Document of

The World Bank FOR OFFICIAL USE ONLY

ReportNo. P-6638-BR

AND RECOMMENDATION MEMORANDUM OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTIONAND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED U.S.

DOLLAR SINGLE CURRENCYLOAN

IN AN AMOUNT EQUIVALENT TO US$50 MILLION TO COMPANHIA VALE DO RIO DOCE (BRAZIL) WITH THE GUARANTEE OF THE FEDERATIVE REPUBLIC OF BRAZIL FOR AN ENVIRONMENTAL CONSERVATION AND REHABILITATION PROJECT

JUNE 9,

1995

This document has a restricteddistributionand may be used by recipientsonly in the performanceof their official duties. Its contents may not otherwise be disclosedwithout World Bank authorization.

CURRENCY EQUIVALENTS

Currency Unit =

Real(R$)

US$1= R$0.89 (May 26, 1995)

WEIGHTS AND MEASURES I Metric Ton (m ton) 1 Metric Ton (m ton) 1 Meter (m) 1 Kilometer (km) 1 Cubic Meter (m 3 ) 1 Hectare

= 1,000 Kilograms (kg) = 2,204 Pounds (lb) = 3.28 Feet (ft)

= 0.62 Miles (mi) = 35.3 Cubic Feet (cu ft) = 2.47 Acres

LIST OF ABBREVIATIONS AND ACRONYMS

CVRD DDSR FUNAI IBAMA NGO NOVA ERA PHRD PIFI PPAR SEPAs

Companhia Vale do Rio Doce Debt and Debt Service Reduction National Indian Foundation Brazilian Institute of the Environment and Natural Renewable Resources Non-Governmental Organization Nova Era Silicon S.A. Policy and Human Resources Development Fund Integrated Industry/Forest Management Plan Project Performance Audit Report State Environmental Protection Agencies

FOR OFFICIAL USE ONLY BRAZIL ENVIRONMENTAL CONSERVATION AND REHABILITATION PROJECT Loan and Project Summary Borrower:

Companhia Vale do Rio Doce (CVRD)

Guarantor:

Federative Republic of Brazil

Beneficiaries:

Selected affiliated companies and subsidiaries of CVRD and municipalities under some pollution control and municipal improvement subprojects.

Poverty:

Not applicable

Amount:

US$50 million equivalent

Terms:

US dollar single currency loan, for fifteen years, including a five- year grace period, at the Bank's standard LIBOR- based interest rate for US dollar single currency loans'.

CommnitmentFee:

0.75% on undisbursed loan balances, beginning 60 days after signing, less any waiver.

Onlending Terms:

Funds would be onlent to participating CVRD affiliated companies and subsidiaries and municipalities at the same terms and conditions as the Bank loan to CVRD, plus, for CVRD affiliated and subsidiary companies, a small administration fee.

Financing Plan:

See Schedule A.

Net Present Value:

Pollution control and land reclamation investments financed under the project (equivalent to 58% of project costs) will bring no or negligible financial returns to CVRD, but will significantly contribute to improved health and safety. Natural resource components (6% of project costs) will have unquantifiable local and global benefits by promoting carbon sequestration and biodiversity and increasing knowledge of tropical forest ecosystems. Socially-oriented investments (in basic water supply and sanitation infrastructure, and an Amerindian program) will increase welfare of benefitting communities while promoting self-sufficiency goals (19% of project costs).

Staff Appraisal Report:

Report No. 14585-BR, dated June 9, 1995

Map:

IBRD No. 23514

I Until Loan signing, CVRD would have the option of changingthese terms to the standard terms of a fixed-rateUSDollar single currency loan.

This document has a restricteddistributionand may be usedby recipientsonly in the performanceof their officialduties. Its contents may not otherwisebe disclosedwithoutWorld Bank authorization.

MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO COMPANHIA VALE DO RIO DOCE (BRAZIL) WITH THE GUARANTEE OF THE FEDERATIVE REPUBLIC OF BRAZIL FOR AN ENVIRONMENTAL CONSERVATION AND REHABILITATION PROJECT

1. I submit for your approval the following memorandum and recommendation on a proposed US dollar single currency loan to Companhia Vale do Rio Doce (CVRD), with the Guarantee of the Federative Republic of Brazil, for US$50 million equivalent to help finance an Environmental Conservation and Rehabilitation Project. The loan would be at the Bank's standard LIBOR-based interest rate for US dollar single currency loans, for a maturity of 15 years, including five years of grace. However, after Government approval to the proposed terms was obtained, the Bank announced the expansion of the Single Currency Loan program to offer a fixed-rate option, and CVRD expressed interest in selecting that option. CVRD qualifies for a fixed-rate single currency loan because neither the Government of Brazil nor CVRD hold unconverted VLR82 outstanding obligations. It is therefore proposed that CVRD would retain the option of changing to the standard terms of a fixed-rate option until loan signing, subject to Government approval of the proposed changes. The Loan Agreement would be changed accordingly prior to Loan signing. Background 2. Major environmental problems in Brazil include industrial and urban pollution, deforestation and land degradation arising from weak enforcement of environmental regulations, rapid urbanization and rural poverty. In the past few years, however, the Federal Government has, through modern environmental legislation, established broad ambient quality standards, introduced procedures and requirements for environmental licenses, set aside areas for the preservation of critical ecosystems, and intervened whenever state agencies were not carrying out their responsibilities. In particular, the federal law requires all enterprises, as a condition for issuance or renewal of operating and investment environmental licenses, to submit comprehensive environmental impact assessments of their ongoing operations and to implement the recommended mitigation plans. State environmental protection agencies (SEPAs), are responsible for monitoring environment quality, developing local legislation and emission standards and enforcing the law at the state level. However, only a few states have as yet made significant headway in controlling environmental degradation, although all of them have significantly increased pressure on the largest enterprises to comply with environmental regulations. 3. Companhia Vale do Rio Doce (CVRD) is a major mixed state-private company with mining, industrial, transport and port operations, mostly clustered along two CVRD-owned 800 to 1000 kilometer railways, constituting the Northern System (in Para and Maranhao states) and the Southern System (in Minas Gerais and Espirito Santo states). In the northern system, environmental considerations were incorporated into project design and operations from the start. However, much more needs to be done in the older southern system to meet current environmental standards. CVRD has designed a program to deal with all the direct negative environmental consequences of its operations, partly to improve its national and international image and partly in response to increased institutional and community pressure made effective by the new environmental legislation. CVRD has placed a high priority on implementing its environmental program within the agreed time frames for compliance. In addition, despite excellent environmental management within its Carajas mining and railroad concession, CVRD has been strongly criticized for the indirect contribution of the Bank-

