Document of The World Bank...Consolidated Copper Minies Investment Holding (ZCCM-IH), reviewed and approved by the Environmental Council of Zambia (ECZ), and implemented for all mining

Document of The World Bank

Report No: ICR00001904

IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-37410 IDA-3741A IDA-H0260)

ON A

CREDIT

IN THE AMOUNT OF SDR14.1 MILLION (US$19 MILLION EQUIVALENT)

AND GRANT

IN THE AMOUNT OF SDR15.5 MILLION (US$21MILLION EQUIVALENT)

TO THE

REPUBLIC OF ZAMBIA

FOR A

COPPERBELT ENVIRONMENT PROJECT

October 22, 2011

Sustainable Development Department Zambia – AFCS3 Africa Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective March 31, 2011)

Currency Unit = ZMK 1.00 = US$ 0.00021

US$ 1.00 = 4731

FISCAL YEAR January 1 - December 31

ABBREVIATIONS AND ACRONYMS

CAS Country Assistance Strategy CBA Cost-Benefit Analysis CBE Citizens for a Better Environment CDC Commonwealth Development Corporation CEMP Consolidated Environmental Management Plan CEP Copperbelt Environment Project CIDA Canadian International Development Agency DAA Delegated Authorizing Agency DO Development Objective DPP Detailed Procurement Plan EA Environmental Assessment ECZ Environmental Council of Zambia EIA Environmental Impact Assessment EIS Environmental Impact Statement EMF Environmental Management Fund EMF-SC Environmental Management Fund-Steering Committee EMMS Environmental Management in Mining Sector Project EMP Environmental Management Plan EPA Environmental Protection Agency EPPCA Environmental Protection and Pollution Control Act ERIP Economic Recovery and Investment Promotion ERIPTA Economic Recovery and Investment Promotion Reform Program ESP Environment Support Program FMS Financial Management System FPM Financial Procedures Manual GRZ Government of the Republic of Zambia IBRD International Bank for Reconstruction and Development IDA International Development Agency IFC International Finance Corporation IPPP Industrial Pollution Prevention Programme IRC Interagency Regulatory Committee KAPS Knowledge, Attitude, Practice Surveys KCM Konkola Copper Mines KDMP Konkola Deep Mining Project LRP Labor Reduction Program MCM Mopani Copper Mines M&E Monitoring and Evaluation MENR Ministry of Environment and National Resources MLA Mining License Areas MMA Mines and Minerals Act MMMD Ministry of Mines and Minerals Development

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MFNP Ministry of Finance and National Planning MOU Memorandum Of Understanding MPAP Mining Pollution Affected Persons MSD Mines Safety Department MTENR Ministry of Tourism, Environment and Natural Resources MUZ Mineworkers Union of Zambia NEAP National Environmental Action Plan NFT Norwegian Pollution Control Authority NOP Nchanga Open Pit NORAD Norwegian Agency for Development Cooperation NPV Net Present Value OP Operational Policy PAD Project Appraisal Document PCB Polychlorinated biphenyls PCD Pollution Control Dam PHRD Policy and Human Resources Development Fund PIM Project Implementation Manual PPF Project Preparation Facility POP Persistent Organic Pollutants PSC Project Steering Committee PSCAP Public Service Capacity Building Project PSREP Public Sector Reform and Export Promotion RAP Resettlement Action Plan RSA Resettlement Action Plan SDB Standard Bidding Document SIL Specific Investment Loan SOE Statements of Expenditures SRK Steffen, Robertson and Kirsten TD Tailings Dam TDS Total Dissolved Solids TLP Tailings Leach Plant TOR Terms of Reference TPM Total Particular Matter TSS Total Soluble Solids USEPA United States Environmental Protection Agency WHO World Health Organization ZCCM Zambia Consolidated Copper Mines Limited ZCCM-IH ZCCM -Investments Holdings Plc ZECU ZCCM-IH Environmental Coordination Unit ZMK Zambian Kwacha

Vice President: Obiageli Katryn Ezekwesili Country Director: Kundhavi Kadiresan Sector Manager: Idah Pswarayi-Riddihough

Project Team Leader: Martin Fodor ICR Primary Author Sabine Cornelius

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ZAMBIA Copperbelt Environment Project

CONTENTS

Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph

1. Project Context, Development Objectives and Design ........................................................... 1 2. Key Factors Affecting Implementation and Outcomes ........................................................... 8 3. Assessment of Outcomes ...................................................................................................... 17 4. Assessment of Risk to Development Outcome ..................................................................... 29 5. Assessment of Bank and Borrower Performance .................................................................. 30 6. Lessons Learned .................................................................................................................... 35 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ....................... 36 Annex 1. Project Costs and Financing ...................................................................................... 38 Annex 2. Outputs by Component .............................................................................................. 39 Annex 3. Economic and Financial Analysis ............................................................................. 56 Annex 4. Bank Lending and Implementation Support/Supervision Processes ......................... 60 Annex 5. Beneficiary Survey Results ....................................................................................... 62 Annex 6. Stakeholder Workshop Report and Results ............................................................... 63 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ................................. 64 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ................................... 79 Annex 9. List of Supporting Documents................................................................................... 81

MAP IBRD 32243, IBRD 32244

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A. Basic Information

Country: Zambia Project Name: Zambia Copperbelt Environment Project (CEP)

Project ID: P070962 L/C/TF Number(s): IDA-37410, IDA-3741A, IDA-H0260

ICR Date: 10/31/2011 ICR Type: Core ICR

Lending Instrument: SIL Borrower: GOVERNMENT REPUBLIC OF ZAMBIA

Original Commitment: XDR 29.60M Disbursed Amount: XDR 24.46M Revised Amount: XDR 29.60M Environmental Category: A Implementing Agencies: Environmental Council of Zambia Zambia Consolidated Copper Mines - Investment Holdings (ZCCM-IH) Cofinanciers and Other External Partners: Nordic Development Fund (NDF) B. Key Dates

Process Date Process Original Date Revised / Actual Date(s)

Concept Review: 09/19/2000 Effectiveness: 09/25/2003 09/25/2003 Appraisal: 03/11/2002 Restructuring(s): 05/28/2010 Approval: 03/20/2003 Mid-term Review: 08/31/2005 Closing: 08/01/2008 03/31/2011 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: Substantial Bank Performance: Unsatisfactory Borrower Performance: Moderately Unsatisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings

Quality at Entry: Moderately Satisfactory Government: Moderately Unsatisfactory

Quality of Supervision: Unsatisfactory Implementing Agency/Agencies:

Moderately Unsatisfactory

Overall Bank Performance: Unsatisfactory Overall Borrower

Performance: Moderately Unsatisfactory

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C.3 Quality at Entry and Implementation Performance Indicators

Implementation Performance Indicators QAG Assessments

(if any) Rating

Potential Problem Project at any time (Yes/No):

Yes Quality at Entry (QEA):

None

Problem Project at any time (Yes/No):

No Quality of Supervision (QSA):

Satisfactory

DO rating before Closing/Inactive status:

Moderately Satisfactory

D. Sector and Theme Codes

Original Actual Sector Code (as % of total Bank financing) Mining and other extractive 100 100

Theme Code (as % of total Bank financing) Environmental policies and institutions 50 10 Pollution management and environmental health 50 90 E. Bank Staff

Positions At ICR At Approval Vice President: Obiageli Katryn Ezekwesili Callisto E. Madavo Country Director: Kundhavi Kadiresan Christiaan J. Poortman Sector Manager: Idah Z. Pswarayi-Riddihough Marjory-Anne Bromhead Project Team Leader: Martin Fodor Yves Andre Prevost ICR Team Leader: Martin Fodor ICR Primary Author: Sabine Cornelius F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The Project Development Objectives (PDOs), as stated in the Project Appraisal Document (PAD), were to: (i) address environmental liabilities associated with the mining sector, following the privatization of the mining assets; and (ii) improve future compliance of the mining sector with environmental and social regulations. The wording of the PDOs in the PAD differed from that in the Development Financing Agreement (DFA) between IDA and the Republic of Zambia, according to which the Project aimed to assist the Borrower's efforts in: (a) addressing environmental liabilities and obligations associated with the mining sector, following the privatization of the

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mining assets of ZCCM; and (b) strengthening the capacity of its environmental regulatory institutions to improve future-compliance of the mining sector with environmental and social regulations. Given that the PDOs in the DFA were, in addition to being more specific and achievable, the Objectives negotiated and signed by both parties, the assessment of Project Results in this ICR is based on the DFA version of the PDOs. Revised Project Development Objectives (as approved by original approving authority) The Project Development Objectives were not revised. (a) PDO Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 :

Environmental Management Plans (EMPs) prepared by investors and the Zambia Consolidated Copper Minies Investment Holding (ZCCM-IH), reviewed and approved by the Environmental Council of Zambia (ECZ), and implemented for all mining sector investments.

Value (quantitative or qualitative)

No EMPS in Place. Completed. Completed.

Date achieved 04/15/2003 05/31/2004 10/31/2006

Comments (incl. % achievement)

Target fully achieved: 15 Investor and 12 Counterpart EMPs created. EMPs are under implementation. Compliance with them monitored by ECZ increased from 35% in 2005 to 60% in 2010.

Indicator 2 : Consolidated Environmental Management Plan (CEMP) completed by ZCCM-IH, approved by ECZ and adopted by the EMF Steering Committee (EMF-SC).


No CEMP in place for the Copperbelt and Kabwe. CEMP Completed.

CEMP 2 Completed (NB: The CEMP2 was the final CEMP).

Date achieved 04/15/2003 04/15/2004 05/28/2006


Target fully achieved. The completion, disclosure and approval by ECZ of the CEMP II represented a significant milestone in the mitigation and prevention of mining related adverse environmental impacts.

Indicator 3 : Environmental and social obligations resulting from ZCCM's historical liabilities identified and addressed on a priority basis.


No prioritization except for time bound commitments made to investors.

Priority liabilities and obligations addressed.

Contractual obligations substantially addressed.

Date achieved 04/15/2003 04/30/2004 03/31/2011

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Contractual obligations addressed, except one site. Priority liabilities addressed except 13 tailings dams turned assets and transferred for reprocessing instead of closure.

Indicator 4 : Monitoring system established to monitor implementation of EMPs and their compliance with environment regulations.


Existing monitoring system considered weak, not comprehensive, and not effective.

Ongoing monitoring through establised system.

ZCCM-IH and ECZ monitoring system in operation.

Date achieved 04/15/2003 12/31/2005 03/31/2011


Monitoring system established and operational. 90 inspections per year to 23 mine areas carried out 2005 - 2010. Industry compliance with EMPs at 60%.

Indicator 5 : Pollution flows and loads resulting from mining operations are regularly monitored.


Lack of regular monitoring.

Regular ongoing monitoring. Partially completed.

Date achieved 04/15/2003 12/31/2005 03/31/2011


ECZ regularly monitored pollution flow, based on data from the mining companies and own sampling. Water quality steady despite more than doubling of copper mining.

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised

Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : Pollution flow from rehabilitated project sites into Kafue River watershed reduced by 70%.


Baseline values were established during the preparation of the CEMP for 2004/5

Pollution flow from rehabilitated project sites into Kafue watershed reduced by 70%.

Exact value of this indicator was considered not measurable, given difficulties distinguishing between flows from historic and active mine operations.

Date achieved 01/02/2006 03/01/2008 03/31/2011


ECZ undertook water quality monitoring of the Kafue River starting in 2007. Some sampling points were monitored by designated agencies such as ZECU. Water quality steady despite more than doubling of copper mining. Pollution flow from rehabilitated sites not distinguishable from other pollution flow.

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Indicator 2 : Zero leakage of tailings from dams rehabilitated under the project.


Dam failures at Tailings Dam (TD) 33C and weakness at several dam sites prior to the Project

Zero linkage from tailings dams rehabilited under the project

Minor spillage due to vandalism but no dam failures or major leakage occured since Project intervention.

Date achieved 02/03/2003 03/01/2008 03/31/2011 Comments (incl. % achievement)

Geotechnical studies/safety assessments completed for 13 tailings dams slotted for closure. These eventually not closed except for 5 facilities due to transfer for reprocessing. Leakage potential from transferred tailing dams remains.

Indicator 3 :

Private investors EMPs and ZCCM-IH Counterpart EMPs for each site completed with adequate participation of local governments and stakeholder groups, including Non-Governmental Organizations (NGOs) and Community-Based Organizations (CBOs).


Four mining facilities with EMPs in place As stated in DFA

completed (Aug 31, 2003 - prep)


ZCCM-IH and the Government environmental liabilities and obligations defined and mitigation developed. Counterpart EMPs publicly reviewed and concerns of stakeholders taken into account.

Indicator 4 : Environmental liabilities of ZCCM-IH prioritized according to a transparent and accepted ranking system.


No prioritization system. Ranking system established and functioning.

System established and functioning.


A ranking system established to prioritize sub-projects based on environmental liabilities’ health risk. System used to approve subprojects.

Indicator 5 : Improvement of performance and capacity of ECZ and the Mine Safety Department (MSD) to enforce regulations.


Weak capacity and lack of cooperation.

Improved capacity and enforcement of regulations ongoing

Capacity of ECZ improved by 60% (ECZ estimate).

Date achieved 04/15/2003 08/31/2005 03/31/2011


ECZ and MSD increased compliance inspections to about 90 per year at 23 mining facilities; approximately 7 per year for problematic facilities. They temporarily shut two facilities for non-compliance. Issuance of pollution permits increased from 1,392 in 2005 to 3,582 in 2010.

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G. Ratings of Project Performance in ISRs

No. Date ISR Archived DO IP

Actual Disbursements (USD millions)

1 05/29/2003 Satisfactory Satisfactory 0.00 2 11/25/2003 Satisfactory Satisfactory 1.60 3 05/29/2004 Satisfactory Satisfactory 2.14 4 12/01/2004 Satisfactory Satisfactory 2.89 5 06/29/2005 Satisfactory Satisfactory 4.69 6 08/17/2005 Moderately Satisfactory Moderately Satisfactory 6.19 7 06/14/2006 Moderately Satisfactory Moderately Satisfactory 9.94 8 06/25/2007 Moderately Satisfactory Moderately Satisfactory 14.79 9 12/21/2007 Moderately Satisfactory Moderately Satisfactory 18.59

10 06/05/2008 Moderately Satisfactory Moderately Satisfactory 21.06 11 12/15/2008 Moderately Satisfactory Moderately Satisfactory 24.39 12 05/28/2009 Moderately Satisfactory Moderately Satisfactory 26.15 13 12/16/2009 Moderately Satisfactory Moderately Satisfactory 30.58 14 06/29/2010 Moderately Satisfactory Moderately Satisfactory 32.60 15 03/27/2011 Moderately Satisfactory Moderately Satisfactory 33.90

H. Restructuring (if any)

Restructuring Date(s)

Board Approved

PDO Change

ISR Ratings at Restructuring

Amount Disbursed at

Restructuring in USD millions

Reason for Restructuring & Key Changes Made DO IP

05/28/2010 Y MS MS 32.60 If PDO and/or Key Outcome Targets were formally revised (approved by the original approving body) enter ratings below: Outcome Ratings Against Original PDO/Targets Moderately Satisfactory Against Formally Revised PDO/Targets Moderately Satisfactory Overall (weighted) rating Moderately Satisfactory

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I. Disbursement Profile

- OrlginOl.I ---- FormOl.lly Revised -- AauOI.I

50

40

30

I 20 • • , 10

0

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1. Project Context, Development Objectives and Design 1.1 Context at Appraisal 1. Country context. Zambia is a land-locked country in sub-Saharan Africa of about 753,000 km2 (291,000 square miles) that has maintained peace and political stability since gaining independence in 1964. At the time of project appraisal, Zambia’s economy had been experiencing a steady decline in the purchasing power of its copper resources,1 and its per capita income had fallen from US$752 in 1965 to US$351 in 2002. During the 1990s, in an attempt to reverse the economic downturn, the Government implemented an extensive liberalization and deregulation program. While the economy began to experience a modest recovery of 1.4 percent per annum in 1999, poverty reduction remained a challenge due to a heavy debt burden, weak institutional capacity, and ineffective spending. In 1998, an estimated 73 percent of the population lived below the poverty line (Zambia Country Assistance Strategy (CAS), 2004). In recent years, at a rate of 6 percent per annum, Zambia has enjoyed a period of rapid economic growth, and inflation has fallen to single digits. However, despite its macroeconomic and fiscal recovery, poverty remains high at about 60 percent (CAS Progress Report, 2011). 2. Sector background. Since independence, copper mining has been the backbone of the country's economy2 and a powerful force in shaping urban development in the Copperbelt Province in the Northern part of Zambia where the mines are concentrated. The Government of Zambia gained control of the copper mines in 1973 and created the state-owned Zambia Consolidated Copper Mines (ZCCM) in 1982. As a result of deteriorating copper prices, reinvestments in Zambia’s copper industry dwindled, productivity declined, compromising ZCCM’s financial sustainability. Losses reached unsustainable levels, averaging US$20-30 million per month.3 With a view to increasing productivity through foreign investment and private sector development, between 1995 and 2000, the Government proceeded to sell ZCCM assets to private investors. ZCCM was transformed into an investment holding company, ZCCM-IH.4 ZCCM's privatization was expected to mark a turning point in Zambia's economic reform, providing the basis for improved environmental management, economic stability and growth. 3. The poor economic performance of the mining sector in Zambia in the 1980's and 1990's led to an increasingly inadequate handling of environmental issues arising from mining activities. At the time of privatization, ZCCM was burdened with enormous environmental liabilities accrued over 70 years of mining operations. The appropriate handling of ZCCM’s adverse environmental legacy was a key issue during negotiations with private investors who were unwilling to accept legal responsibility for historical environmental liabilities, given both the extent and seriousness of mining-related environmental and public health liabilities (See Box 1). Hence, the Government made the strategic choice to clearly delineate the liabilities to be transferred to investors from those that would remain with ZCCM-IH and the Government.

1 The value of copper exports was halved from US$895 million in 1991 to US$430 million in 2000, before rising slightly to US$504 million in 2001. 2 Throughout the 1970's and 1980's, the copper industry was the second largest employer in the country after the Government, generating about 85 percent of Foreign Exchange Earnings, 30 percent of Government Revenues and 15 percent of GDP. 3 World Bank (2003). Project Performance Assessment Report. Public Sector Reform and Export Promotion Credit et. al. Report No. 27053. 4 ZCCM-IH became a minority shareholder with 10-20 percent share in the newly privatized mining, processing and power facilities in the Copperbelt; ZCCM-IH is 87 percent Government-owned.

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Box 1: Mining-induced environmental problems in the Copperbelt and Kabwe at appraisal Air pollution. Copper smelters were emitting 300,000 to 700,000 tons of sulfur dioxide (S02) per year. S02 was affecting the health of residents in adjacent communities, particularly in the form of respiratory problems. Soil contamination. S02 emissions from smelters, after converting to sulfuric acid (H2S04), impacted soils and caused loss of vegetation downwind of smelter stack emissions. Dust particles containing copper, nitrous oxides and organic acids had entered streams and affected aquatic fauna. Redundant chemicals, and oil laced with PCBs (Polychlorinated Biphenals) or other hazardous waste (including radioactive Uranium tailings) further contributed to soil contamination. Water pollution. Uncontained and untreated runoff and leakage from existing waste rock dumps and tailings dams were polluting streams, causing widespread negative human health and ecological impacts downstream from the mines that extended as far as the Kafue River, its tributaries and wetlands.

Risk of catastrophic failure of tailing dams. Some tailing dams were located close to human habitation; their destabilization due to the lack of maintenance, and the dismantling of decant structures by vandals were feared to cause extensive physical and ecological damage and, potentially, loss of life. Unplanned urban development. Nearly ninety per cent of the Copperbelt’s population is urban. The concentrated demand for natural resources, such as water, energy and wood, led to unsustainable use of water resources, and overdependence on charcoal fuel by urban households were the main causes of deforestation. Poor urban sanitation caused the eutrophication of waterways by untreated sewage effluents, and the occurrence of noxious weeds. Lead poisoning in Kabwe. In addition to copper mining issues on the Copperbelt, ZCCM-IH was faced with serious liabilities related to lead zinc mining in Kabwe. About 50,000 residents (including 9,000 children) were affected by high lead levels in the soil, due to naturally occurring mineralization as well as the impact of the smelting and mining operations.

4. Rationale for Bank assistance. The overarching theme of the Bank’s 2000-2003 Country Assistance Strategy (CAS) for Zambia was to support diversified and sustainable growth. The CAS objective for the mining sector, which represented the main pillar of the Government’s economic restructuring program,5 was to remove constraints to such growth through the privatization of mining assets. The Copperbelt Environment Project (henceforth referred to as CEP or the Project) was specifically identified in the CAS to address the environmental liabilities associated with the privatization of ZCCM assets. The Project further aimed to synergistically complement external support to the Government’s privatization process provided by the World Bank’s International Development Association (IDA), International Finance Cooperation (IFC), and other development partners.6 In addition to mitigating ZCCM’s adverse environmental legacy, the Project aimed to reinforce ongoing support to the Government’s efforts to prevent new environmental liabilities from occurring through new mining activities or mine closure in the event of a pullout by investors.7 5 The mining sector remained the major contributor to Zambia’s economic growth, representing an average share of GDP of 9.1 percent between 2006 and 2009. Further, the sector’s contribution to foreign exchange earnings and the country’s formal employment levels were 70.3 percent and 8.5 percent respectively in 2009 (Republic of Zambia (2011). Sixth National Development Plan 2011-2015, pg. 26). 6 Privatization was supported by several World Bank Group operations, including the IDA-funded Mine Township Services Project (whose Outcome, according to the World Bank Group’s Independent Evaluation Group, was rated Satisfactory), the Economic Recovery and Investment Promotion Technical Assistance Program (whose Outcome was rated Moderately Satisfactory), and the IFC-investment in the Konkola Copper Mines Plc. 7 The IDA-supported Environmental Support Program (ESP), whose Outcome was rated Unsatisfactory and which closed in 2003, aimed to help build the capacity of the Environmental Council of Zambia (ECZ) to fulfill its regulatory role. The CEP was expected to complement and supplement NORAD’s support to ECZ through the Industrial Pollution Prevention Programme, which also closed in 2003. Furthermore, the

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1.2 Original Project Development Objectives (PDO) and Key Indicators 5. Project Development Objectives. The original Project Development Objectives (PDOs), as stated in the PAD, were to: (i) address environmental liabilities associated with the mining sector, following the privatization of the mining assets; and (ii) improve future compliance of the mining sector with environmental and social regulations. The wording of the PDOs in the Development Financing Agreement (DFA)8 between IDA and the Republic of Zambia differed substantially from that in the PAD, according to which the Project aimed “to assist the Borrower’s efforts in: (a) addressing environmental liabilities and obligations associated with the mining sector, following the privatization of the mining assets of ZCCM; and (b) strengthening the capacity of its environmental regulatory institutions to improve future-compliance of the mining sector with environmental and social regulations.9” Part (i) of the PDOs in the DFA was thus defined more broadly to encompass obligations, defined as contractual responsibilities negotiated with investors during the privatization of the mining sector as well as liabilities, defined as the Government’s legal responsibilities for cleaning up mining related environmental liabilities. Part (ii) of the PDOs in the DFA, on the other hand, was defined more narrowly than in the PAD by referring to “strengthening the capacity of environmental regulatory institutions to improve future compliance of the mining sector” rather than promising to actually improve compliance by the sector, which hinges on factors that are beyond the Project’s control. Given that the PDOs in the DFA were the ones negotiated and signed by both parties, in addition to being more specific, measurable, and achievable, the DFA version will be used to assess Project results.10 6. Key Performance Indicators. The wording of the 10 Key Performance Indicators (KPI) in the DFA, albeit not significantly different in terms of substance11 is slightly different from that in the main body of the PAD; the 10 KPI in the DFA are slightly more specific.12 The 10 Key Performance Indicators (KPIs) specified in the main body of the DFA (Schedule 2), comprised of Outcome/Impact and Output Indicators are listed in Table 1 below.

Canadian International Development Agency (CIDA) financed the Environmental Management in the Mining Sector Project, which aimed to develop the Mine Safety Department (MSD)’s technical capacity to regulate, monitor, enforce and/or implement appropriate environmental management practices on behalf of EZC. 8 There was only one DFA for both the US$19 million IDA Credit and the US$21 million IDA Grant. In recognition of the severity of environmental degradation and urgent need for remediation in the Copperbelt, an IDA Grant of US$21 million equivalent was allocated solely to the Environmental Management Facility (EMF) to be established under Component 1 of the Project to address priority environmental liabilities. The IDA Credit was to finance the remaining Project activities. The US$4.2 million equivalent of the Euro 10 million Credit from the Nordic Development Fund (NDF) was designed to finance the entire Component 2 of the Project, i.e., strengthening of the environmental regulatory framework; the remainder of the NDF Credit proceeds was allocated towards environmental remediation activities, with particular focus on the proper disposal of hazardous substances. 9 The PDOs in the DFA and the Project Agreement (PA) between IDA and the Environmental Council of Zambia (ECZ) were identical. 10 In light of the complexity of the Project, this ICR exceeds the 25-page standard for “regular” projects. 11 One of the Outcome/Indicators in the main text of the PAD was listed as an Output indicator in Annex 1 of the PAD; and several indicators in the PAD’s Annex appeared to be more results-oriented, for example, as it specified numeric targets for reducing pollution flow and loads. 12 Schedule 7 of the DFA lists the same 10 KPIs as the main body of the PAD, albeit not categorized as Outcome/Impact and Output Indicators, with target dates. The wording and classification of the KPIs in the main text of the PAD differed from those in the PAD’s Project Design Summary.

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Table 1: Key Performance Indicators (as specified in the DFA)

Type of Indicator Indicator Outcome/Impact Indicators

1. Private Investors’ Environmental Management Plans (EMPs)13and ZCCM-IH Counterpart EMPs are finalized, reviewed and approved by the Environmental Council of Zambia (ECZ), and implemented for all mining sector investments.

2. Consolidated Environmental Management Plan (CEMP)14 completed and approved by the EMF-Steering Committee (EMF-SC) and ECZ.

3. Environmental and social obligations resulting from ZCCM's historical liabilities identified and addressed on a priority basis.

4. Monitoring system established to monitor implementation of EMPs and their compliance with environmental regulations.

5. Pollution flows and loads resulting from mining operations are regularly monitored.

Output/ Intermediate Results Indicators

1. Pollution flow from rehabilitated project sites into Kafue River watershed reduced by 70%.

2. Zero leakage of tailings from dams rehabilitated under the project. 3. Private investors’ EMPs and ZCCM-IH Counterpart EMPs for each site

completed with adequate participation of local governments and stakeholder groups, including Non-Governmental Organizations (NGOs) and Community-based Organizations (CBOs).

4. Environmental liabilities of ZCCM-IH prioritized according to a transparent and accepted ranking system.

5. Improvement of performance and capacity of ECZ and the Mines Safety Department (MSD) to enforce regulations.

1.3 Revised PDO and Key Indicators, and reasons/justification

7. The PDO and Key Performance Indicators were not revised.

1.4 Main Beneficiaries 8. The Project’s direct beneficiaries included people living in mining communities in the five Copperbelt towns15 and Kabwe whose health was expected to improve through reduced exposure to mining-induced environmental pollution and lowered risk of accidents (PAD). Its indirect beneficiaries included: � The people of Zambia, who were envisaged to benefit from a more robust economic position

resulting from the removal of potential impediments to new private investments in the mining sector.

13 As part of the unbundling of ZCCM, for each mining operation being privatized, investors had to prepare Environmental Management Plans (Investor EMPs) detailing mining companies’ environmental obligations as part of the sales agreement. In parallel, Counterpart EMPs, detailing the environmental liabilities to be addressed by ZCCM-IH and the Government, were prepared for each property sold to investors. 14 The Consolidated Environmental Management Plan (CEMP) aimed to incorporate the EMPs prepared for the different investment packages, and looked beyond individual mining sites at ecosystem-wide issues such as watershed management and air pollution, as well as soil and sub-surface water contamination. The CEMP ranked issues according to the severity of their potential impacts on the environment, and particularly on human health. 15 The Copperbelt Province comprises the mining towns of Ndola, Kitwe, Chingola, Mufulira, and Luanshya.

