Document of The World Bank Public Disclosure Authorized

Report No: 23368

IMPLEMENTATION COMPLETION REPORT (CPL-39270; SCL-3927A; SCPD-3927S; PPFB-P2380)

ONA

Public Disclosure Authorized LOAN

IN THE AMOUNT OF USS30.0 MILLION

TO THE REPUBLIC OF

ARGENTINA

FOR A

MINING SECTOR DEVELOPMENT TECHNICAL ASSISTANCE PROJECT Public Disclosure Authorized November 1, 2002

Mining Department of the World Bank Group Country Management Unit: Argentina, Chile, Paraguay and Uruguay Latin America and the Caribbean Region Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective December 31, 2001) Currency Unit = Argentine Peso AR$1.00 = US$ 1.00 US$ 1.00 = ARS1.00

FISCAL YEAR January 1 December 31

ABBREVIATIONS AND ACRONYMS

BUD Unified Mining Information System CAS Country Assistance Strategy COFEMIN Federal Mining Council DIA Environmental Impact Declaration DNM National Mining Directorate DNSG National Geological Service Directorate DPM Provincial Mining Directorate EIA Environmental Impact Assessment GPS Global Positioning Systems GIS Geological Information Systems IHA Environmental Impacts report INTEMIN Mining Technical Institute NGO Non-governmental Organizations PASMA Mining Sector Development Technical Assistance Project PCU Project Coordinating Unit PMI Public Mining Institution PSR Project Status Reports QAG Quality Assurance Group SEA Sector Environmental Assessment SEGEMAR Argentine Geological and Mining Service SINATEM National System of Mining Technology SM Secretariat of Mines SSM Under Secretariat of Mines SUIM Unified Mining Information System UGAP Provincial Environmental Management Units UGAN National Environmental Management Unit WB World Bank

Vice President: David De Ferranti Country Manager/Director: Myma Alexander/Axel van Trotsenburg Sector Manager/Director: Peter van der Veen Task Team Leader/Task Manager: Gotthard Walser ARGENTINA MINING SECTOR DEVELOPMENT TECHICAL ASSISTANCE PROJECT

CONTENTS

Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 5 5. Major Factors Affecting Implementation and Outcome 9 6. Sustainability 11 7. Bank and Borrower Performance 12 8. Lessons Learned 14 9. Partner Comments 15 10. Additional Information 15 Annex 1. Key Performance Indicators/Log Frame Matrix 16 Annex 2. Project Costs and Financing 22 Annex 3. Economic Costs and Benefits 24 Annex 4. Bank Inputs 25 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 27 Annex 6. Ratings of Bank and Borrower Performance 28 Annex 7. List of Supporting Documents 29 Annex 8. Borrower's Summary Report 30 Map IBRD 27034

Project ID: P006055 Project Name: MINING SECTOR DEVELOPMENT T.A. Team Leader: Gotthard Walser TL Unit: COCPD ICR Type: Core ICR Report Date: November 1, 2002

1. Project Data Name: MINING SECTOR DEVELOPMENT T.A. L/C/TF Number: CPL-39270; SCL-3927A; SCPD-3927S; PPFB-P2380 Country/Department: ARGENTINA Region: Latin America and Caribbean Region Sector/subsector: Central government administration (100%)

KEY DATES Original Revised/Actual PCD: 03/29/1994 Effective: 12/07/1995 12/07/1995 Appraisal: 03/27/1995 MTR: Approval: 07/25/1995 Closing: 06/30/2001 06/30/2001

Borrower/lImplementingAgency: GOVERNMENT OF ARGENTINA/UNDERSECRETARIAT OF MINES Other Partners:

STAFF Current At Appraisal Vice President: David De Ferranti Shahid Javed Burki Country Manager: Axel van Trotsenburg Gobind T. Nankani Sector Manager: Peter Van der Veen Alfonso Sanchez Team Leader at ICR: Gotthard Walser Aura Garcia de Truslow ICR PrimaryAuthor: Sati Achath; Gotthard Walser

2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU-Substantial, M=Modest, N=Negligible) Outcome: S Sustainability:L Institutional Development Impact: SU Bank Performance:S Borrower Performance:S

QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: No 3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: The main objective of the project was to develop and support, through an institutional development technical assistance, the government's policy, regulatory and institutional reforms which encourage the expansion of private investment in mining in an environmental sound way. The project was aimed to help build the capacity needed at the federal level and in six participating Provinces (Catamarca, La Rioja, Mendoza, Salta, San Juan and San Luis) for the efficient administration of mining rights. It was also expected to establish adequate environmental safeguards for mining operations; strengthen services that support mining growth, including the public provision of reliable geological and mineral information, and support divestiture of mining interests held by provinces. The six provinces selected to participate in the project were those actively implementing the sector reform and located within the most prospective mineral area of the country. A "PASMA" (acronym of the project name in Spanish) Agreement was signed in 1995 between the federal Government and the six Provinces to formalize the policy and implementation principles along which the project would be carried out. The choice to include only six and not all the 23 Provinces was made because of the historical complexity of the relationships between the federal and provincial States regarding the management of mineral resources. As stated in the Argentine Constitution - mineral resources belong to the Provinces. The successful implementation of the project led in 1998 to a second operation (loan 4242-AR) involving the 17 remaining Argentine provinces. The objectives of the project were clear, realistic and consistent with the Bank's Country Assistance Strategy (CAS) discussed by the Board on May 4, 1995, which stated that "Bank support for private sector development would also be provided through the strengthening of institutions providing assistance in mining development". The project aimed to facilitate increased foreign and local investment in mining to develop Argentina's hitherto underdeveloped mineral potential. It was also aimed at technologically updating the quality and enhancing the usefulness of government services supporting mining and growth, and develop a better legal framework, including a revised mining code, improved and unified concession procedures and secure tenure provisions through the Unified Mining Cadastre. In addition, the project would also help develop technical services to enhance the productivity of small and medium-scale mining. Finally, the project would help develop mechanisms throughout the sector to ensure adequate capabilities and technological skills for the application of environmental safeguards in mining and related activities. Overall, by strengthening the geological infrastructure and mining rights tenure security, the project expected to strengthen the enabling environment for overall sustained growth in mine development activities, which once established, were likely to continue.

3.2 Revised Objective: There was no formal revision of the original project objective, as it is stated in the MOP and the Loan Agreement However, as in several contemporaneous mining projects in other countries (see for example the Ecuador ICR, dated December 2001), socio-economic issues related to mining development were increasingly integrated into the project at about mid-term of its implementation (mid 1998). This trend followed the growing worldwide awareness at the end of the last decade by communities and companies alike regarding the need of deeper community involvement to optimize the potential contribution of mining to local and regional socio-economic development

- 2- 3 3 OriginalComponents: The project consisted of the following four components: * Policy Development Component (US$1.4 million or 4 percent of the base cost) to ensure the consistency of mining sector policy with the country's overall economic liberalization efforts, to continue the modernization of the legal framework; and to develop tools for its implementation, including procedures for the provincial administration of mining rights and appropriate environmental norms and standards. * Policy Implementation Component (US$16.6 million or 47 percent of the base cost) to help develop the management capacity of the federal Secretariat of Mines (SM) and sector agencies in the selected provinces, including their cadastral and registry systems and advisory services, as well as the mechanisms to monitor and enforce environmental management. It was also to finance relevant skills transfer, training and divestiture efforts. * Support Services Component (US$16.1 million or 45 percent of the base cost), to build up the geological infrastructure in support of private investment decisions: geological and thematic mapping; a sector data bank and public information network; mineral and market statistics and promotion facilities; and a geological repository facility. Provisions for a selective support of laboratory; and, * Project CoordinatingUnit (PCU) to oversee the project implementation (US$1.4 million or 4 percent of the base cost). The project financed consulting services and contract works, computer equipment and software, field and office equipment and vehicles, training, incremental operating costs (for establishing and strengthening functions), and the necessary upgrading of facilities. The components were closely related to achieving the objectives. Their design was well-prepared and based on relevant lessons learned in other T.A. projects experience, in the country and in the mining sector, in Argentina as well as in other Latin American countries. The Bank's experience in the mining sector reform also facilitated in preparing a realistic project design (see for example WB Technical Papers No 345 "A Mining Strategy for Latin America and the Carribean" and No. 405 "WB Group Assistance for Minerals Sector Development and reform in Member Countries").

3.4 Revised Components: The main components have not been revised. However, two activities under the Support Services component were partially or totally cancelled. (i) Upon delivery of the National Geological Repository design study, a decision was made not to go ahead with the actual building of this facility due to its foreseen high operating and maintenance costs. In addition, the location of a suitable site proved to be a difficult task. And (ii), as a result of the study carried out under the Policy component on how best provide support to the important sector of Small and Medium-scale mining Enterprises (SMmEs), the decision was made not to implement the Research & Development subcomponent as designed during preparation, which included mainly the modemization of state laboratory and investigation equipment and facilities.This option had been considered in the MOP. The study showed that management capacity building, networking and access to information were more imortant factors to support the developpment of SMmEs, and a new work plan was designed and implemented along these recommendations. In addition, activities related to the contribution of mining to social development were initiated during the second half of project implementation. They included participatory diagnostics studies on socio-economic impacts of an existing mining operation - Bajo de la Alumbrera in Catamarca - and development of

- 3- procedures to be applied in future projects - Veladero-Pascua Lama in San Juan - allowing all stakeholders to understand and manage such impacts; and to optimize benefits at the community, provincial and national levels. These activities were planned and implemented in parallel with - and mainly funded under the second mining TA loan ("PASMA II"). (Note that both projects represent private investments and did not benefit from any direct support from the "PASMA" project. However, MIGA was mvolved in the Bajo de la Alumbrera mine).