financed Carajas iron ore project to environmental and social problems in the Carajas corridor in the Eastern Amazon (see also para.7). This project will address some of the environmental impacts attributed to the project and contribute to identifying solutions to help prevent further degradation and enhance opportunities for environmentally sustainable development in the region. It is thus an important element in the Bank's strategy to deal with environmental issues in Brazil. 4. A source of deforestation in the Carajas corridor which has been attributed to the development of the Carajas iron ore mine is the establishment along the railroad of charcoal-based pig iron smelters. There are today six pig iron plants in operation, of a total capacity of about 768,000 tons. Although this has been only a minor contribution to deforestation in the area, there are risks in the future of increased pressure on the forest due to a projected reduction over time of available sawmill residues, currently their major source of wood supply. Regulations were approved in 1990 for all pig iron producers to secure their raw materials supply from plantations or managed forests by the end of 1995, but only one pig iron producer is expected to be complying with the law by then. Under the proposed project, CVRD has agreed to carry out an action program which would use CVRD's leverage on pig iron smelters derived from its position as iron ore and transport services supplier, by: (a) conditioning the supply of iron ore and transport services on compliance with the law within an agreed timeframe; (b) providing the smelters with technical assistance to prepare and carry-out reforestation and forest management schemes and technological improvements aiming at minimizing use of wood and charcoal; and (c) signing a cooperation agreement with IBAMA to ensure adequate and timely monitoring of the actions taken. 5. Bank environmental projects currently under implementation include the National Environmental Project (Loan 3173-BR); the Second Industrial Pollution Control Project (Loan 2831-BR); the National Industrial Pollution Control Project (Loan 3480-BR); the Minas Gerais Forestry Project (Loan 2895-BR); the Parana Land Management Project (Loan 3018-BR); and the Rondonia and Mato Grosso Natural Resource Management Projects (Loans 3444-BR and 3492-BR). All these loans include components aimed at strengthening SEPAs. The Pilot Program to Conserve the Brazilian Rainforest, financed by the G-7 and other donors, also include significant funding for actions aimed at reducing the rate of deforestation, promoting environmentally sustainable development in the Amazon, conserving biodiversity, protecting indigenous areas, and strengthening SEPAs in the nine Amazon states. Lessons from Previous Bank Involvement 6. Given the wide variety of components in the proposed project, relevant lessons can be drawn from a number of projects, but mostly from the Carajas Iron Ore Project and the Sao Paulo Industrial Pollution Control Project. 7. The Caraias Iron Ore Proiect (Loan 2196-BR) supported the establishment of the mining facility at Carajas and was notable at the time for the heavy emphasis it placed on limiting the environmental impact of the mine. The project was successful in terms of accomplishing stated project objectives, but it had a number of unforeseen environmental effects which gained international publicity. The Project Performance Audit Report (PPAR) for the Carajas project stresses that, while environmental management in the area directly under CVRD's control was excellent, and the Special Project aimed at protection of the Amerindians in the project's area of influence did bring substantial benefits, the Bank and CVRD failed to anticipate the contribution of this project to degradation of the physical environment and human conditions in the project's indirect area of influence, due to strong migrant

-3inflows in the area facilitatedby the constructionof the Carajas railroad and roads. Chief among these effects are social problems, in particulardeterioratinghealth conditionsof the population in rapidly growing frontier towns unable to provide basic sanitationsystems; pressure on Amerindian communitiesfrom settlers, prospectorsand loggers;and rural violenceassociatedwith land concentration. Physicaldeteriorationof the environmentis evident in erosion and land degradation causedby deforestationfor agriculturaland livestockuse, often unsustainableactivitiescaused by poverty (subsistenceneeds of poor migrants), governmentfiscal and credit subsidiesand land speculation. 8. Although it is difficultto isolatethe share of CVRD from that of other unrelated programs which preceded or accompaniedthe developmentof the project (the Belem-Brasiliaand Belem-Sao Luis highways,the Tucurui dam, the COLONEcolonizationscheme in Maranhao,the Serra Pelada wildcat gold mine), the PPAR points out "a continuingmoral obligationof CVRD to assist broader official efforts to provide needed infrastructureand servicesto the rapidlygrowing rural and urban populations--as well as to limit environmentaldegradation--in the region," and urges the Bank "to be open to the possibilityof providingadditionalassistancefor socially and environmentally-sound developmentprojects in this area." The report also stressesthe importanceof institutional strengtheningat the federal, state and local levels; increasingpublic awarenessand active community participationin program design and monitoringactivities;and the need for cross-sectoralapproaches to solving the region's problems. The Bank has already steppedup its efforts at natural resource managementand environmentalinstitutionalstrengtheningin a numberof states, includingthose in the region, through the National EnvironmentalProject (Loan 2831-BR),and through its participation in the Pilot Program Natural ResourcesPolicy Project. The proposedproject would seek to contributeto the mitigationof the Carajasproject's impactby: (a) preventingfuture degradationfrom pig iron plants; (b) ensuringthe continuityof CVRD's assistanceprogram to Amerindiancommunities initiated under the Carajas Iron Ore Project; (c) strengtheningconservationand forest management efforts of CVRD and increasingbasic scientificand ecologicalknowledgeof the area; (d) helping identify and promote environmentallysustainableeconomicactivitiesin the regionto lessen the pressure on the native forest by creatingemploymentand reducingpoverty; and (e) promoting urgently-neededsocial infrastructuredevelopment(water supply and basic sanitation)in selected towns along the railroad. 9. The Sao Paulo IndustrialPollutionControl Project (Loan 1822-BR. This project, approved in 1980, aimed at improvingregional air and water quality by reducingindustrialpollution and by training SEPA staff to design and implementa pollution control strategy. On the whole, the project was a success, and the impactson overall air and water quality were significant,although not as great as expected. The PPAR stressesthat the Bank should not hesitateto invest in environmental improvements,even if they appear non-productive. However, a long-term and broad-based environmentalprogram, strong politicalcommitmentat the state level and a strong environmental agency are essential in order to ensure that the programwill be effective. Rationalefor Bank Involvement 10. The World Bank Group's current Country AssistanceStrategyfor Brazil, discussedby the Board on June 29, 1993, and the new Country AssistanceStrategy(expectedto be presented to the Board on June 29, 1995)both supportpolicies and investmentsthat will encourageeconomicgrowth and social developmentin a contextof macroeconomicstability. The Bank pursues four long-term objectivesto stimulatedevelopmentin Brazil: (a) poverty alleviationand human resource

