HC is an international building material group producing cement, aggregates and ready mix concrete, listed on the Prime Standard stock market segment of the Frankfurt stock exchange. In 2008, the group delivered 99 million tons of cement and clinker sales, 300 million tons of aggregates and 44 million m³ of ready mix concrete. HC recorded sales of $20.9 billion.

The proposed IFC investment includes (a) a direct IFC equity investment of up to $110 million and (b) an IFC debt facility of up to $70 million. Due to changes in the scope of the Project, IFC has been requested to increase the amount of its proposed equity investment to up to $110 million from up to $90 million previously under consideration. IFC African, Latin American and Caribbean Fund, managed by IFC Asset Management Company LLC, is also considering an equity investment of up to $35 million.

180.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	70.0
Equity	110.0

* These investment figures are indicative

HC has : (a) grinding mills in Benin (Cotonou), Ghana (Tema and Tekoradi), Togo (Lome), Liberia (Monrovia), Sierra Leone (Freetown) and Gabon (Libreville and Franceville), (b) an integrated cement plant in Tanzania (Dar es Salaam), and (c) a clinker plant in Gabon (N’Toum).

The proposed Project will support the cement sector in several IDA countries – namely, Liberia, Ghana, Benin, Togo, Sierra Leone, Gabon and Tanzania – which have limited foreign investments. It will stimulate an important investment program, create jobs and increase the availability of more affordable cement supply. In turn the proposed Project will stimulate the development of local housing and infrastructure projects and will result in significant foreign exchange savings thanks to regionally produced cement and reduced freight costs. The Project is also expected to introduce higher environmental and social standards. The success of the Project will have a strong demonstration effect and will potentially lead to other projects for IFC as well as other foreign investments in those countries.

At a time when long-term financing is scarce, through the Project, IFC is demonstrating its willingness to commit a large investment in IDA countries. IFC is expected to mobilize additional funds from other IFC partner investors. HC values working with IFC which has a long-term view of the industry. HC has a proven expertise in the cement industry. The support of IFC will contribute financing an important and profitable capital expenditure program, consisting of new modern and more energy-efficient facilities in some of the countries involved. The program will not only improve the cost competitiveness of HC’s network of African operations, but also enable the Company to have less recourse to transporting clinker over long distances, reducing simultaneously its carbon footprint and high associated freight costs. In the future a few of the remaining cement facilities will also need additional investments to improve their energy efficiency. Finally, IFC will assist the Company in further upgrading its environmental and social practices in all of its facilities in the seven countries concerned.

This is a Category A project according to IFC’s Procedure for Environmental and Social Review of Projects. The project appraisal consisted of undertaking a site visit to the individual facilities as located in Sub-Saharan Africa, interviews with relevant personnel, and a review of applicable documentation.

While all Performance Standards (PS) are applicable to this investment, the following are deemed relevant to this Project:

- PS1: Social and Environmental Assessment and Management Systems
- PS2: Labor and Working Conditions
- PS3: Pollution Prevention and Abatement
- PS4: Community Health, Safety and Security
- PS5: Land Acquisition and Involuntary Resettlement
- PS6: Biodiversity Conservation and Natural Resources Management
- PS8: Cultural Heritage

The following Performance Standard was not triggered during the due diligence process:

- PS7: Indigenous People - none were identified within the project affected areas.

At the HC facility in Tanzania, individuals who have occupied Company land may require resettlement. In addition, a proposed new clinker plant to be constructed in West Africa may require physical and economic displacement, the extent of which is yet to be determined. Due to these activities which are considered to be potentially “significant, adverse and largely irreversible”, the Project has been classified as a Category A project.

The Company will implement measures as defined in the Environmental and Social Action Plan to address these impacts, along with the others as summarized in the Environmental and Social Review Summary.