Incorporated in Mozambique in 2009, the Company is a fully owned subsidiary of Portucel Soporcel Group (“Portucel”), the leading European manufacturer of printing and writing paper and Europe''s leading manufacturer, and one of the largest producers in the world, of bleached eucalyptus kraft pulp. Portucel also produces wood biomass-based energy for internal consumption and for sale to the grid, a model it intends to follow in Mozambique. The group exports pulp and paper to 120 countries.

Portucel is listed as Portucel S.A on the Euronext Lisbon and is controlled by Semapa group. It is headquartered in Setubal, Portugal, and has 2,258 employees. Portucel is a recognized leader of sustainability in Portugal and Europe, with 120,000 ha of FSC and PEFC certified eucalyptus plantations under management. With 55 years of experience in pulp and paper sector and a strong financial performance trend, the group has extensive sector expertise and a strong consumer market position.

The estimated total project cost of US$125 million will be funded with equity from Portucel and IFC. IFC will invest up to US$25 million in the common shares of the Company, representing roughly 20% of the Company’s total share capital.

32.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	32.0

* These investment figures are indicative

The Project will be rolled out in two provinces of Mozambique, Zambezia (Ile and Namarrói districts) and Manica (Manica, Mossurize, Sussundenga, Báruè and Gondola districts). The locations were selected on the basis of soil and climate conditions, to ensure adequate levels of productivity, and potential to provide adequate logistic solutions for access to pulp mill and ports, and followed an open and transparent concession process. The Company is headquartered in Maputo.

Portucel''s investment in the under-developed rural regions of Mozambique lays the foundation for a far greater and expansive development of the regions and of industry over the next 12 years. While mega-projects in the mining and energy production sectors in Mozambique may be limited in their ability to impact employment creation and productivity spillovers, the Project will create rural jobs and have a significant multiplier effect, thus broadening the economic base of the country.
- Employment: generating at least 2,000 direct and indirect rural jobs during the first phase and up to 6,500 additional jobs once the second phase has been fully implemented;
- Smallholder Farmers'' Benefits: reaching over 150,000 rural poor, and with complementary public investment by IFC and the World Bank in agriculture and agribusiness development, improving livelihoods for 23,000 farmer households;
- MSME Development Catalyst: promoting development of an estimated 100 MSMEs as suppliers of goods and services to the company, including through training and outgrower component imbedded in the Company''s business model;
- Infrastructure Development: developing several types of infrastructure, including secondary and forest roads, and - during the second phase - a port, that will encourage economic integration;
- Training and Demonstration: encouraging knowledge transfer by providing trainings to local employees, supporting forestry programs in Universities and integrating agriculture extension services to local farmers in the Company''s business model;
- Increasing Country''s Competitiveness through Economic Diversification: Despite the Government''s targets, Mozambique''s forest products sector potential remains unrealized. Successful implementation will encourage additional investment and stimulate forest products sector development, and provide the much-needed diversification to the local economy and additional source of forex earnings to the budget.

- Environmental and Social Standards: Through its emerging market experience in sustainable forestry projects and its participation in large-scale plantation and pulp and paper investments globally, IFC is well placed to assist Portucel with advice on environmental and social sustainability, including development of a comprehensive ESIA and an Environmental and Social action plan to mitigate the potential negative and enhance the positive impacts of the Project.
- Catalytic Role: As one of the largest agribusiness investors on the continent, IFC will play a key role - as a shareholder in the Project company - in promoting agriculture development in the areas of the Project influence. IFC will seek to invest in commercial agriculture projects with substantial out-grower and demonstration components. In addition to catalysing private sector activity through direct investment, IFC will work closely with IBRD and development partners to (i) take advantage of and enhance their ongoing activities in the sector in Mozambique and (ii) develop new joint World Bank Group interventions in agribusiness and forestry, such as in the area of smallholder commercialization.
- Advisory Support: IFC is already implementing a custom-tailored advisory project, which will help the Company to develop and operationalize a comprehensive land access policy and design a multi-year stakeholder engagement and community development strategy. The objective of the community development programs would be to empower local communities, smallholder farmers, and small and medium enterprises to take maximum advantage of the economic opportunities created by the Project and to improve livelihoods.
- Risk Mitigation: IFC participation will provide comfort and political risk mitigation to Portucel as they embark on this substantial and expansive multi-year project in an unfamiliar market vulnerable to political uncertainty

This is a Category A project due to the potentially significant, diverse, and irreversible environmental and social risks and/or impacts inherent to a project of this nature and scale operating in Mozambique. Although E&S risks and impacts would be expected to be localized and largely predictable, the geographic scale of the project is sizeable; therefore, the project''s impacts on local populations and ecosystems will be extensive. In addition, Mozambique''s regulatory environment remains incipient, and the land law and allocation systems are imperfectly implemented.

Please refer to the related Environmental and Social Review Summary (ESRS) document for this project.

Please refer to the Environmental and Social Action Plan (ESAP) tab in the related Environmental and Social Review Summary (ESRS) document for this project.