development;(b) environmentpreservation;(c) private sector developmentand public sector reform; and (d) improvementin infrastructureby rehabilitatingneglectedinfrastructure,promotingprivate sector participation,and strengtheningurban institutions. The proposedproject is fully consistent with the Country AssistanceStrategy, contributingprincipallyto the first two objectives,by reducing industrial and miningpollution, protectingnatural resources, providingbasic sanitationinfrastructure to poor communitiesand assistingvulnerableAmerindianpopulations. More specifically,the project deserves Bank support for the followingreasons: first, the proposed investmentsfit into federal and state priorities since CVRD is requiredto complywith the new federal legislationand with agreementswith state and municipalauthorities;second, the Bank would contributeto the preparation and implementationof a comprehensiveenvironmentalprogram in one of the largest industrial conglomeratesin Brazil, and to improvementsin its organization,policies and systems, which could be an examplefor other large industrialpolluters in the country; and third, the project would help correct and prevent further environmentaldegradationin the Carajas corridor, by: (i) ensuring that pig iron smelters in the corridor will not cause further environmentaldegradation;(ii) ensuring the continuityof the assistanceprogram to Amerindiancommunitiesinitiatedunder the Carajas Iron Ore Project; (iii) providingurgent basic sanitationinfrastructureto deprivedcommunitiesalong the railroad; and (iv) identifyingpossible waysto mitigate the other negativeenvironmentaland social impacts of the Carajas iron ore project, by using the strong researchand implementationcapabilities of CVRD. Project Obiectives 11. The project has three major objectives:(a) to support the entire environmentalprogram of CVRD by financing high-priorityinvestmentsthroughoutits operations;(b) to bring about changesin CVRD's policies, systems and proceduresneeded to reinforce soundenvironmentaland social policies and management;and (c) to correct some of the negativeindirectenvironmentaland social impacts of CVRD's operationsin sensitiveportions of its area of influence,in particular in the Carajas corridor. Project Description 12. To support these objectives,the project includesthe followingcomponents:(a) air, water and soil pollution control and land reclamationinvestments(58 percent of project costs) in CVRD's mining, industrial, rail and port operationsthroughoutthe country; (b) natural resource investments(6 percent of project costs), which includereforestationactivitieswith native species and the conservationof natural forest and ecosystemsin or near CVRD's installations;(c) sociallyoriented investments(19 percent of project costs) contributingto the alleviationof social problems in ecologicallysensitive areas in CVRD's area of influence,includingthe continuationof the Amerindianprogram (5 percent); the provisionof water supply and basic sanitationinfrastructureto urban communitiesnear CVRD's facilities (13 percent); and pilot rural extensionand small business developmentprograms (1 percent); (d) studies, research. training, and technicalassistance(3 percent of project costs) includingenvironmentalimpactassessmentsand monitoring(in particular at the Tubarao industrialport); and socio-economicstudies in CVRD's area of influence;(e) institutional strengtheningof CVRD (2 percent of project costs) through the establishmentof a corporate environmentalinformation,monitoringand control and auditing system;and (f) other subprojectsand studies to be defined (12 percent of project costs) aimed at further controllingenvironmentalpollution and degradationidentifiedas part of the environnental auditingprogram financedunder the project; and at improvingknowledgeand protectionof natural ecosystems,and enhancingthe welfare of communitiesin CVRD's area of influence.

13. The total financingrequired is estimatedat US$109.9million. The-proposedBank loan of US$50 million would finance 50 percent of total project costs, excludingtaxes, equivalentto 45 percent of total financingrequired. An amountequivalentto about US$1.6 million was approved under the Japan PHRD Fund to finance technicalassistancefor preparationof some of the Amerindianand natural resource subprojectsyet to be defined. Retroactivefinancingfor up to 10 percent of the loan amount would be includedfor expendituresmade up to 12 months before loan signing. Such retroactive financingwouldhelp ensure the implementationof a number of subprojects in time for CVRD to complywith the terms of its agreementswith the SEPAs. The project would be implementedover a five-yearperiod. A breakdownof costs and the financingplan are shown in ScheduleA. Amountsand methodsof procurementand the loan disbursementscheduleare shown in ScheduleB. A timetableof key processingevents and the status of the Bank group operations in Brazil are presented in SchedulesC and D, respectively. Agreed Actions 14. During negotiations,CVRD agreedto: (a) providetimely and sufficientfunds to cover the project expendituresand provide counterpartfunds equivalentto 50 percent of project expenditures net of taxes; (b) maintain a debt/equityratio not greater than 55:45 and a current ratio of not less than 1.2:1; (c) carry out its operations,cause its subsidiariesto take action, and take all further action in its power to ensure that its affiliatescarry out their operationsin an environmentallysound and socially fair manner and at all times complywith federal, state and local environmentalregulations; (d) forward to the Bank annual reports on its environmentalperformanceand that of its subsidiaries and participatingaffiliates; (e) continueto implementan agreed action program to ensure that pig iron producers using iron ore suppliedby CVRD in the Carajas corridor carry out their operationsin an environmentallysoundmanner; (f) prepare, and adopt withinthree months after effectiveness,a statementof policies and proceduressatisfactoryto the Bank to govern CVRD's Amerindianprogram; review and select subprojectsand developa methodologyto monitor and evaluate their impact; and carry out its program in accordancewith this statement;(g) ensure that subprojectsunder the Amerindianprogram meet criteria consistentwith those establishedunder Bank policy; and (h) undertake a Mid-Term Reviewof project implementationin July 1996. The closing date would be June 30, 2000. 15. Conditionsof Disbursementsare as follows: (a) with respect to all subprojects,that the Bank has approvedthe subproject;(b) that CVRD has signed satisfactorysub-loanagreementswith each participatingsubsidiaryand affiliate and implementationagreementswith participatingpublic entities governingthe onlendingof Bank funds; (c) with respect to investmentsin basic sanitationfor Amerindiancommunities,that appropriatemechanismsfor operationand maintenancehave been established;and (d) with respect to demarcationof Amerindianreserves, that satisfactorycontractual arrangementswith the National IndianFoundation(FUNAI) havebeen signed. ProposedExceptionsto Section9.03 of the General Conditions(NegativePledge Provisions) 16. CVRD has requestedthat the Bank grant a numberof exceptionsto the NegativePledge Provisions(besides the two exemptionsalready allowedunder the Bank's provisions--liens on property to secure its purchaseprice and short term bankingtransactions)for the followingliens or transactions:(a) project financing;(b) short term non-banktrade financing(suppliers' credits); (c) statutory liens; and (d) other secureddebts (such as securitizationof receivables)if and when required, but limitedto an aggregateof US$250 million--an amounthigh enough to providesome

