This sector includes, in general, all branches of mining and quarrying as specified under Major Division 2, Mines and Quarries, of the United Nations International Industrial Classification of Economic Activities, Statistical Report Series M, No. 4, Rev. 2, Add. 1.
The Bank's mining policy is directed to the support of projects and programs aimed at identification and economic exploitation of mineral resources in the developing regional member countries, as well as extension of support to institutions in the sector, in consonance, where appropriate, with the respective economic development plans.
Within this policy framework, the Bank is prepared to consider requests for project financing and/or technical cooperation financing for the mining sector which will contribute to:
- Identifying and evaluating mineral resources;
- The development of mineral resources and their exploitation and concentration;
- Providing the necessary infrastructure for development of mining projects;
- Increasing the value added to mineral products and making their exploitation more efficient;
- Facilitating the development, transfer and absorption of technology, including use of lateral technical cooperation;
- Stimulating the development, transfer and absorption of technology, including use of lateral technical cooperation;
- Creating incentives to intra-regional cooperation in mineral resource development and fostering economic integration through multinational mining projects;
- Mobilizing financial resources for the identification and development of mining projects; and
- Strengthening the institutional capacity of the mining sector.
Fields of Activity
1. RECONNAISSANCE. Mining activities may or may not be carried out with respect to particular mineral deposits. In the latter event they will consist in the preparation of maps and the performance of studies or research directed to establishing the existence and nature of geomineral structures in a given area. The purpose of such studies and research is to collect and evaluate general geological, geophysical and geochemical information on a particular area in order to facilitate the identification of specific mineral deposits for possible inclusion in a later stage of mining development.
2. PROSPECTING. Prospecting is the search for mineral resources, based on the particular geologic characteristics of the soil and subsoil, with the aim of identifying a specific mineral deposit.
3. EXPLORATION. Exploration is the entire range of activities having as their purpose the determination of the magnitude, form, position, characteristics, grade and value of a given mineral deposit. It is generally carried out through soundings or perforations of the soil and subsoil to calculate the existing economic reserves of mineral (tested reserves) and estimate the probable and possible amounts of reserves.
4. DEVELOPMENT. Development is the performance of works to allow access to and within an already-explored mineral deposit in order to put it into condition for subsequent exploitation.
5. EXPLOITATION. Exploitation is the entire series of activities involved in extracting the mineral contained in a deposit.
6. CONCENTRATION. These operations consist in subjecting the mineral extracted from a mine to physical-chemical treatment to eliminate impurities and increase the grade of the mineral. Smelting, pelletization, refining, etc., of minerals are included in the operational policies under "Industrial Development" (OP-722).
7. TRANSPORTATION AND SHIPMENT. Transportation and shipment refer to the transport services (infrastructure and means of transport), basically captive facilities of the mining operation (including related specialized port facilities), for moving the mineral to a point from where it is on-carried by a public transportation service.
8. INFRASTRUCTURE AND SUPPORT INSTALLATIONS. This refers to the construction of installations to facilitate mining activities, such as storage of fuels, captive generation of electricity, transmission lines, generation of compressed air, maintenance shops, yards for stocking mineral and concentrates, air ventilation and purification, purification of mine waters, catchment, transmission and treatment of water for industrial use and drinking, management and accumulation of mine wastes, housing and social services for personnel, etc.
Considering the investments in foreign exchange that have to be made in certain items that form part of the working capital, e.g. bits, certain chemical products, etc., exceptions might be made, after justification in each case, to the Bank's general policy of not financing working capital.
In addition to complying will all the requirements included in other chapters of this Manual on this matter, the following specific aspects should be given special consideration in performing the economic, financial, technical, institutional and legal evaluation of mining projects:
a) the rate of financial return and, also, the rate of economic return, in accordance with the general socioeconomic criteria for evaluation of projects;
b) in the market analysis, the historical evolution of the fluctuations of the international prices and the international market outlook should be analyzed, as well as, when appropriate, the world accumulation of stock;
c) assurance of sufficient mineral reserves;
d) endeavor to see that the benefits of the project reach the community, avoiding enclave projects;
e) adequate information on the mineral deposits for forming a judgment as to possible effects resulting from unforeseen geological conditions;
f) the utilization of technology appropriate for a rationally-based exploitation that will maximize recovery and optimize the possibilities for utilization of secondary minerals;
g) the legal framework of control and exploitation under which the company will operate the mining deposits;
h) possible environmental pollution effects and ways of avoiding or minimizing adverse ecological impact of the project; and
i) the adoption of measures to protect the health and safety of the workers.
Small, Medium and Large-Scale Projects
In view of the wide diversity of economically exploitable non-fuel and fuel minerals and the various forms of exploitation of mines and deposits, in rating a project in terms of size, consideration should be given among other factors, to its particular characteristics and those of the country concerned. As experience with mining projects is gained in the Bank, Management will be able in the future to present to the Board of Executive Directors operating criteria for rating mining projects in advance as small, medium or large.
Forms of Financing
When reviewing a loan application the Bank will consider the applicants ability to obtain the loan from private sources of financing on conditions which, in the Bank's opinion, are reasonable for the borrower, taking into account all pertinent factors.
In addition, when considering loan and/or technical cooperation applications in the mining sector, the Bank will take into account the following basic criteria:
a) Consideration will be given to granting technical cooperation applications in connection with advisory services, in general, in the mining sector of the countries and in support of institutional strengthening, including the negotiation of mining contracts and agreements with third countries or enterprises and advice for the formulation of mining policies and legislation;
b) For small and medium-scale mining projects, the Bank will consider requests for loans and/or technical cooperation. These operations may include both the preinvestment and investment stages of such projects; and
c) For large projects, along with providing loans and technical cooperation in limited amounts with resources of its own, the Bank will play an essentially catalytic role, participating actively, at the request of beneficiary countries, in the raising of additional external funds to assist in adequate financing and execution of such projects.
Prevailing Reference Document: GP-69-4, May 1979.
* The operational policies of the Inter-American Development Bank are intended to provide operational guidance to staff in assisting the Bank's borrowing member countries. Over the course of the Bank's more than 40 years of operations, the approach to developing operational policies has taken various forms, ranging from the preparation of detailed guidelines to broad statements of principle and intent. Many policies have not been updated since they were originally issued, and a few reflect emphases and approaches of earlier years which have been superseded by specific mandates of the Bank's Governors, the most recent being the Eighth Replenishment mandates of 1994.
In accordance with the Bank's information disclosure policy, the Bank is making all of its operational policies available to the public through the Public Information Center. Users please note that the Bank's operational policies are under a process of continuous review. This review process includes preparation of best practice papers summarizing experience at the Bank and other similar institutions, and sector strategy papers.