FOR OFFICIAL USE ONLY Report No: PAD4120 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT APPRAISAL DOCUMENT ON A PROPOSED GRANT IN THE AMOUNT OF SDR3.6 MILLION (US$5 MILLION EQUIVALENT) TO THE SOLOMON ISLANDS FOR A SOLOMON ISLANDS SUSTAINABLE MINING DEVELOPMENT TECHNICAL ASSISTANCE PROJECT NOVEMBER 5, 2021 Energy & Extractives Global Practice East Asia And Pacific Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Exchange Rate Effective September 30, 2021 Currency Unit = SDR 1 = US $1.40887 US$ 1 = SDR 0.70979 FISCAL YEAR January 1 - December 31 Regional Vice President: Manuela V Ferro Country Director: Stephen Ndegwa Global Director: Demetrios Papathanasiou Practice Manager: Rachel Perks Task Team Leader(s): Wilfred Lus ABBREVIATIONS AND ACRONYMS CPF Country Partnership Framework DFAT Australia’s Department of Foreign Affairs and Trade EGPS Extractives Global Programmatic Support EIA Environmental Impact Assessment FCV Fragility, conflict and/or violence-affected FM Financial Management GBV Gender Based Violence GDP Gross Domestic Product GHG Greenhouse Gas GRM Grievance Redress Mechanism GRS Grievance Redress System IDA International Development Association IPF Investment Project Financing M&E Monitoring and Evaluation MECCDMM Ministry of Environment, Climate Change, Disaster Management and Meteorology MDTF Multi Donor Trust Fund MMERE Ministry of Mines, Energy and Rural Electrification MOFT Ministry of Finance and Treasury NDS National Development Strategy NMP National Minerals Policy PDO Project Development Objective PLP-ESS Pacific Learning Partnership for Environmental and Social Sustainability RAMSI Regional Assistance Mission in the Solomon Islands SBD Solomon Islands Dollars SCD Systematic Country Diagnostic SDR Special Drawing Rights SEA Sexual Exploitation and Abuse SH Sexual Harassment SIG Solomon Islands Government SIMGov Solomon Islands Mining Governance Project SMI Sustainable Mining Institute SPREP Secretariat of the Pacific Regional Environment Program TNC The Nature Conservancy USD United States Dollar The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) TABLE OF CONTENTS DATASHEET ........................................................................................................................... 1 I. STRATEGIC CONTEXT ...................................................................................................... 6 A. Country Context................................................................................................................................ 6 B. Sectoral and Institutional Context .................................................................................................... 7 C. Relevance to Higher Level Objectives............................................................................................. 11 II. PROJECT DESCRIPTION.................................................................................................. 12 A. Project Development Objective ..................................................................................................... 12 B. Project Components ....................................................................................................................... 13 C. Project Beneficiaries ....................................................................................................................... 22 D. Results Chain .................................................................................................................................. 23 E. Rationale for Bank Involvement and Role of Partners ................................................................... 26 F. Lessons Learned and Reflected in the Project Design .................................................................... 27 III. IMPLEMENTATION ARRANGEMENTS ............................................................................ 29 A. Institutional and Implementation Arrangements .......................................................................... 29 B. Results Monitoring and Evaluation Arrangements......................................................................... 30 C. Sustainability................................................................................................................................... 30 IV. PROJECT APPRAISAL SUMMARY ................................................................................... 30 A. Technical and Economic Analysis ................................................................................................... 30 B. Fiduciary.......................................................................................................................................... 33 C. Legal Operational Policies ............................................................................................................... 33 D. Environmental and Social ............................................................................................................... 33 V. GRIEVANCE REDRESS SERVICES ..................................................................................... 35 VI. KEY RISKS ..................................................................................................................... 35 VII. RESULTS FRAMEWORK AND MONITORING ................................................................... 38 ANNEX 1: Implementation Arrangements and Support Plan .......................................... 47 ANNEX 2: Solomon Islands National Minerals Policy Summary ...................................... 54 ANNEX 3: Climate Co-benefits Table.............................................................................. 56 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) DATASHEET BASIC INFORMATION BASIC_INFO_TABLE Country(ies) Project Name Solomon Islands Solomon Islands Sustainable Mining Development Technical Assistance Project Project ID Financing Instrument Environmental and Social Risk Classification Investment Project P173018 Substantial Financing Financing & Implementation Modalities [ ] Multiphase Programmatic Approach (MPA) [ ] Contingent Emergency Response Component (CERC) [ ] Series of Projects (SOP) [✓] Fragile State(s) [ ] Performance-Based Conditions (PBCs) [✓] Small State(s) [ ] Financial Intermediaries (FI) [ ] Fragile within a non-fragile Country [ ] Project-Based Guarantee [ ] Conflict [ ] Deferred Drawdown [ ] Responding to Natural or Man-made Disaster [ ] Alternate Procurement Arrangements (APA) [ ] Hands-on Enhanced Implementation Support (HEIS) Expected Approval Date Expected Closing Date 30-Nov-2021 31-Mar-2027 Bank/IFC Collaboration No Proposed Development Objective(s) To strengthen the capacity of regulatory institutions to implement revised mining and related laws consistently, transparently and effectively. Page 1 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) Components Component Name Cost (US$, millions) Completion of the Regulatory Framework 0.60 Strengthening the Capacity of Regulatory Institutions 3.00 Project Management 1.40 Organizations Borrower: Solomon Islands Implementing Agency: Ministry of Mines, Energy and Rural Electrification PROJECT FINANCING DATA (US$, Millions) SUMMARY -NewFin1 Total Project Cost 5.00 Total Financing 5.00 of which IBRD/IDA 5.00 Financing Gap 0.00 DETAILS -NewFinEnh1 World Bank Group Financing International Development Association (IDA) 5.00 IDA Grant 5.00 IDA Resources (in US$, Millions) Credit Amount Grant Amount Guarantee Amount Total Amount Solomon Islands 0.00 5.00 0.00 5.00 National PBA 0.00 5.00 0.00 5.00 Total 0.00 5.00 0.00 5.00 Page 2 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) INSTITUTIONAL DATA Practice Area (Lead) Contributing Practice Areas Fragile, Conflict & Violence, Governance, Macroeconomics, Energy & Extractives Trade and Investment, Social Sustainability and Inclusion Climate Change and Disaster Screening This operation has been screened for short and long-term climate change and disaster risks SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT) Risk Category Rating 1. Political and Governance ⚫ Substantial 2. Macroeconomic ⚫ Moderate 3. Sector Strategies and Policies ⚫ Substantial 4. Technical Design of Project or Program ⚫ Moderate 5. Institutional Capacity for Implementation and Sustainability ⚫ Moderate 6. Fiduciary ⚫ Moderate 7. Environment and Social ⚫ Substantial 8. Stakeholders ⚫ Substantial 9. Other ⚫ Moderate 10. Overall ⚫ Substantial COMPLIANCE Policy Does the project depart from the CPF in content or in other significant respects? [ ] Yes [✓] No Does the project require any waivers of Bank policies? [ ] Yes [✓] No Page 3 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) Environmental and Social Standards Relevance Given its Context at the Time of Appraisal E & S Standards Relevance Assessment and Management of Environmental and Social Risks and Impacts Relevant Stakeholder Engagement and Information Disclosure Relevant Labor and Working Conditions Relevant Resource Efficiency and Pollution Prevention and Management Relevant Community Health and Safety Relevant Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Relevant Biodiversity Conservation and Sustainable Management of Living Natural Relevant Resources Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Relevant Local Communities Cultural Heritage Relevant Financial Intermediaries Not Currently Relevant NOTE: For further information regarding the World Bank’s due diligence assessment of the Project’s potential environmental and social risks and impacts, please refer to the Project’s Appraisal Environmental and Social Review Summary (ESRS). Legal Covenants Sections and Description 1. The Recipient shall vest responsibility for carrying out the day-to-day coordination, management and implementation of the Project to its MMERE, with the MMERE Permanent Secretary serving as the Project Director. Schedule 2, Section I.A.1. Sections and Description 2. No later than one (1) month from the Effective Date (or such later date as may be agreed in writing between the Recipient and the Association), the Recipient shall establish and thereafter maintain throughout the period of Project implementation the Project Steering Committee (“PSC”), with composition, resources, and terms of reference acceptable to the Association. Schedule 2, Section I.A.2. Sections and Description Page 4 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) 3. No later than one (1) month from the Effective Date (or such later date as may be agreed in writing between the Recipient and the Association), the Recipient shall establish and thereafter maintain throughout the period of Project implementation the Technical Working Group (“TWG”), with composition, resources, and terms of reference acceptable to the Association, to provide operational oversight of the Project at a technical level. Schedule 2, Section I.A.3. Sections and Description 4. No later than three (3) months from the Effective Date (or such later date as may be agreed in writing between the Recipient and the Association), the Recipient shall establish within the MMERE and thereafter maintain throughout the period of Project implementation the Project Management Unit (“PMU”), with composition, resources, and terms of reference acceptable to the Association. Schedule 2, Section I.A.4. Sections and Description 5. No later than two (2) months after the Effective Date (or such later date as may be agreed in writing between the Recipient and the Association), the Recipient through the MMERE shall prepare and adopt a Project Operations Manual, satisfactory to the Association. Schedule 2, Section I.B.1. Sections and Description 6. The Recipient through the MMERE’s PMU shall prepare and furnish to the Association, no later than two (2) months after the Effective Date and February 1 of each subsequent year during the implementation of the Project (or such later interval or date as the Association may agree) following approval by the PSC, for the Association’s review and no-objection, an Annual Work Plan and Budget. Schedule 2, Section I.C.1. Sections and Description 7.i The Recipient shall ensure that the Project is carried out in accordance with the Environmental and Social Standards, in a manner acceptable to the Association. Schedule 2, Section I.D.1. 7.ii Without limitation upon paragraph 1 above, the Recipient shall ensure that the Project is implemented in accordance with the Environmental and Social Commitment Plan, in a manner acceptable to the Association. Schedule 2, Section I.D.2. The Recipient shall ensure that: (a) all consultancies related to technical assistance, design and capacity building under the Project, the application of whose results could have environmental, social and health and safety implications, shall only be undertaken pursuant to terms of reference reviewed and found satisfactory by the Association; and (b) such terms of reference shall require the technical assistance, design and capacity building activities to take into account the requirements of the applicable ESSs. Schedule 2, Section I.D.7. Sections and Description 8. The Recipient shall ensure that all technical assistance under the Project shall be: (a) consistent with the principles and standards in the NMP and international best practice; and (b) satisfactory to the Association. Schedule 2, Section IV.A. Conditions Page 5 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) I. STRATEGIC CONTEXT A. Country Context 1. Solomon Islands is a small low-income archipelagic island country in the south-west Pacific Ocean. It consists of 997 islands with a total land area of 2,840 km2 spread over 1.34 million km2 of ocean (an area larger than France, Germany and Poland combined). The population of 721,458 is growing fast but is dispersed across 90 inhabited islands. 1 The urbanization rate (17 percent) is one of the lowest in the world. Distances between islands are significant: the north western Choiseul group is approximately 1,500 km from the south eastern Santa Cruz Islands - a distance equivalent to that between London and Rome. Distances to major export markets are even greater, with the capital Honiara over 2,000 km from urban centers on Australia’s eastern coast. 2. Solomon Islands is highly susceptible to natural disasters and increasingly to climate change. Located in the Pacific Ring of Fire and within the Pacific cyclone belt, the country is highly prone to natural disasters such as earthquakes, volcanic eruptions, cyclones, tsunamis, coastal and river flooding and landslides. Given its location and physical characteristics, it has been suffering from extreme events associated with climate vulnerability, including sea level rise, storm surges, and increased precipitation and flooding. The April 2014 flash floods were one of the strongest on record and cut off several communities from access to Honiara by road. Many significant earthquakes have occurred in the past, including the December 2016 earthquake of magnitude 7.8 that struck some 130 km from Honiara. With climate change it is anticipated that average annual and seasonal rainfall will increase over the course of the 21st century, extreme rainfall days are likely to occur more often and the intensity and frequency of days of extreme heat will rise.2 3. The incidence of poverty remains high - an estimated 25.1 percent of Solomon Islanders live below the global extreme poverty line - and economic opportunity is distributed very unevenly. Economic activity in the formal sector is narrowly based and heavily concentrated on Guadalcanal, dominated by public service employment in Honiara. Plantation, logging and fishery based commercial activities have dominated since Independence in 1978, with virtually no structural change observed in the economy in over four decades. Youth unemployment and under- employment, as well as economic stagnation in more remote areas are enduring challenges. The economy is vulnerable to external shocks because of dependence on imports of critical commodities and fuel, combined with volatility in the prices of export commodities. Moreover, revenues generated by logging, which is the main export commodity, are expected to decline in the medium term. 4. With an absence of new drivers of growth and challenges of geography and demography economic growth has been sluggish. Recent GDP growth has averaged some 3 percent. Subsistence and semi-subsistence agriculture (including fisheries) remains of overwhelming importance to security, economic growth, and equity. It is of immediate and direct importance to the well-being of the rural population, as well as many urban residents. Domestic revenue mobilization is skewed towards trade taxes and there is limited scope to shift the tax burden towards personal and business taxes. Reliance on external support, especially official concessional finance, remains high. These deep economic challenges have been exacerbated by the global COVID-19 pandemic and related restrictions on economic activity and the delivery of basic services. 1This is according to preliminary figures from the 2019 Census 2Pacific Climate Change Science Program: Current and Future Climate of the Solomon Islands. https://www.pacificclimatechangescience.org/wp-content/uploads/2013/06/13_PCCSP_Solomon_Islands_8pp.pdf Page 6 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) 5. Solomon Islands is categorized as a fragility, conflict and/or violence-affected (FCV) country. It underwent “the tensions”, a period of civil conflict from 1998 to 2003, during which GDP is estimated to have declined by 9 percent. While often characterized as an ethnic conflict, “the tensions” had multiple political and economic causes, including the disproportionate concentration of economic development in and around Honiara compared to the rest of the country. There has been no recurrence of “the tensions”, nevertheless, no government has survived a full term since then and several national elections have been marred by rioting and other violence. The Regional Assistance Mission to Solomon Islands (RAMSI), a partnership between Solomon Islands and fifteen Pacific countries that was in place between July 2003 and June 2017, played a key role in helping Solomon Islands negotiate its fragility. While this helped to rebuild public institutions, they are for the most part extremely limited in reach and Solomon Islands remains a fragile country. 6. Economic and social challenges stem in part from a difficult adaptation of traditional Melanesian governance structures to commercially driven activities in rural areas, such as logging and mining. These difficulties manifest themselves in a variety of ways, including disputed authority, corruption and the denial of access to justice for those without voice. The SIG has recently signaled its intent to review provisions of the Constitution that address land tenure, access to land and natural resources for public and commercial use and the rights of landowners and rural communities in this regard. B. Sectoral and Institutional Context 7. For over two decades the development of Solomon Islands’ mineral resources has been talked about as a new source of economic growth and diversification. The country is prospective for a range of precious and base metallic minerals, especially gold, copper and nickel, and hosts bauxite in several locations. Yet even while the mining sector globally enjoyed several bumper years on the back of mineral-intensive growth in emerging economies earlier this century, the country failed to take advantage of this opportunity. The mining sector makes only a minor contribution to the economy of Solomon Islands today, far below its potential. The sector has accounted for less than one percent of GDP, except for the period 2011-2013 when it jumped to some 5 percent while the Gold Ridge mine was temporarily in full production. Since the mine shut down, the share of mining in GDP has fallen to preceding levels and in 2018 was just 0.5 percent. The evolution of mineral exports from 2006-2019 is shown in Figure 1. Figure 1. Mineral Export Value Source: Solomon Islands Central Bank 8. Mining operations have the potential to become a vital part of the Solomon Islands economy and to account for Page 7 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) an increased share of gross domestic production, exports, and government revenues as outlined in Figure 2. The development of the mining sector becomes even more critical considering the expected decline in log production – the main driver of economic growth and largest contributor to government revenues – over the medium-term. The decline of logging presents major challenges to economic growth and broader macroeconomic sustainability, and mining is arguably the only industry with any prospect of filling the macroeconomic space currently occupied by logging.3 Figure 2. Economic Contribution of Mining Solomon Gold Ridge Nickel Islands Forestry Minerals Mine Operations in (2019) (2019) (2019) (early 2011) Isabel (est.) Value of Exports, SI$m 3,758 2,601 43 1,080 3,680 Employment (est. full-time jobs) 1/ 60,643 5,000- n/a 400 1,000 7,000 Investment SI$m 388 n/a n/a 1,072 10,000 1/ Total contributions to the National Provident Fund as a proxy for formal employment Source: IMF, World Bank, Central Bank of Solomon Islands, Gold Ridge annual reports 9. Gold Ridge, the largest mine, has had a checkered past. The gold mine is on Guadalcanal, not far from Honiara. It was the first significant mineral deposit to attract foreign investment starting in the late 1990s. However, operation of the mine has been plagued by repeated social and economic challenges and ownership has changed hands several times. The mine operated at capacity from 2011-2013, producing some 1.5 – 2 tonnes of gold annually. It shut down in 2014 after the last foreign investor, facing losses and mounting risks that the tailings dam would fail due to flooding, gave up its interest. This culminated in acquisition of the mining rights by a local landowner company. The most recent proposal to re-open the mine was in September 2019 when a foreign consortium announced it would be investing in the re-start and expansion of Gold Ridge by mid-2021. There have been attempts in recent months to secure access to the mine site in discussions with local communities and artisanal miners but the restart is likely to be delayed. 