these departments, be responsible forthe planning of their department's work programme (allocation of personnel,equipment and required operational funding etc.) and coordinate workbetween the respective departments to which they are assigned. TheRegional Geology Co-Manager will have speclfic responsibility fororganizing the execution, interpretation and compilation of all geologicalmapping activities. The Economic Geology Co-Manager will have specificresponsibility for all mineral inventory and exploration activities, theevaluation and dissemination of results and will set priorities withrespect to work required from the Services Department. The Co-Manager ofthe laboratory in the Services Department will advise on the constructionand refurbishing of the laboratory facilities, institute working proceduresrequired to service and support GEOBOL field programmes (largelyexploration) and general public demands for custom work, advise on andintroduce modern analytical techniques as required and generally providequality control for the department. The Co-Manager of the geophysicsdivision of the Services Department will advise and assist in setting upthe geophysical workshop and will be responsible for planning andsupervising geophysical surveys required to support, largely explorationactivities and thematic requirements of the m'neral inventory work (Project#2). In addition to the department and division co-managers a mineralinventory program coordinator, project co-leaders and specialist technicalconsultants (economic geologist, geochemist and short-term consultants)

- 108 - ANNEX 3-4

Page 14 of 15

will provide GEOBOL with the expertise required to successfully manage,execute and interpret the results of Projects #2 through 7. They will eachintroduce modern mineral assessment techniques, theories and mineralizationmodels into the work programme and manage and participate directly infieldwork. Essentially they will provide the inputs required for theproduction of mineral inventory and thematic maps as well as for thedevelopment of the resource data bank (Project 18).

4. STCM

Objectives. The STCM project (para. A, 2.2 of this Annex) is ofvital importance to the country. This project will be implemented in threeseparate but inter-dependent phases and will permit the development of anew cadastre and a computer based cadastral information system. Thisproject will thus allow the precise location and registration of allexploration and mining claims, will allow the enforcement of the new min ingexploration and mining claims, will allow the enforcement of the new mininglegislation with respect to revenue collection and property protection andprovide support to the legal authorities of the country (e.g. mining court,notary etc.). Existing mining claims (mining registry) which are subjectto an old and chaotic system will be built into the new system over theduration of the project. The resurveying of all existing claims will th.usbe an essential project component and will precisely clarify landownership.

Scope of Work. For the STCM (ref. para. A, 3.3 of this Annex), aMining Cadastre Expert will be provided and will be the project coordinatorfor the establishment of this new and vitally important institutionalservice. He will assist in the overall design and planning of this office,staffing and budgetary requirements. Under his leadership a cadastralcoordinator, a GFS equipment expert (global positioning system), a datatreatment expert and surveying and field inspectors and consultants willdevelop a new cadastral index map based on UTM coverage, will resurveyexisting concessions and land positions on the basis of the new cadastreand provide the data for the development of a new cadastral register. Thenew cadastral register to be set up by the data treatment expert willrecord abstracts of title, mortgages, loans, servitudes, changes ofownerships etc. The project coordinator, cadastral coordinator and dataexpert will also assist in the setting up of registers at the Notary ineach designated region of the country.

5. CIM

Objectives. The IDM (CIMM) projects (para. A, 2.3 of this Annex)will provide support to and develop methodology for use by the privatemining sector, particularly small-scale and cooperative mining that do nothave their own equipment, technology and expertise to improve their miningand mineral beneficiation methodology. Projects (#'s 1 through 6) havebeen selected on the basis of country priorities; to generate economicrates of return on the processing of old discarded mine weste (tailings),to effect better separation of metallic components of complex ores, toreduce smelter and processing costs and to produce marketable products andto allow the recovery of gold (through leaching and other processes) from

- 109 -ANNEX 3-4Page 15 of 15

both alluvial and tailing deposits which has not been possible to datebecause of outdated processes and previous economic conditions.

Scope of Work. Four advisers and consultants will be provided tothe CIMK division of the IDM. The Chief Adviser in mineral processing, theprincipal function of CDMM, will assist in the restructuring of thedivision, the planning and management of the division and the repair andupgrading of all facilities including the laboratories and pilot mineralconcentrating plants. le will introduce new laboratory techniques suitableto support requirements of the Bolivian mining industry. Co-Managers ofthe departmenta of mining and concentration/metallurgy will assist in thestrengthening of these departments and will lead specific projects aimed atdeveloping and refining mining, metallurgical and concentration techniquesincluding the execution of the specific investigation projects to beexecuted under the segis of this Mining Sector Rehabilitation Project (ref.para. A, 2.3 of this Annex). The senior adviser (Analytical Chemist) willsupervise the rehabilitation of the chemical laboratory, design andimplement a work programme to effectively support the work requirements ofthe IDM as well as custom contract work and will liaise closely withmineral processing and metallurgical departments to provide them with therequired assay services to test flow-sheet design etc. He/she willintroduce adequate modern analytical and assay techniques and lead teams inthe actual mineral analytical day to day laboratory workloads.

BOLIVIA


New Institutional Relationships

ASISTENCIA FINANCIERA AS_EC T_NC

SECTOR MINERO SECTOR MINEROPR I ADO'* POLITICA - CORDINACION - CONTROL |ESTATAL

MINEROSCHOS |SCA G. D. M. O|SAM M IS N|O.cIYERAS JOINT VENTURES" GEOBOL I I I S.T.C.MI

ASISTENCIA TECNICA PRESTACION DE SERVICIOS SE_,YIC_TE_NI_ oEXTENIONISMO MINERO AY DE CrASTRO

FINANC MIENTO DE PROYECTOS I PARA SOLCITU-

DES DE CONCE-ASISTENCIA TECNICA RELACIONADA CON FINANCIAMIENTO SIONESMINERAS

COMERCIALIZACION DE MINERALES- VENTA INSUMOS

Fig. 3 ROL DE LAS ENTIDADES ESTATALES Y PRIVADAS EN EL SECTOR MINERO EN SU CONJUNTO

i~~~~~~~ ______________ ________________________

- 111 - ANNEX 3-6Page 1 of 2

BOLIVIA


COMIBOL - Rehabilitation Sub-component

The procurement and supply of operating materials, consumablesand sptre-parts. A detailed breakdown of the requirements forthe individual facilities (mines, concentrators, shops) hasbeen prepared by COMIBOL and been presented to IDA, with theexception of the spare-parts requirements.

The procurement and installation of equipment to replace worn,obsolete and less efficient equipment in the mines, theconcentrators and the shops. This would include lobc-motives,loaders, drills, concentrator tables, flotation cells, pumps,electric motors and laboratory equipment, etc. Equipmentlists by mine/facility have been prepared by COMIBOL andpresented to IDA. Packaging of the equipment requirementswill depend on the outcome of the co-financing efforts.

The execution of mine-works to improve and reduce theoperating costs of the vertical and horizontal transportationof ore and waste and to improve the dewatering/pumping endventilation systems in the mines. Mine by mine programs havebeen prepared. This work will be executed on the basis ofoutside contracts. Detailed scope of work and draft contractshave to be prepared by COMIBOL for presentation to IDA.

The execution of exploration/mine development works. Asstated before COMIBOL has been hampered by a lack of provenore-reserves in its mines. This program will address thereserve issue. General scope of work, expressed in number ofmeters of drilling and development work has been agreedbetween COMIBOL and IDA on a mine by mine basis. Detailedwork-programs will be reviewed by IDA and subsequent work willbe executed by outside contractors. As for the mine-works,detailed scope of work and draft-contracts have to be preparedby COMIBOL.

The execution of technical studies. These studies in contrastwith the work to be undertaken under the joint-venturepromotion sub-component, deal with the existing operatingproperties with the objective improving profitability.COMIBOL will execute three sets of studies. The first groupwill assist COMIBOL to joint-venture or lease properties tooutside private investors. The following properties comprisethis first group.

o Tatasi, Tasna, Chorolque, Animas-Innocenteso Poopo, Santa Fe

- 112 - ANNEX 3-6

Page 2 of 2

In order to assist COMIBOL in its joint-venture efforts, apromotional prospectus/package will be prepared with theassistance of outside consultants. The second group ofstudies deals with the 18 months assessment of theexplorationldevelopment work to be undertaken. An expert-opinion will be required to assess the justification tocontinue further exploration/development work at the SanVicente, Unificada, Caracoles and Viloco mines. This group ofstudies will assess the technical/financial feasibility ofthese mines foi the next five years in order to assist COMIBOLin its decision-making. The third major study to beundertaken is to assess the expansion-potential at the SanJose mine. This study would first focus on the technicalfeasibility and if warranted the economic and financialjustification and the optimal timing of the expansion. Inaddition to the above studies, several individual st4dies willbe undertaken in the areas of hydro-power supply (Colquiri)adaptability of leaching (Unificada, Animas Innocentes) andutilization of tin-tailings (Catavi).

Implementation of a social plan. COMIBOL, as is usual formining in reamote areas, provides housing, medical attention,schooling and recreational facilities to its employees andtheir families. In order to improve the living conditions,which deteriorated during the past years as a result of thecrisis, COMIBOL has designed a social plan as part of therehabilitation-program. The plan calls for upgrading andimprovements of the facilities, houses, schools, medical unitsand the procurement of furniture and equipment.

- 113 - ANNEX 3-7

Page 1 of 2

BOLIVIA


COMIBOL - Environmental Program

COMIBOL will execute a staged environmental protection program asoutlined below. A detailed program, including the organizational structurewill be presented to IDA for its review and approval. A phased approach aspresented in the attached Fig. 1 - COMIBOL Proposed Environmental Program -will be the basis for the detailed program. The program consist of thefollowing Phases:

Phase I

Establishment of monitoring programt to determine thecharacteristics of aqueous and solid wastes associated with miningoperations as well as the upstream and downstream quality of thereceiving systems. This will provide the basic data required todefine appropriate corrective programs. At the present time, nosuch data exists. This phsse might have an initial duration of 12months and will start shortly after effectiveness. It willrequire the availability of an environmental anal7tical laboratoryas well as personnel trained in analytical and samplingtechniques. The provision/financing of both the laboratory andthe technical assistance to train the personnel form part of theproposed project.

Phase II

Preparation of a conciae environmental overview report for eachoperation in which the impacts identified in the Phase Imonitoring program would be prioritized and corrective programsdefiued at a conceptual level for review with regulatorypersonnel. The regulatory mechanisms would be in place prior tothe completWn of this phase so that the reports can address theguidelines and codes of practice pertinent to the industry. Thetiming for this ;hase would probably be spread over a period of atleast 24 months wfth reports for the larger active mines beingprepared within the first year and others following on an assignedpriority basis.

Phase III

Definition and agreement of environmental measures to beimplemented for each property (on a prioritized basis) and designof corresponding environmental systems.

Phase IV

Implementation of programs defined in Phase III.

Phase V

On-going performance monitoring.

A national environmental mining plan will be prepared for reviewby IDA before June 30, 1991.

BOLIVIA


COMIBOL - Proposed Environmental Program

YEAR I Y, AR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7

STATEMENTOF INTENT

P fSENTATION Of DETAILED P OGRAM

ORGAN IZATIONAL STRUCTUREmm

GUIDELINES a REGU ATIONS

PHASEII PHASE

MONITORING ONGOING PERFORMANCE MONITORI G.~ ~ ~ ~~ ____ _.____ _____

.J

PHASE 31

OVERVIEW REPORTS

_i

DEFINE 8 DESIGN ENVIRONMENTAL MEASURES

PHASEM |

IMPLEMENTATIONI

0' I r.

- 115 - ANNEX 3-8

BOLIVIA


COMIBOL - Management Strengthening Sub-component

1. The first element is the recruitment of a number of experiencedproiessionals to fill a number of limited strategic positions in COMIBOLwhile COMIBOL staff are selected/trained for these positions. Theseexperts will be hired on fixed-term contracts not exceeding two years. Assoon as the Bolivians are trained they would be phased into these positionsand the contract professionals phased out, with an appropriate transfer ofresponsibilities. Approximatel7 17 managers/specialists would be hired inthe following fields, mine-management (4), finance/administration (4),metallurgylmineral beneficiation (3), electrolmechanicai engineering (3),and geology (3). These managers/specialists will occupy line-functionswithin COMIBOL's overall organizational structure. Expert-profiles, job-descriptions and conditions of employment for the positions will beprepared by COMIBOL. The second element in the management strengthsniingarea is technical assistance. This activity builds upon and is a follow-upto the TA-work provided by Coopers and Lybraad under the PPF. The projectcalls for 18 man-months (mm) of TA distributed as follows; strategicplanning (3 mm), human resources (3 mm), marketing (3 mm), industrialsafety/environmental protection (6 mm) and mine project evaluation t3 mm).The management strengthening sub-component will be parallel financed byIDB.

2. In addition to the above elements, which deal with the management-strengthening issue via the injection of outside expertise, it will benecessary to strengthen the company from within. It is in this area thatthe issues of compensation-competitiveness and training are addressed. Asurvey conducted comparing COMIBOL's compensation arrangements with thoseof private mining companies in Bolivia, concluded that COMIBOL's salarylevels are, on average, not competitive with the external market,particularly at the senior management levels in the organization. Thesalary variance fluctuated from a difference of 372 for a mechanicalsuperintendent to 96Z for the general manager's position. It is obviousthat with such a variance COMIBOL can not attract and retain the competentstaff required. Under the project it is, therefore, proposed to establisha scheme to enable COMIBOL to pay adequate salaries to middle and seniorlevel managers. Presently COMIBOL with the assistance of Coopers andLybrand is formulating a revised job-classificaticn and compensation policysystem to rationalize the existing structure.

- 116 - ANNEX 3-9Page 1 of 2

BOLIVIA


COMIBOL - Training Sub-component

1. A comprehensive training program would aim at upgrading andcontinuously improving the general skills level of COMIBOL's personnel.The program would include:

(i) Strengthening of the company's training capability at the headoffice through the creation of a new unit, the Training PlanningUnit within the mandate of the Human Resources Department. Thisunit would be responsible for collecting and processing of data ontraining needs (both for managerial and general skills levels) andfor the coordination and execution of all training activities.Two competent experienced training professionals will be required,initially on a contract basis while internal skills are developed.

(ii) Training for Managerial and Supervisory Personnel. For senior andmiddle level managers (approximately 90) an initial pilot projectwould train approximately 12 selected staff who would then serveas a steering committee to review the training materials. Theremaining managers (75-80) would be trained in three courses (eachcourse with a group of 25-30). Each course would extend over an8-month period, one week every two months. For the forseeablefuture it is recommended that the course trainer should be arecognized organizational and management expert external toCOMIBOL. Because of management turnover and the requirement forreview courses, this management training would become a permanentactivity. The senior and middle management program model isattached as Annex 3-9 and the course outline (theory) as Annex3-10. Apprnximately 180 staff will require and be eligible forsupervisory training and a training group will consist ofapproximately 25 persons. This program will consist of 6 seminarsper year with each seminar having a duration of one week. Seminarcontent will be as follows:

- Production planning and scheduling- Production control- Leadership- Financial management- Safety administration- Industrial relations- Human relations- Performance management- Time management- Training- Social issues- Project management

- 117 - ANNEX 3-9Page 2 of 2

All of the foregoing will be framed within COHIBOL's revisedexpectations of management and supervisors in a decentralizedenvironment. The priority for supervisory training is clearlyin produ:tion areas, in which the greatest number of workersare employed (e.g., mines, concentrators, maintenance, etc.).

In addition to the in-house training seminars, a limited numberof outside courses abroad, in specialized areas will beatcended by COMIBOL staff. The total time allocated for thispart of the program is equivalent to 150 staffweeks over the 5year period.

(iii) The technical skills and development program aimed largely at thework force is presently under preparation by Coopers and Lybrandas part of its consultancy services contract with COMIBOL financedunder the PPP. The program calls for a modular systems trainingapproach based on the fact that the work-activitylprocess and itsassociated equipment determine the training that needs to be done.

This will be a manual based system, and to satisfy CONIBOL'simmediate needs some 213 manuals require preparation as follows:

- Operations 76- Electrical general skills 19- Mechanical general skills 41- Basic industrial electronics 16- Operations/electrical equipment

maintenance 53- Shops - general shafts 8

213

It is estimated that some 36 weeks will be required to prepare theinitial 12 priority manuals once program coordinators have trainedsupervisors how to coach, conduct a training needs assessment, setup qualification procedures and standards and maintain trainingand qualification records. A typical manual format is presentedin Annex 3-11.

During the training sessions the trainees will alternate betweenthe manual and the field equipment to meet each objective. Onsuccessful completion of the manual training, the traineeprogresses to whands-on' training, where within a specified timeperiod, he gains a degree of proficiency. The measurement being"can he do the job?"

Each training session (held at the appropriate mine, mill orsubsidiary headquarters site) will be made up of minimum of 4 anda maximum of 8 participants. The length of the training time toqualify each participant will be dependent on the 'trainingprofileo developed for each job category. Attached as Annex 3-13is an example of a typical training profile already developed forthe San Jose mine and mill but which would be appropriate for mostof the other COMIBOL operations.

- 118 - ANX31

BOLIVIA 3-10

MINING SECTOR REIABILITATION PROJECT

COMIBOL - SENIOR AND MIDDLE MANAGEMENT DEVELOPmENT (SMD) PROGRAm MOODL

STAGE SUD I OUTPUT

DOCUMENT MANAGEMENT 0 A SET OF MANAGEMENT STATEMENTSPHILOSOPHY WHICH DEFINE THE ORGANIZATION'S

AND STRATEGIES MANAGEMENT APPROACH.

STAGE SMD 2

DESIGN O DRAFT TRAINING MANUAL(S).TRAININGMATERIALS

STAGE SWD 3

PILOT TEST O COURSE MATERIALS APPROVED BYCOURSE THE STEERING COMMITTEE.MATERIALS

STAGE SMD 4

IMPLEMENT 0 MANAGERS WHO HAVE KNOWLEDGE OFTRAINING APPROPRIATE MANAGEMENT PRACTICES,PROGRAM WHICH SUPPORT COMIBOL'S MANAGEMENT

PHILOSOPHY, VALUES AND STRATEGIES.

STAGE SW) 5

EVALUATION O ESTIMATED IMPACT OF TRAININGPROGRAM AND IMPROVED/REVISEDMODULES.

- 119 - ANNEX 3-11

Page 1 of 3

BOLIVIA


COMIBOL - Senior and Middle Management Course Outline

mmK ONE

Day One: An Introduction to Management

The management model to be used at Comibol andtherefore this course will be introduced.Participants will engage in simulations and roleplaying exercises to initially explore the keyconcepts.

