The project company is a joint venture created specifically for the development, financing, construction and operation of the project. The project has a Technical Services and Support Agreement with BHP Billiton (“BHP Billiton”) and will adopt BHP Billiton policies (including policies on health, safety, sustainability, governance and transparency). The sponsors are listed below (with the relevant ownership percentage in parentheses):

- BHP Billiton (33.3%)

BHP Billiton (ASX: BHP) is the world’s largest mining group based on market capitalization and operates as a diversified natural resources company with its headquarters in Melbourne, Australia. IFC has targeted BHP Billiton to be one of its strategic global partners because of BHP Billiton’s ability to set high standards which can have a major influence on the industry as a whole. BHP Billiton considers its relationship with IFC and the World Bank as strategic to its activities in Africa. IFC’s relationship with BHP Billiton in the mining sector includes Escondida in Chile and Mozal I & II in Mozambique.

- Global Alumina (33.3%)

Global Alumina (GLA-U.To) has been the key project developer and negotiator of the various agreements with the Government until May 2007, when 2/3rds of the project company was sold to BHP Billiton, Dubai Aluminium Company Limited and Mubadala Development Company. Global Alumina was founded in 1999 with a vision to become the preferred low-cost alumina supplier to the independent aluminum industry by gaining first-mover advantage in the development of a domestic alumina refining industry in Guinea.

- Dubai Aluminium Company Limited (25.0%)

Dubai Aluminium Company Limited (“DUBAL”) is 100% owned by the Dubai government. DUBAL was founded in 1979 and is the seventh largest producer of primary aluminum in the world with one of the largest single site aluminum smelter operations in the world located in Jebel Ali. This will be IFC’s first engagement with DUBAL on a significant project financing opportunity.

- Mubadala Development Company (8.33%)

The Mubadala Development Company (“Mubadala”) is a state owned company of the Abu Dhabi government. Mubadala’s activities include: acquisition of new companies and strategic holdings in existing companies, diversified investments and strategic partnerships. Currently Mubadala has invested in the energy, telecommunication, aerospace, automotives, healthcare, real estate and ship building sectors. This will be IFC’s first engagement with Mubadala on a significant project financing opportunity.

The estimated total project cost (excluding financing costs) is $5.2 billion of which around $500 million is estimated to be spent at notice to proceed. The sponsors plan to finance the project with $3.6 billion of equity and $2.6 billion of long term senior debt sourced from export credit agencies (“ECAs”), multilaterals and development financial institutions (“DFIs”) and a commercial bank tranche. The proposed IFC investment is an A-loan of up to $200 million and a possible B-loan up to $300 million.

150.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	150.0
Equity

* These investment figures are indicative

The mine, power plant and refinery site is located about 20 kilometers west of the town of Sangarédi. The port is located at the town of Kamsar (about 82 kilometers from the refinery in a straight line). The refinery and mine concession covers an area of approximately 690km2. The associated infrastructure includes: a steam and power plant to provide the refinery with necessary steam and electricity; two rail spurs, one servicing the port facility and the second servicing the refinery site; a new port facility; a bauxite residue disposal area; and a water reservoir, sanitation facilities, drainage and electricity supply to the developments.

The project will establish the first bauxite processing facility in Guinea in 54 years, as well as lead to the creation and improvement of various infrastructure facilities. As such, the expected development impacts from the project are substantial and diverse, and may include:

(i) Generation of Direct and Indirect Employment: The Project is expected to create approximately 12,000 direct jobs (refinery and port sites) for local Guineans during construction and approximately 2,000 direct jobs (refinery and port sites) during the operations phase. Additionally, the creation of three to five secondary and tertiary jobs for each wage-paying job is anticipated. The project company is currently implementing some vocational and health/safety training to maximizing the sourcing of local skilled labor. The Boké Technical Training School will produce job-ready workers for the Project construction phase. The school is partly funded by the Government’s Education Department which provides some training budget, power, equipment and materials. The project company has planned significant investment in providing additional resources and improving the facilities. About 1,000 Guineans attend classes in trade skill development.

(ii) Fiscal Contributions: The project is expected to generate between $5-12.5 million per year in lump sum taxes to the Guinean government for the first 15 years of its operations. Beginning in the 16th year, tax on profits of 35% will be paid to the Government, averaging $418 million per year In addition, there will be a mining royalty tax averaging $22 million per year based on bauxite consumption. In total, the project is estimated to generate $8.2 billion of new tax revenue through 2044. The project company has agreed to publicly disclose all revenue payments made to the Government over the life of the project.