10. In recent years several small but high-grade bauxite deposits on Rennell and Choiseul have been mined. This is against a background of sustained demand for raw material from China to feed its aluminum industry. However, as in several other countries in the region, the types of mining operations that have been launched rely on low cost extraction methods targeting easily accessed near-surface pockets of bauxite. Unfortunately, this is a segment of the mining industry open to companies with limited sophistication and, as has become increasingly evident, scant regard for safe operating practices and the environmental and social harm this can lead to. 11. Nickel deposits have also attracted increased attention, although mining has yet to commence. Laterite deposits found on San Isabel and Choiseul are large enough and of sufficiently high quality to have been of interest to investors for many years, especially at times of higher nickel prices prompted by policy actions in other source countries which interrupted or threatened to interrupt nickel supplies. A major player in the international nickel market held an interest in several nickel deposits in Solomon Islands before electing to withdraw in 2017 following protracted court actions to try to safeguard its mineral rights. It had been evaluating options to mine nickel deposits on a large scale, involving significant investment in drying, sorting, loading and shipping facilities (see cost data in Figure 2). A junior exploration company secured an interest in a license previously in dispute at San Jorge only for 3 Solomon Islands Systematic Country Diagnostic (2017) Page 8 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) its export permit to then be denied and legal actions taken to prevent it from conducting business in Solomon Islands. Other companies have secured nickel exploration rights on San Isabel and hope to exploit scattered nickel deposits, directly shipping high-grade material to for processing in export markets. 12. The level of interest in other minerals has ebbed and flowed, with gold attracting most interest, followed by copper. However, few ventures have advanced to close spaced drilling and detailed technical studies, let alone full mine feasibility. The most promising opportunities are on islands on trend with Bougainville’s copper-gold porphyry resources and a belt of nickel laterite. However, the mineral resource base, both terrestrial and marine, is yet to be fully mapped and interpreted using modern exploration techniques. 13. Artisanal mining is present in some locations, mostly where gold deposits are indicated and in adjacent river systems. This is almost all informal and subject to only limited regulatory supervision. The Gold Ridge mine has been a focus for in-migration by families hoping to exploit exposed in-pit areas during times when industrial mining has stopped. In October 2020 efforts to re-locate families based on negotiated terms were reported to be in progress. Gold tends to be the main interest of artisanal miners, with elevated gold priced triggered by the global COVID-19 pandemic spurring higher levels of activity. 14. As in many resource-rich countries, inconsistent management of the mining sector and low levels of regulatory capacity have played a role in inhibiting investment by capable and responsible mining companies and have allowed poor performing operators to gain a foothold in the sector. Governance challenges include: a. Weak property rights in general and, especially, friction between rights to explore for and mine minerals and customary use of land and natural resources. This has generated problems in managing relations between the government and miners with landowners, communities and women (who are often excluded from local and national level decision making), generating disputes over land access, use of renewable natural resources, community benefit sharing and local development. Adherence by mining operators to good corporate social responsibility practices has been inadequate and associated with these deficiencies have been social problems resulting from the presence of a non-local workforce and population influx, with rises in GBV being observed, for example; b. Low levels of regulatory capacity at central and provincial levels across a range of core regulatory functions, including licensing, monitoring compliance, providing technical and geodata services, revenue collection and management of the environment and land. The mining sector regulator operates on a meagre budget and has had difficulty attracting and retaining qualified staff as well as providing itself with facilities and equipment commensurate with its functions. It is widely perceived to lack capacity to monitor mineral exploration and mining operations and assure compliance to an adequate standard. Its ability to provide geodata services, including safe storage and management of data, interpretation and mapping and promoting exploration is quite limited. Poor coordination among regulatory institutions, especially on matters of revenue, the environment and land, owing to insufficient harmonization of laws and administrative arrangements has sometimes undermined effective action by the government; c. High levels of discretion in decision making are relied upon with relatively few checks and balances in place and limited scope for officials and leaders to be held to account. The conduct of the Minerals Board, which is vested with authority to grant and cancel rights, and issue penalties, has faced criticism, with some stakeholders considering it as too opaque and arbitrary in the use of the discretionary powers given to it in Page 9 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) the mining legislation. The Minerals Board is comprised of senior government ministry officials and provincial government representatives and is not presently required to include participation of civil society or other groups. Too many regulatory matters have ended up in dispute, including legal challenges against Board decisions, or generated grievances for which formal channels for redress have proven inadequate; d. Challenges have also been faced in safeguarding the national interest to secure a fair share of revenues from mining and generate wider economic benefits from mining, such as jobs and local supply chain development. Since each mining project involves ad hoc negotiation of key terms and conditions and low capacity for implementation exists, concerns persist that asymmetries in access to information and negotiating skills disadvantage the government and that royalties and taxes and other economic benefits are being waived or avoided. An example is waivers of export duty and challenges faced in collecting royalties from companies mining bauxite, for which the relevant valuation basis is not yet settled. Other examples are of a heavy reliance by some mining companies on expatriate labor, even in jobs for which local people have requisite skills. e. Lastly, mining has been associated with environmental harm. Environmental challenges derive from the fragile ecology and vulnerability to natural and man-made disasters, coupled with low quality operating practices employed by many of the companies that have secured mineral rights. Heavy rainfall has raised repeated concern that the tailings dam at Gold Ridge mine would overflow or burst, exposing downstream communities to potential contamination. Seismic events can also increase the risk of tailings dam failure. Extreme weather, including cyclones, increases the likelihood of catastrophic incidents, when coupled with poor performance by operators and regulators, such as the bauxite and oil spills from mining vessels in Rennell and Bellona Province. 15. In sum, the mining sector has for some time substantially under-performed in terms of overall levels of investment, the quality of companies that operate in the sector and the capability of regulatory institutions . The sector has therefore generated few of the benefits that sustained investment by well-funded, technically advanced and responsible miners could offer in a well-governed regulatory environment. Communities instead experience the negative impacts of mining, generating low levels of trust in both mining company and government’s capacity and commitment to high performance standards. 16. If responsible investors were to be re-assured about the conditions for launching risky long-term investments in mineral exploration and mining in Solomon Islands, there is the possibility of the mining sector eventually becoming a significant contributor to exports, foreign exchange, government revenues, employment and local development opportunities in some of the more remote parts of the archipelago. International mining companies have been following closely the attempts of successive governments to reform mining sector management and they await completion of the Mining Bill, associated regulations and related reforms. 17. Among communities, and in civil society more generally, expectations of mining being able to generate jobs, local development and other benefits are matched by fears that mining will, like logging before it, generate negative environmental and social impacts locally while benefits flow to others, either in Honiara or abroad. Mining has to date been associated with unmet expectations, whether in the case of Gold Ridge, in which resentment was closely tied to “the tensions” in the early 2000s, or more recent experiences with unrehabilitated mining sites and coastal pollution from bauxite mining on Rennell, in relation to which royalty proceeds have been negligible and few jobs and local opportunities have been created. These stakeholders also seek assurance that their interests will be upheld Page 10 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) and that, as a result, they will see more equitable sharing of benefits from mining, especially at the community level and among women and youths, often sidelined from male-dominated decision making in relation to land and governance. 18. In response to these challenges, and after several rounds of stakeholder consultation, SIG developed a National Minerals Policy (NMP), the first of its kind, which Cabinet endorsed in March 2017 . This comprehensive and ambitious policy demonstrated a national commitment to strengthen mining governance, make decisions more transparently and inclusively, offer greater investment certainty and create a system that better protects community interests. A summary of the NMP is provided at Annex 2. 19. Among the first measures taken by SIG to implement the NMP was to launch a review and prepare revisions of the mining legislation. The Mines and Minerals Act of 1990 inherited many of the features of legislation prevailing in the colonial period. When development of the Gold Ridge Mine was under discussion in the mid-1990s, special contractual provisions had to be crafted to fill gaps in the legislation and tailor terms for an investment of its size and significance to Solomon Islands’ economy. Although amended from time to time, it became increasingly apparent that the Act was incompatible with the needs of the sector and the protection of the interests of a range of stakeholders. The review was launched in 2018 after adoption of the NMP and steered by an Inter-Ministerial Taskforce chaired by the Permanent Secretary of the Ministry of Mines, Energy and Rural Electrification (MMERE). This resulted in drafting instructions in mid-2018 which formed the basis of an initial mining bill prepared under guidance of the Office of the Attorney-General by the end of 2018. At the time of writing the Mining Bill had undergone further rounds of development after comments were received on drafts of the Mining Bill from several stakeholders, including industry and some NGOs. The Inter-Ministerial Taskforce had aimed to have completed new drafting instructions in the first half of 2020 so that a revised version of the Mining Bill would be ready for Cabinet endorsement and tabling in parliament late in that year. This timetable was impacted by the COVID-19 related restrictions and wider impacts on government business, nevertheless, a further revised draft Mining Bill underwent review in SIG in 2021 with a view to its finalization and adoption by July 2021. C. Relevance to Higher Level Objectives 20. The Project aligns with the World Bank Group’s Country Partnership Framework (CPF) for Solomon Islands for FY2018–FY2023 (Report No. 122600-SB). The CPF is anchored in supporting Solomon Island’s resilience as a FCV country facing challenges of economic geography and state fragility. Part of this involves supporting the development of productive sectors that can contribute to exports and revenues as the contribution of logging declines. It notes that Solomon Islands’ ability to secure sustained economic growth will rest on the private sector, and on new and expanded developments in mining, fisheries, and tourism. “Reaping the gains of investment in new mining developments will require that Solomon Islands ensure effective governance in the sector to: (i) avoid and mitigate the substantial risks associated with environmental degradation; and (ii) ensure that the benefits generated are maximized and spread as widely as possible through public investments in health and education, and through linkages to agriculture, fisheries, transport, and other services.” (Paragraph 16, CPF) 21. Strengthening the mining regulatory framework is a CPF objective under Focus Area 2: Promoting Inclusive and Sustainable Growth. When launched the CPF anticipated modest support to SIG in the CPF period to complete the initial steps in implementing the NMP, with potential to step up this support, through a future IPF, if good progress was made: “If this phase is successful, further assistance will be provided to: (i) modernize the mineral tenements management system to ensure fairness and attract responsible and capable miners; (ii) improve mine inspection to Page 11 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) improve compliance with mine safety and proper mining practices; (iii) generate, collate, and manage valuable geodata to make better-informed decisions about allocating mineral rights; (iv) enhance revenue administration to avert revenue leakage; and (v) define and improve compliance with appropriate environmental and social management standards.” (Paragraph 71, CPF) 22. The Project reflects key elements of SIG’s National Development Strategy 2016-2035, particularly sustainable and inclusive economic growth. For the mining sector, SIG priorities are to: (i) review and improve compliance the Mining Act in collaboration with various stakeholders, including landowners, to improve sustainable mining resource management; (ii) introduce and facilitate environmental and economic assessments, licensing agreements, accountability laws and policies between potential investors, landowners, concerned communities and government on exploitation of the mineral resources; (iii) undertake surveys and assessments to identify mineral and hydro- carbon resources potential sites both in-shore and offshore; and (iv) encourage establishment of improved research facilities to foster rigorous assessment of resources and provide quality advice to decision makers and investors on the potential of investment. (Medium Term Strategy 1, pp 20) 23. The Project will contribute to implementation of SIG’s National Minerals Policy. The World Bank supported SIG for several years to develop the NMP by assisting with access to expertise and helping to organize stakeholder consultation. After the NMP was approved in 2017, SIG requested further support to assist it in implementing the NMP. The World Bank responded by granting SIG US$400,000 to implement the Solomon Islands Mining Governance (SIMGov) Project (P162737). The grant was provided from the Extractives Global Programmatic Support Multi Donor Trust Fund (EGPS). The grant was approved in February 2018 and closed at the end of June 2019. In October 2019, SIG requested further support to sustain the preparation of new mining legislation and included mining sector technical assistance in its concessional borrowing program in the IDA19 cycle. This Project will build on and expand this support to build capacity needed to implement the NMP in line with the CPF and the National Development Strategy. II. PROJECT DESCRIPTION A. Project Development Objective PDO Statement To strengthen the capacity of regulatory institutions to implement revised mining and related laws consistently, transparently and effectively. Project Development Objective Indicators • Increased monitoring of contractual and regulatory arrangements and their enforcement to ensure alignment with National Minerals Policy and applicable international standards (Yes/No) • More credible public regulatory institutions that can assure higher performance standards • Reduced time between lodging applications and approval hearings (Months) • An increase in the average ratio of actual royalty collection to collections at the nominal royalty rate (reduced leakage) (Percentage) • Extent of forest loss in mining areas (Percentage) • Proportion of licensed mining operations for which a recent inspection report has been uploaded to a MMERE Page 12 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) inspection database (Cumulative) (Percentage) • Transparency of mining data and in the performance of public regulatory institutions is improved • Comprehensive public disclosure of cadastral records of license applications and awards and subsequent license management (Yes/No) • Stakeholder participation in the governance of the mining sector • Participation rate of women in committees and boards established by communities to negotiate access, community development and other agreements provided for in the mining legislation (Cumulative) (Percentage) • Women’s employment in mining sector increased (Cumulative) (Percentage) Refer to Section D: Results Chain for further details. B. Project Components 24. The Project will support implementation of the NMP. The NMP aims to achieve stronger mining sector governance. The project will finance activities that enable SIG to i) complete the regulatory framework in line with the NMP, beginning with enactment of a new Mining Act, and ii) build capacity of government regulatory institutions to fulfill their functions consistently, transparently and effectively. 25. The Project will be implemented over five years and disburse US$5 million in the form of an IPF grant. 