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� The Environmental Council of Zambia (ECZ)16 and its delegated authorizing agencies, such as the Mines Services Department (MSD) in the Ministry of Mines and Minerals Development (MMMD), were intended to benefit from improved regulatory capacity, in the form of enhanced competencies of their staff in regard to strategic planning, monitoring, and evaluation of environmental issues and proposed mitigation measures.

� NGOs, the Copperbelt University, University of Zambia, technical institutes, etc., were supposed to contribute to and benefit from the strengthening of the national environmental management capacity through their involvement in consultancies, studies and targeted training.

9. These primary target groups were not revised. In addition to the key beneficiaries identified in the PAD, private investors were expected to benefit from Project investments, since they did not have to incur the cost of remediating environmental liabilities stemming from historic mining activities. 1.5 Original Components 10. The Project’s objectives were to be supported by two components: (i) establishment of an Environmental Management Facility (EMF) for addressing historical environmental liabilities; and (ii) strengthening of the environmental regulatory and institutional frameworks for preventing future liabilities related to mining. 11. Component 1: Environmental Management Facility (US$37.5 million). The EMF was envisaged to support Part (i) of the PDOs by financing and administering, on behalf of ZCCM-IH and the Government, the implementation of priority measures to remedy environmental and social problems resulting from ZCCM’s pre-privatization mining operations, in accordance with national environmental laws and regulations as well as contractual obligations negotiated with new investors during the privatization of the mining sector. The delineation of liabilities between investors, ZCCM-IH and the Government was to be determined through the preparation of an Environmental Management Plan (EMP) by each investor and of a Counterpart EMP by ZCCM-IH. The EMF was designed to finance subprojects in: (i) the Copperbelt, such as the cleanup of defunct mine plant sites, removal and disposal of hazardous materials, rehabilitation of tailings dams in preparation for closing, and the resettlement of settlers in mine caving areas; and (ii) Kabwe, one of the world’s most polluted towns,17 the treatment of lead-exposed children and remediation of lead contamination in their living, play and learning environments as well as blood lead levels. 12. A Consolidated Environmental Management Plan (CEMP) was to be prepared to identify funding priorities, and provide the criteria for selecting priority subprojects in the Copperbelt, and in Kabwe. The Kabwe Design and Scoping Study was to provide the analytical basis for prioritizing subprojects, according to the severity of the public health and ecological impacts of the problems they intended to address.18 A Secretariat, housed in the Ministry of Finance and National Planning (MFNP), was envisaged to handle the day-to-day management of EMF

16 The Environmental Council of Zambia (ECZ) was renamed after the signing of the 2011 Environmental Management Act and is now known as the Zambia Environmental Management Agency (ZEMA). For the purposes of consistency, the Agency will be referred to as ECZ in this ICR. 17 See Blacksmith Institute (2001). The Silent Death: Lead Poisoning in Kabwe, Zambia. 18 Furthermore, the CEMP was expected to form the basis for managing environmental issues in the Copperbelt over a 25-year period, within the broader context of environmental and social sustainability.

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activities, notably the preparation and implementation of EMF subprojects.19 The EMF Secretariat was expected to collaborate closely with ZCCM-IH, which was accountable to MMMD. ZCCM-IH’s Environmental Coordination Unit (ZECU), the Implementation Agency for Component 1, was responsible for managing subproject cycles, in close collaboration with affected communities20 and procurement. Oversight of Component 1 EMF activities was to be provided by a Steering Committee, chaired by the Secretary to the Treasury.21 The first three Outcome Indicators and the first four Output Indicators in Table 1 above were to measure the performance of Component 1. 13. Component 2: Strengthening of the Environmental Regulatory Framework (US$4.2 million). Component 2 sought to support Part (ii) of the PDOs by strengthening the environmental regulatory and institutional frameworks to assist the Government in ensuring that historical and future environmental liabilities arising from mining activities were addressed in compliance with national environmental and social safeguards.22 This was to be achieved mainly by realigning the activities of the Environmental Council of Zambia (ECZ)23 to allocate a higher proportion of its resources and efforts to its regulatory mandate, and by strengthening the capacity of ECZ and the delegated authorizing agencies such as the Mines Safety Department (MSD) to review Environmental Impact Assessments (EIAs), effectively negotiate Environmental Management Plans (EMPs) with investors and with ZCCM-IH, issue pollution permits, monitor the EMPs, and collect fees and fines. The Project also intended to strengthen NGOs and relevant training institutions, such as the Copperbelt University, to increase national capacity to address environmental issues associated with the mining sector. As the executing agency for Component 2, ECZ’s Technical Secretariat was charged with monitoring and enforcing compliance with Zambia’s environmental regulations for the mining sector, and ensuring that EMPs of investors and ZCCM-IH were implemented as agreed.24 The Council Secretary within ECZ was to be responsible for monitoring the overall progress of Component 2. Outcome Indicators 4 and 5, and Output Indicators 2 and 5 in Table 1 above were to measure the performance of Component 2.

1.6 Revised Components 14. The Components were not revised.

1.7 Other significant changes 15. Changes in scope and scale. As the various studies undertaken during Project implementation revealed an increasingly complex set of environmental issues to be addressed by

19 See Project Implementation Manual, Volume 1, for details. 20 Active community participation was to be a core element of the sub-project process. 21 The Steering Committee, to be chaired by the Secretary to the Treasury, was expected to include representatives from various ministries as well as NGOs and academic institutions. 22 The Project was to fund the following six sub-components: (i) revision and harmonization of environmental regulations in the mining sector; (ii) monitoring and enforcement of compliance; (iii) environmental emergency response system; (iv) support to the Inter-Agency Committee for environmental compliance in the mining sector; (v) environmental awareness and public participation; and (vi) ECZ capacity building and project monitoring 23 The Environmental Council of Zambia’s name was changed to the Zambia Environmental Management Agency (ZEMA) following the signing of the new Environmental Management Act in May 2011. 24 See Project Implementation Manual, Volume 2, for details.

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the Project, the need for changes in both scope and scale of select activities became evident.25 As more detailed information about the type and scope of appropriate mitigation measures became available during the first two and a half years of Project implementation,26 some of these findings necessitated further analysis, such as the environmental and social impact study of two uranium dumps in the Kitwe area.27 In addition to changes in the extent of consulting services, the scope of physical works changed due to: (i) a higher than anticipated volume of remedial works required to ensure the safe disposal of radioactive uranium tailings; (ii) the expanded scope of works under the Kabwe community water supply subproject to permit the rehabilitation of a particularly dilapidated part of the water reticulation network in two townships; and (iii) the deferred closure of tailings dams, in line with the agreement reached at Midterm Review (MTR) to explore the potential for profitable re-processing of 13 tailings dams in light of a more favorable copper price.28 Given that potential breaches of these dams could threaten the lives of nearby residents29 the deferral of permanently closing the dams was considered a risk to the achievement of the development objectives. While no dam breaches have occurred since the implementation of the Project-funded repair and maintenance works, these only provided an interim rather than permanent solution. 16. Furthermore, the Project financed the cost of setting up and starting up the Environmental Protection Fund (EPF) (not to be confused with the Environmental Management Facility (EMF) created under Component 1 of the Project). Unlike the EMF, the EPF was a statutory entity established by the 1999 Mines and Minerals Act, and operationalized in 2007 to ensure that provisions were made and sufficient funds were available from mandatory contributions of mining companies to cover cleanup costs when mines are closed or investors pull out. The EPF was to be overseen by the Mines Safety Department (MSD) but managed by an independent body. While options for the suitable long-term management of the EPF were explored, as an interim arrangement, it was agreed that the EPF would be managed by the Secretariat of the EMF for the duration of the Project’s lifetime. Thereafter, the EPF was to be managed by MSD. 17. Changes in funding allocation. In 2003, the Nordic Development Fund (NDF) committed to co-financing the Project through a 10 million Euro Credit, which freed up IDA 25 For example, the extent and complexity of the lead contamination problem in Kabwe was only identified during preparation of the Kabwe Scoping and Design Study, which carried out a much more in-depth, block-by-block and house-by-house analysis, than the Environmental Assessment was able to do. 26 For instance, the CEMP II was conducted in 2004/2005, and the Kabwe Scoping and Design Study, the CEMP equivalent for Kabwe, was carried out between 2004 and 2006. 27 A small uranium deposit was exploited at the Mindola Shaft 4 sunk by a company called AMCO in Kitwe between 1957 and 1960. At the time of Project preparation, the exact location of the tailings was unknown. It was only discovered during the preparation of the CEMP and promptly brought to the attention of the Government and the International Atomic Energy Agency (see Blerk, JJ. (2005). Between 2007-2009, a German consulting firm was contracted to undertake an environmental and social impact study of the two AMCO uranium dumps in Kitwe (Project files). The Uranium tailings ended up being safely stored in cells lined with clayey laterite in an existing tailings dam still in use. The radiating soils and lining are covered by a 2-meter thick layer of copper tailings and topped with soil for vegetation. 28 A decision was made at MTR to defer the envisaged closure of 13 tailings dams until the results of a rapid assessment would shed more light on the economic potential of reprocessing. Even though it was later concluded that the reprocessing was not economically viable based on a geological assessment, MMMD chose to transfer (sell or allocate) mining rights for these tailings dams to private investors interested in reprocessing them to recover copper. Given the new ownership of the dams, complicated by legal disputes over the ownership of some of them, the envisaged closure works could not be completed during Project implementation, for reasons beyond the Project’s control. 29 Overburden, waste rock, tailings and slag dumps occupy a significant land area of about 100 square kilometers or nearly 40 square miles in the Copperbelt and Kabwe.

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funds previously allocated to funding Component 2 and selected activities under Component 130. In addition, the significantly higher than anticipated extent and cost of consulting services required a reallocation of IDA proceeds from the Credit-financed Works to Grant-financed Consultants’ Services categories, which was approved in November 2009. 31 18. Changes in implementation schedule. Project effectiveness was delayed from April 2003, when the DFA was signed until September 200332 due to the delay in the appointment of the Manager of the EMF Secretariat and a Project accountant, which were conditions of effectiveness. The Project’s MTR was postponed from August 2005 to February 2006, mainly due to delays in the start up of Component 2,33 along with the need for more time than projected to complete studies, and the slow inception of physical works.34 In light of persisting procurement and disbursement challenges (see paragraphs 36 and 41) two extensions of the closing date for a total of 36 months were requested and granted, until March 31, 2011. 2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry 19. Soundness of background analysis. For the most part, the prevailing conditions were correctly diagnosed during Project preparation, which took place between October 2000 and February 2003. The background analysis appropriately comprised reviews of existing analytical work,35 as well as the preparation of a full Environmental Assessment, which was essentially a hybrid between an Environmental Assessment and an Environmental Audit, carried out and disclosed during Project preparation. Environmental issues to be addressed by the Project were prioritized, based on these studies’ findings. However, while the PAD contained a very elaborate assessment of ZCCM-IH’s and the Government’s environmental liabilities, their impact and proposed remedial measures, the analysis of the weaknesses in the environmental regulatory framework was rather succinct and the proposed remedial measures were too narrow (as per paragraph 15 above). Nevertheless, it accurately assessed the shortcomings and their impact.

30 Project proceeds for Component 2 were channeled from the Ministry of Finance and National Planning (MFNP) to ECZ under a sub-grant agreement. 31 See November 2009 letter from the Bank’s Acting Country Director for Zambia to the Zambian Minister of Finance and National Planning (MFNP). 32 The Project was approved by the Bank’s Board of Directors on February 14, 2003, the DFA was signed on April 4, 2003, and the Project became effective on September 25, 2003 (see letter from the Bank’s Country Director for Zambia to the Minister for MFNP dated September 25, 2003). 33 These were partly caused by prolonged discussions about the Project management structure for this Component with NDF, as well as about the proposed “salary top up” for ECZ staff. The latter was controversial as it was to apply to the entire Agency staff, which would have amounted to more than 20 percent of NDF Credit proceeds. It was rightly considered a fundamentally unsustainable measure by NDF, the Bank and MFNP. An agreement was reached during the February/March 2005 mission that ”supplementary salaries” were to be paid in installments based on agreed-upon performance milestones. 34 This was partly attributable to the unfamiliarity of ZCCM-IH’s Environmental Coordination Unit (ZECU), which was responsible for the implementation of EMF sub-projects, with the Bank’s procurement procedures, and the unsatisfactory performance of some contractors. 35These included: (i) Environmental Impact Statements (EIS) for each of ZCCM’s 12 Mining License Areas prepared with IDA funding by Steffen, Robertson and Kirsten in 1993, which provided the baseline data and analysis that underpinned the preparation of privatization agreements; (ii) an initial mitigation plan prepared in 1996; and (iii) interim EMPs for facilities taken over by Konkola Copper Mines (KCM), as well as for defunct facilities, prepared by Envirolink, commissioned by Anglo American.

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20. Incorporation of lessons learned. According to the PAD, Project design took into account lessons learned from Bank-supported environmental projects in Zambia, and mining sector operations supported by development partners in Zambia, such as CIDA and NORAD (see paragraph 4). The design of Project interventions aligned closely with other operations in Zambia, as well as the Bank’s experience with mine closure and reform activities in other countries. 21. Rationale for the Bank’s intervention. At the time of appraisal, the Government was justifiably concerned that environmental liabilities from historic mining operations might discourage private mining companies from investing in Zambia. Since the Bank was a major driving force behind the privatization of ZCCM’s copper mines, it was reasonable for the Bank to support the Government in addressing the accumulated negative impact of a 70-year history of mining and poor environmental practices on public health, the environment, and on future investments. In addition, the Bank brought international best practice experience and convened a diverse group of stakeholders among whom it facilitated a constructive dialogue, which reassured the private sector to invest in Zambia’s mining industry. 22. Assessment of project objectives, design and components. The PDOs were highly relevant at the time of appraisal, and their continued relevance was confirmed during the MTR.36 The Project’s design was innovative, and one of the first of its kind in the Africa Region. It was laudable that the Project Components were designed to concurrently remedy past and ongoing mining-induced negative environmental externalities, as well as prevent future liabilities by strengthening the regulatory framework and enforcement in order to boost the mining sector’s compliance with environmental and social regulations. However, the approach was rather complex, and, in retrospect, achieving the proposed outcomes within the original timeframe of the Project (5 years) was overly optimistic, particularly in light of the status quo. 37 23. With regard to Component 1, it is commendable that, rather than addressing environmental liabilities and obligations in a piecemeal fashion, the selection of Project interventions was designed to be guided by a CEMP aimed to prioritize measures for addressing mining related externalities in a comprehensive fashion, using a risk-based methodology. The lead contamination mitigation program in Kabwe, for example, was an excellent, well thought-out, holistic high priority intervention package designed to treat lead-affected children medically, as well as to reduce their exposure to renewed contamination in their physical living, playing and learning environments.

24. While a substantial amount of time and effort was put into the design of Component 1, as evidenced for example, by the comprehensive Volume 1 of the Project Implementation Manual (PIM) pertaining to this Component, the design of Component 2 and the corresponding Volume 2 of the PIM were less detailed but did contain performance indicators for each of the six sub-components of Component 2. Also, the 14-month delay38 in the start up of Component 2 activities

36 As noted in paragraph 33, Part (ii) of the PDOs, as formulated in the PAD, was unrealistic to achieve during a 5-year Project life, given that it aimed to improve not only the capacity of ECZ but also committed to improving the mining sector’s compliance with environmental regulations. 37 As pointed out by a member of the Project design team, a simpler approach had initially been pursued but was deemed not feasible for political economy reasons. The split of implementation and regulatory responsibilities between ZCCM-IH, responsible for implementing the EMF, and the Environmental Council of Zambia (ECZ) was considered crucial in order to prevent regulatory capture by the Ministry of Finance. 38 Due to late availability of funds, implementation of Component 2 started effectively in November 2004 (see Ginet, 2006. Backstopping Report).

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and the fact that Bank Management called for restructuring of Component 2 only eight months after Project effectiveness, indicated design weaknesses.39 25. Implementation arrangements. As noted by a cross-section of stakeholders consulted during the ICR mission, the implementation arrangements for Component 1 were satisfactory, including the overall oversight of EMF activities by the EMF Steering Committee. However, it was noted that more independent oversight of the EMF Secretariat, as opposed to an EMF secretariat housed in the Ministry of Finance, would have been preferable. The selection of ZECU, ZCCM-IH’s environmental management arm, to implement mitigation measures was a good choice, given their familiarity with and vested interest in addressing pressing environmental and social issues. The selection of the ECZ Secretariat as the principal implementing agency for Component 2 was reasonable from an institutional point of view,40 yet problematic in practical terms, given that, despite ECZ’s institutional weakness, the principal implementation responsibility for Component 2 was placed on ECZ, relying on its ineffective operational structure. As several stakeholders later pointed out, it would have been preferable if the oversight of both Components had been combined under one overarching institutional umbrella. 26. Adequacy of Government commitment. At the time of appraisal, the Government’s commitment was inferred from its adoption of environmental legislation, institutional reforms, and the creation of the ECZ in 1991.41 The fact that the Government agreed to the reallocation of about US$7 million from the Labor Reduction Program (LRP) to address urgent mitigation measures, as well as the request and subsequent provision of a Preparation Advance for the Project, indicated tangible Government commitment, particularly to Component 1 of the Project. Given that the environmental liabilities were feared to impede the privatization process, the Government and ZCCM-IH42 were motivated to assume and mitigate historical environmental liabilities. With regard to Component 2, Government commitment was less evident, especially since the restructuring plan for MSD developed with support from CIDA in order to grant MSD more autonomy and capacity, was not endorsed by the Government.43 27. Stakeholder involvement and participatory processes. At the time of appraisal, active involvement in particular of affected communities, local authorities, and line ministries in the Project was considered essential for the sustainability of remedial works to be carried out under the Project (see PAD). The Project Implementation Manual for Component 1 included an elaborate communication and participation strategy intended to guide the structure and procedures for stakeholder participation. While the PAD envisaged systematic consultation and

39 According to a member of the Project preparation team, the process of ECZ reform began under the Environmental Support Project (ESP). A Draft Plan for Action for ECZ had been developed as part of the ESP but not implemented due to its premature termination. Component 2 of the CEP was prepared and funded by NDF. Even though there was close coordination between the Bank and NDF teams prior to effectiveness, it appears that the thinking spelled out in the Draft Plan of Action might not have been fully captured during preparation or pursued during implementation. 40 The selection of ECZ over the Mine Safety Department (MSD) was justified by the need for oversight by an entity tackling environmental issues from a broader, i.e. not exclusively mining-focused, perspective. 41 However, no reference was found in the Project documentation as to the extent to which compliance with these provisions was enforced. 42 At the time of appraisal, ZCCM-IH had already initiated public meetings to discuss the proposed Project with people living in close proximity to targeted sites. 43 A restructuring plan for MSD was developed under the CIDA-supported Environmental Management in the Mining Sector Project, which closed in 2004. A draft bill was prepared but reportedly not submitted to Cabinet for approval. Since then MSD has continued to operate at low capacity. Due to high turnover and reportedly low salaries, only half of its existing positions are presently filled.

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participation of stakeholders in the design of measures that might affect them, it appears that the selection and identification of subprojects was done primarily by ZECU, with only limited involvement of communities throughout the subproject project cycle. While community consultations were extensive during the preparation of the CEMP, i.e., the identification of potential subprojects, the extent of community involvement in the implementation of remedial subprojects, e.g., through labor-intensive public works opportunities, was lower than anticipated, and may have adversely affected their ownership and sustainability.44 On the other hand, households that benefited from community-based works in Kabwe seemed to value and maintain their newly greened yards that reduced lead dust exposure. 28. Assessment of Risks. In hindsight, a number of risks were underestimated or not acknowledged. For example, the risk of insufficient commitment by the Government to improving environmental management of the mining sector and enforcing environmental regulations was rated Substantial rather than High. Some signs apparent at appraisal that would appear to have supported the higher risk rating include: (i) the Government’s reluctance to approve the CIDA-supported restructuring of the MSD, which would have granted this key enforcement agency more autonomy and capacity; and (ii) the fact that the less stringent environmental standards, compared to other industries, applied to investors during privatization might have indicated the Government’s continuing reluctance to “get tough” and hold mining companies that were not in compliance with their EMPs and environmental standards accountable.45 Furthermore, the overall rating should have reflected that this was going to be a rather complex, one of the first of its kind, high-risk Project. Moreover, it was overly optimistic to expect the government to achieve all these changes in such a short time, when experience from developing and developed countries shows that restructuring of agencies needs to be appropriately paced and financed. As such, it is very possible that what in hindsight seems like reluctance of the government to effect some of these changes is, in fact, a case of too much, too soon. 2.2 Implementation 29. Project changes. In an effort to remedy the slow progress highlighted in Implementation Status Reports (ISRs), several changes in Project design, allocation of funds, and implementation arrangements were agreed at various stages. While earlier delays, caused by safeguards, procurement, and technical processing issues were successfully addressed, persistent procurement and disbursement problems impeded the pace of implementation throughout the Project’s lifetime. 30. Extension of Closing Date and DFA Amendment. A first extension of the closing date from August 2008 to March 2010 requested to accommodate the slower than expected implementation pace, was approved by the Bank’s Country Director for Zambia46 in July 2008. A request for Project restructuring (2nd order) was approved by the Regional Vice President (RVP)

44 While the procurement methods and disbursement categories did not allow for community participation, the proposed community grants category foresaw a more active community role in the subproject cycle. 45 Several investors were permitted, as part of their sales agreements, to exceed national standards, as long as the pollution levels remained within the targets set out in the EMPs. 46 In his March 4, 2008 letter to the Bank’s Country Director the Zambian Secretary of the Treasury formally requested an extension of the closing date. The approval of an extension until March 31, 2010 was communicated to the Government in the Country Director’s letter to the Zambian Secretary of the Treasury dated July 29, 2008.

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in March 2010.47 The purpose of the restructuring was to extend the Project’s closing date until March 31, 2011 in order to: (i) conclude most of the remediation actions underway at the time; (ii) allow sufficient time to “do it right” given that this “operation [was] one of the first of its kind in Africa and there [were] many lessons to be learned;” (iii) develop capacity in the involved agencies and ownership for maintenance; (iv) involve affected communities more deeply in the management of sites; and (v) facilitate stronger involvement from private mining companies and the need to ensure sustainability of the recently set up Environmental Protection Fund. 31. In November 2009,48 the DFA was amended to reallocate Project proceeds, given that: (i) a significant portion of IDA funding was freed up as a result of co-financing of the Project by the NDF; and (ii) the 2006 Midterm Review (MTR) had called for a reallocation of funds (and amendment of procurement thresholds) among the different disbursement categories to reflect the actual financing requirements under the Consultants and Works categories.49 32. Midterm Review. By the MTR, it had become evident that the allocation of Project proceeds for consultancies was insufficient.50 Lingering procurement and related financial management and disbursement problems prevented the timely replenishment of the EMF’s Special Account and slowed down Project implementation. (Even though the Project closing date was extended twice, unresolved disbursement issues carried over into the extension and disbursement grace period.) In parallel to addressing the above issues, given that the funding allocations in the DFA did not seem to match the Project’s actual resource requirements under the respective disbursement categories, Bank Management urged the team to see to the timely amendment of the DFA and to identify “surplus funds that should either be cancelled or justifiably redeployed even if this may require major restructuring”. Nevertheless, the Grant and Credit proceeds were not reallocated until November 2009 due to insufficient follow through on the part of the Bank’s supervision team.

33. Changes in Project Design and Scope agreed during Midterm Review. One of the key changes recommended by stakeholders51 during the MTR mission was to “systematize … a clearer link between socio-economic development and environmental remediation, through the involvement of local communities in the maintenance of sites and/or developing economic activities around such sites.” To this end, a new Community Development Small Grant category, i.e., a mini social fund to finance small scale, demand-driven investments, preferably in income generating activities, was to be created in the process of amending the DFA. While labor intensive subprojects, such the manual spreading of materials dredged from the Luanshya River had provided temporary employment opportunities for local communities, and limited support was provided to income-generating women’s groups, the community subproject component did not materialize. This was partly due to the Amendment to the DFA being delayed by three and a 47 The description and scope of the Project’s Components remained unchanged during the Project’s restructuring and DFA amendments. 48 See Amendment Letter signed by the Acting Country Director for Zambia on November 19, 2009 and countersigned on November 27, 2009 by the Zambian Minister MFNP. 49 In fact, the need for a DFA Amendment to reflect NDF co-financing and adjust IDA commitments was recognized and recorded even before the Project became effective. 50 The Grant-financed Consultancy Services disbursement category was soon depleted and ZECU proceeded to pay consultants by “borrowing” Credit proceeds from the works category. Since ZECU was not able to furnish receipts for eligible expenditures under the Works category, withdrawal applications were not approved by the Bank’s Disbursement Department, causing cash flow problems and implementation delays. 51 During the MTR mission, a stakeholder forum was held in Kitwe with 60 stakeholders from local governments, local communities, NGOs, media, church, and the mining industry.

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half years (see paragraph 30) as well as concerns expressed by the Africa Region’s Legal Department that adding a community component would make this already very ambitious Project too complex and implementation possibly even slower.

34. Other changes agreed during MTR included: (i) the deferral of the planned rehabilitation and permanent closure of 13 tailings dams due to their potential for reprocessing (see paragraph 15 above); (ii) the need for ZECU and the Government to better involve private sector mining companies in the remediation of “old” and prevention of “new” environmental impacts of mining, which did not materialize; and (iii) a call for a “radical action plan” to strengthen and restructure MSD, which was prepared but not implemented. The realization of (ii) presented an ongoing challenge, as documented in multiple ISRs. While (iii) was essential for the effective enforcement of the mining industries’ compliance with environmental regulations, it was unrealistic to achieve during the latter half of the project’s implementation. 35. Implementation arrangements. During MTR, it was agreed that Project oversight would be transferred to the Ministry of Mines and Minerals Development (MMMD), in line with the Government’s decision that projects be assigned to ministries by thematic area. The Project Implementation Manual was revised accordingly, but for unknown reasons the change did not materialize and was thus not reflected in the November 2009 DFA Amendment.52 In addition, the team proposed the incorporation of simplified procurement procedures to facilitate community participation in project implementation which also did not occur since the Community Grant Component did not materialize (see paragraph 31). 36. Project Risk status. At various times, the Project carried two risk flags, i.e., a country record flag and a disbursement delay flag due to slow disbursement,53 caused by a combination of the following:

(i) Delayed amendment to the credit agreement, which was to remedy the over-exhaustion of some disbursement categories by aligning them with the Project’s actual cost profile. At one time, almost 65 percent of the Special Account was tied up in expenditures that had been incurred but could not be claimed from the Bank because the ceilings of the respective expenditure categories had been exceeded, and a reallocation of funds was required before the Bank could pay the claimed amounts;

(ii) Lag on granting of “no objections” on the part of the Bank’s team. Attempts to clear the backlog of no objections, which were delayed by anywhere between 1-12 months were made during several missions between May 2009 and December 2009, with mixed results; and

(iii) Persistent financial management and disbursement problems on the part of the EMF team. Repeated attempts were made by the Bank’s Project team to resolve these problems, largely attributable to a substantial amount of ineligible expenditures, i.e. funds advanced to ZECU, the implementing agency, that were not accounted for vis-à-vis the EMF Secretariat, that created a backlog of outstanding payments and outstanding claims in various withdrawal applications. As noted in the December 2007 ISR, a large number of items on disbursement applications was repeatedly rejected by the Bank’s Disbursement Department due to inadequate documentation and as a result of contracts that were subject to the Bank's prior review not being posted to SAP. The reconciliation of the Special Accounts (including reconciliation of funds from the EMF to ZECU) and reclaiming of all the rejected expenditures had not been completely resolved by the

52 The revised Volume 1 of the PIM further reflected the introduction of a Community Development Small Grant category and of a specific MSF program. 53 The slow rate of disbursements remained a concern throughout the Project: more than 75 percent of project funds remained undisbursed two years prior to the original closing date and only half of the credit was disbursed six months before the original closing date.

