31153 - Merec Grp Expn

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Summary of Proposed Investment

Project Number

31153

Company Name

MEREC INDUSTRIES SA

Date SPI Disclosed

Mar 1, 2012

Country

Mozambique

Industry

Agribusiness and Forestry

Projected Board Date

Apr 2, 2012

Status

Completed

Sector

Grain Processing (Milling, Starch, Flour, Malt)

Department

Gbl Ind, Manufact, Agribus & Services

Environmental Category

B - Limited

Previous Events

Approved : Apr 25, 2012
Signed : Jun 18, 2012
Invested : Jan 10, 2013

Project Description

Merec Industries Lda (Merec) was established in 1998 and is today the largest wheat miller in Mozambique. IFC provided partial guarantees for the establishment of the company’s first mill in 2000 and for the acquisition of a second mill in 2003 followed up by a US$7 million loan in 2008 to finance the establishment pasta plant in FY2008

The proposed project would allow Merec group to expand and optimise their operations through the establishment of:

a new wheat mill in the north of the country in Nacala; and
a port based discharge and storage facility at the port of Maputo.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	25.0
Equity

Development Impact

(i) Strengthening the wheat procurement logistics and improving the group''s production infrastructure; (ii) Employment creation; (iii) SME development as the company''s new projects would entail increased demand for locally produced maize and increased business for retailers; (iv) Increase domestic food production in Mozambique; (v) import substitution which will save the country foreign currency outflows; and (iv) Increased tax revenues to government

IFC Additionality includes: (i) provision of long-term financing without which the Company would seek funding locally which is typically of shorter tenors (<7 years) thus constraining the Company''s ability to implement its projects; (ii) assist the Company in addressing production and supply constraints in some difficult regions of the country; (iii) help to enhance environmental and social best practices: IFC will seek to continue to assist the Company in aligning its environmental and social standards with the industry''s best practices; (iv) help the company to implement sound corporate governance principles which is particularly important given its a family-owned business.

This is a Category B project according to IFC’s Policy on Environmental and Social Sustainability. Grain milling and processing are typically low impact operations with few environmental and social issues. The proposed greenfield flour mill in Nacala will be constructed within an existing commercial development zoned for industrial use on a plot leased by the Company from a private owner. The proposed grain handling terminal in Maputo with a 20,000 ton silo capacity will be constructed on the premises of the port of Maputo under the jurisdiction of the Port Authorities. As such, neither of the two proposed facilities will have significant adverse impacts. The key environmental and social issues identified during IFC’s appraisal relate to worker occupational health and safety (OHS) in all operations and food safety management in the Company’s food processing operations.

Contacts

For Inquiries About the Project, Contact

Mr. Mhamud Charania, Managing Director
Av. do Trabalho 1107, Maputo,
Mozambique

Tel.+258-21-401-850
Fax.+258-21-401-695
Website: http://www.charaniagroup.com/

For Inquiries and Comments About IFC, Contact

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2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
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Local Access of Project Documentation

Details of the proposed operating procedures and mitigation measures will be provided in the Environmental and Social Review Summary (ESRS) and this Summary of Project Information (SPI) which will be available to the public at the following locations:

- World Bank offices in Maputo and Beira;
- Merec’s offices in Maputo
- World Bank Group Infoshop;
- World Bank Group Infoshop website at……………………….

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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