26. The Project activities are organized in three components: Component 1: Completion of the Regulatory Framework (US$ 0.6m). This component will support MMERE to complete the design of the regulatory framework in line with the NMP. The activities in this Component are organized in two sub-components: a. Sub-component 1.1: Policy, Plans and Legislation (US$ 0.45m). The Project will finance the following activities to support the preparation of policy, plans and legislation needed to implement the NMP with legal, policy and technical expertise and stakeholder consultations connected therewith: i. conduct a Strategic Environmental and Social Assessment (SESA) of mineral development in Solomon Islands; ii. complete drafting of the Mining Bill, Mining Regulations and model form agreements to reflect the NMP (see summary of NMP in Annex 2), the SESA and appropriate internationally recognized technical, environmental (including on avoiding deforestation and river pollution and other impacts that affect communities’ adaptive capacity to climate change) and social (including gender) management standards which license holders must comply with; iii. update the mines occupational health and safety legislation in line with internationally recognized standards; iv. prepare regulations, guidelines and protocols on matters beyond the scope of mining legislation to better harmonize mining-relevant regulation of (A) land administration; (B) environmental and social management, including impacts of mining on climate adaptation and mitigation Page 13 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) (especially avoiding damage to forests and soil) in line with relevant international commitments4; and (C) employment and community level development, to include gender considerations (especially minimum requirements for local employment incorporating gender and equity considerations); and v. prepare regulations, guidelines and protocols on matters beyond the scope of mining legislation to better harmonize mining-relevant regulation of taxation and trade, to include (A) mineral royalties, taxes and fees; (B) mineral revenue collection; and (C) mineral revenue allocation among provinces and districts. b. Sub-component 1.2: Institutional Structures and Functions (US$ 0.15m). The Project will finance the following activities to support the design of institutional structures and functions necessary to implement the NMP with legal, policy and technical expertise and stakeholder consultations connected therewith: i. develop written mandates of MMERE and other regulators to implement the NMP and mining and related legislation, and design appropriate key performance indicators and coordination mechanisms; ii. design specific administrative measures to address the effective delivery of key functions across relevant ministries including those relating to: (A) core mining management functions (the Minerals Board, cadaster, mines inspection and geological survey); (B) landowner identification and access to land; (C) environmental and social impact assessment and related permitting; and (D) royalty, tax, customs collection, audit and export monitoring; iii. prepare staff development plans for MMERE and budgets consistent with its mandate and key performance indicators; and iv. develop a strategy to: (A) increase the share of female staff and technical experts within MMERE; (B) encourage female university enrolments in engineering and technology; (C) establish minimum standards for local employment and gender equality in mining which include provisions for non-discrimination in employment and wages, sexual harassment, and support for GBV survivors, introducing the principles of the Waka Mere Commitment to Action 5 to the mining sector. 27. Component 2: Strengthening the Capacity of Regulatory Institutions (US$ 3m). This component will support building capacity of government regulatory institutions to fulfill their functions consistently, transparently and effectively and support MMERE to overcome near term operational challenges. The activities in this Component are organized in five sub-components: a. Sub-component 2.1: Mineral Rights Management (US$ 1m). The Project will finance the following activities to support strengthening MMERE’s capacity to carry out its mineral rights management duties: i. Licensing: The project will finance knowledge sharing, specialized training and the acquisition of software and other tools to build capacity of MMERE in the licensing of mineral exploration and 4 Including the Solomons Climate Change Policy 2012–2017 (to be updated) and the National Action Plan for Adaptation. 5 Led by the International Finance Corporation and the Solomon Islands Chamber of Commerce and Industry, Waka Mere involved 15 of the largest companies in Solomon Islands committing to one or more of the following three focus areas: (i) promote women in leadership; (ii) build respectful and supportive workplaces; and (iii) increase opportunities for women in jobs traditionally held by men (IFC 2019). This include establishing policies and procedures on gender-based violence, establishing targets for women’s employment in male -dominated roles (such as transport) and other pro-active measures. Page 14 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) mining operations. This will include, inter alia: (A) the design and installation of a computerized geo- referenced cadastral system for managing the application, award and registration of mineral rights, based on the pre-feasibility assessment conducted under the SIMGov Project (DeVries), and with links to the geodata repository addressed in sub-Component 2.3; (B) the design of procedures and documentation to competitively tender mineral rights; (C) the design of criteria, procedures and documentation for conducting reviews of exploration, mining and mine closure plans submitted for approval by applicants; and (D) the design of criteria, procedures and documentation for conducting reviews of environmental and social impact assessments and management plans consistent with internationally recognized standards for environmental and social management including managing climate impacts such as deforestation. ii. Compliance: The project will finance knowledge sharing, specialized training and the acquisition of software and other tools to build capacity of MMERE to monitor and improve compliance with legislation and the conditions of licenses by license holders based on appropriate internationally recognized technical standards and approaches. This will include, inter alia: (A) the design of monitoring and reporting requirements to cover mineral resources and reserves, according to an internationally recognized classification system, exploration results, mining and mineral processing operations, including waste handling and the production, storage and disposal of minerals, closure and reclamation of mined areas and other aspect of mining operations; (B) the design of procedures and documentation for conducting site inspection based on a diagnostic conducted under the SIMGov Project (Walker); and (C) the design of procedures and documentation for undertaking any other monitoring and compliance measures provided for in legislation, including reducing illegal mining and associated deforestation. iii. Community Engagement: The project will finance knowledge sharing and specialized training to build the capacity of MMERE to engage responsibly with mining affected communities, especially women, youths and other groups, whose access and voice can be enhanced. This will comprise: (A) establishing a community liaison function in MMERE staffed by at least equal numbers of male and female officers 6 ; (B) preparing a MMERE Communications Strategy that embodies Citizen Engagement principles suited to the Solomon Islands context; (C) preparing a MMERE Gender and Social Inclusion Strategy which: (i) identifies barriers to women working in technical and other staff roles in the mining industry and lists actions the MMERE can take to promote greater participation of women in its own human resources, (ii) incorporates facilitation and outreach activities in community negotiations to ensure women participate in deliberations and are able to give informed consent, and (iii) monitors women’s participation in decision-making bodies (through encouraging representation and sharing data on progress to government and communities); (D) conducting awareness raising (in collaboration with other relevant government agencies at central and provincial levels) of stakeholders, through workshops, specialized training, and outreach publications and events, of local community planning needs at national and sub-national government levels and opportunities to benefit from fiscal revenue and mining company procurement of jobs, goods and services; (E) conducting mapping of existing GBV-related services in mining affected areas, delivering regular awareness raising sessions on GBV, consequences, and available services in mining-affected areas, and training staff on GBV and responding to any disclosures of violence; and (F) developing an MMERE annual work plan and budget based on the aforementioned activities. 6 This requirement will be specified in the Project Operations Manual. Page 15 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) b. Sub-component 2.2: Mineral Revenue Management (US$ 0.15m). The Project will support strengthening SIG’s capacity, across several relevant government agencies, to carry out its mineral revenue management duties with a focus on the following areas: i. Revenue Administration through capacity building in administering royalty, tax, value-added tax and customs, including physical and financial audit and effectively administer negotiations-based tax concessions. ii. Sub-national Revenue Management (administration of revenue allocations from mining revenues) through an assessment of needs and identification of suitable capacity building activities and funding sources. iii. Extractives Industry Transparency Initiative (EITI) through capacity building in re-launching and implementing EITI and related outreach publications and events. c. Sub-component 2.3: Geo-data Management (US$ 1.8m). The Project will support strengthening MMERE’s capacity to carry out its geo-data management duties consistently, transparently and effectively, with a focus on the following areas: i. Data Management System including: (A) capacity building in managing geodata; (B) design, installation and management of a modern geodata repository; and (C) support for the design, installation and management of a core shed to improve core storage and management. ii. GeoData Acquisition through a study to develop a strategy for acquiring and adding value to geophysical and geochemical data, identifying mapping hardware and software and geochemical laboratory and other equipment needs and assessing the financing needed for this. The study will include an assessment of opportunities to leverage geophysical and geochemical data to address identification of areas vulnerable to climate-risks such as erosion, flooding and coastal inundation and thus contribute to enhancing climate resilience. d. Sub-component 2.4: Operational Support (budgeted under Sub-component 1.1). The Project will support MMERE to overcome near term operational challenges by engaging a resident adviser in the first two Project years to provide: (i) immediate operational support to MMERE to evaluate and approve mining related investments, compliance monitoring, including mine site inspections; (ii) help coordinate project financed advisory work flows; (iii) support coordination between MMERE and other government agencies and (iv) offer staff development through training & mentoring. e. Sub-component 2.5: Independent Advisory Institution (US$ 0.05m consultancy plus consultation costs budgeted under Component 3). Strengthen community empowerment by establishing an independent advisory institution drawing on a pre-feasibility study conducted under the SIMGov Project (Grice). This institution would be mandated to offer landowners, communities, women, youths and groups exposed to increased climate impacts, access to information and advice on the exercise of their rights under relevant legislation, as well as any obligations connected therewith, and raise awareness of mining sector impacts and benefits generally and the roles of mining companies and regulatory bodies in particular. The financial and governance arrangements for setting up the advisory institution will need to be developed to supplement the work by Grice and then approved. The project will finance: (A) consultation to this end; (B) a gender and social inclusion analysis; (C) a strategy setting out how the institution can best operate in a way that includes women in its management and delivery of services and provide tailored services to women, youth and other Page 16 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) groups; (D) collecting data to track the representation of women on relevant boards and committees (those arising from the exercise of rights conferred by mining and other legislation, such as in negotiating surface access and community development); and (E) promotion of a better understanding of environmental and climate risks and adaptation measures through regular community training programs conducted to help build capacity of mining affected communities in adapting and coping with climate issues. 28. Component 3: Project Management (US$ 1.4m). This Component will fund: a. The operational and technical assistance needed by MMERE as the Implementing Agency to manage the project during implementation for which a PMU will be established to exercise project management responsibilities on MMERE’s behalf. Its scope would include the conduct of financial management, procurement and contract management, monitoring and evaluation of project performance, coordination among government entities and guidance necessary to adhere to the ESCP. The PMU will need to have expertise to assume all fiduciary responsibilities, fulfill ESCP requirements and provide input to TORs, IT and equipment specifications, management of consultant delivered workflows, and reporting requirements. PMU arrangements are detailed in Part III, Section A; b. Selected equipment costs and office refurbishment at MMERE: (A) acquisition and installation of critical equipment including servers to support the IT functions of the MMERE office in Honiara and network equipment and software to connect the Honiara office to provincial offices and other government offices; (B) up to two vehicles at Honiara; and (C) equipping and fitting out a project management office at the MMERE Honiara office; and c. Workshop expenses to be incurred across all components of the Project. 29. Sequencing of project activities. The activities under Component 1.1(ii) (development of mining regulations and model form agreements) will occur after enactment on the Mining Bill. The remaining activities are not impacted by the timing of enactment of the Bill. Activities targeted at building the licensing, compliance and stakeholder engagement capacity of MMERE have been sequenced in the procurement plan to occur early in the project. The risk to the project of the Mining Bill being enacted, along with mitigation measures, is explained in detail in the Key Risks section. Strategic Alignment 30. Citizen Engagement: Citizen engagement consideration are incorporated in the Project design, notably in sub- components 2.1.iii and 2.5, and are addressed in the ESF instruments developed for the Project. The Stakeholder Engagement Plan (SEP), forms part of the Overarching Project ESF Terms of Reference (ESF TOR). The ESF TOR sets out the procedures for environmental and social protection, consistent with the Bank’s ESF, that will be employed to design and implement all technical assistance. The SEP identifies methods for actively engaging Project stakeholders during implementation. It will be used to ensure continuous citizen engagement and consultations on the Project’s activities. The SEP provides details on how to enable women, youth and other groups to participate and engage in Project activities. Stakeholder engagement will involve a hands-on approach to the establishment of consultative fora, developing terms of reference and meeting procedures, organizing meetings, reporting on outcomes, and maintaining records about Project activities. The SEP will be updated as and when specific activities are decided. MMERE is responsible for updating and implementing the SEP and will ensure Project stakeholders are proactively Page 17 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) engaged throughout implementation using culturally appropriate consultation techniques including: correspondence (telephone, email), one-on-one meetings, formal workshops, focus group meetings, MMERE communication and outreach program (defined in a Communication Strategy), direct communication with affected persons and project flyers, signs and posters. At present, stakeholder engagement consultations have been reduced due to COVID19 restrictions on travel within the Solomon Islands, the SEP will be updated periodically to reflect the changes to travel within the country, as some of the key stakeholders are in the Provinces. 31. During implementation, consultation methods will be designed in consideration of the different sociocultural norms that inhibit participation and input into decision-making from women. Engagement of communities and interested parties will be a key approach to ensuring that there is support for the Project and the Project meets the needs of the end users, with appropriate mitigation in place. Where possible, stakeholder engagement will utilize engagement structures within the national system (e.g. MMERE outreach events, provincial government-led community meetings and community officer engagement supported by the Community Governance and Grievance Management Project (P147005)). Ongoing stakeholder engagement will include special outreach efforts to groups such as women, elderly and disabled persons, so that the process is socially inclusive, and a range of stakeholder views and perspectives are represented. Stakeholder engagement methods will include: (i) using existing advisory panels to collaborate on stakeholder liaison efforts during implementation; (ii) initiatives to empower women in mining decision making processes such as inclusion on land committees through setting mandatory minimum land committee participation composition standards (in regulations); (iii) safeguard consultations; (iv) provide information to commercial users through annual reports; (v) dialogue with other Ministries to identify areas for collaboration on Project activities; (vi) dialogue with other donors to ensure Project synchronicity; (vii) MMERE communications and outreach programs to communicate key aspects of the Project; (viii) notices/posters/brochures posted and documents made available to the public in suitable locations close to any project sites (e.g. school offices, churches); and, (ix) MMERE will conduct a beneficiary satisfaction survey at baseline, prior to mid-term review and prior to project closure to ensure proactive citizen engagement. The Results Framework includes two intermediate indicators: (i) beneficiaries who feel Project financed activities reflect their needs (disaggregated by gender and age); and (ii) time taken for grievances registered related to Project delivery to be addressed through the Grievance Redress Services. 32. Climate Change and Disaster Risk Screening: A screening of the Project for short- and long-term climate change and disaster risks was undertaken using the World Bank Climate and Disaster Risk Screening Tool. As described in the Country Context, Solomon Islands has been identified as one of the most vulnerable to the adverse impacts of climate change. This vulnerability is in large part because most of the population lives within 1.5 km of the coastline, rendering a considerable portion of the country’s economy, infrastructure, and livelihoods vulnerable to changes in climate (Climate Risk and Adaptation Country Profile, 2011). 33. Solomon Islands is prone to natural disasters such as earthquakes, volcanic eruptions, cyclones, tsunamis, coastal and river flooding and landslides. With climate change it is anticipated that average annual and seasonal rainfall will increase over the course of the 21st century, extreme rainfall days are likely to occur more often and the frequency of days of intense heat will rise. Heavy rainfall has raised concern that the existing tailings dam at Gold Ridge mine would overflow or burst, exposing downstream communities to potential contamination. Seismic events can also increase the risk of tailings dam failure. Extreme weather including cyclones, coupled with poor mining company and regulator performance, has also led to bauxite and oil spills from mining vessels in Rennell and Bellona Province. 34. Climate Co-benefits: Project activities promote efforts towards the reduction, limitation, or sequestration of greenhouse gas (GHG) emissions and enable Solomon Islands to adapt to the negative impacts of a changing climate. Page 18 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) Project activities under Component 1 will support reforming the mining regulatory framework to consider and implement international best practices, including environmental standards that address climate risks and protect against climate impacts (e.g. avoiding deforestation and river pollution which underm ine communities’ adaptive capacity) and generate carbon benefits through avoiding damage to forests and soil which are GHG sinks. Therefore, activities under Component 1 will contribute to the implementation of the Solomon Islands Nationally Determined Contributions of Solomon Islands, as well as its Climate Change Policy 2012–2017, National Action Plan for Adaptation, particularly in terms of adapting to long-term climate impact in all development sectors. 35. Component 2 of the Project will strengthen capacity to regulate mining activities including monitoring of, and improving compliance with, environmental obligations. Greater regulatory effectiveness should on the one hand improve the quality of entities licensed to conduct mineral exploration and mining. It should also reduce the occurrence of illegal mining activities in forested areas, leading to climate mitigation benefits and enhanced adaptive capacity of ecosystems and communities through avoided deforestation. 