|1. Project Data:
ICR Review Date Posted:
|Zambia Copperbelt Environment Project (cep)
Project Costs(US $M)
Loan/Credit (US $M)
Cofinancing (US $M)
Board Approval Date
|Mining and other extractive (100%)|
|Pollution management and environmental health (50% - P)
Environmental policies and institutions (50% - P)|
||ICR Review Coordinator:
|Robert Mark Lacey
||George T. K. Pitman
|2. Project Objectives and Components:|
According to the Project Appraisal Document (PAD, page 3), the project development objective is to assist Zambia:
"to i) address environmental liabilities associated with the mining sector, following the privatization of the mining assets, and ii) improve future compliance of the mining sector with environmental and social regulations.”
According to the Development Finance Agreement the objectives of the project are:
This Review uses the statement in the Development Finance Agreement to assess the project since it is more monitorable.
"to assist the Borrower’s efforts in: (a) addressing environmental liabilities and obligations associated with the mining sector, following the privatization of the mining assets of ZCCM [Zambia Consolidated Copper Mines, hereinafter Consolidate Copper]; and (b) strengthening the capacity of its environmental regulatory institutions to improve future compliance of the mining sector with environmental and social regulations.”
b. Were the project objectives/key associated outcome targets revised during implementation?
There were two components:
1: Environmental Management Plans and Environmental Management Facility (US$35.3 million at appraisal, US$46.9 million at closure). The Component financed the identification and implementation of priority measures to remedy environmental and related social problems arising from Consolidated Copper’s pre-privatization mining operations, as well as to enable Investment Holdings to meet its environmental contractual obligations to private mining companies. The delineation of liabilities between investors, Investment Holdings and the Government was to be determined through the preparation of an Environmental Management Plan (EMP) by each investor and of a Counterpart EMP by Investment Holdings. The Component also financed the preparation of a Consolidated Environmental Management Plan (CEMP). While incorporating the concerns of the EMPs, the CEMP would look beyond individual mining sites to address ecosystem-wide issues such as watershed management, air pollution, and contamination of soils and sub-surface water. The CEMP would also identify funding priorities and provide the criteria for selecting priority sub-projects to be funded by the Environmental Management Fund (hereinafter called the Fund) in the Copperbelt and in Kabwe, such as the cleanup of defunct mine plant sites, removal and disposal of hazardous materials, rehabilitation of tailings (mining residue) dams (because of the possibility of dam failure due to mining res in preparation for closing, the resettlement of people living in mine caving areas, and (in Kabwe) the treatment of lead-exposed children and remediation of lead contamination in their living, play and learning environments.
2: Strengthening the Environmental Regulatory Framework (US$4.2 million at appraisal, US$6.2 million at closure). To help the Government to ensure that both historical and future environmental liabilities were adequately met, this Component aimed to assist the Environmental Council of Zambia to allocate a higher proportion of its resources and efforts to its regulatory mandate, to strengthen the capacity of the Council and of the delegated authorizing agencies, such as the Mines Safety Department, to review Environmental Impact Assessments, effectively negotiate Environmental Management Plans with investors and with Investment Holdings, issue pollution permits, monitor the EMPs, collect fees, and enforce compliance if necessary through the imposition of penalties such as fines and temporary closure of facilities. The Component also intended to finance capacity strengthening of NGOs and relevant training institutions, such as the Copperbelt University, in order to increase national capabilities to address environmental issues associated with the mining sector.
d. Comments on Project Cost, Financing, Borrower Contribution, and Dates
Total project cost at closure was US$53.1 million, 34% higher than the appraisal estimate of US$39.5 million. Much of this was due to the higher cost than anticipated of the remedial measures financed under Component 1. These measures, while outlined in general terms in the PAD, were not identified in detail or pre-costed. This was done in the EMPs and the CEMP prepared during implementation.
IDA financing consisted of a credit of Special Drawing Rights (SDR) 13.32 million, equivalent to US$19.00 million, and a grant of SDR 5.23 million, equivalent to US$21.00 million. While the grant was fully used, Annex 1 of the ICR indicates that only US$15.50 million of the credit was utilized. The ICR reports (paragraph 17) that the significantly higher than anticipated extent and cost of consulting services required a reallocation of IDA proceeds from credit-financed physical works to grant-financed consulting services. This was approved in November, 2009. At project closure, SDR 5.23 million remained undisbursed.
