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Managing Risks & Industry Challenges

To Deliver Sustainable Growth


in the
Global Fertilizer Industry
Nitrogen + Syngas 2015

Anil Chandramani

Istanbul, Turkey

Chief Investment Officer and Global


Sector Lead, Chemicals & Fertilizers

February 23-26, 2015

The World Bank Group and IFC


IFC
International
Finance Corporation
Est. 1956

Role:

MIGA

IBRD

IDA

Multilateral
Investment and
Guarantee Agency

International Bank
for Reconstruction
and Development

International
Development
Association

Est. 1988

Est. 1945

Est. 1960

To promote private
sector development

To reduce political
investment risk

To promote institutional,
legal and regulatory
reform

To promote institutional,
legal and regulatory
reform

Clients:

Private companies in
member countries

Foreign investors in
member countries

Governments of member
countries with per capita
income between $1,025
and $6,055

Governments of poorest
countries with per capita
income of less than
$1,025

Products:

- Equity/Quasi-Equity
- Long-term Loans
- Short-term Finance
- Risk Management
- Advisory Services

- Political Risk Insurance

- Technical assistance
- Loans
- Policy Advice

- Technical assistance
- Interest Free Loans
- Policy Advice

Public Sector Support

Private Sector Support

The Mission of IFC is to promote private sector investment in developing countries to reduce poverty and
improve people's lives
2

Holding $50Bn Portfolio


IFC in FY14

Committed Portfolio (IFC balance) by region


RoW
8%
Sub-Saharan
Africa
15%

East Asia and


the Pacific
14%

Europe and
Central Asia
21%

South Asia
11%

Middle East and


North Africa
10%

Latin America
and the
Caribbean
21%

Committed Portfolio (IFC balance) by sector

S&P, Moodys

AAA

Committed 2014
- Syndicated
- Own Account

$22.4 billion
$5.1 billion
$17.3 billion

# of projects
# of countries

599
98

Largest multilateral source of loan and equity financing for


the private sector in emerging markets
Takes market risk with no sovereign guarantees
Promoter of environmental, social, and corporate
governance standards

Manufacturing,
Agribusiness
and Services
29%

Infrastructure
and Natural
Resources
28%

Resources and know-how of a global development bank +


flexibility of a merchant bank
Portfolio of over 2,000 companies worldwide

Financial
Markets
43%

Holds equity and quasi-equity in over 800 companies


worldwide: Honest Broker Role
Loans may be foreign currency or, in several countries,
may be in local currency

* Manufacturing includes the following subsectors: Chemicals/Petrochemicals, Construction Materials and Energy Efficient Machinery

Chemicals & Fertilizers Sector


Investments of about $1 Bn in FY14 in the Industry
Committed Amount by Sector

Key Features
(historical)
US$6.5 billions invested (own
account)
308 projects
53 countries

Committed Amount by Region

In-house industry specialists with global experience in


the sector and benchmarking capabilities
Strong regional knowledge with exclusive focus on
emerging markets
Climate change strategy
Promotion of sustainable economic growth and
competitiveness with creation of direct and indirect
jobs, know-how transfer

Chemicals & Fertilizers Sector


Fertilizer Sector Strategic Sector for IFC
IFC remained active in project finance in the Chemicals sector throughout the crisis
and closed deals during the most difficult periods of the financial markets.

Committed Exposure ($ Million)