-6financial flexibility to CVRD but low enough to minimize risks to unsecured creditors (this upper limit represents only 3 percent of CVRD's total assets as of the end of 1993, less than 4 percent of its total equity, less than 10 percent of its total liabilities, and less than 12 percent of its consolidated net revenues). It is proposed that the Bank should grant CVRD's request (the exceptions are incorporated in a supplemental letter). The waiver would take effect as soon as the last agreement with lenders with negative pledge provisions similar to the Bank's (including Loan 2196 BR, for the Carajas Iron Ore Project) has expired (March 1998). Until this date, the waiver granted in conjunction with the Carajas project (Loan 2196-BR) (liens up to an aggregate of US$10 million) would continue to apply. 17. All loan agreements with international financiers entered into by CVRD in the early 1980s for the financing of the Carajas Iron Ore Project included negative pledge provisions identical to that of the Bank loan. Since the early 1990s, however, CVRD has successfully pursued a long-term financial policy aimed at improving its ability to raise financing from international markets at better terms by consistently negotiating relaxations to negative pledge provisions with its international creditors. Since 1990, it has been able to obtain the same exceptions it is now requesting from the Bank to negative pledge provisions on new financing from all its international creditors (bondholders under two unsecured bond issues underwritten by Citibank and Chase Manhattan, and from Japan EXIM Bank). All CVRD agreements containing Bank-type restrictive clauses (including Loan 2196-BR for the Carajas Iron Ore Project) will have expired by March 31, 1998. Beyond that date, however, CVRD will not be able to make use of exceptions granted unless it can obtain similar exceptions from the Bank under the proposed loan. Finally, CVRD did obtain a blanket waiver to the negative pledge provision under the Bank loan for the Carajas Iron Ore Project (up to an aggregate of US$10 million). 18. CVRD states that inability to secure its borrowing limits its financial options and substantially increases its funding costs. CVRD estimates 1.5 percent per year as the additional costs of unsecured borrowing relative to secured senior debt. In addition, there are large differences in maturities (less than five years for unsecured lending, compared with over eight years for secured project financing). 19. As stated in the Board Paper, dated July 19, 19902, "the Bank has on occasion waived its rights in the case of liens created by Government-owned or controlled entities on their own assets and as security for their own borrowing, for entities which meet the following criteria: (a) the entity is established as a business corporation and conducts its affairs along the lines of a private company; (b) the entity is managed autonomously and is not included in the Government's budget; and (c) the entity's activities have no material financial or economic significance in relation to the ability of the Government to service Bank loans. Waivers, however, have not normally been given for entities in the main foreign exchange- earning sectors of a country and, in some cases, financial ceilings may be imposed on the amount of debt the entity could secure".

"IBRD's NegativePledge Policy with Respectto Debt and Debt ReductionOperations"(No. R90-151)July 19, 1990. 2

20.

CVRD meets all the criteria listed in the July 19, 1990 Board Paper:

(a) it is establishedas a businesscorporation. A total of 48.7 percent of its capital is privately owned (24 percent of ordinaryshares and 93 percent of preferentialshares, which have the same rights as commonshares except for the right to vote in the election of the members of the Administrative Council); and it conducts its affairs along the lines of a private company; (b) CVRD does not depend in any way on the Government budget; it is managed autonomously and, because it has demonstrated financial autonomy from the government, it is considered eligible for a single currency loan. Given its predominant export orientation and large private participation in its capital structure, the Government has refrained from interfering in the management of the company and has traditionally appointed professional managers; and (c) this waiver will not affect in any significant way the ability of either CVRD or Brazil to repay its debt to the Bank. Altogether the proposed exceptions are not expected to exceed US$250 million over 15 years, i.e., only 2.5 months of CVRD's exports and the equivalent of two days of Brazil's total exports of goods. Brazil's debt service to the Bank in relation to its overall public and publicly guaranteed debt service requirements is small (15 percent in 1994, expected to decline to 11 percent by 1998), and Brazil's debt service to the Bank in relation to its exports is also small (4 percent in 1994, expected to decline to 3 percent by 1998)-- after considering the effects of the DDSR agreement. Although the Bank's exposure in Brazil is significant (US$6.9 billion), the creditworthiness of Brazil is expected to improve now that it has resolved the debt issue with its creditors. A waiver of the Bank's negative pledge provision with regard to the DDSR agreement was approved by the Board on April 7, 1994. Brazil is presently not in arrears in its payments to the Bank. 21. CVRD's export earnings (about US$1.3 billion, 94 percent of which are from sales of ores and minerals) account for only 3.4 percent of Brazil's foreign exchange earnings from exports of goods. Brazil has a diversified export base, and mining products accounted for only about 6 percent of exports in 1993. Thus, CVRD is not in the main foreign exchange-earning sector of Brazil. 22. CVRD depends on external markets for both its sales (60 percent of its revenues are from exports) and its financing requirements (in Brazil's current context, domestic medium and long term financing is not available), and is on these accounts an exceptional case among Brazilian public enterprises. CVRD, however, like its competitors, needs to minimize its funding costs to maintain competitiveness. Waiving the negative pledge provision as requested would be consistent with the Bank's development objectives of helping public enterprises operate on commercial terms and on the same footing as their private competitors, particularly when the requested exceptions are fully consistent with normal business practices. Furthermore, CVRD is in a sound financial position and is a competitive enterprise worldwide. The Carajas loan will be fully repaid by October 15, 1997 and debt service requirements of the proposed new US$50 million loan are small compared to CVRD's projected net cash flow. Prudent financial management of CVRD would also be protected by financial covenants that have been negotiated under the proposed Loan.