36. Several aspects of project design are relevant to the management of disaster risks. The Project will support strengthening of mining, environmental and related legislation in line with the NMP to attract investment by better resourced and more responsible mining companies and to increase the capacity and effectiveness of regulatory institutions. This includes a heavy emphasis on improved mine safety and closure regulation and on building capacity to monitor and inspect mines, as well as assure that adequate financial provision is made to address mine closure and site rehabilitation liabilities. The project will support enhanced performance of MMERE’s role in collecting and managing geological and geohazard data. 37. Climate change and disaster risk management will also be addressed through the project’s support for enhanced community engagement in the management of the mining sector and strengthening avenues for women and other groups to have voice and exercise their rights. A detailed gender assessment will focus on alleviating risks to women and other groups and identify specific actions to be taken within the project, including to increase representation of women in negotiations and decisions around land usage, impacting on livelihoods, nutrition through access to food gardens and water supply. 38. Finally, as articulated in the Solomon Islands Systematic Country Diagnostic (2017), through support to sustainable mining development, the project will better prepare Solomon Islands to reduce reliance on the logging sector, which has been a source of elevated climate change and disaster related risks. 39. Gender gaps. Despite the commitment of SIG to promote gender equality, several substantial gender gaps remain. According to the 2009 census, 62 percent of women and 64 percent of men aged 12 and older were in the labor force, including those who produce goods for their own consumption. However, of those employed, women were only half as likely as men to be in paid work (26 percent of women and 51 percent of men). Young women have a double disadvantage of lower status and access to services and job opportunities - for example, in 2017 only 28 percent of government scholarships for school graduates were awarded to women (26 out of 91 pre-service scholarships)7. Due to cultural norms of men as spokespeople and the registration of land in a limited number of trustees, women are rarely in a position to influence land ownership and use and are generally excluded from public discussions regarding land and governance, even in matrilineal communities8. However, reduced availability of land and/or environmental damage adversely affects women, who form the bulk of the agricultural labour force and local 7 UNDP (2018) Solomon Islands Youth Status Report. Honiara: SIG/UNDP. 8 DFAT 2016 Page 19 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) sellers of agricultural products. 40. In the mining sector similar significant gender gaps exist. The SCD notes "protecting the interests of women during the potential expansion of Solomon Islands' mining sector will be vital if negative gender outcomes and associated social costs observed in logging are to be mitigated9. Women, in general, face elevated risks from mining and lesser benefits than men. Risks include sexual exploitation by mining staff, who “buy” wives from male and female family members, and increased alcohol consumption and violence from partners, due to changes in men’s purchasing power. In addition, because of their limited access to land, women are frequently excluded from economic benefits arising from mining. Globally the mining industry, despite traditions of women being involved in artisanal mining in many areas, is a male-dominated field, with a “hypermasculine” working environment that interacts with the broader setting in ways that can entrench gender inequality. 10 Data from the Solomon Islands Household Income and Expenditure Survey (HIES) (2013) shows that out of approximately 1,400 people employed in mining and quarrying, only about 200 (14%) were female. Further data from the HIES (2013) indicates that women represent only ten percent of science and engineering professionals and associate professionals in the Solomon Islands. Within MMERE’s Mines Division, women represent only 20percent of all staff. Record keeping was incomplete but in terms of community-level decision-making, few women took part in community stakeholder engagement meetings held by MMERE in 2019 in Guadalcanal, Isabel, Renbel and Choiseul Provinces and it was noted that women generally did not interact in discussions11. This is consistent with gender norms in which women are unlikely to speak in community meetings, and require gender segregated forums for input into decision making processes and proactive strategies (such as quotas) to increase representation of women leaders on decision-making bodies, which in turn increases likelihood of these women taking on leadership roles within the bodies. 41. The project will support several of activities to close these gaps by promoting women’s employment opportunities and equal participation in mining decision-making within communities. The project will support the design and formal adoption of: (a) Gender and Social Inclusion Plan which consists of : (i) a strategy for gender and social inclusion in facilitation and outreach regarding community agreements for mining (incorporating actions such as gender segregated discussions, networking with women’s groups, and exchange of information from women with previo us experience of mining to those without prior experience, as well as access to legal support if required) and (ii) a strategy for equal access to training, scholarships and employment aiming to increase the share of female staff within MMERE and support MMERE outreach to encourage female university enrolments in engineering and technology; (b) monitoring women’s participation in decision-making bodies (through encouraging representation and sharing data on progress to government and communities); and (c) minimum standards for local employment and gender equality in mining company operations including provisions for non-discrimination in employment, sexual harassment and support for victims of domestic violence. The provisions will draw on the experience of employers who participated in the Waka Mere initiative12, which did not include any companies in the mining sector. 42. Progress towards achieving these outcomes will be measured with the following indicators: (i) Adoption of the MMERE Gender and Social Inclusion Plan: Baseline: No gender and social inclusion in plan, Target: Plan adopted; (ii) 9 This may require (a) arrangements for negotiating access that allow women's voices to be heard; … (b) skills and livelihoods training to ensure women can access benefits from mining development, both within the mining sector and through backward linkages between the mining sector and sectors within which women are already active; and (c) attention to ensuring the equitable distribution of benefits within and across communities to reduce risks of contestation, conflict, and violence." 10 Laplonge, D. (2014). So, You Think You’re Tough: Getting Serious about Gender in Mining. Perth: Factive 11 Ministry of Mines, Energy and Rural Electrification. 2019. Provincial Stakeholder Engagement Report 12 International Finance Corporation. 2019. Waka Mere Commitment to Action: Improving business outcomes in Solomon Islands through advancing workplace gender equality. Page 20 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) increased women’s representation in committees and boards established by communities to negotiate access, community development and other agreements provided for in the mining legislation (Percentage): Baseline 0, Target 25; (iii) incorporation of employment and gender equality requirements into the obligations of license holders; Baseline: 0, Target: 100 percent; and (iv) women’s employment in mining sector increased (Percentage): Baseline 1413, Target 20. 43. Gender-Based Violence. Solomon Islands is among the countries with highest prevalence of gender-based violence in the world. 64 percent of women aged 15-49 who have been in a relationship have experienced physical or sexual intimate-partner violence in their lifetime14 In addition, 61 percent of all women aged 15 and older have experienced some form of physical violence from a non-partner. While there has been increased awareness and action on the issue since the implementation of the Family Protection Act in 2016, responsiveness of the police and justice system remains poor, with 60 percent of police visits not resulting in any action in 2019. At a community level, violence against women and girls is still widely accepted, with 36 percent of men and 27 percent of women in 2019 reporting that domestic and sexual violence is sometimes acceptable 15 and 27 percent of people consulted in 2019 said if they heard of children under the age of 15 in their areas engaging in transactional sex with miners and loggers they would do nothing. 16 Mining and logging activities have been shown to exacerbate the risks of sexual exploitation and violence, including intimate-partner violence, in affected communities 17. The project will address these risks by strengthening MMERE capacity to appropriately respond to gender based-violence (GBV) in mining affected areas through: (A) mapping existing GBV-related services in mining affected areas; (B) conducting regular awareness raising sessions on GBV, consequences, and available services in mining-affected areas; and (C) training staff on GBV and responding to any disclosures of violence. 44. The NMP recognizes that significant gender gaps exist and contains commitments to address these, notably in relation to the representation of women in decision making processes and in the negotiation of agreements . This provides a policy framework within which the project can support SIG to make progress to address gender gaps. The project will finance a variety of activities in both Components 1 and 2 and include a gender and social inclusion officer in staffing of the PMU. 45. Nutrition: Solomon Islands faces the double burden of malnutrition-related diseases, reflected in a high prevalence of child stunting and wasting while rates of overweight/obesity are rising. According to the 2012/13 Household Income and Expenditure Survey, 38% of children age five and under were stunted, a rate considered ‘high’ according to World Health Organization (WHO) thresholds. 16% of children under five were wasted, a level considered ‘alarming’ according to WHO thresholds. Rates are highest among the bottom 40% of households and vary across provinces.18 46. Mining has the potential, when poor mining practices take place, to harm smallholder and subsistence agriculture, which is a key source of food and nutrition for both rural and urban populations. Given the vulnerabilities faced by 13 Solomon Islands Household Income and Expenditure Survey (HIES) (2013) shows that out of approximately 1400 people employed in mining and quarrying (based on ISIC- Rev. 4), only about 200 (14 percent) were female. 14 SPC. 2009 Solomon Islands Family Health and Safety Study: A study on violence against women and children. 15 IFC. 2019. The Impact of Domestic and Sexual Violence on the Workplace in Solomon Islands. 16 International Organization for Migration/Solomon Islands Government (2019) Community Health and Mobility in the Pacific: Solomon Islands Case Study. Honiara: ILO/SIG. 17 See Gender Assessment (Ride 2021); also, Ride, A. & P. Soaki (2019) Women’s Experiences of Family Violence Services in Solomon Islands. Honiara: SIG/Australian Aid. 18 According to the 2013/14 HIES the rate of stunting highest in Makira (at 46 percent) and lowest in Guadalcanal (at 33 percent). Page 21 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) farming households in Solomon Islands, the potential harm of mining on food security and nutrition is a serious concern.19 In line with the NMP, the project will support an improvement in overall governance of the mining sector, including investment by more responsible miners, greater regulatory effectiveness and strengthened community engagement, especially in matters of land tenure, access to land and the exercise of landowner and community rights. This should lead to the reduced incidence of damage to food gardens, coastal fisheries and water supply, as well as soil contamination from mining (particularly poorly managed tailings) that can make locally sourced food unsafe to eat. 47. Maximizing Finance for Development: Mining is one of SIG’s priority sectors to stimulate economic growth and development. However, the mining sector has under-performed in terms of overall levels of investment, the quality of companies that operate in the sector and the capability of regulatory institutions. The sector has generated few of the benefits that sustained investment by responsible miners could offer in a well-governed regulatory environment. 48. The Project supports development of Solomon Islands’ mining sector along a sustainable pathway that promotes private sector investment by capable and responsible mining companies in opportunities that deliver commensurate risk-adjusted returns. If such investments can be mobilized, the mining sector is expected to become a significant contributor to exports, foreign exchange, government revenues and local development opportunities in some of the more remote parts of the country. To benefit from increased investment in new mining developments, Solomon Islands must ensure effective governance in the sector to: (i) avoid and mitigate the risks associated with environmental degradation and social impacts; and (ii) ensure that the benefits generated are maximized and spread as widely as possible through public investments in health and education, and through linkages to agriculture, fisheries, transport, and other services.20 49. Project Components 1 and 2 provide targeted support in developing effective policy and regulatory support for SIG to promote scaled-up and higher quality investment in the sector. This covers all dimensions of investor Environmental, Social and Governance risk (ESG). C. Project Beneficiaries 50. The primary beneficiaries of the project will be MMERE and other government agencies responsible for implementing parts of the regulatory framework for mining. Indirectly project success is likely to be of benefit to all stakeholders with an interest in improved mining sector governance, especially at community level, including women and youth. The mining industry, especially more capable and responsible mining companies, will benefit from new opportunities to invest in an improved investment climate with less pronounced ESG risks. The Project will finance activities to define how to implement the NMP’s commitments to closing gender gaps, and support several relevant initiatives. It will also generate climate related benefits through its support to enhanced environmental governance. Fuller explanation of how the project will benefit different stakeholders is contained in Part B above and in the Project Appraisal Summary. 19Solomon Islands Systematic Country Diagnostic (2017) 20 Solomon Islands County Partnership Framework. Page 22 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) D. Results Chain 51. Theory of Change: Given its rich mineral resource endowment and limited economic alternatives, Solomon Islands seeks to harness mineral resources for sustainable and inclusive development. To date the preconditions for this have not been in place. In fact, the record thus far is of only intermittent mining activity which has delivered limited benefits and in cases generated significant unmitigated environmental and social impacts. The theory of change underpinning design of the World Bank's technical assistance is based on assisting SIG to achieve the necessary preconditions. These preconditions consist of: • investment by companies that design, conduct and finance mining operations responsibly; • regulation by public institutions that perform consistently, transparently, and effectively; and • an ability for an informed public, especially landowners and impacted communities, to hold public regulatory institutions and mining companies to account. To achieve these preconditions many policy and legal reforms will need to take place and public regulatory institutions strengthened. The project aims to assist SIG to do this over a five-year period through technical assistance with a focus on both completing reform of the regulatory framework which already started some years ago and supporting SIG to build the strength of the line ministry responsible for regulating mining and institutions regulating related fiscal, land and environmental matters. 52. There are four main outcomes which will be directly attributable to activities financed by the project if successful. These are: • a more stable, transparent and non-discriminatory investment climate for mining investment due to advice provided to complete the regulatory framework based on the principles enshrined in the NMP and applicable international best practice, to include legislative harmonization across fiscal, land and environmental matters; • more credible public regulatory institutions that can assure higher performance standards of incumbent licensees and incoming mining investors due to capacity building provided in a range of core regulatory functions, supported with tools for better implementation and access to professional advice; • greater transparency of mining and mineral revenue data and in the performance of public regulatory institutions due to support provided to improve reporting practices and public disclosures and to establish fora within which to analyze and discuss sector performance; and • embodiment of stakeholder consultation in the governance of the mining sector and stronger management of disputes, grievances and social tensions generated by mining due to strengthening of community engagement by public regulatory institutions and establishment of an entity to support the better exercise of landowner and impacted communities’ rights. 53. While the four outcomes listed above are all necessary to achieve the three preconditions for a sustainable and inclusive contribution by the mining sector to development of Solomon Islands, they are insufficient on their own. Other factors may impede achievement of the wider development outcomes, notably: • global and country risk factors that may encourage or discourage mining investment, including mineral price volatility; • inability or unwillingness of SIG to sustain financing of MMERE and other relevant public regulatory institutions; and Page 23 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) • persistence of poor governance practices that limit the effective performance of regulatory functions by MMERE, especially in licensing and in monitoring and assuring compliance, and undermine the ability of the public to hold public institutions and mining companies to account. The factors which are outside the scope of the project to manage may nevertheless be addressed in the wider SIG reform programs supported by the World Bank and other development partners, including complementary technical assistance and budget support operations. 54. The Theory of Change (depicted in Figure 3) shows diagrammatically how the financing of project activities arranged under two components generates outputs which lead to directly attributable outcomes which are necessary but not sufficient conditions for achieving the ultimate development goal. Component 1 is a prerequisite for Component 2 and the success of both components is needed to assure that outputs lead to outcomes. Figure 3. Theory of Change 55. Results Framework. The Theory of Change provides the basis for monitoring and measuring the results of the project, as consolidated in the Results Framework (RF). The project RF consists of PDO Outcomes and Intermediate Outcomes Page 24 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) and the Indicators of success associated with each which will be reported on. The PDO Outcomes are those directly attributable to the success of activities financed by the project, which correspond to the four necessary conditions set out in the Theory of Change. For each PDO Outcome there are several indicators which are measurable as indicated below. 56. PDO Outcome 1: A more stable, transparent, and non-discriminatory investment climate for mining investment is established as indicated by: • Increased monitoring of contractual and regulatory arrangements and their enforcement to ensure alignment with National Minerals Policy and applicable international standards. Completion of all regulatory instruments necessary to implement the Mining Act as verified by all regulatory instruments needed to implement the new Mining Act being issued by the responsible Minister, coming into force and published by MMERE. Enactment of a Mining Act, is a precursor for all other regulatory instruments and therefore an Intermediate Outcome. 