267
171

376

533

203

128
Fertilizers
61
32

27
26

652

FY1

561

FY2

Chemicals

53

52

496

502

FY3

FY4

782

885

882

947

FY8

FY9

FY10

932

818

596
420

FY5

FY6

FY7

FY11

FY12

A Sample of IFCs Industry Experience


Petrochemicals
Continental Carbon of India Ltd.
NPC, Thailand: gas cracker
Copesul, Brazil: naptha cracker
Copene, Brazil: naptha cracker
Samsung, Korea: petrochem/aromatics
complex restructuring
HMC Polymers, Thailand: PP
Petroken, Argentina: PP
Politeno, Brazil: PE
Ipiranga I & II, Brazil: PE, PP
Indelpro, Mexico
Profalca, Venezuela: PP
Grupo Zuliano, Venezuela: petrochem complex
Suzhou, China: PVC
Vinythai, Thailand: PVC
Engro PVC, Pakistan: PVC
Tuntex, Thailand: PTA
Rhodiaco, Brazil: PTA
Rhodia-ster, Brazil: PTA/PET
Oxiteno, Brazil: EO/MEG
Girsa, Mexico: EO/MEG
Pralca, Venezuela: MEG
Gidesa, Mxico: EG, PS
Trikem, Brazil: PS
Innova, Brazil: styrene/PS
Daaboul, Syria: LAB
Jose Methanol, Venezuela: methanol
KuAz, Russia: caprolactam
Eleme Petrochemicals, Nigeria: PE, PP
Xinao, China: Coal-to-DME
DCM Shiram, India: PVC
Himadri, India: Carbon Pitch, carbon black
Galaxy Chemicals, India: Surfactants
EIPET, Egypt: PET

Fertilizers
Engro Corporate, Pakistan
ICS, Senegal: phosphoric acid
Indo Jordan, Jordan: phosphoric acid
Engro Chemicals, Pakistan: ammonia
Trigen II, Trinidad & Tobago: ammonia
Fosfertil, Brazil: SSP, TSP, MSP, DAP
GNFC, India: ammonia, urea
Deepak Nitrate, India: ammonia,Urea,DAP
PQB, Bolivia: ammonium nitrate
KuAz, Russia: ammonia, urea
Indo Egyptian, Egypt: phosphoric acid
Koyo, China: ammonia, urea
Abocol, Colombia: ammonium nitrate,NPK
JIFCO, Jordan: DAP
JPMC, Jordan: phosphate
Engro Emergency, Pakistan: urea
OCI Egypt: Corporate loan for fertilizers
Paradeep Phosphates, India: DAP
Itafos Brazil: PhosRock & Acid

Inorganic Chemicals
Engro Polymers, Pakistan
Kanoria Vizag, India
Atul Ltd, India
Alexandria Carbon Black, Egypt: Carbon black
Continental Carbon (CCIL), India: Carbon Black
Maanshan I & II, China: Carbon black
Rain Calcining, India: calcined carbon
Peroxythai, Thailand: hydrogen peroxide
Chengdu, China: potassium hydroxide & PVC
Prodesal, Colombia: caustic soda, chlorine
Meghmani Finechem, India: ChlorAlkali
Magadi Soda, Kenya: soda ash
Lukovac Soda, Bosnia: soda ash
Kanoria Chemicals, India: ChlorAlkali
Jiuda Salt, China: industrial salt

Others/Infrastructure
JPMC Terminal, Jordan
IFC / SCB Facility
Engro Vopak, Pakistan: Chemical terminal
Messer, Trinidad & Tobago: industrial gases
Opet Petrolculuk, Turkey: fuel distribution
Antai, China: metallurgical coke
Ecogreen I & II, Indonesia: oleochemicals
Darong, China: specialty chemicals
UPL, India: pesticides, herbicides
Gapco, Kenya: storage terminal
Zhong Chen, China: storage terminal
Galnaftogaz, Ukraine: petroleum retailer
Dongyue, China: fluorine chemicals,
organicsilicone
Atul, India: Dye and pesticide intermediates
Hikal, India: Pharmaceuticals
Vinati Organics (JV), India: specialty chemicals

Refineries
ERC Refinery, Egypt
PSPC (Shell), Philippines
Star Petroleum (Caltex), Thailand
Refisan (Pecom), Argentina
Petrotel-Lukoil, Romania
Alliance Oil Company, Russia

IFCs Value Proposition: How IFC can help you


An Integrated Approach to Risk Management
Global Industry
Expertise

Sustainability
Services
& Support

Both Equity
and Debt
Financing.
Long Term

Mobilization incl.
Cooperation
Agreement with
Multilaterals

Risk
Management /
Political risk
Mitigation

World Bank
Synergies /
Economic
Analysis

Short Term
Customer
Financing and
Supplier Financing

Political Risk: Far Away Issues Also Impact Us


All Economics Is Driven By Politics
Portugal 2013
Porque Debemos Sair do Euro (Why
We Should Leave The Euro) by
Professor Joo Ferreira do Amaral

Italy
What if this
heavyweight takes
too long to get in
shape?