3.5 Quality at Entry: The Quality Assurance Group (QAG) did not do an official assessment of the project's quality at entry. Nevertheless, the ICR finds the quality at entry, on balance, to be satisfactory. As mentioned in the earlier section, the project objectives were consistent with the country assistance strategy and the Government priorities and met the critical needs of the mining sector. Since SM had the technical capacity, the quality of project design was generally adequate to meet the project's overriding objective. The definition of objectives and project design had benefited of a fruitful cooperation between the Government of Argentina (GOA) and the Bank, initiated in 1992 with the preparation of a mining sector review (WB report 11704-AR, 1993), following the government decision to liberalize, modernize and open to private investment the mining sector, as part of the overall market economy policy reform initiated in 1990. Along the lines of actions recommended by the Bank's report, the govenmment initiated an ambitious and comprehensive reform program, including the release of all mineral resources controlled by the federal authorities. The program yielded quickly positive results in attracting investments (see charts in Section 4.1 below). Following the approval of a Bank PPF in 1994, the federal Secretariat of Mines (SM) continued its work on reforms in parallel with project preparation. The government formulated in 1995 a Sector Policy and Strategy document, reconfirming its role as a facilitator of private-led mining activities. During preparation, findings and recommendations from the sector review as well as from the project comprehensive Sectoral Environmental Assessment (1995), were considered and incorporated into the project design. The project preparation also used a participatory approach by consulting and coordinating closely with the six provincial administrations as well as with industry branch organizations, trade associations, miners unions and non-governmental organizations (NGOs). All institutional aspects were also safeguarded. The development and implementation indicators, i.a. the expected mining investments level by project end, were selected prudently and proved to be achievable without change (see annex 1). The project was complex by virtue of its interface between the federal govermment and the provinces, a risk which was minimnized through the decision to involve only selected Provinces commited to the reform. In addition, the project took into account what was deemed to be the main risk factor to successful implementation. The main risk was that of sustaining the provincialstance for reform. While participating provinces had already expressed their readiness, and had been closely involved in project preparation, (i) the political commitment could have changed; and (ii) the establishment of reliable provincial administrative capacity during implementation could have been more difficult than planned. To address (-) above, an Agreement was signed by the federal government with six participating provinces whereby all parties were committed to implementing the project, including the Unified Mining Cadastre. Regarding (ii) above, there was some flexibility in the project's strong institutional component to respond to changing needs, with a technical advisory capacity at the federal level, that could help guide and support the development of managerial and administrative capacities at the provincial level (and that could help expand such activities to other provinces later), and training (on-job and formal) addressing such specific needs. From an implementation point of view, the assessed targeted times for achievements of outputs were ambitious and did not take enough into account factors such as "resistance to changes" regarding institutional re-organization; or terrain/climatic constraints for the setting-up of the cadastral reference

- 4- system in the High Andes.

4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: The project succeeded in achieving its project objectives. It is considered as one of the most successful mining sector reform projects that the Bank has financed in recent years. It has put Argentina on the global mining map as an attractive destination for private investment and diversified the economy. The project assisted the government to implement its policy, regulatory and institutional reforms with the goal of encouraging the expansion of private investment in mining in an environmental sound way. The project also helped build the capacity needed at the federal level and in selected provinces for the efficient administration of mining rights. Major outcome and achievements of the project are: (i) Legalframework. The project succeeded in modernizing the mining sector's legal and regulatory framework, which now even includes a number of best practice examples such as the Environmental Law for Mining, the Mining Investment Law, the Mining Treaty with Chile regulating the many across border activities, and the Unified Provincial Regulatory Procedures. (ii) InstitutionalFramework. To improve services to the mining industry as well as the capacity to monitor its performance and compliance with regulations and norms, a high priority has been given to the modernization of the public mining authorities, particularly in the provinces. With great success throughout the country, mining agencies were restructured, work processes and methodologies streamlined to improve efficiency and quality, infrastructure modernized, and modem technologies and equipment introduced. Special attention has been paid to the training and motivation of personnel, emphasizing the need to implement a cultural change, from closed and control-heavy mentalities to a more open and client-oriented behavior.

Argentina - Mining cadastre and management of property rights The establishment of a mining cadastre, which integrates the regulatory, institutional, and technological aspects of mineral rights administration, is the comerstone of a mineral resource management aimed at optimizing the contribution of mining to regional development. The granting of mining titles, founded on transparent procedures and on unequivocal location and limits of mineral properties, guarantees the security of tenure for investors. The World Bank-supported technical assistance program to set up a modem cadastral systems in Argentina has been particularly successful and led to many improvements. Computerized granting and monitoring procedures, strictly mirroring existing regulations, speed up processing times and limit the opportunities for "arbitrary" interventions. Set-up of mining rights data- bases, linked to the procedures management system, allow the accurate and precise location (using GPS and GIS technologies) of mining properties in real time, a key factor for security of tenure and avoiding legal conflicts. In addition, displaying the information on the Intemet allows the government, as well as communities and investors, to foresee and mitigate potential conflicts between mineral resources exploitation and other land-uses, including conservation of protected areas

Text Box 1 (iii) Mining Cadastre.A particularly positive achievement of the project is the successful set-up of a modem mining cadastral management system (see also Text Box 1). The project addressed the different

- 5 - aspects - legal, institutional and technical - in an integrated manner. Unified Procedures were prepared under the umbrella of the Federal Mining Council, and have been approved by all provinces. A reliable and updated mining cadastre has been established, which includes the setting up of a complementary geodetic reference network in remote areas, the precise location of all existing mining rights using modem GPS technology, eliminating legal problems such as superposition or inaccurate positioning of rights. At the provincial public mining offices, computerized management systems, mirroring the existing procedures, are operative. In provinces where the new technology is fully implemented, a mining title application can be processed in less than 15 minutes. (iv) EnvironmentalManagement. With the support of the project, mining environmental units have been established in all provinces to monitor and control enforcement of the regulations and train personnel. Since February 1997, when the law became effective, 3640 environmental impact assessments (ELAs) have been prepared by mining companies and processed by the UGAPs until December 2001, at an estimated cost of US$7 million, an amount greater than the total mining investments in 1992. To provide an adequate reference framework to evaluate possible future impacts, baseline studies have been carried out in mining regions all over the country. (v) Geological and Mining Information Infrastructure. Today, about 75 percent of the country is covered by 1:200,000 geological maps, which represents enormous progress. Metallogenic maps and other valuable thematic information (including large parts of the country covered by airbome geophysics and regional geochemistry) that are valuable for investment have been prepared. A modem computer based information network has also been established to share geological, environmental, statistical, legal and other data between federal and provincial agencies. Most of the information is also available worldwide through the intemet.

Argentina - Mineral Exploration Argentina - Mineral Production Values Investments c 1500- 115i120q,111299 ~~ 150 iiol~11030 140 .2 _ 100 80 .100 80 100 1000417434481492513543 50-4 7 15 23mEEImE. 0 500- ....mEIIIII 0 I6EEEE n t e (D -s X 01 0 c' _ _ _ o O) O 01 0a °> Years Years

Argentina - Mineral Exploitation Argentina - Mineral Export Values Investments c 1000 71692 723 sO800 708 658 .2 01 565 7 6001 j ~~~~~~~~~~~~~6001- = 4200 1 1 1 51 1mU' 200 - 0i

O4 Om a Ul) to r- c~o~ 0) 0

Years Years

With the existence of a congenial legal and institutional framework, the project has succeeded in promoting private investment and increasing mining production. Today, more than 55 foreign mining companies are active in Argentina, compared with four in 1990 and total private investment has increased in exploration

- 6- from US$4 million in 1991 to more than US$100 million/year since 1996; and in total investment from US$70 million in 1994 to US$370 million in 2000 (source: Subsecretaria de Mineria). Several important mining operation projects have started production (eg. Salar del Hombre Muerto, Bajo de la Alumbrera, Cerro Vanguardia) and as a result, mineral production has increased from US$341 million in 1992 to US$1,073 million in 2000 and, in export value, from US$60 million in 1994 to US$700 million in 2000 (see Graphs above).