Days Two &Threes Planning

The planning model to be used by Comibol will bereviewed. Different planning approaches will beconsidered. The differences between strategic andoperational planning will be explored. Memberswill participate in a planning simulation and beginwork on a major organizational case study.

Days Four &Fives Organizing

The course will review the organizational designconcepts including classical and human relationstheories. Case studies will be used withcrntinuing work on the major organizational case.

Mm TWO

Day Ones Review

Through discussion, role playing and case studiesthe material presented in Week One will be reviewedand the participants will have the opportunity todiscuss how they have implemented these conceptsand what issues they encountered.

- 120 - ANNEX 3-11Page 2 of 3

Days Two &Three: Directing

The three primary directing functions of anlayzing,defining and delegating the work will be explored.The role of motivation, reward systems, authority,responsibility and accountability will bediscussed.

Case studies, simulations and/or role playing willbe used to assit the participants in exploring andunderstanding the directing function.

Days Four&Fives Leadership

The manager's role as leader will be thoroughlyreviewed. The development of leadership theory andthe leaders need to develop both his/her directiveand supportive behaviours will be explored. Selfstudy of the individual's leadership style will beencouraged. Case studies and role playing will beused to reinforce the learing. Continued work willoccur on the major organizational case.

Day Ones Review

Through discussion, role playing and case studieswe will briefly review the planning andorganizational areas but primary emphasis will begiven to the directing and leadership functions.

Days Wo &Three: Coumunication

The manager as an effective communicator and anactive listener will be thoroughly explored.Participants will identify strengths and weaknessesin their communication styles, idenify ways toimprove communications and actively work on theirpersonal communication issues during this part ofthe course.

Days Four &Fives Problem Solving

A problem solving model will be introduced withmaterial and discussion on finding creativesolutions. Role playing will be used to explorethe concepts and then members will be asked to

- 121 - ANNEX 3-11

Page 3 of 3

identify real issues facing the organization and towork on finding appropriate solutions. Actionplans on different solutions will be developed andpresented to the appropriate Comibol executive(s).

WE FOUR

Day One: Controlling

A key principle in this section is the idea thatone can only control work, not people. Planningcontrols such as scheduling, budgeting and policiesand organizing controls such as structure,definition and delegation will be explored. Casestudies will be used to illustrate these concepts.

Day Two: Performnnce Management

In this section we will idenitfy how a managerapplies good management principles in face-to-facesituations with their own people to achieve highperformance. We will integrate the directing andsupporting concepts from the leadership review withtask analysis to estabish specific individualobjectives.

Day Threes Team Building and Meeting Management

Understanding group dynamics is an importantcomponent in developing a high performance team. Areview of group development theory will bepresented and integrated with concepts on improvingteam morale, communication and productivitY.

The second half of the day will look at thechairman's role in managing meetings and willassist the individual to develop specific skillssuch as agenda setting and summarizing. Roleplaying will be an important part of thiscomponent.

Days Four &Five$ Integration

In the last two days of the course we will knottogether all of the materials presented. We willuse simulations and role playing to review and useall of the management techniques developed duringthe course. The major case study developed duringthe course will be completed at this time.Participants will be encouraged to discuss theirimplementation of the materials and to identifyareas of concern.

- 122 - ANNEX 3-12Page 1 of 2

BOLIVIA


COMIBOL - Tmaical Training Manual Format

Each Systems Training Manual follows basically the same format withvariations being incorporated when needed. The following outlines thetypical areas of coverage that can be expected.

SECTION 1

- Prologue- Performance Objectives- Safety- Introduction- Equipment Description- Equipment Summary- Equipment Operation- Feedback

SUCTION 2

- Introduction- Controls- Control Summary- Feedback

SECTION 3

- Pre-Start Checks- Start-Up- Planned Shut-Down- Emergency Shut-Down- Feedback

SECTION 4

- Normal Operating Mode- Off-Normal Adjustments- Operating Problems- Feedback

- 123 - AMNEX 3-12Page 2 of 2

SECTION 5

- Operator Maintenace- General Maintenance- Feedback

SECTION 6

- Summary- Qualifications

SECTION 7

- Special Procedures

*NOTE - For Equipment Maintenance Manuals, latter sections arereplaced with: - Test

- Troubleshoot- Repair

- While following the same training methodologies of theother Training Manuals, the Genera. Skills Manuals differslightly in their approach, and are theory and taskoriented.

- 124 - ANNEX 3-13

Page 1 of 5

BOLIVIA


COMIBOL - Typical Training Profile San Jose Mill Ogerations

Tralalag TimePEED PREPARATION OPERATOR

PStI' s

- Overview 1- Feed Preparation System 3

PENI's

- Belt Conveyors 2- Belt Feeders 2- Jaw Crushers / 2- Cone Crushers 2- Tramp Iron Magnets 2- Vibrating Screens 2- Ball Mills 2- Rake Classifiers 2- Automatic Samplers 2- Horizontal Centrifugal Pumps 2- Cyclones* 1

Total 25 Days* Positive Future Installation

Ag/Pb EXTRACTION SYSTEM OPERATOR

PStl'8

- Overview 1- Ag/Pb Extraction System 3

PE1's

- Agitated Tanks I- Automatic Samplers 2- Floatation Cells 2- Horizontal Centrifugal Pumps 2- Clarkson Metering Feeders 1

Total 12 Days

- 125 - ANNEX 3-13

Page 2 of 5

CONCENTRATE RANDMING SYSTED

- Overview 1- Concentrate Handling System 3

PEK's

- Thickeners 2- Dorr-Oliver Diaphragm Pumps 2- Disc Filters 2- Horizontal Centrifugal Pumps 2

Total 12 Days

LDMXSTONE PREPARATION SYSTEM

PSW's

- Overview 1- Limestone Preparation System 2

- Belt Conveyors 2- Ball Mills 2- Rake Classifiers 2- Agitated Tanks 1- Clarkson Metering Feeders 1

Total 11 Days

REAGNTS PREPARATION SYSTEMS

PSN1's

- Overview 1- Reagents Preparation Systems 4

P31's

- Agitated Tanks 1- Clarkson Metering Feeder 1- Horizontal Centrifugal Pumps 2

Total 9 Days

- 126 - ANNEX 3-13Page 3 of 5

PLANT UTILITY SYSTEMS

PSHIs

- Overview 1

- Plant Utility Systems 3

PE1's

- Agitated Tanks 1

- Horizontal Centrifugal Pumps 2

- Mine Air Compressors 2

Total 9 Days

- 127 - ANNEX 3-13Page 4 of 5

COMIBOL - Typical Training Profile San Jose Niee Operations

TraininR Time

MINING SEQUENCE

MS4 s

- Overview 1- Mining Sequece 3- Ventilation System 2

NEKI's

- Jackleg and Stoper Drills 2- Horizontal Centrifugal Pumps 2- Air Operated Submersible Pumps 1- Mucking Machines 2- Mine Air Compressors 2- Battery Locomotives 2- Trolley Locomotives 2

MM'S

- Blasting Procedures 2- Scaling 1- Rockbolting and Screening 1- Timbering 1

Total 24 Days

LOADING AND HA&LAGE SYSTEM

NS514's

- Overview 1- Loading and Haulage System 3- Ventilation System 2

- Mucking Machines 2- Battery Locomotives 2- Trolley Locomotives 2- Air Operated Tugger Winches 2- Horizontal Centrifugal Pumps 2- Jackleg and SToper Drills 2

- 128 - ANNEX 3-13Page 5 of 5

mii's

- Scaling 1- Rockbolting and Screening 1- Timbering 1- Laying Tracks and Switches 1

Total 22 Days

SKIPPING AND HOISTING SYSTDI

MSm's

- Overview 1- Skipping and Hoisting System 3- Ventilation System 2

MI'8

- Mine Hoists 2- Allis Chalmers 2- Wolman Morgan 2

- Krupp 2- Mine Air Compressors 2- Horizontal Centrifugal Pumps 2- Air Operated Submersible Pumps 1

Total 17 Days

BOLIVIA


INSTIlSTIONAL STRENOTHENING COMPONENT:Impl _mntaeton Schedule.

1989 1wo i0 19S2 iwsa 1994

Hire Proj. Coordinator xxxProcure Equip e t xxxxxxxxxxxxxxxxxxxx xxx xxxRepeir BulIdnge/lIab xxxxxxxxSilet Experte.Inwentory xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxMinistry Export. xxxxxxxxxxxxxxxxxxx xxx xxxGEOSOL Expert. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxSTCM Experts.Log Toro xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxXX5xx

STCW Experts.Short Term xxxxxxxxx xxx xxx xxIOM Expert Assletenc. xxxxCI Exporte.Le T'rm xxxxxxxxxxxxxxxxxx xxx xx xxx

CIWS Expert.Short Tot xxxxxxxx xxx xxxWOEUNI TA Project. xxxxrxsxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxClUE TA Projoct. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxSTCM Project.Phs r xIxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Ph... II xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxPha.e III xxxxx tt

Traintng xxx xxx xxx xxx xxx

Coordintn on/Supervislon xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Io

- 130 -

ANNM 3-14Page 2 of 2

IIXIVIAMININS SECTOR REHABILITATIDN PROJECT

COMIBOL and BAMIN ImDlementation Schedule

1989. 1990 1991 1992 1993

COMIBOL

1. Operatino Cyinters

Major Equipment Procurement --------------------- -Mine Works ---------------Geological Packages ------ ------ …---------…----------------

Studies -----------

E. Joint Venture Promotion

3eneral Evaluation A ------------General Evalua'lon B ------------Specific EvaluationsStudLes --------Exploration

3. Trainina ---- -- -…----------------------------- --

4. Technical Assistance --- -- ------ …

5. SuDDlements ----------------------

BNI

Fullfillment of Conditions XTechnical Assistance

- 131 -

ANNEX 3-15

liiii

' ~~a1t

ANNEX 3-16- 132- Page i of 5

BOLIVIA


Guidelines for the Establishment of a Guarantee Fund

1. aan.kgr.gwn&. Mission interviews with small and mediumentrepreneurs. with bankers, with Government authorities andwith bilateral donors have revealed that the lack ofappropriate guarantees constitutes a major problem inchanneling oredit for small mining and small industrialenterprises. The problem is more acute among the small minersbecause the commercial banks have little, if any, oxperiencein dealing with the legal and economic procedures related tothe valuation and mortgaging of mining properties. Becausethe Bank has been working, almost in parallel, in thepreparation of two IDA Credits, one for small miners and onefor small industries, it was in a good position to respond toa Government request for assistance in setting-up aGuarantee Fund to covrer several productive sectors. The firstaction of the Bank mission was to review some other local orbilateral initiatives underway (e.g., FUNDES,swisscontact,

-USAID, FONEM, etc.), as well as the past experience gained bythe Central Bank with its own guarantee fund (Programa deGarantia de Creditos Productivos -PGCP), which operated inBolivia, between 1977 and 1984, with assistanoe from USAID.

2. Upon review of such initiatives and experiences, andfollowing discussions with BCB and commercial banks, andsubject to a more detailed study to be financed under the TAoomponent of the proposed project, the mission recommended,in principle, the establishment of a second-tier guaranteefund (Fondo de Retrogarantia), which would reinst'reguaranteed portfolio from different kinds of first-tierguarantee funds. Such a scheme would enable the creation andoperation of several competing private and public funds,rpecialized by sector or region, would provide for thenecessary economies of scale required to operate a self-financed guarantee/insurance business. and would establish amultiplying mechanism through which first-tier funds would beable to increase their coverage manyfold (say from 3:1 to10:10 without incurring unacceptable risks.

3. PEat ExoeUience_ The already mentioned PGCP, whichoperated until 1984, was established in 1977, in BCB, with acontingent fund from USAID for US$ 2.5 million, and acontribution from BCB for US$ 1.25 million. It was a rathersuccessful experience assisting nearly 3,000 smallentrepreneurs (mostly farmers) in its nearly seven years of

- 133 - ANNEX 3-16Page 2 of 5

operations. However, it never developed into a large programand it oeased to operate in 1984, after USAID stopped itssupport. BCB claims that the Program was a financial success,that arrears did not exceed 1Z, and that, as a result, thecontingent resources contributed by USAID were never used.Nevertheless, PGCP did not generate enough resources tocontinue operations and, when BCB tried to continue theprogram with a PGCP II, in 1985, using a BCB's contingenvcontribution, the success could not be repeated. The mainreason given for the failure of PGCP II is that the capitalof the fund was not adjusted by inflation and consequently,in the hyperinflotionary crisis of 1985-86, it could notcover the clai&.. by financial intermediaries. The programlost its credibility and was finally discoqtinued in 1986.While a new fund is expected to benefit from the experiencesof the past it would, initially, face an uphill task toregain credibility vis-a-vis the financial intermediaries.

4. The Proposed Scheme. The details of the new mechanismwould only be spelled out as a result of a specific study tobe financed under the TA component of the proposed project.The expected timing of that study calls for a final draft inor about September 1989 and for the implementation of theFund by the end of 1989. In deciding the detailed procedures,BCB and the consultants are no only expected to draw upon thepast experienoe of PGCP, in Bolivia, but also upon practicalexperience in other countries and, in particular, upon thatof the European mutual guarantee organizations andcooperatives and their sohemes of risk sharing with theprovincial and state governments. On the basis of that andother foreign experiences 1, some of the characteristics ofthe Fund can be expected to look as follows:

(a)Risk sharing. Evidence collected from most developedcountries--and also to some extent from developed countries--(see Levitsky and Prasad, op. cit.), indicates that banks arenever very enthusiastio about guarantee sohemes and that itis necessary to encourage them to participate by reducing theshare of risk. There are some indications that where the riskof the lending institution is 30X or more the institutionsare less willing to participate. Consequently, it has beensuggested that the risk for the banks should around 20 to30X, leaving 70-80X to be covered by the Fund.

(b) Guarantee Fees. Most guarantee systems require thepayment of a fee, or premium, for the guarantee. Such fee

1 See IBRD, Technical paper ft 58, J. Levitsky and R. Prasad:"Credit Guarantee Schemes for Small and Medium Enterprises",1987.

- 134 - ANNEX 3-16Page 3 of 5

might take various different forms, including one-timepayments when the loan is arranged, service payments for theinvestigation of the loan by tthe Fund, and/or annual premiumseither for the guaranteed portion or for the total loan.Considering the high cost of money itn Bolivia and, inparticular, the alternative cost of funds, in informalmarkets, for those entrepreneurs with lack of adequateguarantees, as well as the rather high operational costs ofthe first-tier funds (which would include TA services), ithas been suggested that the first-tier funds oould oharge apremium of about 3% p.a., on the total amount of each loan.The reinsurance premium could, in turn, be around 1% p.a. onthe reinsured portfolio.

(c) Claims. Because guarantee schemes build up theircredibility principally by how claims are handled, theproposed scheme would have to establish very expediteprocedures to respond to, and for the paying of, claims.However, while payments to financial intermediaries should bealmost automatic, the regulationi shouild also clearlyestablish those specific steps that the lending institutionwould be required to take in order, to satisfy the guaranteeorganization in that every effort has been made to obtainrepayment, and to facilitate further recovery actions onbehalf of the Fund. Recovery procedures would have to bepursued with due diligence by the financial intermediary, andthe amounts recovered, and the losses incurred, should bedivided between the lending and guarantee institutions inproportion to their agreed sharing of risk.

(d) Beneficiaries. While BCB would like to extendcoverage, from the beginning, to all productive sectors;prudent management of scarce financial and human resoureesmay suggest a more limited initial coverage. The missionsuggested that since the Bank/IDA has been preparing twosimilar projects, for small enterprises in the mining andindustrial se¢tors, a pilot guarantee fund could startactivities covering initially only those two sectors. Inaddition, and to avoid concentration of resources in few andrelatively larger enterprises, it has been suggested to adopta ceiling on the size of enterprises eligible for the Fund.Such ceiling could be similar to the maximum size of acceptedenterprises under the credit components of the proposed IDAcredits (i.e., below US$100,000 in fixed assets, excludingmining properties, in the case of mining, and excluding landand buildings, in the case of SSIs). It could also be lowerthan those limits assuming that only part of the universe ofpotential clients would require assistance from the guaranteefund.

(e) Technical Support. Past experience in Bolivia, as

- 135 - ANMEX 3-16Page 4 of 5

well as in other countries, suggests that several private andpublic guarantee schemes can trace their success to theprovision of adequate technical/managerial assistance whichhelps their clients in confronting growth problems andcritical junctures. Under the proposed scheme it has beensuggested to use some of the existing private institutes toensure a sound technical supervision of the loans covered bythe guarantee Fund. Furthermore, some of the first-tierfunds, now under preparation (e.g. FUNDES) have included TAas an essential part of their operational procedures.

(f) Resources. Initially the Guarantee Fund is expectedto require about US$ 2.0 million, which can be contributed tothe Fund "pari-passu" with its commitments of coverage. Inprinciple, those funds are not necessarily required in cashsince the fund way operate on the basis of contingentcontributions. However, and in view of the credibilityproblems related to PGCP II (para 3), it has been suggestedthat the Fund should have its own separate assets and that atleast its initial contributions should be in cash. Possiblesouroes for such contributions, whichhavo alroady boon oxploiod, inoludot direct contributians bythe BCB from its own resources, contributions by BCB from IDACredit recoveries (i.e., RIC I), contributions from the newproposed credit for the mining and industrial sectors. Afterimplementation it is also expected that some bilateralcontributAons could be forthcoming. With the initial US$2.0million the Guarantee Fund would be in a position to cover aportfolio of about US$10.0 million.

5. ProDosed Institutional Structure. The Guarantee Fund isexpeoted to operate under the aegis of the BCB, but as aseparate institution with independent resouroes, assets andpersonnel. Its second-tier nature should allow a very leanstructure, with a very reduced team of specialized andcompetent operators.

6. First-tier Minina Guarantee Fund. The existence of aSecond-Tier Fund should stimulate the emergence of first-tierfunds, but these are not expected to appear spontaneously. Inthe particular case of mining, the ministry of Mining hasrequested IDA for assistance in the creation of such a fund,and that assistance has been considered in the TA componentunder the proposed IDA Credit. While most of the work to beundertaken as preparation for the second-tier fund would beessential for the preparation of the first-tier mining fund,the later would require rev'ew of procedures which arespecific to the sector. FONEM (Fondo taoional de ExploracionMinera), which is currently being restructured, is expected

136 - ANNEX 3-16Page 5 of 5

to play arI important role as Pruvidar ur TA rur Llie smallminers and mining cooperatives. One of the possible sourcesof funds f r mining fund could be the Emergency Fund (PondoSocial de Emergencia) which has received resouroes from localand foreign donors to assist in the creation of new jobs formining workers displaoed from COHIBOL. The timing for thepreparation of the mining fund has been set forth in order tocoincide with the second-tier fund.