Where
is
France
Going
Does
anyone
know?

?
Greece Political Turmoil:
Inconclusive general
election Mainstream proEurope parties lose
support and anti-austerity
groups increased share of
IFC. Chemicals
8
the vote

US: Playing Political Games With No Rules


The next political crisis is always just a few weeks away !!
Prospect of
prolonged and
frequent fights
on Capitol Hill

The New Normal : Shut the government


down and flirt with debt default every 3
months?

Presentation Title

The Asian Giants: China and Japan


Bank of Japan
BOJs twin aims generating
inflation and bringing down yields
may be somewhat contradictory

China: Average Base Metals


Consumption and GDP per Capita

China: Yuan versus Dollar

Source: IMF, SEI

IFC Chemicals

10

Due to economical & political instability


Volatility has been Increasing

Source: IMF

IFC Chemicals

11

Economic Insights: We know Emerging Markets


Emerging Markets are driving global growth. All Companies
are increasingly focusing on EM.
Historical and Forecast GDP Growth
10
6
8
5

4
2

0
2
-2
1

-4

2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017

-6

-1

Source: IMF

World
Advanced economies
Emerging and developing economies

As a member of the World Bank Group, IFC has unparalleled insights into Emerging Markets.
12

MIGA: Multilateral Investment Guarantee Agency


Facilitation of settlement of disputes

Umbrella of deterrence
MIGAs Shareholders are the same as the Host
Countries of investments
Only a small proportion of MIGA-supported projects
encounter difficulties
MIGA guarantees provide downside protection on longterm investments
Equity covered up to 90%; Debt covered up to 95%
Tenor covered up to 15-20 years

Host Country is motivated to find a

solution
Project sponsors and financiers

have a vested interest in continued


success of project
5 claims paid out of 980 guarantees

for total of 616 projects since 1990

MIGAs Risk Mitigation Solutions


Political (Country) Risk Insurance

Coverage
Currency
Transfer
Restriction and
Inconvertibility

Expropriation

War and Civil


Disturbance

Breach of
Contract

Non Honoring of
Sovereign
Obligations

Guarantee holder can pick any combinations of coverage

13

Counter-Cyclical Role: AAA-rated


Cyclicality: we have to live with it
Volume growth is volatile and pricing is often lagged to volumes

Phosphatic Fertilizers : An example

14

Source: Fertilizer International, Deutsche Bank

Local and Foreign Currency capabilities


IFC has committed over $6.0 billion of local currency loans in a variety of currencies
since 1999
(31 currencies currently available)

15

For more information see Annex 3

Strong Equity Track-Record: Different fromPE


IFC is pushing innovation via its new direct venture/growth capital investment program
(US$136 million committed since 2009)
Priorities
1

Clean
energy &
access

2 Sustainable
urbanization

Industrial
efficiency

Agriculture,
4
water, and
forestry

Innovation hot spots


IFC Cleantech Clients

Solar
Biomass
Energy storage
Green Buildings
Energy efficiency
Energy storage
Water
Waste
Energy efficiency
Biomass
Water
Biomass
Energy efficiency

IFC holds an annual Cleantech Workshop which is


attended by 150 investors, companies, and IFC
staff to exchange ideas on innovation

IFC has also committed US$254 million in


12 climate funds
16

Long term player On both debt and equity sides


The Fertilizer Industry is Capital Intensive
400
350

2010 Global Chemical Capital Spending and


as % of regional shipments

Historical Global Chemical Capital Spending


(billions of dollars)

