The project sponsor is Acerinox S.A. a Spanish headquartered stainless manufacturer with a majority 76% shareholding in Columbus. Acerinox S.A is public company listed on the Barcelona Stock Exchange in Spain. The other shareholders of Columbus are the Industrial Development Corporation of South Africa Limited and Samancor Ltd who each have a 12% equity holding.

The total project cost is estimated at $ 100.6 million and IFC has been requested to provide $50 million in the form of an A loan to help finance the project.

50.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	50.0
Equity

* These investment figures are indicative

The project is located in Middelburg, Mpumalanga Province (140 km east of Johannesburg).

Strengthening economic linkages:

The project will support Columbus’ long term sustainability and increase profitability, benefiting employees through job-security, the government through higher taxes, and generate higher export earnings. It will also help strengthen upstream and downstream supply chains in raw material supply, transportation and services.

Support for the transport sector:

The vehicle manufacturing industry in South Africa is a large user of Columbus’ stainless steel. By improving Columbus’ competitiveness, the project will indirectly support the growth and competitiveness of the domestic vehicle production industry.

Long-term partner:

IFC’s main role is to be a long-term partner for Columbus and Acerinox, supporting the latter’s investment in South Africa. Acerinox believes that IFC’s multilateral status, development mission, global presence and knowledge, makes it the right partner to support it in emerging markets. In support of this partnership, IFC will provide a long-term loan to Columbus to help finance the Project. By providing support for Columbus, IFC will be positioned to provide similar support to Acerinox for projects in other developing countries.

Comfort in a dynamic environment:

South Africa is a young democracy and still undergoing change both on the political and economic fronts that may pose a threat to Columbus. IFC’s presence as a long-term lender will provide comfort to Columbus and Acerinox and support their continued investment in South Africa.

Diversifying funding sources:

IFC’s presence is expected to help diversify Columbus’ funding sources to include more international bank including Acerinox’s own Spanish relationship banks. IFC had previously explored using its syndication product to introduce the Spanish banks to Columbus, and though this is not part of the current proposed IFC investment, it could be pursued in a future repeat IFC investment.

Linkages and advisory service linked to black economic empowerment: The proposed investment could allow IFC to play a role in Columbus’ efforts to improve its Black Economic Empowerment (BEE) performance, including creating linkages with local small and medium-size enterprises.

This is a Category B Project according to IFC’s Procedure for Environmental and Social Review of Projects because, as a result of its due diligence, IFC has concluded that the potential adverse environmental and social impacts presented by the project are few in number, site-specific and have been or can be readily mitigated by adhering to generally recognized performance standards, guidelines or design criteria.

The key environmental and social issues in on-going and proposed operations are

- assessment and management of environmental, health and safety, and social performance associated with the existing integrated stainless steel manufacturing operations;
- labor and working conditions, including provision of a safe working conditions for direct and contracted employees;
- management of emissions to the environmental from the steel mill and other associated facilities and carrying capacity of the local environment; and
- host community safety and impacts from existing and proposed operations and community engagement.

While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment may have impacts that must be managed in a manner consistent with the following Performance Standards:

- PS1: Social and Environmental Assessment and Management Systems;
- PS2: Labor and Working Conditions;
- PS3: Pollution Prevention and Abatement;
- PS4: Community Health, Safety and Security; and
- PS6: Biodiversity and Sustainable Natural Resource Management: