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| Hongtai Group Limited |
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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 | 28834 |
| Company name | Hongtai Group Limited |
| Country |
| China |  |
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| Sector | Paperboard (Including Boxboard, Fiberboard) |
| Environmental category | B |
| Department | Reg Manufact, Agri & Services, ASIA |
| Status | Dropped |
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| Date SPI disclosed | January 20, 2010 |
| Projected board date | February 21, 2010 |
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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 |
| The IFC investment is to support the Hongtai Group’s next growth phase. The cornerstone of the 2010-2011 investment program is the construction and start-up of a greenfield packaging facility near Xiamen, Fujian Province of China (“Xiamen Project”). The box making facility will have a capacity to produce 168 million m2 per year of container and printed box board. The new plant will be equipped with modern color printing capacity for about 53 million m2 of board per year. Water-based printing has both a lower environmental impact and is lower cost than alternative oil-based inks. The new facility is expected to generate approximately 250 new, direct full-time jobs. The Hongtai Group’s 2010-2011 investment program also includes maintenance capital expenditure at its three existing packaging and paper facilities and the possibility of acquiring additional machinery and/or a further site. |
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| Project sponsor and major shareholders of project company |
| Mr. Lin Jiebo and his wife, Ms. Chen Xiaoling directly and indirectly own all of the Hongtai Group companies. The Hongtai Group includes: Quanzhou Yongchun Liansheng Paper Products Co Ltd. (“Liansheng”), and Fujian Yongchun Hongyi Paper Co. Ltd. (“Hongyi”), producers of packaging paper from wastepaper as well as Fujian Yongchun Hongtai Industry Co. Ltd., which produces paper and cardboards (the “Group”). Mr Lin, a Chinese national, is an entrepreneur who was born and spent his life in Fujian Province. Ms. Chen is a Canadian national. The Group has its origins when Mr. Lin set up a small packaging plant in 1988 and then subsequently built the rest of the Group through organic growth and acquisition. |
| Total project cost and amount and nature of IFC's investment |
| The investment required for the Xiamen Project is estimated at RMB170 million (approximately $25 million). IFC is considering making a convertible loan to Hongtai of up to $10 million (approximately RMB 68 million). |
| Location of project and description of site |
| The new packaging plant, the cornerstone of Hongtai’s 2010-2011 investment plan, will be located in the Houxi Industrial Park in Xiamen, about 20 km from the center of the city. The site is located in the center of an industrial park that was developed by the Government of Xiamen during 2009. |
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| Anticipated development impact of the project |
This Project will support efficient and higher quality paper and packaging production in China and is expected to have a strong development impact as follows:
Increase employment: With the successful implementation of the project, the Company will create additional 250 new jobs within its new Xiamen plants. In addition, the Project will create numerous indirect job opportunities in the Company's local waste paper collection system
Private Sector Development: According to the expansion plan, the Project will support large number of SMEs to provide waste paper collection and transportation service to the Company
Environment and social standard: The Company reuse more than 98% of wastepaper and its waste water treatment facility is a showcase in local county by recycling most of water used in the production process. The Company will become a successful market model for waste paper recycling, with value chain integration from waste paper collection locally to paper production in China.
Climate change: The Company will recycle up to 120,000 tons of waste paper per year locally. The waste paper collection and recycling facility will allow the Company to significantly reduce green house gas emission.
Other E&S impact: In addition to reduction of green house gas emission, the Project will generate other E&S impact such as reduction of water usage, effluent and air emission. |
| IFC's expected development contribution |
Long term financing: The Company currently lacks access to long-term finance. This is due to local credit conditions which are disadvantageous to small private companies such as Hongtai.
The IFC long-term financing will be very beneficial to the Company.
Risk mitigation: The Company highly values the long term partnership with IFC, because of IFC's deep China knowledge, sector experience, and future's continuous supports to the Company. IFC's participation also can provide stamp of approval effect for the Company
Countercyclical role: By providing long-term financing for a fundamentally sound company during a global financial crisis
Paper manufacturing and Paper Recycling Experience: IFC has rich paper sector experience and has also been involved in several other paper recycling projects around the world and can bring value addition to the Company.
Corporate Governance and E&S standard: IFC can help the Company to improve its corporate governance and E&S standard and be prepared for future public listing. |
| Environmental and social issues - Category B |
| This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects. Hongtai Group has provided information on its current practices and policies that seek to address environmental and social risks and impacts to ensure that the proposed project complies with or, will upon implementation of measures agreed upon as part of IFC’s Investment documents, comply with host country laws and regulations and IFC's Performance Standards (PS). The principal environmental and social risks identified for the project which will require additional mitigation measures by Hongtai Group include implementation of an environmental and social management system, oversight of subcontracted labor, occupational health and safety, emissions to the environment, emergency response and community engagement. Going forward, the Company shall consider all relevant social and environmental risks and impacts, including the issues identified in PS 1 through PS 8 while assessing any new business opportunities, and mitigate as necessary. |
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| For inquiries about the project, contact: |
Mr. Keefe Lai
Chief Financial Officer
Bangde Industry Zone,
Yongchun County, Fujian Province
Tel: +86 (595) 23860599
Fax: +86 (595) 23860599
Http://www.hongtai88.net |
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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 |
| Local access of project documentation |
A Chinese-language copy of the Environmental and Social Review Summary and associated Action Plan will be made available at the main entrance of the facilities listed below. An announcement informing the public of its availability will also be placed in a local newspaper.
Planned Xiamen Project Site
Houxi Industrial Park, Jimei District, Xiamen, Fujian Province
Fujian Yongchun Hongyi Paper Co. Ltd., and
Quanzhou Yongchun Liansheng Paper Products Co. Ltd.
Address: Hong’an village, Donping Town, Yongchun County
Fujian Yongchun Hongtai Industry Co. Ltd.
Address: Bangde Industry Zone, Yongchun County |
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