-8Project Benefits 23. Pollution control, land reclamation, conservation and reforestation, and improvements in public sanitation and infrastructure will provide improved air, water and soil quality, leading to health benefits for the surrounding population. The project will also generate substantial externalities: (a) the project will contribute to the resolution of some difficult outstanding environmental issues associated with CVRD's presence, in particular the pig iron plants issue; (b) programs aimed at preserving and studying biodiversity, endangered fauna and flora species and natural forest management, and recovery of degraded areas, in particular in the Amazon region, will bring global benefits and make valuable contributions to ongoing international research and efforts in the framework of the Pilot Program to Conserve the Brazilian Rainforest; (c) the carbon sequestered in the Green Belts has an estimated value of US$8.7 million; and (d) the welfare of poor communities close to its operations (Amerindians, population of Parauapebas and Itabira) will be enhanced by the social infrastructure and services provided under the project and by efforts to promote self-sustainable development and to identify workable solutions to land degradation and poverty issues in affected areas. Finally, substantial benefits will be generated over time from the consistent adoption by CVRD, a major and expanding mining and industrial conglomerate in Brazil, of sound environmental principles and systems to ensure their consistent adoption throughout the group, thereby providing institutional models for environmental projects in Brazil and elsewhere. Project Risks 24. The main risk of this operation is that CVRD may fall short of its commitments to control the environmental performance of its own and its affiliates' operations and programs, and fail to carry out actions to correct their indirect impact, especially if either: (a) the pig iron and charcoal production problem is not acceptably resolved along the agreed lines; (b) demarcation activities still pending (Awa and Krikati groups) and protection of Amerindian communities along the railway continue to be delayed or are inadequate; or (c) generally, CVRD or its affiliates fail to comply with their legal obligations or to adequately deal with adverse environmental and social impacts of their operations and projects. However, under the project CVRD has committed itself to carrying out programs to deal with these issues. Past experience with CVRD has shown that the company has consistently met its commitments. Furthermore, the Bank has reviewed and participated in the formulation by CVRD of its overall environmental organization, and will continue to follow the establishment of an internal environmental information, monitoring and auditing system which would ensure that emerging environmental and social problems arising for CVRD's and its affiliated companies' operations are identified and addressed in time. Finally, covenants committing CVRD to sound environmental management and social fairness and compliance at all times with the environmental legislation have been included in the Loan agreement, providing remedies. 25. The Government has announced its intention to privatize CVRD. However, it is not expected that privatization would constitute a risk additional to that mentioned above. This is because subprojects financed under the project and other commitments (such as the pig iron plant program) either reflect commitments to State Environmental Agencies which would have to be met irrespective of ownership, or will improve CVRD's international image, a concern of the current CVRD management as well as of most major exporters to G-7 countries: failure to implement agreed action plans could affect the company's image to such an extent that this is unlikely to occur. Also, the risk of a new owner choosing to pre-pay loan proceeds already disbursed by the time of privatization instead of implementing the project using Bank funds is low, first because the proposed exceptions to

the Negative Pledge provisions of the Bank's General Conditions would eliminate a major constraint on financial management which the loan would cause otherwise, and, second, the counter-guarantee which the Government usually requires from the new owners of privatized companies in order to continue providing its guarantee to the Bank has already been agreed upon with CVRD. Financial Benefits and Risks 26. CVRD will benefit from reduced currency risks as a result of financing this project from a US dollar single currency loan, since its export earnings are predominantly priced in US dollars while its expenses and most of its debts are in local currency and other non- US dollar foreign currencies. CVRD has sophisticated risk management capabilities by developing country standards, and can manage any interest risk it faces as a result of the LIBOR basis of the single currency loan interest rate. Environmental Aspects 27. This project is classified as a category "B" in accordance with Operational Directive 4.01. The investments related to the project, which intend to address pollution and land degradation problems in CVRD's facilities, are all well supported by complete documentation, all prepared by outside consultants and compulsory under Brazilian law. Supplemental environmental analysis has been carried out as needed for each operation and subproject, and it is not expected that any of these investments, which are corrective in nature, will have negative environmental effects. The small Amerindian components (totalling about US$4.9 million) are not related to any of the project's investments, but constitute the continuation of the Special Amerindian Project included under the Carajas Iron Ore Project, the impact of which has already been well documented in several OED reports. Details of the program will be subject to the scrutiny of a specially appointed group of experts and Bank review and actions will have to conform to the criteria established for Bank involvement with tribal peoples. Their design will take into account knowledge accumulated in the course of Bank supervision and auditing activities of the earlier project. Finally, other socially oriented components include the provision of basic sanitation infrastructure to local communities, which by their nature have positive environmental impacts. Poverty Category 28. This operation is not part of the Program of Targeted Interventions. However, several of its components (Amerindian assistance program, provision of basic sanitation infrastructure and services to poor communities) will primarily benefit the poor. Program Obiective Category 29. The project fits into the Bank's Environmentally Sustainable Development Program Objective Category.

- 10

-

Recommendation 30. I am satisfiedthat the proposed loan would comply with the Articles of Agreement of the Bank, and recommendthat the ExecutiveDirectorsapprove it, includingthe proposedwaiver of the Negative Pledge Provisions. James D. Wolfensohn President

Attachments June 9, 1995

-11

-

Schedule A Page 1 of 2 BRAZIL AND REHABILITATION PROJECT CONSERVATION ENVIRONMENTAL PROJECT COSTS AND FINANCING PLAN (US$ Million) A. Estimated Costs Local

Component Control of Pollution and Land Reclamation Air Pollution Water Pollution Solid Waste & Reclamation Areas Other Pollution Control Activities Subtotal Natural Resources Protection of Ecosystems Reforestation of Degraded Areas Subtotal

9.5 15.0 10.7 1.5 36.7

Foreign

8.0 6.7 3.0 1.5 19.2

Total

17.5 21.7 13.7 3.0 55.9

0.2 4.8 5.0

0.9 0.9

0.2 5.7 5.9

8.1 4.0 0.5 12.6

4.0 0.9 0.2 5.1

12.1 4.9 0.7 17.7

Studies. Technical Assistance and Training Environmental Impact & Social Studies Environmental Information & Auditing System Subtotal

2.3 0.7 3.0

0.3 1.1 1.4

2.6 1.8 4.4

Other Sub-proiects and Studies

8.7

2.7

11.4

66.0

29.3

95.3

Physical Contingencies Price Contingencies

2.0 1.7

0.9 0.8

2.9 2.5

Total Cost Taxes and Duties

69.7 9.2

31.0 -

100.7 9.2

78.9

31.0

109.9

Socially-Oriented Components Municipal Improvements Amerindian Assistance Rural and Small Business Extension Subtotal

Total Base Cost

Total Financing Required

..

-12 Schedule A Page 2 of 2 B. Financing Plan3 : Local Costs

Foreign Costs

Total Costs

19.0

31.0

50.0

45

ates

59.9

-

59.9

55

Total

78.9

31.0

109.9

100

Bank Loan

% of Total Costs

CVRD and Affili-

3An amount

equivalent to US$1.6 million was approved under the Japan PHRD Fund for the preparation of some of the sub-projects. These funds are not included.

-13 Schedule B Page 1 of 2 BRAZIL ENVIRONMENTAL CONSERVATION AND REHABILITATION PROJECT PROCUREMENT ARRANGEMENTS Estimated Cost in US$ Million Equivalent

Procurement Method Bank- Financed ICB

LCB

Other

N.B.F.