4.2 Outputs by components. A. 1. Legal framework The unified "Nuevo Cuyo" procedures for the efficient administration of mining rights were approved by the Provincial legislative chambers. The final draft of the new Mining Code project was completed by the end of 1997. The draft, aiming at integrating in a consistent way the many amendments passed during the 90s to the original 1875 cod, went through a longer than expected ownership and consensus-building process and could not be sent to Congress before project closing. However, this process did not end at project completion and a final proposal is currently (October 2002) under preparation. A.2 Sistema Nacional de Tecnologia Minera (S1NATEM). The diagnosis, design and implementation phases of this subcomponent as well as the training program orientated to mining SMEs were completed. B. 1. - Public Mining Institutions. Based on the institutional design and recommendations of the study prepared by Swedish Geological AB (09/97), detailed operational procedures and manuals were prepared by the Project Coordination Unit (PCU) at the Under-secretariat of Mines (SSM), and the respective provincial entities. The implementation of the new organizational set-up and procedures - including the installation of an integrated computerized management system - was very successfully completed in all six provinces participating in the project. Detailed arrangements for guidance, adjustments and monitoring after completion of the first implementation phase was also set up. The management of the systems installed by the project, as well as all infrastructure and equipment, were officially transferred to the provincial authorities in December 2000. At the federal level, the Undersecretariat of Mines, (SSM), and the Argentine Geological and Mining Service (SEGEMAR) were strengthened, but reform was not as deep as in the provinces, partly due to multiple restructuring of the Ministry of Economy and Public Works. B. l .(a) Institutional Infrastructure. Facilities rehabilitation works as well as purchase of office and field equipment in all six Provinces and at the federal SSM were completed. With respect to SEGEMAR, the purchase of map production facilities, vehicles, field and office equipment were also completed. B. l.(b) - Training. Most of the institutional management training planned under this program were provided in an integrated manner together with the implementation of the institutional reform (see also section 8, lessons leamed). The fiscal training program, including series of workshops organized both at the federal level and in each of the participating provinces as well as the publication of the training materials, was also completed and very successful. B.2 - Mining Cadastre. All works related to the setting-up of the geodetic mining reference network and the GPS survey of the existing mining claims were completed and the data - as well as the related information and management system - officially were transferred to the six provinces. All planned procurement (hardware and software, Global Positioning System equipment (GPS), vehicles and others) and training were also completed. A computer system for administration of mining rights, based on the present procedures, has been developed and installed. The system is now operational in all project provinces.

- 7 - An Asset for Competitiveness - From Hodgepodge to Streamlined Environmental Management Process

In 1995. the federal government of Argentina, assisted by the World Bank and with the support of the 23 Provinces, streamlined its previous mix of federal and provincial laws and regulations applicable to mining activities by proposing Federal Mining Environment Law which was approved unanimously by Congress. The Law requires full and complete environmental impact statements and mitigation plans in order to initiate and continue exploration and exploitation activities. The importance of well-defined and uniform requirements for environmental permitting of mining projects in a federal country such as Argentina, where the mineral resources are under the responsibility of the Provinces, cannot be understated. At the time the law was passed, Argentina was undergoing a boom in both exploration and mining development. The new law helped companies by streamliing the permitting process, thereby removing discretionary behavior on the part of the provincial authorities that had delayed projects or filling a legal void which had caused major uncertainties for the making of investment decisions. This also eliminated discriminatory treatment of operations, depending on their location. To apply the law and its regulations, provincial environmental management units were established, trained and equipped in all 23 Provinces with the support of the WB. At the same time, the federal government, together with the Provinces, undertook an innovative environmental information project to collect, process and provide to the public air, soil and water, fauna and flora baseline data in existing and prospective mining areas. This provides companies with ready-made information and, more importantly, set baseline ambient standards against which mining projects can be monitored Text Box 2 B.3 - Enviromnental Management (see also Text Box 2). The complete legal and regulatory framework has been approved. Provincial Environmental Management Units (UGAPs) are now processing on a routine basis the Environmental Impact Assessments (EIAs) presented by the mining companies, and grant environmental permits ("Declaracion Ambiental"). In addition to the training provided under the institutional subcomponent regarding work procedures and administrative tools, courses and workshops have been held on environmental management principles and methodologies in relation to mining activities, as well as on specialized issues (e.g. tailings management, mine closure and others). These activities did address specific needs, to update the technical and processing capacity of the UGAPs, as well as to systematize evaluation criteria of ElAs and to adjust procedures. Monitoring plans and procedures were developed, and baseline surveys were completed, providing the necessary information to assess properly impacts which might be caused by mining operations. An Environmental Information System has been developed, as part of the overall National Mining Information System (SUIM, see below). Baseline and monitoring data collected under the project have been input in the system's databases. C. I - Geological information. Different programs of this subcomponent were completed successfully. Products, working methodologies, organization, procedures and norms were established and are operational. Digital geological and thematic maps are now produced on a routine basis. The airbome geophysical survey work was completed by June 1999 and all scheduled maps were produced (see annex 1). C.3 -Unified Mining Data Banks (BUD). BUD units are operative in all federal and provincial institutions participating in the project. The scope of the component was broader than originally planned, as it included the development and installation of computerized integrated administration management system at the provincial mining institutions. Relevant sector infommation has been loaded in the mining web site,

- 8- including mining concessions, environmental data and more. (Towards the end of the project, the system was renamed as Unified Mining Information System (SUIM)

4.3 Net Present Value/Economic rate of return: While the calculation of NPV or ERR figures is difficult to apply to a technical assistance project, it is useful to summarize some of the macro-economic results for the mining sector in Argentina and to compare them to what was predicted in the original appraisal document:

Macro-economic Impacts (US$ million) -Low Case i ediuniCase . 4 High Case -| Gross Exports Gross Exports Gross Exports ,Predicted 2004 (SAR) - 1,045 457 1,657 1,032 2,056 1,312 Actual-Z000 - 1,114 692 Projected 2006 - ,. 2,240 1,635

The predictions in 1994 were based on a ten years time horizon for a low, medium and high case scenario. As can be seen, five years after the project has started the gross production and exports figures already exceed the low case projections. The predicted figures in 2006 could exceed the high case scenario, providing the mineral market prices stay around reasonable levels. The project did not directly invest in these projects, however the progress made on the cadastre, information systems, mining and environmental laws has made these investment possible.

4.4 Financialrate of return. Not applicable

4.5 Institutionaldevelopment impact: The project's institutional development impact has been significant, especially at the provincial level. Each of the six provinces has now a well-functioning provincial mining directorate, with sufficient administrative capacity, responsible and responsive to the needs of the private sector. The staff in these offices interface regularly with private sector for activities such as processing applications and issuing permits. The project has also equipped these agencies with modem tools and equipment (e.g.GPS and GIS), trained staff for using up-to-date technologies and developed the environmental management and mining rights administration capacity. At the federal level, the project succeeded in strengthening key functions such as production of maps, geological information, legal documentation and economic evaluation. See Section 6 for an assessment of the sustainability of this development.

5. Major Factors Affecting Implementation and Outcome 5.1 Factorsoutside the control ofgovernment or implementing agency: Steep decline of global commodity prices in 1998, did not directly affect existing operations, including exploration ones, in Argentina, but indirectly it affected the expected outcome of the project. For instance, had the price of gold increased, it was likely that two additional mines (e.g. the Agua Rica project in Catamarca or the Veladero-Pascua Lama in San Juan), as expected in the SAR would have been developed. However, interesting enough, the fallout of the East Asia crisis in 1997, as well as the reduced

-9 - access to financing on international markets for "junior" companies, certainly affected mining investments in Argentina but did not impact exploration or investments but not as dramatically as in many other emerging mining countries (see charts in Section 4.1 above). Resistance to reform. Such resistance, mostly from traditional and national mining groups and interests, did not affect the project activities, but had an impact on a few of the implementation objectives. For example, even though a final draft of the new Mining Code project was completed by the end of 1997, the necessary consensus building process to implement before sending it to Congress proved to be more complex and time consuming than expected, due to this factor. (However, the proposed legislation is gaining an increased support and this particular implementation objective could still be achieved within the near future. A simplified Mining Code would certainly increase the attractiveness of Argentina for mining investment, but has not so far significantly affected decisions to invest in mining.)

5.2 Factorsgenerally subject to government control Consistent government policy, despite change of administrations, was a positive factor which facilitated smooth project implementation. The economic slowdown in the country during the second part of the project (which closed a few months before the political problems and near collapse of the economy at the end of 2001) adversely affected the availability of counterpart funding for implementation since early 1999. This problem had a moderate negative impact on this project, as most objectives were achieved until 2000 (however, they caused significant financial difficulties to the second operation, see separate ICR). Local interests opposed to changes at the provincial level, in a few cases, delayed activities supporting the sector reform. Examples include delays in San Juan regarding the re-ordering of mining rights file. Also, an unilateral position from the Catamarca govermnent opposed the province to the federal and the other provinces on the issue of mining royalties calculation. This situation affected somewhat the credibility of the sector image regarding fiscal and regulatory stability and uniformity, which is one of the strong argument for attracting mining investment, particularly because Bajo de la Alumbrera, the first major mine development in Argentina, and a flagship of the country's mining reform benefits, is located in Catamarca. However the ability to solve this issue through the established institutional mechanisms - the Federal Mining Council - does certainly represent a very positive indicator of the level of maturity reached by the Argentina sector authorities.

5.3 Factorsgenerally subject to implementing agency control: The SM established an efficient project coordination unit, fully conmmited to the reform and aware of the importance to optimize the participation of the provinces in sector management to ensure its success. During the entire preparation and implementation period there has been only one project coordinator and this ensured the stability of the PCU as well as continuity and consistence in the implementation of the project operations. The PCU played a critical role as interface between the federal and provincial authorities and the WB, and was instrumental to the success of the reform implementation. Overall the activities in Provinces could be implemented without major problems and the provincial agencies demonstrated commitment to the project objectives. All main objectives were achieved (see Section 4), although with some delays by comparison to the initial time targets (see annex 1). In addition to the perhaeps optimistic assessment of time necessary to implement reform activities (see Section 3.5), some of the delays originated in the difficulties for the implementing agency during the initial months to adjust to the WB procedures and timing regarding procurement. The PCU took then corrective measures, strengthening its organization in terms of capacity and procedures.