ANNEX 3-17- 137 - Page l of 8

BOLIVIA


Guidelines and Operating Regulations of Credit Line

Artioulo 1. La Republica de Bolivia y la AsooitaionInternacional de oamento (All) del Banco Mundial, en fecha ....de . de 19... sl2scribieron el Convenio de Credito IDA.por un aonto de us ........... de los cualos $Us....... serandestinados para ouorir las necesidades de capital do Lr=bulju yoapital de inversion para reactivar el sector de la mineriamediana, pequena y cooperativas del sector privado.

Artioulo 2. El objetivo basioc del Programa es el de incrementary divermifioar la produooion del sector minero a traves delfinanoiamiento de proyeatoo destinadom a ls oreaoion, ampliaoionI/o modernizaoion de empresas mineras perteneoientes aI sector dela mineria medians pequena yVo ocoperativas.

RRCURSOB nRL Mflt-RAMAArtioulo 3. Los reourso. del programs estaran constituidos porel aports del oredito AIP y por e1 sports local, constituido porlas oontribuoiones do lou bonefioiario. do los subprestamos.

MRNRPCIARIO& DEL PROGRAM4AArtioulo 4. Se oonsideraran elegibles, oomo sujetos de redlitosbajo eute programs, aquellas personas naturals o juridicas quoeJersan una aotividad miner. y quo, a juicio de lam ICIS: a) se*nouentron legalmento constituidas con adecuada capacidadadministrativa, teonioa y financier& pars ojeoutar y operar e1subproyeoto a ejeoutarse; b) quo havan presentado un estudio defaotibilidad toonica, economics y financiesa de au proyecto, quodomuestre ls adeouada rentabilidad del mismo. Pars efctoo delProgram&, ae oonmideraran pequenas empresas mineras aquellas quoLongan aotivos fijos, exoluyendo el valor de las propiedadesminera,, hasta por el equivalents de US$ 100.000. Beconsidersran emproeus de mineria mediana aquellas empremas quasesn del seator privado y ouyo valor do log aotivos exoeda elindioado anteriornLente.

C_IlERTUA O PRO2RAMArtioulo 5. Los reoursos del oredito AID ostaran destinados alftnanoiamiento de: a) aotivo. fiJos y capital de trabajo asociadoa osao aotivos; b) ospital de trabajo incresental a libre,deutinado a aumento de producoion do inAstalaciones .xistentes; o)prograias de reostructuraoion tecnica y financiers an eapresoa

ANNEX 3-17-138- Page 2 of 8

existentes. Los rubros a financiar bajo oada categoria seran lassiguientes:

u) luu luvwCuluuw wit Lv:liv6x fij.59 eiih-rimvi hinvinn dooapital importados o nacionales, nuevos y usados, asi cooolao aquipoo, inotai3gtQnqag obras eiviles, Rrvinins d1faingenieria y mon4ajw du '1^ uzluaus, I&xatwLtaw&&L a V & -;.hPrrRmiAntAP; invnrsinone an laboros .nqrp pgra eldeoutrrullu y pruyiLuulua do lan y?&iUiStR"5linfraestructura e instalaoiones de apoyo, tales comoeaminos de anORAn, instalaoiones oleotricas. etc.; y elcapital de trabajo permanents, de hasta un 30X del costototal dol subrroveeto, asocirin A In Awplnt.nflinn de losactivos flioe menrionadom mas arriba.

b) nl capital de trabaJo libre o inoremental inoluira lsinsumos y materlas primas de origen importado o local,neosearios para incrementar la produccion do una ampresaexistente.

a) Ian creditos de reutt!uoturaoion, teonioa y finanoiera,astaran destinados a oubrir tanto la rstinanoiaoion depasivos oomo la adquisicion de activos fijos v do oapital detrabajo, inoluido. en un Plawn de restruoturacion teonica yeoonomica de una empresa ouye viabilidad de largo plazodebera ser plenamente juutifi*,ada.

Awtloulo d. En todo. ls ounase de importacion, los biOnesdebeoan provenir de paises slegibles, de oonformidad con Ionoonzrazom de pruuwLmu dw l AIP, y no fLuwswu.l.&;. ls 6h la basede su valor CII. In el easo de lam equipos comprados localmente,oaten se finQnoiawvn oubvo la baee do au valor oxeluyendnimpuestoui.d,ocompraventa a transacoion.. Rn el oaso de equipOsUmUsm,.. A ,# ; J.L. 1 ... _ 6L&Ll&&i*& 19 IANR pSDiORK I ontidadadena al oomprador y al vendedor, y ouys oaouihdd tsonioa seaaceptable para e1 BCB.

CARAL.TEACITn nR RT.S RCtLRS%sArtioUao 7. Los reoursos so canalisaran a Iva wu wLLulu,; iL.-iI Ai law Ims6f6idi o.ns de r'adddtn Tntnumnrlnuismi (TrT9l niishayan soao oalfoaosae y designadas oomo eseliblvu vur e1 BCB.Para e1 efoeto, el BCB sumoribira oon Ian ICIS elogibles, unoontrato do partiuipacion del oual east reglamento forma partointegral.

CBTTTRRO DR LELGIBILTnAD DE LAS 1=IArtioulo 8. Loa oriterios financierom y administrativom deelegibilided de las ICIS estan basados en las disposiconeslegales en aotual vigenoia, siendo lo minimos loe siguientes:

a) Acreditar una relaoion pasivo/patrimonio, un indioe deoartera on mora, y unas provisione. y reservas para oubrtr

ANNMX 3-17-139- Page 3 of 8

pouibles perdidas por prestamoo dudosos, que no exoedan losoriterios estableoido. entro el BCB y AIP.

b) Law inversione. en aotivos fijoo. on ningun osso podranexoeder del valor del patrimonio neto.

c) Las ICIS deberan tonor una organizacion adecuada de au Vnidadde Desarrollo, la oual dispondra del personal teoniconeoemario para ouaplir racional y ofiioenteoment Ian tsreasde procesamiento. evaluacion, supervioion y seguimiento doproyeotow baJo este Progxama.

d) Las ICIS deberan toner, ademas, sistemas de administracion decredito y contabilidad teonicamente adcuadoe, y unaauditoria externa que sea aoeptable pars el BCB.

a) Certifioacion de gus la Saposintondencia do Banoos y el BCE,han habilitado como ICT al Banco solicitante, oonforms a laLey de Banoom.

El BCB revimara periodioaments la evoluolon de Ian ICIS, deacuerdo a loa oriterina de slegibilidad antes aenoionadou y alos informem periodioos de la Superintendenois de Bancos.Cualquier modifiosoion posterior e. estas normas, serainoorporada al presonto ReglJsuento y oomunioada a lao IrCamaedants ciroalares,

CRITERI 9 DR 9RLRCCION DR 9UfPROXICTQRArtioulo 9. Para recibir un subprestamo oon reoursos delPrograma, log subproyeotoa deberan demostrar mu viabilidadtoonioa y eoonomica modiante un estudlo do faotibilidad quoinoluya, a la mencs: una desoripoion detallada del subproveoto(yaoixientom, motodou de oxplotacion, posibilidadeu do aeroado,oapaoidad toonica do el a lo emprosarios, eto), y un aonJunto deproyoeoiones finanoerao (fluJo do fondos, balances, y estadom doperdida. y gananoias) quo demuestren una rontabilidad positivadel proycoto.

Artioulo 10. Adioionalmento ae debera inoluir un analisis de lossiguientos aBpeotom eapeoif los:

a) quo los proyeotou correspondan, a la aetividades definidas enlas secoionem 2.03 y 2.04 do oato Reglamento:

b) quo la utiliaoion de la teonologia sea adeouada pars unsexplotacion racionai o incromentar la reouperaoion y optialo.el posible aproveohamiento de lou minerales ooitenidoa en lamrelaves y desmiontes;

c) quo exiatan saguridades acerca do la sufioaenoia do lareservas del mineral;

ANNEX 3-17- 140 - Page 4 of 8

d) qua la WnXormaoion sobre .1 yacimiento y sobre la teonologiade explotaoion, permitan juzgar los posibles efootos,go'logicos y ambientales, derivados de su operaoion;

f) quo lee instalaoiones y operaoiones de la empresa den adeouadaatencion a la salud y seguridad de lo trabajadores.

Artioulo 11. En el osso de subproyeotos qua requieran reocursoodel programa para una re.structuraoion finanoiera, 1 estudio defaotibilidad debera demostrar olaramente la viabilidad teenics yfinanciera de largo plazo de la empreea a ser restruoturada.Dioch ostudio, ouyo costo podra inoluirse entre loa rubro8 afinanoiar por el programa, debera inoluir, ademas de los datomrequeridos par& los subproyootos mencionados en lo0 artioulosprsecdenteo, a lo meno. lo siguientoo antsoodent*s: a) un plande produocion basado en la restruoturacion toonioa de la emprema;b) un plan de ventas quo denueetre un incremento en Ionresultado. finanoiero. do la empress; o) un plan finanoiero quoinoluya todas las medidam de restruoturacion a tomar (p.ej. ventade activos ±nneoesarios, nuevos aportes de capital,restruotursoion administrativa, etc), en orden a haoer viable la*mrosa. Las evaluaoiones db tales subproyeotoa deberan inoluirel oaloulo de tasao de retorno financieram MTP) y economicsa(TRE), oalouladan usando preoios de frontera y preoai real de IonreourSon.

T!EEMT?nIOI V ONDICIONIRS DR LOR UnRUD'RRTAWAgAttioulo 12. Los prestamos conoedido. a traves del Programa,soran otorgado. y pagadero. on monsda nacional oon clausula degantonizionto do valor, al- tipo de oambia oficial del dolar do10 REUU de Amerioa.

Art*ulao 13. Los montom de los subprestamos no podran oxoderIon siguientos lunites:

a) E1 monto maximo del oredito total, inoluyendo el monto delsubpreatsmo, do una 1CI a un solo subprestaterio a grupo deempresas relaoionada., no podra exoeder del 2ox delpatrimonic noto do la ICI (Artioulo 81 y 82 del DS. 21860).

b) La deuda total del prostatarlo. inoluyendo el monto delsubprestamo, no podra excoeder.do 1.5 vaces au patrimoniomuditado.

a) Ningun subprestmao financiara mas del BOX del oosto total delproyeoto.

d) 21 monto maxima do l10 oreditoas en pequena minoria, no podraexoeder de US$ 100,000 por empress a grupo de emprosasrelaoionadas entre si.

- 141 - ANNE 3-17Paige 5 of 8

a) En el caso de subprostamos de reconversion a mediana aineria,loa monton maximos no podran exceder los US$ 500.000, y lo1subprestamos deberan contar con la aprobaoion previa de ATP(Banco Mundial) antes del desembolso del BCB a la ICI.

Artioulo 14. La tasa de interes anual efeotiva para las ICISsera igual a la tasa quo periodioamente establezoa el BCB y quean la actualidad as LIBOR + 1. la quo se mantendra durante e1periodo do amortizacion del subprestamo. E1 BCB hara conocer alas ICIS v estas a los subprsstatarios, las tasas LIBORcorrespond iontes.

La tama ofeotiva para el subprestatario seva Is oobrada pot elBCB, ass un maximao de oinoo puntos poroentuales por ano. Elmonto quo exceda a la LIBOR sesra libremento negooiado y pactadoentre las ICIS y loa subprestatarios, con la unios restriocion dequo sea inferior a winco puntos poroentuales anuales.

La tasa de interes anual etfotiva al subprestatario, inoluiratodor low cobros, rocargos, oomisiones y avales por cualquieroonoepto o oualquier otra aoolon quo resultare en bensfioio de laICI.

Para todo refinanciamiento con reoursos del Programa, lam ICISindloaran explioitamente, en 10 dooumentos de prestamo con losubprostatArio,, 1 tasa fefotiva de interes anual.

Artioulo 15. 31 plaza de loa subprestaao. estara do acuerdo alo requerimiontos de oada subproyeoto. Para los subprestamoudestinadom a activos fijos, el plaza maxiao sera do 10 anos, quopodran incluir un plazo do gracid de hasta 3 anos. Paras losubpi'utsaas do oapital de trabajo. .1 p1820 maxiMo sera deauatro anos, inoluyendo hasta I ano de gracis.

SERVICIO fli LAS QEIIDAB.Artioulo 18. Las amortisaoiones y .l pago do interomes seefootuaran on poriodos someotralso o anuales, dr scuordo a lo quooonvonfgan lam ICIS oon loa subprestatarios y quo eats detalladoen el dcoumento "Reconooimiento do Douda y Promoma de Pago".(Apendioe 2 del Contrato do Participaoion).

Los reoursom otorgadoo a las ICIS para lo subprestatarios, sorando ouenta y riesgo exclusive de las ICIS y, on las foohas devenoimiento do los plazow, el BCB dobitara el importsoorrospondiente an la cuenta oorriSente o enoajo legal do lasICIS. El BCS no reprograma.r ostas operaCiones por ningunmotivo.

Aitioulo 17. Los subprestatariow podran ofeotuar pagomantioipadou, parciales y/o totailess sin ponalidad o roaargoalguno. Los pagos antioipados efootuados, deberan ser

- 142 - ANNEX 3-17Page 6 of 8

notificados al BCB, por las ICIS, en un plazo maximo de 48 horasdo haborse ofeotuado el mismo. Los pagos antioipado. parcialesso8 splioables a las ultimas ouotas.

Aitioulo 18. E1 BCB desembolsara los fondos del Programa a lanICIS, uns vez qua estas hayan aprobado el oredito y remitida todala dooumentaoion requerida, para que los fondo., a mu vex, seantrzaupaados a ls subprostatarios finales an un plazo no mayor a2 dias habiles.

TRamTTACTIG1 BE LO% stJBpRI Sr'AHoArtioulo 19. Para la tramitacion de los subprestamos ae aplioarael siguiente procedimiento:

a) Una vez quo la ICI aprusbe el subprestamo, en l10 diferentesniveles e instanciae quo establezoan sue reglamentos docredito, solicitaran a la Gerencia de Domarrollo del BC8sodisnte oarta. oon las firmas autorizadas respeotivas, eldesembolso de lo0 recursos del Progranm adjuntando:1) Formulario de solicitud al BCB;2) Documento de Reconocimiento de Deuda y promosa de pago;3) Eetudic de factibilidad q4n incluva un flujo de fondom

proyeoatado, por .l periodo del oredito, sin inoluir eincluyondo lo reoursom del subrrestamo.

b) Dentro do' termino do treinta (30) dias oalendario a partirdel do8ambolso, las ICIS doberan enviar a la Gerencia deDosarrollo del BCS, loo siguiontes documento. relaoionadou alsubprostatario y al subproetamo, bajo riesgo de reversion encamo de incumplimiento:1) Copia do dooumento probatarlo do traspaso do la recurmas

al subprestatario;2) Detalle do gastos y sum oarreopondientes faoturas oon RUC

do todam las compras de capital do trabajo y de inversionquo se realizaton con el oredito, oorrespondiente &Itieapo tranuourrida deeds el momento del demssbolso hastala fooha.

3) Formulario estadistioo del BCBs el cual se adjunta alpresents reglamento.

a) Una vez concluido el plan do inversiones, pero en todo casoon un plazo no superior a 180 dias despuos del desembol.o,so enviara al BCB oapia de la documentaoion do desoargo deloa fondos provistos par el prograna.

ORIAGIngRS Y HRRSTICCTONKS PARA LOS ICT. X LnOS UBPRSSTATARIORArtioulo 20. En aplioacion al artioulo t.48 de la Ley General deBanoos del 11 do Julio de 1928, las ICIo estan prohibida. deotorgar creditoa oon reoursos del PROGRAMA, a sue proplosfuncionarios a empleadom, dirootores o asse.res.

- 143 - ANNEX 3-17Page 7 of 8

Artioulo 21. En todom lou contrato. de prestamos quo otorgue laICI oon cargo al Programa, deberan incluirso, por lo menos, lassigipienteo oondiciones:

a) El oompro§isa del bensfioiario do quo ls bienes y servioiosqua ae finanoien con el oredito se utilizaran oxolusivamenteen la eJeouioon del respeotivo proyeVto.

b) El dereoho del Gobierno de la Republica de Bolivia, a del BCBo la ICI, en mu oamo, y de la AIP, a examinar los bienes, loalugareo, las trabajom y las oonstruooiones del rospeotivoproyeoto;

o) La obligocion do proporcionar todas las informaciones que laICI o el BCB solioiten al bonsfioiario con respecto alproymeto y a mu situaciori financiera;

d) E1 dersoho do la IC! o el BCB a aumpender loa desembolsoo deloredito 9i el benofioiario no oumple con muS obligaciones.

e) 21 oompromino del beneficisria de quo tomara todas lagmedides quo mean neoesariam para quo tods la compra de bienespara el proyeato, se haga a un costo razonable que seragoneralmente e1 prooio mas bsj- del moroado, tomando encuenta factores de calidad, eficienoia y otros quo sean deloame. rars compras quo exoeden de US$ 25.000 elsubprestatario tendria que preomentar ovidenoias de quo hasrocibido a lo mono. tres (8) ofertas de preoio de vario5muministradores.

f) La oonutituoion por parte del bonefioiaria de garantiamopeciftoeas sutaicentes en favor de la ICI.

g) B1 aompromimo del boneficiario de asegurar v mantener elmeguro do loe biones qua garantieon el oredito oontra loozioagos y on low valorem quo as aooutumbran en el Seotor,dentro de las posibilidados quo existen en sl pais.

RKGis'rR V CONTROLAttioula 22. El programa sera registrado contablemento por elBCa an ouentss moparadas pars oada ICI partioipante. A eateofeoto lam ICIS deberan:

a) Proporoionar monsualmento al BCB, hasta el dia S de cada &e.,un ostado colocaciones y recuperaciones del programas.

b) Efootuar oonoilisoiones mensualso de saldos oon el ECS.

Artioulo 23. Las ICle deberan prosentar a la Gerencia deDesarrollo del BCB, memestralmente, el flujo de fondom efootivodel semestre anterior aoumulado haita l f cohs de prosontacion.

