Cimos d.d. Automotive Industry

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	26693
Company name	Polslovni sistem CIMOS TMD Automobilska industrija d.o.o.
Country	Bosnia and Herzegovina
Sector	Industrial & Consumer Products
Environmental category	B
Department	Global Manufacturing & Services
Status	Active

Date SPI disclosed	May 8, 2008
Projected board date	June 9, 2008
Previous Events	Invested: August 7, 2008 Signed: June 18, 2008 Approved: June 16, 2008

View Environmental & Social Review Summary (ESRS), click here

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

The project is a 4-year capital investment program for Cimos d.d. to increase production capacity, improve efficiency and productivity and to modernize its automotive components production facilities in Bosnia & Herzegovina. The project will enable Cimos to increase supply of quality competitive products to the European automotive manufacturing cluster.

Anticipated development impact of the project

Revival of the Automotive Industry: The project will help revive the automotive industry in Bosnia & Herzegovina, which has historically been a key component of the country’s economy but was severely affected by the recent conflict.

Strengthening Economic Linkages:

The project will benefit employees through increase in job security, and government through higher taxes, and help strengthen upstream and downstream supply chains in materials supply, transportation, distribution, services and finance.

Access to Knowledge and Markets:

Cimos will help develop management and technical skills, transfer knowledge, improve productivity, and promote efficient use of raw materials and labor, which will help to strengthen the competitiveness of the domestic automotive industry in Bosnia & Herzegovina.

Improved Environmental Performance:

Cimos will implement international environmental standards in its subsidiaries in Bosnia & Herzegovina, which is expected to translate to improved financial performance and benefit the country.

Demonstration Effect:

The program is expected to have a strong demonstration effect by encouraging other foreign investments in the country as the perceived risk continues to diminish. Increased economic ties between the countries of former Yugoslavia will help re-cement relationships.

IFC's expected development contribution

Political Comfort: IFC‘s strong and long presence in the country would provide the necessary comfort for Cimos’ investment in Bosnia & Herzegovina, in a region with a turbulent history and elevated risk.

Financial Support: IFC will provide appropriate long-term financing to support the project.

Environmental: IFC will support Cimos in implementing environmental improvements in its subsidiaries in Bosnia & Herzegovina.

Environmental and social issues - Category B

Cimos is a Category B project, according to IFC’s Procedure for environmental and Social Review procedure. A summary of IFC’s environmental and social review findings for the project including the rationale for the B categorization is made available through the Environmental and Social Review Summary (ESRS) disclosed through the IFC's website. The Environmental and Social Action Plan (ESAP), which is attached to the ESRS, contains specific tasks that the client will undertake to mitigate perceived risks and impacts from the project, and to ensure compliance with IFC’s Performance Standards.

Key environmental and social issues of this project are associated with the process of construction of production facilities and refurbishing of the existing plants, including social and environmental assessment and putting in place appropriate permissions. During the operations phases the key issues include air emissions, waste water discharges / management; solid hazardous waste management. Designs must incorporate life and fire safety measures appropriate to facility size, location and expected end use. Management of occupational health and safety during construction and operations is crucial. In addition, the energy efficiency of the processes needs to be carefully assessed and if necessary improved.

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