|
|  |
| Shanshui III |
|
| Summary of Proposed Investment |
| This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 26088 |
| Company name | China Shanshui Cement Group Limited |
| Country |
| China |  |
|
| Sector | Cement |
| Environmental category | B |
| Department | Reg Manufact, Agri & Services, ASIA |
| Status | Active |
|
| Date SPI disclosed | September 28, 2007 |
| Projected board date | November 1, 2007 |
| Previous Events | Invested: November 26, 2007
Signed: November 16, 2007
Approved: November 15, 2007 |
|
| View Environmental & Social Review Summary (ESRS), click here |
|
| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
| The Shanshui Cement Group (or the company), an existing IFC client, is undertaking a cement and clinker capacity expansion program through strategic acquisitions with follow-on capital expenditure at the site at the sites of the acquired companies in Shandong and Liaoning provinces as well as some new capacity addition in Liaoning province. |
|
| Project sponsor and major shareholders of project company |
| In 2005, China Shanshui Cement Group Company Limited (ListCo) was established with 51% owned by China Shanshui Investment Co Ltd (ManagementCo), and 49% by foreign institutions – which consist of IFC, Morgan Stanley Private Equity Asia (MSPEA) and CDH. The ListCo has a 100% subsidiary called China Pioneer Cement Company Limited (HoldCo) that in turn owns the company. The ManagementCo, ListCo, and HoldCo were all registered in Hong Kong. |
| Total project cost and amount and nature of IFC's investment |
| The total project cost is estimated at $682 million. The company has requested IFC to participate in its upcoming capital increase rights issue as well as consider providing up to $50 million of A Loan and up to $150 million in B Loan / parallel loans to support this project. |
| Location of project and description of site |
| The company is headquartered in Jinan, Shandong province, China. The acquisitions and expansion will involve multiple sites in Shandong province and Liaoning province. |
|
| Anticipated development impact of the project |
- Supporting industry consolidation:
The Government is encouraging industry consolidation, particularly through the growth of larger, efficient producers of high quality cement (such as the company), and the consolidation of small, inefficient and polluting producers of low quality cement. The company’s strategy of acquiring inefficient state owned enterprises and improving efficiencies through better management, improved technology and economies of scale complements this objective.
- Encouraging shift to more efficient technology:
IFC will continue to support the company to embrace the technological shift in the cement industry from NSP to VSK. Such shift will benefit China’s economy in terms of less pollution and greater energy efficiency.
- Supporting investment in China’s rustbelt.
The Government is encouraging companies to invest in frontier markets such as Liaoning, and to privatize state owned enterprises and improve their efficiencies. This project would be a major step in that direction. An important element of the company’s expansion strategy is to enter Liaoning province, which is the heart of China’s “rustbelt”. |
|
| IFC's expected development contribution |
IFC’s expected development contribution include:
- mobilization of long-term financing through the B Loan program;
- providing strategic support and advice on effectively integrating environmental and social management plan in the acquired entities into the company’s business model; and
- supporting the company in its foray in the “frontier” province of Liaoning with long term financing (otherwise difficult to obtain) and international cement production standards. |
| Environmental and social issues - Category B |
This is a category B project according to IFC’s Procedure for Environmental and Social Review of Projects. IFC’s appraisal consisted of:
- a review of project documentation and discussions with SSG management regarding details of the performance of assets targeted for acquisition as well as details of the proposed greenfield projects;
- site visits by Social and Environmental specialists to the four facilities targeted for acquisition and the two greenfield projects; and
- discussions with SSG corporate leadership regarding general management of the company’s current and planned operations.
SSG has demonstrated a commitment to responsible environmental and social performance through investment in quality and environmental management systems, energy efficiency, occupational health and safety and human resources management.
The complete Environmental and Social Review Summary (ESRS), including specific environmental, social and community engagement commitments made by SSG can are located in the corresponding ESRS. |
|
| For inquiries about the project, contact: |
Mr. Li Yanmin, Vice General Manager
Shanshui Group,
Jinan Changqing District Industrial Park,
China
Telephone: 86-531-8360166
Fax: 86-531-7800741 |
|
| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
|
|
|
|