The project sponsors are Colacem, S.p.A. of Italy (51%) and a group of local partners in the Dominican Republic with substantial knowledge of the local building materials industry (49%). Colacem ranks as Italy’s third-largest cement company and is part of the Financo Holding Group, a private Italian conglomerate owned by the Colaiacovo family of Italy. Founded in the 1950s as a construction and building materials company, Financo today has interests in four operating divisions: - cement/hydraulic binders; - concrete and aggregates; - transport, and - diversified industries. In 2002, Colacem had estimated Net Sales of Euro 398 million, EBITDA (Earnings Before Income Tax and Depreciation) of Euro 145 million and Total Assets of Euro 674 million. SIMEST will acquire a 2% shareholding in Domicem from Colacem, although Colacem will retain majority voting control of Domicem. SIMEST is a publicly owned Italian company supported by the Ministry of Industry and created to encourage Italian investments abroad. Its Board of Directors comprises a range of Italian industrial companies and banks.

The total project cost is estimated at $84 million. The proposed IFC investment amounts to $42 million and comprises a $21 million A Loan for IFC’s own account and a $21 million B Loan for the account of participants. As of March 16, 2005, total project cost has been revised to US$113. 5 million. The proposed IFC investment will increase to US$55.5 million (see project Domicem II – No. 24209).

24.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	24.0
Equity

* These investment figures are indicative

The Domicem project will be located on a 500 ha site located 40 km from the capital Santo Domingo, 26 km from the international Port of de Haina and 2 km from the village of Sabana Grande de Palanque, where the project’s limestone quarries are located. The site is easily accessible, located 2,000 meters away from the Haina Palanque highway.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. This categorization is based on the location of the cement plant in an unpopulated area, the limestone quarry is a short distance from the plant in an area previously used for grazing cattle with no apparent land acquisition issues, and the sponsor is committed and capable to run the operation in an environmentally and socially responsible manner. The limestone and clay quarry has all the necessary licenses and permits from the government. Environmental, health, safety and social issues associated with this project include:

- management of air emissions including potential cumulative impacts;
- management of wastewater and solid waste;
- impacts of transportation;
- quarry reclamation plan;
- occupational health and safety;
- hazardous materials management;
- life and fire safety;
- emergency response;
- land acquisition procedures;
- community relations and development.
Location of environmental documents in locally affected community
The environmental documents will be made available at the following locations: Domicem’s offices in Santo Domingo Municipality of Ciénega de Palenque

The IFC Role will provide the following: - Access to Long-term Financing. IFC’s involvement will enable the project to obtain long-term financing with maturities otherwise unavailable in the local DR market. As a greenfield project, Domicem requires adequate grace periods on principal repayments to ensure proper capitalization and ‘breathing room’ during construction and start-up. IFC will also play a catalytic role by attempting to mobilize up to $21 million from foreign commercial banks who may be unfamiliar with the local DR market and political environment. In this regard, IFC’s own investment in the project is expected to provide comfort to banks. - Support to Colacem. Colacem seeks to diversify geographically and find growth opportunities in emerging markets. While it has formed a joint venture with strong local partners in the DR, Colacem can benefit from IFC’s involvement in Domicem given that this is its first investment in Latin America. IFC contributes, beyond its ‘umbrella’, regional knowledge and investment experience in the cement industry in the Latin America. IFC has also provided the Sponsors with input such as suggesting improvements in limestone quarry investigation, bulk sampling of raw materials for the turnkey contractor, and guarantee for Nitrogen Oxides (NOx). - Endorsement of CBMI as Turnkey Contractor. IFC has first-hand knowledge of CBMI, the Chinese turnkey contractor, which Colacem will use for the Domicem project after its successful prior collaboration with CBMI. IFC’s endorsement of CBMI would help introduce a new, low cost, competitive supplier to the Latin American market. Development Impact: The Domicem project, a joint venture between Colacem, an industry player with a solid track record and a strong group of local DR investors, is expected to improve the productivity and competitiveness of the DR cement sector. By supplying its own clinker needs through an integrated cement operation in a country where 60% of cement is produced on the basis of imported clinker, Domicem is expected to have a competitive cost structure. The additional production of quality cement is expected to reduce cement prices in the DR, which are among the highest in the world, to more competitive levels. Other development benefits of the project include ‘best practice’ technology transfer, job creation and foreign exchange generation when the project exports a portion of its production. The project will also support infrastructure development and construction efforts, which are critical in a country prone to frequent devastation from hurricanes and in constant need of quality cement and building materials. Colacem has a track record of implementing community development programs in the communities where it operates in Italy and is committed to support similar efforts in the DR. Domicem is expected to operate in line with superior environmental management and safeguard systems, including ‘best practice’ standards for energy efficiency.