144 ~~~~~AN=KJ 3-17- 144 - Page 8of 8

Artioulo 24. l BCEB se reserve el desoho d: supervi8ar on laftoha y forma qu osttime convenisnto, la oorroota apllcion delos reoursou de oonfornidad a lo dispuesto an el presentsReglamento y el Artioulo 89 del D.S. 21880.

evR =lB U rEnNnArtioulo 25. 91 BCB realizara la reversion de un oreditootorgado oan reouruos del PROGRAMA, cuando se verifiquooualquiera do lam miguientos infraoolones:

a) Cuando las inmtituoiones orediticias intersediarias hubiesenIasignado reouroos a seotores *empro8as y/o propositosdistlntom al obJeto del programs.

b) Cuando Ice subprsutatario. no hubiesen oumplido oon todo loestablecido en el presents Reglatsento, o hubiesen deeviadofondos para otros propositoo distinto. a la satipulado an elContrato de Participaclon y en sate Reglamento.

Las reversiones de los sontos mal utiliaados seran efeotuadas unavez quo el BCE hubisre detectado aualquiera de Ian anterioresinfraooiones, y devengaran la tass comerolal aotiva de interes deIs ICI infraotora, a la tama oomercial active promedio delmistema finanoero, meleooionando de entre setas la mas slovadsvigents al momenta del cobra, aplioada al manto mal utllizadodeude, el momento dol desembolso. Si la infraoclon tuere do laICd, la tsas activa quo se Is oobre, no debera ner tramfetrids alsubprestatario.

- 145 -

ANNEX 4-1

BO0LIVIA

MINING SECTOR REHABILITATION PMJECT

Sumary of Flve Year Prosram(USI million)

X S of TotalForelTn Local Total Forelso Base Cost

A. COMIBOL

1. Upgrading of Mining and Plant Facilities

Oruro 16.1 18.6 26.9 62 21Quechine 6.7 4.1 9.6 58 7La Paz 9.6 9.4 19.0 51 14Potosl 4.9 8.8 8 .7 57 6Corporate Office and ServiceFacilities 2.8 1.6 4.4 64 8

Subtotal B8.1 82.7 70.6 64 51

2. Training Program 1.t 0.5 2.1 e8 2

8. Organizational and ManagerialStrengthening 2.9 1.4 4.8 67 8

4. Joint Venture Promotion .68 7.2 12.6 44 9

Subtotal 48.4 41.6 90.0 54 e6

B. Institutional Strengthening

MUm 2.1 0.8 2.4 so 2GEOBOL 7.8 6.4 18.7 68 101DM 1.6 8.4 6.2 85 4Cadastral Service 8.4 4.8 7.7 44 6BAMIN 0.4 0.1 0.5 70 0

Subtotal 15.0 14.6 29.6 50 21

C. Credit to Private Minsand Cooperativee '4.0 6.0 20.0 70 14

Total Project Base Cost 77.4 62.8 189.6 66 100Physical Contingencies 4.0 8.4 7.4 54 6Price Contingencies 2.8 2.0 4.8 54 8

Total Project Cost 68.7 67.6 161.2 65 108- - m

N-, ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~gako f oa$It.tnmm~~~~~~~~~~~~~~los'o

is" 190 1991 19112 111113Total Is" 19 1"I m IM Ttal Fr.Exahd o Totals [md loW

INESTPENI cosis~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~lsi00

A. wimmi~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~- a.0us

E"IPENI 2~~198 2.890 19916 19920 6199 Tot33 99 3190 19921 13992 1993 Toa For. Ea33ch .Tazei faes Sot"Ms m~~~~~.5: :s:: IOss:: :5:::s9: :25: 2:s:: :5::::5:: ::5 5 2.5535 GM:35: :5:.:1 219::: 25:.19

GEOLOGY 2.103 2,156 2.102 2,2919 2.299 10.959 2.313 2.369 2.389 2.107 2,899 12.803 .1.041 6. 02 I. 2* 12.303

So-fatoal NuI8hII 3.4V 7.105 3,284 3.479 2.913 20. 193 3.771 7,871 3.110 4.09? 3.653 23.009 12.06 17.618 3.32? 23.009B, SuN JOSE

(OUIPIIENI 220 174A 239 50S 152 1,690 242 636 272 191 W8S 1.930 1. 49 - 431 1.920101S 705 616 136 144 - 1.641 7M 727 151 170 1.827 548 1.096s 183 1.821NA11L*15L 94. ,218 - 371 102 308 - 410 311 - 91 410STUDIES .4 200 - - - 200 - 202 -202 iII s0 WI26(01007 661 616 S80 185 609 3.051 727 683 619 689 743 3.101 1,400 1.710 350 3.50

Ssh-lotel SAN JOSE 1,679 2.323 95S 1.234 761 6.913 1.84? 2.151 1.086 1.453 928 7.869 3.913 2.897 1.019 7.86eC. P0090

EOUIPUENI 18 7 . . 115 .63 63 - . - 127 97 - 29 127CyNATERIALS 20 61 - elS 22 68 so8 69 - 2 1 a

GEOLOGY 341 2015 - 546 375 227 - 602 241 301 so 602 STUDIES - so so - 5 so5 so 38 13 so5

Sub-Tota P00P0 418 373 - - 791 460 409 . 6 444 314 too 88D. SANIA FE

EtUIPIIENT 174 31 209 192 39 -230 176 54 230NUsS a 8a Is 9 9 - . - Is S 2 la11TERMS1 lie Ila- - 1 130 130 39 I 130GEOLOGY 394 - - - 394 433 .-- - 433 173 21? 43 433

Soft-Total Suva 11 694 43 - - 13 763 48 all-81 414 227 130 sit

E. 011199 NETAL. PLANT

NAfTIBALs 19 s8 117 -234 59 19 121 - 239 164 9 4 239I

5thi-total 0O1URO RETAIL. PLANT 59 58 II? - 234 S9 59 121 - 239 184 5 4 239I"

loW* INVESININI COStS L.281 9.903 4.33? 4.714 3.673 28.9091 6.904 10.944 4.917 5,110 4.481 32.7?97 17.061 1 1. 055 4,680 32.7?97

total 6.281 9.903 4.337 4.714 3. 673 28.909 6.904 10.1144 4.911 1.510 4.481 32.797 17.061 1 1,055 4,680 32. 97zzzz =at; -52 55555? nz:5" 5fl-22 =55:32 *53fl. fl5.2 =5*5fl 232fls :32555t Z.:5?35::: 555:55: s::::::: :235::

frtse-y 10. 1989 18:S7

tosedem.of Ttatls loimo. Cons0155 I 00

We.1 Is- ctIiAdifag Coanto mumiss .................sall Cots. in $ (us$ loom1 to"aI

... ... .. ... .. ... ... .. ... . * . . . . . . . . . . . . . . . . . . . .. (Ec ld. uso 8*09 *9 9* *9 981111989 1990 199 I*9OM 99 totalOm 1o 1s l " T l Fo. (scSi. Taws) loans total

I. liUWSIUUT 8951

igmimust 1.038 701 920 77 14% 2.682 1.142 778 9.064b 90 177 3.234 2.491 738 3.234UTEEIALS 164 469 613 l*0 S42 - 72 f51 - IS 722619006? *20 9*4 1.0On 1.066 t. 012 4.147 143 1.0*3 1. 161. 5,211 235 4.8*1 1.924 2,405 481 4.8*11198115 so - So So * - SO 38 13 so

M1.h-ola SoM VICENIE *382 2. 106 1.941 I. 43 I. II? 7.132 I.SIS 2.333 2,211 I. 345 1.412 G.6*7 56.013 2.418 1.388 6.6*7s. tkvasi

189199011 603 -' 603 164 - 6 Sol AT 6646E9066? U8 *4% *93 S3 *65 2*3 Is *07 21 213

1198115 . 10~~.... .... 9... ..9......... ......... .... .... - -9

SM-Ioal1*1 *19S 70* 141 846 678 169 " 92 630 fie III 927C. CMoaoqu

E9819663 31 31 39 . - 39 so 9 3966*119161 2% I? l0t 27 6% 112 8 28 9*2619066 136 *35 272 ISO *1* - 00 *20 ISO 30 300 1168*15 too *0 lot - o*0 76 21 got0

Ssbilltal cIlStOS *96i 313 - 10 216 336 - 12 3*1 fig 85 152 a

0. MIN"6

619006 423 - 423 465 461 IN0 233 47 461 .

5190115 IGO I6O *6* 161 III 40 let

Stol-Total MIMS6 123 *60 % 13 461 161 - .2707 273 47 621

STUDIES *21 121 926 . 26 04 31 1 26

Sioll-otol Mull 121 In*% 12 6 12 I9 3 - 28

total 1198516601 COSTS 2.702 2.848 1.941 1.143 1.151 9.796 2.It' ,3.116 2.211 1.341 1.412 *1.049 E. 311 3.0*7 96.676 *1.049I5.&-: 222.. 5 :. '. 22- --.. II v... .f... .. 25.51 . . .58 ....fl t ...88 882228588 .88288 58822S ... 8588"2

total 2.702 2.8481 1.945 1.143 1. IS? 9.796 2.983 3.118 2.2*1 1.341 1.412 11.049 6,316 3.0*7 1. 616 *5.049582225 128285Ss82l -l.,2 --.. 281 5:. . ;:...A1:718 2582*388 28-2528- 2888585252-22 885.88

I 1eiryI. *989 isS 1

2'.~~~~~~~~~~~~~~~~~~

.22~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~t

Table S. LA Mt1 II ASU?MVntal led C a Table

0r.aI of total Inel. Conttt# '.oo

lotals Including Contngnl" -- . .-.....ease Costs in S 1USs 0001 tocal

................................. ......... .... ----- ..... -.--.-- lEscl. Dutios A1989 1990 1991 IM 1993 lotal 1989 1990 1291 tW2 13 Total for. Ec lenm teom Total

1. INUSI;E4T cosis........... .......... ..

A. COtlUIRI

EOUlPEU4T 1.2M9 1.743 - 3.033 1.418 1,932 3.350 2.572 - *78 3.350

MIE RIALS - 2. 124 2.124 2.353 2.353 1.313 540 2.353

610106 1 043 1.3e2 1.377 1. 349 1.349 6. 00 1. 147 1.532 1. 565 1,588 . 64b 1.478 2,991 3.739 748 7,478

STUDIES 27 * - 27 27 27 20 7 - 27

"MS 2. 132 91 2.223 2.349 l0t 2.449 734 1. 48 245 2.446

SAr-lol.l CO011191 4.464 9.36? 1.371 1.349 1.349 13.906 4.911 t ,945 1,955 1.,88 1.546 15.655 8.130 5.213 2,311 15,655

8. C*RA1OlS

EfoulpEwI * 461 . 461 91 Sll 393 * s11 Sll

MIERuItS - 236 - - - 236 262 262 202 * 60 252

M(0t= 459 659 628 62m 592 2.965 503 730 714 741 722 3,410 1.364 1.709 341 3,410

SlUDitS - 50 - - - 50 - SO * - S0 38 13 - SO

110RIS 47 142 - - - 189 92 IU? - 209 63 125 21 209

...... ...... .. ..... ... ...... ....... ...... ..... .... .... ...... I..... ..... ....... ...... ........ ....... .... .............................

S%6-lotal C61COtES 504 1.548 628 629 s92 3.901 994 1.711 714 741 722 4.442 2.0t 9 1,843 S39 4.442

C. 91t9c0

Itl£RatS * 215 - - 215 239 * - 239 184 SS 239

601015T 308 213 197 131 131 980 339 238 224 194 160 1.113 445 956 MII 1.113... . ......... ......

.. .... .. ... .. . . .. . ... .... ... ..... .. ..... ...... ....... .......... .......

Sib-total 931080 308 428 197 131 131 1, 19 339 475 724 PA 160 1.392 629 996 166 1.302 a

..... ~~~~~~~~~~~~~~~~~~~~~~~~. ............. ............................ ......... ....... ........... ... .. .. .... .. , .......

totol IUVSIHEII COSIS 5,276 7.343 2.202 2.109 2,072 19.003 5.804 0.130 2.503 2.483 2.528 21.448 10.819 7.6l; 3.016 21.448

::: $ :5:: :::: :::::: 5:::n :: ::::: K::.:: S:5:5:: 5:::; . . :: .:SSfl ttn:: n:::n:S:: *::z:: 822:2::: tS:S::;

total 5.276 7.343 2.202 2. 19 2.072 19,003 9.804 8.130 2,503 2.483 2.528 21.448 10,819 7.613 3.016 21.446

,,5, , , , ,s:: 2..:: 5:8t:: K,, , a:.: ....... .:: : . ,............; .... 2 :,aS. ...... a2:: ,,ls* cas.,. .. .. |.X...

fdfrwary to. 198911 18 s7

0I1

4P-

MatM

ctol led

Eroamloom of lotal$ lol. CantI US 0001

lots Is Inc luding echo I Sf m ... ....... ........Usia Cost In S bUSs c000ol Locl

....... ....... ....... ... . . .. .. . .. . . . . - - . .-. -* - -It l Duties a

1989 19 1991 1992 1993 tool 1989 1990 1991 1992 1993 Total for. Lxch ltagga tarn Total,aG::. a::.. Ia. ::, ,, 51:: CS2 . :, 8,:: .. . ' ., :. .: :,,t .: !::: t,:a:a&g: ;tfl-*Bt:sz- *-s8 :.:..:S 58* Sllt:

1. ImusImt costs................

EIU9lNIP I 314 1.042 72 609 49% 2.592 412 I. ISS 82 71t 603 2.969 2,307 - 662 2.960NAtIRISIS 84 650 416 . 1,152 92 721 475 1.288 .99S 293 1,288

EOllGT 1.055 938 1.045 975 651 4.664 1, Ibl 1,040 1.18 1.148 794 5.330 2.132 2,66b 533 5.330StIIDIIS lo1 25 135 110 25 13% 101 34 - 135"Ms 32 91 123 3% lot 136 41 82 14 135

Sati-lotal tIJFIIC* 1.655 2. 747 1. 35 1. SU 1, 146 S. b6 1.610 3. 041 1. 74b 1. 56 1, 398 9. 858 5.576 2.760 1,502 9.868

total IUMS1NUIf coIsS 1.666 2.74n 1.;36 1.584 1. 146 8 666 1.810 3.041 1. 74T 1.65 1,398 9.856 . 576 2.78e0 1.62 9.8i8,:: . ;:- --. L.. ; -- .. ........ : :-.- -:- -.... I.-I:: .. :.:. :.. .:.:.: ::....... : .:::%