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end of the disbursement grace period. At the time of writing of this ICR, about US$ 0.58 million in Designated Account balances still did not have the required justification and documentation for disbursement against IDA Special Accounts.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 37. M&E framework. The Project’s M&E design was typical of this generation of pre- Results Framework projects, as both objectives and indicators were largely not Specific, Measurable, Achievable, Realistic and Time-bound (SMART). The Country Director expressed “concerns about the weak M&E framework54 and requested that the Project team work closely with the Africa Region’s quality control team“ to ensure that a well-designed and monitorable M&E system [was] in place”. However, the Project file does not contain any evidence of such consultations, and the M&E framework was not changed. The M&E system comprised few numeric targets, such as the Output indicator “Zero leakage of tailings dams rehabilitated by the project,” which in the end was found to be immeasurable.55 The success of subprojects aimed at cleaning up mining sites, rehabilitating tailings dams, and dredging rivers or canals, etc. was to be measured in a dichotomous fashion, as opposed to the percentage of works successfully completed (and sustained). Physical works were rated either as “completed or ongoing.” This rating system was more focused on engineering outputs than outcomes. It did not take into account that, in several instances, some of the successes were short lived, as some of the Project benefits of “completed” subprojects had been partially undone by the end of the Project.56

38. Other PDO indicators, such as “Pollution flows and loads resulting from mining operations are regularly monitored” were more focused on process (monitoring) than outcome (compliance with environmental standards). PDO indicators, however, such as “Consolidated EMP completed by ZCCM-IH, approved by ECZ and adopted by the Steering Committee” were more outcome-focused. Key Performance Indicators did not intend to measure the public health impact of the Project. While the reduction in blood lead levels in children that received treatment under the Project and changes in water quality were tracked during Project implementation, these were not formal Outcome or Output indicators. Changes in air and soil contamination, which

54 It was noted that ”[t]he Project was an early recipient of IDA grants on the condition that there would be clear indicators of project performance and impact related to leakage level of tailings, reduction of pollution flow from project rehabilitated sites into the Kafuwe, etc.” While the indicators existed, the reduction in pollution flow was not measured, given that the Bank team considered it impossible to distinguish between flows from historical liabilities and active operations; (ii) and the “zero leakage from rehabilitated tailings dams” indicator could not be measured, given that the dams were not rehabilitated towards closure, as planned, under the Project. 55 A member of the Project preparation team remarked that, at the time of Project preparation, mining companies were not being held responsible for environmental damage caused by their operations, and considered it less costly to pay fines than to adopt pollution-reduction measures. The Project preparation team would have therefore considered it inappropriate to include arbitrary pollution reduction targets as KPIs at appraisal. Instead, the designers intended to invoke better compliance in the mining sector through strengthening ECZ’s regulatory power, which the Project succeeded in doing. 56 The benefits of dredging and removing lead-contaminated materials from the Kabwe canal were significantly diminished by the Municipal Council’s subsequent dredging and failure to remove lead-contaminated materials from the banks of the canal, as well as the lack of maintenance which caused re-vegetation and renewed obstruction in the water flow. In other words, even though the subproject was “completed” in terms of the scope of works performed, its benefits were partially undone shortly thereafter. In addition, due to vandalism, the equipment in 9 out of 11 play parks intended to prevent children from playing in lead-contaminated dust were vandalized and scavenged, even though these sub-projects were considered successfully completed by ZECU, the implementation agency for Component 1.

15

would have allowed an end-of-Project comparison with assumptions made by the ex ante Cost –Benefit-Analysis of the Project, were not monitored during implementation.

39. M&E of Component 2 activities. While the EMF Secretariat was responsible for monitoring overall progress under Component 1 -- i.e., implementation progress made under the EMF activities implemented by ZECU -- the ECZ Board was responsible for ensuring that overall progress under Component 2 was monitored periodically by independent parties.57 The findings of the consultants’ backstopping missions and performance reviews were more descriptive than analytical and more output-oriented than outcome-focused. While the 2006 report lists the main issues identified during ECZ’s inspections of mining facilities, it does not offer information as to the extent and impact of these infractions, whether they were resolved (and if so how), and whether any fines and other penalties were imposed and to what effect. Due to the split of Project oversight responsibilities between the EMF Steering Committee and the ECZ Board, the findings of these performance reviews were not adequately addressed by the Bank’s team, which was to supervise the Component on behalf of the NDF. This was most likely due to the fact that the supervision team did not include an Institutional Development or Public Sector Governance Specialist.

2.4 Safeguard and Fiduciary Compliance 40. Safeguards implementation. Throughout Project implementation, safeguards implementation was consistently rated Satisfactory. The Government prepared a comprehensive Environment and Resettlement Framework that spelled out requirements to comply with World Bank safeguards, as well as national regulations. Early on in the Project’s life, the slow preparation of Environmental Project Briefs (EPBs) adversely affected the pace of subproject preparation. To overcome this hurdle, consultants were contracted in early 2006 to assist ZECU staff with the preparation of EPBs, which resulted in a substantial improvement in both the speed and quality of the EPBs. Based on this positive experience, ZECU continued to contract out the preparation and quality assurance of most EPBs and other safeguard documents. To ensure subproject compliance with Bank safeguards requirements, with the assistance of an international safeguards consultant, ZECU put in place a methodology for screening subproject proposals for potential environmental and social impacts. The screening tool, which was also used by the EMF Steering Committee in their subproject review and approval process, was consistent with the provisions of the Project’s Environment and Resettlement Framework.58 41. Financial Management was rated Satisfactory during the first part of the Project but downgraded to Moderately Unsatisfactory for the one-year period between June 2007 and June 2008. The rating was upgraded to Moderately Satisfactory in June 2008 and downgraded again to Moderately Unsatisfactory in June 2010, which was also the rating assigned in the Project’s last ISR. One of the main reasons for the first downgrading was the delayed submission of quarterly reports and the auditors’ management letters. The EMF Secretariat’s internal control environment was inadequate, given both the insufficient segregation of duties, shortcomings in the internal audit function, and the failure to reconcile reported financial statement figures with the Bank’s Disbursement Department. The agreed-upon remedial actions were implemented, albeit to a limited extent and in an untimely fashion, but nevertheless the financial management

57 An international consultant provided technical backstopping in 2005 and 2006 to perform assessments, monitoring and evaluation of ECZ’s activities. From 2007-2010, a consulting firm was recruited to undertake annual performance reviews. 58 Furthermore, the Bank’s Project team facilitated a cooperation arrangement between ZECU and the US EPA to fully integrate safeguards into ZECU functions and to strengthen capacity.

16

arrangements were working reasonably well until August 2009. The second downgrading occurred when the accounting software package, which had been installed in August 2004, was not operational between August 2009 and February 2010, following a server crash, and causing data loss. Reverting to a manual - Excel spreadsheet - accounting system was susceptible to errors and manipulation. It also adversely affected the timely submission of quarterly interim financial reports and audited financial statements. The auditors expressed unqualified audit opinions but raised several accountability issues59 in their reports to Management. The EMF Secretariat and ZECU failed to address the auditors’ recommendations in a timely fashion, and the Government was requested to refund to the Bank all remaining ineligible expenditures. 2.5 Post-completion Operation/Next Phase 42. Follow-on operation. Stakeholders consulted during the ICR mission, including the Government, private mining companies, academic institutions, civil society and beneficiary communities, agreed without exception that the Project resulted in tangible improvements in people’s health-related quality of life, notably due to reduced exposure to harmful substances, such as lead, PBCs, and uranium. Despite its implementation challenges and steep learning curve, stakeholders recognized the Project, which was the first of its kind in Zambia, as an important vehicle for addressing mining-related environmental liabilities. In light of the important remedial work remaining to be done in the Copperbelt and Kabwe, and the need for mining communities to partake in the profits generated by the mining industry, they strongly emphasized the need for a follow-on operation. Earlier this year, the Zambian MFNP submitted a formal request for a follow-on Project to the Bank.60 The main objectives of a successor Project would be to support the Government in: (i) the remediation of mining-related environmental liabilities and obligations in affected communities in the Copperbelt and Kabwe through a demand-driven approach; and (ii) the implementation of the new Environmental Management Law through community involvement in monitoring mining companies’ compliance with environmental regulations.

43. The first part of the proposed PDOs for the possible follow-on operation aims to involve the Government, ZCCM-IH, and the mining companies in co-financing a “Social Responsibility Fund”61 that would enable communities living adjacent to mines and mineral processing plants to be proactively involved in the design and implementation of small-scale investments in social and economic infrastructure that would contribute to better environmental conditions.

44. The second part of the proposed PDO intends to strengthen social accountability by engaging mining-affected communities in measuring water, air and soil quality. The Bank’s

59Some of the accountability issues raised by the auditors pertained to ineligible expenditures as a result of, for example, advancing funds between the different Project accounts for Grant and the Credit proceeds, which is not permitted according to the DFA (Article II, Section 2.02.); salary increases for EMF Project staff without proper internal authorizations; and ineligible expenditures and honoraria, which affected the flow of funds to the EMF because the Bank was unable to reimburse the expenditures; and lapses in the operation of internal controls. 60 See February 22, 2011 letter from the Zambian Secretary to the Treasury to the Bank’s Country Manager 61 Due to the magnitude and severity of the environmental liabilities and obligations in the Copperbelt and Kabwe, some of which were only revealed by in-depth studies undertaken during Project implementation, the first Project was only able to address a portion of the adverse legacy of 70 years of uncontrolled mining activities. The proposed follow-on Project would leverage funds to be provided by ZCCM-IH, the Government, mining companies and possibly development partners to finance priority activities in terms of their risk to human health. This could include the rehabilitation of the 13 dams that were not closed, as planned, during the first Project’s lifetime, if they end up reverting back to the Government. The total cost of rehabilitation and post-closure maintenance is estimated to be about US$39.2 million.

17

comparative advantage in supporting these activities lies in its international experience in facilitating governance, both on the demand side, by strengthening the environmental management capacity of community-based entities, such as Resident Development Committees, and NGOs, and on the supply side, by supporting the Government in providing an enabling environment to jointly improve governance and compliance in the mining sector which instills trust in local authorities and the Government.62 45. Timing of the follow-on project and transitional arrangements. Stakeholders emphasized the urgent need to commence the preparation of a follow-on project in order to sustain and expand the Project’s positive public community health benefits, especially in Kabwe. ZCCM-IH allocated US$2.13 million (about ZMK 10.5 billion) of its own resources to finance the maintenance of human resources and systems put in place under the Project, and the continuation of select Project activities, such as lead treatment in Kabwe, maintenance of two tailings dams and disposal of redundant chemicals, between the closing of the Project on March 31, 2011 and the expiration of the disbursement grace period on July 31, 2011. ZCCM-IH’s Board approved funding of US$3.1 million (ZMK 15.2) for the period between August 1, 2011 and March 31, 2012. Considering the profitability of the mining sector at current commodity price levels, the World Bank expects future IDA financing to leverage a significant counterpart contribution from the Government’s as well as mining companies’ growing mining revenues.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation 46. Relevance of objectives and design. The Project’s objectives, i.e., remedying past and preventing future environmental liabilities and obligations related to mining operations, remain highly relevant, as well as the premise that environmental sustainability is a prerequisite to both a prospering mining sector and a flourishing national economy. The relevance of the Project’s design reflects generally proper diagnosis at the time of appraisal, as well as consistency with both the Project’s stated objectives and Zambia’s development priorities during the Project’s lifetime, as evidenced by the facts that: � Sound economic management, and in particular remedying mining-related water and air

pollution, was one of the Development Objectives in the 2000-2003 CAS. The Project was regarded as the Bank’s key lending instrument for supporting the Government in carrying out environmental mitigation measures in mining areas, in pursuit of sound environmental management (2000-2003 CAS).

� The mining sector’s compliance with environmental regulations represented one of the Outcome Indicators which the 2004-2007 CAS aimed to influence and which were aligned with Strategic Priority 1, i.e., sustained economic growth anchored in a diversified and export-oriented economy (2004-2007 CAS, pg. 16).

� Increasing the percentage of mining companies in compliance with the EMPs for the identified priority environmental liabilities from 35 percent in 2005 to 85 percent in 2010 was

62 This Component could further include support to the Government in operationalizing and enforcing the 2011 Environmental Management Act. The timing for the preparation of a new Project is opportune, given that, over the next three years, the Ministry of Environment will have to prepare a National Environmental Action Plan (NEAP), which shall, among other things, outline a strategy and schedule for the implementation of the necessary actions “to prevent, eliminate and reduce adverse effects as described in the most recent State of the Environment Report” (ECZ (2011). Environmental Management Act No. 12 of 2011, Paragraph 21.2.).

18

one of the key outcomes of the Bank’s 2008-2011 CAS that the Bank expected to influence through its interventions (CAS Progress Report, 2011). The actual achievement in 2010 was 60 percent compliance.

� The mining sector, which has accounted for about 15-18 percent of GDP and 80 percent of export earnings in recent years,63 remains the main contributor to Zambia’s economic growth. In order to maximize the sector’s economic benefits and to realize its potentially high contribution to poverty reduction, ensuring sustainable production and management by mitigating the adverse environmental impacts of mining is crucial (Zambia’s Sixth National Development Plan for 2011-2015).

47. Effectiveness of implementation arrangements. According to various stakeholders consulted during the ICR mission, overall, the oversight of EMF activities by the EMF-Steering Committee worked well. Based on a screening checklist, the Steering Committee, with the assistance of an Independent Advisory Team (IAT) successfully reviewed and approved about 60 percent of all submitted subproject proposals. However, several members of the Steering Committee noted that its effectiveness was compromised by the discontinuity in the chairmanship of its meetings64 as well as the perception that MFNP did not always honor decisions made by the Committee, thereby reportedly undermining its effectiveness as the EMF Secretariat’s oversight body.65 Unlike the EMF Steering Committee, the Interagency Regulatory Committee established by the ECZ to coordinate contributions from delegated authorizing agencies, did not function effectively. Its meetings took place less frequently than the anticipated quarterly schedule, and it reportedly needs to be reorganized (Komex, ECZ Performance Report, 2009).

3.2 Achievement of Project Development Objective 48. The purpose of this section is to: (i) assess the Project’s achievement of its higher-level objective, as measured by its contribution to ensuring environmentally sustainable economic development; (ii) measure the Project’s achievement of its objectives against the Outcome Indicators, as stated in the DFA; and (iii) evaluate the Project’s outcomes by Project Component. 49. Achievement of Higher-Level Objective. The Project’s higher-level objective was to support the Government in removing constraints to private investments in mining assets, which was considered critical to economic growth. As mentioned above, ZCCM’s adverse environmental legacy was a key issue during negotiations with private investors who were unwilling to accept legal responsibility for the enormous historical environmental liabilities. The Project achieved the following outcomes with regard to this higher-level objective: � Reassurance of investors. The Project provided the necessary funding to assure investors that

ZCCM-IH and the Government would not default on their environmental mitigation obligations,66 which would have led certain investors, such as Konkola Copper Mines (KCM), to pull out. The Project was thus instrumental to the completion of the privatization

63 See World Bank (2011). Zambia. What would it Take for Zambia’s Copper Mining Industry to achieve its Potential? Report No. 62378-ZM, pg. 14f. 64 The Secretary to the Treasury reportedly delegated the chairmanship of the Steering Committee meetings on a regular and rotational basis. 65 In addition, in light of the protracted difficulties in accounting for funding, ineligible expenses, special account replenishment, the effectiveness of the EMF Secretariat was certainly limited. 66 It is important to recognize that, during privatization negotiations with private investors, ZCCM-IH and the Government had agreed to retain responsibility for a wide range of environmental liabilities, which were not passed on to the new mine investors.

19

process. In addition to facilitating the preparation of EMPs for each privatized mining operation, the Project further led the Government to adopt a “bigger picture” approach to addressing mining-related environmental liabilities. The CEMP identified and prioritized remedial actions for implementation during the Project’s life and beyond.

� Macro level impact. The Project succeeded in achieving one of its main purposes, namely to

remove barriers to investment. Two success stories stand out in this regard. The rehabilitation of two sites, i.e., the Kansanshi mine near Sowezi and the defunct high-grade leach plant in Nchanga, paved the way for the subsequent development of these sites by investors at a total cost of about US$245 million. These investments, which would not have occurred without the Project, far exceeded the cleanup cost of about US$2.9 million,67 and the total Project cost. Furthermore, mining companies have invested in new technologies that allow second-generation copper mining, as well as third generation smelting of copper. The successfully privatized mining sector has remained the major contributor to Zambia’s economic growth, and its fiscal impact is significant. Annually, the Government collects about US$360 million in royalties from mining companies (Project staff calculations), in addition to profit taxes. In addition, ZCCM-IH retained 10-20 percent equity interest in the newly privatized mining companies.

� Improved environmental governance due to strong NGO involvement. Apart from reassuring private investors that ZCCM-IH and the Government would honor their contractual environmental mitigation obligations, the Project managed to engage NGOs, who had strong reservations against the privatization of the mining industry due to the perceived lack of regard for environmental and socio-economic impacts on the majority of Zambians living below the poverty line,68as constructive partners.69 Furthermore, as a result of several NGOs’ advocacy and social accountability efforts, important interventions, such as the lead remediation works in Kabwe were included in the Project’s scope, which had initially been limited to the mitigation of mining-related environmental impacts in the Copperbelt area, at the urging of the Blacksmith Institute.70 NGOs also provided additional oversight during Project implementation by monitoring implementation progress, in close collaboration with the ZECU and Bank teams.

67 Given the need for rapid mobilization of financing, the Government decided to utilize surplus funding ZCCM-IH's Labor Reduction Program (LRP) that had been established under the Public Sector Reform and Export Promotion Adjustment Credit (PSREP). 68 In their 2000 Report, Citizens for a Better Environment (CBE), Oxfam, Rights and Accountability in Development Refugee Studies Centre (RAID), the Inter-African Network for Human Rights & Development (Afronet) argued that the privatization of the mining industry had created conditions in which the majority of poor Zambians were denied their fundamental human rights, particularly due to the lack of regard for negative socio-economic impacts of involuntary or uncompensated resettlement. 69 Several NGOs even lodged a formal complaint against the Anglo American Corporation, a significant minority shareholder represented on the ZCCM board, with the Department of Trade and Industry (DTI) in London for failing to bear the degree of responsibility for past failures in environmental management, such as exceeding standards for sulfur emissions and effluents (see RAID, Afronet (2002). 70 In addition, 65 families facing involuntary displacement from a mine subsidence area in Mufulira were successfully resettled under the Project at the urging of Citizens for a Better Environment (see www.cbezambia.org); and partly due to NGO pressure, the Konkola Copper Mine (KCM) made the mobilization of its funds to develop the Konkola Deep Mining Project contingent on the resettlement of 20 families from this site. The resettlement was implemented, as a priority action, during Project preparation, financed from the proceeds of the Labor Reduction Program.

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50. Achievement of Project Outcomes. Despite significant challenges faced during implementation, the Project managed to accomplish its objectives, albeit with moderate shortcomings in timeliness and scope of its outcomes. It’s most significant overall achievement, detailed below, is the fact that it led the Government to adopt a longer-term, systematic, and risk based approach to environmental management planning. PDO (i) addressing environmental liabilities and obligations associated with the mining sector, following the privatization of the mining assets of ZCCM; 51. A total of 15 Investor and 12 Counterpart Environmental Management Plans (EMPs) were created, defining ZCCM-IH’s, the Government’s, and private investors’ remediation responsibilities for each mining operation. These successfully negotiated and ECZ-approved EMPs marked the starting point for tackling the adverse environmental legacy and provided a baseline for the management and regulation of environmental and social issues (Aide Memoire, MTR). These long-term EMPs are being implemented for the duration of the mining sector investment operations. Their implementation is being monitored by ECZ for the whole mining sector. The mining companies’ compliance with provisions of the EMPs has increased from 35% in 2005 to 60% in 2010. 52. The completion, disclosure71 and approval by ECZ of the CEMP 2, i.e. the final CEMP represented a significant milestone in the mitigation and prevention of mining related adverse environmental impacts. It ensured the concurrence between the Investor and Counterpart EMPs in the larger context of concerns about public health and ecosystem functioning downstream from mining operations. 53. The subprojects implemented under the Project were selected in accordance with environmental obligations identified and classified as high priority interventions in the CEMP 2. As noted by ECZ, the CEMP should be updated as soon as possible to reflect recent changes in accountability due to changing ownership of mining rights. The priorities identified for EMF funding during Project appraisal (PAD) were rather similar to the ones identified by the CEMP. The scope of lead remediation activities, however, had been underestimated and was only revealed during the Kabwe Design and Scoping Study, which took an in-depth look at pathways and impacts of lead contamination at household level. The Project’s environmental cleanup activities achieved the following tangible positive impacts on people’s health and livelihoods in the Copperbelt province and Kabwe. � Successful resettlement of residents from unsafe mine caving areas. A total of 175 families

previously living in unsafe housing due to land subsidence as a result of underground mining activities were resettled to new permanent homes in the Copperbelt area. The families reported great satisfaction with their new residences, and ZECU has been commended on this successful intervention, including its meaningful involvement of communities in decision-making by stakeholders including mining companies, NGOs, and development partners.

� Reduced exposure to health hazards. Exposure to harmful substances was significantly

reduced through the removal and proper disposal of hazardous materials from mine sites, such as 150,000 cubic meters of radioactive uranium tailings, about 220 tons of PCBs, and 56,000 m3 of lead contaminated soils in Copperbelt and Kabwe, as well as extensive

71 In addition to disclosing the CEMP in public places, town summaries were produced in local languages and were publicized in local media. Furthermore, disclosure meetings, attended by a total of 634 concerned residents, were held in three Copperbelt towns (CEP News, Issue 3, Jan-March 2007).

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demolition, cleanup and re-vegetation efforts. In addition, four tailings dams and two overburden dumps were repaired and their potential health and environmental risks reduced.72 However, the fact that the permanent closure of 13 tailings dams did not occur as planned due to their potential reprocessing represents a shortfall in anticipated Project outcomes.

� Healthier children as a result of lead treatment. In Kabwe, one of the World’s most polluted

towns, the Project contributed significantly to the remediation of lead contamination caused by ZCCM’s historic mining activities.73 Based on the Kabwe Scoping and Design Study, which identified the nature, extent and pathways of contamination, and recommended actions, the Project financed a well-designed, comprehensive set of interlinked activities to reduce the - by international standards - exceptionally high blood lead levels74 in children living in the vicinity of the smelter. The Project supported a state-of-the-art Integrated Case Management (ICM) program, which provided specialized care through by a multidisciplinary team comprising a physician, nurse, sociologist, community volunteers,75 environmental technical specialist and caregivers. As shown in Graphs 1 and 2 below, this program resulted in a reduction of blood lead levels in 2,822 children (out of 5,000 children tested) by between 20-25 percent in the case of treatment with nutritional supplements (for children with blood lead levels between 20-64 micrograms per deciliter) and by up to 74 percent for chelation treatment (for children with blood lead levels beyond 65 micrograms per deciliter).

Graph 1: Geomeans* before lead treatment Graph 2: Geomeans* after lead treatment

* Geomeans indicate the central tendency in blood lead levels (in microgram/dcl) by township (ZCCM-IH data).

72 For example, the stabilization of Tailings Dam 33C prevented a recurrence of the dam breaches that had occurred in 1997, releasing about 1 million tons of tailings into a stream, damaging traditional farmlands. 73 About 50,000 people were severely affected by lead-contaminated air, soil and vegetation stemming from a smelter that operated in the center of town until the mine’s closing in 1994. 74 Records show average levels of lead in children of between 60 and 120 mcg/dl. The WHO considers levels over 10 unhealthy, and levels exceeding 120 are usually lethal (BBC News, 2003). 75 Community volunteers essentially played the role of social workers, who, in exchange for food, identified children for testing, provided follow-up, monitored and encouraged treatment adherence.

0.0

20.0

40.0

60.0

80.0

100.0

120.0

2007

2009

2010

0.0

20.0

40.0

60.0

80.0

100.0

120.0

2007

2009

2010

22

54. As shown in Box 2, to sustain the positive treatment outcomes, the Project also supported efforts to prevent recontamination of treated children and contamination of newly born children. Box 2: Reduction of lead exposure to prevent lead contamination and re-contamination * Access to safe drinking water was provided in 2005-2006 to about 99,000 Kabwe residents, that is more than half of Kabwe’s population. This lowered exposure to lead dust through adequate hygiene, including vegetable and hand washing. In addition, the drop in the number of Cholera cases was largely attributed to water supply investments under the Project.76 Number of Cholera cases in Kabwe, 2003-2010

The rehabilitation of the water reticulation system in Kabwe, though, was not matched by corresponding investments in sewerage treatment. Kabwe’s sewerage plant is not functional, and, thus, more untreated sewerage than before is being released into the Muswishi River via the Kabwe Main Canal.

* The risk of flooding-induced exposure of 40 families (or 250 persons) living along the Kabwe Canal to lead-contaminated water was reduced as a result of the dredging, removal and disposal of 56,000m3 of lead-contaminated material. However, the risk reappeared due the lack of adequate canal maintenance by the Kabwe Municipal Council. * Exposure to windblown lead dust was reduced as a result of topsoil removal and greening of the yards of 3,100 households and 30 schools, and creating 11 play parks. While 9 out the 11 play parks have been vandalized or equipment broken, they still provide alternative play environments to children who would otherwise play in lead-contaminated dust or tailings dams. * Reaching out to communities through lead risk awareness campaigns, with support from local NGOs, and the creation of two Environmental Public Information Centers (EPICs) and the rehabilitation of the Kabwe Public Library contributed greatly to increased awareness and behavior change. The EPICs scaled back their activities at the end of the Project but, funding permitting, they are to be revitalized.77

55. Livelihood support. The use of local manual labor during the dredging of the Luanshya River78 to improve both water flow and water quality provided a temporary income opportunity for nearby residents. Under this safety-net like, labor intensive-public works subproject, a total of 170 community laborers were employed for four weeks at a rate of ZMK10,000 or about US$2 per day. The total wage payment amounted to ZMK47,600,000 (US$10,000) or about US$59 per participant. Other examples of livelihood support include the provision, on a pilot basis, of basic business management training and in-kind seed capital (in the form of a hammer mill, a pressure water pump and start-up capital for a chicken run) to three income-generating groups of women,

76 The spike in Cholera cases in 2008 was due to flooding caused by excessive rainfall. 77 However, children are now playing at these centers, which is preferable to playing in the dust. 78 About 40 percent of the tailings from upstream mining activities were dredged from the banks of the Luanshya River. This has reduced flooding of farmlands and communities downstream, as well as diminished the risk to the physical integrity of the Akatiti and Chonga tailings dams.

0

100

200

300

2003 2004 2005 2006 2007 2008 2009 2010

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each comprising about 25 members. These alternative income opportunities enabled the women to supplement family incomes in healthier ways compared to scavenging tailings dams for scrap metal. Livelihood support was further provided to the 175 families resettled under the Project.79 56. All contractual obligations were addressed80. Priority liabilities were addressed to varying extent. While in Kabwe most of the priority liabilities identified by the Kabwe Scoping and Design Study were tackled by the Project, priority liabilities identified by the CEMP in the Copperbelt were addressed to a significantly lesser extent, given that the 13 tailings dams, earmarked for closure under the Project, could not be rehabilitated, as planned. As mentioned above, following the increase in copper prices, the mining rights for these dams, along with the liabilities associated with them, were transferred to the private sector by MMMD for reprocessing of residual copper content. PDO (ii) strengthening the capacity of its environmental regulatory institutions to improve future-compliance of the mining sector with environmental and social regulations. 57. One of the key intentions of Component 2 of the Project was to change the power balance between ECZ and the mining companies by strengthening the agency’s capacity to actively participate in the negotiation of privatization contracts with new investors, and to monitor and enforce their compliance with contractual environmental obligations and environmental standards. The Component was visionary as it complemented the remediation of the adverse mining-related environmental legacy, financed from the EMF under Component 1 of the Project, with capacity building of Zambia’s environmental regulatory agency in order to avoid future liabilities. ECZ has become stronger, as evidenced by the fact that it is using litigation to enforce compliance, and, on two occasions, it temporarily shut down specific polluting mining facilities81 until an identified problem was rectified or a schedule of remedial measures agreed-upon. 58. A second intended outcome was for ECZ to play the role of a “dispatcher” to mobilize specialized delegated agencies, such as MSD. This arrangement resulted in a strengthened relationship and revised MoU between ECZ and MSD, thus more effectively integrating environmental concerns into the “Terms of Reference” of the delegated agencies. While formal efforts aimed at strengthening ECZ’s and the MSD’s monitoring and enforcement capacity resulted in less tangible outcomes, particularly in the case of MSD, due to implementation delays under this Component, the review and monitoring of the implementation of the EMPs, EIAs, and the CEMP had a positive “learning by doing” effect as reported by staff of the institutions to the ICR mission. 59. ZCCM-IH established and is operating a monitoring system. ECZ established a monitoring program and has been monitoring the EMPs’ compliance with statutory limits, primarily based on compliance reports from mine operators. Between 2005 and 2010, ECZ conducted, on average, 90 visits to 23 mine areas (i.e. business units or facilities) per year to

79 It was noted, though, that community consultation could have been better in regard to people’s choices of livelihoods. Resettled families had been assigned farming plots under the somewhat erroneous assumption that they would take up farming. However, due to the convenient location of the new settlement, families were able to pursue alternative livelihoods. 80 At the recommendation of an independent advisor a dredging subcomponent planned was not implemented given that 90% of the pollution problem to be addressed was the result of continued pollution by an upstream mining company. 81 These were business units or facilities of Konkola Copper Mines and Ndola Lime for suspected water and air pollution, respectively (information provided by ECZ).