Total Cost

16.2 (16.2)

1.9 (1.9)

0.3 (0.3)

8.6

27.0 (18.4)

Materials

0.4 (0.4)

3.0 (3.0)

0.2 (0.2)

5.7

9.3 (3.6)

Works: Civil and Agricultural (land preparation, planting, seeding, seedling production)

6.0 (6.0)

16.1 (16.1)

1.0 (1.0)

33.6

56.7 (23.1)

Expenditure Category Equipment

Consulting Services 1/

Total before Taxes Taxes

Total

-

-

(-)

4.9 (4.9)

2.8

(-)

7.7 (4.9)

22.6 (22.6) -

21.0 (21.0) -

6.4 (6.4) -

50.7

100.7 (50.0) 9.2

22.6

21.0

(21.0)

6.4 (6.4)

59.9

(22.6)

9.2

109.9

(50.0)

1/ These include: (a) project engineering, supervision and management services for the Carajas Tailing Pond Dam and for basic sanitation investments in Parauapebas and Itabira (US$1.1 million); (b) environmental impact assessment (Tubarao) and environmental auditing and small business development studies, and studies and technical assistance to the municipality of Parauapebas to prepare and administer the Parauapebas basic sanitation subproject (US$2.5 million); (c) the provision of pollution monitoring services and social services for Amerindian communities (US$1.0 million); and (d) studies to be defined (US$0.3 million). Note: Figures in parentheses are the respective amounts financed by the Bank loan. N.B.F.: Not Bank-financed.

-14 Schedule B Page 2 of 2 DISBURSEMENT

Amount of the Loan Allocated (US$ Million Equivalent)

Percent of Expenditures to be Financed

29.28

100%

Expenditures under Natural resources and Community development and Welfare Subprojects

5.22

100%

Expenditures under Municipal Infrastructure Sub-projects Expenditures under the Amerindian Assistance Program

11.03

100%

1.70

100%

Consultants Services and Training for Studies not Included under the Above Subprojects

2.77

100%

Loan Category

Expenditures under Pollution Control Sub-projects

Total

50.00

Estimated Disbursements (US$ Million Eguivalent)

4Including

disbursements.

Bank Fiscal Year

1996

1997

1998

1999

2000

Annual

10.04

12.7

14.3

8.2

4.8

Cumulative

10.0

22.7

37.0

45.2

50.0

US$3.2 million initial deposit into the Special Account as a revolving fund to facilitate

-15 -

Schedule C BRAZIL ENVIRONMENTAL CONSERVATION AND REHABILITATION PROJECT Timetable of Key Proiect Processing Events

a)

Time taken to prepare:

Eleven months

b)

Prepared by:

CVRD, with Bank assistance

c)

First IBRD mission:

April 14, 1991

d)

Appraisal mission departure:

March 18, 1992

e)

Negotiations:

November 1993

f)

Planned date of Effectiveness:

October 1995

g)

List of Relevant PCRs and PPAR:

PPAR Carajas Iron Ore Project (Loan 2196BR)- Report No. 8869, dated June 29, 1990. PPAR Industrial Pollution Control Project (Loan 1822-BR)- Report No. 7720, dated April 10, 1989.

- 16 SCHEDULE D

THE STATUSOFBANKGROUPOPERATIONS IN BRAZIL A. SUMMARYSTATEMENTOFLOANS As of March 31, 1995

One hundredand fiftyeight loansfully disbursed 2523 2524 2563 2679 2681 2699 2718 2719 2761 2762 2763 2810 2830 2831 2857 2860 2861 2862 2863 2864 2895 2931 2950 2975 2983 3013 3018 3043 3072 3100

1985 1985 1985 1986 1986 1986 1986 1986 1987 1987 1987 1987 1987 1987 1987 1987 1987 1987 1987 1987 1988 1988 1988 1988 1988 1989 1989 1989 1989 1989

Brazil Brazil Brazil Brazil Brazil Brazil Brazil Brazil Brazil Brazil Brazil Brazil Stateof Sao Paulo Brazil FEPASA Brazil Brazil Brazil Brazil Brazil StateofMinasGerais Brazil Brazil CEF CEF Brazil State of Parana Cia. de Gas Sao Paulo Brazil State of Parana

12,017.5 RuralDevelopment Rural Development Railways Agriculture UrbanDevelopment Health Rural Development Irrigation RuralDevelopment-Bahia Rural Development-Piaui RuralDevelopment-Ceara Education StateHighway IndustrialPollutionControl RailwayRehabilitation Rural Development- Paraiba Rural Development- M. Gerais Rural Development- Marnhao Rural Development- Alagoas LivestockDiseaseControl ForestryDevelopment Disease Control IrrigationSubsector Rio Flood Reconstruction Municipal& Low-Income Irrigation Land Management NaturalGas Distribution AmazonBasinMalaria Control MunicipalDevelopment

60.3 51.4 200.0 100.0 36.6 59.5 72.0 57.0 111.0 53.0 92.0 15.6 174.0 47.6 100.0 60.0 55.0 84.0 42.0 41.0 48.5 82.0 169.0 168.2 80.0 71.0 63.0 94.0 72.9 100.0

10.9 10.3 7.5 15.2 13.4 14.2 16.1 4.3 23.4 10.9 38.9 2.1 42.6 20.7 4.8 30.9 36.8 52.0 27.0 22.5 11.2 17.9 52.5 12.5 36.0 40.0 12.2 46.3 12.9 15.8

- 17 -

SCHIEDULE1) A. BRAZIL-SUMMARYSTATEMENTOF LOANS

3102

1989

3129 3130 3135 3160 3169 3170 3173 2883-1 3269 3375 3376 3442 3444 3457 3480 3492 3503 3504

1990 1990 1990 1990 1990 1990 1990 1990 1991 1991 1991 1992 1992 1992 1992 1992 1993 1993

Cia. SaneamentoBasico SaoPaulo State of Rio Grandedo Sul Brazil Brazil State of Santa Catarina Brazil Brazil Brazil ELETROBRAS Brazil State of Sao Paulo PetroleoBrasileiro S.A. Brazil Brazil Brazil BNDES Brazil Brazil Brazil

3505

1993

Brazil

3547 3548 3554 3604 3633

1993 1993 1993 1993 1993

State of Santa Catarina State of Alagoas State ofMinas Gerais Brazil Brazil

Water Sector MunicipalDevelopment AgriculturalResearch Basic Health Land Management HighwaysMgmt&Rehabilitation Irrigation Enviromnental Resettlement& Irrigation Educaftion Education HydrocarbonTransport& Processing Water SectorModernization RondoniaNaturalResourceManagem Metro Transport- Sao PauloII Pollution Control NaturalResource- Mato Grosso Water Quality and Pollution Control State of SaoPaulo Water Quality andPollutionControl State of Parana Water Qualityand Pollution Control StateHighway StateHighway Water QualityandPollutionControl SecondN.E. BasicEducation MetropolitanTransport,RJ

