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| Jiuda Salt |
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| 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 | 26090 |
| Company name | Sichuan Jiuda Salt Manufacturing Co., Ltd. |
| Country | China |
| Sector | Oil, Gas and Mining |
| Environmental category | B |
| Department | Oil, Gas, Mining And Chemicals |
| Status | Active |
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| Date SPI disclosed | June 26, 2007 |
| Projected board date | July 27, 2007 |
| Previous Events | Invested: January 28, 2008
Signed: August 8, 2007
Approved: August 6, 2007 |
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| View Environmental & Social Review Summary (ESRS), click here |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
| Sichuan Jiuda Salt Manufacturing Co., Ltd. (Jiuda Salt or the company), a large private salt producer headquartered in Zigong city of Sichuan Province. The company’s main products are industrial/chemical salt, edible salt and specialty salt. The company is implementing an expansion program through a combination of organic and inorganic growth. The project will involve expanding a number of the company’s existing production capacities, as well as acquiring existing production facilities in China. |
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| Project sponsor and major shareholders of project company |
The company’s major shareholders are its Chinese management and employees, who own shares indirectly in the company through three offshore special purpose investment vehicles, including:
- Jiuda Mine Mineral Salt Co., Ltd. (6.8%)
- Jiuda Sea Salt Co., Ltd. (26.5%)
- Jiuda Lake Salt Co., Ltd. (27.8%)
Another strategic investor made an equity investment in the company indirectly through Dunearn Investments (Mauritius) Pte Ltd. and currently holds the remaining shares not owned by management and employees. |
| Total project cost and amount and nature of IFC's investment |
The proposed IFC investment consists of:
- equity investment of up to $15 million; and
- A-loan of up to $35 million.
The total project cost is estimated at $158 million. |
| Location of project and description of site |
| The company is based in Zigong, Sichuan Province, and will expand its production capacities in Zigong, Penglai, and Rongzhou of Sichuan Province, and in Yingcheng of Hubei Province. The company’s salt mines and manufacturing sites are located in a mixed farming, residential, and industrial area. There are no protected species or protected areas at or near the site. |
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| Anticipated development impact of the project |
- Employment Generation:
The company currently employs about 6,900 staff. The project will create additional employment opportunities through expansion and will also preserve employment at locations that will be acquired. These jobs are essential in the underdeveloped interior areas of China. An expected 290 jobs will be created through the expansion projects, and additional jobs will be preserved at acquired facilities.
- SME Development:
The company utilizes 3 truck transportation companies to handle transport needs for raw materials and finished products. It is expected that these numbers will increase to 5 to handle the expansion volumes.
- Private Sector Development:
The project will stimulate the further development of the local industry in a frontier region of China, stimulating value addition to a commodity product. Furthermore, China now has one of the largest chlor-alkali industries in the world, hence a robust, competitive, and reliable salt supply is key to its long-term viability.
- Demonstration Effect:
The project will utilize advanced salt mining and manufacturing technologies, which will significantly improve energy efficiency and safety practices in the salt industry. |
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| IFC's expected development contribution |
IFC would be supporting a leading salt producer in China by providing equity and debt financing to help the company implement its long-term development strategy. Among other things, IFC will:
- Provide long-term financing:
IFC is expected to provide loans with long maturities and grace periods, which are not readily available to the company. The long-term loans will help the company utilize its earnings to fund its current phase of expansion and development. With the addition of long-term financing from IFC, the company will be able to improve its liquidity.
- Introduce the company to international standards and best practices in environment, health, and safety practices:
The company has specifically asked for IFC’s involvement with a view to introducing to it international standards and best practices in corporate governance, environmental, social, health, safety and labor management practices, and community development activities.
- Contribute to private sector development:
IFC’s support for privatized enterprises will contribute to their further long-term growth and will send a positive signal to the market and promote competition. |
| Environmental and social issues - Category B |
This is a Category B project according to IFC’s Environmental and Social Review procedures because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria.
The project mainly involves the capacity expansion at various existing sites in Jiuda. Hazardous materials are not used or produced in this project. There is no underground salt rock mining at Jiuda. In the mine facilities of Jiuda, the water is pumped to the underground salt rock layers from one well, and the brine is pumped up to the surface through another well for manufacturing.
Identified Applicable Performance Standards:
- PS1: Social and Environmental Assessment and Management Systems
- PS2: Labor and Working Conditions
- PS3: Pollution Prevention and Abatement
- PS4: Community Health, Safety and Security |
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| For inquiries about the project, contact: |
Mr. Yu Xiaobo, Director
No. 89 dongxingsi Street, Zigong,
Sichuan Province, 643000, P.R. China
Telephone: +86 813 8105828
Fax: +86 813 8105472
Website: http://www.jdgrp.com |
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| 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 |
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