(iii) Community Development: The company has committed $2.5 million per year during construction. During operations, a compulsory contribution of $0.5 million per annum (for years 1 through 15) and $1.0 million per annum (from year 16 thereafter) is required. In addition to this, the company has proposed a voluntary contribution of $3.5 million per annum for the duration of operations to fund community development programs, in the region and at the national level. The project company has also entered into a partnership with the African Development Foundation to implement a program for a school and health center in the main relocated village. Training initiatives for the community include training for village elementary school teachers, adult French literacy programs, environmental management, health and hygiene, understanding of national law, HIV/AIDS awareness and malaria prevention knowledge. In addition, the project company is planning to establish a community development foundation at the commencement of production, similar to the Mozal Community Development Trust in Mozambique.

(iv) Support to Local SMEs: Procurement of an estimated $150 million worth of goods and services in Guinea is expected during Project construction. Once built, an estimated $40 million worth of procurement is expected annually from within Guinea for continuing operations.

(v) Public Infrastructure: The project is currently developing infrastructure projects that will benefit the broader population, including road and bridge upgrades from Kamsar port to the Sangarédi refinery site, construction of the container terminal at Kamsar and improvements in the Government owned railway operations. In addition, the project is expected to lead to improvements in the social infrastructure in Boke and Sangarédi where housing will be built and employees will be supported to own their own homes.

Key indicators that are proposed to be used to monitor the development impact of the project during its life are: (i) taxes and royalties paid to the Government; (ii) direct and indirect jobs created during the construction and operational phases; (iii) number of employees having received vocational training by the project company; (iv) number and total value of contracting arrangements with domestic businesses; and (v) total expenditures incurred by the project company on community development activities. The project company has commissioned a socio-economic impact assessment study for the project based on a scope of work agreed with the DFIs. This study will be publicly disclosed when completed and form the basis of agreeing key performance indicators on socio-economic impacts for the Project.

Fit with World Bank Group Strategy:

The World Bank Group is at an early stage of revising its Country Assistance Strategy for Guinea, which is likely to focus on support to the Government for the implementation of further measures to improve economic governance, urgent investments in water and electricity and capacity building for better governance of the mining sector. Within this overall framework, the recent focus of IFC’s activities in Guinea has been the mining sector. In 2006, IFC approved its first investment project in Guinea: support for a locally incorporated subsidiary for Rio Tinto’s Simandou iron ore project in eastern Guinea. Looking forward, IFC’s priorities in the sector in Guinea will be supporting companies that play an important role in promoting governance and transparency, as well as working closely with mining companies to broaden and deepen the socio-economic impacts of their projects. The proposed investment is consistent with these priorities.

Governance Context:

It is expected that substantial benefits from the project will accrue to different levels of Government in the form of taxes and royalties; large benefits to the local community are also anticipated on the basis of the project’s community investment strategy (refer iii) Community Development). The World Bank continues to engage with the Government in the context of policy improvements and capacity building. Guinea has joined the Extractive Industries Transparency Initiative (“EITI”) and has made progress in its implementation: 2005 Government revenues were audited and publicly disclosed.

Additionally, the Government has volunteered to be a pilot country under the EITI++ initiative being led by the World Bank Group and launched by President Zoellick in the March 2008 Spring Meetings. The EITI++ is an initiative of the World Bank Group to build on the transparency and good governance concepts of the existing multi-stakeholder Extractive Industries Transparency Initiative (EITI). EITI++ looks at the entire value chain and seeks to provide technical assistance to governments, including on the awarding of contracts, monitoring operations, collecting taxes, improving resource extraction and economic decisions, better managing price volatility and investing revenues effectively in sustainable development. The World Bank Group continues to monitor the political and governance environment in the sector specifically, and country broadly. Governance is core to the project''s ability to achieve the outlined potential positive socio-economic impacts, and will continued to be assessed as a basis for IFC''s involvement in the project. IFC''s final support for the project will be based on a balanced assessment of the governance context, the expected development impact and the expected benefits, including to communities and local governments.

IFC’s Expected Developmental Contribution:

(i) Long-Term Funding: The scale of the investment and the long-term nature of the commitments require the sponsors to seek out the influence and long term sustainability perspective of the IFC for the project. The 15-18 year tenors being sought for this transaction will be the longest debt tenor for a private sector led project in recent times.

(ii) Technical Assistance on SME Linkages: The company will benefit from IFC Advisory Services’ global and regional experience in the sector. IFC and BHP Billiton are looking to replicate the Mozal SME Linkages program in Guinea. In October 2007, upon request by the project company, IFC began scoping a linkages program to provide locally sourced goods and services to the project. A SME training pilot program is soon to be launched by IFC and the project company. IFC is also in discussion with the African Development Bank and the African Development Foundation on possible collaboration on SME development.