- 10 - Regarding contracts implementation, only one case has to be mentioned of a contractor's unsatisfactory perfornance in relation to the setting-up of the geodetic mining reference network and the GPS survey of the existing mining claims in four provinces due to the firm's operational and managerial problems. This activity caused delays in the setting up of the mining rights management system; it could be completed thanks to a close monitoring of the PCU. Difficulties from part of the federal agencies - mostly SEGEMAR - to respond to the spirit of the reform in terms of (i) consensus process with the provinces through COFEMIN regarding the definition of priorities and products; (ii) institutional restructuring and the definition of a clear role regarding the provision of information infrastructure - role of the State - versus the provision of services to the industry and community - role of the private sector; and (iii) clear focus on the generation of well-defined products responding to clients needs instead of widespread and changing activities driven by staff preferences. Again, the institutional mechanisms set up under the reform process helped to reach an agreement between the parties. However, the situation caused delays in the implementation of some of the activities or even, to some extent, the cancelation of the geological repository program without possibility to define options at a time when counterpart funds became a scarce resource. The strengthening of the mapping and the information components were not affected by this situation.

5.4 Costs andfinancing: The total cost of the project executed at closure amounted to US$ 35.97 million. This is about US$ 4.03 million (-10.01%) less than the US$ 40 million estimated in the MOP. The difference is mainly due to a reduction in the scope of activities as a consequence of reduced counterpart funds since 1999 (see 5.2 above), including the cancelation of the support to an upgrading of mining related laboratory facilities (SINATEM sub-component) and of the building of the geological repository infrastructure. With the exception of the two mentionned sub-components, all implementation objectives could be achieved. The Bank financed about US$ 28.18 million (78.3%), and the Government contributed about US$ 7.79 million equivalent in local costs (21.7%).

6. Sustainability 6.1 Rationalefor sustainabilityrating: The sustainibility of the project is rated Likely, because the federal and provincial governments have adopted and maintained a policy conducive to mining sector development - as shown by the continued support to the Federal Mining Agreement as well as by the commitment of the Federal Mining Council ("COFEMIN"), even under the difficult present circumstances -; and because they made significant progress towards the establishment of an enabling legal and institutional framework and are demonstrating commitrnent to follow-up on the results and recommendations of the project. However, the long term fnancing of all functions in many provinces and most certainly at the federal level needs to be ensured through the definition of reliable financing mechanisms such as those developed in other Latin American countries (for example in Bolivia, Ecuador and Peru, where a percentage of the proceeds from land fees and services are allocated to the institutions responsible for the sector administration or the provision of the information infrastructure). The total amount needed to implement all functions defined and developed under the project to properly manage the sector is estimated at no more than about US$ 1.2 million per year for the six provinces involved under the project (and about US$ 4 million for all 23 Argentine provinces), including maintenance and renewal of infrastructure (but not salaries), which broadly corresponds to the annual mining-related proceeds from services and land fees. However, while the resources have been identified, proper arrangements have yet to be made to ensure the

- 1 1 - channeling of those resources to finance functions and/or institutions such as (i) environmental monitoring - in the case of all Provinces; and (ii) basic functions (mining rights administration and environmental permitting) in many provinces with less resources or with no specifically allocated sources (for example, Catamarca, Mendoza and a few other provinces do have a percentage of oil and/or mining generated revenues allocated to sector administration). Also, the Geological Survey depends more than 90% on the federal budget and any arrangements should include the financing of its mapping functions. Until the end of 2001, the sustainability of the basic functions was likely considering that the federal government's commitment to continue its support to the sector both financially and in important policy reforms. However, sustainability of the project at the provincial level would mainly depend on the reasonable availability and allocation of resources by the provincial govemements to the mining administrations. Due to the prevailing economic crisis in Argentina and the resulting budget cuts, sustainability is doubtful in certain provinces, particularly in those where mining is not a critical activity. There are also specific concerns regarding the full sustainability of some key functions after project closure such as the continuity of federal environmental management unit (UGAN) responsible to coordinate the sector policy regarding environment and to provide assistance and advice to the provinces when needed. A year after project closure, and after a series of administration changes, UGAN appears to be still adequately staffed and in capacity to fulfill its mandate, which would indicate that the environmental awareness and cultural changes have reached deep enough during project implementation to maintain the reform achievements even during situations such as the present day overall political and financial crisis.

6.2 Transition arrangementto regularoperations: At the provincial, and in a number of cases at the federal level as well, the project focused its activities on the development of on-the-job capacities and procedures directly linked to the fulfillment of core functions related to the application of laws and regulations, functions which will continue beyond closure. In that aspect, the transition from project supported to regular operations has been smooth and work plans are well-established for the long term. However, as discussed under 6. 1, arrangements remain to be made to ensure the full financial sustainibility of all functions in all provinces.

7. Bank and Borrower Performance Bank 7.1 Lending: The Bank's performance during the identification of the project was satisfactory. The mining sector review prepared by the Bank provided the appropriate background and opportunity for the Bank and the government to map out the joint program of the project. Project preparation was well organized and satisfactory. The Bank, which had a team with a good skill mix, brought in the state of the art expertise into project design. During the project appraisal, the Bank assessed the project's risks and benefits. The Bank had a consistently good working relationship with the Borrower during preparation and appraisal.

7.2 Supernision: The Bank's performance during the implementation of the project was satisfactory. Since the Bank had allocated sufficient budget resources, the project was adequately supervised. Over the five years of project implementation, there were 21 supervision missions, about 4 missions per year. The Bank - client

- 12 - relationship was very cordial and productive. There has been continuity of Bank staff involved. Supervision teams included specialists in mining economics, mining law, private sector development, environment, geology and institutional development. The Bank took a firm and dynamic role in the supervision of the project implementation, and showed flexibility to adjust the project to the client's needs, for example regarding the increased importance of training activities or the decision to cancel the originally planned upgrade of laboratory facilities (SINATEM). Aide-memoires were regularly prepared and transmitted, which alerted the Government to problems with project execution and suggested remedies in a timely manner, in conformity with Bank procedures. The Form 590s and Project Status Reports (PSRs) realistically rated the perfornance of the project both in terms of achievement of development objectives and project implementation. Whenever delays in implementation occurred, the Bank was able to define concrete steps and a timetable for putting the program on track. Extemal consultants were used for specific aspects of certain project components. Bank staff worked closely with the Government and the implementing agency and provided them with extensive assistance, in terms of providing suggestions for drafting the laws and regulations, reviewing legal drafts, and giving technical comments.

7.3 Overall Bank performance. Overall, the Bank performance was satisfactory during project preparation, appraisal and implementation.

Borrower 7.4 Preparation. The Borrower's performance in the preparation of the project was satisfactory. During the preparation stage, the Borrower displayed a strong level of commitment to the objectives of the project. The government officials and staff of the implementing agency both at the federal and provincial levels worked closely with the Bank's project team on a continual basis, with full cooperation and enthusiasm.

7.5 Government inmplementationperformance. The government's implementation performance was satisfactory. The government consistently maintained its commitment throughout the implementation. It had established an effective project implementation unit and the day to day implementation of the project was very smooth, particularly considering the challenge to actively engage provincial authorities and staff in a long ranging reform. The country's prevailing economic crisis led the project to suffer from counterpart funding problems towards the end of the project. The project was demanding to the Borrower in the initial stages of implementation. Since the project was the first of its kind in the mining sector, SM had the onerous responsibility of translating the government strategy into a real-life implementation. The process of putting into effect the Agreement signed by the federal govemment and the provinces was also a challenge to the Borrower. Although the six provinces were to follow the Agreement, due to change of administration in the provinces, there were at times disagreements between some of the provinces and the federal government, especially on fiscal matters or mining rights administration. All such issues could be solved through the Federal Mining Council set up at the early stage of the reform process.

7.6 Implementing Agency:

- 13 - Performance of the SM was satisfactory. It had a highly trained and motivated staff. The federal PCU was well organized and effective in dealing with procurement, disbursement, progress reports, and in maintaining proper records of the project. At the provincial level, performance was satisfactory barring the initial stage of the project until the provincial agencies were convinced of the project commitment to achieve its objectives and trust could be established. Changes of the federal administration at the end of 1999 caused a slow down of the project implementation activities until the new team could pick-up the pace.