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countercheck the reported data. However, due to the delay in the procurement of NDF-financed monitoring equipment by ECZ, the monitoring program was not fully implemented, and the collection of monitoring data has, therefore, been very limited to date. 60. Based on ECZ’s efforts to monitor and enforce, through fines, temporary suspensions of mining licenses and litigation, private mining operators’ compliance with environmental regulations, the industry’s compliance with EMPs is, on average, presently about 60 percent (CAS Progress Report, April 2011) against a target of 85% and a baseline of 35% in 2005. This is partly due to the fact that, during privatization, the Government exempted various new investors from having to comply with environmental standards to give them time to phase out or retrofit the old technology they inherited. 61. ECZ monitored pollution flows and loads periodically, based both on pollution data submitted by the mining companies, its own sampling at discharge points to verify data reported by the mining companies, and at sampling of ambient water quality at fixed sampling points throughout the Copperbelt. ECZ carried out water quality monitoring of the Kafue River. Some of the samples were collected by designated agencies such as ZECU and the Department of Water Affairs. The water quality data suggest that Project activities did not lead to a significant improvement in water quality (see Annex 2). However, the fact that the water quality did not deteriorate in spite of a more than 100 percent increase in copper production between 2003 and 2010 from 300,000 to 700,000 tons per year is attributable to more vigorous compliance enforcement efforts on the part of ECZ, as a result of Project support. While no spillage occurred following Project interventions at the dams that were maintained (5) or repaired (2) under the Project, little preventive maintenance was carried out at the recently privatized tailings dams that were initially earmarked for closure under the Project. Their current contribution to the pollution flows into streams flowing out of the mine areas is unknown.

3.3 Efficiency 62. According to the ex ante Cost Benefit Analysis (CBA), the mitigation measures to be carried out by the EMF, coupled with enhanced regulatory oversight by ECZ, were expected to generate benefits in the form of lower soil contamination, water pollution and air pollution levels as well as a reduction in the likelihood of a tailings dam failure. The results of the ex post CBA analysis (see Annex 3) indicates an Economic Rate of Return (ERR) of 10 percent, which is about 60 percent of the ERR projected at Project appraisal. 63. The benefits generated under the Project from reduced soil contamination in Kabwe were substantial, albeit lower than anticipated; the Project benefits in the form of water and air pollution prevented from occurring as a result of the Project were lower than anticipated, as were benefits from the reduced likelihood of tailings dam failures. The latter is attributable to the fact that the planned rehabilitation of 13 tailings dams for closure was not implemented under the Project (see paragraph 15). 64. While the ex post CBA, based on the methodology used to calculate the ex ante CBA at Project appraisal, represents an important measure of efficiency, the Economic Rate of Return, which assesses the opportunity cost of Project investments, only tells part of the story. At the time of appraisal an ex ante Financial Rate of Return, which would have measured the financial return in relation to Project investments, was not calculated. It is important to note that, contrary to an anticipated limited (negative) impact (PAD, pg. 24) Project investments actually generated a dramatic positive fiscal impact.

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65. As a result of the US$1.5 million investment in the cleanup of the Kansanshi Mine (in Solwezi), funded during Project preparation from the Labor Reduction Fund (see paragraph 24), a private mining company invested US$125 million in the construction a new plant, which would not have occurred without the Project. Since then, the mine has expanded substantially, which has led to a considerable appreciation in the value of the 20 percent share in the Kansanshi Mine retained by ZCCM-IH during its privatization. The mine’s present value is estimated at about US$10 billion, and the company is planning to build a US$500 million new smelter in the near future. Until 2010, most tax revenues collected from mining in Zambia came from Kansanshi; in 2009 Kansanshi paid US$265 million in taxes, and between 2006 and 2010 it paid over US$1 billion in taxes. This amount does not include the recently announced US$224 million in super profits tax, which the company agreed to pay (information received from World Bank’s Mining Department). A similar success story is the case of the Nchanga High Grade Tailings Leach Plant where the demolition and site cleanup, at a cost of US$1.4 million, also funded during Project preparation from LRF proceeds, paved the ground for a new US$120 million smelter and Acid Plant financed by a private investor.

3.4 Justification of Overall Outcome Rating Rating: Moderately Satisfactory 66. The achievement of the PDOs – which, as confirmed by stakeholders during the ICR mission, continue to be highly relevant – was moderately satisfactory. Even though the overall environmental liabilities from historic mining activities were not completely addressed, or were not addressed in a fully sustainable fashion, the Project achieved its key performance indicators’ targets82, and successfully put in place the “blue print” (through CEMP2) for addressing adverse mining-induced environmental problems according to a risk-based methodology. In other words, in addition to addressing a significant portion of the priority physical historical liabilities, the fact that the Project developed a comprehensive approach for tackling ZCCM’s environmental liabilities rather than dealing with them in a piecemeal fashion, was a significant contribution. Similarly significant was the excellent integrated approach to reducing elevated blood lead levels in children affected by lead contamination in Kabwe. While the Project’s achievement of its PDOs was less than fully satisfactory, it is noteworthy that the Project was very successful in achieving its higher-level objective, i.e. to contribute to the revitalization of the copper industry. The Project was instrumental to the successful privatization of the mining industry, and it generated a remarkable positive fiscal impact.

3.5 Overarching Themes, Other Outcomes and Impacts 67. Knowledge, attitude and behavior change. The Project amplified the importance of environmental protection in the mining sector, and significantly enhanced the awareness of environmental risks and prevention among mining communities in the Copperbelt and Kabwe.83 The community outreach activities were a remarkable success, given that the Project team

82 The achievements of indicators’ targets is summarized in the ICR Datasheet and supported by details in Annex 2. 83 A risk communication strategy was developed and implemented in Kabwe at household level, in close collaboration with the Kabwe Municipal Council, the Kabwe Lead Management Committee and community leaders. A comprehensive Knowledge, Attitudes, Practices and Beliefs (KAPB) baseline survey was undertaken. The follow up survey was not carried out due to shortage of (uncommitted) funds. The Kabwe Scoping and Design Study (KDSD) assessed the extent and magnitude of lead contamination, pathways of lead exposure to humans, and consulted with communities on proposed mitigation measures.

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managed to build trust and overcome obstacles deeply rooted in cultural beliefs.84 In addition, the Project made environmental information accessible by establishing four Environmental Public Information Centers (EPICs) in Copperbelt towns and Kabwe and reaching out to communities through a variety of media, including an excellent newsletter. The outcome was not only increased awareness but, more importantly, considerable behavior change, especially in the form of improved personal and household hygiene, made possible by water supply investments under the Project.

(a) Poverty Impacts, Gender Aspects, and Social Development 68. Environmental remediation particularly benefited the poor. Poor and vulnerable population groups, who had been most adversely affected by ZCCM’s environmental liabilities, benefited the most from the Project.85 It was typically the disadvantaged population groups, in particular women-headed households, which: (i) lived in unsafe conditions caused by mine subsidence, lead contamination, and close proximity to radioactive mine waste; (ii) were exposed to dust emissions, SO2 inhalation, and produce grown on land irrigated with contaminated water for agriculture; and (iii) faced more health risks associated with flooding or breaches of tailings dams and accidents while scavenging tailings dumps for scrap metals and ore. As rightly noted by Bank Management, “if sustained, the environmental remediation works … are an important building block to improved health of communities in mining areas (see Box 2).” Though not measured under the Project, it also was an investment in human capital, given that children who benefited from lead treatment are less likely to suffer lead-induced cognitive impairments86 and are more likely to perform better academically and professionally.

Box 3: Livelihood Support Beneficiary Profile: Judith Kasikila

84 As the KSDS entailed testing of blood lead levels research team members were reportedly initially suspected of practicing Satanism. The fact that under ZECU’s leadership community members’ suspicions as well as initial denial about extent and impact of lead contamination could not only be dispersed but transformed into an attitude of trust and cooperation represented a considerable accomplishment. The Project team also managed to dissuade pregnant women from eating soil, which had been a major source of lead exposure for women in reproductive age. While eating soil is a cultural practice in several African countries, it also addresses a physiological need for nutrients. 85 During ZCCM’s privatization, thousands of jobs were lost, driving people (deeper) into poverty. The World Bank-supported Public Sector Reform and Export Promotion (PSREP), intended to prevent the social hardship to be expected from an unmitigated thirty percent reduction in the public sector wage bill provided tens of thousands of newly laid off ZCCM workers with termination benefits and retraining (World Bank (2003). PSREP Project Performance Assessment Report, pg. 17). Even though the retrenchment Component of the PSREP was considered successful, and helped clear an important obstacle to completing the sale of ZCCM, it did not benefit employees in the mining-related informal sector. 86 According to the literature, children in the high lead exposure category (>16mcg/dl) suffer 3.0 IQ deficit (See Ogunseitan, O., Smith, T. (2007). The cost of environmental lead poisoning in Nigeria. Downloaded from: http:/www.academicjournals.org/AJest).

Judith Kasikila is a 58-year old married mother of 10 children aged 16-38, living in Kabwe’s Mutwewa Nsofu Township. Judith used to scavenge mine dump sites for scrap metal and metal ore, which she would sell every day for about ZMK 10,000 to businessmen who would come up from Lusaka to buy stones and scrap from men and women who, with their bare hands, pick and shovel, would engage in illegal scavenging of dumps. They put their lives at risk as they inhaled heavy metal dust and excavated in unsafe areas.

Judith first learned about the effects of exposure to lead when she attended community meeting organized by ZCCM-IH staff. At first, she attended focus group meetings held as part of the sensitization campaign and soon she trained to become a community facilitator and peer educator herself. She was happy to have benefited from the yard greening as well as the water supply programs supported by the Project. Judith is a member of a group of 25 women who were trained in business management skills.

With the help of the Project, the women started a hammer mill business, which is going so well that the group is eager to get a bigger mill. At present, they make a profit of about ZMK 60,000 per month, which is paid out to the group members on a rotating basis. Every month, 5 different women receive ZMK 10,000, which allows them to buy fertilizer for growing vegetables that generate an income of about ZMK 15,000 per day at a market that was rehabilitated under the Project. Judith’s biggest wish is for her group to be able to expand its hammer mill business.

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69. Environmental liabilities as development opportunities. Given that the “challenges of poverty are overwhelming, poor living conditions and poor diets frustrate the efforts of the project and community health workers,” agreement was reached at MTR that a clearer link be established between socio-economic development and environmental remediation. In line with the motto “liabilities as development opportunities,” local communities were to be involved in the maintenance of sites and/or the development of economic activities around such sites.87 One successful example was the dredging of the Luanshya Rather, which engaged manual labor – as opposed to heavy machinery - to spread the dredged material along the River.88 However, the plan to establish a US$1.5 million small community grants scheme to fund small-scale, community-based livelihood and environmental improvement investments was not implemented in order to maintain the slowly disbursing Project’s focus on its already ambitious original scope of work. (b) Institutional Change/Strengthening 70. New environmental mitigation and prevention tools. One of the Project’s most significant accomplishments in this regard was the Project–supported review of Zambian environmental legislation and subsequent drafting, by ECZ, of the new Environmental Management Act, which was signed into law in May 2011. The Act contains more stringent penalties for non-compliance than the previous Environmental Protection and Pollution Control Act (EPPCA).89 Of similar importance was the support provided by the Project to the development of EMPs and the CEMP II, which resulted in the creation of a cohesive system of clearly defined responsibilities regarding the remediation of environmental liabilities at and downstream of mine sites. As a result of the provision of monitoring equipment and technical assistance, albeit limited, compliance-monitoring efforts on the part of ECZ and MSD have intensified, contributing to an improvement in the industry’s compliance from 35 percent in 2005 to 60 percent in 2010 (ECZ data). However, there is room for stricter “supply side” enforcement through these mandated agencies and “demand side” accountability exercised by civil society. While the Project managed to significantly improve people’s lead risk awareness, it did not improve access to environmental data and compliance monitoring reports, which is a crucial prerequisite to promoting social accountability. (c) Other Unintended Outcomes and Impacts (positive or negative) 71. Improved environmental governance due to strong NGO involvement. As detailed in paragraph 49, the Project managed very effectively to engage NGOs, some of whom had strong reservations against the privatization of the mining industry due to its perceived disregard for environmental and socio-economic impacts. Key project activities, such as lead remediation in Kabwe, resettlement of 65 families from a mine subsidence area in Mufulira, resettlement of 20 families from the Konkola Deep site, and others were designed and implemented with substantial input from several NGOs’ advocacy and social accountability efforts.

87 See June 12, 2006 letter from the Bank’s Country Director to Ministers of MFNP and MMMD. 88 The deposit of a large volume of mine tailings stemming from upstream mining operations had raised the riverbed to the extent that it posed a risk to the structural stability of the Akatiti and Chonga tailings dams. 89 The maximum imposable fine was raised from ZMK 2,700,000 or about US$ 550 (or imprisonment for a period of up to three years or both) to ZMK 180,000,000 or about US$ 36,000 (or to imprisonment for a period not exceeding ten years or both). See 2011 Environmental Management Act, Part XI: Environmental Offences).

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72. Environmental Protection Fund (EPF). As mentioned earlier, the Project financed the cost of setting up and starting the national Environmental Protection Fund (EPF) (not to be confused with the Environmental Management Facility (EMF) under Component 1. The former is a statutory entity established to ensure, through mandatory contributions from mining companies, that sufficient funds are available to Government to cover cleanup costs in the case of mine closure or investor pullout. The amount which has been collected to date from 30 mining companies (US$8 million) is below the projected (and needed) amount; however, the operationalization of this earmarked clean up funding mechanism is a major institutional accomplishment that had to overcome significant political and industry resistance.90 The EPF’s goal is to be financially self-sustaining by 2013, i.e. collect sufficient contributions to be able to fund all existing mine closure and clean up plans.91 This seems particularly important, considering that remedial actions that have been suggested for mining companies may not be commensurate with the risks.

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops 73. While beneficiary surveys or end-of-Project stakeholder workshops did not take place, extensive stakeholder consultations were held during Project preparation, implementation, and also during the ICR mission. The various stakeholders were very consistent in their assessment of the Project’s strengths and weaknesses discussed above. A Midterm Review workshop with 62 different stakeholders from local authorities, mining companies, NGOs, faith-based organizations, media, the Government, ZCCM-IH and others took place in 2006. 4. Assessment of Risk to Development Outcome Rating: Substantial 74. The sustainability of assets and activities supported under the Project is a concern, particularly if a follow-on project to consolidate the results of the Project does not materialize. Despite repeated cautioning by Bank Management, insufficient attention was paid by both the Bank and ZECU teams to ensuring an effective handover of operation and maintenance responsibilities for assets created under the Project to the designated entities. Potential threats to the Project’s longer term sustainability are outlined below. They take into account the Project MoUs with the respective partners:92

90 EPF contributions are determined by the “cleanliness ratings” assigned by ECZ/MSD based on environmental audits. The biggest challenge has been the mining companies’ limited compliance with the requirement to provide a Bank guarantee for the remainder of the anticipated mine closing costs. This challenge had, as of the drafting of this ICR, not been fully resolved, particularly for large mining houses reluctant discouraged by the high cost of (large) Bank guarantees. 91 Intending to achieve this in five years seems overly ambitious and unrealistic. At present, about 30 mining companies contribute to the EPF, and adequate capacity at the level of MSD is crucial (but not yet in place) to ensure the EPF’s financial viability as the number of mining companies increases. Several stakeholders consulted during the ICR mission recommended that the mining operators continue to contribute – and that contributions be increased in light of the current profitability of the mining industry - after the mandated 5 to 20 percent of closing costs have been paid into the EPF. 92 In the case of Kabwe, these included line ministries, local authorities, water companies, and communities. The MoU with the counterparts contained provisions governing end-of-Project handover of operational and maintenance responsibilities. However, the MoU counterparts seemed to lack a sense of ownership and commitment to protecting Project-financed investments.92

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� Recontamination of remediated sites due to lack of political will.93 Lack of political will to: (i) enforce compliance with environmental regulations; as well as (ii) increase the mining companies’ contributions to the EPF could present94 a potentially significant risk to the Development Outcome. Failure on the part of MSD and ECZ to reduce adverse environmental impacts of ongoing mining could present a threat to the long-term benefits of Project interventions. The interface between Government, ZCCM-IH, the private sector and communities, which was supposed to facilitate the remediation of active, as well as historical, environmental liabilities remained difficult throughout the Project.

� Privatization of tailings dumps for reprocessing. Even though the reprocessing of tailings

dams and reopening of the Kabwe mine were found not to be economically viable, these sites were privatized by the Ministry of Mines and Minerals (see paragraph 15). This effectively prevented ZCCM-IH from implementing the rehabilitation and decommissioning works, in accordance with the Project’s original scope of work. ECZ is expected to closely monitor the situation to safeguard Project benefits and minimize health risks for nearby communities.95 However, due to “human and financial resources constraints” Project sites were not inspected and monitored by ECZ as regularly as intended (KOMEX, 2009 Component 2 Performance Review).

� Uncertain support to ongoing programs. While ZCCM-IH has agreed to provide temporary

funding for the continuation of successful programs, such as the Kabwe lead management and treatment activities a long-term solution has yet to be found; and it is hoped that a follow-on project would provide financing, at least in the medium term. The need to “involve more decisively local authorities, including capacity building, to ensure long term sustainability” was correctly recognized. Due to its interim nature, this arrangement, while successful in the short term, does not ensure sustainability in the longer run.

� Insufficient community ownership. While the Project entailed extensive lead risk awareness

activities and other forms of community consultation, it was agreed that a more proactive involvement of mining communities would have helped to ensure sustainability, in accordance with the Project’s design. The Community Development Small Grants Fund, which aimed to enhance community participation through demand-driven investments during the second half of the Project’s lifetime, was not established and, as a result, communities played more of a consultative than a decision-making role.

93 For example, there was justifiable concern that: (i) the potentially careless exploitation of the Kabwe tailings dam would jeopardize Project efforts to control lead contamination in the area; (ii) in 2009, high levels of waste materials, such as tailings and concentrate from an upstream mining operation, caused the stream to rise within 30 cm of the base of the bridge over the steam to the Democratic Republic of Congo, “[calling] into question the environmental benefits of abating problems with the Nchanga overburden dumps”; Aide Memoires, November 2009 and January 2011 missions); and (iii) emissions from a battery recycling plant in Kabwe are causing adverse health impacts. 94 A new Government has been elected in Zambia and the Bank will encourage it to take on the baton with respect to improving compliance on environmental safeguards. 95 Bank Management had urged the Project team to “quickly resolve issue of tailings dams that are a danger to local communities”. No dam failures have occurred since Project implementation as a result of Project-funded maintenance and repair works, but a viable long-term solution remains to be sought.

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5. Assessment of Bank and Borrower Performance

5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Satisfactory

75. Project Design. Bank performance during Project preparation was Moderately Satisfactory. The Project team was commended by Bank Management for the good preparation of the first year work programs.96 With the exception of the absence of a Public Sector Governance/Institutional Development Expert for Component 2, the team’s composition represented an appropriate skills mix. Project design was innovative, and Project preparation was thorough and creative.97 In addition to very positive feedback from the Quality at Entry Review (QER) panel, the Task Team Leader had arranged a “Tiger Team” of senior level Bank staff, which reviewed preparation milestones and advised the task team. Project preparation documentation was readily available and detailed, as was the PAD.

76. However, Bank Management rightly expressed concerns about “the weak M&E framework” given the failure to track “clear indicators of project performance and impact related to leakage level of tailings, reduction of pollution flow from project rehabilitated sites into the Kafue River.” Furthermore, the overly ambitious design of Component 2, the lack of integration of oversight of Components 1 (by the EMF Steering Committee) and Component 2 activities (by the ECZ Board) turned out to be shortcomings in Project design. At a thematic level, though, the linkages between ECZ and EMF seemed well designed, in particular their interface with regard to the EMPs and CEMP.

(b) Quality of Supervision Rating: Unsatisfactory

77. Overall quality of implementation support. Positive and successful aspects of Project supervision were noted, in particular during the first half of the Project. These included: (i) flexibility by the TTL to adapt to changing circumstances, such as the inclusion in the project scope of: the removal of uranium tailings, which were only identified during implementation; the financing of the rehabilitation of the water supply system in Kabwe to enable residents to avoid lead ingestion through hand washing; and the inclusion of the resettlement of residents in a mine subsidence area, in response to a need identified through an NGO; (ii) innovation on the part of the TTL, in the form of supporting the creation and initial operation of the Environment Project Fund; and (ii) the TTL’s trusted partnership and productive collaboration with NGOs. 78. Supervision missions were conducted on a fairly regular basis, as reflected in the ISRs. However, mission documentation, such as Aide Memoires and management letters from six supervision missions were not readily available in the electronic Project files. The Bank’s Management also rightly expressed concern about infrequent updating of indicators in ISRs. As noted in the December 2008 ISR, “presently some of [the indicators] go too far back to give an

96 As noted in the November 2003 ISR, “the project is now off to a smooth start, with good preparation of first year work programs. The Task Team should be particularly congratulated for its extremely effective handling of the potential Kabwe resettlement and insistence on transparent communications with civil society.“ 97 For example, in order to raise awareness among decision makers of the reputational risk and potential consequences incurred in a “without Project scenario” the team screened the movie “Erin Brockovich.”

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accurate measure of progress.” The quality of ISRs varied. Some were very thorough, detailing issues and outlining recommended actions, others resembled forward-looking SMOs as opposed9 to documenting actual implementation status. While technical support provided by the Bank team with regard to mining and environmental issues, in particular, seemed to have been sound and solid, as evidenced by the Project’s significant achievements particularly in the remediation of environmental liabilities (see paragraph 51), the Bank’s supervision performance overall was Unsatisfactory, due to the following shortcomings:98

� Significant delays in issuing No Objections. Stakeholders consulted during the ICR mission

attributed a large part of the Project’s slow implementation progress, in particular after MTR, to delays in the Bank Task Team Leader’s handling of No Objection requests.99

� Delayed processing of the DFA Amendment. As noted above (see paragraphs 30 and 31) even though Bank Management had urged the supervision team in June 2006 to redeploy Project funds, Project proceeds were not reallocated – and the DFA amended - until November 2009, which, coupled with the disbursement challenges, partly caused by the Zambian team’s difficulty to account for Project expenditures, caused cash constraints that brought Project implementation almost to a halt in 2007. By the end of the disbursement grace period on July 31, 2011, this issue had still not been fully resolved.

� Failure to improve the M&E system. The Project team was repeatedly encouraged to work closely with the Africa Region’s quality assurance team “to ensure a well-designed and monitorable M&E systems is in place” (ISRs No. 5, June 2005 and No. 6, August 2005). However, no evidence of such consultations was found in the Project files, and M&E indicators were not revised during Project implementation, as they should have been in order to make them more specific, relevant, and time-bound.

� Community Development Small Grant category not established. Following the MTR, as part of the Project restructuring, in order to address the link between socio-economic development and environmental remediation, a community development fund was to be established to finance small scale, demand-driven socio-economic investments (see paragraph 33). While economic opportunities were provided, to a very limited extent, on a pilot basis, the community subproject component did not materialize even though it was for understandable – yet undocumented – reasons (to not increase the level of complexity of the already overly ambitious Project).

� Failure to restructure Component 2. While the need for “a radical action plan to strengthen and restructure MSD” into a stronger semi-autonomous agency was identified early on during Project implementation100 the envisaged restructuring did not materialize, despite Management’s emphasis of the importance for “further strengthening of ECZ and MSD ability to enforce regulations.” However, a major restructuring of MSD would have been beyond the scope of the envisaged 5-year Project lifetime. While less than vigilant Bank supervision efforts have contributed to the lack of Project impact on MSD’s capacity, the Government’s lack of political will to fully empower MSD, in particular, during the Project’s

98 The team could have addressed the continued slow implementation process in a more systematic and proactive way. Bank Management appropriately noted, for example that the “project has been rated only Moderately Satisfactory (MS) for about three years now. The performance of the project should be re-assessed … for more realistic ratings”. 99 In the case of Makululu Road in Kabwe, for example, the sub-project could not be implemented since the contractor had increased its price beyond the budgeted amount during the nine months it took to receive the No Objection. 100 See ISRs No. 8, June 2007 and No. 6, August 2005, and letter from Country Director to Ministers of MMMD and MFNP dated August 12, 2005.

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lifetime certainly was not conducive to capacity enhancement efforts. This should have been documented and addressed at a higher level between Bank Management and the Government.

� Interface with private mining companies. Stakeholders as well as Bank Management101 repeatedly emphasized that involving private sector mining companies in the mitigation of the environmental impacts of mining was crucial to achieving the PDO. However, there is no evidence of any efforts having been made by the Bank team to this effect.

� Inadequate focus on sustainability. The importance, for example, of identifying measures that could have helped the Government ensure sustainability of the Kabwe lead management activities beyond the Project’s closing date in order to yield long-term results was appropriately emphasized in several ISRs from December 2008 to May 2009, yet it did not seem to have been a major discussion topic during supervision missions. As a result, arrangements to ensure sustainability of Project investments were not made, thus putting sustainability at risk.

� Insufficient utilization of corporate risk list. The project was recognized from its preparation as representing an elevated level of corporate risk, mainly due to the inherently sensitive nature of issues it tackled and safeguards risks. As such, it was reviewed twice per year at the Sector Director or Regional Vice President (RVP) level. The enhanced monitoring and recognition of elevated risks, did not, however, lead to enhanced follow up on disbursement, FM, monitoring, and other issues that affected the project, and amplified the inherent risks.

79. These supervision shortcomings were partly attributable to the fact that the Project was supervised from Headquarters when more “hands on” supervision support could have been provided from the country office. In addition, the Project was transferred around the time of effectiveness from the Africa Region’s Environment Department to the then newly merged IFC and Bank Mining Department; the Task Team Leadership was transferred from a Senior Environment Specialist to a Senior Mining Specialist; there were also numerous changes in team leadership that affected oversight of the Project during the course of its implementation. 102 The lack of continuous presence of a social safeguards specialist on the team weakened the degree of intended community involvement, and the absence of an institutional development or public sector governance specialist impeded better oversight of the implementation of Component 2. (c) Justification of Rating for Overall Bank Performance Rating: Unsatisfactory 80. Overall, Bank performance was Unsatisfactory. Even though essential analyses, designs, implementation arrangements, financial management and procurement plans were in place and endorsed by an internal senior level quality review team prior to funding approval, quality at entry shortcomings were noted with regard to the M&E framework, the split oversight of Components 1 and 2 of the Project, and the overly ambitious design of Component 2 for a 5-year Project. During implementation, the Project achieved tangible results, especially under

101 Multiple ISRs underscored the importance of tackling the complex and difficult interaction/interface between the Government and the private sector and of identifying more efficient mechanisms for soliciting private sector commitment to addressing active, as well as historical environmental liabilities (ISRs No. 14, June 2010, No. 12, May 2009, and No. 13, December 2009). This did not materialize under the Project. 102 The Project had a total of four Task Team Leaders (TTLs): the first TTL led the Project preparation process; the second TTL led Project supervision from effectiveness in 2003 until 2010; a third TTL briefly led the Bank’s supervision efforts from 2010 until project closure in 2011, at which point it was transferred to a fourth TTL who handled the Project’s closing and Implementation Completion Report preparation. Between 2003 and 2011, Project supervision was overseen by a total of four different Country Directors or Designees and four different Sector Managers.