In 2003, the Nordic Development Fund committed a €10 million credit (about US$13 million equivalent) for parallel financing of the project, which freed up IDA credit funds previously allocated to Component 2 and selected activities under Component 1. At closure, US$10.8 million of the Nordic credit had been disbursed.
According to Annex 1 of the ICR, the Borrower contributed US$3.8 million, more than twice as much as expected at appraisal. The funds came from both the Government and Investment Holdings. The higher contribution is explained in part by the profitability of the mining sector at prevailing world copper prices.
Project effectiveness was delayed from April 2003, when the Development Finance Agreement was signed, until September 2003 due to the delay in fulfilling effectiveness conditions, specifically the appointment of the Manager of the Environment Management Facility Secretariat and a project accountant. The mid-term review was postponed from August 2005 to February 2006, mainly because of delays in the start up of Component 2, the need for more time than projected to complete studies, and the slow inception of physical works. In light of persisting procurement and disbursement challenges (see Section 11 below), two extensions of the closing date totaling 32 months were granted.
|3. Relevance of Objectives & Design:|
a. Relevance of Objectives:
- Project objectives were relevant to the need to mitigate the environmental impact of Zambia's mining industry. The PAD had identified five major mining-induced environmental problems which gave rise to contractual obligations and liabilities for Investment Holdings, and which were confirmed by the CEMP: (i) air pollution: copper smelters were emitting 300,000 to 700,000 tons of sulfur dioxide (S02) per year. S02 was affecting the health of residents in adjacent communities, particularly in the form of respiratory problems; (ii) soil contamination: S02 emissions from smelters, after converting to sulfuric acid (H2S04), impacted soils and caused loss of vegetation downwind of smelter stack emissions. Dust particles containing copper, nitrous oxides and organic acids had entered streams and affected aquatic fauna. Redundant chemicals, and oil laced with Polychlorinated Biphenal (PCB) or other hazardous waste (including radioactive uranium tailings) further contributed to soil contamination; (iii) water pollution: unrestricted and untreated runoff and leakage from existing waste rock dumps and tailings dams were polluting streams and causing widespread negative human health and ecological impacts downstream from the mines that extended as far as the Kafue River, its tributaries and wetlands; (iv) risk of catastrophic failure of tailings dams: some tailings dams were located close to human habitation; their destabilization due to the lack of maintenance, and the dismantling of structures by vandals were liable to cause extensive physical and ecological damage and, potentially, loss of life; and (v) lead poisoning in Kabwe: Investment Holdings was faced with serious liabilities related to lead zinc mining in Kabwe. About 50,000 residents (including 9,000 children) were affected by high lead levels in the soil, due to naturally occurring mineralization as well as the impact of the smelting and mining operations.
- Accelerating economic growth while ensuring environmental sustainability is one of the four main objectives of the 2008-2011 Country Assistance Strategy (CAS), the CAS at closing. Given the critical importance of the copper mining industry to Zambia’s economy and fiscal revenues, and the expansion in more efficient production enabled by the privatization process, the project, by facilitating privatization through helping to ensure environmental compliance, assumes a central place in achieving the CAS objective. One of the key outcomes of the CAS is increasing the percentage of mining companies in compliance with their EMPs from 35% in 2005 to 85% in 2010.
- The project was equally central to attaining the goals of the 2000-2003 CAS, the CAS at project appraisal. The CAS objective for the mining sector, which represented the main pillar of the Government’s economic restructuring program, was to remove constraints to growth through the privatization of mines. The project was specifically identified in the CAS to address the environmental liabilities associated with the privatization of Consolidated Copper assets.
- Zambia’s Sixth National Development Plan for 2011-2015 seeks to maximize the mining sector’s economic benefits and to realize its potentially high contribution to poverty reduction, through ensuring sustainable production and management, and by mitigating the adverse environmental impacts of mining.
b. Relevance of Design:
- The planned activities in Component 1 were appropriate for the identification, prioritization and remediation of the environmental and related social issues leading to obligations and liabilities for Investment Holdings. In particular, the holistic approach used in guiding project interventions through the preparation of a CEMP, rather than relying on a piecemeal, case-by-case methodology, helped to ensure a comprehensive and internally coherent coverage of mining related externalities.
- The planned activities in Component 2 -- in particular, the revision and harmonization of environmental regulations in the mining sector, the establishment of an environmental emergency response system, monitoring and enforcement of compliance, and targeted training nand institution building -- were relevant to the intended outputs and outcomes expected to lead to achievement of the second development objective in the DFA. The Component also facilitated capacity building in such institutions as the University of Zambia, the Copperbelt University and NGOs, all of which were, or were to become, involved in the mitigation of environmental impacts from mining.