7.7 Overall Borrowerperformance: The overall performance of the Borrower was satisfactory.

8. Lessons Learned * Creating the right enabling environment is very important. The major lesson of the project is that, by creating the right enabling environment and responsive institutions to interface with the private sector, would result in a positive response for investment making a significant contribution to the country in terms of mining exploration and job opportunities. * Integralapproach to sector development. The Argentina mining TA provides yet another example of the importance to approach sector reform in an integrated, instead of a piecemeal way. This lesson applies both to the project as well as to the component levels, as discussed e.g. in text boxes 1 and 2 regarding the development of mining rights and environmental management capacity, respectively. * Government commitment is essential to success. The success of the project was mainly due to the original political support from the highest levels of the govemment, both at the federal and provincial levels. * Strong sector work helps projectpreparation. The process implemented in Argentina for the mining sector reform has been consistent and - almost - a best practice case. The Bank was able to effectively discuss with the govemment the sectoral reforms and the significance of the project because of the mining sector review done prior to the project preparation. This also gave sufficient time for both the Bank and the government to design the project very thoroughly. * Consistency in the politicalagenda is a key factorfor the project's success. In a country like Argentina with a strong federal system, consistency in the political agenda of federal government and provincial governments is a crucial factor for the project's success. By signing an agreement between the federal government and provincial governments, the project could maintain continuity in sector policy despite changes in administration both at the federal level and the provincial levels. Another key factor for the project's success was the consistency of the sector reform with the general economic reform. * A well-defined interface ensures smooth project implementation. Establishing a well-defined coordination between the federal and provincial implementing units, strong leadership and active participation of provincial implementing agencies and stability are also important factors for a project's success. * Institutionalstrengthening process. The strategy adopted under the project to implement the institutional capacity building was particularly successful considering the traditional mistrust between federal and provincial authorities and the following sequence was followed: (i) based on the institutional mandate, as defined by the agreed sector policy and the prevalent regulations, an overall

- 14- institutional model was designed with the participation of most stakeholders (provincial and federal authorities and clients); (ii) in each of the provinces, a participatory diagnostic of the existing institutions was carried out and the reformed institutions and business processes were designed to respond both to the provincial specificities; (iii) a detailed implementation plan - including training, set-up of procedures, often computerized, purchase of equipment and rehabilitation of facilities - was designed, again in a participatory way; (iv) the process of equipment purchase, training and rehabilitation of the facilities was then implemented in a swift and well-coordinated way. The process contributed to create a positive institutional momentum which proved to be an important part of the "cultural change" which is a somewhat difficult to quantify but nevertheless important outcome of the project. * The project successfully laid new grounds in mining sector. The project results have been to create new benchmarks not only concerning project implementation, but also with respect to various areas such as mining cadastre, land management, and environmental management Lessons and experiences could be applied also to other sectors in Argentina, for instance hydrocarbons.

9. Partner Comments (a) Borrowver/implementing agency: The Borrower's summary report can be found in Annex 8. (b) Cofinanciers: Not applicable (c) Other partners (NGOs/private sector): Not applicable

10. Additional Information Not applicable

- 15 - Annex 1. Key Performance Indicators/Log Frame Matrix

MAIN INDICATORS: MATRIX OF KEY PROJECT ACTIVITIES AND TIMED TARGETS (AE After Effectiveness - 12/07/1995: from Annex 7 of MOP) Main Project Expected Output/impact Timing Outputs Objectives Component Targets Activities AE

Encoutage A. 1 Legal A. Reformed Mining Code and 24 months Draft new Mining Code and regulations Private Framework regulations ready about 18 months AE. Mimng Code Investment in Development not yet sent to Congress, but under Mining review at Mining Committee. Unified Regulations approved by 23 Provinces 48 months AE. Overall, legal and regulatory framework are competitive on a worldwide basis. Best practice regarding Mining Treaty with Chile and I_Environmental Law.

B.2 Mining A. System fully operational in 24 months System fully operational in six Provinces Cadastre the six participating provinces about 48 months AE

C Support Services A. Geological Infrastructure: a) Fully operational mapping 12 months a) Map production procedures fully set-up operational about 24 months AE b) Production of maps: b) Maps produced (cumulative 1996- - I0 geol and 10 sets of 18 months 2001): thematic maps * Geological:: - 15 geol. And 15 sets of 30 months - 95 at 1:250,000 thematic maps - 25 at 1:100,000 - 17 geol. And 17 sets of 42 months * Thematic: thematic maps - 8 natural risks (1:250,000) - 18 geol. And 18 sets of 60 months - 5 environmental baseline thematic maps (1:250,000) - Cumulative product: 60 60 months - 617,000 linelan airborne geophysics geological maps - 30 geochemical (1:250,000) - Metallogenic map of Argentina (1:2,500,000) + book - Open file reports, publications etc.. B. Sector Data Bank: fully 24 months B. SNIM operational about 48 months operational AE

Develop B.3 A. Baseline data in participating 36 months A. Baseline data established about 48 Environmental Environmental provinces established months AE Management Management Framework, B. Monitoring Program 12 months Procedures and established and operational at B. Monitoring Programa established Instruments for National and Provincial levels and operational at provincial and Mining Activities federal levels about 48 months AE

- 16 - ACTION PLAN - IMPLEMENTATION SCHEDULE OF KEY PROJECT ACTIVITIES (1) (from Attachment A, A'nnex 2 to the MOP; AE - A ter Effectiveness (12/05/1995) Timing Government Project Component Expected Results/Impact Targets Achieved Results/Impact Objectives Activities (Comp.) AE/ Respons. Agency Provide A. Legal Framework * Reformed Mining Code - 2 yrs./ SM - See Table above Appropriate Development (A. 1) Legal I. National level * Mining Code Regulations - 2 yrs /SM - See Table above Framework to 2. Provincial level * Provincial Regulations - I yr./ Prov. - Unified Regulations approved - 4 Mining - 2 yrs./ yrs AE 3. Development of * New environmental norms Prov. - Regulations approved - 3 - 4 yrs environmental and standards AE (varying acc to province) standards Strengthening B. Framework definition and (B l) modemization 1. National level * Restructured SM - 2.5 yrs / - Reorganized and strengthened (as of sector SM SSM - 4 yrs AE institutions 2. Geological Service * Geological Service with - Autonomous status lyr. AE, re- responsible of independent administrative - 3 y*s/SM organized and strengthened 4 yrs implementing function, satisfactory to AE (lack formalization of new the mining the Bank intemal structure) policy and law 3. Provincial level * Restructured DPM - Restructures 3 to 4 years AE (acc. - 2.5 yrs / to province) Prov. C. SM and DPM * Upgraded facilities and - 2 5 yrs/ - Achieved - 4 yrs AE (acc. to rehabilitation and provided equipment fully SM, Prov agency and province) equipment to upgrade operational work facilities (B. I) D. SINATEM analysis: * Actions plans (including - I yr/ SM/ - Assessment completed 2 yrs AE. studies about Demand details of document flows, INTEMIN Recommends mainly the and Supply definition of areas of implementation of management responsibility, issues capacity building programs for identification and mining SMEs as a key factor to proposed system support the development of the sub- improvements to resolve sector (see below) them) E. Design of detailed * Systems, training and Throughout - Achieved; fiscal training was a training program testing fully operational project life/ special success. Sustaunability after composed of four SM/Prov. project closure planned but not different subprograms ensured due to un-availability of (B.l) resources I. National level 2. Provincial level 3. Fiscal 4. SINATEM

-17- ACTION PLAN - IMPLEMENTATION SCHEDULE OF KEY PROJECT ACTIVITIES (2) (from Attachment A. Annex 2 to the MOP; AE - After Effectiven ess (12/05/1995) Timing Government Project Component Expected Results/Impact Targets Achieved Results/Impact Objectives Activities (Comp.) AE/ Respons. Agency Strengthening F. Implement the Mning * Procedures and action - Before - Overall design achieved before and Cadastre to plans (incl. details of effectiven./ effectiveness Model and operation modernization strengthen minig documents flows, SM/Prov. plan completed I yr. AE. Detailed of sector nghts and simplify definition of areas of system design, includmg institutions the granting of responsibility in document computenzed admimstrative flows responsible of concessions making handling for granting, and data bases (SRM: Minmg implementing it more transparent. transferring, converting or Register System) completed 2 yrs the muning Composed of four terminating concessions; AE. Installation completed - 3 yrs. policy and law different, assessment and registry of AE;. procedures adjusted to new (cont.) interconnected concession payments; Unified Regulations 4 years AE. subprograms (B.2): exact positioning; issues "Mining" geodetic network and 1. document handling identification and survey of all existing mining rights 2. legal, financial and proposed system completed - 4 yrs AE (acc. to economic data improvements to resolve province) 3. positioning, them) surveying, plotting * System fully operational - 2 yrs - Achieved 4 yrs AE and map preparation * Systems training Throughout -Completed 4. title registry * Systems testing Throughout - Completed and continued after closure * Linkage with BUD/ SUIM - 3 yrs - Achieved at project closure Promote and G. Environmental * Provincial regulations - I yr - Regulations ready I yr. AE support the monitoring and control ready and monitoring (formally approved - 2- 3 yrs AE systematic system (B.3) teams set-up at national (varying acc. to province). Teams development of and provincial levels set-up: UGAN before effect.; environmentally satisfactory to the Bank UGAPs I yrs AE; sound mining * Design the monitoring - I yr. - Monitoring programs designed as activities program satisfactory to the result of baseline surveys; - 4 yrs Bank AE (original schedule not realistic) 1. Establish baseline data * Complete the baseline at - 3 yrs. - Completed 4 yrs AE (terrain and provincial levels climatic factors) 2. Develop monitoring * Monitoring work in the Throughout - Achieved dunng project program field implementation. Sustainability after closure not ensured due to scarce economic resources 3. Establish monitoring * Visit main monitonng - At the - Partially achieved at national level work routines and areas to discuss program beginning of and in Catamarca, Mendoza and procedures to with communities at monitoring San Juan provinces. implement the national and provincial work and program levels penodic. thereafter

* Feedback to SM and DPM - I yr. - Partially achieved enforcement functions Resp.: SM/Prov.

