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WASHINGTON, D.C., June 28 -- The International Finance Corporation (IFC) today signed a US$74 million financing agreement with Pará Pigmentos S.A. (PPSA), which will produce kaolin, a coating ingredient important in paper production, primarily for export. The project, which has an estimated total cost of US$183 million, will produce 660,000 tons per year of three grades of superior-quality kaolin. It will take advantage of growing world demand for kaolin. PPSA is expected to be among the lowest-cost kaolin producers in the world and to generate an estimated US$70 million annually in kaolin exports. PPSA's deposits are located in the state of Pará in northern Brazil. "The project reflects IFC's strategy of investing in Brazil's less developed regions, such as the north and northeast," according to Mr. M. Azam K. Alizai, Director of IFC's Oil, Gas and Mining Department. "Brazil has excellent kaolin reserves, in terms of both quality and quantity. This project represents the first step in Brazil's efforts to est
ablish a world-class kaolin industry in keeping with its reserves and will be of great benefit to the country," he added. The project complies fully with World Bank and Brazilian environmental regulations, and features a comprehensive reforestation plan for the project site. An additional 2,000 hectares of land adjoining the project site will be set aside as a forest reserve and ecological station -- a first in the Capim River region of Pará. IFC is making a US$65 million loan to PPSA, US$35 million of which has been syndicated to 7 participant banks: ABN-AMRO Bank NV, Crédit Lyonnais, Deutsch-Sudamerikanische Bank, Deutsche Bank Luxembourg, ING Bank, the Long-Term Credit Bank of Japan, Ltd., and Swiss Bank Corporation. IFC is also making a US$9 million equity investment in the company. PPSA is owned jointly by two leading Brazilian mineral firms, the Caulim da Amazonia S.A. subsidiary of the Caemi Group and Companhia Vale do Rio Doce (36% each), Mitsubishi Corporation of Japan (18%), and IFC (10%). IFC is a
member of the World Bank Group and is the leading multilateral source of equity and loan financing for private sector projects in the developing world.
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