57. PDO Outcome 2: More credible public regulatory institutions assure higher performance standards of incumbent license holders and incoming mining investors. as indicated by: • Capacity built to manage mineral licensing as measured by reduced time between lodging license applications and approval hearings; • Capacity built to undertake mines inspection as measured by the proportion of licensed mining operations in respect of which a recent inspection report has been uploaded to a MMERE inspection database; • Capacity built to protect the environment and mitigate adverse climate impacts through the mining and environmental permitting process and compliance measures as measured by extent of forest loss in mining areas; • Capacity built to collect royalty as measured by an increase in the average ratio of actual royalty collection to collections at the nominal royalty rate. 58. PDO Outcome 3: Transparency of mining data and in the performance of public regulatory institutions is improved as indicated by: • Comprehensive public disclosure of cadastral records of license applications and awards and subsequent license management by MMERE. 59. PDO Outcome 4: Stakeholder participation in the governance of the mining sector, as indicated by: • Participation rate of women in committees and boards established by communities to negotiate access, community development and other agreements provided for in the mining legislation increased. • Women’s employment in mining sector increased. 60. Intermediate Outcomes are outcomes which are attributable to activities conducted as the project progresses. Monitoring and reporting on the Intermediate Outcomes by Project Component offer a way to check that the project is on track and that the activities financed by the project are having the intended impacts at a time when it is still possible to restructure the project. This information is especially important as input into the Mid-Term Review of the project. The Intermediate outcomes indicators are shown in the RF Table. Page 25 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) E. Rationale for Bank Involvement and Role of Partners 61. Rationale for Bank Involvement: The World Bank has engaged in strengthening the Solomon Islands mining sector governance and policy framework since 2010, including providing access to expertise and supporting stakeholder consultation to develop the NMP in 2015-16, and subsequent implementation of the NMP through technical assistance to strengthen Ministry capacity in mining site inspection, community engagement and support for development of draft legislation through SIMGov. Progress in implementing the NMP is also under consideration as part of the policy matrix in the upcoming Solomon Islands Development Policy Operation (DPO). Previous World Bank support to Solomon Islands mining sector governance is outlined at Figure 4 below. Figure 2. Support to SIG on mining sector governance through small grants 2010-2019 62. Role of Partners: Preparation of the Project was carried out in close collaboration with a wide range of development partners and stakeholders. It is designed to complement ongoing programs by development partners and avoid duplication or overlap with other externally financed activities. During the execution of Bank support over the past decade the Government of Australia has been the main partner, through AusAid and now Department of Foreign Affairs and Trade (DFAT). This has been especially relevant in relation to preparation of mining legislation. The set of ongoing programs currently supported in the sector by development partners, include: DFAT: The current aid program in Solomon Islands support the implementation of the Solomon Islands’ National Development Strategy (2016-2035) with total budget of AUD$434.30 million for the period 2017-2021. DFAT is supporting implementation of the NMP through (i) support for capacity building in government agencies, including MMERE that administers the mining sector, and (ii) catalyzing investment in the mining sector to support the overall economy that has been affected by the COVID-19 pandemic. DFAT through the Solomon Islands Resource Facility (SIRF), administered by DFAT, is assisting MMERE with a qualified Policy Adviser consultant is assisting the Inter-Ministerial Taskforce on Mining Page 26 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) to produce the drafting instructions for revision and finalization of the Mining Bill and the Regulations, which is being drafted by the Legislative Drafting Division of the Attorney-General’s Chambers. Regional Agencies (SPREP): The Secretariat of the Pacific Regional Environment Programme (SPREP) and the World Bank facilitated Mining Sector Environmental Impact Assessment (EIA) Training for Solomon Islands as part of the Pacific Learning Partnership for Environmental and Social Sustainability (PLP-ESS) in October 28-31, 2019. PLP-ESS aims to foster training, knowledge exchange, technical expertise and capacity building related to environmental and social safeguards and infrastructural development standards in the Pacific region. The EIA training workshop was based on a request to SPREP from the Solomon Islands Government Permanent Secretary for the Environment, Climate Change, Disaster Management and Meteorology (MECCDMM) on behalf of MMERE to run an EIA training program specifically for the mining sector in Solomon Islands. The training program was coordinated by SPREP with technical assistance provided by the World Bank to raise the EIA capacity of participants based on SPREP’s Regional EIA guidelines. The training objective was to provide training to Solomon Island mining sector stakeholders on the EIA process and an overview of the World Bank Environmental and Social Framework. A site visit was held to the small Win Win Gold Mine allowing the group to identify and discuss potential risks, impacts and controls. Sustainable Mining Institute (SMI) and The Nature Conservancy (TNC): SMI/TNC Strategy workshop report addressing Mining in Solomon Islands was held at SMI within the University of Queensland in August 2019. The main purpose of the workshop was to reflect on current challenging context of the mining sector in Solomon Islands; understand how the Solomon Islands context fits into the broader context of the Pacific and the extractives sector in the region; and identify the ‘lessons learned’ and next steps from TNC, UQ and others working in this field. 63. Partnering for Project Implementation. The Project will be solely financed by an IDA grant. No co-financing arrangements are in place. Where appropriate, the World Bank will support SIG to identify opportunities to benefit from external assistance from other sources. Where it would be beneficial, opportunities to arrange the complementary delivery of technical assistance by other providers will be examined with MMERE. This, in principle, could include the mobilization of expertise from the South Pacific Forum through its regional secretariat in Suva, Fiji. It could also include arrangements under which experts from other national mining regulatory agencies in the region or outside the region are assigned to support capacity building in MMERE. F. Lessons Learned and Reflected in the Project Design 64. The World Bank has extensive experience supporting development and management of mineral resources worldwide, including in the Pacific Island region. The Extractive Industries Unit in the World Bank’s Global Infrastructure Practice Group, in partnership with other practice areas, delivers advisory services, analytics and technical assistance to client governments to better enable development of mineral resources sustainably and inclusively. Typically, some 15-25 resource-rich countries benefit from World Bank assistance of this kind, with some 6-8 IPF projects in the lending portfolio at any time. 65. The Project design draws on lessons in delivering technical assistance in several other low-income low-capacity settings. This includes two mining focused IPFs delivered in neighboring Papua New Guinea, another in Laos, as well Page 27 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) as numerous IPFs completed and under implementation in sub-Saharan Africa. One critical lesson is not to underestimate the time it takes for regulatory capacity to develop – this project builds on preliminary scoping activities that were completed under the Solomon Islands Mining Governance (SIMGov) Project (P162737). A second important lesson is that good management of the mining sector is not limited to the line ministry with direct sector oversight but requires close harmonization of legislative and institutional arrangements, especially on matters such as land, environment and revenue. This is reflected in the planned activities in both Components 1 and 2. Third, there is a risk that the client finds it difficult to plan, oversee and take advantage of technical assistance delivered by experts on many different subject areas. This can be addressed by achieving a suitable balance between relatively short-term expert inputs (by firms and individuals) and having technically qualified and seasoned advisers who can help support the client management teams to plan, oversee and benefit from expert inputs. The Project includes the financing of one or two such advisers, especially in the early years of the Project. 66. Reforms in the mining sector require an extended time horizon, support for progressive capacity building and broad‐based consultative processes to build consensus and encourage inclusion of all stakeholders . In this respect the Project builds on the long engagement of the World Bank in both making relevant expertise available to counterparts in SIG and helping to convene stakeholders in association with Solomon Island civil society organizations, such as TNC and SMI. This culminated in the NMP which forms the anchor for the reforms that the Project will support. 67. Defining achievable outcomes. The previous Solomon Islands minerals sector engagements have demonstrated the benefit of focused delivery on a small number of incremental reform steps on the critical path – especially in mining legislation. This Project recognizes this and focuses on activities that directly strengthen SIG’s capacity to improve mining sector governance, and support development of an enabling environment for sustainable investment in the Solomon Island’s mining sector. 68. Project management. Previous World Bank-supported engagements in the Solomon Islands mineral sector have relied on stretched Ministry staff, and as a result, required addition of technical experts to ensure gaps in expertise were filled and to build the capacity of counterpart staff. This Project is designed to invest in project management through the PMU to ensure sufficient staffing, reduce administrative burden on the implementing agency and minimize the risk of delays. 69. Environmental and social safeguards. MMERE staff greatly benefitted from capacity building by technical experts in areas such as community engagement, environmental monitoring and health and safety management in the previous World Bank engagements. However, to ensure sustainability of these benefits, a longer-term presence is required. A dedicated environment and social (E&S) specialist will be included in the PMU to allow for deeper, ongoing capacity building as well as effective coordination of environment and social (E&S) - related tasks, and timely preparation and implementation of E&S instruments in a consistent manner and in compliance with the ESF. 70. Building on national strategies and institutions. Mining sector governance reform requires strong government and community buy-in. This Project is founded on the NMP, the preparation of which benefitted by several rounds of review and stakeholder consultation, and the strategic priority accorded to mining sector development by SIG as part of its development vision for the country. Page 28 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) III. IMPLEMENTATION ARRANGEMENTS A. Institutional and Implementation Arrangements 71. MMERE is the sole Implementing Agency for the Project and holds primary responsibility for coordination and implementation of the Project. MMERE is responsible for the sustainable development and management of Solomon Islands’ mineral, petroleum, water and energy resources. It is also mandated to manage geological surveys and is responsible for the mitigation of geological and hydrological hazards. The MMERE Permanent Secretary serves as the Project Director. 72. Project oversight will be carried out by the Project Director who will chair a Project Steering Committee (PSC). The PSC will provide overall policy guidance and decision making on issues relating to the Project, facilitating coordination and close collaboration among relevant government agencies, reviewing and endorsing the annual work plan and budget, and end of year reports and annual audits with support from the PMU. The PSC members will be the Permanent Secretary MMERE - Chairman, the Director of Mines MMERE, the Director Economic Reform Unit, MoFT, the Permanent Secretary of the Ministry of Environment, Conservation and Meteorology and the Permanent Secretary of the Ministry of Development Planning and Aid Coordination. 73. Operational oversight at a technical level will be carried out by a Technical Working Group (TWG). The TWG will consist of the Director of Mines MMERE, the Deputy Director Mines MMERE, the Director of Environment and Conservation, the Director of Economic Reform Unit, the Director of Foreign Investment, the Comptroller of Customs and Excise, the Commissioner of Lands subordinate and the Provincial Secretaries and/or the Provincial Coordinators of participating provinces. A draft Statement of Responsibilities of the PSC and TWG has been submitted to the World Bank. The PMU Project Manager would serve as Secretary of both the PSC and TWG. 74. MMERE will establish a Project Management Unit (PMU) that will comprise a full time Project Manager, a Procurement Officer, Finance Officer, M&E Officer, a Gender and Social Inclusion Officer and an ESF and Stakeholder Engagement Officer. These positions will all be full time and must be maintained throughout the Project implementation period in accordance with the Financing Agreement. The PMU members will, as part of their terms of reference, work closely with MMERE counterparts to ensure transfer of skills over the project life and provide opportunities for learning. To support implementation, MMERE will prepare and adopt a Project Operations Manual (POM) no later than two months after the effective date of the Financing Agreement. It will include institutional arrangements for day-to-day execution of the Project, including procurement, financial management, monitoring and evaluation and ESF compliance. In addition, MMERE will prepare the first annual work plan and budget within two months of the effective date of the Financing Agreement with subsequent annual work plans and budgets to be completed by February each year the project is active, once approved by the PSC. The PMU will hold primary responsibility for preparing annual work plans and budget for the Project as well as manage standard Project reporting, the procurement plan and diligent application of the POM. Page 29 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) B. Results Monitoring and Evaluation Arrangements 75. Achievement of the PDO and progress made toward delivering planned outputs and expected outcomes of the Project will be measured against key indicators and targets presented in the Project’s Results Framework. The M&E Officer within the PMU will be responsible for overall monitoring under close supervision of the PMU Project Manager. To ensure sustained progress is made with overall implementation and timely M&E activities, the Project will undergo a comprehensive Mid-term Review in the third year of implementation. C. Sustainability 76. Institutional Sustainability. SIG maintains a strong commitment to the improved management of its mineral resource sector. The SIG’s NMP demonstrated a national commitment to strengthen governance, make decisions more transparently and inclusively, offer greater investment certainty and create a system that better protects community interests, areas which the Project will contribute to. Strengthening mining sector governance is a national priority and there is strong buy-in across the national ministries as demonstrated by the continued strong engagement of all Ministries in the Inter-Ministerial Taskforce. A core focus of the Project is to invest in establishing a strong technical foundation for regulation by MMERE that can be sustained post-closure. In order to achieve this, investments are targeted toward enhancing MMERE’s capacity in licensing, monitoring and compliance, geo-data management and community engagement and coordination with other public institutions that have a role in managing the mining sector. 77. Economic Sustainability. The Project is targeted at creating a more stable, transparent and non-discriminatory investment climate for mining investment due to support provided to complete the regulatory framework based on the principles enshrined in the NMP, to include legislative harmonization across fiscal, land and environmental matters. By doing so, the project activities will help build capacity of SIG to generate fiscal revenues, which will, in turn, provide a basis for sustainable financing of operating and livelihood needs of beneficiaries. 78. Climate, Disasters, and Environmental Sustainability. As set out in Paragraphs 30-36, the Project through its support for alignment of mining sector governance with best international practices and standards on environmental sustainability contributes to the management of climate change and disaster risks. IV. PROJECT APPRAISAL SUMMARY A. Technical and Economic Analysis 79. Technical Analysis. The Project is designed to complete the regulatory framework envisaged by the NMP and strengthen the capacity of regulatory institutions to implement revised mining and related laws consistently, transparently and effectively. Project activities include analytical and technical assistance interventions and extensive capacity building investments to strengthen the skills and knowledge of civil servants tasked with implementing MMERE’s mandate across the sector, along with staff of other Ministries, including those responsible for environmental and climate risk mitigation, customs and revenue collection and land management and local development. The Project design accounts for the thin capacity environment in Solomon Islands and aims to find the right balance between utilizing in-county personnel, identifying areas where there are Page 30 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) opportunities for their development and areas where external expertise is needed. As set out in Paragraphs 30- 36, the Project through its support for alignment of mining sector governance with best international practices and standards on environmental sustainability contributes to the management of climate change and disaster risks. 80. The Project will finance preparation of a Communications Strategy for MMERE which will include, inter alia, community engagement and awareness raising among the broader population and among mining impacted communities. The community engagement will accord with the SEP developed in alignment with the Bank’s ESF. The PMU will identify measures, within the scope of the Communications Strategy to communicate regularly through a range of media on the Project itself. The effectiveness of the Project’s communication, networking and outreach will be a standing item for review at PSC meetings. 81. Economic Analysis: The project focuses on: i) technical assistance to MMERE to complete the design of a mining regulatory framework in line with the NMP; and ii) build the capacity of MMERE and other regulatory institutions to fulfill their new functions consistently, transparently and effectively. Given the technical assistance (TA) nature of this project, and the lack of clearly separate cash flows generated from discrete project activities, it does not lend itself to traditional measurements of net present value or economic rate of return. This is exacerbated by further uncertainties including, but not limited to international mineral prices, the technical feasibility of potential new mining operations, political stability considerations in an FCV country context, and the broader governance environment. Rather, then, the project is considered based on its cost-effectiveness in the achievement of project development objectives. 