28953 - Lafarge Iraq

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Summary of Proposed Investment

Project Number

28953

Company Name

BAZIAN CEMENT CO LIMITED

Date SPI Disclosed

Apr 26, 2010

Country

Iraq

Industry

Manufacturing

Projected Board Date

May 27, 2010

Status

Completed

Sector

Cement

Department

Regional Industry MAS MCT

Environmental Category

B - Limited

Previous Events

Approved : Nov 9, 2012
Signed : Dec 22, 2011
Invested : Feb 23, 2012

Project Description

Lafarge’s operations in Iraq consist of a 2.5 mtpa cement plant in Bazian, Suleimanyah, and a 2.3 mtpa cement plant in Tasluja, Sulaimaniyah, leased from the Government. In addition, Lafarge is in the process of finalizing a lease agreement with the Government of Iraq to rehabilitate and operate a 1.8 mtpa cement plant near Kerbala, Iraq. The Project has three components: (i) supporting Lafarge’s expansion and growth in Iraq; (ii) refinancing a portion of Lafarge’s shareholder loans to the Bazian plant, originally made as a shareholder bridge loan in the absence of banks willing to lend directly into Iraq; and (iii) debt financing to the Kerbala plant.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	100.0
Equity	50.0

Development Impact

The development impact of the project is expected to include: (i) increased supply of cement to meet Iraq’s needs for reconstruction; (ii) substitution of imports from neighboring countries, which will help stabilize prices in the sector; (iii) modernization and standard-setting in the sector, in which Lafarge is currently the only private sector player, and all other plants are state-owned, many of which are small and in poor condition; (iv) demonstration effect on other potential foreign investors who could help bring much-needed FDI into Iraq; (v) job creation; and (vi) tax revenues for the Government of Iraq.

IFC will provide a long-term financing package which is currently not available in either the local or the regional market. IFC will provide the debt financing at the Iraq level, taking country risk at a time when no other financial institution is prepared to accept Iraq risk. IFC will also play a catalytic role in providing comfort to another DFI, Proparco, which is seriously considering financing the project and has indicated that it would have been unwilling to do so in the absence of IFC’s lead.

The proposed project is to invest in already existing cement manufacturing plants, which either already are in compliance with IFC''s environmental and social requirements or will be upgraded to comply with these requirements as part of the project. The overall effect of the investment will therefore be improved environmental performance resulting in a consistent compliance with both national and IFC requirements. The project is being processed as a Category B project, and detailed information on the review of the projects performance can be found in the Environmental & Social Review Summary (ESRS).

Contacts

For Inquiries About the Project, Contact

Guillaume Cavalier Head of Financing, Treasury and Insurance Lafarge, Middle East and Africa Nile City South Tower 2005 A Corniche El Nil Cairo, Egypt 11221 Phone: +202 24 61 28 97 Email: guillaume.cavalier@lafarge.com Website: www.lafarge.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: 202-974-4384E Mail: Webmaster

Local Access of Project Documentation

The ESRS will be translated into Kurdish and Arabic languages and locally disclosed in the villages closest to the Bazian and Tasluja plants, as well as near the Karbala cement plant once it is taken over.

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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