25459 - Tianrui Cement

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Summary of Proposed Investment

Project Number

25459

Company Name

Tianrui Group Co., Ltd.

Date SPI Disclosed

Feb 14, 2007

Country

China

Industry

Manufacturing

Projected Board Date

Mar 16, 2007

Status

Completed

Sector

Cement

Date Revised SPI Disclosed

Mar 6, 2007

Department

Regional Industry - MAS Asia & Pac

Environmental Category

B - Limited

Previous Events

Approved : Apr 5, 2007
Signed : Jun 27, 2007
Invested : Jul 10, 2007

Project Description

Tianrui Cement (Tianrui or the company), a large private cement company in Henan Province, is implementing an expansion program through a combination of an organic and inorganic growth.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	60.0
Equity	25.0

Development Impact

- Support for China’s Cement Consolidation: The government has stated repeatedly that the cement industry needs to update its technologies to cleaner, more energy efficient New Suspension Pre-heater (NSP) technology, and undergo an industry consolidation. In the past few years, the government has implemented a series of regulations aimed at ensuring that all new cement facilities use NSP technology, and that producers using Vertical Shaft Kiln (VSK) technology are phased out. These regulations have been partially successful, as the number of cement manufacturers nation-wide has fallen from over 8,000 to less than 5,000 over the past five years. Over the same period, the percentage of cement produced using NSP technology has increased from about 25-30% to over 50% nation-wide. The project will accelerate the consolidation process and solidify Tianrui’s position as regional industry leader, thereby furthering the country’s development goals and helping to rationalize the Chinese cement industry. - Support for the Development of Central and Northeastern Provinces in China: The government has encouraged greater development in the Western (including central provinces such as Henan) and Northeastern (including Liaoning) provinces of China, in an attempt to establish a more balanced and harmonious development approach, and counter-balance the very fast development along the eastern coast of China. This Project, with its investment in Henan and Liaoning, fits well into the government’s broader development goals for the country.

IFC would be supporting a leading cement producer in China by providing equity and debt financing to help the company implement its long-term development strategy. Among other things, IFC will assist Tianrui in: - improving its market position; - introducing Tianrui to a number of other international financial institutions though raising a B Loan, thereby expanding the company’s future options for raising capital; and - providing much-needed long-term financing, more appropriate to the company’s capital expansion plans than the short-term debt that is primarily available locally. IFC would also be instrumental at introducing international best practices at Tianrui in such areas as corporate governance, environmental and social practices, and good financial management. Indeed, IFC has encouraged Tianrui to undertake its first IFRS audit, and, along with KKR, IFC will help the company establish good governance practices. IFC is also playing an honest broker role.

The proposed project is to improve and expand Tianrui’s production based within its existing operation sites. The project does not require additional land take, and the project review has concluded that all operations either already are, or as a consequence of the project will be in full compliance with the local regulations and IFC Policies, Performance Standards, and environmental and social guidelines. Based on the Company’s current material compliance with the above the project has been reviewed as a Category B project.

Contacts

For Inquiries About the Project, Contact

Mr. Li Liufa, Chairman Tianrui Cement N. 28 Danyangxi Rd., Ruzhou, Pingdingshan, Henan, China Locations of Environmental Documents accusable to the locally affected communities: - Tianrui Cement’s Headquarters in Ruzhou, Henan: No.63, Guangcheng East Road, Ruzhou city, Henan province Telephone: 0375-6037666 - Tianrui cement Ruzhou company Ronggong road, Runan industrial zone Ruzhou city, China Telephone: 0375-6941799 - Tianrui Cement Yutai company Dongying village, Lingru town Ruzhou city, China Telephone: 0375-6681109 - Tianrui Cement Zhoukou company Guanpo village, Nanjiao township, Chuanhui district Zhoukou city, China Telephone: 0394-8276170 - Tianrui Cement Shangqiu company Liu Village, Liangyuan district Shangqiu city, China Telephone: 0370-2292119 - Tianrui Cement Lushan Company Liangou village, Lianggui township, Lushan county, China Telephone: 0375-5952037 - Tianrui Cement Dalian Company Santang village, Changxing Island Township Wafangdian city, China Telephone: 0411-85280745 - Tianrui Cement Weihui company Tiexi industrial zone, Weihui city, China Telephone: 0373-4415301 - Tianrui cement Zhengzhou company Kangzhuang village, Baisha township, Zhongmou county, China Telephone: 0371-62366526 - Tianrui cement Shilong company Sunling village, Shilong district Pingdingshan city, China Telephonel: 0375-2522966 - Tianrui cement Yuzhou company Huoshanfang villlage, Qiangong Township Yuzhou city, Henan Province, China Telephone: 0375-6037666 - Ruzhou city Government No. 72, Danyang Middle Road, Ruzhou city, Henan province, China Telephone: 0375-3331211

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This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. This document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC’s Policy on Disclosure of Information that went into effect April 30, 2006.

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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