Forest Products is a traditional sector for IFC with investments dating to early 1960s. Since then, IFC invested some US$2.3 billion in the sector. By the end of FY05, FPS’s committed portfolio approached a US$1 billion milestone. The portfolio projects span a diverse group of pulp, paper and converted products, ranging from linter and straw pulp to tissue, sacks and various kinds of packaging. The sector involves dealing with sensitive political, social and environmental issues. Among the greatest risks are severe environmental and human health impacts associated with antiquated technology and poor forest practices. The Forest Product Sector offers great potential for IFC to contribute in the creation of environmentally and socially sound development.
Subsector Categories:
- Plantations
- Wood Fiber
- Woodworking
Examples of IFC investments:
- Packages (Pakistan): Packages is Pakistan's premier integrated pulp and paper mill and packaging materials manufacturer. It is widely acknowledged as the market leader and is known for its production of sophisticated and higher quality packaging products based on non-wood fiber. IFC became a shareholder in the company in 1965. Since then, IFC extended over US$40 million in loans and participated in the company's subsequent rights issues.
- Ballarpur Industries (India): Ballarpur Industries Ltd is the single largest manufacturer of printing and writing paper in India. The company has an outstanding Farm Forestry Program through which guarantees the purchase of constant volumes of wood from farm plantations in the poorer parts of India. Through this program, Ballarpur Industries provided technical support to 20,000 farmers. IFC supported the company through a US$27 million partial guarantee in 2001 and a US$15 million quasi loan to support subsequent expansion of the paper production in 2003.
- Carvajal (Colombia): Carvajal is a socially responsible Latin American multinational operating across 17 countries in the region. Carvajal is 101-years old and still controlled by the original family, now in its fifth generation. It started off in the printing industry, and is now a conglomerate covering a wide variety of businesses, including paper manufacturing, school and office supplies, plastic packaging, telephone directories, publishing and printing. IFC’s investment included a $50 MM loan facility together with an up to US$20 MM equity investment in its paper subsidiary. This investment was designed to support Carvajal’s consolidation into its core business, as well as to sustain its further growth in the region, while helping it upgrade its facilities and achieve improved efficiencies. In addition, IFC's investment encouraged Carvajal to adopt international practices in financial reporting and corporate governance, as well as to upgrade its facilities to international environmental standards.