- 18 - ACTION PLAN - IMPLEMENTATION SCHEDULE OF KEY PROJECT ACTIVITIES (3) (from Attachment A, Annex 2 to the MOP; AE - After Effectiveness (12/05/1995) Timing Government Project Component Expected Results/Impact Targets Achieved Results/Impact Objectives Activities (Comp.) AE/ Respons. Agency Support mining H. Provide complete and /DNSG policy accurate geological management and other thematic and private maps (C. I) * Systematic regional investment in 1. Design of detailed geological mapping of the - Map production procedures fully the mining work program PASMA region. Production operational about 24 months AE sector including field work, of at least 60 1:250,000 analytical work and scale maps and - Maps and reports produced map processing corresponding reports. (cumulative 1996-2001) > 60 (see - 10 geol and 10 sets of - 1.5 yr Table above) thematic maps - 15 geol. And 15 sets of - 2.5 yrs thematic maps - 17 geol. And 17 sets of -3.5 yrs. thematic maps - 18geol. And 18 sets of - 5 yrs thematic maps 2. Assessment of * List and program equipment - I yr/ - Completed 2 yrs AE agencies'skills and needed to support mapping DNSG facilities, and activities upgrading proposals * Staff training program Throughout - Completed (a) equipment (computer-wares, instruments, fumiture, vehicles); (b) train staff and provide educational materials. 3. Geological repository * Recover, analyze and record -4 yrs/ Project design and feasibility study program existent geological DNSG completed 3 yrs. AE. information at national and Program cancelled provincial levels 1. SINATEM (according to studies under A 2) (C.2) 1. Practical application * Increase productivity, 3 yrs./ - Cancelled on basis of study under of research program specifically of small and INTEMIN A.2 (see above) medium companies 2. Technological * Assist private sector with Throughout - Management capacity building development program specific problems regarding project life/ and technological etc.. support production and INTEMIN program designed according to commercialization, and study under A 2 and implemented provide information about starting 3 yrs AE advances and changes in technology, markets, environmental issues, etc..

- 19 - ACTION PLAN - IMPLEMENTATION SCHEDULE OF KEY PROJECT ACTIVITIES (4) (from Attachment A, Annex 2 to the MOP; AE - After Effectiveness (12/05/1995) Timing Government Project Component Expected Results/Impact Targets Achieved Results/Impact Objectives Activities (Comp.) AE/ Respons. Agency Support mining J. Mining information policy and promotion /DNM: management system (C.3) to: and pnvate 1. Set up data bank for *Specific information for the - 2 yrs. - Completed 4 yrs. AE investment in mming private sector and other users the mining 2. Prepare analysis of *Increase opportunities and sector international minerals alert in advance about -2 yrs. - Done on a continuous basis markets and studies of potential changes in mining throughout project life and vanous export activities continues after closure possibilities 3. Device and carry out *Availability of accurate public education information Throughout - Completed (mcl. among others an campaigns itinerary public exposition); 4. Prepare and *Provision of helpful continues after project closure disseminate various infomraion Throughout - Completed and continues after bibliography, project closure directories and other information at the national and international levels S. Prepare and . Private investment - I yr. And - Completed; publicafion updated - disseminate "Mining promotion publication periodic. 2'ndyear Investor's Guide" thereafter 6. Prepare conference * Private investment and audio-visual promotion Throughout - Completed and continues after material l project closure K. Data Bank (C.3) * Complete data bank 5 yrs./ - Achieved. 5 yrs AE. However Implement the BUD to * The provision of complete SM/PCU sustainability and maintenance not strengthen sector and accurate geological, fully ensured at project closure, information at the mning and other specific both at federal and provincial levels national and international sector information in real levels time 1. Definition of types * BUD data system I yr. - Completed according to schedule and uses of infornation applications. Global network and requwrements and definifion (hardware and specifications for software), norms, manuals equipment, software and formats and staff training 2. Definition and presentation of the * Global network operational. 2 yrs - Completed 3 yrs AE BUD structure. On-going systematic input of Cadastre and information into the system environmental information will be integrated into the system 3. Geology, topography, * Systematic system for 4 yrs. - Completed according to schedule satellite imagery, information inputs geophysics, geochem., *Global network operating cartography, and other *Availability and distribution data entered into the of useful information system I

-20- ACTION PLAN - IMPLEMENTATION SCHIEDULE OF KEY PROJECT ACTIVITIES (5) (from Attachment A, Annex 2 to the MOP; AE - After Effectiven ess (12/05/1995) Timing Government Project Component Expected Results/Impact Targets Achieved Results/Impact Objectives Activities (Comp.) AE/ Respons. Agency Strengthen L. Project coordination * PCU fully operational Throughout -Fulfilled sector (D ) institutions to I Project coordination * Complete staffing - At - Fulfilled. At project start 3 staff; at implement the (PCU) set-up effectiveness end up to 6 staff on PASMA I PASMA project * Start PCU procurement - I mth AE - Achieved * Develop work routines - By - Progressive development of (including contract effectiveness routines. Procedures fully processing system) operational 1.5 years AE 2. Implementation, * Developing monitoring and - Quarterly, - Progressive development of monitoring and supervision system/project mid-term and routines. Procedures fully supervision accounts and records yearly operational 1.5 years AE. All reviews reports presented on time.

3 Administnng project * Contract management for - According - Fulfilled, with some initial delays procurement and procurement and to project due to progressive development of contractmng of consultants schedule routines. On track about 1.5 yr AE consultants 4. Arranging for project * Auditors selected/ - By Sept. -Fulfilled audits reappointed each year 95- 99 * Audits prepared - Yearly - Fulfilled, but audits generally since overdue effective. - No later -Fulfilled but generally overdue * Audits sent to Bank than 6 mths after end of cal. Year 5. Set-up special account -At - Fulfilled * Special account fully affectiveness operational 6. Periodic project - I" 18 - Fulfilled on-time review * Confirmation of project months AE progress and possible and yearly adjustmnents thereafter

- 21- Annex 2. Project Costs and Financing

Project Cost by Component (in US$ million equivalent) Appraisal Actual/Latest Percentage of Esti'mate Estimate Appraisal Project Cost By Compohent US$ million US$ million A. Sector Policy Development A.1 Legal framework 0.60 0.56 93.3 A.2 SINATEM 0.80 0.92 115 B. Policy Implementation B.l Public mining institutions 5.60 6.34 113.2 B.2 Mining Cadastre 7.20 8.96 124.4 B.3 Environmental management 3.80 4.19 110.3 C. Support Services C.1 Geological information 10.70 8.11 75.8 C.2 SINATEM 1.80 0.30 16.7 C.3 Unified Mining Information System 3.60 3.63 100.8 D. Project Coordination 1.40 1.31 93.6 PPF 0.80 0.80 100 UNDP management fee 0.85 Total Baseline Cost 36.30 35.97

Price Contingencies 3.70 Total Project Costs 40.00 35.97 Total Financing Required 40.00 35.97

Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) Procurement Method ICB ProCu M thod2 N.B.F. Total Cost Expenditure Category- NCB,- Other' 1. Works 0.00 2.00 8.90 0.00 10.90 (0.00) (0.70) (7.90) (0.00) (8.60) 2. Goods 5.90 1.10 1.50 0.00 8.50 (5.20) (0.90) (1.30) (0.00) (7.40) 3. Services 0.00 0.00 9.70 0.00 9.70 (0.00) (0.00) (8.80) (0.00) (8.80) 4. Training 0.00 0.00 3.40 0.00 3.40 (0.00) (0.00) (2.10) (0.00) (2.10) 5. Incremental costs 0.00 0.00 6.70 0.00 6.70 (0.00) (0.00) (2.30) (0.00) (2.30) 6. PPF 0.00 0.00 0.00 0.80 0.80 (0.00) (0.00) (0.00) (0.80) (0.80) Total 5.90 3.10 30.20 0.80 40.00 (5.20) (1.60) (22.40) (0.80) (30.00)

22 - Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalet Pirocuemet Me6thod Expenditure Category M NCB N B.F. Total Cost 1GB~ NP~ Other _____ 1. Works 7.36 1.56 0.05 0.13 9.10 (6.32) (0.48) (0.01) (0.00) (6.81) 2. Goods 3.55 0.00 3.76 0.00 7.31 (3.18) (0.00) (3.83) (0.00) (7.01) 3. Services 0.00 0.00 13.26 0.85 14.11 (0.00) (0.00) (11.71) (0.00) (11.71) 4. Training 0.00 0.00 1.09 0.00 1.09 (0.00) (0.00) (0.37) (0.00) (0.37) 5. Incremental costs 0.00 0.00 3.56 0.00 3.56 (0.00) (0.00) (1.48) (0.00) (1.48) 6. PPF 0.00 0.00 0.80 0.00 0.80 (0.00) (0.00) (0.80) (0.00) (0.80) Total 10.91 1.56 22.52 0.98 35.97 (9.50) (0.48) (18.20) (0.00) (28.18)

"Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies. 2'Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local govemment units.