400

300

300

250

250

200

200

150

150

100

100

50

50

19%

(billions of dollars)

350

7%

5%

4%

13%

4%

0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
North America
Latin America
Western Europe
Central and Eastern Europe
Africa and Middle East
Asia Pacific

Central and Latin America Africa and


Eastern
Middle East
Europe

North
America

Western
Europe

Asia Pacific

Capital Spending vs. Shipments Growth


Fertilizer Plant (Amonia, Urea) costs $1-2bn

30%

A new Refinery costs $5-8bn, while a Polyethylene Plant


costs $2-4bn

20%

2010 Capex was around $247bn in 2010

(%)

10%
0%
-10%
-20%
2001

2002

2003

2004

2005

Growth Global Capital Spending

2006

2007

2008

2009

2010

Growth Global Shipments

Include Pharmaceuticals
17

Short Term Finance: Crisis Mitigation


Risk Sharing Facilities

Bank 1
Country 1

Farmer
Farmer
Farmer
Farmer
Farmer
Farmer

Bank 2
Country 2

Farmer
Farmer
Farmer
Farmer
Farmer
Farmer

Bank 3
Country 3

Distributor
Distributor
Distributor
Distributor
Distributor

RSA

IFC Client
Company

RSA

Global
Framework
Agreement

IFC
RSA

Distributor

IFC would enter into Risk Sharing Agreements (RSAs) with one local banks in each
country, selected jointly by Client Company and IFC. Under each RSA, IFC would
share losses with the Bank on its portfolio of financings to Clients distributors
and/or farmers in that emerging market, typically on a pro-rata and pari-passu basis.
Under a separate Framework Agreement between Client and IFC, Client would
provide a pooled first loss cover and reimburse IFC for its payments under the RSAs,
up to a maximum cap to be agreed between them(First Loss Amount).
Structures of individual RSAs can vary, depending on each banks requirements and
each target portfolio.
18

IFC Mobilizes Others: Lenders & Equity Investors (AMC)


B-Loans & Parallel Loans
Top 10 IFC B-Loan Participants
1. Calyon
2. Cordiant Capital

3. Citigroup
4. ING Bank

5. ABN AMRO
6. BayernLB

7. Societe Generale
8. HSBC

9. Natixis
10. KBC Finance Ireland

Loan Agreement

Borrower

IFC
A + B Loans
Participation
Agreement

B Loan

A loan is for IFCs own account


B loan is for account of participant
commercial banks

Participants

Only one loan agreement, signed by


the borrower and IFC
IFC is the lender of record for the
entire loan (A+B)
IFC Loans exempt from withholding tax

19

In-house Technical and Market Expertise

20

Resource Efficiency (REF) in the Nitrogen Industry:


Value-Add for the Sector and Countering Climate Change
Importance:
Investment demand worldwide:
Nitrogen-based chemicals and fertilizer industry has significant investment
demand (~US$ 20 million per site)
Food Security:
Nitrogen-based chemicals and fertilizers are used extensively in
agriculture worldwide (~50% of agricultural produce)
Energy Efficiency and Climate Change:
Fertilizer producers consume significant volumes of energy (natural gas)
and emit significant volumes of greenhouse gases (~ 2-3% globally)
One must measure REF performance to identify areas for improvements in a
companys operations and to support an informed investment decision

BENCHMARKING
21

The Global Economy is Highly Volatile


The Global and now European Financial Crises shook us
out of complacency.
The world continues to change dramatically.
It is Very Important to Understand and Manage Risks
Let your risk capabilities drive your strategy.
IFCs mandate is to Builds Partnerships
to Share Its Expertise to Supplement
Risk Management Capabilities of Companies,
so they can Enhance Competitiveness
and Build Leadership positions.