totatl 1.565 2. 147 1,535 1.584 1.146 8.665 1.810 3.041 1,745 1.866 1.398 9.8568 5.56 2,780 1.602 9.858-S:::: ::.::S a-:.a :2: : :: - :::a -:-:: I : :::. .:- .. .. ::. Z.-:: s:::.: .-:-:. a.::::;t: 2:::-a :::: ::

~~~~...... ........ ............... ......... ........ ...... ....... .... .... ... .. .... .... ... .... .

lruat' t10. 198Y 18 b7

%01

Table S. ~U W0

Breakdown of total mnel. CantmuS 0031

108,Including Conti : is ...................

Bass Costs lot $ is. 10001 tocal

1969 1990 1291 1992 1993 fatal 19M 1990 1991 1992 1993 lot.t For'. litch. tazelttes lse Total

I. IUiSIEUI Eosis

A. w1OQuMflfl

I1801N1 - 394 M 9 393 393 303 90 393

miTtuiAts 13 40 93 14 49 so9 45 14 99

Sub-total lt188qmiUs 13 39 406 14 437 - 492 348 104 4912

S. 00161640

IWIpUSU 9 330 12479S66 603 10 369 140 69 80 669 531 194 66n

milikiAts ~~Is 49 . fiat It so Go 92 is so

010t03 113 113 190- 190 76 99 i 19100

VM9S 9 9711 M 213 S log6126 - 239 72 143 24 239

Se-total PUIACMO 203 472 239 79 66 1.051 223 923 267 69 60 I. 162 131 232 212 I. 162

C. BIG Vonl

EOOiUUiU 426 424 - 62 471 470 - - 941 722 - 219 941

NMS 20 610 613 22 M7 699 210 940 90 699

Seji-lotel RIO TIM 631 1.03 - .66S 694 1.145 - -1.641 092 940 309 1.641

0. or=1 IND. PLUl

EWIlpnhU 2? 64494 206 30 94 107 231 Its 92 231 .

WAtERItAS 10 31 .42 12 39 46 35 - I 46

Sub-tatal 03111 119. 91891 36 1 6 94 - 24? 42 126 107 277 214 63 277

E. 6699669

5199)15 s0 - 30 30 30 23 6 30

Sub-Total OCONOO - 30 - 30 0- 30 23 6a 30

F. 697*11

SIUoU.1 100 230 - 330 tOO 232 - 332 249 63 S"33

Skib-fot.t 1*1691 100 230 - 330 tOO 232 332 249 63 - 3

StUlIES 49 49 49 45 34 11 49

Smb-tot.0l 3*EUOSE - 49 49 45 - - 934 it - 49

£OuipoEIF 20 29 967 321 332 - - 699 910 I"6 699

Sib-Total t91l989. PROTECTION 29 29 67 321 332 699 910 149 699

Total IUVISIfEUI COSTS 695 2.616 621 1S 66 4.363 1. 073 2.6SU 109 so s 4,6$1? 3.099 860 637 4.6SIT

total 989 2.616 621 I9 66 4.363 1.013 2.6619 705' 62 60 4.61? 3.099 n60 631 4.611

lbtv'10. 198 la: 9?

MI= 0111111 mmmain.ITAT in.mrlede. in wmb met

(usll IOmlotels lnc*iuIm'tg Conitifgoacles ....... I..........

btes Costs in S fuss$ '00* tote I

Ha8 19g9 1901 *992 *993 loWa 1989 199 199*1 1992 1993 total for. lack~ temeI Tu.s 1.ot.... .lns S.,S. 81. 338 8..s. . . 8.. 81181888S. 888.8&88 .1888 ....... 83888

PMaS A1 410 -00 104- - 10so0b w 20 300 10Pon 56 .n 1.0 000 200 ON 1000 *.000 2.000 60 *.000 200 L.000

lab-total 98919*1 1181t11011 M 1. 4W *.000 2'" s0o1 I 410 I. 000 2,100 *.000 1.200 200 2. S"S. SKCuIIC EVtiwawrOuS

STUDIES 10 10*01 s0 10s1 21 *008XPtO*IOU - BONO 3,200 4.000 a"0 3,200 4.000 1. G" 2.000 400 4.0001

Sti-Total PUL*CA19 so 690 J.200 4.100 so 010 3.900 4.100 1.6GIs 2.021 400 4.1002. 11 ASIENTO

STUDIES 29 2I to1 A1 29 t0 38 13 10£391091 IS No0 so0 000 00 s 00 - 1. 000P 400 10 100 1.000

kb-ogl t 5191 29 12 N00 1.01o A9 129 %00 1. 09 438 si too 1.010S. C169 RICO 90*95*

STUlIES 10 o1 *00 10 10 too is 21 . 00EZdtOMIIU - 1.o .0003 4.000 * 000 39000 4,000 1.000 2.00 400 4.000

Sib-lolal 19M RICO9Pot0si SO 1.0no 3.000 4.*00 s0 *. 090 3.000 4*100 1. 671 2.021 400 4,1004. SO tOUiO 011 1*0

kb6-Total SPICIFIC &W*tuhi*AIS *29 2.10 0.G,700 9.329 *29 2.10 1,tb700 9 329 3.844 4.518 900 9.321C. PM$* la00 400 400 .000 200 400 400 1.000 I'1o 210 *000

foist IUVESIEUI 10S11 371 4.310 G.10 too*2. 82 371 4.31 M .100 12.021 S $9.4 L6.12I 1.100 12,682188.8..... .. ..... .. w 5 .. .f'la8 64-ce..8 -. 8S8L

I.t.t31 .1 8.100 *2.67% 371 4."110 . *00 *2.62 S",1 14 6.131 1.100 *2.62n

... 8.81.*~~~~~ ~~ ~~~...... .. 88 ................... ..

10.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~0

r4

tir t lotelt lfel. o0.6611.4 ~ ~ ~ ~ ~ ~ ~~~~11 ba Tbl

6ioahltn ef Ircle Om Ca--foist Including ...... ..-- e.............................ees

, :, .............. s:............. . ,:..... ..... ......... Out

1989 1290 1991 19912 1993 total 198 19910 19911 199 1993 total Toe. SudIl 14480 Tave Total................ n .5.. *5x. . a..: 5sss sasS.: t.S...:......:.. ..... .

a. Sugsaur costs

............

IUAlIUI No w 120 240 240 120 720 121 248 2%7? 133 7SS 7

lmisiwlt Is O0m1,1 104 288 432 120 280 1.424 104 290 446 343 311 1.494 . I.10 33 1.- 4

Sub'talal 1881316 lOt 408 672 560 400 2.144 104 411 694 899 444 2.252 1. 879 373 2.22

a. Us1zi1tt SIKUSIUZUSG................... .................... ,,_ ... .

1. IWtUiCl ISSISIICI........... .......... ... ..

1l01-lSI6 USO15stNil * 1.141 1.341 2.62 - 1. 351 1 38 2.?37 2.483 274 * 2.737

SU0-lt9 I WcSSItiImiS - 2M0 210 s00 292 275 110 4 St - 1S0.. ................... ..... ....... . . ... ...... .... ... .. ....... .............. ......... ... ........ . .... .... ....

-Total t ICNIU tI 8SSISIU - 1.191 1. 9t 3,182 1.603 1.644 3.24? 2.922 321 * 3.24?

2. S8991(UliS 214 426 428 1.010 214 431 442 1.067 - 1.081 - S.al.... ... .... ...... ......... ... .. .. .. ...... .. ..... ....... ............. ........ . ........ ......... ....

Si-iotal 11*I0I*It SinSWWlUlIN 214 2.019 2.019 4.257 214 2,034 2.066 * 4.334 2.22 1.412 4.334.. u SSSCfl .assIS .85. .. 55 .8 ... l . . ... .. fl .. *t 5. ...... .......... 8...... ........ ........

total INKStNial COSIS 318 2.427 2.691 560 400 6.396 318 2441 2.4 t 1 19S 444 6187 4.601 1.186 - 6.8

fitS :25*5. f*S:* :stsx. . :. ... l- : 558 85 ::: . 2s52t -t1B etas .$s&$S .ltStsS8 .t5:f -seSft. 55.....

................................................ ........... ....... ......... ....... ......... _................................................ . . . ..................................................

Sasury IS. 19689 18. I?

IoIemt

TleS. NDIDQ SEO iNoma beNor,

9i.rakdoaui of total, ltmcl Can~t(US$ I0001

lotals Including Conti ugu ous -----------------Ross Costs in I IUs$ '@00) Coco,

195'i 1990 1991 1992 1993 lbtd l1489 1990 1091 IM9 199 lotal lot,. Itch lose,) loses latal

I. lUVlStEINI costs

A. 11115519 of MINING AND0 NlTt*t&RGT

1. LOWtPNIICI

COMPUTERS 236 6 6 6 6 26) 259 7 I a a 2819 221 68 826Of111: (ouIpNiMI 65 . . . 72 . 2 93 I? 72

Siwb-lots) IQUIPIIII 301 6 1 6 6 327 jil I 7 a a 361 216 68 1812.lBPAIUING 28 28 28 281 20 :20 28 28 26 27 22 128 100 28 128J. IPtRIlS 110 360 360 280 240 1.98 710?I 363 37? 300 266 2.011 1,610 20) 2.011

SubIbttal NIINISIR? Of NIulIrG ASO NttAIUsRGn 1.036 39) 391 III 268 2.397 lOb6 395 408 334 296 2.496 2.155 228 88 2.495o. 1:80*511*1 SIBvicIs

I. IOUIPIENI

SURVIV ING fOlIfl'WI 'IIt? 462 71 it 28 1.1,14 1.0ONO 446 as8 90 93 1.796 1. 381 616 I1.796711111:118 628 128 2b ?b 2% b17 4641 1104 29 30 3)1 7% 876 fib IS2011)11 208 206 230 230 Ml - 83 230

Sib-total IQjIpIICN1 1.407 768 103 10? 101 2.499 1. MO8670 III 120 123 2.779 2, 136 - 643 2,779I-2. hRINIING 43

TRAINING *8UO* - 90 88 - 78 93 91 164 164 1543FRA11MIG IN SOLIVIA 40 40 40 40 40 200 40 60 41 43 44 209 . 209 209

Sib total TRAINING 40 40 130 128 40 378 40 40 134 134 44 303 894 209 3933 &RP?RIS

FM IGN EXPEIRS 440 300 300 Igo Igo 1.400 440 302 310 193 20 1.449 1. "a 144 1.448LOc*CAI p&Rls 20 20 20 20 20 199 20 20 21 21 22 104 - 04 104

Sib-total EXPERIS 460 320 320 200 200 1. 800 460 322 331 2)4 22 1. 840 1. 300 249 1.8494 PSGS*NS COSTS 7S0 780 8,00 SOO 800 3.000 780 786 sit 838 888 3,112 -2.601 311 3.1128 SUPPIIN IlIs 82 b2 82 82 1111 l08 4? 6 64 SI) 64 3)9 its 319

Sibp ftal. C*0*Sl60 81171C1S 2.719 I, 987 I. ll " ay"9 8 11 . (Ono 2.8so 2.08) I. 163 1.070 I. 008 LISP8 3.520 3.586 984 S. II2

~~:: ..:::. . ... 2~~~~ . 332 . 33=~. ..lR ..... .... : .n:.. 3 S 33

fatal 3.M8 2.349 1.8508 1. 300 5. 166 10.075 3. 925 2. 446 1.568 1,404 1. 304 10. 648 8 808 3,804 I. 039 10.548

tebrnery 10. 1969 18: SIP?

h-a

~~~~~m - m w ~ ~~~~~~a"dm fltasIesCn

6111 0010D

ease cosls VN~ S fuss5 l0c0) oca I

1989 6990 99 199 2 I 193 T01*1 1989 1990 1991 199 1993 total for. Emich. haloe Im late, lo.lint - Cs ... .... ... ; .fs t: ..tS8StS *1;::p .3*.z... ..... .a:, t

I. IWVES?N8Ul 6951$

*. INUISISUCIIIM

I. coIEIc*1 1*80981911 200 200 400 220 222 442 309 07 75 4422 OEOPIIISICAI UIIISHP %(l %o 00 fit 46 9 53. OJFIlCA OINS 191 LOUIPI6(1 so 00 00 - 0 46 9 Ss4. VIIEiciZs no SPIRES 209 63 13 13 13 261 230 14 Is Is is 290 222 - ? 29

sul-lotolI lURf&SIRICIURt bOO 213 13 13 13 101 560 236 lb is IS 842 623 01 161 8426. SPICIFIC PIOJEICS

0691066CMk 011P SNIEEIS 380 255 255 200 ?25 1.400 380 207 263 213 283 1.456 116 1.340 1.455VIE6I1L&S. PAP StEIE P89OJECI 325 - 320 360 - - 360 2fl 83 390061**1 am0s 30 30 30 30 200 80 30 31 32 33 201 62 145 20?INEUIIAIC NAPS 200 is is 16 70 000 700 16 7? s0 83 Si? 12 444 so?PKCIO01S 8(1*65. LPIINI8NI OEP0SJIS laOso so go 0s 60 000 a@0 SI 83 86 89 St8 114 004 S1801961 P86(1011 alai1 OlPOSlis 2)4 634 134 114 134 7%10 764 635 638 143 649 180 III 683 180oP11611 6060o otpaslis 190 140 640 140 140 no0 190 141 640 608 605 318 88 690 ?18IMPIECJIAU $111110 t90 140 140 140 140 no0 190 146 145 ISO M5 78) 28 492 ?181S51618l(icD/l1IC 244 164 16* 164 664 900 244 660 169 116 182 936 122 8)4 936

M-tIotal SKICIFIC PlOJECIS 1. 618 6.343 6,018 6.066 6.068 6.075 618 TI 1.385 6.052 1.090 1. 129 6.334 1,250 4.M9 63 6.334C. floHIulAi ISSISFIAC( 1. 620 $.620 6. 4)0 60 8 )0 6,10 6.2 620 G 1.632 1. 40 86? 89 6.414 0.82? 84?1 6.414 0. 1*60116G 50 00 t0 - 60 - s0 52 54 - 15 124 36 106 U'E. SIIPIENINIS10 110 I 110 6)0 620 060 lie III 114 it8 133 M85 M8 u80 P-

total INVES18EN1 CBSI 3. 91? 3. 335 2. 601 2. 001 1. 966 13.615 3.988 3.415 2.689 2.143 2.116 14.291 7.829 6.311 244 14.391loW, 3.91? 3.33 2.606 2. 00 6,9561 13.81 Bi .C968 3.415 2.689 2. 643 2. 115 14. 391 7.829 6.36? 244 164. 91

Fana.ry 60, 1969 IS 0?T

'ato

4

wlc~~~~~~~~~~~l It* sge** I"le t MIce ttl It 010-6 OOC't OKOCalo 0001> 0eo** ooo1 ooo11 NS oowloa22 :V-98 *w .Sl" 9t= usts l,Rs: for.tS. ;.2:gs ::::Tt ::'S2: STV-- S:3-22 ::::tfX -w:20 :Trsxa .1:W:= CS t .. .so ...

lBK'49 - 1tip 11911 l, I-lC 9to'# C9C'4 cc$ t MIO' oec- oococ 'QC 0 ' oeo-0 "O ooo 0 I ooc It sism INTAISIN l eot..... ... ........ ......... ...... ...... ........ ..... -..... ...... . . .. .. .... ...... ....... ..... ... ...... ........ ..... ..... ..... ... ....... ....... ...

In'*& - scl &994 199oc gto,I agt S£t [l 001 O O-* lip00-t 0 oeo-oc ooo1 o - e o-*o t oe It llo111111 l =11oec - O t OCt eoc * ooc ooc "S -IRN I3 *ao s e i m 'e v

SISW3 IIIIIISIDI 'I

" f" l x I.... ... . ... :. ... t -:.. se. ,:...................:- .... ::s - ,............................e:g:::............... awe

"lm 4000. $Sol S s *814*0 061.................................. seizvolliw Ouspnl3ul slotel

leo. ISM:03 aul 010o0 e0 _OO"OJ

40u ;l I;

AUM OW NDW '01 elqqL ~ ~ ~ 8 0 661.0 AIuqb

:5u5:s rsut: eg.. .:es,c lh ,s ,n. s::, 2s4:tt,t 52?? .- ?i ftE ,.atis,*32

Table U.mm m.3. am ma iin me

Sraakdi, of Totals lmel. tnt(us$ I ooi

totals tnr Iudtag conlt4 6 ls ...................Base Costs in S loss l o0w0 to I -

........... ................. ....... ...... ............. ........ .... - * - -- Esitel. Olwtie AI989 191 199t 1ts2 m 993 total 1989 199 1991 1992 1913 total f6o. E(xie lamn s tns lotoa

ann:aa at...St.. c;; ;St. ::5:S::: .. S:S:.. X.:: SCS :;:$ :::: :t:::S ::: sU;tSS Sc.. tu#S.. SU..d.

1. I985s101 COSTS................

l15tl6 EVI. lost - EoU........................ ....................

i"ePVA I lOS 26 131 11b 79 144 1O 34 144... ............................. ......... ....... ..... ..... .... ........ .. .... .... .... .... . ....... ........ ............. ....... .......... ......

Sub-lotal 1til010t KV. INST. - IIi lOS 25 131 its 29 144 ItO 34 I"a MINING msasu nmiite - cim

.............. ................. .......

1. 643ItilltS UUG8IUG 435 430 - 86 479 477 955 let 5t3 to# 62. tlUIsas ISOffICE too. 20 10 10 - 40 22 11 I - 44 I1 9 S 44. ISUICIES so SP3hES 117 b 6 6 6 163 t5t I 7 S a 16t 1S - 42 181

4. finaRS 430 300 300 2 0 20 1.430 430 302 310 214 222 1.48 1.30 148 - 1.418S ltUSiOUG 9 9 44 44 9 toS 9 9 45 47 tO 121 S9 24 - o2f& sUPissis 9 e0 90 90900o 40 9 911 93 98o 470 - 470 - 4101. SPttltit 9GRuf

.................

CASSIEOXIE ( lEl tte so 90 90 se0 450 90 91 93 96 600 470 - 470 470IIUSIIW SIENK emal 70o to T1 10 - 28 to To721i 28 8 280 2Ui0l0 mcmOWe-ISUlOS 2 132 13 2 132In 132 60 132 133 13b 141 146 -89 689 -due9 0e161-ilwiaL 90 so 90 90 450 90 99 396 0 loe 410 - 4 - 470IuItSJC EII U so e - - 6 -0 - - - 60 - 60 - oOttO USEUICN 20 2020 20 20 too 20 2 1 21 22 1t4 104 104

..... .... .... ..... ... ...... ... . ................... . ...... ..... _................................................ ...................... ....

S-lots# SfCIJIC P0ROWL" 452 402 402 402 332 2.000 462 405 415 420 38 2 D8l 2.086 - 2.01 et

Si-letel Slsit INS"A=U CErtE1 - CIO .5 6.247 C52 742 637 .06 1.t643 1.302 02 9 701 5.330 1.788 3.i01 246 S.330.... .. ....... .... ...... .... .... .... .... . .... ...... . ... .... ... ... ... .... ...... ........ ..... ...... ... ._......... ...... ... ...

leatl IUISlEUi COSTS 1. 8 1.273 82 142 637 s 1.94 1.158 1.331 882 7 707 L.414 6. 8 3.306 215 5.414.Sc;3; .5:;; 585;a. . :; - sA Z.- ; .. .S .. ... 4z- S.-. St; .S:3 aetna *SS 46 84 S S. S

Iotal .888 6.273 1652 142 53 b. 194 1. 78 t 331 882 RS 707 5.474 1.891 s Sol 275 S.414

. . c:. :5.: ;;.; a.. . . ... .. ... S **.4: .... l S .. .......t. ..... ...... ...... . .t... ...

lebrusav 60. '9989 8 .57

t°L!

a CCMM erlot

* bIk 7.0 4104 001 1 1.0*

10s*l lnr.e*g tota0l 1*t ore0lgn jo.la I lchWp Costs

1. ISVs[imlU COStS

a. tf0P6ltl 14.938 45.161 6,. s 224 1 a6l, 29.040 1S ISt. ITERIAIS MJ SID A PARIS 3.614 I2. 30 15.919 1.b31 S. 17 6965 77 s

C. 0iUs 9. 446 0. ON2 In. 28 33.102 0?20.S6 53. 90 39 39e. coOSmSOLUis 4.016 31.9I 297.0? 1. 613 13. 1S9 14.832 69 itI s5le01s 0.006 .010 4.029 409 1.96 10.6?? S II. tCII0 14.400 33.640 48.00 t.e00 14.000 20.000 70 046. SftCO IC POGSS 24.092 2.308 26.400 0.039 962 I,t000 9 6* CASIs. siniIa #ASS IID II Ion 2.119 71.20 0.370 663 3.020 3,904 7? I1. SItU? SuPiPUilS S .?6 * .2A 2.38b6 * 2.366 2

lots) USEllff COSIS 149.416 M69.306 134.123 62.291 17.211 039.408 ss 000htysmoI Conisnpmees 6.0137 9.607 17.144 3.390 4.003 7.39* 54 s

