JPMC Terminal

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	28124
Company name	Jordan Phosphate Mines Co. (JPMC)
Country	Jordan
Sector	Chemicals
Environmental category	B
Department	Oil, Gas, Mining And Chemicals
Status	Pending Approval

Date SPI disclosed	August 19, 2009
Projected board date	October 9, 2009

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

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

The Project consists of the construction and operation of a new rock phosphate terminal in the south port of Aqaba, by Jordan Phosphate Mines Co. (“JPMC” or the “Company”), replacing the existing one in an area that is to be developed for tourism. The annual throughput of the terminal will be four million tons.

Project sponsor and major shareholders of project company

Jordan Phosphate Mines Company (“JPMC” or the “Company”) is a Jordan-based company listed on the Amman Stock Exchange. JPMC operates three mines, producing phosphate rock and downstream fertilizers, and a chemicals plant at Aqaba, Jordan. JPMC is the largest mining and industrial employer in Jordan and is the sixth largest producer of high quality rock phosphate and the second biggest exporter worldwide.

JPMC was established in 1953 as a public shareholding company with the objective to mine and market phosphate rock, as well as produce fertilizers and invest in related industries. The ownership structure of the Company is as follows: Kamil Holdings/Brunei Investment Agency (37%); Ministry of Finance (26%); Social Security Corporation (16%); Kuwait Investment Authority (9%), Passport Global Master Fund (3%), Jordan Islamic Bank (1%), Non-Jordanian Investors (2%), and Other investors (5%). The Company, which employs about 4,000 people, is publicly traded on the Amman Stock Exchange.

Total project cost and amount and nature of IFC's investment

The Project is estimated to cost $180 million. The proposed IFC investment includes a corporate loan up to $30 million for IFC’s own account and a $60 million loan for syndication or a parallel lender.

Location of project and description of site

The proposed Project will be located in the south port of Aqaba, in the Aqaba Governorate. This is part of a larger strategic plan by the government of Jordan to transform the current industrial terminal into a tourism area while relocating the industrial activities, including the JPMC phosphate terminal, to the south port. The Governorate has a higher than national average proportion of its population that lives below the poverty line. Furthermore, it is rated as the second worse region in Jordan in terms of the severity of poverty as found by a recent World Bank poverty assessment of Jordan in 2008.

Anticipated development impact of the project

As the largest employer and exporter in Jordan, JPMC plays an important role in the Jordanian economy The Project will generate new employment opportunities in the order of 500 jobs during construction, mostly benefiting the local population and 150 during the terminal’s operation. The replacement of the existing facility through the relocation to the south port also provides the opportunity for significant upgrades (particularly with respect to dust emissions), and the new terminal will operate under significantly improved environmental conditions. The relocation of the phosphate terminal is part of a larger strategic plan of the Jordanian Government to transform the current industrial terminal, which is located in an urban center, into a tourism area so as to increase tourism revenues, a sector which contributes to roughly 10% of GDP. Moreover, by relocating the terminal and other industrial sites, the Government of Jordan is hoping to expand its export base and more resourcefully manage the port operations out of the new location.

The key development indicators that are proposed to be monitored during the life of the IFC investment are:

- Employment
- Terminal Throughput
- Reduction in Dust Emissions
- Payments to Government
- Local Purchase of Goods and Services

IFC's expected development contribution

Through this project, IFC is supporting the World Bank Group’s Country Assistance Strategy (CAS) for Jordan, for the period 2006 – 2010, which aims at achieving tangible progress in poverty reduction and job creation, while assisting the country in its transition through medium-term economic shocks.

More specifically, IFC’s strategic priorities in supporting the Jordanian private sector include: (i) supporting Public-Private Partnerships, particularly in financing strategic infrastructure projects, (ii) developing the financial sector, especially “Access to Finance” in areas such as leasing, housing finance, trade finance, and microfinance; (iii) supporting the business enabling environment, and (iv) mobilizing financial resources for project finance and attraction of FDI.

IFC’s approach in Jordan is to provide long-term debt financing, take selective equity stakes, and provide risk management and guarantee products. IFC is especially needed in projects that have large and long term financing needs in strategic sectors, such as the chemical/fertilizer industry. The proposed investment would fit with the fourth priority, facilitating the growth of Jordan’s largest commodity export (phosphates were Jordan’s largest exports in 2008, amounting to around US$ 519 million).

IFC will make its contribution to the proposed project in the following ways:

Provider of Long-term debt: IFC can provide the Company with long-term debt that is currently not available in the domestic or regional market from commercial banks. In the current market, access to long term debt capital has become constricted. Long tenor financing is crucial in this cyclical industry, helping the company to better smooth out its cash flow.

Raising Environmental and Social Standards: IFC will guide the Company to achieve and maintain high environmental and social standards in its operations.

Environmental and social issues - Category B

IFC's early review of this investment has identified the following environmental, social, health and safety issues: Corporate environmental, health, and safety management, environmental management for both construction and operation of the new phosphate jetty, road transportation safety of phosphate rocks from mines to terminal, and coral preservation at the proposed jetty site and coral rehabilitation at the old phosphate jetty site.

While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts that must be managed in a manner consistent with the following 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
PS6: Biodiversity Conservation and Sustainable Natural Resource Management

Based on this early review, it is anticipated that this investment will require 30 days disclosure by IFC prior to Board and has been provisionally categorized as B.

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RECENTLY DISCLOSED