42352 - Indorama Cotton

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Summary of Investment Information

Project Number

42352

Company Name

FE INDORAMA AGRO LLC

Date SPI Disclosed

Apr 24, 2020

Country

Uzbekistan

Region

Central Asia and Turkiye

Projected Board Date

Jun 25, 2020

Environmental Category

A - Significant

Status

Completed

Last Updated Date

Jan 23, 2025

Department

Regional Industry MAS MCT

Industry

Agribusiness and Forestry

Previous Events

Approved : Dec 17, 2020
Signed : Apr 30, 2021
Invested : Nov 29, 2022

Sector

Natural Fibers (Cotton, Sisal, Jute, etc.)

Project Description

The project is to finance the development of cotton farm clusters covering a total area of approximately 50,000 hectares in two regions of Uzbekistan and engaging with local farmers through contract farming, in approximately 22,000 hectares (the “Project”) by FE “Indorama Agro” LLC (the “Company”), a wholly-owned subsidiary of Indorama Group (“Indorama” or the “Sponsor”). The Company will introduce to the country modern technologies of cotton production and supply the Sponsor’s local textile plant, FE “Indorama Kokand Textile” JSC, with a stable amount of machine picked cotton fibre for its raw materials.

The Project will address some of the country’s systemic developmental challenges by eliminating the use of forced labor in Indorama’s local value chain and significantly increase production efficiency at Project farms, thus enhancing the sustainability of Uzbekistan’s cotton sector. The Project will also allow Indorama to strengthen its cotton supply chain in Uzbekistan through backward integration into cotton production, therefore addressing the risks of cotton availability, quality and supply chain reputational risk.

Associated Advisory Engagement

The IFC Advisory project on Sustainable Cotton Supply Chain Development in Uzbekistan (the “Advisory Project) is being implemented in parallel with the Project and in collaboration with Indorama and other cotton industry stakeholders. The Advisory Project will introduce Better Cotton Initiative (BCI) compliant practices and sustainable cotton growing principles within Indorama's supply chain in Uzbekistan in order to create a demonstration example of how cotton can be produced without using forced labor in the country and with sustainable use of resources.

This Advisory Project is being undertaken in close cooperation with the WB, the ILO, BCI, NGOs and with the Government of Uzbekistan to ensure that the local authorities, cotton supply chain stakeholders and farmers adhere to responsible labor practices and to re-open Uzbekistan's cotton market to major international textile producers/brands who continue to boycott Uzbek cotton from their supply chain.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	60.0
Equity

Development Impact

The Project is expected to have a positive development impact, contributing to market creation and generating economy-wide and employment effects. The Project will ensure transitioning to mechanized harvesting that would both increase efficiencies and eliminate the risk of forced labor. The Project will also source cotton from local contract-farmers, helping them integrate into a modernized value chain on commercial terms and reduce off-take uncertainties on both sides. The Project's ginning and warehousing operations will contribute to reducing post-harvest losses and facilitating domestic value addition in the context of broader sector reform and create estimated 700 non-farm new jobs. In addition, the Project will create 1,000 farm jobs.

Financial additionality: Through the Project, IFC will provide an amount and tenor that is otherwise not available in Uzbekistan from private financing sources. Non-financial additionality: (i) IFC's involvement in the Project is expected to contribute to the development of the Company's environmental, health and safety practices, in line with the World Bank Group requirements; and (ii) with the assistance of the IFC Advisory Project, Indorama will demonstrate the viability of Uzbek cotton production within a sustainable supply chain, cleared of any forced labor.

E&S Category Rationale / Risks and Mitigation

The Minorities Rights Group who gained consultative status with the United Nations in 1974, does not recognize indigenous peoples or any of the ethnic minorities living in Uzbekistan. IFC PS7 is therefore not applicable. PS8: Cultural Heritage is not considered to be applicable to the project as land allocated for the Project has long been used for cotton and wheat cropping, with no cultural heritage sites identified.

If IFC’s investment proceeds, IFC will periodically review the project’s ongoing compliance with the Performance Standards.

Contacts

For Inquiries About the Project, Contact

FE Indorama Agro LLC
Amit Jain
General Director
[+998 71 233 22 64]
a_jain@indoramaglobal.com
]
www.indorama-agro.uz]

For Inquiries and Comments About IFC, Contact

General IFC Inquiries
IFC Communications
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384

Local Access of Project Documentation

Contact Person: Amit Jain

Company Name: FE Indorama Agro LLC

Address: 100100, Uzbekistan, Tashkent, 11/1 Amir Temur Street, Mirabad district

Email: a_jain@indoramaglobal.com

Phone: +998 71 233 22 64

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. Its purpose is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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