WASHINGTON, D.C., January 18, 2000 —
In its continuing efforts to encourage investment in China's interior and promote state enterprise restructuring, the International Finance Corporation will lend US$19 million to Shanxi International Castings Company Ltd. (SICC), a joint venture which produces parts for the motor vehicle and heavy equipment industries.
This investment, IFC's eighth in the Chinese interior, promotes a more balanced development of the country's economy, said Mr. Javed Hamid, IFC Director for East Asia and the Pacific. He said that high quality, competitively priced products would replace imported castings and help to transfer world-class technology and management know-how to China.
The investment supports a $73.3 million project to expand and modernize a plant in Shanxi Province in interior north China, an area rich in natural resources. The project is one of the largest foreign investments ever in Shanxi Province.
IFC is lending $19 million and Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden N.V. (FMO, the Dutch development agency), will provide a parallel loan of $10 million.
The project is a joint venture between ASIMCO (Asian Strategic Investments Corporation), which holds a 57 percent ownership share through a direct investment fund; CITIC Machinery Manufacturing Inc. (CMMI) with a 22 percent shareholding; and Caterpillar Inc. with a 21 percent ownership share. Caterpillar will manage the project and purchase a portion of the output.
Founded in 1993, ASIMCO manages direct investments in 18 companies, primarily in the automotive components sector. CMMI, the local partner, is the manufacturing subsidiary of China International Trust and Investment Company (CITIC), one of China's largest investment companies. Caterpillar, which will provide state-of-the-art technology to the project, is a worldwide leader in earth-moving and construction machinery as well as a major producer of engine castings, diesel engines, and natural gas engines.
The project follows IFC's rigorous environmental guidelines, which will encourage local authorities and other companies in the region to use these standards as a model.
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.