82. Cross-country experience shows that similar TA engagements have exhibited improved governance of extractive industries, including improved capacity for greater oversight, and strengthened implementing agencies which has generally led to significant improvements in the use, distribution and management of benefit streams. In Solomon Islands, mining investments in the past have been few, mainly limited to gold extraction at the Gold Ridge mine between 1997-2000 and 2010-2014, and more recently small-scale bauxite extraction. That said, as stated in Paragraph 8, mining operations have the potential to become a vital part of the Solomon Islands economy and to account for an increased share of gross domestic production, exports, and government revenues. 83. Development Impact. The project builds on the back of the preceding World Bank engagements in the mining sector, including a mining sector programmatic ASA, which supported the development of the NMP, and more recently the SIMGov project which supported the initial legislative, institutional and community engagement steps needed to implement the NMP, including a first draft of a new Minerals Bill. The development impact of the new project is likely to be significant compared to the counter-factual scenario of no project. 84. In the case of Solomon Islands, the lack to-date of a sound legal and regulatory framework conducive to mining has resulted in limited mining investments in the past, and even the withdrawal of a major player in the international nickel market in 2017, following a legal dispute. The activities financed under the project will include completion of the regulatory framework in line with the NMP, following the enactment of new mining legislation, and the building of regulatory institutions’ capacity to fulfill their mandate effectively. A more stable, transparent, and non-discriminatory investment climate for mining investments is expected to lay the foundation for attracting sustained investment by well-funded, technically advanced, and responsible miners. On the back of this, compared to a no project scenario, medium term benefits are likely to be derived from: i) higher Page 31 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) contributions from the extractives sector to government revenues, which in turn can be reinvested in human capital and infrastructure; ii) higher export earnings and foreign exchange receipts; iii) increased employment opportunities, including through multiplier effects of local employees spending earned wages in their communities; iv) to the extent that extractive companies reap the benefits of gaining a ‘social licen se’, and the local economy can meet the demand for goods, services and labor – significant social and economic benefits to communities through backward linkages; and iv) enhanced capabilities for environmental and social management leading to reduced risks of potential negative impacts on communities, the environment (including the climate), and mine site accidents. Here, the problems around quantification and attribution persist. 85. Rationale for public sector financing. There is no alternative to public sector financing of institutional strengthening, pre-competitive geodata acquisition and capacity building of government institutions. Investments into institutional and organizational structures and skills development of staff is indispensable if national authorities are to compensate for the asymmetric information between investors and public regulators. The proposed project design aims at improving the government’s bargaining power vis‐à-vis investors in negotiations, oversight, and compliance. At the same time, the project aims at crowding in private sector investment in the mining industry and associated infrastructure development. 86. World Bank Value Added. In 2004, the World Bank completed a multi‐stakeholder review of the World Bank Group’s support to the extractive industries (the Extractive Industries Review) which concluded that the World Bank Group can play an important role in the oil, gas and mining sector if it builds into the design of its interventions the extractive industries’ contribution to poverty reduction. In response, the World Bank developed a holistic approach which considers the entire “lifespan” of extractive industry project development from first discovery of resources through development and exploitation through closure and decommissioning. The approach also considers the wider governance setting in which mineral development takes place as illustrated in the Extractive Industries Value Chain (Figure 5). The competitive advantage of the World Bank compared to other development partners (and the private sector) is its ability to engage in all stages of the extractive’s project lifespan and the industry value chain. Accordingly, the World Bank is in possession of the instruments to: i) support the enabling environment which will attract investors; ii) enhance capacities for oversight of operators’ obligations, including tax payments; and iii) facilitate community development and protect the rights of impacted communities. Hence, the value addition of the World Bank’s engagement is found in the balanced and multi‐ dimensional sector support which targets all aspects of sector governance in the interest of promoting poverty reduction and shared prosperity. Figure 3. Extractive Industries Value Chain Page 32 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) B. Fiduciary 87. Financial Management: A Financial Management (FM) Assessment for the proposed Project has been carried out. The assessment concluded that the Project meets the minimum Bank financial management requirements, as stipulated in the Bank Policy/Bank Directive for Investment Project Financing. The following key FM risks have been identified: (a) MMERE recently completed a small Bank TF with Moderately Satisfactory FM rating but the MMERE fully relied on engagement of external FM services; and (b) MMERE will need to establish a PMU to oversee Project operations but the Project Manager and Finance Officer of the PMU will not be hired until Project Effectiveness. Therefore, the FM risk for the Project, before mitigation measures, is substantial. The FM mitigation measures proposed are: (i) assignment of the MMERE Chief Financial Officer to be responsible for FM until engagement of the PMU Finance Officer; (ii) inclusion of a FM chapter in the Project POM to clearly provide all FM guidance and regulations on planning and budgeting, internal control, accounting system, financial reporting, auditing and especially guidance on Project Assets Management and internal control on Project banking and cash management; (iii) Project accounting software to be installed to use for the new proposed Project; and (iv) Bank training on FM and Disbursement. FM mitigation measures (i) and (ii) are complete, while the remaining two will be completed by Project Effectiveness. Since a transfer of financial management skills to MMERE by the time the project closes is an aim of the project design, the TOR of the FM specialist hired to the PMU will include training and mentoring to MMERE counterparts. The mitigation measures reduce FM risk to moderate. 88. Procurement: A Procurement Assessment for the proposed Project has been carried out. The assessment concluded that procurement risk under the Project before mitigation is substantial for the following reasons: (a) the Implementing Agency has few procurement staff with limited capacity, has limited understanding of the Bank’s procurement regulations and has a record of delays in selecting and contracting consultants; and (b) there is a lack of qualified consultants in the local market, meaning there will be high reliance on the expensive international market. These risks will be mitigated through the following measures: (i) the PMU set up for the project will be staffed with a qualified procurement specialist; (ii) the Bank will provide support to MMERE during the hiring of the international procurement specialist to avoid delays that would impact project implementation and make sure the latter and MMERE counterparts have access to training and guidance on Bank procurement regulations and systems; (iii) the Bank will assist MMERE to prepare TORs in advance of effectiveness; (iv) the Bank will share its global knowledge of the international market for mining sector specialists and qualified firms to assist the PMU to launch selections. Since a transfer of procurement skills to MMERE, by the time the project closes, is an aim of the project design, the TOR of the procurement specialist hired to the PMU will include training and mentoring to MMERE counterparts. The mitigation measures reduce procurement risk to moderate. .C. Legal Operational Policies . Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Areas OP 7.60 No . D. Environmental and Social Page 33 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) 89. The project is expected, overall, to generate positive environmental outcomes through the modernization of mining regulatory and licensing procedures in first instance, whilst also improving the mine health and safety legislation, harmonizing environmental regulation, improving the environmental approvals process and better compliance with mine closure requirements. The project includes technical assistance activities, the purchase of some laboratory equipment and software and refurbishment of the MMERE PMU office in the headquarter building in Honiara. A number of the ESF standards have been assessed to be relevant, but it should be noted that this is largely due to the potential downstream impacts associated with increased investment in the mining industry following the successful project interventions which are aimed at a more harmonized licensing process and improved capacity to manage and monitor the sector activities. 90. The environmental impacts related to the refurbishment works of the HQ building in Honiara are expected to be low (increased noise and dust, waste disposal and occupational health and safety) and can be easily managed through the development and implementation of environmental and social management, health and safety and waste management plans. Particular care must be taken with respect to the identification, handling and disposal of hazardous materials that may be present such as asbestos. An appropriately scoped environmental and social management plan will be prepared once refurbishment activities are fully determined and incorporated in the bidding documents. This requirement has been reflected in the ESCP. 91. With respect to the proposed technical assistance activities, the history/legacy of mining in the country along with weak and inconsistent management of the mining sector and low levels of regulatory capacity at central and provincial levels means that the project has the potential to have significant, long-term and cumulative adverse downstream impacts if not implemented well, e.g. in the event the Solomon Islands government were not to adopt or implement the proposed improvements to the environmental, social and health and safety provisions for the mining sector. 92. The MMERE operates on a meagre budget and has had difficulty attracting and retaining qualified staff as well as providing itself with facilities and equipment commensurate with its functions. It is widely perceived to lack capacity to monitor mineral exploration and mining operations and assure compliance to an adequate standard. The Ministry has previously completed a project under the World Bank Safeguards Policies, but it was classified Category C and had minimal safeguards input. 93. The Environmental Risk Rating is classified as substantial based on the potential downstream impacts, the history of mining in the country and implementing agency capacity whilst noting that the project components aim to directly address these issues. 94. Similarly, the Project' Social Risk Rating is assessed to be substantial as the advisory services will have the potential to have future impacts on community, labor and working conditions, community and occupational health and safety and cultural heritage, if not implemented well. The mining sector is also linked to historic unrest and mine closures, along with weak governance. While no land will be directly impacted by Project activities, the Project may result in changes to land access processes for mining which may have implications for landowners in future. Land acquisition is a complex issue in Solomon Islands due to customary land and ownership rights, which must be taken into consideration in the design of the regulatory framework in line with the NMP. Page 34 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) 95. The E&S risks relating to technical assistance activities, though manageable, are cross cutting and include long term and/or cumulative environmental damage, land and resource-based conflicts, impacts of unmanaged artisanal mining, occupational and community health and safety impacts, livelihood impacts, issues around land access, social inclusion and benefit sharing and other aspects common in the resources sector. These risks will primarily be managed through: the development of an overarching project terms of reference (TOR) that outlines the project activities and details how they will be completed, assesses environment and social risks and associated controls and clearly defines accountabilities; the subsequent screening of TORs for technical studies and advisory services for potential E&S risks and the inclusion of provisions to ensure that advisory services are materially consistent with the objectives of ESS1, all other relevant ESSs and the overarching Project TOR; the recruitment of an environmental and social risk officer to the PMU; and the inclusion of environmental and social aspects management in consultant and staff TOR. The World Bank will provide “no objection” to all TORs for consultants, PMU staff, as well as technical studies and will review the outcomes and reports to ensure material consistency with the objectives of the relevant standards. These mitigation measures have been included in the environment and social commitment plan (ESCP), the overarching TOR for the project, the stakeholder engagement plan (SEP) and labor management procedures (LMP) which have been developed as part of project preparation and appraisal. The ESCP and SEP were disclosed on the Bank’s website on September 30, 2021. V. GRIEVANCE REDRESS SERVICES 96. Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/en/projects-operations/products-and-services/grievance-redress-service. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org. VI. KEY RISKS 97. Overall: The overall risk rating for the project is assessed as substantial due to stakeholder, political and governance, sector strategy and policy and environmental and social risks but all other risks are rated as moderate. The strong interest of some mining entities that currently operate in Solomon Islands, long delayed delivery of reforms since the NMP was endorsed, lack of counterpart funding, limited inclusion of provincial governments as project beneficiaries and the restriction of project reach from addressing Page 35 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) location-specific mining arrangements for benefit sharing and impact mitigation are among the key risks that have been identified. 98. Political and Governance: The inherent risk of politicization of mining sector management in Solomon Islands is substantial due to opportunities for contestation to capture benefits. There is experience both in the logging and mining sectors of weak governance and corruption. Moreover, there is a widely held perception that there are winners (politically connected and Honiara-based) and losers (impacted communities without voice), which can make mining a divisive issue. Uncertainty on when the Mining Bill will be enacted, and whether the Mining Act, once enacted, will fully align with the government’s National Minerals Policy (NMP), along with long delays in delivery of reforms since the NMP was endorsed and lack of counterpart funding, represent key risks to delivery of the PDO. Such risks are somewhat mitigated by the consensus built up over several years of stakeholder consultation, supported by the World Bank, on principles of good mining sector governance, which are captured in NMP. In addition, the project has in place a specific legal covenant requiring the Recipient to ensure that all technical assistance under the Project will be consistent with the principles and standards in the NMP and international best practice, and satisfactory to the World Bank. Compliance with this covenant will also be tracked as an indicator in the Results Framework. 99. However, progress in completing preparation of the Mining Bill, which is the primary legislation needed to implement the NMP, must continue to be monitored closely. The project is designed to support implementation of the NMP and related legislation by: (i) financing completion of the regulatory framework (completing preparation of the Mining Bill and conducting associated stakeholder consultation, mining regulations and harmonization of related laws and institutional mandates); (ii) strengthening institutional capacity at the sector ministry, and revenue (tax, royalty and customs), land and environmental ministries and (iii) building capacity for stakeholder engagement in government and among landowners and communities. Nonetheless, as stated in the project Theory of Change, project success is only a necessary but not sufficient condition for mitigating political and governance risks. The residual political and governance risk after mitigation provided by preparation of the regulatory framework to date and the activities financed by the Project is therefore still substantial. 100. Sector Strategies and Policies: Inherent sector strategy and policy risks are closely associated with political and governance risks and the factors which help to mitigate such risks are addressed in the Political and Governance section above. The NMP, which represents leading mining policy practice and underwent a long period of consideration and stakeholder consultation, marks a departure from the legacy of past governance, environmental and social practices associated with previous mining sector activity. However strong interest of some mining entities that currently operate in Solomon Islands presents significant risk. The Project will finance activities to build institutional capacity to manage such issues, including improving harmonization of legislation among regulatory institutions and strengthening their collaboration in addressing such issues. This will include financing technical advisory support to MMERE on compliance monitoring. Nonetheless, as stated in the project Theory of Change, project success is only a necessary but not sufficient condition for mitigating sector strategy and policy risks. Residual sector strategy and policy risks after mitigation are still considered substantial. 