Project Financing by Component and Subcomponent (in US$ million equivalent) Percentage of Appraisail Component and Appraisal Estimate Actual/Latest Estimate Subcomponent B .-Bank Govt CoF. Bank Govt. CoF. A. SectorPolicy 1.07 0.46 1.29 0.19 120.6 41.3 A.1 Legal framework 0.40 0.20 0.40 0.17 100.0 85.0 A.2 SINATEM 0.62 0 26 0.89 0.02 143.5 7.7 B. Policy Implementation 13.86 4.49 14.87 4.62 107.3 102.9 B.1 Public mining 4.20 1.94 4.29 2.05 102.1 105.7 institutions B.2 Mining Cadastre 6.25 1.73 7.10 1.86 113.6 107.5 B.3 Environmental 3.41 0.82 3.48 0.71 102.1 86.6 management C. Support Services 13.35 4.44 10.28 1.75 77.0 39.4 C.1 Geological information 9.20 2.65 7.07 1.04 76.8 39.2 C.2 SINATEM 1.59 0.41 0.15 0.15 9.4 36.6 C.3 Unifled Mining 2.56 1.38 3.07 0.56 119.9 40.6 Information System D. Project Coordination 0.91 0.61 0.93 0.38 102.2 62.3 PPF 0.80 0.80 100.0 UNDP fees 0.00 0.85 0.0 Note: in the above table, the components amounts include the subcomponents costs.

- 23 - Annex 3. Economic Costs and Benefits Not applicable

-24 - Annex 4. Bank Inputs a) Missions: Stage of Project Cycle No. of Persons and Specialty Performance Rating (e.g. 2 Economists, 1 FMS, etc.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation January/94 2 1 Planner, I Sector Manager June/94 5 1 Planner, I Mining Economist, 1 Mining Specialist, I Environmental Specialist, I Institutional Specialist

Appraisal/Negotiation November/94 7 1 Planner, I Mining Economist, 1 Mining Specialist, I Economist, I Environmental Specialist, I Financial Analyst, I Institutional Specialist March/1995 3 1 Planner, I Environmental Specialist, I Sector Manager Supervision November/95 2 1 Planner, I Mining S S Specialist April/96 2 1 Planner, I Mining Economist, S S June96 2 1 Planner, I Mining Specialist S S November/96 I I Mining Specialist S S January/97 I I Environmental Specialist S S March/97 I I Planner S S May/97 2 1 Planner, I Mining Economist S HS September/97 4 1 Planner, I Mining Specialist, S HS I Mining Economist, I Environmental Specialist November/97 I I Mining Specialist S HS December/97 3 1 Mining Specialist, I Mining S HS Economist, I Environmental Specialist April/98 3 1 Mining Specialist, I Mining S HS Economist, I Environmental Specialist July/98 3 1 Mining Specialist, I Mining HS HS Economist, I Environmental Specialist October/98 I 1 Mining Specialist HS HS December/98 4 1 Mining Specialist, I Mining HS HS Economist, I Environmental Specialist,1 Procurement Specialist April/99 4 1 Mining Economist, I Mining HS HS Specialist, 2 Sector Managers

- 25- October/99 4 1 Mining Economist, I Mining HS HS Specialist, I Environmental Specialist, I Procurement Specialist December/99 I I Mining Specialist HS HS July/00 3 1 Mining Specialist, I Mining S HS Economist, I Procurement Specialist August/00 2 1 Mining Specialist, I S HS Procurement Specialist December/00 5 1 Mining Economist, I Mining S HS Specialist, IEnvironmental Specialist, I Procurement Specialist, I Financial Specialist May/2001 I I Mining Specialist S HS ICR August/2001 3 1 Mining Economist, I S HS Mining Specialist, Sector Manager December/2001 2 1 Mining Specialist, I S HS Environmental Specialist May 2002 1 1 Mining Specialist S HS

(b) Staff.

Stage of Project Cycle Actual/Latest Estimate No. Staff weeks US$ ('000) Identification/Preparation 46.4 225.7 Appraisal/Negotiation 22.5 115 6 Supervision 95.3 425.5 ICR 12.4 52.3 Total 176.6 819.1

- 26 - Annex 5. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substanbal, M=Modest, N=Negligible, NA=Not Applicable) Rating C Macro policies O H OSUOM O N * NA Ol Sector Policies * H OSUOM ON O NA O Physical O H *SUOM O N O NA Oi Financial O H OSUOM O N O NA FL InstitutionalDevelopment 0 H * SU O M 0 N 0 NA O Environmental O H *SUOM ON O NA

Social Oi Poverty Reduction O H OSU*M O N O NA Li Gender OH O SU O M ON * NA O Other (Please specify) O H OSUOM O N * NA O Private sector development * H O SU O M 0 N 0 NA O Public sector management 0 H * SU O M 0 N 0 NA O Other (Please specify) OH OSUOM ON * NA

- 27- Annex 6. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

El Lending OHS * S OU OHU O Supervision OHS * S 0 U O HU O Overall OHS OS O U O HU

6 2 Borrowerperformance Rating

L Preparation * HS OS O U O HU O Government implementationperformance O HS O S 0 U 0 HU O Implementation agency performance O HS OS O U 0 HU LI Overall OHS OS 0 U O HU

- 28 - Annex 7. List of Supporting Documents 1. Argentina - Mining Sector Review (Report 11704-AR, June 30, 1993) 2. Sectoral Environmental Assessment (SSM, September 1994, revised version March 1995) 3. Staff Appraisal Report for Argentina Mining Development Technical Assistance Project dated June 29, 1995 (Report No. P-6617-AR) 4. Aide Memoires, Back-to-Office Reports, and Project Status Reports; 5. Project Progress Reports; 6. Consultant Study Reports financed under the Project; and 7. Borrower's Evaluation Report dated December 21, 2001.

- 29 - Additional Annex 8. Borrower's Summary Report

The Argentine mining sector reform initiated in 1992 is a success. It is expected that many of its achievements will be sustainable - in spite of the difficult economic and political situation prevalent at the time these lines are written (December 2001) -; and that the process to further improve conditions for sector growth and contribution to socio-economic development will continue. Background Ten years ago, in spite of a favorable geology and well-established mining neighbors such as Brazil, Bolivia and Chile, there were only a few mines, most of them small-scale operations in the non-metallic (industrial minerals) sector. In 1992, with support of the World Bank, the Government of Argentina assessed the mining sector's deficiencies and the country's geological potential. The sector's historical poor performance was due to a number of factors, including: * Long term macroeconomic instability; * Interventionist role of Government in the sector; * Weak administration by provincial governments; • Conflicts between the Federal and Provincial authorities regarding mining development policy; * Huge differences regarding regulations and enforcement between provinces; for example, different types and rates of royalties; * Difficult access by private investors to large potential mining areas held by federal or provincial state agencies; * Outdated legal frameworks and cumbersome, unclear or discretionary concession and cadastral procedures; * Lack of security of tenure for mining rights; * Outdated and inefficient institutional framework; and, * Lack of a basic geological information. Objectives of the reform. Based on the sector diagnostic, as well as on the recognition of the worldwide application of the market economy and of the globalization of the industry, in 1993 the Government formulated a mining policy in line with the broader national economic policy reform-initiated in 1990-and started a reform strategy for environmentally and socially sound private mining development. The strategy aimed to: * Encourage private investments and stability, while avoiding earlier wasteful promotion schemes or subsidies; * Ensure that the sector contributes to sustainable economic and social regional development; * Promote consensus regarding mining policy between federal and provincial authorities, through the creation of a Federal Mining Council; * Better define the respective responsibilities of the provincial and federal mining authorities and of the private sector; divest state owned mrining interests and restructure and modemize the sector agencies - emphasizing the role of the State as a regulator - and improving access to mineral land; * Modernize the legal framework by amending the Mining Code and promulgating complementary legislation, establish procedures and non-discretionary administration for the granting of mining rights and enforcement of environmental regulations, and homogenize regulations and enforcement across provinces; and, * Create an autonomous geological service to produce the required base line data and establish an easily accessed nationwide information network. The objectives and content of the reform, as well as its implementation process, were designed on the basis

- 30 - of a policy framework agreed between Provinces and the Central government, and formalized under the 1993 Mining Federal Agreement, and with the support of most stakeholders. The close involvement of the provinces authorities was a pre-requisite to success, as they are the constitutional owners of the mineral resources and responsible for their administration. Implementation and achievement of objectives In 1994, the Government requested a loan to the WB to develop provincial and federal capacities and infrastructure needed to put into practice the reform. At this time, it was decided to design the first PASMA as a pilot project, involving the federal and six provincial authorities, which became effective in December 1995. The reason was to test the selected modernization methodology, before, if successful, to extend the experience to the rest of the country (a second loan was requested in 1997 for this purpose). The project design was based on the following pillars: 1) the modernization of the legal framework, 2) the strengthening of the institutional capacity at the federal and provincial levels, 3) the improvement of the administration of mining rights, 4) the development and set-up of an environmental management system, 5) the improvement of the geological information infrastructure, and 6) the set-up of a sector-wide publicly available information system. Mining legal and fiscal framework The current legal framework has proved to be efficient in attracting private investment and supporting the development of environmentally sound mining activities. During the preparation and implementation of the project, nine laws were prepared and passed by Congress. Some of the most important ones include: the Investment Law (1993), improving investment conditions within the sector and providing fiscal stability; the Federal Mining Agreement Law (1993), defining the consensus and commitment between Provinces and Nation regarding sector development policies and management; the Environmental Law for Mining Activities (1995), incorporated as part of the Mining Code and establishing clear rules for investors regarding EIAs, norms and procedures; and the Mining Treaty (2001) with Chile, setting the rules for the development of the many ore deposits lying close to the border of both countries. In addition, under the umbrella of the project, all provincial mining authorities (six from PASMA I and 17 from PASMA 11) have established unified mining procedures for the granting and management of mining rights. One of the objectives of the project, to pass a modernized Mining Code, was partly achieved. A draft project was prepared and distributed to all stakeholders for analysis and comments. Discrepancies from conservative sectors delayed progress and did not permit to send the project to Congress. However, the consensus building process continues and the proposed law is gaining an increasing support. An important lesson is the need to involve all sectors and actors at an early stage of development through an open process, as demonstrated in the case of the unified mining procedures. Institutional capacity development. The project completed the modernization of the 6 provincial mining agencies and 2 mining courts (Catamarca and Salta Provinces), in terms of streamlining the organizations with the new functions, introducing modern technologies, training staff and improving infrastructure and equipment. At the federal level, the Undersecretanat of Mines, the Environmental Management Unit (UGAM), the Mining Directorate and the Geological Survey (the autonomous status of the Survey has been approved, however the new structure has still to be formally confirTned) were similarly strengthened, equipped and staff trained in order to fullfil their functions in line with the new role of the State. Another important achievement of the reform is the institutionalization of the Federal Mining Council (COFEMIN) where the State policy for sector development is discussed and agreed between the 23 Provincial and the Federal authorities. Following the example of the public sector, the private sector unified and strengthened its representation structure at the national and, in some cases, provincial levels. Institututional strengthening traditionally constitutes a challenging process and the main constraints