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Component 1, to a large extent due to sound technical guidance related to mining and vigilant supervision of safeguards issues provided by the Bank. However, as a result of supervision-related shortcomings, such as significant delays in granting of no-objections, failure to timely resolve disbursement issues, failure to restructure the Project to reallocate funds and add community grant component, and failure to revise the M&E framework , the Bank’s supervision team was responsible for some of the project implementation delays. (a) Government Performance Rating: Moderately Unsatisfactory 81. Overall, the Government appears to have been supportive of parts of the Project, especially Component 1. The recent signing of the 2011 Environmental Management Act by the President demonstrated a commitment to environmentally sustainable development. With regard to Component 2, however, the Government’s commitment to hold private mining companies not fully complying with environmental standards accountable is ambiguous.103 In addition, the transfer of tailings dams, whose reprocessing was found to be economically unviable, to private investors who are reportedly not undertaking routine maintenance to minimize the risk of dam leakage of failure, may pose a risk to the achievement of the PDOs. (b) Implementing Agency or Agencies Performance Rating: Moderately Unsatisfactory 82. Project oversight by the EMF Steering Committee seemed effective. Management by the EMF Secretariat was problematic, mostly because of financial management issues (see below), and the quality of project implementation management by ZECU was mixed. Overall, the ZECU team showed genuine commitment, and it was rightly noted that under its leadership, “excellent progress continues to be made on lead level management in Kabwe.” However, the following shortcomings in ZECU’s performance were also observed: � Procurement. At the inception of Project implementation, ZECU’s inexperience and lack of

familiarity with the preparation of procurement documents,104 coupled with the poor performance of some contractors during the first half of the Project, caused some implementation delays. These shortcomings were resolved during Project implementation.

� Financial management. Several serious financial management shortcomings were observed on the part of ZECU and the EMF Secretariat, such as: delayed submission of quarterly interim financial reports; slow implementation of auditors’ recommendations; shortcomings in the internal audit function; reverting to a manual accounting system when the accounting software was not operational for six months; and their persistent difficulty in accounting for expenditures (see paragraphs 36 and 41 for details). It was appropriately noted that “both EMF and ZECU have been rather slow in resolving outstanding claims with the result that the

103 One the one hand, ECZ is able to use and actually apply compliance tools, such as litigation and temporary suspensions of mining permits to achieve compliance; at the same time, MMMD transferred the environmental liabilities for the 13 tailings dams to private investors, who are unlikely to properly maintain, rehabilitate and close the dams, thereby allowing these dams to leak into and pollute waterways. 104 For example, ZCCM-IH/ZECU staff had never prepared bidding documents and had difficulties estimating subproject costs, which led to delays in the procurement process, given that bidding documents would occasionally have to be revised due to inaccurate bills of quantities.

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Project is short of available funds and payment of some contractors have (sic) been delayed.”105

� Contract Management. In several instances, ZECU adopted unconventional and occasionally ineffective practices, seemingly motivated by a genuine desire to overcome implementation obstacles.106 The quality of supervision of physical works was, at times, suboptimal, as shown in the case of Tailings Dam 33c, where due the inferior quality of the contractor’s work, the drainage crumbled (and was subsequently repaired) before the end of the Project.

� Exit Strategy. During Project implementation, insufficient attention was paid to ensuring the sustainability of investments after Project closing. In Kabwe, for example, the MoUs contained arrangements for handing over operation and maintenance responsibilities for investments made under the Project in water supply, play parks, public information centers, health clinics, etc. to the respective MoU counterparts. However, the exit strategy was not implemented due to a lack of focus on both ZECU’s and the Bank’s part.

83. With regard to ECZ’s management of Component 2 several delays were largely contributable to factors beyond the Agency’s control, such as delayed availability of funds and procurement due to NDF-internal factors. While ECZ drafted the new Environmental Management Act, which was signed by the President in May 2011 and reviewed and approved a large number of EPBs, EIAs, and EMPs, the following significant performance shortcomings were observed: (i) mining sites rehabilitated under the Project were not inspected or monitored on a regular basis; (ii) meetings of the Inter Agency Environmental Coordination Committee were not conducted on a regular basis; and (iii) annual work plans, budgets, and annual progress reports were not submitted to NDF and the World Bank in a timely fashion.107

(b) Justification of Rating for Overall Borrower Performance Rating: Moderately Unsatisfactory 84. While the Government and ZCCM-IH demonstrated commitment to Component 1 activities during implementation, as evidenced by ZCCM-IH’s decision to finance select Project activities from their own funds well beyond the closing date, the administration’s commitment to a vigorous enforcement of environmental standards in the mining sector was less evident. The performance of the EMF Secretariat overall was less than satisfactory; ZECU’s performance varied from satisfactory with regard to lead mitigation activities in Kabwe to less than satisfactory performance on financial management and occasionally the management of works contracts; and ECZ’s performance was also less than satisfactory.

105 In addition, community volunteer case managers and laboratory technicians had not been paid their Project-related supplementary salaries since 2007 and subsequently stopped working for the Project. 106 To remedy a non-performing contractor’s performance, for example, ZECU decided to retain the contractor’s equipment and staff while replacing the subproject manager with one of its own engineers, without prior consultation with the Bank. And, rather than contracting out activities, such as community outreach, blood lead level monitoring, MoU agreements were negotiated with Government ministries, the Kabwe Municipal Council, and the Kabwe Water Authority (Lukanga Water and Sewage Corporation). Inconsistencies between the original and amended MoUs caused a great deal of confusion and further disbursement delays at Project closing. 107 See Worley Parson’s 2010 Performance Review of Component 2 for more details.

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6. Lessons Learned 85. In designing a potential follow-on Project in Zambia and similar operations elsewhere, incorporating the following lessons learned with regard to Project design, implementation arrangements, and Government commitment seems critical: Lessons learned with regard to Project design � Leveraging funding. It was appropriate for the Bank to focus on providing financing for the

remediation of large-scale mining-related environmental liabilities and obligations under the first Project. In light of the profitability of the mining industry, though, Bank financing in the case of a second Project should play more of a leveraging role, i.e. mobilize substantial financial contributions from the Government, ZCCM-IH, and mining companies.

� Sharing mining profits with communities. Under the first Project, mining communities in the Copperbelt Province and Kabwe did not adequately benefit from the thriving mining sector. To this day, they continue to struggle with adverse mining-related environmental and public health impacts, poor access to basic social infrastructure services, and poverty. Mining companies should contribute to a fund that would enable communities living adjacent to mines and mineral processing plants to be proactively involved in the design and implementation of small-scale community-level investments that would improve local living and environmental conditions and livelihoods. Explicit emphasis should also be placed on addressing gender issues.

� Increased sustainability through community involvement in decision-making. Stronger emphasis on sustainability right from the beginning is crucial. While the design of the first Project envisioned meaningful participation of mining communities in the subproject cycle, this did not fully materialize during implementation. Affected communities could have been engaged more actively in the implementation of Project-funded investments, for example through labor-intensive public works. In some instances, community members actually reduced the sustainability of Project investments by stealing bricks and other parts of tailings dams’ drainage systems, which created a risk to their integrity, as well as the scavenging of sand, fences, etc. from play parks.

� Social accountability. More emphasis should be placed on fostering social accountability: (i) “supply side” governance through more access to information, in particular data on environmental compliance and revenues of mining companies; and (ii) “demand side” governance by which civil society plays an active role in pollution monitoring and holding the Government accountable for enforcing environmental laws and regulations and holding mining companies to environmental standards.

� A sound results framework and M&E system. SMART PDOs and key performance indicators are crucial. Baselines for subsequent impact evaluations should be established right from the beginning, possibly in collaboration with the Bank’s Research Department, so that preliminary results are available at MTR to discern whether changes to the results framework and M&E system are warranted.

Lessons learned with regard to implementation arrangements � Bank supervision of complex and high-risk projects such as the CEP requires close

collaboration between field based and headquarters based staff to ensure due diligence in project supervision, and to seize opportunities for dialogue. These include the Bank’s engagement in policy discussions and drawing attention to environmental concerns, as could have been the case during EITI discussions. Regardless of the location of Project TTL-ship, follow through is critical to ensure a prompt resolution of procurement, financial management and disbursement issues. In addition, a close partnership between environment and mining

36

sector staff is critical, as is an adequate skills mix of the preparation and supervision teams. In order to achieve meaningful community involvement and institution building, the continued involvement of a Social Development Specialist and an Institutional Development/Public Sector Governance Specialist are important.

Lessons learned with regard to Government commitment � Political will. The importance of strong and persisting political will, and in particular the

Government’s demonstrated commitment to enforcing the mining industry’s compliance with environmental regulations is a critical prerequisite to sustainability and achieving the Project’s objectives. Given the complexity of the setting, changes in institutional structures as well as challenges in the implementation of their mandates, such as achieving compliance with environmental standards in the industry, are likely to require more time than a typical 5-year project horizon permits. It may therefore be necessary to phase change to afford the Government and its partners the opportunity to learn by doing, as well as the flexibility to adjust the design during the process.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies

Editorial comments and clarifications were received from the Borrower/implementing agencies and were taken into consideration in finalizing this ICR. The Borrower’s version of the ICR is appended to this ICR in its entirety in Annex 7. (c) Cofinanciers Comments and clarifications were received from the Nordic Development Fund (NDF). NDF ratings of the project are consistent with those of this ICR. Factual clarifications, additions and corrections provided by NDF were taken into consideration in finalizing this ICR. NDF’s detailed comments are appended in their entirety in Annex 8. (c) Other partners and stakeholders (e.g. NGOs/private sector/civil society The Borrower’s ICR was prepared by a team that included one of the lead NGOs, Citizens for Better Environment (CBE), which closely monitored the Project during its implementation. CBE inputs are incorporated in the Borrower’s ICR in Annex 7. No other NGO / CSO comments were received.

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Annex 1. Project Costs and Financing

(a) Project Cost by Component (in USD Million equivalent) (IDA, GRZ and NDF)

Components Appraisal Estimate (USD millions)

Actual/Latest Estimate (USD

millions)

Percentage of Appraisal

Component 1 32.57 37.08 114 Component 2 4.20 6.15 146

Total Baseline Cost 36.77 43.23 118

Physical Contingencies 2.50

9.80

Price Contingencies 2.50

0.00

Total Project Costs 41.77 53.03 127 Front-end fee PPF 0.60 0.51 Front-end fee IBRD

Total Financing Required 41.77 53.03 127

(b) Financing

Source of Funds Type of Cofinancing

Appraisal Estimate

(USD millions)

Actual/Latest Estimate

(USD millions)

Percentage of Appraisal

Borrower 1.77 3.81 215 International Development Association (IDA) 19.00 15.54 82

IDA GRANT FOR DEBT VULNERABLE 21.00 20.98 100

Nordic Development Fund (NDF) Credit 10.8

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Annex 2. Outputs by Component 1. The Project comprised two components: (i) Component 1 was designed to support Part (i) of the PDOs, as stated in the Development Financing Agreement (DFA) to support the Government in addressing environmental liabilities and obligations associated with the mining sector, following the privatization of the mining assets of ZCCM; whereas Component 2 was expected to support Part (ii) of the PDO, i.e., “to assist Zambia in strengthening the capacity of its environmental regulatory institutions to improve future-compliance of the mining sector with environmental and social regulations.”

2. Table 1 shows the Outcome and Output indicators set out in the DFA. The analysis presented in this Annex focuses on the Project’s Output Indicators listed in Table 1 below. Indicators 2 through 4 correspond to Component 1 of the Project, and Indicators 1 and 5 pertain to Component 2.

Table 1: Key Performance Indicators (in the Development Financing Agreement) Output/ Intermediate Results Indicators

1. Pollution flow from rehabilitated project sites into Kafue River watershed reduced by 70%.

2. Zero leakage of tailings from dams rehabilitated under the project. 3. Private investors’ EMPs and ZCCM-IH Counterpart EMPs for each site

completed with adequate participation of local governments and stakeholder groups, including Non-Governmental Organizations (NGOs) and Community-based Organizations (CBOs).

4. Environmental liabilities of ZCCM-IH prioritized according to a transparent and accepted ranking system.

5. Improvement of performance and capacity of ECZ and the Mines Safety Department (MSD) to enforce regulations.

3. Summary of Output/Intermediate Results Indicators for Components 1 and 2. The Project achieved the following key Outputs/Intermediate Results. Under Component 1: (i) A Consolidated Environmental Management Plan (CEMP, also referred to as CEMP 2 or

final version of the CEMP) was developed and utilized. The CEMP, which aimed to incorporate the Investors and Counterpart Environmental Management Plans (EMPs) prepared for the different investment packages, looked beyond individual mining sites at ecosystem-wide issues, such as watershed management and air pollution, as well as soil and sub-surface water contamination. The CEMP served to rank issues according to the severity of their potential impacts on human lives and the environment.

(ii) Physical works were carried out to improve people’s health and livelihoods through: (a) effective treatment of 2,822 children against lead poisoning and prevention of recontamination; (b) successful resettlement of 175 families from mine subsidence areas; (c) safe disposal of hazardous materials, including 150,000 cubic meters of radioactive uranium tailings, 272,000 kg of persistent organic pollutants waste, and 56,000 cubic meters of lead contaminated soils in the Copperbelt and Kabwe; (d) provision of safe water supply to 99,000 members of vulnerable mining communities; (e) establishment of four Environmental Public

39

Information Centers and rehabilitation of six Public Libraries; (f) improvement of household incomes through livelihood programs for women; and (g) maintenance and repairs of tailings dams to maintain their structural integrity.

(iii) The most significant Output/Results Indicator not achieved was the intended rehabilitation and closure of 17 tailings dams, due to the fact that the Ministry of Mines and Minerals Development (MMMD) had transferred 13 of them to private investors for reprocessing of the tailings’ copper content. Even though physical works on these dams were limited to maintenance and repairs of 7 dams these minor works helped to minimize the leakage levels of the tailings dams earmarked for rehabilitation and closure under the Project.

Under Component 2: (i) Establishment of an environmental monitoring program, whose implementation was

started under the Project; (ii) Improved capacity and reduced staff turnover at ECZ (iii) Improved enforcement of environmental compliance by ECZ, including through the

use of litigation. 4. Box 1 below reviews the achievement of intended Outputs/Intermediate Results Indicators in more detail. Boxes 1 and 2 highlight examples of Component 1 activities, which are listed in detail in Table 2 below. Box 1: Output/Intermediate Results Indicators

Indicator and sub-indicators

Outputs/Intermediate Results achieved Target dates and actual dates

Indicator 1: Pollution flow from rehabilitated project sites into Kafue River watershed reduced by 70% (Component 1) Sampling of effluent from all rehabilitated sites.

ECZ periodically carried out water quality monitoring of the Kafue River, starting in 2007 (2004 and 2005 baseline data were collected during the preparation of the CEMP). Some of the sampling points were monitored by designated agencies such as ZECU and the Department of Water Affairs. The water quality in the Kafue River at the end of the Project was, on average, similar compared to before the Project. As Chart 1 below shows, the Total Suspended Solids (TTS) levels, used in the ex ante Cost Benefit Analysis as a proxy for measuring water pollution, varied greatly making it difficult to draw a conclusion about the overall change in water quality.108 While these data suggest that Project activities did not generate a significant improvement in water quality, at the same time the water quality did not deteriorate due to ECZ’s stepped up enforcement efforts despite doubling of copper production between 2003 and 2010 (from 300 to 700 thousand tons).

108 Except for the first sampling point K10, where the TTS level increased slightly between 2007 and 2010, at all other sampling points the 2007 and 2010 values are identical. If compared with the 2001 and 2004 levels (see Environmental Assessment and CEMP, respectively), the TTS levels in 2010 were lower some in instances (K41, K50, K65 and K90), in other cases the levels had increased (K30, K70). The great variation in TTS levels at K30 and K41 is most likely attributable to pollution-reducing dredging activities carried out under the Project and ongoing upstream pollution as a result of upstream mining activities.

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Indicator 2: Zero leakage of tailings from dams rehabilitated under the project (Component 1) Rehabilitation of tailings dams (TDs 25, 26, 27, 35, 36, 37, 41, 38, and 39, 33C, TD25, TD8, TD10 towards closure).

While geotechnical studies and safety assessments were completed for 13 tailings dams earmarked for closure under the Project, these were not rehabilitated towards closure, as planned. Except for 2 overburden dumps and 3 tailings dams, due to the rise in copper prices since appraisal, all the dumps/dams were transferred by MMMD to new investors for reprocessing of their copper content.109 Only maintenance and minor repair works were performed on tailings dams instead of the planned rehabilitation works to contain the runoff and prevent leakage. Nevertheless, the tailings dams earmarked for closure were 95% compliant during Project implementation. There have been no dam failures since Project interventions.

Not implemented due to sale of tailings dams to investors for reprocessing

109 The cost for closure and post-closure monitoring of these tailings dumps, to be borne by the new owners, is estimated at US$39.2 million. To date, investors have not demonstrated any efforts to manage and maintain the dams in the event that these are not reprocessed.

0

10

20

30

40

50

60

70

80

90

Chart 1: Total Suspended Solids (Mg/l) at select sampling points in the Kafue River 2001 - 2010

2001 2004 2007 2008 2009 2010

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Indicator 3: Private investors’ EMPs and ZCCM-IH Counterpart EMPs for each site completed with adequate participation of local governments and stakeholder groups, including Non-Governmental Organizations (NGOs) and Community-based Organizations (CBOs) (Component 1) ZCCM-IH Counterpart EMPs prepared and publicly disclosed

ZCCM-IH environmental obligations were defined and mitigation measures developed. Counterpart EMPs were publicly reviewed and concerns of stakeholders taken into account. EMPs are under implementation and monitored by ECZ.

Target: Jan. 5, 2003 (preparation) and Oct. 9, 2006 (disclosure) Actual: Aug. 31, 2003 (preparation) Nov. 30, 2007 (disclosure)

Indicator 4: Environmental liabilities of ZCCM-IH prioritized according to a transparent and accepted ranking system (Component 1) Ranking system developed Identification and prioritization of ZCCM historical liabilities by CEMP 2 consultants

A ranking system was established for prioritizing proposed subprojects, based on the environmental liabilities’ and obligations’ relative risks to human and environmental health. It was utilized by the Consolidated Environmental Management Plan 2 (CEMP 2) to identify and categorize historical liabilities. A checklist version of this ranking system was used by the EMF's Steering Committee as the basis for reviewing and approving proposed subprojects.

Actual: Dec. 2005 Revised Draft approved by ECZ in 2009.

Indicator 5: Improvement of performance and capacity of ECZ and the Mines Safety Department (MSD) to enforce regulations (Component 2) Number of inspections carried out by ECZ of all companies identified for monitoring Number of facilities certified compliant by ECZ over total of operations inspected Number of non compliant operations halted by ECZ after serious non compliance

On average, ECZ conducted about 90 site visits to a total of 23 mining facilities per year between 2005-2010. About 7 site inspections are carried out per year for problematic facilities. The site inspections were done in collaboration with MSD. At present, while very few facilities are certified compliant with their EMPs, the overall compliance rate with EMPs has increased from 35% in 2005 to 60% in 2010. The number of pollution control permits increased from 1,392 in 2005 to 3,582 by December 2010. Similarly, the number of enforcement notices rose, and two facilities were ordered to shut down temporarily – and had their licenses suspended – for non-compliance.110 The Project’s impact on the capacity of MSD and other intended beneficiaries, such as academic and research centers was minimal, and interagency cooperation did not improve significantly due to infrequent and irregular meetings of the Interagency Committee.

Ongoing

110 The offenses were: (i) excessive dust emission in June 2011 in the case of the Ndola Lime Company, due to defective dust collecting plates at a rotary kiln; and (ii) a unit at KCM’s leach plant was suspected of leaching and polluting the Kafue Gorge River (see Zambia Parliament (2011). Daily Parliamentary Debates For The Fifth Session Of The Tenth Assembly. Friday, 17th June, 2011; and ECPengineer (2011). Zambia’s Konkola Copper Mines Shuts Polluting Leach Plant.

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Box 2: Examples of EMF subprojects to remediate environmental liabilities in the Copperbelt Area (Component 1)

Dredging of the Luanshya River (in Luanshya)

•Luanshya River dredged, about 83,000 tons (40% of all historical tailings) removed and dredged material spread along Luanshya River using community labor. However, tailings continue to be discharged into the River by an upstream mine operator.

Mushishima Community Water Supply Project (in Chingola)

•3 kiosks and 1 overhead water reservoir constructed and supplying clean drinking water to a population of 2,000.

•Assets were handed over to the local authority and are now being managed by Mulonga Water and Sewarage Company.

Cleanup of No. 1 Nkana Cobalt Plant site

•Cleanup works partially completed.

•Phased demolition and site clean up work reduced scope of works and cost from US$ 4.6 million US$ to approximately US$ 1.5 million through removal and sale of reusable and recyclable materials.

Remediation Measures for the AMCO Uranium tailings • 150,000 cubic meters of Uranium tailings and

Uranium contaminated material removed from TD 11 and TD 13 and disposed.

•Uranium tailings at TD 13 A and TD13F were not completely removed due to overhead electricty power lines and extremely wet conditions in the dambo area during rainy season when the works were carrried out.

Removal, storage and disposal of other hazardous materials

•220 tons of PCB oils and PCB contaminated materials were removed from 5 site, collected, repacked, and , under close expert supervision, transported to Denmark for High Temperature Incineration.

Maintenance and Repairs of Tailings Dams (TD), Overburden Dams (OB), and access roads•Maintenance and repair works carried out at 7

Tailings Dams

•In preparation for closing of tailings dams, geotechnical survey completed for 3 Tailings Dams and issues and other critical aspects of the Tailings Dams and the design of closure works identified in order to reduce the risk of dam failure.

Resettlement from mine caving areas•21 houses demolished at Zambia Railways

compound in Mufulira, and Phase 2 demolition works completed at Zambia Railways compound in Masondashi compound in Mufulira.

•Resettlement in Kitwe. Houses demolished on AMCO compound. 90 families successfully resettled.

•Resettlement in Mufulira. 65 families successfully resettled from the Zambia Railways compound to Kawama and Chibolya Townships in Mufulira.

Renovation and construction of faciltites to increase environmental awareness

•5 public libraries renovated

•2 Environmental Public Information Centers (EPIC) constructed and operational.

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Box 3: Component 1: Examples of remediation sub-projects in Kabwe

Dredging and cleaning of Kabwe Main Canal

•Kabwe Canal dredged and cleaned. Exposure to lead-contaminated soil persists due lack of adequate maintenance by Kabwe Municipal Council.

•Kabwe Mine plant site rehabilitated. Parts of the rehabilitated mine plant area owned by ZCCM-IH are being sold for approximately US$ 3 million.

Removal of mine waste materials•PCB-contaminated soils retested/analyzed,

removed, repcked and transported to Denmark for incineration.

•Dredged material removed from Kabwe Main Canal. Site to be used for construction of market. Vendors will be required to pay market levies.

•Mine waste materials removed from Mulungushi Road Slag Dump. Site to be re-used as market (see above).

•Removal of mine waste materials from residential areas. 163 houses are no longer exposed to lead in their living environment.

Water supply development

•Borehole siting and drilling completed. As a result, nearly 100,000 people have access to water.

•Kabwe Community Water Supply Water Supply Development. Water reticulation network rehabilitated and approximately 1,154 households in Kasanda Township now have access to water through house connections. The sewerage system, however, is not operational.

Lead risk information and treatment facilities

•1 public library (used by 250 people per month) rehabilitated.

•1 Residents' Development Committee (used by 1,000 people per month) rehabilitated,

•2 Environmental Protection Infromation Centers (EPIC) constructed and actively used by 1,600 people.

•4 health clinics rehabilitated. 5,000 children were tested for lead exposure, 2,700 received treatment.

Play Parks and Community Park

•11 community play parks constructed and one community park were rehabilitated (but vandalized before the end of the Project).

•Expected to be used by about 28,350 children even without the equipment.

Greening at household level and of schools

•Vegetation barriers (greening) for lead dust suppression a completed.

•3,000 households benefited.

•Greening of 30 schools 99% completed.

•303 plus 3672 children benefited.

Improvement of livelihoods

•Market and ablution facility constructed in Makululu, Waya, and Mutewansofu. 72 vendors are benefitting. Each vendor pays a fee of ZMK 500 per day. Kabwe Municipal Council is responsible for maintaining the market.

•Hammer mill house constructed in Mutewansofu. A group of 25 women operates the mill (and maintains shelter) generates a profit of ZMK 60,000 every month.

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Table 2: COPPERBELT ENVIRONMENT PROJECT - Subprojects with completion dates and costs Subproject/Activity Description Actual Completion

Date(s) Target Completion Date(s)

Actual Cost Original Contract Cost

REMEDIATION WORKS IN THE COPPERBELT AREA Dredging of the Luanshya River (in Luanshya)

Luanshya River dredged, works supervised, dredged material spread along Luanshya River using community labor, Luanshya River access road constructed. Environmental Project Brief (EPB) prepared and remedial measures for remaining historical tailings material in Luanshya River designed but not implemented as time until Project closing was deemed insufficient. 40% of historical tailings (about 93,000 out of 235,000 tons) of historical tailings materials were removed, but subproject accomplishments were diminished as new investors continue to discharge tailings into the River.

various contracts: dredging and supervision June 30, 2007; spreading of dredged materials November 30, 2005; access road January 19, 2009; EPB and design of remaining works March 31, 2010.

various contracts: dredging and supervision March 7, 2005; spreading of dredged materials November 30, 2005; access road January 19, 2009; EPB and design of remaining works September 18, 2009

various contracts: dredging and supervision US$ 1,091,519; spreading of dredged materials US$ 14,272; access road US$ 46,791; EPB and design of remaining works EURO 115,795

various contracts: dredging and dredging supervision US$ 997,825; spreading of dredged materials US$ 14,272; access road US$ 42,537; EPB and design of remaining works EURO 115,795

Mushishima Community Water Supply Project (in Chingola)

1. Mushishima Community Water Supply Project completed in Chingola. 3 kiosks and 1 overhead water reservoir constructed and supplying clean drinking water to a population of 2,000; assets were handed over to the local authority and are now being managed by Mulonga Water and Sewerage Company. 2. Environmental Project Brief prepared for Mushishima and Luansobe Community Water Supply subproject. Social component of the subproject implemented in Mushishima. Luansobe Community Water Project not implemented due to cash and time constraints.

various contracts: works July 31, 2008; preparation of EPB November 10, 2006; social component April 25, 2009.

various contracts: works July 31, 2008; preparation of EPB November 10, 2006; social component March 31, 2008.

various contracts: works ZMK 975,638,230; preparation of EPB US$ 23,100; social component US$ 29,028

various contracts: works ZMK 916,072,331 ; preparation of EPB US$ 23,100; social component US$ 18,713

Cleanup of mine plant sites

Kansanshi Mine (in Solwezi) site cleaned up and attracted US$125 million in new investment. Mining company paid about US$ $1.3 billion in taxes to the Government from its production between 2007 and 2011.

December 2002 December 2002 about US$ 1.5 million

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Nchanga High Grade Tailings Leach Plant Leach plant, power plant and heap leach pad demolished and site cleaned up. New US$ 120 million smelter and Acid Plant financed by investor.

