BEIJING, CHINA, October 25, 1999 —
The International Finance Corporation signed an agreement today to invest US$55.6 million in Lafarge Dujiangyan Cement Company Ltd., the largest modern cement plant in southwest China's Sichuan province. The project promotes foreign investment in China's remote interior region, thus supporting a more balanced development of the country's economy. The cement plant is one of the largest ever foreign invested projects and the largest private sector project financing in China's interior.
The greenfield cement plant, to be built at a cost of $158.8 million, will use state of-the-art technology to produce 3,200 tons of clinker per day—corresponding to 1.24 million tons of cement per year—for sale in Sichuan where the supply of high quality cement does not meet existing demand.
The project is a joint venture between Lafarge China Offshore Holding Company Limited (LCOCH) with 75 percent shareholding and Dujiangyan Building Materials Corporation (DBMC), the local sponsor, with 25 percent shareholding. Lafarge S.A, the second largest cement producer in the world with a majority shareholding in LCOCH, will provide technical support to the project, its first major venture in interior China. DBMC is owned by the local city government and is part of the local administrative bureau of the building materials industry.
IFC's financing package consists of a loan for its own account of $25.6 million and a $30 million syndicated loan for the account of Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden N.V. (FMO), Caisse des Depots et Consignations, New York Life International Inc., and Banque Worms.
Mr. Javed Hamid, IFC's Director for East Asia and the Pacific, said the project would bring sound management, modern technology, and jobs to one of China's less developed provinces. It would also support the Chinese government's efforts to improve the quality of infrastructure in the country's interior and close some of the older cement plants, which are inefficient in energy consumption and highly polluting. He added that successful completion of the financing demonstrates that sound investment opportunities exist in China's interior. This is the fifth project that IFC has financed in Sichuan province and the seventh in the interior region.
The project will follow state-of–the-art pollution control technologies and has been designed and implemented in full consultation with local communities.
The mission of IFC, part of the World Bank Group, is to promote private sector investment in developing countries, which will reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses.