Prie- C ichsee . 4.74 59.606 00.390 1,977 2.136 4.313 S4 1

botal uooCI CoDSS 162.799 200.909 s307.66 67.62795 .%49 ISI. 014 ss Ito

~~~~~~~~~~~~..... ... .. .. . : .. . ..... . ...... . .... ... ..... .

*.bruarp 6. O96 20: 24

It0

- 158 - ANNEX 4-2Page 13 of 14

6ot IVIA8INING SECTOR REHaBILIAIAION PROJECt

PROJECT COSI SUNNARY

IIOLIVIANO '0001 (USS '000I s total......................... -. ---------...... I Foreign Base

tocal foreign total tocal foreign lotal Exchange Costs

A C£081B01

I ORURO

NiUANUNI 23,033 25.431 48.463 9.597 10.596 20. 193 52 14SAlU JOSt 8.383 8.303 16. 687 3,493 3.460 6.953 so 5POOPO 925 974 1.899 385 406 79t St ISA1A FE 779 990 1.769 325 412 737 56 I0RUR0 NElALt. PLANT1 128 434 563 53 l8e 234 77 0

Sub-lotal OJRO 33.248 36. 132 69. 380 13. 853 *s. 055 28. 909 52 212 QUE1CISt1.

SAIN VICENTl 7.944 10.614 18.588 3.310 4.422 7.732 57 6lATasI 650 1. 382.. 2.031 271 576 846 68 1CHOROLQUE 528 693 1.221 220 289 509 57 0aNI8AS 7os 694 1. 399 294 289 583 so 0I ASA 75 225 300 31 94 125 r 0

I ~~~~~~~~~~~~~~~~~~~~~. ....... . ....... ........ -- - - -- - - -- -- - -- - - - -- - -

Sub-lotal QUECNJSLA 9.902 13.607 23,510 4.126 5.670 9.796 . 58 73. LA PAZ

CoGUWIeI 15.972 17.403 33.375 6.655 7.251 13.906 52 10CARACOLES 5.001 4.36t 9.362 2.084 1.811 3.901 4? 3ItOCO 1. 530 1. 339 2.869 637 558 1. 195 47

5tb-lotal LA PAZ 22.503 23. 103 45.606 9,376 9.626 19.003 51 144. PIIOSI

UNIFICAOA 9.023 11.776 20.799 3.760 4.907 8.666 5? 6

Sth-lotal POTOSI 9.023 11.776 20.799 3.1760 4.90? 8.666 57 6s. COIPORATE OfFICE

NEAOouARTERS 225 154 978 94 314 408 77 0RIO TURA 1.842 2. 55 3.997 768 898 1.665 54 1PULACAYO 966 1.555 2.521 403 648 1.051 62 1OR0URO INO PLANT 135 458 594 56 191 247 77 0C0I0CORO 18 54 72 8 23 30 75 0CATAVI 198 594 792 .- 83 248 330 75 0O1RURO WAREHOUSE 27 8l 108 II 34 45 75 0ENVIRONNtEUTAL cONTROL 319 1.090 1.408 133 454 587 77 0

Sth-lotal CORPORATE OFFICE 3.730 6.741 10.471 1.554 2.809 4.363 64 36. JOINT VEN1URE PRO1T110N 17.355 13.425 30.780 7.231 5.594 12.825 44 97. cONISOL TRAINING 854 4.291 5.146 356 1.1788 2.144 83 28. COIIIBOL ORGANIZATIONAL STREUGTHENING 3.332 6.873 10.2Q5 l.388 2.664 4.252 67 3

-- - - - - - - - - - - - - - - - - - - - - - - - ... . .. ... -- - -

Sub-Total COMISOL 99.948 115.949 215.897 41.645 48.312 89.957 54 65S. INStIlUTIOIIS

t. KIlISTRI 710 5.042 5.752 296 2. 101 2,397 U8 22. GEOBO0

STRUCTURAI INPROVENENT 3.395 15.182 18.578 1.415 6.326 7.741 82 aSPECIFIC PROGUIUS 12.092 2.308 14.400 5.039 962 6.000 16 4

--- -- --- --- --- - - -- - - - - - - --- --------- - -- - - -- -

S'ub-Total GEOD3t 15.488 17.490 32.916 6.453 7.288 13.741 53 to3. ION AND CIlI

ION 74 240 314 31 100 131 77 ?ChUM - STRUCT. IIIPROVEENTI 3.259 4.092 7.351 1.358 1.705 3.063 56 2CINN - SPECIFIC PROGRAMS 4,800 - 4.800 2.000 - 2.000 - 1

Sub-total ION AND Celm 6.133 4.332 12.465 3.389 1.805 5.194 35 44. IMININ 360 840 1.200 150 350 soo 70 as. CA4I0TRAt SERVICE 10.379 8.0o2 t &431 4.325 3.355 7.680 44 6

-------.. -- - - - - - - -.-- - .--- - - - - - - - - - . . .

Sah-lotal INSTITUTIONS M5.070 35.756 70.828 14.612 14.89" 29.511 so 21C. IIIIII CR7OI tillE 14.400 33.600 48.000 6.000 14.000 20.000 1o 14

total BASEtINE COSTS 149.418 185,306 334.723 62.257 77.211 139.468 55 100Physical Cant ingences 8. '37 9.607 ?. 744 3.390 4.003 7.393 54 , 5Price Contamngencts 4.745 5.606 10.350 1.97n 2.336 4.313 54 3

total PROJECt COSTS 162.29s 200.519 362.818 67.625 83.549 151.174 55 108Febru ary.9..z t6.Xta.s .. . s1a989 21:2412 txt

February 6. 1989 21: 24

- 159 - ANNME 4-2

Page 14 of 14

BOLIVIAINIIG SECTOR IEHA6Iall iIUo PRJeCt

Project ComonentIs by falls

toasIncl uding Cnfitpm ss flaotl In~cluin,g Cafit1l96flc 041811v1810 -000l WS$I 0001

1282 1990 1991 1992 1993 total 1989 1990 1991 1992 1993 total. I.I ... -I. s.s. I . .$.SSns.2 . .t .t .Ita,I at:: t:.:I . . . . . . . . .sSt.s.

IIUANUNI ~~~~~~~~~~9. 069 18.899 8.904 9.833 8. 2? 5S. 922 3. 77 7.8Th 3. 710 4.097 3. S63 23.009SAN JOSE 4.432 6.132 2.809 3.488 2,22? IL8*8 1. 84? 2.6S6 1.086 1.463 928 7*89PUP 1. 104 1180, - 2.084 460 408 - 8hhula of 1.832 114 - - - 1.946 783 48 all091100 161*11 PLANt 141 141 290 - 613 69 69 121 - 239

Sull.1.s 009t0 16.559 26.267 11.801 13. 321 10.766 18.712 6.9204 10.944 4.91? S.660 4.481 32.1"I2. OIIEOISLA

SAN VICENII 3.536 S. 600 6.306 3.229 3.389 21. 160 1.5 IS 2.333 2.211 1. 346 1.412 8.81?ItAtASI 1.840 386 - - 2.22S 18? 161 - 02?CIIIIoLuE 618 807 . - 1.339 218 338 S" - 66AIIII8A 1. it? 38? 1.504 466 161 6 1TAM1* 302 - * 128 126

Imb-total OUEOIIS1A 7.110 7.482 5.306 3.229 3.389 26.616 2.963 3. fig 2.211 1.34S 1.412 11.0493. IA PAZ

cotouIlRI 1.1.88 14. 268 3.156 3.812 3.9O0 37.572 4.911 5.945 1. SO 1. US 1.645 IL .ISSCACOMLES 1.331 4.106S 1. 113 1.778 1.733 10.660 664 1. 711 714 741 722 4.4421131060 813 1.140 63? 370 384 3.244 339 476S 224 164 160 1.362

S1b-ltotl LA PAZ 13. 930 12. S13 8.00? 6.960 6.015 51.476 6.804 A. 130 2.503 2.483 2.528 21.4484. POTOSI

*IFlCAOA 4.343 7.299 4.1IN 4. 41S 3.354 23.660 1.8610 3.041 1. 946 1.886 1.398 9,1868

S5*-Ttatl POTOSI 4.343 7.299 4. IU 4.476 3.354 23.680 1.810 3.041 1. 745 1.8966 1. 396 9.8S8S. CORPORATE OFFICE

NIEAOUAIRtERS 36 1.060 - 1.084 14 43? - -w

RIO TURA* 1. 6366 2.761 - 4.41? 694 1. 146 - - 1.841PULA861A 63 1.266 840 213 193 2.836 223 623 267 89 80 1.182ORURO0 IND. PLAN? 100 307 256 - . 66 42 128 t0? - - 277£0906030 73 . - 73 - 30 - - 3 sCAIAVI 240 666 . 96 t00 232 - 332ORURtO MAROUSE too0 log0 4S 4-EUVIIOIINEIAL £011301 ? 84 797 1. set 327 33? S"66

Sub-Total CORPORATE OFFICE 2.576 6. 866 1.693 213 193 11.5600 1.093 2.862 706, 89 80 4.8176 JOIST VENTURE P9010110 900 10.440 19.440 - - s0. 788 371 4.360, 8.100 - - 12.8967. £011601 IIaiMIUG 390 987 1.566 1.439 1.06M 6.405 104 411 694 S99 444 2.2628. £01901 ORGANIZATIONALt STIEKGTHEUI9* S14 4.88 6.007 - - 10.402 214 2.034 2.088 . 4.334

1*d-Total £0O1801 48.191 83.158 SS. 100 28.631 24.821 238. S12 19.246 34.898 22.982 11.232 10.342 99.3808.INSTITUTIONIS

I. pNISSTS? 2.669 946 912 802 Ill 6.992 1. 068 39 406 334 2M 2.4952. 61080

1SIITRUCML INPIOVNENT S. 497 4. B1t 3.928 2,6281 2.612 19.338 2. 290 2.029 1,83? 1.063 2.041 8. 06?SPECIFIC P90O981 4. 196 2.570 2.836 2.131 2.82 14.962 1.148 1.021 I. 098 I. 138 1.119 6.224

S9*-Tota 060801 9.892 1.441 6. 666 6.269 5.342 34.298 4.038 3.100 2.136 2. 191 2.226 14.291S. IN MD1 6101

Ion 276 69 - 346 I16 29 - 144elm1 - 5199£?. INPIVEIIEI 2.834 2.16S2 1.121 878 814 7.198 1.181 89? 461 36 339 t 2424elm1 - SPECIFIC 090O9*1 1.100 992 097 1.033 11814 1.994 462 406 416 430 368 2.081

S1b-Total 10810 £1C01 4.219 3.193 2.118 1. 909 1.6SU 13. 131 1.168 1.331 882 19 70? S.4144. WINI 1.200 - - - . 1.200 600 - oL. 648*118* SERIVICE 8.884 4.923 2.190 2.667 2.420 19.S684 2.880R 2.061 1.183 1.010 1.008 9.26*

Sub-Total INSTITUTI01S 24.534 IL SOS 12. 44S 10.63? 10.170 14.191 10.222 6.877 S. 186 4.390 4. 23 3 0.013C. MINING CREDIt LIVE 9.600 9. 672 9.919 10.276 20.846 60.114 4.000 4.030 4.123 4,282 4.436 20.881

Total PROJCT COSTS 80. 329 199. 932 17. 473 49. 450 46.638 382. 816 33. 469 45. 806 32. 280 20. 604 19. 016 151. 174

fabruary 6. I98 21:24

- 160 -

ANNEX 4-3

BOLIVIA

HINING SECTOR REHABILITATION PROJECT

Flow Chart of Project Funding

i ~COFINANCIERS|

SLAGOB MM

TA INVTR INST. STRENGTHENING

COMIBOL C Ll l ~~~~~~~CR SLA

TA

TA INV CENTRAL BANKTR . TA

GEOBOL | IDM4 BAMIN|TA! I _ I I ~~~~~FINANCIAL

iINTERMEDI,ARIES BAMIN

MEDIUM/SHALL HINESCOOPERATIVES

TA - Technical AssistanceINV - InvestmentTR - TrainingCR - CreditSLA - Subsidiary Loan Agreement

- 161 -

PlebureemetProcurembnt Items Est atte Gi Procuremnr I

Ecul.mmnt sour ult en A LID Souc r

A. CfMflJ

1. E-uinnt tor iD*raiin tin ntre1.-a irys a inh1a.Li.akI.W

Packsme

1 Locomotives 706 706 - - 706 - - -2. Dril l-s 1S6 1 - - 5I6 - - -. Pu 479 473 - - 479

4. Grners 408 4011 408S. Cyclon u s80 u1 - - 188 - - -6. winchec 866 860 - - 6do7. Filters and Separators 273 7 - - 27S. Flotation Celle 146 146 - - 148 - _9. Compreors W1 Sol - - d61 - - -10. Jigs 140 140 - - - 140 - -11. Shovels 476 476 - - - 476 - -12. Tables 0D0 60 - - - 08013. Trucks - - - - - - - -14. Spero Paer 847 847 - - - - 34715. Various Smaller Packages 170 170 - - - 170 - -18. Electr7:al Motors and a84 854 - - - 864

Electrical Equipmnt17. Equipmnt for Pulacayo 218 218 - - 219 -o1. Equip t for Oruro 149 149 - - 149

19. Equipnet for Rio Yura 612 612 - - 61220 . Environ Ia

Prote cton Equipnt 251-0-

Subtutal 6.I6 6.860 - - 4,001 2.220 847

2. Works and Studles

21 Iuanuni21 Mine Works 1.73S - 1,738 - 1 78921b. Resrv-i Development 4.778 - 4,M - 4778 22 Poog22* Reserv Development22(b) Studies - - - - - -23 San Vicente2(a). Rerve Development 1,208 - 1.208 - 1,20823(b). Studiec - -_ _24. Tatasi24a) * Resrve Developent24 b) Studi- t * _ _ _ _ _ _25. Chorolque

Studies - - - - - - - I26. Animas

Studies * - - - - - - -

27. TenuStudie - - - - - - - -

28. Colquiri28. 1 Rerve Developmnt 687 8 697 69728) .Min- Works 122 - 1 - 12 - - -22d c) Studies _ _ 29. Caracolr29(v) Rerve Develoment O98 - 9Ws - 9f29 (b )line Worvk s0v 2029 - 20929(c). Studies - - - - -- -

30. VilIococ Resrve Development 278 - 278 270

81. Service FaciltiesWorks 6S0 - Sao 60 -

32. Closd mineStudies 299 - - 299 - - - 29

3e. Joint Venture PromOtion84. Exploration Works 98,10 - 8.610 - 810 - -S8t Techntcal Aei staence 14 CO - L.o _ - _ La

Subtotal 16.111 - 14.812 1,299 14.612 - - 12"9

. Inatituttonal Strinathitnin

L ~~~~1. Efimf6. Vehicle 27 277 - - -

S7. Computer, Office. Field ___= __ _* - - _ -

[ ~ ~ ~~~~ ~~,10 1,188 - - - 27 - 908

2. Workj. Technical Assice and Training

80. Si) .8 ax3. Specific Project. 1.450 _1,48 - 1.456Ob. Trasining 47 _ - 47 _ _ _ 47

89 Ministryv of Mining - - _

89() Technical wmitne56- 6 640. WMN fCD14)

Training 47 - -47 -- 4741. bAIIN

Technical Assistnceand Training _ -

Subtotal 2,888 - 1,450 10.2 - - - 2,8

06A1N TOTAL 26,400 7,751 16.268 2,831 18.818 2,497 847 4,745

I~~~~~~~~ _ - - - -_ t

- 162 -

ANMn 4-5Page 1 of 1

BOLIVVIA

MINING SECTOR REMABILITATION PROJECT

Projected Disbursement Schedule for IDA Credit

Semester of Projected Cumulative CumulativeIDA FY Disbursement Disbursement 2

by Semester bl Semester-- (US$ million)---------

FY 90

I 2.0 2.0 6II 4.0 6.0 17

PT 91

I 4.0 10.0 29II 4.0 14.0 40

F. 92

I 5.0 19.0 54II 4.0 23.0 66

FY 93

I 3.0 26.0 74II 2.0 28.0 80

FY 94

I 3.0 31.0 89II 2.0 33.0 94

FY 95

I 2.0 35.0 100

- 163 - ANNEX 5-1Page 1 of 8

BOLIVIA


Metal Markets

1. The relative importance of different metals for Bolivia's exportrevenues has changed substantially over the last few years. The mostimportant trends have been the continuation of the secular decline of tinand the rapid rise of gold exports, as well as the resurgence of silver asa major export revenue earner. The principal reasons for this adjustmentprocess were analyzed in detail in Chapter I and can be summarized as theshrinking of COMIBOL to a small number of core mines, and the rapidreaction of both medium and small mines, as well as cooperatives, to the1985 crash of the tin market, the stabilization of the Bolivian economy,and the recovery of base metal markets. Nevertheless, on the basis ofrecent developments and projected trends, it can be safely assumed that forthe next few years the principal metal exports of Bolivia will consist oftin, zinc, silver and gold. The outlook for these commodities has beenreviewed in a recent Bank reportl the results of which are summarized inthe following paragraphs.

Tin

2. World tin consumption declined by an average of nearly 12 p.a.from 1970 through the mid 1980s, its level decreasing from about 220,000 in1970 tpy to 201,000 tpy in 1985. As a result of production quota under theinternational tin agreement and a buffer stock system tin prices were keptartificially high in real terms during this period and reached a peak ofmore than US$16/kg (in 1985 terms) in 1979. This led to the introductionof new technology and due to less intensive use of tin--a trend illustratedin the use of thinner tin coatings for tinplate. The substitution ofaluminum cans for steel (tinplate cans) in the beverage sector alsocontributed to the decline in tin consumption. Additional pressure ondemand resulted from the introduction of new packaging systems which haveeroded the traditional market for steel cans in the food processingindustry.

3. The collapse of the International Tin Council (ITC) in October1985 was marked by a precipitous price decline and, after decades ofmanaged markets and buffer stock activities, a general concern that theemerging comyetitive environment would result in highly volatile markets.After the initial price decline, there was increased uncertainty regardingfuture price trends. Some analysis expected continued declines through1986 while other observers anticipated generally constant prices forseveral years. In assessing short-term prospects, a major concern involvedthe length of time required to eliminate the inventory surplus (about oneyear's consumption) which had emerged when ITC buffer stock operationsceased. In addition, the existence of pre-collapse subsidies, royalties,

1/ Price Prospects for Major Primary Commodities; Report No. 614/88 ofNovember, 1988.

- 164 - ANNEX 5-1

Page 2 of 8

and export controls distorted operating costs and raised questionsconcerning the extent of likely cost reductions and their impact on long-term equilibrium prices.

4. Experience over the recent past indicates that the more direpredictions of late-1985 and early-1986 were exaggerated. Tin prices haveincreased modestly since early 1986, but prices have not been volatile--particularly when compared to the experience of other major metals such asaluminum, copper, lead, zinc, and nickel. Surplus stocks still remain, butthe large inventory overhang at the end of 1985 has been substantiallyreduced. Estimated stocks of tin metal amounted to about 37,000 tonnes atthe end of 1988, about 12,000 tonnes above normal commercial levels. Themuch lower prices have led to reduced tin production and, at leasttemporarily, appear to have reversed the dramatic decline in tinconsumption. Finally, adjusted production quotas, as agreed by theAssociation of Tin Producing Countries, (ATPC), appear to have supportedand stabilized prices.

5. World output of tin-in-concentrates has declined markedly since1985. The termination of the ITC's program and lower prices have led tothe cessation of smuggling which was a major source of tin during the earlyand mid-1980s. Tin output also has been constrained by the precipitousdecline of the Bolivian industry and only modest recent increases ofBrazilian production after several years of rapid expansion. Tin mineproduction, which reached a low point of 179,000 tonnes in 1987, hasincreased since then and is expected to reach about 193,000 tonnes by 1989as stocks are reduced to aormal commercial levels. The reduction in tinproduction and the increase in consumption experienced during the pastseveral years should eliminate the current tin surplus by 1990.Consequently, prices are expected to increase to USC925/kg in 1990(USC610/kg in 1985 constant dollars) and to reach USC1,700/kg in 2000(USc750/kg in 1985 constant dollars). Tin prices in real terms through the1990s will remain far below levels typical during the pre-ITC collapseperiod, largely due to cost containment and ample supplies. In the longerterm, material substitution in major markets such as tinplate and sclder isexpected to continue as real tin prices, gradually incritase through themid-1990s. Consequently, world tin consumption is expected to decrease0.92 p.a. during the 1987-2000 period from about 208,000 tpy to 185,000tpy. During the 1990s therefore, production should gradually decline,paralleling trends in consumption. Only Brazil is expected to increaseoutput during that period and by the year 2000 should account forapproximately 25Z of world production.

6. Following the price collapse in late 1985, world tin productiondeclined and has averaged approximately 180,000 tonnes during the 1986-87period. However, marked differences exist in the pattern of individualproducer responses. The three large, traditional producers of SoutheastAsia--Thailand, Malaysia, and Indonesia--together accounted for 76,000tonnes in 1985 and 71,000 tonnes in 1987. This rather small deceasereflects the fact that only Malaysian output contracted significantly whileIndonesian production increased. In contrast, high-cost Bolivianproduction declined from 27,000 tonnes in 1980 to only 8,000 tonnes in 1987(from about 121 to 42 of world production. Tin smuggling essentiallyceased with the elimination of export controls and the price decline of

- 165 - ANNEX 5-1

Page 3 of 8

late 1985. The rapid expansion of Brazilian production also slowed, thusminimizing the impact of marginal cutbacks in other countriesiregions.