January 2002 January 2002 about US$ 1.4 million

No. 1 Nkana Cobalt Plant site (in Kalulushi). Hazardous waste materials identified, which led to amendments to the EPB and Bill of Quantities. Soil characterization completed, which assisted in determining the soil remediation methodology at the site; the phased demolition and site clean up work reduced scope of works and cost from US$ 4.6 million to approximately US$ 1.5 million through removal and sale of reusable and recyclable materials.

various contracts: hazardous waste characterization August 31, 2006; soil characterization August 31, 2006; phase 1 clean up works: April 15, 2010;supervision September 30, 2010.

various contracts: hazardous waste characterization August 31, 2006; soil characterization December 14, 2006; phase 1 clean up works: September 30, 2010;supervision June 30, 2006.

various contracts: hazardous waste characterization US$ 46,684;soil characterization US$ 49,035; Phase 1 clean up works: 0;supervision US$ 43,850

various contracts: hazardous waste characterization US$ 46,684; soil characterization US$ 18,660;Phase 1 clean up works: 0;supervision US$ 46,947

Remediation Measures for the AMCO Uranium tailings

Safety and Environmental Assessment prepared, design of remediation measures completed, and subproject disclosed to affected persons (Mindolo community) and key stakeholders; 150,000 m3 of Uranium tailings and Uranium contaminated material removed and disposed. Radioactive tailings were not completely removed due to overhead electricity power lines and extremely wet conditions in the Dambo (swamp) area due to rainy season.

various contracts: Env. assessment &design of remediation measures: March 31, 2008; Phase 1 works June 19, 2010; Phase 1 supervision December 31, 2009; Phase 2 design December 23, 2011; Phase 2 supervision April 31, 2011; Phase 2 works March 31, 2011

various contracts: Env. assessment & design of remediation measures Nov. 19, 2007; Phase 1 works October 14, 2009; Phase 1 supervision November 22, 2009; Phase 2 design December 23, 2011; Phase 2 supervision March 31, 2011;Phase 2 works: March 31,11 2011

Design of Phase 1 remediation measures Euro 635,637; Phase 1 works ZMK 12,987,080,214; Phase 1 supervision Euro 332,532; Phase 2 design Euro 74,340; Not yet invoiced; Phase 2 works ZMK 10,033,948,355

Design of Phase 1 remediation measures Euro 473,120; Phase 1 works ZMK 5,521,445,681; Phase 1 supervision Euro 197,670; Phase 2 design Euro 74,340; Phase 2 supervision Euro 133,682; Phase 2 works ZMK 10,668,291,250

Removal, storage and disposal of other hazardous materials

PCB Removal subproject 100% completed. About 44,500 kgs of PCB contaminated materials (38,480 kg PCBs contaminated soils and 6,020 kgs of PCBs capacitors and PCBs waste) removed from No. 1 Nkana Cobalt Plant, under close expert supervision, and exported for High Temperature Incineration disposal at the Kommunekemi facility in Denmark.

various contracts: Phase 2 works August 1, 2009; Phase 2 supervision August 31, 2009.

various contracts: Phase 2 works March 31, 2009; Phase 2 supervision Sep. 30, 2008.

various contracts: Phase 2 works EURO 412,935; Phase 2 supervision US$ 124,500.

various contracts: Phase 2 works EURO 520,691; Phase 2 supervision US$ 175,300.

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Security services provided for the Radiation Waste Storage Building (RWSB) in Kalulushi. Unauthorized access to the building is prevented and public health and safety maintained.

March 31, 2010 August 1, 2008 US$ 16,724 US$ 16,724

Characterization of redundant chemicals completed. Disposal of redundant chemicals not undertaken due to time constraints.

February 22, 2010 January 28, 2010 Euro 133,205 Euro 130,205

Resettlement from mine caving areas 20 houses constructed and 20 families resettled from mine subsidence area at Konkola plant in Chiliabombe to Mingomba and Kawama communities.

21 houses demolished at Zambia Railways Masondashi compound in Mufulira, and Phase 2 demolition works.

various contracts: demolition works December 1, 2004; Phase 2 Masondashi demolition works December 1, 2005

various contracts: demolition works December 1, 2004; Phase 2 Masondashi demolition works December 1, 2005

various contracts: demolition works US$ 7,107; Phase 2 Masondashi demolition works US$ 8,485

various contracts: demolition works US$ 6,001; Phase 2 Masondashi demolition works US$ 8,347

1. AMCO Resettlement in Kitwe. 58 houses constructed and 58 families successfully resettled. Construction of houses was delayed due to high demand for and shortage in supply of high quality blocks; shortage of cement; delays in the payment of certified works; contractors’ cash flow constraints resulting in lack of building materials and wages for workers 2. AMCO Resettlement in Kitwe. 32 houses constructed and 32 families successfully resettled. 3. Supervision contract was terminated, as there was no need for supervision of works when contractor was not working. 4. Resettlement of settlers from Zambia Railways compound to Kawama township in Mufulira. 21 houses constructed and 21 families successfully resettled. Construction of houses was delayed due to high demand for and shortage in supply of high quality blocks; shortage of cement; delays in the payment of certified works; contractors’ cash flow constraints resulting in lack of building materials and wages for workers. 5. Resettlement of settlers from Zambia Railways compound to Chibolya township in Mufulira. 44 houses constructed and 44 families successfully resettled. 6. As of May 2010 ICR mission, supervision contract was still in effect for supervision of construction of community hall at Kawama resettlement site.

1. August 31, 2008 2. March 31, 2011 3. August 31, 2008 4. March 31,2011 5. January 21, 2008 6. March 31, 2011

1. December 31, 2006 2. March 31, 2011 3. December 31, 2006 4. September 7, 2007 5. September 9, 2007 6. September 9, 2007

US$ 2,392,060US$ 1,229,404 US$ 230,910US$ 596,248US$ 1,346,271US$ 230,910

US$ 2,497,920US$ 836,878 US$ 115,582US$ 588,549US$ 1,473,489US$ 224,723

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Preparation for closing of Tailings Dams (TDs) 1. Geotechnical survey completed of TD 8 (in Mufulira). Geotechnical and dam safety issues and other critical aspects of the Tailings Dams and the design of closure works identified in order to reduce the risk of dam failure.

1. October 1, 2004 1. October 1, 2004 US$ 91,003 US$ 91,003

2. Geotechnical survey completed and bidding documents prepared for Akatiti TD and Chonga TD.

2. October 1, 2004 2. October 1, 2004 US$ 97,745 US$ 97,745

Renovation of public libraries and construction of Environmental Protection Information Centers (EPIC) aimed to increase environmental awareness 1. Kitwe City Council Public Library renovated. 2. Mufulira Municipal Council Public Library renovated. 3. Luanshya Municipal Council Public Library renovated. 4. Chingola Municipal Council Public Library renovated. 5. Chililabombwe Municipal Council Public Library renovated. 6. Chambishi EPIC constructed andoperational. 7. Kalulushi EPIC constructed and operational.

1. December 31, 2005 2. February 9, 2006 3. June 4, 2008 4. September 30, 2008 5. August 30, 2008 6. June 30, 2010 7. March 31, 2011

1. September 24, 2005 2. October 15, 2005 3. April 7, 2008 4. April 7, 2008 5. March 31, 2008 6. June 30, 2010 7. June 30, 2010

US$ 85,699 US$ 40,213 US$ 74,378 US$ 98,239 US$ 90,929 US$ 98,832 US$ 108,235

US$ 68,782 US$ 40,213 US$ 68,818 US$ 89,504 US$ 82,408 US$ 85,624 US$ 79,597

Maintenance and Repairs of Tailings Dams (TD), Overburden Dams (OB), and access roads

1. Road between TD33C and TD38/39 repaired. 2. Road between TD33C and TD35 maintained. 3. Gullies on TD40 repaired. 4. Decant on TD38 repaired and stolen concrete culverts replaced. 5. Drainage channel around Nkana East Tailings Dam (TD25) cleared. 6. – 13. Maintenance works carried out on TD10 (Mufulira), Akatiti TD (Luanshya). 8. Maintenance works carried out on Chonga TD (Luanshya). 9. Maintenance works carried out on TD25 (Kitwe). 10. Maintenance works carried out on TD26 (Kitwe). 11. Maintenance works carried out on Akatiti, Chonga and TD33C (Kitwe). 12. Maintenance works carried out on TD8 (Mufulira), and TD10 (Mufulira). 13. Maintenance works carried out on TD25 (Kitwe) - scheduled for 2007. 14. -16. Warning signposts constructed around Kitwe Tailings Dumps, TD8 and TD10 (Mufulira), Luanshya Tailings DumpsWorks 100% completed but people still trespassing despite warning signs. 17. Maintenance works (scheduled for 2008) carried out on TD10 (Mufulira). Contract terminated due to Contractor's failure to complete works( 95% completed), gullies have since worsened in areas where works were not completed. 18. Maintenance works (scheduled for 2007) carried out on Chonga Tailings Dump (Luanshya). Works 100% completed but new gullies formed after theft of drainage discharge pipe by vandals. 19. Maintenance Works (scheduled for 2008) carried out on Chonga (TD26) Tailings Dump (Luanshya). Contract terminated due non-performance of the Contractor. Works were only 55% completed. The constructed bundwall is still effective.

1. July 2, 2005 2. July 2, 2005 3. July 2, 2005 4. July 2, 2005 5. February 1, 2005 6. March 23, 2005 7. March 23, 2005 8. February 1, 2006 9. November 30, 2007 10. December 31, 2006 11. February 1, 2007 12. January 1, 2007 13. April 12, 2007 14. April 4, 2008 15. February 1, 2008 16. February 1, 2008 17. May 15, 2010 18. July 2, 2008 19. May 9, 2009

1. March 17, 2005 2. March 17, 2005 3. March 17, 2005 4. March 17, 2005 5. February 1, 2005 6. March 23, 2005 7. March 23, 2005 8. February 1, 2006 9. November 30, 2007 10. Dec. 30. 2006 11. February 1, 2007 12. January 1, 2007 13. October 12, 2007 14. April 4, 2008 15. April 2, 2008 16. February 1, 2008 17. February 17, 2009 18. July 2, 2008 19. August 7, 2009

US$ 14,276 US$ 16,279 US$ 12,666 US$ 10,824 US$ 3,262 US$ 36,271 US$ 64,846 US$ 29,618 US$ 6,829 US$ 9,270 US$ 143,500 US$ 101,516 US$ 7,499 US$ 24,395 US$ 23,418 US$ 12,329 US$ 155,564 US$ 60,137 US$ 318,685

US$ 17,857 US$ 16,279 US$ 12,666 US$ 10,824 US$ 2,753 US$ 27,634 US$ 22,725 US$ 27,697 US$ 5,920 US$ 6,232 US$ 107,400 US$ 56,901 US$ 6,191 US$ 19,270 US$ 22,802 US$ 11,729 US$ 117,683 US$ 56,264 US$ 148,643

48

REMEDIATION WORKS IN KABWE actual completion

Date(s) target completion Date(s)

Total actual Cost US$

original cost

Dredging and cleaning of Kabwe Main Canal

Sections 1, 2 and 3 of Kabwe Canal dredged and cleaned. All obstructions removed and unobstructed flow of water achieved at end of subproject implementation. 40,000 people still affected by flooding due to lack of maintenance and re-vegetation by Kabwe Municipal Council.

December 1, 2003 December 1, 2003 US$ 122,738 US$ 120,117

Renovation of ZCCM-IH Kabwe offices 1. Installation of Overhead tank at Kabwe ZCCM-IH offices 2. Rehabilitation of Kabwe ZCCM-IH offices

November 1, 2004 May 1, 2007

November 1, 2004 March 1, 2007

US$ 7,730 US$ 34,632

US$ 8,372 US$ 27,812

Rehabilitation of Mine Plant area Kabwe Mine plant site rehabilitated. Parts of the rehabilitated mine plant area owned by ZCCM-IH are being sold for approximately US$ 3 million.

August 1, 2009 November 1, 2009 US$ 2,163,237 US$ 2,157,412

Rehabilitation of Kabwe Head Frames. September 1, 2007 May 1, 2007 US$ 117,086 US$ 109,404 Securing pits in caving area Construction of wall fence round the pits in the caving area. 90 % of wall fence still in place.

August 1. 2004 March 1, 2008

August 1. 2004 March 1, 2008

US$ 16,510 US$ 161,666

US$ 16,631 US$ 163,598

Removal of mine waste materials 1. Testing/anal Testing/analysis, removal and disposal of PCB-contaminated soils. 2. Non-PCB contaminated solids removed at Kabwe Site. 3. Removal of dredged material from Kabwe Main Canal zone. 4. Mine waste materials removed from Mulungushi Road Slag Dump. Kabwe Municipal Council intends to re-use site and finance construction of market. Vendors will be required to pay market levies (vendor fees). 5. Removal of mine waste materials from residential areas.

See PCB-subproject 1. August 3, 2007 2. October 1, 2009 3. May 1, 2009 4. February 1, 2010

above 1. August 4, 2007 2. May 1, 2009 3. May 1, 2009 4. March 1, 2009

(PCB removal in Kabwe and US$ 5,550 US$ 538,917 US$ 861,422 US$ 169,474

(Copperbelt were one contract) US$ 5,550 US$ 846,021 US$ 856,871 US$ 145,022

Water supply development 1. Borehole siting and drilling completed. As a result, nearly 100,000 people have access to water. 2. Kabwe Community Water Supply Development - Phase 1. Completed but households in Kasanda Township were still not able to get water due to old and dilapidated water reticulation network. 3. Kabwe Community Water Supply Phase 2. Water reticulation network rehabilitated and approximately 1,154 households in Kasanda Township now have access to water through house connections. However, sewerage system is dilapidated and not operational and beyond Project scope.

September 1, 2005 April 1, 2007 March 1, 2010

June 1, 2005 February 1, 2007 December 1, 2009

US$ 22,393 US$ 1,187,458 US$ 1,314,380

US$ 22,227 US$ 1,540,767 US$ 1,242,793

49

Lead risk information and treatment facilities 1. Kabwe Municipal Council Library rehabilitated. About 250 people are actively using the library per month. 2. Katondo Resident Development Committees (RDC) rehabilitated. About 1,000 people are actively using the center per month. 3. Kasanda Environmental Protection Information Center (EPIC) constructed. About 600 people are actively using the center per month. 4.Makululu EPIC constructed. About 1,000 people are actively using the center per month. 5. 4 health clinics (Makululu, Kasanda, Chowa and Zambia Railways) rehabilitated. A total of 5,000 children have been tested and 2,822 treated under the Project.

1. May 1, 2005 2. May 1, 2005 3. May 1, 2006 4. August 1, 2007 5. April 1, 2008

1. November 1, 2004 2. November 1, 2004 3. May 1, 2006 4. June 1, 2007 5. February 1, 2008

US$ 40,727 US$ 38,909 US$ 84,864 US$ 117,690 US$ 97,802

US$ 27,088 US$ 17,163 US$ 78,706 US$ 116,640 US$ 95,997

Play Parks and Community Park 1. Lot 1 Community Play Parks constructed. Contract was terminated because of poor performance of contractor as it took 15 months to complete 75% of the works against contract duration of 5 months. 2. Lot 2 Community Play Parks constructed and expected to be used by 7,530 children from Kasanda, Makandanyama and Mutwewansofu but most of the parks were vandalized during Project implementation. 3.Lot 3 Community Play Parks constructed and expected to benefit 21,000 children from Makululu and Luangwa. However, most of the parks were vandalized during Project implementation. 4. 9 toilets at play parks constructed. 5. Rehabilitation of Clayton Community Park

1. N/A 2. September 1, 2007 3. July 1, 2007 4. December 1, 2008 5. May 1, 2008

1. October 1, 2007 2. June 1, 2007 3. June 1, 2007 4. December 1, 2008 5. February 1, 2008

US$ 42,885 US$ 73,654 US$ 82,877 US$ 101,620 US$ 102,020

US$ 11,027 US$ 58,633 US$ 92,600 US$ 95,349 US$ 127,911

Greening at Household level and of schools 1. Vegetation barriers (greening) - Dust suppression at Household level completed. 3,100 households benefited. 2. Greening of 10 Schools – Lot 1. 98% completed. 303 children are benefitting from this subproject. Lot 1 schools are the closest schools to the mine plant area. 3. Greening of 10 Schools – Lot 2. 99% completed. 3,672 children are benefitting from this subproject. 4. Greening of 10 Schools – Lot 3. 99% completed.

1. March 1, 2011 2. March 1, 2011 3. March 1, 2011 4. February 1, 2010

4. March 1, 2011 5. August 1, 2010 6. June 1, 2010 7. November 1, 2009

US$ 665,383 US$ 36,115 US$ 80,485 US$ 40,354

US$ 642,149 US$ 28,470 US$ 74,381 US$ 37,897

50

Improvement of livelihoods 1. Market and ablution facility constructed in Makululu. 24 vendors are benefitting. Each vendor pays a fee of ZMK 500 per day. Kabwe Municipal Council is responsible for maintaining the market. 2. Market and ablution facility constructed in Waya. Used by 24 vendors who each pay a user fee of ZMK 500 per month. 3. Market and ablution facility constructed in Mutwewansofu. Used by 24 vendors who each pay a user fee of ZMK 500 per month. 4. Hammer mill house constructed in Mutwewansofu. A group of 25 women operates the mill and generates a profit of ZMK 60,000 every month.

1. November 1, 2008 2. March 1, 2010 3. February 1, 2010 4. October 1, 2009

1. December 1, 2008 2. November 1, 2010 3. November 1, 2009 4. March 1, 2009

US$ 42,140 US$ 38,754 US$ 40,354 US$ 7,469

US$ 42,131 US$ 38,739 US$ 37,897 US$ 7,083

Environmental Assessment (EA) of the CEP prepared. Public Disclosure done and EA reviewed and approved by ECZ.

No information available

September 30, 2001 US$ 201843 US$ 201,843

World Bank Social Safeguards Workshop held in Kitwe. All ZECU and EMF staff trained.



US$ 15,906 US$ 15,906

Public Disclosure of the counterpart Environmental Management Plans and AMCO Resettlement Action Plan held in all Copperbelt Town.



US$ 50,007 US$ 50,007

1. Consolidated Environmental Management Plan (CEMP 1) prepared and disclosure meetings held in all Copperbelt Towns. 2. Terms of Reference for preparation of CEMP 2 prepared and approved by ECZ. 3. CEMP 2 prepared and environmental liabilities of ZCCM-IH and GRZ identified. 14 environmental and social impacts identified mitigation measures defined and prioritized for mitigation and responsibility for mitigation determined. 4. Facilitator for Public Disclosure. Public disclosure meetings held in all Copperbelt Districts.

1. July 31, 2003 2. May 15, 2006 3. December 2005 4. November 1, 2007

1. January 5, 2003 2. March 31, 2005 3. March 28, 2003 4. October 9, 2006

US$ 310,773 US$ 3,061,323 US$ 13,061 US$ 50,251

US$ 310,773 US$ 2,500,000 US$ 13,061 US$ 49,650

Kabwe Scoping and Design Study prepared. 70% of prioritized remediation works completed.

May 1, 2006 November 1, 2004 US$ 930,553 US$ 657,496

51

5. As Table 3 below shows, the priorities identified during Project appraisal (PAD) were rather similar to the ones identified by the CEMP, although the extent of remediation in Kabwe was underestimated and was only revealed during the Kabwe Design and Scoping Study, which took an indepth look at pathways and impacts of lead contamination at the household level. The fact that the priority sub-projects were not fully identified at the start of the Project makes it difficult to make a direct comparison between what was planned before the Project and what of it was accomplished at the end of the Project.

Table 3. Assessment and Preliminary Prioritization of Environmental Issues, Remediation, Cost and Benefits (see PAD, Annex 13)

52

I"""" m >s. 19

I"""" Sp,]]",

I'""'"

I;';;;;;';;",

Surrounding Planl Life

d soil

I:;;~' I damage.

Low

M'" ~i" 2

High Mod 2

NlA

High High

High High

High High

I;;;'

Rehabilitate

Finland

30

mo",,,, I

'"""'"" 'oc'","'

I"",""

510

'<'"''''

53

Mufi>lira Mufulira

Mufulira

Mufulira

Mufulica

Lumshya

'--"" Nolo.

Ndola

....",.,,.

""""'"

Lwn"'''

Luomh"

,

TDIO roJand!

TD'

Valley Dam (ZCCM Liability to be determined)

Clo5Cd Shafts

Smelter

5ux:lter

Ndoll CQpp« Refinery (NCR)

Ndoll CQpper R,,,,,,,>

I(NCR)

0,00" Tailillg Dam

Abtiti Tailing Dam

Luanshy:a ,,_

ActiveMusi Tailing Dam

,"",00

Stability, WaID. Quality, Safetyof Undergr0un4 workings, Town Water SUPPly Exposed Tailing, Waler Quality, Safety(abovc ,=:md w . ) Stability, Impact of Failure on Water SupplyaJld Underground ..,00,;", Safety

Safety

Soil and Water Contantiulion Soil and Water ContanrinatiOD

""" Serious erosion and deep guUies on dam walls. High risk of failure with high human Slfety issuel and major impa:ts on water and livelihood. Incruscd flood risk. Dam wall stability.

Sedimentatiop, Water Quality, Could cause dam erosion of dam ..". Dam saability (gulleys boeing formed and drains blocked). Water management (spiUway to be commissioned to draw water from

I_)~O'_I breacb with water

~d fioodin(! n~ undt:T?<md mIne.

Low H;gh

Low

Low

Low

Mod

High

High

H;gh

Low

High

Low

W2,OO Quality Low S Included WaterQuali High , Stabilization, Included Safety, Water QuaIi

Rehabilitation

Rehabilitation, Included Safety, WaID. Quali Containment

High , Assess stability and Safety, Water Supply monitoring. Emergency plmning.

High , Seal Shafts" Remove So'''' Ul'lSt<lblc SUuctutcS

Hi., , Decommission and <:lean up and reN.bilitation. (not ZCCM issue, contribution of CEP to boe determined)

Mod , '" ... ~ Hi., , Collect groWidwater S20

samples and check

Low , Decommission and cleanup

lligh , Repair gulliC5. stabilize WJ,SOO Health and safety. walls, revegetation Water quality.

Livelihood.

~gh 3 Repair walls. Health and safety. Waler quality. Livelihood.

High , Dttdging of River WI,500 Water quality

High 3 Repair walls. Complete Safety. livelihood. $pil!way. Water Quality. (note aetively used by RAMCZ (in Receivership)

II Note: Luanshya and Ndola Copper Refinery are privately held assets and not ZCCM-IH or GRZ liabilities at this time.

Possible inclusion in the CEP is to be determined.

54

Annex 3. Economic and Financial Analysis: Cost Benefit Analysis (including assumptions in the analysis) 1. Introduction 1. The Copperbelt Environment Project (CEP) comprised two components. It (i) established an Environmental Management Facility (EMF) that financed the costs of priority environmental and social measures required of ZCCM-IH and the Government; and (ii) strengthened the regulatory and institutional frameworks to ensure compliance of the mining sector with environmental regulations, and to monitor implementation of investor and counterpart Environmental Management Plans EMPs) at a cost of US$4 million. The total actual investment costs amounted to about US$35.89 million. 2. This Annex presents the results of the ex post Cost-Benefit Analysis (CBA), which assesses the environmental and social costs and benefits of mitigation measures implemented under the Project. The results of the estimations are presented below. 3. Summary of Benefits and Costs. The results of the CBA presented in this Annex indicates an Economic Rate of Return (ERR) of 10 percent, or roughly 60 percent of the ERR calculated in the ex ante CBA, according to which an 18 percent ERR was to be achieved as a result of Project activities. 2. Results 4. Costs. The Project costs included investment costs and maintenance costs. Under Component 1, the EMF, actual total expenditures amounted to about US$38.27 million. Investment costs were, on average, about US$4.35 million per year over 8 years (from 2003-2010), and US$1.09 million for 2011, given that the Project closed at the end of the first quarter, on March 31, 2011. Maintenance costs are estimated to be US$0.32 million per year over 20 years. With the inclusion of US$4 million for Component 2 expenditures on institutional strengthening, investment costs amounted to US$35.89 million. 5. In addition to cost estimations the cost computations include the consideration of "with-and-without" Project scenarios; annual maintenance costs without the Project are expected to be double (US$0.64 million) the maintenance costs with the Project (US$0.32 million). The incremental costs (i.e. investment costs minus incremental maintenance costs) were US$4.03 million per year for the first 8 years, US$0.77 in year 9; incremental costs savings of US$0.32 million are expected per year thereafter. 6. Benefits. The mitigation measures to be carried by the EMF were expected to generate benefits in the form of lower soil contamination, water pollution and air pollution levels as well as a reduction in the likelihood of a tailings dam failure. 7. Benefits from reduced soil contamination. About 100,000 people were affected by lead contamination in Kabwe. Lead-contaminated soil and windblown lead-contaminated dust are two main pathways of lead exposure. In the ex ante CBA, the benefits from reduced soil contamination were appropriately considered to be attributable to: (i) savings in treatment costs for children aged 0-5 years; (ii) savings in treatment costs in persons aged 6-18 years; and (iii) reduction in work days lost in those 19 years and older.

55

8. Of those persons that were impacted by lead in soil in Kabwe approximately 20,000 were aged 0-5 years, and 40,000 aged 6-18 years. The remaining 40,000 were 19 years or older, of whom approximately half, or 20,000, are (potentially) income earning. Under the Project, about 5,000 children were tested to determine their blood lead levels, and 2,822 of them received treatment in the form of nutritional supplements or chelation therapy. The cost of treating 2,822 children amounted to US$378,357. Assuming the same testing-treatment ratio applies to the remaining 15,000 children in Kabwe, the cost of treating (and re-treating in the event of re-contamination) all 20,000 children would amount to about US$1,513,428. The cost of treating 40,000 youth, assuming that each 6-18 year-old makes one visit per year to a medical center for a lead-related illness, estimated to be US$13 per person per year, would amount to $US 520,000 per year. The cost of workdays lost, in the case of each potentially income earning person 19 years or older forgoing 5 workdays per year, estimated to be $US11.00 per person per year, would be US$220,000 per year. This is based on an average income of $US481 per year earned over 220 workdays (data received from ZECU). 9. The benefits of mitigation measures were translated into: a 95 percent savings in treatment costs of children aged 0-5 years with costs rising at 2 percent per year; a 50 percent savings in treatment costs of persons aged6-18 years with costs increasing at 2 percent per year; a 50 percent reduction in workdays lost by half of those persons aged 19 years and over using half of annual income (reflecting a combination of work and leisure lost) rising at 2 percent per year. The total non-discounted benefits amount to US$42.76 million. 10. Benefits from reduced water pollution. Water pollution in the form of suspended solids entering the Kafue River continues to impact people’s quality of life. The ex ante CBA estimated that benefits would accrue from reductions in suspended solids in the form of reduced maintenance and treatment costs of pump stations located along the Kafue River. However, the water sampling data (see Annex 1) collected along the Kafue River between 2007 and 2010 (and in some instances also in 2001 and 2004) suggests that the Project did not generate a tangible improvement in the water quality in the River, as measured by the change in the quantity (mg/l) of Total Suspended Solids (TSS). 11. However, in spite of a more than 100 percent increase in copper production between 2003 and 2010 from about 300,000 to 700,000 tons per year the water quality has not deteriorated. This is considered to be attributable to more vigorous compliance enforcement efforts on the part of ECZ, as a result of support provided to the agency under the Project. It is assumed that the benefits associated with the prevention of a deterioration in the water quality, which could have been expected in light of the considerable increase in copper production, amounts to 50 percent of the benefits calculated for benefits from reduced water pollution in the ex ante CBA. 12. Benefits from reduced air pollution. Air pollution, due to dust and sulphur dioxide, was prevalent in Mufulira and deemed to have a high impact on human health in Kankoyo and a medium impact on human health in Kantanshi. The ex ante CBA anticipated Project activities to generate benefits from reduced air pollution in the form of: (i) savings in treatment costs in 0-5 year olds; (ii) savings in treatment costs in 6-18 year olds; and (iii) reduction in work days lost in those 19 years and older. According to air quality monitoring data collected by Mopani Copper Mines for the period from July - December 2010, the SO2 concentration in ambient air in Kantanshi (Clinic No. 3) was 100 percent above the WHO guideline limit of 125µg per m3 per 24-hour period; and the SO2 level in Kankoyo (Clinic No. 5) was more than 83 percent above the guideline limit (data provided by ZCCM-IH). The limited data available on ambient air quality suggests that the Project did not have a significant positive impact on improving ambient air quality.

