26090 - Jiuda Salt

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Summary of Proposed Investment

Project Number

26090

Company Name

Sichuan Jiuda Salt Manufacturing Co., Ltd.

Date SPI Disclosed

Jun 26, 2007

Country

China

Industry

Manufacturing

Projected Board Date

Jul 27, 2007

Status

Active

Sector

Miscellaneous and Industrial Ores (Including Magnesite, Fluorite, Sulfur, Soda Ash, Clays, Gypsum, Lime, Peat, Boron, Diatomite, Feldspar, etc.)

Department

Regional Industry - MAS Asia & Pac

Environmental Category

B - Limited

Previous Events

Approved : Aug 6, 2007
Signed : Aug 8, 2007
Invested : Jan 28, 2008

Project Description

Sichuan Jiuda Salt Manufacturing Co., Ltd. (Jiuda Salt or the company), a large private salt producer headquartered in Zigong city of Sichuan Province. The company’s main products are industrial/chemical salt, edible salt and specialty salt. The company is implementing an expansion program through a combination of organic and inorganic growth. The project will involve expanding a number of the company’s existing production capacities, as well as acquiring existing production facilities in China.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	35.0
Equity	15.0

Development Impact

- Employment Generation:

The company currently employs about 6,900 staff. The project will create additional employment opportunities through expansion and will also preserve employment at locations that will be acquired. These jobs are essential in the underdeveloped interior areas of China. An expected 290 jobs will be created through the expansion projects, and additional jobs will be preserved at acquired facilities.

- SME Development:

The company utilizes 3 truck transportation companies to handle transport needs for raw materials and finished products. It is expected that these numbers will increase to 5 to handle the expansion volumes.

- Private Sector Development:

The project will stimulate the further development of the local industry in a frontier region of China, stimulating value addition to a commodity product. Furthermore, China now has one of the largest chlor-alkali industries in the world, hence a robust, competitive, and reliable salt supply is key to its long-term viability.

- Demonstration Effect:

The project will utilize advanced salt mining and manufacturing technologies, which will significantly improve energy efficiency and safety practices in the salt industry.

IFC would be supporting a leading salt producer in China by providing equity and debt financing to help the company implement its long-term development strategy. Among other things, IFC will:

- Provide long-term financing:
IFC is expected to provide loans with long maturities and grace periods, which are not readily available to the company. The long-term loans will help the company utilize its earnings to fund its current phase of expansion and development. With the addition of long-term financing from IFC, the company will be able to improve its liquidity.
- Introduce the company to international standards and best practices in environment, health, and safety practices:
The company has specifically asked for IFC’s involvement with a view to introducing to it international standards and best practices in corporate governance, environmental, social, health, safety and labor management practices, and community development activities.

- Contribute to private sector development:

IFC’s support for privatized enterprises will contribute to their further long-term growth and will send a positive signal to the market and promote competition.

This is a Category B project according to IFC’s Environmental and Social Review procedures 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.

The project mainly involves the capacity expansion at various existing sites in Jiuda. Hazardous materials are not used or produced in this project. There is no underground salt rock mining at Jiuda. In the mine facilities of Jiuda, the water is pumped to the underground salt rock layers from one well, and the brine is pumped up to the surface through another well for manufacturing.

Identified Applicable 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

Contacts

For Inquiries About the Project, Contact

Mr. Yu Xiaobo, Director
No. 89 dongxingsi Street, Zigong,
Sichuan Province, 643000, P.R. China

Telephone: +86 813 8105828
Fax: +86 813 8105472

Website: http://www.jdgrp.com

For Inquiries and Comments About IFC, Contact

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IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster

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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