280.0 80.0 42.0 217.0 33.0 270.0 141.0 117.0 100.0 140.0 245.0 260.0 250.0 167.0 126.0 50.0 205.0 9.0

166.2 23.2 16.1 129.3 19.4 110.6 127.8 76.3 12.2 81.7 196.6 185.6 228.3 109.3 81.3 45.0 167.9 8.5

119.0

106.4

117.0 50.0 38.0 145.0 212.0 128.5

100.0 34.0 37.0 145.0 188.2 104.7

- 18 -

SCHEDULED

A. BRAZIL- SUMMARYSTATEMENTOF LOANS

3639

1993

Stateof Minas Gerais

3659 3663 3713 3714 3715 3733 3766 3767 3789

1993 1993 1994 1994 1994 1994 1994 1994 1995

Brazil Brazil StateofPiaui Stateof Tocantins StateofMaranhao State of Minas Gerais State of Parana State of EspirituSanto State of Ceara

Management&Environmnental Infrastructure Aids&STDControl ThirdN.E Basic Education StateHighwayManagernent StateHighwayManagement StateHighwayManagement BasicEducation Basic Education Water &Pollution CearaUrbanDev. and Water

TOTAL -

Note:

Of which has been repaidto the Bank9.35 Total now outstanding Amountsold - Of which has been repaid Totalnow held by Bank Total undisbursed

150.0 160.0 206.6 54.0 87.0 79.0 150.0 96.0 154.0 140.0

150.0 111.1 18.7.8 51.0 83.0 75.9 150.0 96.0 150.0 140.0

19,296.2

4,357.0

9,562.7 45.83 45.8 9,516.9

The status of the projects listed in Part A is describedin a separatereport on all Bank/IDAfinanced projects in execution,whichis updated yearlyand circulatedto the ExecutiveDirectors on October 31.

4,357.0

- 19 -

SCHEDULE D

B. STATEMENTOF IFC INVESTMENTSIN BRAZIL (As of March 31, 1995) r.CUn .. .L.a...q.t..T -

.~~~~~~~~~~~~~~~~....

1957 1958 1958 1958 1959 1959 1966169/76/S5/89 1966169172 1967/72 1969 1970 1971/S4 1971 1972V75/91/S7 1973/74/77/81183/84/85 1973 1973/78/83 1974 1974/U8 1975/9 1975 1976 1976/10 1977 1977 1977/7S/H4 1979/S3/87 1980 1980/93/94 1980 19SO/S8 1980 19S0/83 1980/8t/87 1981 1981 19S1/S7 19S1/S21S7 1982 19S2 1983 19U3 19S3/S5/SS 1983 1983 1985/86/88

;...... .

.....

-. --.-.-....

. ...

.

-..-...i .......-i

.. .. -.

Siemens do Brazl Cia de Eletncidhde O0inkr, S.A. Cehuose e Papel D.LR Plsticcs do Brasil, S.A. Wflys-Oveelbd do Bra S.A-k-Id.e Coawoio Cmanhia Mnirns de Cimen Pordand, S.A Chumpion Celukoe, S.A PCC- CatMr1ense AcosVillaic, S.A Utrafertli, S.A-Inl. e Comecio de Fertilizantes PetroimicaUniio, S.A Poliolefins, S.AkIndusta c Comercio Oxieno, S.A. Indusia e Comerco Rio Grande - Companhiado Ceise do Sul Cia de Cimcnto Nacionalde Mina - CMINAS Cia Siderugica de Guawawab- COSIGUA Capital Markt Dewlopmnat Fund - FUMCAP Emp.dc Dcenvovimento de Recunos Minerais-CODEMIN Indiaust VIlrs, S.Ak FabriradeTecidoTauape,S.A Capuav Cabonos Induaas Ltd. Oxiteo Nordeste, S.Ak S - Indiariusi- Texil do Nordoete, S.A. Tecasor S.A - Texil Catense do Nordeste FMB S.A Produc4osM etalffc hoeeaa Rio do Norte S.A Cietal Sidenagi, S.A VoM doBrmsdMotores c Veiulo, S.A Heting do Nordescte,S.A. -Malha Dende do Pua, S.A - Denpaa - Agricutlti, Industia e Comercio do Okagins ViUl dusIniasde Bae, S.A - VIBASA PPH - CompanhiaIndustrialde Pohpropecno DestilariaCianoxte,S.A Sotav Anazonia Quima e Minerl, S.A PoliPulPeoquimica Brapr Compani Braslia de Agropecuaria- COBRAPE Trwifo Cimento CAUE PLANIBANC(lAM) CiL Riogndene de Pstcupa (CRP) Ata Figoifico Cmpa Dende do Amaps(CODEPA) PISA - Ppel de ImprenaS.A Sococo, S.A CIMAG Nitclor Produtm

-

.. ............

. .....

Elctncal Equipment Pulp and Paper AutomotivePanu Fabricmetal Products Cement Pulpand Paper Pulp nd Paper Sted e.00 Ferilizes & Pestcides Petroclemicals Petrochemicals Peflochmicab Pulpsnd Paper Cement Steel Capal MarketDcvelopment NickelMwinig& Refining Ekvatmr & Ind. Equipment Textiles Chemicals& Peaochemikals Petrochecals Texiles Textiles bIo ASted Bac Induste Mning Iron & Steel Motor Vehicks Ready-madeGamcnis

2.86 2.16 0.45 2.45 2.40 4.00 19.06 8.22 5.50 5.50 4.60 4.90 200.39 76.97 5.00 85.00 6.00 34.52 6.18 10.00 6.45 16.20 20.00 15.00 8.38 60.00 2.00

Agric.& LivestockProduca Iron and Steel Chemica & PetrchemiCals CheCmWic & PetroChemicals Fertllizem Chemicwas & Petrochemicals Money & CapitalMsrket Food & Food Processing Cemicl& t Pc ochemacal Cemcng& Conaswucn Materia LeaMing Compa Money& Capal Markets Agpic.&tlvetock Products Vegetable& AnimalOil Pulp& Paper Prodcu Foreany Cement & Constction Matial Ding' & Medicmes

4.22 5.00 31.00 35.00 43.00 5.50 46.00 40.00 30.00 13.00 6.10 82.00 3.00 35.00 3.00

-

5.79 1.93 3.03 2.U 2IS 1.4.4 -

6.70 15.27 -

8.74 -

1.19 1.00 -

8.2 6.95 1.12 2 00 0.25 6.00 6.00 1.50 3.00 4.11 5.00 0.45 0.01 -

6.57 2.50 5.70

.....

....