- Design included provisions for monitoring progress in addressing environmental issues -- such as tracking the public health impact through measuring blood levels in children receiving treatment for lead poisoning under the project, and regular monitoring of ambient water and air quality. However, the outcome and intermediate outcome indicators chosen were insufficient to provide a logical linkage between the activities financed and the project objectives (see Section 10 below).
|4. Achievement of Objectives (Efficacy) :|
"To assist the Borrower’s efforts in: (a) addressing environmental liabilities and obligations associated with the mining sector, following the privatization of the mining assets of ZCCM [Zambia Consolidated Copper Mines, hereinafter Consolidate Copper]; and (b) strengthening the capacity of its environmental regulatory institutions to improve future compliance of the mining sector with environmental and social regulations.”
(a) Addressing environmental liabilities and obligations associated with the mining sector, following the privatization of the mining assets of Consolidated Copper. Substantial.
- 15 investor and 12 Investment Holdings counterpart Environmental Management Plans were prepared by investors and by Investment Holdings respectively, and approved by the Environmental Council of Zambia. These plans define the remediation responsibilities of the Government, Investment Holdings and the investors for each mining operation.
- A Consolidated Environmental Management Plan (CEMP) was prepared and utilized.
- According to Table 2 of Annex 2 of the ICR, 85 groups of remedial activities and sub-projects (45 in the Copperbelt and 40 in Kabwe), which were identified through the CEMP, were carried out to address Investment Holdings’s historical and current environmental liabilities and obligations. In the Copperbelt, these included dredging of polluted rivers; demolition and site clean-up at mines; removal and proper disposal of hazardous materials from mine sites, such as 150,000 cubic meters of radioactive uranium tailings, about 220 tons of PCBs, and 56,000 m3 of lead contaminated soils in the Copperbelt and Kabwe, as well as extensive demolition, cleanup and re-vegetation efforts; resettlement from mine caving areas; and preparation for closure, and essential repair and maintenance, of tailings dams. In Kabwe, activities included the rehabilitation of the disused mine plant site; the securing of pits; the removal of mine waste materials; the dredging and rehabilitation of the Kabwe Main Canal; renovation and rehabilitation of community services and facilities, including water supply; and improvement of livelihoods through construction of markets and small manufacturing and commercial facilities.
- An in-depth study (the Kabwe Design and Scoping Study), financed under the project, was carried out to examine the nature, extent, pathways, and impact of lead contamination at household level. This study revealed that Investment Holdings was faced with serious liabilities related to lead zinc mining in Kabwe. Based on the study, the project financed a comprehensive set of interlinked activities to reduce the - by international standards - exceptionally high blood lead levels in children living in the vicinity of the smelter. The project supported “a state-of-the-art Integrated Case Management program, which provided specialized care by a multidisciplinary team comprising a physician, nurse, sociologist, community volunteers, environmental technical specialist and caregivers” (ICR, paragraph 50).
- This program was reinforced by (i) provision of access to safe drinking water for 99,000 inhabitants of Kabwe; (ii) reduced exposure to lead-contaminated water as a result of the dredging of the Kabwe Canal, and removal and disposal of lead-contaminated material; (iii) greening of the yards of 3,100 households and 30 schools in order to reduce exposure to wind-blown lead dust; (iv) creation of 11 play parks to provide alternative play environments for children who would otherwise play in lead-contaminated dust or tailings dams; and (v) lead risk awareness campaigns supported by local NGOs, two new Environmental Public Information Centers (EPICs), and the rehabilitated Kabwe Public Library.
(b) Strengthening the capacity of its environmental regulatory institutions to improve future compliance of the mining sector with environmental and social regulations. Modest
- The ICR (paragraph 50) reports that all Consolidated Copper’s priority contractual obligations relating to the environment were addressed, “albeit not always in a sustainable fashion due to insufficient focus on operation and maintenance responsibilities." Conversely, priority liabilities were addressed to a varying extent, especially in the Copperbelt. The ICR does not state how many interventions were related to obligations and how many to liabilities.
- The rest of the discussion of this objective focuses on the five major mining-induced environmental problems which the PAD had identified as giving rise to contractual liabilities for Investment Holdings, and which were confirmed by the CEMP: (i) air pollution; (ii) soil contamination; (iii) water pollution; (iv) risk of catastrophic failure of tailings dams; and (v) lead poisoning in Kabwe.
