26175 - Abocol

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Summary of Proposed Investment

Project Number

26175

Company Name

YARA COLOMBIA S A

Date SPI Disclosed

Jun 6, 2008

Country

Colombia

Industry

Manufacturing

Projected Board Date

Jul 10, 2008

Status

Completed

Sector

Nitrogenous Fertilizer

Department

Regional Industry MAS LAC & EUR

Environmental Category

B - Limited

Previous Events

Approved : Oct 6, 2008
Signed : Oct 24, 2008
Invested : Feb 19, 2009

Project Description

Abonos Colombianos S.A. (Abocol or the company), a mid-sized chemicals producer in Colombia, has approached IFC with a request for a corporate loan facility (the Facility) in the amount of up to $30 million. The Facility will help Abocol implement its 2008-2010 capital expenditure program aimed at increasing operational efficiencies and backward integration, replacing low margin products with higher value-added products and expanding production capacities to respond to growing demand in niche markets.

In addition, IFC is considering providing a Carbon Delivery Guarantee (CDG) to enhance the value of approximately 1.25 million carbon credits (“CERs”) expected to be generated by the Company through 2012 from the abatement of nitrous oxide at its two nitric acid plants in Cartagena.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management	45.0
Guarantee
Loan	30.0
Equity

Development Impact

Through the proposed Facility IFC will help a mid-sized Colombian fertilizer company with a focus in the agricultural sector enhance its competitiveness through investment in cost and technology improvements and capacity enhancements and allow it to better serve the farming population in Colombia and neighboring markets by responding to growing demand for higher quality complex fertilizers. The introduction of new technologies, the replacement of imported raw materials with local inputs, and the realization of economies of scale are expected to result in lower costs for fertilizers allowing the company the flexibility to support an increase in agricultural production in the context of tight global food markets. Abocol’s growth through value added and import substitution would help generate quality employment opportunities in Colombia, particularly in rural and mining communities.

In addition, there are specific developmental impacts associated with the Facility, which are summarized below:

Benefits to employees:

The company currently employs over 300 people directly and also generates approximately 700 full time jobs through contractors. Abocol’s growth is expected to create new employment opportunities not only in Colombia but in other neighboring emerging markets.

Local community benefits:

Abocol is an active member of “Fundacion Mamonal” through which it contributes to community projects. The company’s charity and sponsorship efforts are aimed at supporting educational projects and low-income people. It is expected the Company will further enhance its corporate social responsibility and that with the additional cash flows resulting from Abocol’s future growth the company further enhances its community impact.

Benefits to the consumers/enhancing agricultural efficiency:

Abocol’s products help improve agricultural yields and promote efficiencies in the rural economy. The products are made available on a cost-competitive basis to farmers, not only in Colombia but also in other emerging markets. As Abocol’s fertilizers are an important input to agriculture, the company is in a key position to help enhance farmer income which is an important aspect of poverty reduction efforts of developing countries.

Benefits to the environment:

Abocol will further enhance the environmental conditions of the area where it operates by strengthening its environmental controls to have its operations complying not only with local but also with international standards. In addition, it will ensure that its current and future subsidiaries and associated operations will protect the environment when it establishes the corporate structure to ensure sound EHS performance of these activities.

Long-term funding:

The proposed transaction is part of a broad engagement plan with Abocol, which envisages continuous support of the company’s investment plans in Colombia and overseas. The proposed corporate loan is the first step in developing IFC’s relationship with the company and is expected to be followed by financing of Abocol’s near-term investments in neighboring emerging markets.

Facilitating South- South investments:

Through the proposed Facility and in view of the broader engagement plan with Abocol, IFC would support the growth of a mid-sized Colombian fertilizer company and help it establish itself as a regional player. A partnership with the IFC would provide comfort to Abocol as it further expands its presence in neighboring countries with different regulatory environments, and thus facilitate South-South investments.

Environmental and Social Policies and Management Systems:

This proposed project will allow Abocol to extend the environment, health, and safety management to its current and future subsidiaries by establishing a corporate EHS structure. It will also help the company operate in accordance with international best EHS practices.

Higher standards/stamp of approval As a result of IFC’s adherence to high standards of corporate governance, environmental safety and social consciousness and adequacy of insurance coverage, an IFC investment in Abocol will enhance its credibility in the domestic and international markets.

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. Abocol will implement agreed actions a to comply with and will operate existing and design and operate any new projects in accordance with the applicable IFC Performance Standards and Environmental Guidelines.

Contacts

For Inquiries About the Project, Contact

Carlos Ortiz Prada, Investment Advisor
ABOCOL S.A.
carlos.ortiz@abocol.com
Av. Carrera 15 no. 100-43 Piso 2
Bogota, Colombia

Phone: 011 571 6236822
Cell: 011 57 316 878 7139

For Inquiries and Comments About IFC, Contact

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

Local Access of Project Documentation

The environmental documents related to the proposed investment will be made available to the public as follows:

- at the reception desk of Abocol’s main offices in Cartagena;
- in Fundación Mamonal located in the Mamonal Municipality in Cartagena;
- in Cardique (Corporacion Autonoma Regional del Canal del Dique ) - the Government Supervision entity in charge of environmental and social impact permits in Cartagena;
- at a public posting area in Pasacaballos in Cartagena; and
- on Abocol''s website: http://www.abocol.com Address: 207.57.79.26.

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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