101. Environmental and Social: The Environmental Risk Rating is classified as substantial based on the potential downstream environmental impacts of the anticipated increased investments in the mining Page 36 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) sector, the environmental legacy issues of mining operations in the country and limited implementing agency capacity, whilst noting that the project components aim to directly address these issues. Similarly, the Project's Social Risk Rating is assessed to be substantial as the advisory services will have the potential to have future impacts on community, labor and working conditions, gender based violence (GBV), sexual exploitation and abuse/sexual harassment (SEA/SH), community and occupational health and safety and cultural heritage, if not implemented well. The risk of GBV/SEA/SH in the mining sector can be substantial with labor influx into the country, mitigation risks and measures will have to be considered in the Project. The mining sector is also linked to historic unrest and mine closures, along with weak governance. While no land will be directly impacted by Project activities, the Project may result in changes to land access processes for mining which may have implications for landowners in future. Land acquisition is a complex issue in Solomon Islands due to customary land and ownership rights, which must be taken into consideration in the design of the regulatory framework in line with the NMP. 102. Stakeholder: Inherent stakeholder risk arises from: (i) the strong interest of some mining entities that currently operate in Solomon Islands, which could undermine PDO outcomes; (ii) legacy issues that have been divisive and generated public mistrust; (iii) escalating center-periphery political polarization; (iv) limited inclusion of provincial governments as project beneficiaries in the Project; (v) restriction of project reach from addressing location-specific mining arrangements for benefit sharing and impact mitigation (vi) the risk of mismatch between elevated expectations created by the process of developing a consensus for the NMP and the challenging multi-year process of implementing the reforms and achieving tangible capacity building results; and (vii) the impact of mining sector activity spreading to more parts of the Solomon Islands creating new winners and losers. The most effective mitigation of such risk is effective implementation of the reforms set out in the NMP with support of the Project. The Project has a strong focus on capacity building for MMERE staff to strengthen community outreach and engagement. Establishment of a national independent advisory institution is intended to improve community ability to engage with national government and mining companies on issues of access to land, use of natural resources and local development benefits. Stakeholder coordination and consultation may be affected by the current COVID-19 restrictions on movement and travel. To mitigate this risk, the PSC will include membership from the provinces and PMU staff will be in regular contact with provincial governments to ensure stakeholder engagement continues remotely to the extent possible. However, despite these mitigation measures, escalating center-periphery political polarization and limited reach to mining affected communities present risks that may go well beyond the scope for mitigation through this small project. Residual stakeholder risk based on implementation of Project activities described above is therefore substantial. . Page 37 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) VII. RESULTS FRAMEWORK AND MONITORING Results Framework COUNTRY: Solomon Islands Solomon Islands Sustainable Mining Development Technical Assistance Project Project Development Objectives(s) To strengthen the capacity of regulatory institutions to implement revised mining and related laws consistently, transparently and effectively. Project Development Objective Indicators RESULT_FRAME_TBL_ PD O Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 A more stable, transparent and non-discriminatory investment climate for mining investment Increased monitoring of contractual and regulatory arrangements and their enforcement to ensure No No No Yes Yes Yes Yes alignment with National Minerals Policy and applicable international standards (Yes/No) More credible public regulatory institutions that can assure higher performance standards Reduced time between lodging applications and 3.00 3.00 3.00 2.00 1.00 1.00 1.00 approval hearings (Months) An increase in the average ratio of actual royalty 50.00 50.00 70.00 70.00 80.00 80.00 90.00 collection to collections at Page 38 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) RESULT_FRAME_TBL_ PD O Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 the nominal royalty rate (reduced leakage) (Percentage) Extent of forest loss in 30.00 25.00 20.00 20.00 20.00 15.00 10.00 mining areas (Percentage) Proportion of licensed mining operations for which a recent inspection report has been uploaded 10.00 50.00 65.00 75.00 80.00 85.00 90.00 to a MMERE inspection database (Cumulative) (Percentage) Transparency of mining data and in the performance of public regulatory institutions is improved Comprehensive public disclosure of cadastral records of license No No No Yes Yes Yes Yes applications and awards and subsequent license management (Yes/No) Stakeholder participation in the governance of the mining sector Participation rate of women in committees and boards established by communities to negotiate access, community development 10.00 10.00 15.00 20.00 30.00 40.00 50.00 and other agreements provided for in the mining legislation (Cumulative) (Percentage) Women’s employment in 14.00 16.00 18.00 20.00 25.00 28.00 30.00 Page 39 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) RESULT_FRAME_TBL_ PD O Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 mining sector increased (Cumulative) (Percentage) PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_ IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 Component 1: Complete the Regulatory Framework MMERE Annual Report published within a year of effectiveness includes information on actions No No Yes Yes Yes Yes Yes taken to implement the NMP. (Yes/No) Mining Bill based on the No Yes Yes Yes Yes Yes Yes NMP enacted (Yes/No) Strengthen Capacity of Regulatory Institutions Use of a digital geo- referenced platform for managing cadastral records No No Yes Yes Yes Yes Yes (Yes/No) Beneficiaries who feel Project financed activities reflect their needs 25.00 50.00 50.00 60.00 70.00 75.00 80.00 (disaggregated by gender) (Percentage) Time taken for grievances registered related to Project 0.00 4.00 3.00 2.00 2.00 1.00 1.00 delivery to be addressed Page 40 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) RESULT_FRAME_TBL_ IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 (Weeks) Approval and publication of MMERE's Communications No No Yes Yes Yes Yes Yes Strategy (Yes/No) Adoption of the MMERE Gender and Social Inclusion No No No Yes Yes Yes Yes Plan (Yes/No) Gender related employment requirements incorporated in the No No Yes Yes Yes Yes Yes obligations which license holders must comply with (Yes/No) IO Table SPACE UL Table SPACE Monitoring & Evaluation Plan: PDO Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection All regulatory instruments Increased monitoring of contractual and Verification on the needed to implement the regulatory arrangements and their MMERE and SIG M&E Officer of the new Mining Act are issued Once MMERE enforcement to ensure alignment with websites and in the PMU by the responsible Minister, National Minerals Policy and applicable Official Gazette come into force and are international standards published by MMERE. The number of months on Register that Search of cadastral Reduced time between lodging Once PMU M&E Officer average recorded in the forms part of records and calculation applications and approval hearings cadastral system between the cadastre of average duration Page 41 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) the registered date that an at MMERE application is lodged for an exploration license and the date on which the granting authority hears the application for the first time. Increase in the average ratio of royalty rate based on collections to the nominal royalty rate in which the denominator is the amount of royalty based on the nominal royalty rate and the MMERE and Review of royalty PMU M&E Officer and numerator is the actual An increase in the average ratio of actual MoFT royalty receipts records and appropriate royalty amount collected Once royalty collection to collections at the receipt calculation of royalty MMERE/MoFT revenue calculated on average for nominal royalty rate (reduced leakage) records collection ratios official annual royalty collections. If there are multiple royalty rates for different minerals, the average would be derived in the case of each mineral separately and the most significant in terms of total collections used. Percent of land in mining Once to areas comprising forest measure the Remote cleared for mining baseline and sensing Review of remote MMERE as verified by operations. Improved thereafter survey of Extent of forest loss in mining areas sensing survey results PMU M&E officer regulation should lead to every two areas under less forested areas being years to mining leases included in areas licensed project for mining leading to less closing Page 42 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) clearance of such forest. Percentage of mining licenses in respect of which Proportion of licensed mining operations a mine inspection has been MMERE Review of database for which a recent inspection report has conducted and the Once Inspection PMU M&E Officer records been uploaded to a MMERE inspection inspection report uploaded Database database (Cumulative) to a MMERE inspection database within the previous year. Cadastral records of the application and award of all Reconciliation between Comprehensive public disclosure of types of licenses and cadastral system cadastral records of license applications subsequent management Once Portal records and data PMU M&E Officer and awards and subsequent license (expiry, relinquishment, published through the management transfer etc.) are published portal. by through a portal accessible by the public. Written records of meetings, events or Participation rate of women in financial Percentage of members of committees and boards established by contributions Review of published such committees or boards communities to negotiate access, Once produced by records of PMU M&E Officer who are women on average community development and other Waka Mere sponsors/organizers across a sample of agreements provided for in the mining sponsors/org committees / boards legislation (Cumulative) anizers (including IFC and Chamber of Commerce) Page 43 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) ercentage of those in formal employment in the mining At project Government M&E officer of the PMU M&E Officer of the Women’s employment in mining sector sector as recorded in closing statistics to review data source PMU increased (Cumulative) government statistics who are women ME PDO Table SPACE Monitoring & Evaluation Plan: Intermediate Results Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection MMERE Annual Report published within a Review of MMERE MMERE Annual Report Once MMERE PMU M&E Officer year of effectiveness includes information website published on its website on actions taken to implement the NMP. Enactment of the Mining Bill Official Review of Official Once M&E Officer of PIU Mining Bill based on the NMP enacted as indicated by the Official Gazette Gazette Gazette Vendor report A cadastral system verifying Review of vendor according to specification Use of a digital geo-referenced platform Once handover; report and MMERE PMU M&E Officer has been installed and for managing cadastral records acceptance records of acceptance handed over to MMERE by of handover the vendor for use by MMERE Project success is to be of Monthly Beneficiaries who feel Project financed benefit to all stakeholders Several Review of reports, reports to PMU M&E Officer activities reflect their needs with an interest in improved times agreements MMERE (disaggregated by gender) mining sector governance, especially at community Page 44 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) level, including women and youth. Mechanism ensuring basic rights of and interests of persons affected by poor socio-economic and environmental performance MMERE Time taken for grievances registered or social management of Several (Website, Review of GRM reports PMU M&E Officer related to Project delivery to be Mines Division are times reports addressed protected and concerns received) arising from poor performance of mining projects at all stages are in place and effectively and timely addressed. A Communications Strategy MMERE Review of MMERE Approval and publication of MMERE's Once PMU M&E Officer is developed, formally Website Website Communications Strategy approved and published A Gender and Social Inclusion Plan is developed MMERE Review of MMERE Adoption of the MMERE Gender and to guide MMERE's Once PMU M&E Officer Website Website Social Inclusion Plan engagement on these issues, formally adopted and published The obligations which a license holder must comply Mining Gender related employment include gender-based legislation Review of national requirements incorporated in the employment requirements Once and register legislation and license PMU M&E Officer obligations which license holders must introduced by legislation of mineral registry records comply with generally and/or in the licenses conditions imposed on individual license holders. Page 45 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) ME IO Table SPACE Page 46 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) ANNEX 1: Implementation Arrangements and Support Plan COUNTRY: Solomon Islands Solomon Islands Sustainable Mining Development Technical Assistance Project A. Implementation Arrangements 1. MMERE is the sole Implementing Agency responsible for the coordination and implementation of the Project. The MMERE Permanent Secretary serves as the Project Director. The MMERE organizational structure is outlined in Figure 6. Figure 4. MMERE Organizational Chart PRINCIPAL ECONOMIC GEOLOGIST PRINCIPAL TENEMENT OFFICER PRINCIPAL MINING INSPECTOR 2. Project oversight will be carried out by the Project Director who will chair a Project Steering Committee (PSC). There will also be a Technical Working Group (TWG). The PSC at Director level will be convened only to consider and make the main decisions and the TWG at technical level will consist of focal points appointed by each government agency. The TWG would meet more frequently and provide the main means of inter-ministry coordination. The PMU, with supplementary support from Mines Division staff, would serve as Secretary of both Page 47 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) the PSC and TWG. 3. The PSC will provide overall policy guidance and decision making on issues relating to the Project, facilitating coordination and close collaboration among relevant government agencies, reviewing and endorsing the annual work plan and budget, and end of year reports and annual audits with support from the PMU. The PSC members will be the Permanent Secretary MMERE - Chairman, the Director of Mines MMERE, the Director Economic Reform Unit, MoFT, the Permanent Secretary of the Ministry of Environment, Conservation and Meteorology and the Permanent Secretary of the Ministry of Development Planning and Aid Coordination. The TWG will consist of The Director of Mines MMERE, the Deputy Director Mines MMERE, the Director of Environment and Conservation, the Director of Economic Reform Unit, the Director of Foreign Investment, the Comptroller of Customs and Excise, the Commissioner of Lands subordinate and the Provincial Secretaries and/or the Provincial Coordinators of participating provinces. A draft Statement of Responsibilities of the PSC and TWG has been submitted to the World Bank. 4. MMERE will establish a Project Management Unit (PMU) that will comprise a full time Project Manager, a Procurement Officer, Finance Officer, Monitoring and Evaluation Officer, an Environmental and Social Risk Officer . These positions will all be full time and must be maintained at all times throughout the Project implementation period in accordance with the Financing Agreement. The PMU members will, as part of their terms of reference, work closely with MMERE counterparts to ensure transfer of skills over the project life and provide opportunities for learning. To support implementation, MMERE will prepare and adopt a Project Operations Manual (POM) no later than two months after the effective date of the Financing Agreement. It will include institutional arrangements for day-to-day execution of the Project, including procurement, safeguards, financial management and M&E. In addition, MMERE will prepare the first annual work plan and budget within two months of the effective date of the Financing Agreement with subsequent annual work plans and budgets to be completed by February each year the project is active once approved by the PSC. The PMU will hold primary responsibility for preparing annual work plans and budget for the Project as well as manage standard Project reporting, the procurement plan and diligent application of the POM. B. Financial Management 5. Ministry of Mines, Rural and Electrification (MMERE) has experience in working with Bank’s operations through a recently completed Bank trust fund in 2019. However, the Project fully relied on an external firm for financial management services, so MMERE familiarity with Bank FM and Disbursement requirements is still limited. Since MMERE is the sole Implementing Agency for the Project and holds primary responsibility for coordination and implementation of the Project, a PMU will be established under MMERE to support and implement the Project including a Finance Officer responsible for financial management. A FM Assessment for the proposed Project has been carried out. The assessment concluded that the Project meets the minimum Bank financial management requirements, as stipulated in the Bank Policy/Bank Directive for Investment Project Financing. The following key FM risks have been identified: (a) MMERE will establish a PMU to oversee Project operations but the Project Manager and Finance Officer of the PMU will not be hired until Project Effectiveness; (ii) the MMERE Chief Financial Officer will be responsible for FM until engagement of the PMU Finance Officer but is new to World Bank-financed projects; (iii) MMERE recently completed a small Bank TF with Moderately Satisfactory FM rating but the FM works fully relied on external services. Therefore, the proposed FM risk for the Project, after mitigation measures is Substantial. The FM mitigation measures proposed are: (i) MMERE assign experienced FM staff to work for the Project while waiting for Finance Officer is selected; (ii) inclusion Page 48 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) of a FM chapter in the Project POM to clearly provide all FM guidance and regulations on planning and budgeting, internal control, accounting system, financial reporting, auditing and especially guidance on Project Assets Management and internal control on Project bank and cash; (iii) Project accounting software to be installed to use for the Project and; (iv) to improve the FM capacity of MMERE’s PMU staff through consultant support and regular World Bank training on FM and Disbursement. These FM Actions (i) and (ii) were completed by the Project Negotiation while the remaining two are to be completed by Project Effectiveness. 6. FM Staffing: MMERE establish a PMU including a Finance Officer to oversee project FM. . Additional consultants or advisors will be recruited if necessary, with the aim to strengthen the overall procurement and FM function of the PMU under MMERE. In any circumstances, it is important that MMERE takes full fiduciary, including FM, responsibilities of the project, including the reporting, monitoring and oversight of the FM function. 7. Accounting Policies, Systems, and Procedures: The Project will adopt accounting policies and procedures applied by the Solomon Island Government and acceptable to the World Bank. 8. Internal Controls: The PMU under MMERE is responsible for ensuring that an adequate internal control framework and internal controls are in place and operating for the Project. All these internal control procedures, including detailed FM guidance are to be specified in the Project Operation Manual and FM Chapter, in accordance with government regulations including authorization of payments and transactions, segregation of duties, asset physical management, cash management, budget formulation and variance analysis, and financial reporting. 9. Fund Flow and Disbursement Arrangement: One (1) separate Designated Account (DA) in Solomon Islands Dollars (SBD) for receipts of only IDA Grant will be opened at the Central Bank of Solomon Islands or one of the commercial banks present in Solomon Islands acceptable to the World Bank. MOFT will manage the DA and then subsequently channel the funds from the DA to a separate Project bank account in SBD for the receipt of funds only from the IDA Grant to implement Project activities. The disbursement methods available to the Project include reimbursement, advances, special commitment, and direct payments. The ceiling of the DA will be set which is equivalent to about 6 months’ worth of Project expenditures to be financed out of the funds in the DA and to be specified in the Project’s Disbursement and Financial Information Letter. The minimum value of applications for Direct payment, Reimbursement and Special Commitment is also set in the Project’s Disbursement and Financial Information Letter to facilitate payment processing. World Bank funds for this Project will finance at 100% of goods, works, non-consulting services, consulting services, operating costs and training, inclusive of taxes. 