7. The gradual increase in world production through 1990 will resultfrom output expansion in several countries. Indonesian output shouldincrease as relatively low-cost offshore dredging is emphasized. Chineseproduction also will increase to satisfy expanding domestic consumption.Bolivian mine output is expected to increase modestly in the short-run,reflecting the gains attained with the restructuring of COMIBOL. Brazilremaius a key factor in world supply. The continued exploitation of low-cost deposits in Amazonas State, the expected increase of world tin prices,recent announcements of additional tin reserves, and the resurgence ofsmall-scale tin operations, all indicate that Prazilian output shouldexpand to 39,000 tonnes in 1990 and 48,000 tonnes in 2000--at that timeBrazil is expected to account for slightly over one-fourth of world mineproduction.

8. In contrast to the situation in Brazil, over the long-term in mostother countries/regions output is expected to decline. Industrial countryoutput should be 10,000 tonnes in 2000--a decline of 3.11 p.a. for the1987-2000 period. Similarly, Bolivia and the traditional producers ofSoutheast Asia are likely to exhibit declines in both volume and marketshare thrcagh the 19909 as ore grades and reserves decline. For Bolivia,these developments imply that up to the mid-1990s, the markets for theproduction of COMIBOL's core mines, as well as the remaining private sectortin mines remain assured. In the second half of the 19909 it is likelythat further cuts in private sector tin capacity will be needed, and thatthe higher-cost tin centers among COMIBOL's core mines will need to beclosed. It is for this reason that despite an expected short-term recoveryof the tin market, its unfavorable long-term prospects would suggest forBolivia, and for COHIBOL, in particular, the active continuation of adiversification away from tin.

2. Zinc

9. World tin consumption during the 1961-86 period increased 2.6Zp.a., but demand slowed markedly in the 19709 due to lower economic growthand material substitution. The recession of 1981-82 exacerbated thedecline. However, zinc demand has increased steadily since 1983.

10. The performance of the world zinc industry during the mid- andlate-1980s--by most measures--has been reasonably good. As has been thecase with other metals such as aluminum and copper, demand has beenbuoyant. World consumption in 1986 (6.68 million tonnes) surpassed theprevious high attained in 1973. Prices soared to US$922/tonnes in 1984while the ensuing downward price correction in 1985 to US$783Itonnes wasrelatively moderate. Prices remained in the US$730-830/tonnes rangethrough 1987. However, the market became increasingly tight during theletter part of 1987. Zinc prices have risen dramatically during 1988,averaging US$1,058/tonnes for the first half of the year.

11. Recently the market has been typified by declining inventorieswhich are now at histort.cally low levels. The tight supply situation isthe result of several factors. The generally poor markets and excess

- 166 - ANNEX 5-1

Page 4 of 8.

capacity which typified much of the late 1970s and early 1980s curtailedInvestment spending; world smelting capacity stagnated during the 19809,and utilization rates increased. In addition, demand has been unexpectedlystrong, particularly in some developing countries. A third factor--unanticipated supply disruptions--has also contributed. Although strikesand technical difficulties have occurred with considerable frequency in thezinc industry, the magnitude of the supply disruptions during the pastseveral years has been particularly large.

12. After stagnating through most of the 1980s, expanded toapproximately 6.8 million tonnes in 1987, an increase of 750,000 tonnesover the estimated 1985 capacity. The increase reflected improved marketconditions and the subsequent reopening of a major mine as well as thestart-up of several new units. Although a number of new mines are expectedto open over the next several years total capacity is expected to belargely unchanged in 1990. Among those mines closed by mid-1988 orscheduled shortly for shutdown are Pine Point (Canada) and several Europeanmines. Capacity expected on-stream by 1990 will be concentrated in Canada(Winston Lake, Mines Selbaie, and Caribou), the United States (GreensCreek, Ward) and in Australia (Cadjebut, Lady Loretta).

13. The major uses of zinc will remain galvanizing, diecasts andalloys (brass). The prospects for the galvanizing and diecast markets aredetermined both by decreased tin intensity and by the introduction ofadditional applications, while the alloys market is generally expected tolose ground because of substitution with other materials (aluminum,plastics). The general outlook for zinc consumption through 2000 is thusmixed. Total consumption is expected to increase from its 6.8 mtpy levelin 1987 by 1.52 p.a. during the 1987-2000 period, which contrastspositively to the 0.9? p.a. rate exhibited during the 1970-86 period.Industrial country consumption is expected to increase modestly. Althoughexpanding galvanizing markets and renewed competitiveness of diecastsshould arrest the declines experienced previously--lZ p.a. durinb the1970 -86 period--several trends should restrict industrial countryconsumption growth to 0.6Z p.a. through 2000. Continued keen competitionshould lead to further reductions in zinc coating thickness and lighterdiecastings. Moreover, a major end use market for zinc--construction--isexpected to expand at only 0.5Z p.a. in the industrial economies through2000. In contrast, consumption in the developing countries is forecast toincrease by 3.2? p.a. during the 1987-2000 period.

14. During the 1987-2000 period, zinc mine capacity is expected toexpand by approximately 900,000 tonnes from 6.8 to 7.7 mtpy (about 1?p.a.). Industrial countries will continue to account for the majority ofcapacity, but their proportion should decline slightly from 60? in 1987 to56? in 2000. The continued expansion in industrial countries during the1990s is dominated by the anticipated opening of Alaska's Red Dog mine in1991 (314,000 tpy of zinc). The Red Dog deposit (17.1? zinc, 5? lead, and2.6 oz. silver/ton) also documents a recent trend toward high zinc contentand precious metal by-products.

15. Vhile a large proportion of the additions to capacity during theearly and mid-1980s consisted of mine expansions, greenfield projects willbe the preferred type of investment through the 19909. The new lead-zinc

- 167 - ANNEX 5-1

Page 5 of 8

mines planned for the next several years also are predominantly zinc.Recent exploration and development activity has emphasized zinc (and by-products such as silver) with minimal consideration to lead content. Thesetwo trends reflect the more sanguine outlook for zinc vis-a-vis lead andare illustrated particularly by investment activity in Australia andCanada.

16. World mine production is expected to increase 1.42 p.a. during the1987-2000 period. Regional production should parallel capacity trends.Output expansions will be concentrated in those countries/regions withrelatively low costs and substantial by-product credits. Japanese andEuropean output should decline during the period. The North Americanincrease is due to expected production from the Red Dog mine in Alaska.Australian mine output will also rise. In the developing countries, therelatively high silver values in both Peru and Mexico should encourageexpanded output. In general, industrial and developing country outputshould increase 0.6? and 2.52 p.a., respectively, during the 1987-2000period.

17. World zinc smelter capacity was 6.5 million tonnes In 1987--anincrease of only 150,000 tonnes since 1985. Expansions were limited todeveloping countries. High costs (particularly energy and labor) haveresulted in declining capacity in Japan and Europe. This trend in theindustrial countries is expected to continue and may accelerate if recentlyannounced mergers prompt additional rationalization. Consequently, the730,000 tonnes increase expected in zinc smelter capacity during the1987-2000 period (about 0.8? p.a.) will be the result of expansions indeveloping countries which will then account for 40? of smelter capacity inthe year 2000 compared to only 31? in 1987.

18. Zinc metal production is projected to increase 1.4? p.a. duringthe forecast period, in line with consumption, and with zinr mineproduction. Developing country output should increase 3.1? p.a. whileindustrial country production is expected to expand a modest 0.6? p.a. andis expected to be constrained by the contraction of smelting capacity inEurope and Japan. The more robust 3.1? p.a. expansion of developingcountry output reflects increasing zinc consumption and the desire of manydeveloping countries to increase the value-added of mining by expandingsmelting activities.

19. Exports of zinc ores/concentrates should increase 2.3? p.a. duringthe 1987-2000 period--somewhat faster than production. Decreasing mineoutput in Japan and Europe and the rise in metal production in developingcountries with limited mine output should account for the moderate rise inexports. Zinc metal exports through 2000 are expected to increase at thesame rate as output--l.4S p.a. Several contrasting trends are apparent.The main reasons, however, for modest growth, are that higher smeltercapacity in Asia will reduce metal import requirements, and stagnant demandin North America and Asia is expected to minimize import requirements inthese regions.

20. Zinc prices are expected to average US$1,100/tonnes in 1988, upfrom US$799/tonnes in 1987. The rapid price increase reflects decliningstocks and tight market conditions brought on by strong demand and supply

- 168 - ANNEX 5-1

Page 6 of 8

disruptions. It is estimated that production losses at zinc smeltersamounted to a combined total of over 270,000 tonnes in 1986187. Prices areexpected to moderate over the short term as demand slows and increasingoutput permits stocks to rise. By 1990, zinc prices are expected toaverage US$S895/tonnes. Prices are projected to average US$1,140 andUS$1,799/tonnes in 1995 and 2000, respectively, and should mirrorunderlying cost changes. Prices in real (constant 1985 dollars) terms willincrease from US$590/tonnes in 1990 to US$794/tonnes in 2000.

21. Bolivia has in the past been a producer of negligible importanceat the international level. Its share in world production is only about0.52 and even doubling its production would not make any difference ininternational markets. Given the reasonably favorable prospects fo- zinc,this appears a prime metal for diversification of Bolivian mining.However, because of the generally high cost of Andean mining, the viabilityof new deposits and expansions will depend not only on their tin grades(which have to be relatively high) but also on their by-products, mostlyleadjsilver and some gold.

3. Silver

22. Silver is a by-product or coproduct of other metals. Some two-thirds of silver reserves are contained in lead, zinc, and copper sulfides,while zAly about 252 originates from pure silver mines. Mine production isthe largest source of supply. It has accounted for nearly 70X of totalsupply over the past few years. Other sources of supply ares secondaryrecovery, coin melt, South Asian disboarding, and sales from Governmentstocks. Since 1976 world mine production has increased at an averageannual growth rate of 2.91. World mine production peaked in 1984, declinedslightly in 1985 and 1986, but recovered in 1987 when the silver pricerecovered. The major producing countries are Mexico (17.22), Peru (14.3Z),Canada (9.11), United States (7.91), Australia (7.52), and the USSR(11.91). Smaller producers are Chile, Japan, Spain, and South Africa.Bolivia's share in world silver production is about 1.32.

23. Though the USSR is one of the major silver producers, the USSR andother CPEs have been either almost nonactive in world trade or netimporters in the 1980s. In previous periods they had been net exporters.Judging from the incomplete data available it seems that their consumptionhas grown while their production has remained static. However, as oilprices were much higher prior to 1986, they may not have needed to producesilver for foreign exchange purposes. Moreover, it is unclear to whatextent they built up stocks during this period.

24. The composition of world silver consumption is as follows:photography (452), currently the dominant user of silve::; electronics,about 172; jewelry and silverware, 142. World concumption of silver hasincreased modestly since 1983, though the level of consumption issignificantly smaller than it was ten years ago. Reduced jewelry demandand more efficient use of silver in photegr.p4hy after the 1979-80 high-price period appear to be the main reasons for the reduction in consumptionsince 1977. The major users of silver arid the United States, the majorcountries in Europe (France, the Federal Repdiblic of Germany, the UnitedKingdom, and Italy), and Japan. The major EEC countries as a group have

- 169 - ANNEX 5-1

Page 7 of 8

experienced modest growth rates over the past five years, and their levelof consumption is still much lower than it was ten years ago; 5o, too, isthe consumption of the United States. Japan's consumption has maintainedits general upward trend and its consumption level in the mid-1980s washigher than ever.

25. The intensity of use of silver in industry will be subject tocontinuing technological innovation. In the industrial countries therewill continue to be a trend towards replacing electromechanical switchingsystems in telephone exchanges with electronic devices, more widespread useof miniaturization, new manufacturing processes, and improved contactlifetime. All these improvements in efficiency will have a negative impacton silver consumption. The jewelry and silverware industry has suffered ageneral decline in its consumption level as comoared to the levelexperienced ten years ago. The demand for costume jewelry, which is acheap substitute for silver jewelry, has increased (stainless steel, brass,and wood). Silver is at a disadvantage since it has an image of beingcheap relative to other precious metals such as gold and platinum and ittarnishes on exposure, but it is still considerably more expensive thansubstitutes. However, the current lower sil-er prices might encourageconsumers' interest in silver as jewelry.

26. Silver prices averaged US$6.60lounce in the first half of 1988.Sstrong economic trends generated substantial activity in silver, leadingto a better performance than gold over the summer months. The silver priceis expected to average US$6.65lounce in 1988. In 1989 the price of silversheald move up with relatively healthy demand and sustained inflationaryconcerns. By 1990 the fundamentals point to downwards pressure on theprice; industrial demand is expected to be weak and mining output isexpected to increase. Inflation should be moderating, and the gold priceshould be weakening. Therefore, prices are projected to decline in 1990and 1991 but begin to move upward again in 1992. Since the long-termsilver price cycles are similar to those for gold the rate of change aorsilver prices for the period 1992-2000 is assumed to resemble that forgold. The silver price is expected to increase in current terms fromUS$6.6/troy ounce in 1988 to US$9.70Itr^_y ounce in 2000 corresponding to adecrease of about 8t in real terms.

4. Gold

27. Gold production has been expanding rapidly in recent years,largely in response to the shift in relative metals prices in favor ofgold.2 Expansion and exploration activities continue, in particular inNorth America and Australia. South African production declined in 1987 dueto a combination of lower grades and the failure of the industry toincrease the volume of ores mined. The South African decline was more thanoffset by other major producers, in particular in the United States,Canada, Australia, and Brazil. Other smaller, but still important,producers are the Philippines, Paoua New Guinea, Colombia, Chile, andVenezuela. Bolivia's production, although growing fast, is negligible in

2/ The index of the ratio of gold prices to the average of the prices ofnonferrous base metals increased from around 100 in the 1981-84 periodto 112 in 1986 and 117 in 1987.

- 170 - ANNEX 5-1Page 8 of 8

the world context, amounting to only 0.2Z of western world total yearlyoutput. The USSR and China are major producers of gold, though theirsupplies fluctuate considerably. Other sources of gold supplies aresecondary supply and official transactions. Secondary supply fromrecycling has increased since 1981 as it is price sensitive. It is alsogoverned by a combination of changing economic circumstances which at timescan lead to distress selling. In the past few years supplies from thissource have been governed mostly by profit taking as prices have risen.

28. Demand for gold is made up of fabricated demand (jewelry,electronics, dentistry, and othsr industrial uses) and investment demand(officially issued coins, bullion, and medallions). Fabricated demand hasincreased in this decade, though it has declined in the past two years.Jewelry accounts for nearly 822 of total fabricated gold. Since the dropin jewelry consumption in 1979-80, when gold prices rose dramatically,jewelry demand has risen by 4.72 p.a. Jewelry sales are a function of netdisposable income. Even though a slower industrial growth rate is expectedin the short term, the demand for jewelry should increase--in particular inlight of lower gold prices in most of the currencies other than the USdollar.