56

13. However, in spite of a more than 100 percent increase in copper production between 2003 and 2010 from about 300,000 to 700,000 tons per year the air quality has not deteriorated. This is considered to be attributable to the more vigorous compliance enforcement efforts on the part of ECZ, as a result of support provided to the agency under the Project. It is assumed that the benefits associated with the prevention of a deterioration in the air quality, which could have been expected in light of the considerable increase in copper production, amounts to 50 percent of the benefits calculated for benefits from reduced air pollution in the ex ante CBA. 12. Benefits from reduced likelihood of a tailings dam failure. In the event of a failure of the tailings dams at Chonga and Akatiti water pollution, in the form of suspended solids entering the Luanshya River would adversely impact people’s quality of life. The ex ante CBA assumed that reducing the likelihood of a tailings dam failure would result in benefits in the form of savings in the costs of treatment of drinking water and maintenance of pump stations located along the Luanshya River. 14. While no dam failure occurred during Project implementation, partly as a result of maintenance works carried out at five dams, including Chonga and Akatiti, and repair works at another two dams, the Project generated only limited benefits in terms of water treatment and maintenance cost savings. A total of 13 tailings dams, including Chonga and Akatiti, were to be rehabilitated towards closure under the Project. These works were not undertaken, since in light of the more favorable copper prices, the MMMD proceeded to transfer the mining rights for reprocessing the dams, along with the responsibility for maintenance and eventual closure, to private investors. While ZCCM-IH data suggests that leakage was zero during Project implementation, ongoing mining operations continued to discharge tailings into the Luanshya River. It is therefore assumed that the Project generated only 5 percent instead of the expected 15 percent savings in maintenance and treatment costs, increasing at 2% per year, and only for the duration of the Project.

57

ANNEX 3

Table 1: Co s ts and be ne fits o f mitigatio n me as ure s unde r the P ro je c t (millio ns o f US $ )

2003 2004 2005 2006 2007 2008 2009 2010 2011 12 13 14 15 16 17 18 19 20 21 22

To tal Ye ar 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Co s ts

Inves tment Cos ts 36.19 1 1.66 4.21 5.1 5.99 5.8 7.58 1.36 3.49

Maintenance Cos ts

with Project 6.4 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32

without project 12.80 0.64 0.64 0.64 0.64 0.64 0.64 0.64 0.64 0.64 0.64 0.64 0.64 0.64 0.64 0.64 0.64 0.64 0.64 0.64 0.64

Incremental mainten. cos ts 6.4 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32

Incremental cos ts 29.79 0.68 1.34 3.89 4.78 5.67 5.48 7.26 1.04 3.17 (0.32) (0.32) (0.32) (0.32) (0.32) (0.32) (0.32) (0.32) (0.32) (0.32) (0.32)

B e ne fits

A Savings From Reduced Soil Contamination*

in 0-5 years treatment cos ts 34.99 1.44 1.47 1.50 1.53 1.56 1.59 1.62 1.65 1.69 1.72 1.76 1.79 1.83 1.86 1.90 1.94 1.98 2.02 2.06 2.10


in 19+ years workdays los t 1.46 0.06 0.06 0.06 0.06 0.06 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.08 0.08 0.08 0.08 0.08 0.08 0.09 0.09

Total From Soil Contamination 42.76 1.76 1.80 1.83 1.87 1.91 1.94 1.98 2.02 2.06 2.10 2.15 2.19 2.23 2.28 2.32 2.37 2.42 2.46 2.51 2.56

B From Reduced Water P ollution**

Savings in maintenance 1.21 0.05 0.05 0.05 0.05 0.05 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.07 0.07 0.07 0.07 0.07 0.07 and treatment cos t

C Savngs From Reduced Air P ollution***



in 19+ years workdays los t 0.36 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02

Total From Air P ollution 2.43 0.10 0.10 0.10 0.11 0.11 0.11 0.11 0.11 0.12 0.12 0.12 0.12 0.13 0.13 0.13 0.13 0.14 0.14 0.14 0.15

D From Reduced Likelihood 0.49 0.05 0.05 0.05 0.05 0.05 0.06 0.06 0.06 0.06

of Tailings Dam Failure ****

To tal B e ne fits 46.90 1.96 2.00 2.04 2.08 2.12 2.16 2.21 2.25 2.30 2.28 2.33 2.37 2.42 2.47 2.52 2.57 2.62 2.67 2.73 2.78

Ne t B e ne fits 17.11 1.28 0.66 (1.85) (2.70) (3.55) (3.32) (5.05) 1.21 (0.87) 2.60 2.65 2.69 2.74 2.79 2.84 2.89 2.94 2.99 3.05 3.10

NP V o f Ne t B e ne fits @10% (0.29) 1.16 0.54 (1.39) (1.84) (2.20) (1.87) (2.59) 0.57 (0.37) 1.00 0.93 0.86 0.79 0.73 0.68 0.63 0.58 0.54 0.50 0.46

Ec o no mic Rate o f Re turn 10%10% discount rate 1.10 1.21 1.33 1.46 1.61 1.77 1.95 2.14 2.36 2.59 2.85 3.14 3.45 3.80 4.18 4.59 5.05 5.56 6.12 6.73* 95% savings in 0-5 years treatment cos ts ; 50 savings in 6-18 years treatment cos ts increas ing at 2% per year; 50% reduction in 19+ years work days los t @ 50% of annual income and 2% GDP

** Although water sampling data (see Annex 2) sugges t the P roject did not result in an improvement of water quality in the Kafue River, water quality did not deteriorate despite the fact that production

more than doubled between 2003 and 2010, as a result of improved enforcement of environmental s tandards under the P roject.

*** Even though, according to air quality monitoring data collected by Mopani Copper Mines (July - December 2010), the SO2 concentration in ambient air in Kantanshi (Clinic No. 3) was 100% above the WHO

guideline limit of 125µg/m3/24 hours , it represented a reduction of more than 70% compared to the average (April-December) 2002 levels . While the SO2 level in Kankoyo (Clinic No. 5) was more than 83% above the

the guideline limit (data provided by ZCCM-IH), these data sugges t that the P roject had a pos itive impact through improved enforcement of environmental ambient air quality s tandards . The air pollution levels at

clinics 5, 7, and 9 remained about the same despite the fact a more than 100% increase in copper production between 2003 and 2010.

**** No dam failures occurred during P roject implementation. While the 13 tailings dams were not rehabilitated, as planned, for closure under the P roject, maintenance works were carried out at 5 dams and repair

works at 2 dams. ZCCM-IH data sugges ts that leakage was 0 during P roject implementation. Given that ongoing mining operations continued to discharge tailings into the Luanshya River, it is therefore assumed that

58

Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members

Names Title Unit Responsibility/ Specialty

Lending Yves Prevost Lead Environment Specialist AFTEN TTL Christopher Gilbert Sheldon Lead Mining Specialist SEGOM Sarah Keener Sr. Social Development Specialist LCSSO Martin Fodor Senior Environmental Spec. AFTEN

Supervision/ICR Gotthard Walser Lead Mining Specialist SEGOM TTL Peter Coombes Sr. Mining Specialist SEGOM TTL Sandra Cesilini Consultant – Social Specialist LCSAR Hellen Mbao Chilupe Senior Operations Officer AFMJB Fenwick M. Chitalu Financial Management Specialist AFTFM Adriana Maria Eftimie Mining Specialist SEGOM

Martin Fodor Senior Environmental Specialist AFTEN TTL (at Project closing)

Wedex Ilunga Senior Procurement Specialist AFTPC Bwalya Mumba Procurement Specialist AFTPC Veronika Kohler Consultant SEGOM Alex Mwanakasale Agricultural Officer AFTAR Idah Z. Pswarayi-Riddihough Sector Manager AFTEN Lozi S. Sapele Program Assistant AFCS3 Christopher Gilbert Sheldon Lead Mining Specialist SEGOM Marie-Helene P. Trepy Information Assistant AFTCS Amelia V. Williams Language Program Assistant SEGOM

(b) Staff Time and Cost

Stage of Project Cycle Staff Time and Cost (Bank Budget Only)

No. of staff weeks USD Thousands (including travel and consultant costs)

Lending FY01 29 146.45 FY02 61 388.09 FY03 39 151.72 FY04 0.00 FY05 0.00 FY06 0.00 FY07 0.00 FY08 0.00

Total: 129 686.26

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Supervision/ICR FY01 0.00 FY02 0.00 FY03 9 54.00 FY04 33 177.97 FY05 25 113.88 FY06 21 123.60 FY07 22 147.56 FY08 17 83.78 FY09 0.00

Total: 127 700.79

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Annex 5. Beneficiary Survey Results (if any) While feedback from a limited number of beneficiaries was solicited during the ICR mission, a Beneficiary Survey was not conducted under the Project.

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Annex 6. Stakeholder Workshop Report and Results (if any) While a Stakeholder Workshop was conducted during the Midterm Review, a Stakeholder Workshop did not take place at the end of the Project implementation period.

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Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR

IMPLEMENTATION COMPLETION REPORT (CR.3741–ZA, H 026-ZA and NDF Cr. 405)

ON A

CREDIT/GRANT

IN THE AMOUNT OF SDR26.6 MILLION AND EURO 10 MILLION (US$ 50.8 MIILION EQUIVALENT)

TO THE REPUBLIC OF ZAMBIA

FOR A

COPPERBELT ENVIRONMENT PROJECT

SUBMITTED BY: THE GOVERNMENT OF THE REPUBLIC OF ZAMBIA DATE: JUNE 2011 Abbreviations and acronyms CAS Country Assistance Strategy CBU Copperbelt University CEMP Consolidated Environmental Management Plan CEMP 1 Interim Consolidated Environmental Management Plan CEMP 2 Final Consolidated Environmental Management Plan DFA Development Financing Agreement DO Development Objectives ECZ Environmental Council of Zambia EMF Environmental Management Facility EMF SC Environmental Management Facility Steering Committee EMP Environmental Management Plan EPPCA Environmental Protection and Pollution Control Act FMR Financial Management Report GRZ Government of the Republic of Zambia IDA International Development Association KMC Kabwe Municipal Council NDF Nordic Development Fund MSD Mines Safety Department TTL Task Team Leader UNZA University of Zambia PAD Project Appraisal Document WHO World Health Organization ZCCM Zambia Consolidated Copper Mines Ltd ZCCM -IH ZCCM Investments Holdings Plc ZECU ZCCM –IH Environmental Coordination Unit

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ZAMBIA

Copperbelt Environment Project

CONTENTS

1. Project Data

2. Principal Performance Rating

3. Assessment of Development Objective and Design, and Quality at Entry

4. Achievement of Objectives and Outputs

5. Factors affecting Implementation and Outcome

6. Sustainability

Tables

Table 1: Cholera Prevalence Cases

Table 2: Status of Case Management Appendix Annex 1: Performance Indicators Annex 2: List of implemented sub-project

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1. Project Data

IDA Date of Approval: Date of Signature: Date of Effectiveness: Original Closing Date: Revised Closing date Revised Final Closing Date:

20 March 2003 14 April 2003 25 September 2003 1 August 2008 31st March 2010 31 March 2011

Credit No. 3741 –ZA Amount SDR 14,100,000 (US$ 19,000,000 equivalent) Grant No. H 026 -ZA Amount SDR 15,500,000 (US$ 21,000,000 equivalent) NDF Date of Signature 30 June 2003 Credit No. 405 Amount EUR 10,000,000 (US$ 10,800,000 equivalent)

DISBURSEMENT TO DATE111 IDA Credit (US$) 12,439,775 NDF Credit (US$) 12,701,521

IDA Grant (US$) 20,579,256 GRZ Counterpart (ZMK) 13,572,952,418 ZCCM-IH Counterpart (ZMK) 8,266,111,700

2. Principal Performance Rating

Rating112 Outcome113: S Sustainability114: M Institutional Development Impact115: HS Bank Performance116: U Borrower Performance: S Quality at Entry: S

111 Figures are as of 31 March 2011 and will be revised once the disbursement grace period expires. 112 HS= Highly Satisfactory, S=Satisfactory, U= Unsatisfactory, HL=Highly Likely, L= Likely, UN=Unlikely, HUN= Highly Unlikely, HU=Highly Unsatisfactory, H= Highly, SU=Substantial, M= Modest, N=Negligible 113 Outcome objectives did not change during Project implementation and were attained. However, TDs were not closed as focus changed to reprocessing. 114 Sustainability rating is highly likely as most subprojects were implemented with involvement of stakeholders and at mine sites acquired by private investors. 115 High experience and skills have been developed by the Implementing Agent in implementing World Bank funded project. 116 Late amendment to the DFA, infrequent supervision and untimely issuance of no objections affected timely implementation of project.

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3. Assessment of Development Objectives and Design, and Quality at Entry

3.1 Original Objectives The overall objective of the project was to facilitate the completion of the privatization of ZCCM by assisting the GRZ in remediating environmental liabilities that were not taken up by new mining investors. The specific objectives of the project were to address environmental liabilities and obligations associated with the mining sector, following the privatization of the mining assets of ZCCM and strengthen the capacity of its environmental regulatory institutions to improve future compliance of the mining sector with environmental and social regulations. 3.2 Revised Objectives The Objectives of the Project were not revised. 3.3 Original Components

The project, estimated at a total of US$ 50.8 million, consisted of two components as follows: 3.3.1 Environmental Management Facility (EMF) The activities of the component were not changed. 3.3.2 Strengthening of the Environmental Regulatory Framework The activities of the component were not changed. 3.4 Project Design and Quality at Entry

The project quality at entry was satisfactory as it addressed the right issues to support the privatization of ZCCM. The design by setting up of ZCCM – IH Environmental Coordination Unit (ZECU) and the Environmental Management Facility (EMF) as pillars for project implementation, instead of using the line Ministries, helped to enhance implementation. However, the design had a few shortcomings. The project start up did not clearly have identified liabilities to be addressed, apart from what was identified in the Interim Environmental Management Plan (IEMP). These full liabilities were only identified after the completion of Consolidated Environmental Management Plan (referred to in this ICR as CEMP 2 or final version of the CEMP) and the Kabwe Scoping and Design Study (KSDS). At project effectiveness, 23% of the resources from IDA were unallocated because of this lack of full knowledge of the liabilities. Furthermore, the CEMP 2 was only completed in 2005 and the KSDS in 2006. This resulted in delays of 2 and 3 years respectively before the full implementation could commence. The Project Preparatory Facility (PPF) was used to undertake project preparation (such as Copperbelt Environment Assessment, ZCCM-IH Counerpart Environmental Management Plans, Negotiations of Liabilities, Project Implementation Manual, etc) while the LRP was used mainly for implementation of liabilities identified in the Interim Environmental Management Plan (IEMP). While this was important because of the concerns of health and safety placed on the liabilities in the IEMP, adequate resources should have been made available for the implementation of the two important studies, namely CEMP 2 and KSDS under the PPF. This resulted in the delay in implementation of the project, hence the two project closing dates extensions.

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The privatization of the mining industry led to loss of formal employment and incomes as new investors focused on core business of mining which also led to dependency on unsustainable exploitation of natural resources for survival resulting in environmental degradation. Furthermore, the findings of CEMP 2 identified and ranked highest, economic empowerment and job creation. Consequently, the project midterm review of 2006, resolved that community grants should be introduced in the DFA to create economic opportunities for the affected communities. However, the amendment of the DFA did not include community grants and therefore the community grant component was not implemented. On the other hand, implementation of component two at ECZ was placed within the institutional line. While this was important for capacity building and institutional sustainability, there were challenges, viz, coordination with the delegated institutions supported under the project and internal project. 4. Achievement of Objectives and Output

The project was to achieve set objectives and output through implementation of the two components. The performance indicators with achievements are presented in appendix 1. The performances under each component are presented below; 4.1 Component 1 A number of sub-projects were implemented so as to achieve the objective of the component. The full lists of sub-projects implemented are attached at appendix 2. 4.1.1 Studies The component undertook studies as part of the process including the following; Interim Environmental Management Plan: The plan contained interventions which were identified considering health and safety as well as those which were part of the sale development agreement with the new investors prior to project effectiveness. CEMP 1: Assisted ZCCM-IH to identify retained assets and potential ongoing environmental impacts following privatisation of ZCCM Ltd. It further indentified historical liabilities arising from the operations of the mine sites prior to privatisation and social impacts associated with the privatisation of the mines. The CEMP I further recommended remedial measures for the facilities retained by ZCCM-IH. CEMP II: The CEMP II consolidated the site specific environmental obligations that remained with ZCCM-IH (as detailed in the Counterpart EMPs) and those obligations that are the responsibility of investors (as detailed in the Investor EMPs). It Identified and investigated, the cumulative and downstream impacts of mining activities on public safety and health and critical ecological functions most particularly the impact of mining activities on the Kafue River watershed that were not captured in the Counterpart and Investor EMPs. The study also determined who was responsible for addressing environmental liabilities. KSDS: The KSDS determined the extent and level of contamination by toxic substances arising from past mining operations in and around Kabwe. The study identified the main sources and pathways of lead contamination to humans, designed follow up measures for reducing lead levels in blood below 25µg/dL which was an interim action standard, particularly in children impacted by the Kabwe mine, developed a risk communication program which will deliver appropriate messages to all interested parties in the resolution of impact of lead in the project area. KAPB Survey: In Kabwe, a Knowledge Attitude Practice and Beliefs (KAPB) survey was also

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undertaken to provide the baseline for the project. Based on the KAPB survey a risk communication strategy was developed. 4.1.2 Sub-Projects Implemented on the Copperbelt Hazardous Waste: To safeguard public health and safety, hazardous materials including Polychlorinated Biphenyls (PCBs) and Uranium tailings were identified for remediation. Approximately 220 tonnes of PCBs oils and PCB contaminated materials and soils were removed from five sites ( Kitwe, Mufulira, Kalulushi, Chingola and Kabwe) and disposed off by high temperature incineration in Europe in an environmentally sound manner to comply with contractual obligations between ZCCM and the new mine investors. Approximately 150, 000 cubic meters of uranium tailings and uranium tailings contaminated materials identified adjacent to Mindolo township were removed and disposed at an engineered cell at TD15A. Resettlements: A number of communities living in areas earmarked for mine expansion as well as those in areas considered dangerous due to mine operations were resettled in safe areas. In Chililabombwe, a total of 66 and 74 houses were constructed and a total of 840 people were resettled from surplus of the ZCCM Labour Reduction Program provided under IDA Public Sector Reform and Export Promotion Credit (PSREP Cr. 3167 –ZA). This project intervention facilitated the investment by Konkola Copper Mines (KCM) in excess of US$1.6 billion in Konkola Deep Mining Project, which will eventually increase company’s copper production by approximately 200,000 metric tonnes per annum. In Mufulira, a total of 21 and 44 houses were constructed at Kawama and Chibolya respectively. A total of 517 people were resettled at the two sites. In Kitwe, a further 90 houses were constructed and 583 people were resettled. Dumps: The objectives of the dumps closure were to protect public health and safety, reduce or prevent environmental degradation and allow productive use of land similar to its original use or an acceptable alternative. A total of 14 Tailings dams (TD’s) and 15 Overburden dumps (OB’s) were earmarked for closure. However, in 2006, the focus changed from closure to reprocessing due to high copper prices, which resulted in these dumps being considered as a resource to recover residual metals by the private investors. The Government therefore decided to grant large scale mining licences over the TDs and OBs to private investors. Prior to granting of these mining licenses, adhoc maintenance works were carried out by the Project in order to safeguard the integrity of the dumps. Defunct facilities: At the time of privatization there were some decommissioned facilities, which were not taken over by new mine owners. As part of the Sale and Purchase Agreement, ZCCM-IH was required to demolish and clean up the sites in order to avail the land for alternative use. For example:

� The High Grade Tailings Leach Plant was demolished and a new smelter and acid plants were constructed. As a result of this project, jobs were indirectly created due to new development on the sites and the other benefits, which accrued to GRZ included increased tax revenues.

� Only 40% of the Demolition and Site Cleanup of No.1 Nkana Cobalt Plant was done. The remaining works could not be carried out due to initial flawed demolition design resulting in high cost of demolition. However, new designs have been prepared and the subproject is ready for implementation.

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� In addition various structures at Kansanshi mine were demolished and the site cleaned in 2001. A new mine was built and commissioned in 2005.

Kafue River Water Quality Monitoring: One of the performance indicators of the Project was to reduce pollution load into the Kafue River by 70% from rehabilitated project sites (dumps). Although none of the dumps were rehabilitated, nevertheless, the Project carried out periodic monitoring of the quality of water in the Kafue River and its tributaries. The findings of Project (under CEMPII) indicated that 90% of the pollution load in the Kafue River was from ongoing operations. The result of the monitoring programme has been useful to ECZ, MSD and others. Supply of Potable Water to Mushishima Community under the Community Development Framework: During the time of ZCCM operations, the Mushishima Community was provided with potable water. This was done due to pollution of Mushishima stream and low water table resulting from mine dewatering. At privatization the new mine owners were not willing to take over the responsibility of supplying water to the community. Through the Project the community was provided with potable water, which benefited about 2,000 people. Public Information and Risk Communication: The objective was to effectively communicate and raise awareness on the risks associated with mining environmental related issues. To address this, Environmental Public Information Centres (EPICs) were established to serve as public disclosure centres and as reference centers for research and other educational and academic purposes. The Project constructed EPICs in Kalulushi and Chambishi and rehabilitated the Kitwe, Mufulira, Luanshya and Chililabombwe Public Libraries for use as EPICs. However, the planned rehabilitations of Ndola ZCCM-IH Archivers and Ndola Public Library were not undertaken due to time constraints. 4.1.3 Subprojects implemented in Kabwe The overall project objective in Kabwe was to reduce blood lead levels in affected children to initially an interim lead level of 25ug/dL and ultimately to WHO recommended level of 10ug/dL. The following activities were carried out: 4.1.3.1. Mine Site Rehabilitation Plan Plant Area: The main objective was to remove public health hazard arising from human access to and/or the emanation of contamination from Kabwe mine site. All decommissioned plant infrastructure and equipment were demolished and removed from the mine site. These were disposed off at a safer site. Mine Waste Dumps: The main aim was to rehabilitate and close mine waste dumps through re-vegetation. This was required as a means to suppress wind-blown lead contaminated dust. However, rehabilitation was not done as the dumps were sold by GRZ to new investors. 4.1.3.2. Community Lead Risk Mitigation Strategy Kabwe Main Canal Zone Rehabilitation: The objective was to reduce/eliminate human health hazards caused by lead contamination through removal of contaminant sources from communities within the vicinity of Kabwe Main Canal Zone. The Project removed a total of 56,000 cubic meters of lead contaminated soils from the banks of Kabwe Main Canal and disposed it at a designated site. However, profile sampling of the Kabwe Main Canal has revealed that the base and sides of the canal are still highly contaminated with Lead. Unless the canal is concrete lined, dredging and removal of the lead contaminated soils from the Canal Zone has to be done on a

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regular basis. Any occurrence of flooding and dredging of the canal would result in recontamination of the banks. Community Water Supply Improvement:The subproject provided adequate water for dust suppression and for health and hygienic purposes in Makululu, Makandanyama, Kasanda, Mutwe Wansomfu, Chowa, Waya and Katondo. The objective was to reduce risk of exposure to lead through inhalation and ingestion. Approximately 100,000 people have benefited. The other benefit has been a significant reduction of cholera occurrence since 2005 in the project areas which can, in part be attributed to improved hygiene due to availability of water (see Table 1). Table 1: Cholera Prevalence Cases

Year 2003 2004 2005 2006 2007 2008 2009 2010 No of Cholera Case reported 269 280 8 4 0 289117

0 0

Source: Kabwe urban District Health Management Team Vegetation Barrier Programme: The objective was to reduce windblown dust and reduce the impacts of lead contamination in communities. The target was to plant Lawn (Kapinga) grass and Moringa trees at 7000 households and only Lawn grass at 10 schools. A total of 3000 households had Kapinga grass planted with 6000 Moringa trees planted, two at each of the household. Only 6 schools benefited. The balance of 4000 households and 4 schools are outstanding.

Removal of Mine Waste from Residential Areas and from Mulungushi Road Slag Dump: The objective was to reduce/eliminate human health hazards caused by Lead contaminated materials in the communities. Approximately 4000 cubic meters of Lead-contaminated mine waste was removed from residential areas, while 30,000 cubic meters was removed from Mulungushi Road Slag Dump and disposed safely at a designated site. Public Information and Risk Communication: The objective was to effectively communicate and raise awareness on the risks associated with Lead. To address these EPICs were established in Makululu, Kasanda and Katondo. The project also rehabilitated the Town Centre Library. Integrated Case Management (ICM): The objective of is to reduce elevated blood lead levels in the affected children in Chowa, Kasanda Katondo, Mutwe Wansofu, MaKandanyama and Makululu townships to interim blood lead level of 25ug/dl and ultimately to WHO recommended level of 10ug/dl. The Project rehabilitated four health centres at Makululu, Kasanda, Chowa and Zambia Railways to provide adequate space for ICM programmes. Three recruitments were undertaken between 2007 and 2010 with a total of 5986 children sampled for blood lead levels. Table 2 below shows that there was significant reduction in the blood lead levels during the periods 2007-2008 and 2008 - 2009 compared to 2009 -2010. This was caused by inadequate funds caused by delay to amend the DFA, which resulted in nil stocks of drugs and nutrition supplements most of the time.

117 The increased prevalence was attributed to the flooding, which occurred in 2008 due to above normal rainfall, which was experienced.

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Table 2: Recruitment Statistics under ICM SN:

YEAR Total Number of Children Recruited

Total number of Children on Nutritional Therapy

Total number of Children in Class 5118

Geomeans119 before treatment

Geomeans after treatment

1 2007-2008

1,339 962 73 59.0 42.0

2 2008-2009

2,425 1,465 53 78.2 38.8

3 2009-2010

2,222 1,623 120 93.3 66.0

Total 5,986 4,050 246

Due to various constraints attributed to inadequate disbursement from IDA , the programme was unable to sustain progressive reductions in the geomeans and was unable to achieve the intended interim geomean of 25ug/dL.

Public Play Parks: The objective was to provide Lead free and safe play areas for children in order to reduce the risk of exposure to Lead. A total of 11 play parks were constructed in the affected (Chowa, Kasanda, Katondo, Mutwe Wansofu, MaKandanyama and Makululu) communities and Clayton Park was rehabilitated. Economic Empowerment: The objective was to empower communities with business skills and provide infrastructure in order to alleviate poverty. The Project constructed a total of three markets, one hammer mill with a shelter and provided start-up capital for ten community clubs. 4.1.4 Environmental Protection Fund The Mines and Minerals Act of 1995 provided for the establishment of Environmental Protection Fund (EPF) for the mining sector. In 2007, the Statutory Instrument was issued but due to financial and logistical constraints the EPF was not established. It was therefore decided that the Fund be established with the support of the Project. The Fund has two key objectives. Firstly, to provide assurance to the Director of Mines Safety Department that the developers shall implement their Environmental Management Commitments, stipulated in their EMPs. Secondly, to provide guarantee to Government that public fund shall not be used to clean up environmental liabilities of the developers in the event that they fail to do so. In excess of US$180 million has been assessed as being closure liability for 30 large scale mining and mineral processing facilities. Out of this total amount, US$8.5 million cash has been contributed by the developers into the EPF. A further US$9.7million in guarantee has been secured by one developer, while 21 operations have not secured their guarantees.

118 Classes of Lead in blood are defined as follows; Class 1= 0 to 9ug/dl, Class 2 =10 to 19ug/dl, Class 3= 20 to 44ug/dl, Class 4 =45 to 64ug/dl and Class 5 = above 65ug/dl. 119 Geometric means refers to a mean or average which indicates the central tendency of a typical value of a set of numbers. The numbers are multiplied and the nth root (where n is the count of numbers in the set) of the resulting product is taken.

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4.2. Component 2

The component was implemented through sub-components as follows;

4.2.1 Environmental Legislation Review The main focus of this sub-component was to improve the legal framework and strengthen enforcement capacity. This was to be done through strengthening environmental legislation in order to improve monitoring and enforcement and to review pollution standards so as to incorporate total pollutant loads in pollution permits. As a result of implementing this sub-component, the old Act was repealed and a new Act has been accented into Law.

4.2.2 Environmental Management and Compliance Monitoring The overall objective of the sub-component was strengthening the capacity of ECZ to regulate the mining industry in accordance with environmental legislation and standards. This was to be done through issuance of pollution control permits, imposition of fines, having a dedicated compliance monitoring programme, development and approval of EMPs, thereby reducing pollution loads and the negative health effects of mine pollution. This resulted in the Environmental Management Plans (EMPs) for all the targeted mining companies including ZCCM-IH were submitted and ECZ conducted monitoring activities to ensure that implementation was carried out in accordance with the regulations.

4.2.3 ECZ Capacity Building

The overall objective of sub-component was to have enhanced ECZ’s capacity to address its institutional weaknesses for effective enforcement of environmental regulations and improved environmental performance of the mining industry. Following a needs assessment, a training policy was developed and adopted in 2004, and implemented.