10. Financial Reporting and External Audit: The PMU within MMERE will be responsible for overall FM and financial reporting. The PMU will consolidate the Project activities and prepare interim unaudited financial reports every six months and submit these reports to the World Bank within forty-five (45) days of the end of each six-month period (semester). The Project annual financial statements – which cover all Project components - will be prepared and audited either by the Office of the Auditor General (OAG) of the Solomon Islands or by selected private audit firms. In case the OAG is not available then a private audit firm will be selected and financed from the Project fund to fully comply with annual audit requirement. The audited financial statements and the management letters of the whole Project will be submitted to the World Bank within six (6) months after the end of each fiscal year. Page 49 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) 11. Disbursement Arrangement: The World Bank’s documentation of eligible expenditures under Reimbursement and Advance methods will be based on the statement of expenditures; a template of the statement of expenditures will be attached to the Disbursement and Financial Information Letter. Direct payments will be utilized for procurement of goods and contracts with payments exceeding the minimum application size. The disbursement deadline date is four (4) months after the closing date of the Project. Due to the issue of lapsed loan currently in the country portfolio, i.e TF 16614 - Community Resilience to Climate and Disaster Risk in Solomon Islands Project, the use of Advance method (and designated account) will not be available to the Project until the issue of lapsed loan is resolved. 12. Implementation Support Plan: As the FM residual risk is assessed as Substantial, supervision of Project financial management will be done on semi-annual basis. The FM performance is to be monitored by reviews of the semesterly (semi-annual) interim unaudited financial reports, discussions with the MMERE/PMU and Project teams; other remote FM support including regular online team/FM meetings with the Project team to discuss the FM implementation issues; and provide online training to the Project FM staff, in lieu of on-site FM missions. Otherwise, bi-annual FM missions will be carried out to reassess FM risks and performance. Time- bound FM action plans will be prepared for implementation to mitigate any identified control weaknesses and risks. C. Procurement 13. Applicable procurement regulations: Procurement under the project will be carried out in accordance with the World Bank’s Procurement Regulations for IPF Borrowers for Goods, Works, Non-Consulting and Consulting Services, dated July 1, 2016 (revised in November 2017, August 2018, and November 2020). This includes the requirement for the implementing agency (MMERE) to prepare a Project Procurement Strategy for Development (PPSD) which will form the basis for devising the most appropriate procurement arrangements and Procurement Plan (PP) for the project and subject to the Bank’ prior approval. The Projects will be subject to the World Bank’s Anticorruption Guidelines, dated October 15, 2006, revised in January 2011, and as of July 1, 2016. The Project shall also use the Systematic tracking of Exchanges in Procurement (STEP) to plan, record and track procurement transactions. 14. Procurement implementation arrangements: The project will be implemented by the Ministry of Mines, Energy and Rural Electrification (MMERE) under the overall oversight of the Permanent Secretary, who will be the point of liaison between MMERE and other relevant Ministries and Government agencies. The principal MMERE focal point for project administration purposes will be the Director of Mines. MMERE has limited staff who carry out procurement activities. Hence the Project will finance and establish a Project Management Unit (PMU) including a procurement specialist who will be responsible for the day-to-day procurement activities. The procurement specialist from the World Bank will also provide procurement guidance to the project team during project implementation. 15. Most of the procurement under the Project is expected to be procurement of consulting services, mainly individual consultants to support all the project components which will be selected by comparing of at least three qualified consultants among those who have expressed interest in the assignments or have been approached directly by the implementing agencies. There will be procurement of goods also such as Page 50 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) procurement of vehicles, software licenses, and office equipment for the PMU, which will be procured using the Request for Quotations (RFQ) method. Other than that, there will be procurement of small works for office refurbishment and procurement of consulting services with firm for cadastral software installation and geodata assessment. 16. Procurement risk assessment: A Procurement Assessment for the proposed Project has been carried out. The assessment concluded that procurement risk under the Project before mitigation is Substantial for the following reasons: (a) the Implementing Agency has few procurement staff with limited capacity, has limited understanding of the Bank’s procurement regulations and has a record of delays in selecting and contracting consultants; and (b) there is a lack of qualified consultants in the local market meaning there will be high reliance on the expensive international market. These risks will be mitigated through the following measures (i) the PMU set up for the project will be staffed with a qualified international procurement specialist; (ii) the Bank will provide support to MMERE during the hiring of the procurement specialist to avoid delays that would impact project implementation and make sure the latter and MMERE counterparts have access to training and guidance on Bank procurement regulations and systems; (iii) the Bank will assist MMERE to prepare TORs in advance of effectiveness ; (iv) the Bank will share its global knowledge of the international market for mining sector specialists and qualified firms to assist the PMU to launch selections. Since a transfer of procurement skills to MMERE by the time the project closes is an aim of the project design, the TOR of the procurement specialist hired to the PMU will include training and mentoring to MMERE counterparts. The mitigation measures reduce procurement risk to Moderate. 17. Procurement Plan. Based on PPSD, the initial procurement plans for the project has been prepared by the MMERE were agreed by the World Bank at negotiation. The procurement plan will be updated at least on an annual basis by the MMERE to: (i) reflect project implementation; (ii) accommodate changes that should be made; and (iii) add new packages as needed for the project. All procurement plans and their updates or modifications will be subject to the World Bank’s prior review and no-objection. The procurement plan identifies the risk for each activity and prior review of these activities is conducted based on the performance and risk rating. Contracts not subject to prior review will be subject to post review and the World Bank will carry out procurement post reviews on an annual basis with an appropriate sample. D. Environment and Social 16. The Project is being implemented at the national level by MMERE. A PMU will be established in MMERE to implement the Project and will hold overall responsibility for ensuring that environmental and social issues are adequately addressed within the Project. The PMU is expected to retain a full-time safeguards specialist who will provide safeguards support for the Project throughout implementation. 17. Grievance Redress Mechanism. The complaints process is for people seeking satisfactory resolution of their complaints on the performance of the Project. This process is consistent with the Project’s Environmental and Social Management Framework (ESMF). The mechanism will ensure that: i) the basic rights and interests of every person affected by poor environmental performance or social management of the project are protected; and, ii) their concerns arising from the poor performance of the project during the phases of design, construction and operation activities are effectively and timely addressed. Anyone can register a grievance, ask for information on the Project or get in touch for any reason. Complaints can be anonymous. The various ways to get in touch are phone, email, mail, in person and on the project website. This information, and a summary of the process for answering queries and managing grievances, has been published on MMERE’s Page 51 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) website or can be provided in person upon request, by email, or by mail. 18. Roles and responsibilities. The Project Manager in the PMU holds primary responsibility for managing the complaints process. In addition, a Grievance Committee will be formed to address any complex or significant grievance management. 19. The complaints process. All complaints or grievances are entered into an assigned database that tracks progress of each complaint. Complaint records (letter, email, record of conversation) are stored together, electronically or in hard copy. Each record has a unique number reflecting year and sequence of received complaint (i.e. 2020-01, 2020-02). Each complaint is assigned a specific person responsible for close out. Note: The Project Manager will provide a monthly report of all complaints received to the Permanent Secretary, MMERE, including details of their resolution or on-going action to resolve the complaint. All notifications of potential legal action will be immediately notified to the Permanent Secretary, MMERE. 20. Each complaint will have a resolution plan. All simple complaints must aim to be closed out within 1 month. Complex complaints should aim to be closed out within 3 months or deferred to the Grievance Committee. All complainants have the right to use the national court system at any time to seek resolution. The Project Manager will adjust consultations, the GRM, community engagement, project implementation and other aspects as necessary to avoid future complaints and grievances. 21. Reporting and Evaluation. Complaints shall be reported in the regular project reporting to the World Bank. It should contain: a) total number of complaints received; b) total number resolved; c) total number under investigation / not yet resolved; d) total number not yet resolved and exceeds the recommended close out time of 1 month or 3 months; an, e) short paragraph on any significant grievances currently not yet resolved and any risks to project implementation. If there are more than 30 complaints recorded, the Project Manager may decide to investigate any patterns or repetition of issues that need addressing. The Project Manager may decide to get an independent consultant to review and provide advice. E. Monitoring and Evaluation 22. Monitoring and Evaluation: The Project monitoring and evaluation system will assess the project’s progress against the Theory of Change (see Figure 2) and related indicators in the Results Framework. It will include internal progress monitoring, a Management Information System (MIS) and surveys. The overall M&E system builds on the previous project experience and addresses some of the challenges including need for more accurate data and record keeping. The M&E Officer in the PMU will be responsible for project monitoring, with inputs on stakeholder engagement provided by the Safeguards and Communications Officer, under the supervision of the Project Manager. F. Strategy and Approach for Implementation Support 23. The Implementation Support Plan for this Project will consist of continuous dialogue with MMERE and MoFT. This will include systematic joint reviews of program implementation, and regular oversight and support for Project fiduciary activities with emphasis to be placed on the risks surrounding institutional capacity identified. Regular dialogue and ongoing implementation support will enable early identification of problems and permit for provision of timely technical assistance to correct any issues that arise. As a part of the joint reviews, the lessons learned from implementing the POM will be sought. These will be incorporated into future revisions Page 52 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) and further training will be offered for PMU staff and other relevant stakeholders where necessary. 24. For the fiduciary aspects of the operation, the World Bank will provide support in the areas of procurement and FM, as requested. This will include (a) providing training to the respective PMU staff; (b) assisting with the technical specifications for terms of reference; (c) examining procurement documents and providing feedback to the PMU; (d) monitoring progress that has been made against the detailed Procurement Plan; (e) assisting with accounting, reporting, and internal controls; and, (f) reviewing submitted reports and providing feedback to the PMU. 25. Implementation Support Plan and Resource Requirements. The limited institutional capacity within the MMERE for implementation of World Bank projects means that this operation will require ongoing implementation support. This will need to be relatively intense during the first 12 months of operation as the PMU becomes accustomed to the requirements of a World Bank operation. As such, three implementation support missions will take place during the initial 12 months of implementation. This will be reduced to two implementation support missions in subsequent years of the operation. These periodic support visits will be complemented by regular telephone connections with the relevant counterparts to support day-to-day implementation of the Project throughout implementation. Figure 5. Implementation Support Plan Time Focus Skills Needed Resource Estimate (Staff Weeks/Year) First twelve Implementation Support Task Team Leader 8 months Coordination Operations Officer 4 Overall technical support Mining Specialist 6 Financial management FM Specialist 2 Procurement Procurement Specialist 2 Safeguards Environmental Safeguards 1 Specialist Social Safeguards Specialist 1 12-48 months Implementation Support Task Team Leader 6 Coordination Overall technical support Mining Specialist 3 Financial management FM Specialist 2 Procurement Procurement Specialist 2 Safeguards Environmental Safeguards 1 Specialist Social Safeguards Specialist 1 Page 53 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) ANNEX 2: Solomon Islands National Minerals Policy Summary 1. After extensive research, technical inputs and stakeholder consultation over several years, SIG developed a National Minerals Policy (NMP), the first of its kind, which Cabinet endorsed in March 2017. This comprehensive and ambitious policy demonstrated a national commitment to strengthen governance, make decisions more transparently and inclusively, offer greater investment certainty and create a system that better protects community interests. 2. The National Mining Policy contains the following statement in the Minister’s foreword: “While there is no doubt an abundance of minerals, our limited land mass and the scattered islands mean that the impacts of mining are heavily felt. There is little room for error and we have few opportunities to get the sector right. For this reason, it is more vital than ever that the country attracts reputable investors who are willing to work alongside the Government, building responsible practices and ensuring that there is a good balance between commercial gain, local benefits, and environmental and social risk.” 3. The Vision Statement of the NMP states: “the mineral resources of Solomon Islands will be developed for the benefit of all the people of our country in a way that causes minimal environmental impact and respects the different cultures, interests, and relationships that make up this diverse community, both now and for future generations.” 4. The main reforms defined by the NMP (pp10-11)21 are: a. Refined and clarified functions and powers of the Minerals Board, with an independent Chair, for more efficient and less discretionary decision making. b. Increased role for provincial government, including in landowner identification, quarrying and artisanal mining licensing. c. Greater inter-ministerial coordination to avoid duplication of efforts or contradictions of powers and processes. d. Greater revenue transparency and accountability, including the flow of all mineral revenue into one fund (the Minerals Special Fund), under the supervision of a multi-stakeholder Oversight Committee. e. Focusing regulatory authority in the statutory position of Director of Mines, who manages a fully capacitated and fit for purpose Mines Division. f. Inclusion of landowners, communities and other project impacted persons in the negotiation of land access and community development benefits, to ensure fair and equal representation for all. g. Strengthening access to legal advice, awareness training, financial management support and other services to enable effective participation by landowners, communities and other project impacted 21 Italicized words are added by the WB team. Page 54 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) persons, through an independent advisory center designed for this purpose. h. Openness and transparency about all agreements made that impact on landowners, communities and other project impacted persons with multiple opportunities for monitoring and verification, bringing dealings in mineral resources into the daylight. All key agreements (as well as Environmental Impact Assessments) will be publicly available documents. i. Heavier reliance on custom-appropriate land identification using traditional authority systems, facilitated by the government, to avoid capture by select interested parties, [and remove responsibility from mining companies]. j. Introduction of a multi-party Community Development Agreement framework for each mining project prior to mining development, to spell out the rights and obligations of each of the parties. k. Adoption of representative community structures to ensure fair and equal representation and benefits in mining revenue and development projects, guided by the Community Development Agreement. l. Standardization of model agreements, fees, and compensation rates to strengthen communities’ ability to negotiate with companies. m. Providing more safeguards to ensure that community decision making is inclusive and represents the views of men, women, and youth, to facilitate equitable development outcomes. n. Removal of several of the sources of risk to [mining company] security of tenure through greater clarity, standardization and efficiency of mineral rights licensing and management. o. Increase in number, size and duration of prospecting licenses during the exploration period. p. Companies will no longer be responsible for, or involved in, landowner identification – this will be a government led activity, with participation from custom bodies q. Standardized Land Access Agreements, Mining Agreements, Community Development Agreements, forms, fees, creating an even playing field for all companies who can have confidence in their landowner and community dealings. r. An even playing field for all companies with comprehensive new transparency provisions and reporting requirements. s. Greater scrutiny of applications with prescribed due diligence checks to encourage reputable operators. The policy identifies commitments towards addressing gender-based violence and enhancing women’s voice which would form part of mining company obligations. Page 55 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) ANNEX 3: Climate Co-benefits Table Sub-components Adaptation Measures and Links Mitigation Measures Specific climate considerations including avoiding deforestation and river pollution will be incorporated in the mining legislation. The sub-component will also prepare regulations, guidelines and protocols on matters beyond the scope of mining legislation to better harmonize mining-relevant regulation of Sub-component 1.1: Policy, environmental management including impacts of mining on climate Plans and Legislation adaptation and mitigation, especially on avoiding damage to forests and soil. The efforts will positively affect communities’ adaptive capacity to climate change in the long term. Carbon benefits will also be generated as forests and soil being protected are GHG sinks. Sub-component 1.2: Institutional Structures and N/A N/A Functions The licensing process will include climate-specific design of criteria, Sub-component 2.1: particularly on deforestation. Monitoring and enforcement of environmental Mineral Rights obligations will reduce the occurrence of illegal mining activities in forested Management areas, leading to climate mitigation benefits and enhanced adaptive capacity of ecosystems and communities through avoided deforestation. Sub-component 2.2: Mineral Revenue N/A N/A Management This sub-component will leverage geodata to address identification of areas vulnerable to climate- Sub-component 2.3: Geo- risks such as erosion, flooding N/A data Management and coastal inundation and thus contribute to enhancing climate resilience. Sub-component 2.4: N/A N/A Operational Support The Independent Advisory Institution to be established by the sub-component will promote the understanding of Sub-component environmental and climate risks 2.5: Independent Advisory and adaptation measures N/A Institution through regular community training programs conducted to help build capacity of mining affected communities in adapting and coping with climate issues. Page 56 of 57 The World Bank Solomon Islands Sustainable Mining Development Technical Assistance Project (P173018) Page 57 of 57