(iii) Enhancing Local Community Benefits: There is no established process today by which a mining operation’s taxes or royalties can be remitted to the regional and community level. IFC is engaging with the Government and mining companies to put in place an effective structure for distribution of mining taxes and royalties to the regions and communities. IFC’s Community Development Facility is supporting this effort by piloting the development of an Integrated Community Development Program in Sangarédi to be partly financed by an allocation of the Government’s taxes and royalties from this project and others in the region.

(iv) Environmental and Social Value-Added: This is the largest resource and ore processing project to be developed in Africa following the adoption of the IFC Performance Standards and their endorsement by the Equator Banks. IFC has worked with the sponsors and other lenders to assess the project against the specific performance requirements. Under IFC guidance, a revised and updated set of environmental and social documentation has been developed in line with the new design and implementation schedule of the project.

In addition, IFC’s involvement in this pioneering project will support the on-going sector policy reforms being undertaken with support from the World Bank and IMF. Ongoing close collaboration between the World Bank, IMF and IFC in the mining sector in Guinea has been sustained over four years and in advance of this and other large scale projects planned in the country.

The review of this project consisted of appraising the project’s technical, environmental and social information, several visits to the project’s refinery and port sites and interviews with the project company’s managers and operations personnel, representatives of project affected communities and local and national administration. The original Environmental Impact Assessments (EIA) for the refinery and port facilities were prepared in 2004-2006 by SNC Lavalin and submitted to and approved by the Government. Based on these approvals, the project received authorization to proceed with implementation. This included all of the pre-construction activities that occurred from mid-2005 through mid-2008. IFC has worked closely with the new project company management team to revise and update these documents into one single Social and Environmental Assessment (SEA) in line with IFC requirements, which was finalized in July 2008.

Performance standards applicable to this investment include:

- PS1: Social and Environmental Assessment and Management Systems
- PS2: Labor and Working Conditions
- PS3: Pollution Prevention and Abatement
- PS4: Community Health, Safety and Security
- PS5: Land Acquisition and Involuntary Resettlement
- PS6: Biodiversity Conservation and Sustainable Natural Resource Management
- PS8: Cultural Heritage

The key environmental, social and occupational health and safety and community aspects and issues associated with this project include:

Corporate level: Health, Safety, Environmental and Community (“HSEC”) management; Social Responsibility and Community Engagement; S&E Assessment and HSE Permitting, EPCM and other contractors’ and service providers’ HSEC management; and employees and contactors hiring and training.

Project level:

- Processing facilities: air emissions, dust control, chemicals management, water and effluent management including groundwater protection, solid waste management and recycling, hazardous materials handling and management as well as emergency response and pollution prevention and abatement;
- Mining activities: dust control, drainage, pit rehabilitation, land use, labor and working conditions, occupational health and safety, impacts to biodiversity, visual impacts and mine safety;
- Infrastructure and related facilities: footprint minimization, public health and safety, resource conservation, dust and air quality control and hazards management and mitigation of transportation risks;
- Surrounding communities: land acquisition and associated physical and economic displacement, income restoration, in-migration and associated challenges to social structure, emergency preparedness and response, community health, safety and security, social/community development, revenue management at local level and sustainable local economic development;
- Protection and conservation of biodiversity, including protection of endangered species, and cultural heritage;
- Cumulative Impact Assessment, to be complemented by a Strategic and Sectoral Impacts Analysis (“SSIA”);
- Stakeholder engagement; and,
- Community development.

The major challenges associated with the project include: physical displacement of 782 individuals; a reduction of habitat for an endangered species (West African Chimpanzee); potential cumulative impacts from bauxite and alumina projects in the Boké Prefecture; air quality impacts due to generation of SO2 from the refinery site; and anticipated in-migration.

IFC’s due diligence findings and application of IFC’s Environmental and Social Review Procedures to this suite of aspects and issues resulted in this project being classified as Category A.

The project company has prepared plans to address the potential environmental and social impacts of the project and to ensure that the project will, upon implementation of the specific agreed measures, comply with all environmental and social requirements (the Guinean laws and regulations and IFC Performance Standards and the World Bank’s Environmental, Health and Safety Guidelines). Information about how these potential impacts will be addressed by the project company is summarized in the Environmental and Social Review Summary (ESRS) and in the Action Plan agreed with the sponsors.