29. The prospects for gold have been assessed on the basis of cyclesJnherent in the historical price series, the relationship between inflationrate and exchange rate movements and gold and silver prices, and expectedchanges in the supply and demand for the metals. The decline in goldprices in 1988 interrupt 1 an upward tend experienced since February 1985.Slower industrial growth in the industrial countries and increasedexploration and production activity as a result of the higher relativeprices for gold will have a dampening effect in 1989, which should becomemore dominant in 1990. With the dollar expected to appreciate in the early19909, price increases in the United States are expected to be relativelylow in the early 19909. The combination of these factors point to a lowergold price in 1990 and 1991 and a slow rebound in 1992. For the longerterm, gold prices should advance slowly from 1992 to 1995 with inflationcontinuing at a moderate pace. In the 1995-2000 period, with the value ofthe US dollar declining and the US inflation rate at a higher level, weshould see gold prices increasing at a faster pace. In real terms thiswould mean a 202 decrease between 1989 and 2000.

30. Bolivia's geology points to a substantial gold potential which hasremained largely under-exploited because of lack of exploration. Improvedrecovery of gold as by-product can help make polymetallic deposits, whichincreased exploration is likely to prove numerous gold prospects in thefuture. Although Bolivia is not expected to play a role in the gold marketit clearly has the potential to increase its market share throughdevelopment of small- and medium-scale competitive gold mines.

- 171 - ANNEX 5-2

Page 1 of 5

BOLIVIA


COMIBOL - Assums.ions for Financial Proiections andProJected Financial Statements

A. Revenues

1. The following sales volumes of tin, silver, lead and ziuc areprojecteds

COMIBOL - Metal Sales, 1989-93(tonnes)

1989 1990 1991 1992 1993

Tin 5,491 6,559 6,855 7,145 7,145Silver 111 120 89 91 91Lead 2,221 2,053 1,008 1,058 1,058zinc 16,731 23,585 18,676 19,644 19,644

Projections of metal sales during 1989 and 1990 take into account theaffect of the rehabilitation effort resulting in additional mine closuresand thus reduction in output of silver, lead and zinc. The salesprojections for 1991-93 are based upon full production of the remainingeiy,At mines. A full account of the outlook for tin, silver, lead and zincis given in the World Bank Report 814/88 Price Prospects for Major PrimaryCommodities, November 1988. The main feature of the metals market outlookis a steady strengthening of the tin market as surplus inventories arereduced and a supply/demand balance is reestablished - following the 1985tin market crash. Sales revenues are the result of the projected salesvolumes and the metal price forecast described below and taken from Report814/88. The metal prices used for the financial forecast are as follows:

Metal Price Forecast, 1989-93

Constant 1989-Terms 1989 1990 1991 1992 1993

Tin (US$/lb.) 3.63 4.14 4.20 4.27 4.34Silver (US$h:.) 7.2 6.8 6.7 6.6 6.6Lead (US$/lb.) 0.27 0.24 0.24 0.24 0.24Zinc (US$/lb.) 0.44 0.40 0.41 0.41 0.42

Current Terms

Tin (US$/lb.) 3.63 4.20 4.42 4.65 4.90Silver (US$/oz.) 7.2 6.9 7.0 7.2 7.5Lead (US$/lb.) 0.27 0.24 0.25 0.26 0.27Zinc (USS/lb.) 0.44 0.41 0.43 0.45 0.47

- 172 - ANNEX 5-2Page 2 of 5

B. operating Costs

2. Operating cost projections are based on COMIBOL's cost structureprevailing during the early 1980s and take into account he followingspecific assumptions: (i) COMIBOL's headquarters staff Vill be reducedfrom currently 1,160 to about 560 by 1991; (ii) wages and salaries,including health and education benefits, will remain unchanged in realterms during 1989-93; (iii) materials, electricity and fuel costs are alsounchanged in real terms; (iv) materials costs for mine development, vwhichare partly financed by the proposed project, are included in the operatingcosts; and (v) labor costs during 1989 and 1,- include dislocation costsfor the workers employed in mines to be closed or to be put up for jointventure. The estimated dislocation payment is US$4,000 per worker. Toeoperating costs of mines, concentrators and metallurgical plants which willremain with COMIBOL are not expected to experience operating costreductions due to further productivity improvements. Substantialproductivity gains were achieved during the recovery period of 1987-88. Animportant objective of the proposed project is to secure these recentproductivity improvements.

- 173 _ ANNEX 5-2

Page 3 of 5

BOLIVIA


COMIBOL - Financial Pro ections for Subsidiaries

1. Important financial indicators for COMIBOL's four subsid.aries,Oruro, La Paz, Quechisla and Potosi, are presented in the table below. Thelarge subsidiaries, Oruro and La Paz, which account for over 70S ofCOMIBOL's net sales revenues, are expected to have strong profit and cashflow performance. They account for 93Z of COMIBOL's net income and 86S ofinternal cash generation. The small subsidiaries, Quechisla and Potosi,would be in a much weaker financial position. In particular, the Quechislasubsidiary would face a period of low profitability and tight liquidityduring 1989 and 1990.

0,e'aIBOL Subsidiaries - Summary Financial Proiections, 1989-93(US$ million - current terms)

1989 1990 1991 1992 1993

OruroNet Sales Pevenues 33.4 37.0 34.3 35.9 37.7Net Income after Royalty 8.3 10.4 11.6 12.1 13.0Int. Cash Generation 9.8 12.2 13.2 13.8 14.8Capital Expenditures 6.0 9.3 5.3 5.2 4.4Net Income after Royalty/Net Sales 252 282 34Z 34Z 35Z

La PazNet Sales Revenues 15.4 22.6 23.8 25.0 26.4Net Income after Royalty 2.5 5.8 6.8 7.5 8.4Int. Cash Generation 3.5 7.1 8.1 8.9 9.8Capital Expenditures 5.5 5.4 3.3 2.5 2.6Net Income after Royalty/Net Sales 162 262 28Z 302 321

QuechislaNet Sales Revanues 11.7 9.7 7.4 7.5 7.8Net Income after Royalty 0.6 (-0.3) 1.2 1.1 1.2Int. Cash Generation 1.2 0.3 1.7 1.7 1.8Capital Expenditures 2.5 2.5 2.3 1.4 1.4Net Income after Royalty/Net Sales 5 (-32) 162 152 162

PotosiNot Sales Revenues 3.9 4.9 5.7 6.3 6.5Net Income after Royalty 0.2 1.1 1.8 2.2 2.4Int. Cash Generation 0.4 1.3 2.0 2.4 2.5Capital Expenditures 1.6 2.4 1.6 1.7 1.3Net Income after Royalty/Net Sales 62 222 322 362 372

- 174 - ANNEX 5-2Page 4 of 5

BOLIVIA


COUIBOL - Projocted Inco. Statement

(UWIOGO

1. Production 1989 1990 1991 1992 109

Tonnes of tin 6,491 8,659 6,566 7,146 7,145Tonnas of silver 111 120 89 91 01Tonns of load 2,221 2,058 1,008 1,050 1,0SaTonnes of zinc 16,781 28,585 18,676 19,644 19,644

2. Net Solos Revenues 60,019 72,681 72,779 79,393 08,981

B. Operating Coat

Labor 16,643 16,908 14,465 16,041 16,661materials 18,789 14,407 18,492 14,041 14,629Electricity 5,289 6,388 5,020 5,207 5,406Fuel 1,688 1,576 1,545 1,602 1,658Overhed 8,864 8,720 5,589 5,605 4,691Otber coats 10,771 9,616 5,547 5,72t 6,220Depreciation 8,762 4,208 3,908 4,146 4,876

Total Operating Costs 60,106 67,808 49,618 61,261,647

4. Oporntlns Inco (87) 14,678 23,269 28,128 82,184

Minus: Financial Chares 1,122 3,047 8,908 4,289 4,687

S. Nt Income Beore Taxes (1,208) 11,981 19,860 28,840 27,640

Minus: Royalties 2,721 8,668 8,688 8,974 4,180

6. Net Income After Taxes (8,929) 8,278 16,728 19,865 28,87

7. Profitability

Operating Incomeo Net Sales ox 20X 82X 85X 8an

Net Income b.T.: Net Sales -7S its 22X 26X 28%

- 175 - ANNEX 5-2Page 5 of 5

BOLIVIA


COMIBOL - ProJected Funds Flow StatementQW11'000)

1. Sources

Internal Sources

1989 1990 1991 1992 1998

Net Incoa after taxes (8,929) 6,278 16,728 19,665 28,867Add: Financial charg 1,122 8,047 8,903 4,289 4,587

Depreciation 8,762 4,208 8,906 4,146 4,876Other non-cash It es 7,166 S,445 8,764 8,675 8,005

Total Internal Sources 9,120 20,969 27,292 81,975 85,884

External Sources

Long-Term DebtRIC IIDA CreditKfW 12,592 22,970 6,819 8,774 2,568IDB Other Cot inancing

Total Long-Term Debt 12,692 22,970 6,819 8,774 2,656

Short-Term DebtIncrease In Accounts Payable 0 0 0 0 0Other short-term debt 0 0 0 0 0

Total Short-Term Debt 0 0 0 0 0

Other Sources 0 0 0 0 0

Tubal Sources of Funds 20,712 48,989 84,111 86,760 87,990

2. Applications of Funds

Capital Expenditure 16,800 22,698 18,08M 11,071 9,867Increas In Inventories 6,481 1,200 689 807 116Accounts Payable (Customs, Sales Tax) 6,691 2,817 1,819 1,222 687

De"b Service

Repayment of Lon-Tern DebtIDA1KfWIDB 1,782 8,911 4,816 5,414 5,867OthersFinancial Charge

Total Debt Service 1,782 ,911 4,815 5,414 6,867

Total ApplIcation of Funds 82,654 80,026 20,164 16,014 15,976

8. Increase (Decrxse In Cash (11,842) 18,114 18,967 17,788 21,914

4. Cash at Beainning of Year 0 (11,842) 1,272 15,220 82,964

S. Cash at End of Year (11,842) 1,272 15,228 82,964 54,878

- 176 - aNN of 5-

§1~~~~~~~~~~~~Pg 1 °f °5

II|~ !-.!U.| £ 8oS

i-il 5: :, t},|,949

U.| E. 4.94,

1g- l- ~I-

Ii s1° ~i.

94 6'-~~

j #4 |X 31 1!

94 q

SoLril

meifme SICTOR REU4BILITATlN PROJECT

Oruro Subsidiary

COMIEOL - Financall Rate of Return CaIculetiors

(UWOUO)

iwo 1090 1001 1092 jM 1994 10n5 166 1997 1008

Inrme_ntal Rovewe: Nat Incmeo 0 0 18,922 14,827 14,964 15,412 15,660 2,418 2,140 0

In"VSteMt Costs: In,Sstmmt 6,015 10,889 5,066 4,7M6 8,64 0 0 0 0 0

Taxes: IVA n Retise S 077 W5e m 486 0 0 0 0 0

S,sramc Pay 0 0 8,964 0 0 0 0 -4,64 -8,910 0

Resdual Value: Stocks 0 0 0 0 0 0 0 1,789 1,64 0

Residual Volvo: Flzid Asaset 0 0 0 C 0 0 0 8,26 1,85 0

Not Cash rio.mEaosemla -4,615 -10,8V b,U4 9,542 11,100 16,412 15,660 7,494 5,U8F1nancll -4,50 -11,838 17,99 8,6164 10,664 1,412 1,9860 2,510 1,858

Intrnal Rat of Reurn CalculationEsnsI c 4.2861FinancIal 55.6811

Ira0 1N|w

UB

mIm SECTOR RUABIUTATION PROJECT

La Paz Sub.idinry

COIIBO. - Financial Rate t Reurn Calculation

(UWOOO)

106 109t 109t 3 100 )99 ION 192 X C 191 1e "

RIben_ 0 0 6,624 9,22S 9,070 9,089 9,341 9,948 1o,s73 11,217 11,217 1,199

mv.t.sst 5,504 7,582 8,00 2,820 2,265

Taxe 415 15'M 65 30 19

So" 5,450 -3 -4,606

Stocks 16O 1,n7

Fixed Assets

11. Cook FlowEcnmic (1-2.54) -5,604 -7,682 6,784 6,905 7,265 9,089 9,841 9,948 10,576 11,217 11,217 2,911

Finsnelnl (1-2-8+4.5.6) -C,919 -9,120 11,119 6,885 6,809 9,089 9,041 9,094 10,576 11,21? 11,217 -1,086

Intrnal Rato of Rturn CalculationEconceic (1-2.64) 46.21XFinancial IRR of (1-2-5.4+5*5) 48.661

wOR

o lU'L

vINm SECTOR RAHDLITATION POJECT

bachlele Subsldlary

COMI3L - Fiuaclial Rs St Ratur Calculationl

1089 lmo 0 1 102 1664 199C

1. Ron.oacv 0 0 1,669 1,752 1,366 1,070 1,4C0 1,9 a6

2. Intw 2.681 2,908 2,202 1,289 1,289 0

S. Tena 170 560 0

4. S vrarae 2,060 -534 -1,666

S. Stocks

S. FlIXd A.aS 62 70a

Nobt Cash FlowsEconomle (1-2.+5) -2,09 -2,908 -313 515 627 1,679 1,513 1,559 1,010FIlannlal (1-2-8.4.640) -2,006 -8.458 1,717 513 827 1,879 1,134 1,859 10

Interl Rto of Return CalculatlonEconomlc (1-2.50) 4.705Fisancll (1-2-8.4.5) 3.70X

n

DOLIVIA

MD=~ SECTOR REtSIATATKOM PROJECT

Poteel SubldlanrC0MI3OL - Flsae)aI at. ofRtnculculations

1906 10 a 1982 1998 4 1906 I 1W7 -9 M _ 2000

1. Rev....0 0 2,044 2,852 2,428 2,486

2. I.wet nt 1,712 2,930 1,907 1,597 1,146

$. Taxe 150 468 1Us 187 a8

4. Seeamne 2,270 -2,270

S. stocks X41

6. Fixed Assets 1,487

Net Co"h FloEconomic (1-2.5.6) -1,7n2 -2,980 187 76 1,277 2,486 2,278 0 0 0 0 0Financial (1-2-384+.5.) -1,362 -8,a80 2,294 618 1,214 2,486 S 0 0 0 0 0

Co

Internal Rat of Retur Colculatlo.Econmic (1-2.*5) 9.851Financial (1-2-8.4.56+) 8.038

'I {0I

U'

- 181 -

BOLIVIA


Documents in Project File

1. GENERAL

Draft Report on an Environmental Overview of the Mining Sector inBolivia Project No. H88095E, Nolan, Davis & Associates (N.S.)Limited, Halifax, Nova Scotia, Canada, July 1988

Codigo de Mineria, Libro Primero, Titulo I, Del Dominio de lasSubstancias Minerales, Capitulo I, Del Dominio

Department of Technical Cooperation for Development, MineralInvestment Policies in Bolivia, Mission Report, November 1988, ThomasWalde

Ministerio de Mineria y Metalurgia, Modelo Impositivo Opcional ParaEl Sector Minero (Primer Borrador)

Ministerio de Industria Comercio y Turinmo, Ministerio dePlanificacion y Coordinacion, Ley de Inversiones, Bolivia

A Programme Designed to Assist the Government of Bolivia in theRevitalization of the Bolivian Mining Industry, United StatesGeological Survey, November 1988

A Review of the Mineral Sector of Bolivia, CIDA (Canada), by C.Delbridge, November 1988

Analisis de la Situacion Juridica, Tecnica y Financiera de losProyectos del Fondo Nacional de Exploracion Minera (PONEM), by SanMartin, Terrazas and Ruiz, becember 1988

2. COMIBOL

Plan Quinquenal 1988-1992- Volumen I- Volumen II- Anexo, Programa de Exploracion, Etapas "A, Fichas Tecnicas

Ajustes al Plan Quinquenal 1988-1992

Plan Quinquenal 1989-1993- Tomo I- Tomo II

Plan Quinquenal 1988-1992, Anexo, Programa de Exploracion Etapas AlFichas Tecnicas

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Plan Quinquenal 1988-1992, Prospectos Preseleccionados, InformacionTecnica Basica

COMIBOL, Perfiles de Proyectos, Plan Social, November 1988

COMIBOL, Subgerencia de Empresas Mineras Subsidiarias, PlanQuinquenal 1989-1993, Tomo 2, Paquetes de Inversion Sujetos AFinanciamiento, November 1988. (A. Estudies, Implementaciones).(B. Activos Fijos, Reposicion Equipe y Maquinaria)

COMIBOL, Subgerencia de Empresas Mineras Subsidiarias, PlanQuinquenal 1989-1993, Tomo 3, Paquetes de Inversion Sujetos AFinanciamiento, November 1988. (Materiales Esenciales, MaterialesUso Corriente, Repuestos)

COMIBOL, Estados Financieros Consolidados, Al 31 de Diciembre de 1987

COMIBOL, Estados Financieros Consolidados, Al 31 de Diciembre de 1986

COMIBOL, Estados Financieros Gestion 1988

Unaudited Balance Sheets and Income Statements 1986, 1987, 1988

Reorganization and Rehabilitation of COMIBOL, Phase I, by Coopers andLybrand, December 1987

Reorganization and Rehabilitation of COMIBOL, Phase II, by Coopersand Lybrand, 1989 (under preparation)

Project Management Assistance, Colquiri Mine and Mill RehabilitationProject (COMIBOL), Bolivia, Final Report, February 1989, MinprocEngineers Inc.

Modelos Conceptuales y Evaluacion del Potencial Mineral de losYacimientos de Pulacayo, Region de Ubina o El Asiento, PotosiBolivia, UNDP Project BOL/871012, by J. Pinto and E. Arteaga, March1988

Preussag Ag Metall Mine Consulting, Preliminary Proposal for theCOMIBOL Bolivar Mine Development

Preussag Ag Metall Mine Consulting Feasibility Study for the CentroMinero Bolivar, July 1988

- Part I, Geology and Reserves

- Part I, Geology and Reserves, Exhibit R4, Pomabamba ChannelSamples and Assays, Includes Table on Wallrock (Dilution Rock),Mineralization at Pomambamba

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Part I, Geology and Reserves, Exhibit RS, Pomabamba and Nane OreReserves, Including Formulas Used for Proven Reserve CalculationFormula Used for Inverse Distance Square Method Diagram SpecificGravity Versus Combined Metal Contents

Part II, Development and Mining

Part III, Metallurgy - Processing JPart IV, Metallurgy - Plant (Design/Operation)

Part IV, Metallurgy - Plant (Design/Operation) Evaluation ofMaltide Mi.e Equipment and Buildings

Part IV, Metallurgy - Plant (Design/Operation) CapitalExpenditure with Equipment Specifications First Part ofEstimate, Summaries, Estimate with Specifications to Fine OreStorage Inclusive

Part IV, Metallurgy - Plant (Design/Operation) CapitalExpenditure with Equipment Specifications Second Part ofEstimate for Primary Grinding Section

Part V, Administration and Services, Including Emso Oruro andCOMIBOL La Paz Overheads, Vehicles, EnvironmentalConsiderations, Mine-Poopo Road Concentrate Transport. Part VI,Infrastructure

Part VII, Economic Evaluation, Inclusive Marketing

3. INSTITUTIONS

'Plan Maestro", Ministerio de Mineria y Metalurgia, January 1989

Future GEOBOL and IIMM, by Swedish Geological International, June1988

Strengthening of the Ministry of Mining and Metallurgy, SwedishGeological International, June 1988

Report on the Bolivian Mining Cadastre with Proposals for the JImplementation of a Modern Cadastral System, Inter-AmericanDevelopment Bank, Project ATN/SF-2948, by j.G. Price, June 1988

Restructuracion del FONEM, by R. Mignon (BRGM), August 1988

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4. BAMIN and Credit

BAMIN, unaudited financial statements 1983, 1984, 1985, 1986, 1987,and July 1987

BAMIN, audited financial statements 1985

BAMIN, organizational manual, 1986

Auditoria Externa del Banco Minero de Bolivia al 31107187

BAMIN, draft statutes

BAMIN, Board resolutions 54188 and 55/88, and documents No.P-646/88,P-652, Pu653, P-654188, regarding policies of sales ofequipment, sales of minerals, revaluation of assets, and debtrecovery

Estudio Asistencia Tecnica al Banco Minero de Bolivia, CAEM, July1988

Reestructuracion Financiera y Financiamineto de Inversiones,Asociacion Nacional de Mineros Medianos, David Ancieta Barron, July1988

Proyectot Rehabilitacion y Fomento de la Mineria Chica Marginal, J.Guillermo Cortez A., 1988

IBRD 21474

B R A B O L I V I ARb AI MINING SECTOR REHABILITATION PROJECT

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3 HUANUNI (TIN) 8 EMUSA (ANTIMONY)

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