-31 - included (i) the initial lack of trust from the agencies staff with respect to the federal government's commitment to fully implement the reform as well as (ii) resistance due to the fear that such reform would be linked to staff reduction. In-depth dialogue from an early stage to promote ownership with the reform objectives, combined with the timely and coordinated implementation of the different components - design, training, infrastructure, set-up of operational procedure and follow-up - were key factors towards a change of attitude - from defensive to service oriented - and the implemention of a more efficient sector management. In addition, flexibility in adjusting the overall institutional model to the customary and, to some extent, regulatory particularities of the different provinces has been an important factor to success. Unified mining cadastre system. The scheduled mining cadastre works have been completed. They included (i) the set-up of a complementary mining geodetic network, linked to and strengthening the national network, (ii) location and GPS measurement of all mining properties; and (iii) set up of a computerized mining concession granting and management system was put in place in the six provinces, using off-the-shelf software applications. The relevant information is available on the intemet. All involved staff have been trained in GPS technology and use of GIS and of related databases, both at workshops and on the job, using the infrastructure and equipment purchased under the project. Lessons learned include: (i) a critical prerequisite consists in the detailed inventory, clean-up and updating of the existing cadastral infonnation, before starting the set up of a new system; (ii) computerized cadastral management systems improve the strict and transparent application of the mining law and its procedures and enhance security of tenure; (iii) a particularly systematic planning effort and a rigorous supervision of contracted works to be carried out in such remote and difficult terrains as the Andes reduces the risk of failure in location calculation or building up of reference sites.The precise positioning of properties, transparent granting and cancellation procedures and public availability of the related information enhance security of tenure and represent fundamental conditions to attract investments as well as for the orderly development and sound management of the mining sector. Mining environmental management system. An environmental law for mining activities was drafted with the support of the project, during preparation, and passed in 1995. Its regulations and norms have been enacted in all six provinces, and guidelines prepared. Six provincial environmental management units (UGAPs), responsible for the evaluation and approval of EIAs, as well as for the monitoring and the enforcement of the law and regulations, were established. In most cases, the UGAPs respond to the provincial mining authorities. However, the review of EIAs involves in all provinces the participation of authorities from other involved sectors. A federal mining environmental unit (UGAM) was set-up as well, providing policy coordination and legal and technical advice to the UGAPs and to the federal authorities. Environmental baseline studies in selected mining areas of every six provinces were completed, and the data input into a GIS based information system, available through internet. Monitoring environmental programs to be carried out periodically by the UGAPs have been set up, the data entered in the databases. These monitoring components should provide an efficient tool, quite unique so far in Argentina, to assess the sector environmental performance. However, they are probably the most sensitive to financial crisis and their sustainability will depend more than other systems (including the environmental permiting procedures) established under the project on the availability of sufficient resources. In addition, as part of the PASMA II project, activities and studies on the socio-economic and environmental impacts of large scale mining operations on communities have been carried out in the Catamarca and San Juan provinces. A methodology has been developed regarding (i) how to assess such impacts and (ii) how to approach from the point of view of the different stakeholders the development of such projects. Important lessons include: (i) the development of an environmental legal and institutional framework is an important pre-requisite for mining investment as it established clear rules; it has been widely accepted by

- 32 - all stakeholders and contributes to the development of the sector without environmental conflicts; (ii) to prevent environmental conflicts and impacts, it is critical to involve all stakeholders (state, private sector, the communities with mining activities and NGOs), with clearly defined roles and methodologies; and (iii) the dissemination of information and communication with the involved communities is critical for the development of mining operations and their contribution to local development.. Geologicalinfrastructure. The Geological Survey (SEGEMAR) has achieved the production goals defined at project start in terms of published maps and documents, as a result of the successful set-up of state-of-the-art and efficient procedures to generate and disseminate earth sciences information. Important lessons include: (i) clear definitions of priorities and long term planning in terms of products and areas - based on consultations with the clients (so far mainly provincial and municipal authorities as well as mining companies) within a well-defined policy framework - induced a more systematic production and improved quality and relevance of the information; (ii) the selected capacity building methodology, based on actual production goals under the responsibility of the agency's staff, supported by mainly on the job training provided by consultants from advanced geological surveys, has contributed to develop a strong ownership of the reform objectives within this field, which translated into the development of efficient work procedures and performance; and (iii) the public availability and dissemination of quality information has enhanced SEGEMAR reputation of reliability and - to some extent - demand. The sustainability of full-capacity activities in a period of economical crisis cannot be ensured. However, the present functions and structure of the institution, constituted by a strong and limited core staff responsible for the planning, coordination, storage, retrieval, processing and dissemination of the national geo-information, while the mapping or data gathering activities are mostly contracted out (universities, consultants), should mitigate the risks of regression to a pre-PASMA situation. National mining information system (SNIM). The project completed the design and set-up of the SNIM linking, through intra-/intemet, federal and provincial databases, such as legal, geological, cadastral, environmental, statistics, promotion and others, related when relevant to GIS based on a unified digital map of Argentina, developed in cooperation with IGM. This component provides an excellent tool for land management, including but not limited to mining development, to the govemement, to the private sector and to all sectors of the society. While transferred from the project to the respective authorities, SNIM requires a strong coordination which could not be fully consolidated during implementation. The operation of this system might also be more sensitive than others developped under the project to the availability or not of sufficient ressources. It represents an essential factor for success in attracting investors, achieve transparency and sustainability of mining sector development. Support of the World Bank The World Bank (WB) has played a critical and positive role in the implementation and success of the mining reform in Argentina. It provided an in-depth assessment of the mineral sector at inception, on the basis of which the federal and provincial authorities could design an effective development policy. The WB then provided policy, technical and financial assistance to implement the sector reform in an effective way, in a constant and open dialogue with the implementing agencies, with the Ministry of Economy, the Chief of Cabinet Office, the provincial govemors, representatives of the private sector and of the civil society. Performance of the federal and provincial authorities The successive federal and provincial governments have been supportive of the sector development policy and reform, and, as a consequence, of the project implementation continuity. Such support is a key factor in the successful achievement of the reform, and of the PASMA project, objectives. The deterioration of the economic situation during the last couple of years of project implementation has affected the level of activities in a few cases, principally due to the progressive reduction in availability of counterpart funds, but did not impact the outcome. However, the impact of the present crisis on the sustainability of some of

- 33 - the achievements, such as environmental monitoring and the information system, remains to be seen. Conclusions The success of the Argentina mining sector reform is based on several factors, including, (i) a continuous political support from all stakeholders; (ii) the initial in-depth analysis of the sector problems; and (iii) the selected approach integrating the legal, institutional and information infrastructure aspects. At the level of the project as such, success was due to (i) a strong link and support between the political authorities and the teams responsible for the coordination and implementation of the activities; (ii) clear and concrete objectives and tasks easy to monitor; (iii) efficient planning, management and monitoring; and (iv) open and constant dialogue between stakeholders. The main issue for the future is related to the sustainability of the project achievements and to the needed continuity to further deepen the reform. A most important requisite will be a strong political support which would allow a clear leadership and consensus based actions through plans and programs to maintain and continue to develop the changes initiated under the project. As part of such plan and programs, is the definition of reliable financial mechanisms to support critical functions of public mining agencies. The completion of the mining code reform is also strongly related to this issue. Most important would be to continue the work initiated under PASMA to develop activities aiming at improving the integration of mining projects to the socio-economic development of communities, including, among others, the development and implementation of improved consultation and participatory mechanisms, community driven development linked to mining, mine closure mechanisms, coordination with other sectors (e.g. infrastructure development and others) in order to optimize the economic benefits from the mining sector development, particularly at the local and regional levels. We express our wishes that the World Bank can continue to provide its support and help our country to deepen the social aspects of the mining reform. Buenos Aires, December 21, 2002 Dr. Carlos Saravia Frias Undersecretary of Mines

- 34 - IBRD 27034

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