26826 - China Glass II

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Summary of Proposed Investment

Project Number

26826

Company Name

CHINA GLASS HOLDING CO LTD

Date SPI Disclosed

Apr 10, 2008

Country

China

Industry

Manufacturing

Projected Board Date

May 12, 2008

Status

Completed

Sector

Glass and Glass Products (Including Glass and Mineral Wool)

Department

Regional Industry - MAS Asia & Pac

Environmental Category

B - Limited

Previous Events

Approved : Jun 2, 2008
Signed : Jun 4, 2008
Invested : Jul 31, 2008

Project Description

The project is to help an IFC existing client, China Glass Holdings Limited (CGH or the company):

- improve its energy efficiency and other aspects of its environmental performance; and
- manufacture more energy-efficient products.

The project consists of three main components:

- build a 3MW heat-recovery generation system and a centralized water recycling system in Suqian, Jiangsu province;
- transform three lines (Suqian, Weihai and Beijing) to produce energy-efficient products such as low-E glass; and
- enhance furnace energy efficiency by revising design and applying new combustion technology and increasing capacity during cold repair.

The total project cost is estimated at up to $52 million and IFC proposes to provide an A loan of up to $30 million to support the project.

Sponsor / Cost / Location

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

Development Impact

The project’s significant development impacts include:

Assisting a market leader to improve market competitiveness:

The project is consistent with the Chinese Government’s efforts to consolidate the industry by supporting a competitive producer and create a strong, efficient leader in the glass industry. The Project will support CGH in strengthening its market competitiveness and enhancing its long term sustainability by improving energy efficiency and diversifying into green glass products like low-E glass.

Promoting energy efficiency:

The Chinese Government is encouraging the glass industry to pursue cleaner production practice to address the rising environment and energy concern in the country. The project will help the Company produce more energy efficient products and enhance furnace energy efficiency, thereby reducing its energy costs and CO2 emissions. This is further expected to help CGH set good cleaner production standards and become a role model for its peers in the industry.

IFC will have a strong role in this project and has identified a number of energy efficiency and cleaner production opportunities that are necessary to be addressed in the near term and will bring significant returns to the company in the medium and long term.

In particular, IFC will support the company’s initiative of adopting new energy efficiency technology/practices and applying higher level environment standards. IFC''s experience in the Chinese glass industry coupled with its global expertise in glass and cleaner production make IFC well-equipped to provide additional advice and know-how to help the company in its pursuit of further potential cleaner production. Furthermore, IFC is uniquely qualified to support the company to implement these energy efficiency focused projects with long term financing, which will in turn support the company’s efforts to rationalize its capital structure and reduce its overall financing risk, allowing China Glass to better weather any cyclical downturns in the future.

The key environmental and social issues associated with this project are CGH’s management of social and environmental issues, in compliance with local regulatory requirements and with the Action Plan agreed with IFC in 2007, environmental assessment and planning processes for the new line, use of energy and water and air emissions.

The project’s principal objectives to conserve use of energy and water in manufacturing, manufacture of glass products which promote energy efficiency and secondary control of emissions to air are unambiguously environmentally beneficial.

Potential adverse impacts arising from the move of the Weihai line from the city center to out-of-town location are reversible and readily mitigable, and the net effect of the project is positive. This is therefore a social and environmental Category B project.

Contacts

For Inquiries About the Project, Contact

Mr. Cheng Xin, Vice President
Unit 2608, 26/F, West Tower, Shun Tak Centre
168-200 Connaught Road, Central, Hong Kong

Telephone: (852) 25592996
Fax: (852) 25597669
E-mail: xin.cheng@chinaglassholdings.com

For Inquiries and Comments About IFC, Contact

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

Local Access of Project Documentation

Beijing Qinchang Glass Co., Ltd.
No.52 East Street
Nankou, Changping District, Beijing, China

Jiangsu SHD New Materials Co., Ltd.
No.288 Yunhe North Road
Suqian, Jiangsu, China

Weihai Blue Star New Technology Glass Co., Ltd.
No.98 Qingdao Road (M), Weihai Economic & Technology Development Zone
Shandong, China

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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