- Air pollution. The ICR reports (paragraph 38) that changes in air quality were not monitored during implementation. The limited data available suggest that “the project did not have a significant impact on improving ambient air quality” (ICR, Annex 3, paragraph 12). According to air quality data monitored by a private mining company for the period from July - December 2010, the SO2 concentration in ambient air in one location was 100% above the World Health Organization guideline limit, and in another location was more than 83% above the guideline limit. The ICR, however, also states (Annex 3, paragraph 13) that “in spite of a more than 100% increase in copper production between 2003 and 2010, from about 300,000 to 700,000 tons per year, the air quality has not deteriorated,” and that this is considered to be attributable to “the more vigorous compliance enforcement efforts on the part of the Environmental Council, as a result of the support provided to the agency under the project.” Although the ICR cites little evidence to back this, the Project Team subsequently informed IEG that "the project funded two mobile air quality monitoring stations which were deployed by ECZ [the Environmental Council] at times and locations of suspected high air pollution. This sophisticated equipment enabled continuous monitoring of multiple air quality parameters and real time transmission from the place of deployment to ECZ head office in Lusaka. While such occasional deployment of air quality monitoring equipment may not be considered systematic, mere availability of such equipment and ability of ECZ to deploy it at pollution sources contributed to the compliance pressures that incentivized the polluters in Copperbelt to improve their air pollution management."
- Soil contamination. According to the ICR (paragraph 38), changes in soil contamination levels were not systematically monitored during implementation (except for lead poisoning in Kabwe, considered separately below). However, the Project Team subsequently stated that, with the project's support, most of the identified contaminated soils, that would otherwise continue to pose environmental and health risks, were removed in substantial quantities. These included the 150,000 cubic meters of uranium tailings, 220,000 kilograms of PCB-contaminated soils, and 56,000 cubic meters of lead-contaminated soils cited in "Outputs" above. In addition, subsequent to project closure, Investment Holdings removed the remaining stockpile of obsolete chemicals stored in the Copperbelt for safe disposal in South Africa.
- Water pollution. Baseline water quality data for the Kafue River watershed were collected for the CEMP in 2004 and 2005. The Environmental Council began to monitor the quality periodically in 2007. On average, the water quality was found to be similar to levels registered before the project. The total suspended solid level, used as a proxy for measuring water pollution, varied greatly, making it difficult to draw a conclusion about the overall change in water quality. Nonetheless, the data suggest that water quality did not deteriorate despite the more-than-doubling of copper production. Once again, the ICR attributes this to Council's strengthened reinforcement efforts supported by the project.
- Risk of catastrophic failure of tailings dams. Repair and rehabilitation work on four out of 17 dams was carried out. According to the ICR (paragraph 50), no spillage occurred at these dams following project interventions, and their potential health and environmental risks have been reduced. For the 13 remaining dams, it was found that reprocessing of the residual copper content was not economically viable, and they were earmarked for closure. However, in view of the higher prevailing price of copper, the mining rights for these dams were subsequently transferred to the private sector. This privatization effectively prevented Investment Holdings from implementing the decommissioning works that would have been supported by the project. Nor were the dam sites inspected and monitored by the Environmental Council as regularly as had been intended, due to “human and financial resource constraints” (ICR, paragraph 65). The ICR reports (paragraph 50) that little preventive maintenance was carried out at the 13 dams, and that “their current contribution to the pollution flows into streams flowing out of the mine areas is unknown.”
- Lead poisoning in Kabwe. The ICR (paragraph 23) describes the lead contamination mitigation program supported by the project as “an excellent, well thought-out, holistic high priority intervention package designed to treat lead-affected children medically, as well as to reduce their exposure to renewed contamination in their physical living, playing and learning environments.” The program resulted in a reduction of blood lead levels in 2,822 children (out of 5,000 children tested) of between 20-25% in the case of treatment with nutritional supplements (for children with blood lead levels between 20-64 micrograms per deciliter) and by up to 74% for children with blood lead levels beyond 65 micrograms per deciliter who were given chelation therapy. While the ICR (paragraph 65) reports that a long term solution has still to be found for funding the continuation of the Kabwe lead management and treatment activities, subsequent information provided by the Project Team indicates that the program has been continued with funding from Investment Holding. According to a December 2012 report by that company, an additional 2,657 children have been newly recruited into the program, and 1,598 children retested since project closure. Moreover, new data confirm that the blood lead levels in affected communities continue to decrease. From 2010 to 2012, the geometric mean blood lead levels fell from 30.1 to 26.3 micrograms per deciliter in the affected communities, and the downward trend in blood lead levels was observed in six out of eight of the affected communities. Maintenance of the Kabwe Canal (a significant source of contamination when it flooded) has been taken over by the Municipal Council and the Canal has not flooded since project closure. The water supply system, introduced as part of the project's lead exposure reduction interventions, continues to operate under a private company. On the negative side, the coverage of the clean water program is still incomplete, and Kabwe's sewerage plant has only a 42% coverage. Consequently, untreated sewage is being released into local rivers via the Kabwe Canal. The ICR reports that nine out of the eleven play parks have been vandalized and their equipment broken. The Environmental Public Information Centers have scaled back their activities due to lack of funding.
