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| This Summary of Project Information 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. |
Summary of Project Information (SPI) |
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| Project number | 11310 |
| Project name | Lukavac Cement |
| Country | Bosnia and Herzegovina |
| Sector | Nonmetallic Mineral Product Manufacturing |
| Department | Global Manufacturing & Services |
| Company name | Fabrika Cementa Lukavac |
| Environmental category | B |
| Date SPI disclosed | May 8, 2002 |
| Projected board date | June 15, 2002 |
| Status | Completed |
| Previous Events | Invested: March 20, 2003
Signed: September 12, 2002
Approved: June 27, 2002 |
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| Project sponsor and major shareholders of project company |
| The project sponsors are the Asamer & Hufnagl Group (Asamer), a large Austrian private company in the aggregates and construction business; and Alpine Mayreder bau GmbH (Alpine), another leading Austrian private construction company (together the sponsors). The majority shareholder of the project company is ALAS International (51%), which is a special purpose holding company established as a joint venture between Asamer (71.5%) and Alpine (28.5%) to hold their investments in frontier countries. |
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| Total project cost and proposed IFC investment |
| The total project cost is estimated at EUR102 million equivalent. IFC's proposed investment consists of an A Loan of EUR20 million for IFC's own account, and a syndicated B Loan of up to EUR5 million for the participants account, for an aggregate investment not to exceed EUR25 million. |
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| Location of project and description of site |
| The existing facilities of Fabrika Cementa Lukavac (FCL, or the company) are located close to the town of Lukavac, Macan Marije bb, 18 km from the city of Tuzla in the northern part of BiH at a flat land between wooded hills. The location offers good infrastructure such as access at just 200 meters to the main road Doboj-Tuzla-Orasje connected to the Sarajevo transversal, railway branch to the plant, power transmission from the public grid, modern communication systems, and human resources at an urban area. The site provides good possibilities for further expansions. |
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| Description of company and purpose of project |
FCL and ALAS Bosna, a special purpose company for modernizing the cement plant for FCL, would be the co-borrowers for the project. FCL was established in 1974 as a state owned company, and uses the dry process technology of the 1970’s. It has a kiln capacity of 800 tons per day, translating to around 340,000 tons of cement a year.
The project would involve the post privatization rehabilitation and modernization of the company. The project would consist of (i) optimization of production capacity of the existing facility of the borrowers located at Lukavac, Macan Marije bb, Bosnia and Herzegovina from its current cement output level of about 260,000 tons per year (tpy) to a full capacity level of 340,000 tpy (stage 1); (ii) expansion of the existing cement grinding capacity to 800,000 tpy (stage 2); and (iii) expansion of clinker production capacity by installing a new kiln line of 2,000 tons per day (tpd) capacity to match the cement production level of 800,000 tpy (stage 3). The first two stages will be implemented together as Phase I, while the kiln will be constructed as Phase II of the project.
The project is underpinned by strong local demand driven by the need to complete repairs to buildings, bridges and other infrastructure damaged during the war. Demand is also growing from new construction of industrial and commercial facilities, fueled by a high post war GDP growth rate and is currently being met through heavy cement imports (estimated at 900,000 tpy in 2001). The modernization will also bring down production costs and enable the company to compete with imports, thus contributing to foreign exchange savings.
The project provides an opportunity for IFC to support privatization and one of the largest and highly visible FDI in BiH. Moreover, the underdeveloped financial system in BiH is not able to provide the sponsors with access to adequate long-term limited recourse financing. In addition, IFC’s review and approval of the project will provide confidence to other potential lenders and signal an improving investment climate in BiH, as the current perception of BiH, and its associated macroeconomic risk, by many international banks is somewhat negative. IFC’s investment, including long term funding for its own account and mobilizing commercial resources, would also play an important role in assisting a company whose modernization would have a substantial positive impact on the economic development in the area. |
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| Environmental and social issues - Category B |
This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects, because a limited number of specific environmental and/or social impacts may result which, can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria.
To view the environmental documents for this project, click here
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| Location of environmental documents in locally affected community |
| ERS is displayed at the Culture Hall in Lukavac. |
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| To contact the project company, please write to: |
Mr. Kurt Asamer
ALAS International Baustoffproduktions AG
Unterthalhamstr. 2, 4694 Ohlsdorf
AUSTRIA |
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