SEF Altyn-Ajydar 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	26690
Company name	Kyrgyz-Chinese Joint Venture Altyn-Ajydar
Country	Kyrgyz Republic
Sector	Primary Metals
Environmental category	B
Department	Global Manufacturing & Services
Status	Active

Date SPI disclosed	June 4, 2008
Projected board date	July 7, 2008
Previous Events	Invested: October 3, 2008 Signed: June 30, 2008 Approved: June 27, 2008

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

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

Altyn-Ajydar, located in Bishkek, was set up in 1995 and has been a long-term IFC client since the late 1990s. IFC provided loans in 1999 to finance the modernization and expansion of the company’s cardboard packaging facility and in 2005 to set up a new corrugated packaging line. Altyn-Ajydar’s management has currently identified strong demand for construction materials in Kyrgyzstan and Kazakhstan due to the long-term growth potential of the construction industry in both countries. The company has approached IFC to assist in the financing of a $3.0 million project to diversify its activity into aluminum. The purpose of the project is to establish production lines for aluminum composite panels and tempered glass/double-glazed window/PVC window frame and stained glass units.

Anticipated development impact of the project

The proposed project will:

- help expand and diversify the company’s product range in a high value-added area and improve its export potential,
- introduce high quality products through the employment of modern equipment and technology that is not available in the sector,
- help promote import substitution for construction materials, and
- enhance energy savings and efficiency in the construction sector.

Altyn-Ajydar’s project will also create additional employment; more than 100 additional employees including 20 women will be hired to work on the new production lines. The project is expected to improve and strengthen local production capabilities of the building materials industry and construction sector as a whole in Kyrgyzstan.

IFC's expected development contribution

This investment will be an opportunity for IFC to further collaborate with a sound client in a frontier market. IFC will continue to provide long-term support for a successful existing client through a project that will help increase the company’s export potential and support regional trade. The company seeks IFC’s involvement in the project to obtain long-term financing and to support its investment in the construction materials area, which IFC views as a successful diversification and expansion in Central Asia. With IFC participation, the company will be able to further benefit from IFC’s sectoral expertise and advice on corporate governance and environmental health and safety management. IFC will continue its efforts for the introduction of a sound MIS system and supporting the transition to a more institutionalized structure at Altyn-Ajydar through increased employment of professional managers. Moreover, IFC will provide long-term financing to a successful private sector company.

Environmental and social issues - Category B

The key environmental and social issues in on-going and proposed operations are:

- capacity for assessment and management of environmental, health and safety performance associated with existing and proposed operations;
- labor practices and terms of employment of direct and contracted employees in the renovation and operations of all facilities; occupational health and safety related to the renovation and operation of all facilities; and
- management of emissions to air and wastewater effluents from existing and proposed operations.

As a result of its due diligence, IFC has concluded that the potential adverse environmental and social impacts presented by the project and by the existing operations are few in number, site-specific and have been or can be readily addressed through mitigation measures, already identified by the company. It is therefore concluded that this is a Social and Environmental Category B project.

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