2.96 2.16 0.45 2.45 2.40 4.00 24.85 9.93 11.25 8.38 8.38 6.04 4.90 207.09 92.24 5.00 93.74 6.00 3-4.52 7.37 10.00 7.45 16.20 20.00 15.00 16.66 66.95 2.00 5.34 5.00 33.00 0.25 41.00 49.00 1.50 8.50 50.11 45.00 30.45 0.01 13.00 6.10 88.57 5.50 35.00 8.70

- 20 SCHEDULED B. STATEMENTOF IFC INVESTMENTS

........ S'

E E-.... 19S4 1925 1957 1987 1928 1987/8S 1988/95 1988 1988 1998893 1988 1928 1988 1988 198 1988 1988 1989/90 1989 1989 1990/91993 1991 1991 1991 1992 1991/92 1992 1992 1992'94 1993 1993

Nacisal - ALQUIM Conmp-a Alcooiqu Qwu cada Baia S30Paulo Alpargaaa AmapaFlorcl e Cluase - AMCEL Fabrira Caic de Calaador - FCC EquLityFundoofrazi Induastrial- PERDIGAO S.A Comeo Banco Bozano Bmco Itau Mmeraca Braaleka. Remid - MBR Unibanco - Unilo de Banc"o Brasicro Duatex, S.A. Cebace Bral Sanuar Mambo SanMama Toaia COPENE ELUMA POLITENO Bahia Sul Sants Maria RIPASA Engepol Fund Brzil livtasa Excel Baco Bradeaco BRADESCO-ROMJ PatnoCnacaui CEBRACTEX CEVAL

1993 1993 1993 1994 1994

Macedo A_osaun Papd SIMAO S.A.LC.C. BACEL GP Capital

Chebca & Petrocaenikcla Cbeical & Petchemicals Ready-MadeGmienta Pulp and Paper Chemica CapialMarkeinstiutions Awt. & livatock Proda Small. Medium Enerpuis SmaIl& Medium Entapria fining Smal a MediwnEntepris. Stnacal ClayProduce Gl mndGla Producu Txtis md Fib., Teixca and Fibes Texia ad Fibcrs Texl. and Fiben ChemicA TMad Steel ChewiAb and Pecochemicals Pulp and Paper Cnema Pulpsad Paper Platic Products Secrsii Marks Fnncirag PlaSic Producrt ComnmrialBanks Mfg.of Mtal a Wood Working Chemicals& Petocheicals Spamog a Weacng Mfg, of Food, Bewvages & Tobacco GrainMillProdu Pulp and Paper SlautingPrepda Pulp, Paper, Papeboard Securmea,Mkt. FIn. InsL

1994195 1994 1994 1994 1994/95 1995 0000

SADIA CHAPECO GAVEA CRP-Caderi Portobelo Canbuby/MC Euca'

FoodManufacturizg Slautag P-paing Reawxnt k Hoaes Ve=ne Capal Texike Food & Beverage Connrcal Morga

Total Gra Comneenta Les Cancelano, Temlnana, Repaynents ad Sales Now Held by IFC Toal Comnltanenmt Total Undiaburld Total OutstandIng IFC

20.00 3.49 30.00 14.00 20.50 20.00 20.00 30.00 80.00 30.00 7.37 40.00 0.04 1.28 12.40 0.76 50.00 15.00 18.50 107.50 25.00 20.00 3.50 20.00 41.03 3.97 -

6.00 45.00 34.00 39.00 -

50.00 0.00 102.00 10.00 24.25 0.00 17.00 30.00 7.50 2003.10 1.510.9S 492.12

4.00 1.0 -

21.20

10.00 -

5.00 -

1.30 -

6.50 21.00 5.00 -

3.00 5.00 -

12.86 4.00

24.00 5.29 30.00 14.00 20.50 21.20 30.00 20.00 30.00 80.00 30.00 7.37 45.00 0.04 2.58 1240 0.76 50.00 15.00 25.00 128.50 25.00 25.00 3.50 3.00 25.00 41.03 3.97 12.26 10.00

10.00 5.00 10.00 20.00

55.00 34.00 39.00 5.00 60.00 20.00

10.00

112.00 10.00 24.25 2 00 22.00 30.00 7.50

-

2.00 5.00 -

272.95 106.30 166.65

2276.05 1617a29 658.76

5643

2L6

705

435.69

14502

580.71

IERD 2351 4 44'

-_^2S

,J

UELA,L-

E|7 VEY

)COLOMEA

t

BRAZIL

.1ArN,cC

'00MM.

) ENVIRONMENTAL t'=s\,J, CONSERVATION AND

0CE-

t_-

--.-'--- -

PROJECT REHABILITATION

.,.-E4LFTT44

">

STATIONS

*ECOLOGICAL

!/ -

~~~~~~~~~~~~~~~~~~~ Co,oo.lo,

-.

0GW-TO

-

- c

~~L

D

E

AMERINDIAN

RESERVATIONS INDUSTRIAL OPERATIONS

.A~~~~~~~~~E

-

T*

Mk I N A S

-

/

4

Is,^

PERU

h

ROADS

x

sELECTED RALROADS

,5,, .-|

I G a,E{A2.~ i A G

?.o znt3

11.6-blrcO -

Belo

*

Ho9w; rizoner......

_. I? L ,s

~~~~~~~~~ - / J \~~~~~

-

S ,

U ip

(RAE e

CR_

srNTN.,A

'E4. 1

_l

A

r

c_

r

STATE CAPITALS

~~~STATE ~~~~~~~~~~~~~

X ) a.0CHttevr i.:

/ Lc* PARAGUJLA

tFW-

O

Ele.1-.1

-

4

/~~~~~~~~~~~~~~~~~~~~

-< |

RIVERS

-

ROUVIA

GE~~~~~~~~~~~AI3

SELECTEDMtNES

~~~~~~~~~~~~~~~~~~~~MAIN

-k

..

A

.

URUGUAY

BOUNDARIES -L.

o-

.

- -

,NTERNA TION AL EO UNDA RIES

_01A.

7 AILAI44IC~~~~~~~~~~~~~~~~~~~~~~~~IOmTR

I.

C.P. .0

AGEbTI

Po

X,

...

*

\

I

2

.

1.

,,..2

5.

\i

J coPX / , W~~~~~~~~~~~~~~~~~~B A-

0 200~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~4

Ri

Rio de

_

2DE

JANEIRO

~

--

cgni o/o*_

rnio\-baDJRrpoea

-24-

L 449

°

5

ik

04000

X1

SOUTHERN SYSTEM 2,

LES5,

42-

fJ osOE

_-______________F___________________.______A._Tj

I

KILCBMETES 1'0

tiQrill->-/

|

\

+

250roro

7