4.2.4 Environmental Emergency Response The overall objective of this sub-component was to enhance preparedness of the Environmental Emergency Response (EER) System and its ability to effectively respond to emergencies. ECZ procured EER equipment and Members of staff from ECZ and Mines Safety Department (MSD) were trained in environment emergency based on the EER protocol developed was being used as a guide in responding to environmental emergency. A toll free environmental emergency hotline was established at ECZ to enable members of the public to report any environmental emergency at less cost on their part. In addition to the above achievement, ECZ also trained police officers in the identification of Hazardous Materials so as to enable them be effective participants in environmental emergencies situation without endangering lives.

4.2.5 Coordination and Capacity Building with Strategic Partners The main focus of this sub-component was capacity building of the delegated authorising agencies so that they are fully integrated into the Environmental Impact Assessment (EIA) process and were effectively participating in environmental management and compliance monitoring. A Memorandum of Understanding (MOU) was signed between ECZ and MSD, and the latter was provided with logistical support. An Interagency Environmental Coordinating Committee (IECC) was formed and continued to hold regular meetings annually.

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4.2.6 Environmental Awareness and Public Participation The main objective of this sub-component was to build capacity of civil society so as to enhance their participation in environmental management and enforcement of compliance through more pro-active strategies. A communication and marketing strategy was developed and adopted by the Council in 2008. Based on this, ECZ carried out sensitization workshops for the key stakeholders on their role in the Environmental Regulatory Framework. Additionally, ECZ participated in several national exhibitions and commemoration of significant international environmental related days annually. 5. Factors Affecting Implementation and Outcomes Design: The design of the Project, which did not provide for studies to identify mitigation measures before Project effectiveness, resulted in delay in implementation. Therefore, the outcome could not be met timely when the full mitigation measures where only fully known three years after the project implementation had commenced. Lender: The Project has been supervised by a Task Team Leader (TTL) different from the one who prepared the Project. This was satisfactory because he was adequately supported by Bank staff120 who were also involved in the preparation until the Mid Term Review (MTR) of 2006. However, after the MTR, the supervision team reduced in number which resulted in some of the proposed decisions not being implemented. For example, the MTR proposed a formal restructuring of the Project Development Financing Agreement to address the Project shortcoming including the unallocated funds to pay for consultancies which had exhausted its allocation and introduction of community grants category in the Project. The restructuring to distribute the unallocated funds and provide for overruns on consultancy was only approved in 2009, which is approximately 4 years after the decision was made. In the prevailing period, the TTL was approving over expenditure, on a case by case basis, on the categories that should have benefited from the restructuring. This resulted in the TTL getting involved in disbursement and caused substantial delays. The Community grants category was not introduced in the project despite the MTR emphasizing the importance. The TTL was again because of the importance of this, compelled to approve community grants on a case by case basis. In Kabwe, he approved construction of three markets, provision of one hammer mill and start up money for 10 community groups. While this was shown to have worked, it fell short of the proposed community grants that should have been introduced to the Project categories. As a result of reduced support to the TTL, the turn around on request for No Objection was substantially affected. In some cases delays were beyond 10 months and this therefore affected

120 Earlier World Bank supervision mission had a number of bank staff participating including from environment, financial management, social, procurement and mining specialists. Some of them were involved in the preparation of the project. After the MTR, IDA supervision mission were usually the TTL and one other staff member.

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implementation resulting in some of the sub-projects being delayed and in some cases not being implemented121. Disbursement has also been affected by Disbursement Division’s inconsistency in applying disbursement rules. For prior review, the requirement is to submit the certification for the works and/or services and the invoices for each payment. However, Disbursement Division required TTLs approval at this stage as well. In cases of Statement of Expenditure (SOE), there were cases when Disbursement Division required contracts when only evidence of payment was required for disbursement. This delayed disbursements. Borrower: Insufficient GRZ counterpart funding due to economic constraints: While the overall socio-economic situation did not directly affect the Project, it may have influenced the Project indirectly, e.g., through limiting government’s ability to provide counterpart funding. This was notable in the reduced allocation of counterpart funding in the approved National budget which was less than required allocation. Implementing Agent: Project Implementation was under taken under (ZECU). It was responsible for the development of detailed sub-project proposals, implementation and procurement. The unit was staffed with a broad complement of staff sufficient for the required task. However, while these personnel were specialized in their fields of competence, they did not have experience in IDA procedures. This resulted in initial delay in implementation during the learning period. The implementing agent had two accounts for managing the credit and grant funds. In the original design, the credit was envisaged to pay for works only and all consultancies were to be paid from the grant. Most works could only be implemented after consultancies were done, e.g. development of EPBs, design of works etc. However, the funds in the consultancy category were exhausted resulting in works not being implemented on time and services not being paid for. To avoid litigation on delayed payments, ZECU used credit funds to pay for consultancy even though this was not provided for in the DFA. This resulted in delayed replenishment which affected the project cash flow position. Environmental Management Facility (EMF):The EMF was set up with a steering committee and secretariat to manage the project. The EMF Steering Committee was responsible for ensuring that the programme of activities that will be carried out under the EMF is consistent with the EMF objectives and policies approved by GRZ and ZCCM-IH and agreed with the donors. The Committee was also responsible for approving the specific proposals for all mitigation measures and remedial activities to be financed by the EMF. They were supported by a secretariat for day to day administration. While the EMF Steering Committee had a broad representation in composition, it lacked specific technical expertise to fully appraise sub-project to be approved. This resulted in delays on decisions of the sub-projects to be implemented. The Task Team Leadership, to address this concern, proposed retaining of an Independent Assessment Team (IAT) to provide technical advisory services to the EMF SC. EMF Secretariat was responsible for managing the transfer of funds to ZECU. The Secretariat was also responsible for replenishment of the Project Special Account from WB and NDF. There 121 For example Makululu Road Rehabilitation and Copperbelt Community Awareness sub-project were not implemented due to delayed No Objection.

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was also delayed replenishment which affected the project cash flow. The delay was caused by a number of factors including delayed amendment to the DFA to provide adequate resources for mainly consultancy activities, ZECU ‘borrowing’ of credit funds to pay for grant financed only activities mainly consultancy services, delayed preparation of replenishment by EMF, inadequately supported documentation from ZECU, etc. Environmental Council of Zambia: The ECZ was responsible for implementing component 2. The capacity of ECZ was enhanced but due to various challenges several deliverables were not attained. There were frequent changes in project management both at ECZ and NDF which contributed to delays and non attainment of various deliverables. Furthermore, there is need to undertake adequate project risk assessment, if a number of project deliverables are dependent on externalities as these could hinder the success of the project. Under ECZ, several procurements were dependant on several externalities for their success which resulted in delayed delivery of key goods, which were a major milestone in ECZ capacity enhancement. Mine Safety Department: Mine Safety Department (MSD) is a key institution for the enforcement of mining environmental sectoral regulations but did not get the attention to strengthen its capacity to fulfill its responsibility. The MTR proposed to define specific MSD institution capacity building program requiring radical rationalization of the institution, including transforming it into an autonomous agency with support of US$ 1 million. However, this was not implemented because Government was not committed to the radical rationalization.

6. Sustainability

Component I Project Management- The project established a Project Implementation Unit (PIU) with a whole array of professional staff at ZECU and EMF. ZCCM-IH has integrated all staff in its mainstream structure to ensure that these skills are readily available for implementation in the event that the project is extended. Similarly, Government is in the short run responsible for EMF staff. Hazardous Waste -The mines sites where PCBs were removed and disposed have been acquired by new mine investors as part of the Sale and Purchase Agreements (contractual). The uranium tailings and uranium tailings contaminated materials removed were deposited at the engineered cell constructed at TD15A, a tailings disposal facility that is owned and operated by Mopani Copper Mines Plc. A post maintenance and monitoring period of up to ten years has been instituted by ZCCM-IH in order to ensure physical integrity and control any possible pollution. The sites where the Uranium tailings and Uranium tailings material were removed have been handed to MCM who are owners of the pieces of land. Resettlement – The Project resettled communities in Chililabombwe, Mufulira and Kitwe, and provided alternative livelihood options. To ensure security of tenure, titles deeds will be issued to house owners.

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Dumps– The closure of the tailings dams by the Project was not implemented as a decision was taken during project implementation to explore the possibility of reprocessing the tailings for the metal value. With the exception of only two overburden dumps and three tailings dams, all the dumps/dams have been transferred to new investors following granting of Mining Licence by the MMMD. However, the investors have not demonstrated responsibility to manage and maintain the Tailings Dams in the event that these are not reprocessed since there is no evidence on the ground. In addition, there is a risk of these Tailings Dams being abandoned should the copper prices slump on the international market and the responsibility for maintenance and eventual closure reverting to GRZ. The cost for closure and Post monitoring of the tailings dumps transferred to private investors is estimated at US$32 Million. Defunct facilities - The cleaned up areas where the defunct facilities were located have been handed over to the new investors for alternative use. Water supply- Mushishima Water project is now managed by Mulonga Water and Sewerage Company. The same is true for the Kabwe Water project which is being managed by Lukanga Water and Sewerage Company. While water provision in Kabwe will continue, the vandalism of stand water pipes has affected the suppression of lead contaminated dust. Furthermore, the suppression of lead contaminated dust will not be maintained as the water utility company plans to reduce the number of stand water stand pipes to a limited number of kiosks. EPICs– The Local Authorities have assumed responsibilities of managing the EPICs with all staff and maintenance costs internalized. ICM – The effects of high Lead in blood manifests in the community, especially in children under the age of five through a number of signs and symptoms122. The Lead Treatment Protocol developed by a team of Medical Doctors from the Ministry of Health (MOH), University Teaching Hospital, Kabwe Urban District Management Team (KUDHMT) and Kabwe Mine and General Hospitals in consultation with ZECU, is being implemented in Kabwe. The syllabus on Lead Pollution has been incorporated in the School of Medicine curriculum at 6th Year level to ensure that graduating medical doctors are equally conversant with Lead Poisoning and Lead Treatment Protocols. ICM activities are conducted at Health Centres which are established health centres under the MOH and KUDHMT. ZCCM-IH has assumed the funding of ICM activities until such a time it is integrated into the Ministry of Health mainstream programmes. However, the Ministry of Health of the Government of Zambia emphasizes mounting a sustained clinical intervention programme based on morbidity and mortality. Play Parks – While the provision of play parks was important to ensure that children avoid playing in lead contaminated dust and therefore limiting their exposure to Lead, vandalism has affected the operation of most play parks. The KMC has given assurance to extend security to all parks EPF – The EPF has set up and will be managed by Mines Safety Department.

122 Classic signs and symptoms of lead poisoning can include loss of appetite, abdominal pain, vomiting, weight loss, constipation, anemia, irritability, learning disabilities and behavior problems.

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ECZ - Activities of the ECZ will be self sustained through the fees and fines which CEP helped to establish through preparation of the Law to transform the council into a self sustaining agency. MSD - While Government signed the Law to transform ECZ into an agency, there is still no commitment to radical rationalization of MSD. The radical rationalization proposal was aimed to transform MSD into an agency which would have provided benefits of autonomy and ability to use the revenue generated from licenses and levies collected. At the moment, all revenue generated is surrendered to the Treasury at the Ministry of Finance and National Planning. In its current form, MSD will continue to rely on appropriation from Government for it operation, which is in most cases inadequate and erratic. This will affect it operations and that of the EPF.

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Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders NDF’S COMMENTS IN RELATION TO THE DRAFT ICR REPORT ICR00001904 IDA-37410 IDA-3741A IDA-H0260 COPPERBELT ENVIRONMENT PROJECT NORDIC DEVELOPMENT FUND CREDIT NO. NDF 405 Credit amount: EUR 10 million (disbursed EUR 9.62 million, unused/cancelled EUR 0.38 million) Key dates: Signing 30.6.2003 Effectiveness 4.11.2003 Closing original 31.12.2008 actual 31.12.2010 Disbursement rate at closing 96.2% (Component 1: 96.3%, Component 2: 96.0%) Rating: Implementing Agency performance / EMF Moderately Unsatisfactory Implementing Agency performance / ZECU Moderately Unsatisfactory Implementing Agency performance / ECZ Moderately Unsatisfactory Lead Agency (World Bank) cooperation Unsatisfactory NDF performance Moderately Unsatisfactory Project outcomes Moderately Satisfactory NDF endorses the main assessments in IDA’s draft ICR report. NDF participation into CEP was designed jointly with IDA in order to coordinate the sub-components and contracts to be financed from NDF credit. EUR 5.3 million of NDF credit was allocated for Component 1 and EUR 4.7 million for Component 2. NDF funds were provided as parallel co-financing where selection of sub-components and contracts was to be made in cooperation with the implementing agencies, NDF and the World Bank. Review of procurement documents and decisions was to be carried out by NDF who would consult the World Bank where needed. World Bank team support was expected for monitoring of project and contracts. Under Component 1 NDF financed the consultancy for preparation of CEMP1 (EUR 2.47 million), removal and disposal of PCB waste from Kabwe, Kalulushi and Kitwe (Nkana Cobalt plant) (EUR 0.41 million), removal and disposal of AMCO uranium tailings in Kitwe (EUR 2.02 million), consultancy for preparation of removal of redundant chemicals from a storage in Kalulushi (EUR 0.13 million), and support to EMF (EUR 0.07 million). Remarkable delays in selection of contracts for NDF-financing and in procurement of works were followed by fairly acceptable pace implementation of the contracts. However, due to financial and time constraints, the actual removal of redundant chemicals could not be implemented as planned. Furthermore, the extent to which uranium tailings had been spread around in Kitwe came as a surprise to ZECU. Despite major additional works approved and volumes of materials removed under the NDF-financed contract, it was not possible to even confirm with full certainty if all the contaminated soils had been identified, not to speak about having them removed and disposed off. If not already attended by ZCCM-IH under their own funding, these two uncompleted tasks should be among those of high priority in the proposed follow-on project. Component 2 was divided to eight sub-components, the largest three being Sub-component 3 - ECZ capacity building; Sub-component 2 - Environmental management and compliance monitoring; and Sub-component 6 - Environmental awareness and public participation. Most of

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the sub-components were marked by delays and slow implementation. Targets could hardly (or could not) be achieved in Sub-component 5 - Coordination and Capacity Building with Strategic Partners and Sub-component 4 - Environmental Emergency Response System. The closing date of the credit was extended twice, first in December 2008 until 30 June 2010 and then again in May 2010 until 31 December 2010. Communications failure between WB and NDF caused the NDF closing date finally being three months before the WB closing date. Some activities under Component 2 might have benefited if NDF closing date had also been 31 March 2010. EMF team role and position in the financial management of NDF credit has not been unproblematic in the respect that most of the funds channeled through Special Accounts have been for Component 2 and in practice managed by ECZ while EMF has tried to work as the channel for disbursements from NDF and for reconciliation documentation and replenishment requests to NDF. Almost nine months from the closing of the NDF credit, reconciliation of Special Account expenditures for the 15 last months of the project has still not been completed. Contracts management and supervision by ZECU team was rated moderately satisfactory until their failure to communicate in time to NDF the need for major additional works in the contract for removal of AMCO uranium tailings in Kitwe. Some kind of confusion in the WB team of NDF’s (parallel financing) role and requirements apparently contributed to this failure. (NDF finally agreed to provide retrospective no objection to an exceptionally big contract addendum.) Performance of ECZ team is also rated below satisfactory mainly due to slow implementation of Component 2. This was in the hands of ECZ team and largely independent from performance of other actors so much of the delay is attributable to ECZ. After active cooperation in the early stages of the project preparation and implementation, the World Bank team participation in selection of contracts for NDF-financing, support to NDF in procurement reviews and monitoring of implementation of the NDF-financed sub-components and contracts became rather limited. This caused serious delays to procurement of works and services under Component 1. From 2008 communication between the World Bank and NDF was almost non-existent for a couple of years, then briefly resumed early 2010 to collapse again until end of ICR stage. Frequent and fast changes in the person of NDF Manager responsible for the project caused fractionation and inconsistency in the monitoring and supervision functions of NDF. Especially the structure of Component 2 was too complex for NDF’s limited resources to manage and supervise adequately. Initial monitoring support provided by a consultant financed by IDA was of great value to NDF but was discontinued after 2007. At that stage, both the Bank and NDF failed to strenghen their teams with necessary expertise. NDF/22.09.2011

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Annex 9. List of Supporting Documents Project-internal Documents:

� Aide Memoires of Preparation, Appraisal, Supervision, Midterm Review and Implementation Completion Report (ICR) Missions

� Implementation Status Reports � Internal correspondence � Environmental Project Briefs � Copperbelt Environment Project. Project Implementation Manual, Volume 1. � Copperbelt Environment Project. Project Implementation Manual, Volume 2. � Environmental Regulatory Framework. Environmental Council of Zambia

Public Project–related Documents

� Blerk, JJ. (2005). Remediation Options for the AMCO (Kitwe) Uranium Mining Residues and Environmental Impact Assessments for the Lumwana Copper Project. October 17-26, 2005 Mission Report. Wierda Park, South Africa: Aquisim Consulting (Pty) Ltd

� Ginet, C. (2005 and 2006). Backstopping report. Assessment, Monitoring and Evaluation of Component 2 Activities. Prepared for Ministry of Finance and National Planning.

� Government of the Republic of Zambia (GRZ), THOMRO, SWECO, SWEDISH GEOLOGICAL AB (2005). Preparation of Phase 2 of a Consolidated Environmental Management Plan. ZCCM-IH: Lusaka, Zambia.

� GRZ (2003). Kabwe Attitude, Belief, Practices Survey. � Water Management Consultants (2006). Kabwe Scoping and Design Study. Prepared for

ZCCM-IH. Shrewsbury, UK. � World Bank (2010). Restructuring Paper on a Proposed Copperbelt Environment Project

(2010). Environment and Natural Resources Management Unit (AFTEN). Africa Region. The World Bank

� World Bank (2003). Project Appraisal Document (PAD) on a Proposed Grant in the Amount of SDR 14.1. Million (UD$19 Million Equivalent) and Grant in the Amount of SDR15.5 Million (US$21 Million Equivalent) to the Republic of Zambia for the Copperbelt Environment Project. Environment and Social Development Unit, Africa Region. The World Bank: Washington, DC.

� Worley Parsons Komex (2007a and 2009a). Copperbelt Environment Project. Independent Assessment Team Performance Review of Component 2. Report to: Environmental Management Facility. Ministry of Finance and National Planning. Worley Parsons Komex: Calgary, AB/Canada.

� Worley Parsons Komex (2007b and 2009b). Copperbelt Environment Project. Independent Assessment Team. Mission Report. Worley Parsons Komex: Calgary, AB/Canada

� Komex International (2002). Environmental Assessment of Copperbelt Environment Project. Prepared for ZCCM-IH. Komex: Calgara, AB/Canada.

� Zambia Consolidated Copper Mines Investment Holding (ZCCM-IH) Environmental Coordination Unit (ZECU), Copperbelt Environment Project. Newsletters.

Documents related to Zambia, Mining and Environment

� Blacksmith Institute (2001). The Silent Death: Lead Poisoning in Kabwe, Zambia. � BBC News. (2003). Zambia’s child poisoning tragedy. 6 November 2003. Downloaded

from: http://news.bbc.co.uk/2/hi/africa/3241037.stm

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� ECPengineer (2011). Zambia’s Konkola Copper Mines Shuts Polluting Leach Plant. Downloaded from http://www.epcengineer.com/news/post/815/zambias-konkola-copper-mines-shuts-polluting-leach-plant

� Environmental Council of Zambia (2011). Environmental Management Act No. 12 of 2011. Downloaded from http://www.necz.org.zm/cap204/Environmental%20Managenet%20Act%20No%2012%20of%202011.pdf

� Hart Nurse Ltd. (2011). Validation of the Extractive Industries Transparency Initiative in Zambia. Report to the Zambia EITI Council. Downloaded from: www. Zambiaeiti.org.zm

� International Development Association (2011). Country Assistance Strategy Progress Report for the Republic of Zambia. Country Management Unit AFCS3. Africa Region. The World Bank.




� Parliament of the Republic of Zambia (2011). Daily Parliamentary Debates For The Fifth Session Of The Tenth Assembly. Friday, 17th June, 2011. Ministerial Statement. Rotary Kiln at Ndola Lime Company Ltd. Downloaded from: http://www.parliament.gov.zm/index.php?option=com_content&task=view&id=1469&Itemid=86

� Pricewaterhouse Cooppers (2011). Zambia Extractive Industries Transparency Initiative. Independent Reconciliation Report for Year end December 2008. Downloaded from: www. Zambiaeiti.org.zm

� RAID, Afronet (2002). Anglo American plc. OECD Guidelines for Multinational Enterprisesin respect of its operations in Zambia. Submission to the UK National Contact Point. Substantive Concerns.

� RAID (2000). Deregulation and the denial of human rights. Downloaded from: http://www.raid-uk.org/docs/Zambia/Privatisation_Rpt/Executive_Summary.pdf). Report prepared for submission to the UN Committee on Economic, Social and Cultural Right by NGOs, such as Citizens for a Better Environment (CBE), Oxfam, Rights and Accountability in Development Refugee Studies Centre (RAID), the Inter-African Network for Human Rights & Development (Afronet)

� Republic of Zambia (2011a). Sixth National Development Plan 2011-2015. Downloaded fromhttp://siteresources.worldbank.org/INTZAMBIA/Resources/SNDP_Final_Draft__20_01_2011.pdf

� Republic of Zambia (2011b). 2011 Environmental Management Act, paragraph 21.2, downloaded from http:/ /www.necz.org.zm).

� World Bank (2011). Zambia. What Would it Take for Zambia’s Copper Mining Industry to achieve its Potential? Report No. 62378-ZM. Finance & Private Sector Development Unit. Africa Region. The World Bank: Washington, DC.

� World Bank (2003). Project Performance Assessment Report. Zambia Economic Recovery and Investment Promotion Credit (Cr. 2764-Za), Second Economic and Social Adjustment Credit; (Cr. 2910-Za) Public Sector Reform and Export Promotion Credit, (Cr. 3167-Za). Report No. 27053. Country Evaluation and Regional Relations Group. Operations

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Evaluation Department. The World Bank: Washington, DC � Zambia Consolidated Copper Mines Ltd. (2000a). Proposed disposal of the assets forming

the Konkola and Nchanga Divisions (including the Chingola Refractory Ore Dumps) and the Nampundwe Mine and grant of an option over the Nkana Smelter, Refinery and Acid Plants. Notice of an Extraordinary General Meeting of Zambia Consolidated Copper Mines Limited to be held on March 29, 2000.

� Zambia Consolidated Copper Mines Ltd. (2000b). Transformation of the Company from a Mining to an Investment Holding Company and Change of Name thereof. Notice of an Extraordinary General Meeting of Zambia Consolidated Copper Mines Limited to be held on June 21, 2000.

� Zambia Extractive Industry Transparency Initiative (ZEITI) Secretariat (2011). Summary Booklet of the Zambia Extractive Industries Transparency Initiative Reconciliation Report for 2008. Downloaded from www. Zambiaeiti.org.zm

KENYA

NAMIBIA

TANZANIA

DEM. REP.OF CONGO

ANGOLA

MOZAMBIQUE

BOTSWANA

ZAMBIA

GABON

MALAWI

BURUNDI

RWANDA

Cabinda(ANGOLA)

ZIMBABWE

CONGO

SOUTH AFRICA

SWAZILAND

LESOTHO

IBRD 32243

FEBRUARY 2003

Zambezi

SOLWEZI

Kasempa

MANSA

Kapiri Mposhi

Mkushi

Serenje

Kawambwa

Nchelenge

KASAMA

Isoka

Mbala

Mpika

Lundazi

CHIPATA

Katete

ChirunduMagoye

Namwala

MumbwaKaoma

Kataba

Mulobezi

MonzeChisekesi

PembaGwembe

Choma

SinazongweKalomoZimba

Sesheke

MONGU

Lukulu

Mwinilunga

N O R T HW E S T E R N

W E S T E R N

S O U T H E R N

LUSAKA

C E N T R A L

COPPERBELT

L U A P U L A

N O R T H E R N

EASTERN

T A N Z A N I A

M A L AW I

MO

ZA

MB

IQU

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M O Z A M B I Q U E

Z I M B A B W E

BOTSWANA

NAMIBIA

A N G O L A

D E M . R E P.O F C O N G O

Z A M B I A

COPPERBELT MINING

Mazabuka

LUSAKA

Kafue

LIVINGSTONE

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50 100 150 200 250 KILOMETERS

S O U T H

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I N D I A N

O C E A N

Zambezi R.

Lake Kariba

Mita HillsDam

Mulungushi Dam

Kafue R.Itezhi-TezhiDam

Zambezi R.

LakeBangweulu

LakeMweru

LakeMweru

Wantipa

LakeTanganyika

L a k e

M a l a w i

To Lobito

To Mbeya

To Harare

10°

12°

14°

32° 34°

This map was produced by the Map Design Unit of The World Bank.The boundaries, colors, denominations and any other information shownon this map do not imply, on the part of The World Bank Group, anyjudgment on the legal status of any territory, or any endorsement oracceptance of such boundaries.

Ngoma

Senanga

Kalabo

Samfya

KaputaKasaba

Bay

Mfuwe

Nakonde

Lubumbashi

Kabompo

Petauke

Chadiza

Chinsali

Chama

Mporokoso

Luwingu

SELECTED MINING SITES

TRUNK AND MAIN ROADS

RAILROADS

PROVINCE CAPITALS

NATIONAL CAPITAL

PROVINCE BOUNDARIES

INTERNATIONAL BOUNDARIES

LusakaSiavonga Kariba

Masuku

Manyinga

Jimbe

Mutanda

Kasumbalesa

Sakania

Mpongwe

Luangwa

Mpulungu

To Victoria Falls / Bulawayo

Luan

gwa

R.

Nampundwe

KafueR.

Kafue

R.

Kafue R.

28° 32° 34°

16°

30°28°26°22°

14°

16°

12°

10°

26°24°22°

Konkola

Chingola Mufulira

Kalulushi Kitwe

NDOLALuanshya

KABWE

Kansanshi

Nampundwe

Chingola

NDOLA

Luanshya

Kitwe

Chililabombwe

Nchanga South

Lulamba

Kamenza

Konkola

Nchanga North ButondoKankoyo

MufuliraKantanshi

MindoloMiseshi

ChachachaTwibukishe

Kalulushi NkanaWest

Wusakili

Natwange

Mpatamatu

Roan

LuanshyaTownship

CHILILABOMBWE

NCHANGA

MUFULIRA

CHAMBISHI

CHIBULUMA

N’KANA

LUANSHYA

BALUBA

BWANAMKUBWA

NDOLAURBANDISTRICTNDOLA

RURAL DISTRICT

NDOLARURAL

DISTRICT

LUANSHYADISTRICT

KITWE

DISTRICT

MUFULIRADISTRICT

KALULUSHI DISTRICT

CHINGOLADISTRICT

CHILILABOMBWEDISTRICT

DEM. REP.OF CONGO

Kafu

e

River

KafueRiver

IBRD 32244

FEBRUARY 2003

27°45'

12°15'

12°30'

12°45'

13°00'

12°15'

12°30'

12°45'

13°00'

28°00' 28°15' 28°30'

27°45' 28°00' 28°15' 28°30' 28°45'

28°45'

Lusaka

LakeTanganyika

WESTERN LUSAKA

SOUTHERN

CENTRAL EASTE

RN

NORTHERN

LUA

PULA

COPPERBELTNORTHWESTERN

DEM. REP.OF CONGO

A N G O L A

NAMIBIA

BOTSWANAZ I M B A B W E

MOZAMBIQUE

MA

LAW

I

TA N Z A N I A

25° 30°

25°

15°

10°

ZAMBIA

A F R I C A

This map was produced by the Map Design Unit of The World Bank.The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

0 5 10 15

0 5 10 15 Miles

20 Kilometers

Z A M B I ACOPPERBELT MINING SITES

MINES

DISTRICT HEADQUARTERS

PROVINCE HEADQUARTERS

BUILT-UP AREAS

RIVERS

MAIN RAILROADS

MAIN GRAVEL ROADS

MAIN TARMAC ROADS

DISTRICT BOUNDARIES

INTERNATIONAL BOUNDARIES

KONKOLA