- Existing environmental legislation and related regulations were reviewed and adjusted where needed.
- A monitoring system has been established and is operated by Investment Holdings.
- The Environmental Council established a monitoring program and has been monitoring the Environmental Management Plans’ compliance with statutory limits, primarily based on compliance reports from mine operators. The Council is also periodically monitoring pollution loads and flows from mining operations.
- Capacity at the Council was strengthened, with a view to enhancing its enforcement, litigation and negotiating capabilities.
- The relationship between the Council and the Mines Safety Department was strengthened and formalized in a revised Memorandum of Understanding and the Department was provided with logistical support.
- The preparedness of the Environmental Emergency Response System was reinforced through the acquisition of equipment (including a toll free environment emergency hotline) and through staff training.
- The Environmental Council has been monitoring mining companies’ compliance with their Environmental Management Plans, and with statutory limitations, basing its work primarily on reports from mine operators themselves. According to these reports, compliance rose from 35% in 2005 to 60% in 2010, though this was short of the CAS target of 85%. The lower than hoped for level of compliance “is partly due to the fact that, during privatization, the Government exempted various new investors from having to comply with environmental standards to give them time to phase out or retrofit the old technology they inherited, thereby effectively limiting the Council’s effectiveness as an enforcement agency” (ICR, paragraph 50).
- The Council organized some 90 visits per year between 2005 and 2010 to 23 mining business units or facilities to check the compliance data reported by the operators. However, the ICR reports (paragraph 50) that the monitoring program was not fully implemented, and the collection of monitoring data has been very limited, due to delays in the procurement of monitoring equipment financed by the Nordic Development Fund.
- The project succeeded in enhancing the Council’s powers to monitor and enforce, through fines, temporary suspensions of mining licenses and litigation, private mining operators’ compliance with environmental regulations. The number of pollution control permits increased from 1,392 in 2005 to 3,582 by December 2010 (no target was set for this indicator). Similarly, the number of enforcement notices rose, and two facilities were ordered to shut down temporarily – and had their licenses suspended – for non-compliance.
- However, the attempts to strengthen the Council’s capacity to exercise its enhanced functions more effectively have met with more limited success. In part this was because the entity was undermined by actions outside its control, such as exempting investors from compliance with environmental standards and transferring the tailings dams mining rights to the private sector. But the ICR also refers (paragraph 35) to the Environmental Council of Zambia’s “ineffectual operating structure,” and indirectly to the need to reduce staff turnover. The ICR presents little evidence that these issues have been addressed. On the contrary, the significant weaknesses demonstrated by the Council in its capacity as project implementing agency (see Section 9 below) would appear to indicate that they had not been effectively tackled. According to the Project Team, the Environmental Management Act of 2011 upgraded the Council to the Zambia Environmental Management Agency and reinforced its mandate. However, no concrete results from this are yet available.
- The ICR reports (Annex 2, Box 1) that the project’s impact on the capacity of the Mines Safety Department and other intended beneficiaries, such as academic and research centers was minimal, and that interagency cooperation did not improve significantly due to infrequent and irregular meetings of the Interagency Committee.
According to the PAD, the project had a higher-level objective of supporting the Government in removing constraints to private investment in mining assets. The ICR (page 19) indicates that this objective was met. It refers to two private-sector financed site rehabilitations at a total cost of US$245 million, "which would not have occurred without the project, [and which] far exceeded the clean-up costs of US$2.9 million. The project had provided necessary funding to assure investors that Investment Holding and the Government would not default on their environmental mitigation obligations. It is known that such a default would have led certain investors to pull out of Zambia.
Efficiency is rated modest
* Refers to percent of total project cost for which ERR/FRR was calculated