22

In Summary
IFC Value Add: Tailored To Each Customer
Long-term
Competitive
Financing

Country Risk
Mitigation

Equity

Government
Relations: 184
Finance
Ministries form
IFCs BoD

Fixed/Floating
Rates, Local
Currencies
Up to 15 year
Loan Maturity
Flexible
Amortization
Profile
Catalyst for
other Investors
and Lenders
Equity
Participation
Capital
Mobilization

Neutral broker
Role
Reduced Risk of
Expropriation,
Breach of
Contract,
Convertibility
World Bank
Synergies

Global
Chemicals
Expertise

Regional
Knowledge

50 Years of
Sector
Expertise

Extensive
Local Office
Network

Greenfield

Local
Transaction
Experience

Expansion/
Modernization
Corporate
Strategy

World Bank
Synergies

Environmental
& Social Risk
Management
Advice on
Environmental
and Social Best
Practices
Equator
Principles
Modeled after
IFC Standards
Local
Consultation
and Disclosure

Access to
International
Investors
Technical
Advice

Sustainability
Toolkit

Local Supplier
Development
Environmental
/ Social Advice
Corporate
Governance
Local
Economic
Development
HIV/AIDS
Prevention
Community
Development
Funding

Withholding Tax
Benefit
Partnership with
MIGA
23

23

How We Finance Projects


Project Type
Greenfield, total cost
less than $50 million
Greenfield, total cost
more than $50 million
Expansion or rehabilitation
Greenfield, expansion,
rehabilitation

IFC Investment
Up to 35% of project cost
for IFCs account
Up to 25% of project cost
for IFCs account
Up to 50% of project cost
for IFCs account
100% project cost for IFC
and participating banks
accounts

Umbrella for participants in IFCs syndication program: IFC lender of


record, immunity from taxation and provisioning requirements.
IFCs total financing must be less than 25% of total company
capitalization, and IFC does not manage or own largest stake.
24

IFCs Works With A Broad Array Of Products and Services


Structured
Finance

Senior
Debt
On-lending
Liquidity management
Acquisition financing
Warehousing facilities
Syndicated loans

Mezzanine
Finance

Partial credit
guarantees
Securitization
Bond underwriting

Private
Equity

Convertible debt

Common shares

Subordinated debt

Preferred shares

Other Tier II
instruments

Credit
Enhancement

Global Trade
Finance Program

Advisory
Services

Sustainable
Finance

$1 billion program

Corporate governance

Carbon finance

Guarantees to issuing banks

Risk management

Renewable energy

46 issuing banks in 24
countries

Small and medium business


banking

Supply chain financing

92 confirming banks in 62
countries

Housing finance

$579 million of issued


guarantees in first 12 months

Privatization

Corporate governance
financing

Energy efficiency finance

25

Approaching IFC
Foreign or Domestic Sponsors
New venture or expansion; private sector majority ownership only
Project must be developmentally sound and commercially viable
Sponsor Commitment is Required
Equity participation; pre-completion support/guarantees
Submit Preliminary Business Plan or Feasibility Study
Brief project description, incl. technical feasibility and market study
Information on sponsors and operator
Environmental studies
Information on requirements, financing plan and cash flow projections
26

IFCs Project Cycle


Early Review

Client needs
determined
Contribution
of project to
development
assessed
Project
screened for
potential risks
& issues
Site visit
Mandate
letter

Due Diligence

Assessment of
business
potential,
risks,
opportunities
Financial and
economic
Evaluation

Negotiation

Terms and
conditions of
the IFC
investment
Action plan
agreed

Disclosure

Environmental
and social
information
disclosed
Opportunity
for public
comment

Internal
Approvals and
Commitment

Board
consideration
Board approval
Legal review

Disbursement

Fulfillment of
conditions of
disbursement
IFC funds
disbursed

Signing of legal
documents

Compliance
with IFCs
social and
environmental
performance
standards
reviewed

We Agree on a Specific Timeline to Meet Clients Needs


27

INTERNATIONAL FINANCE CORPORATION


Anil Chandramani
Chief Investment Officer &
Global Sector Lead, Chemicals & Fertilizers
Washington DC

Phone: +1-202-473-4081
Cell Phone: +1 202 830 8398
E-mail: achandramani@ifc.org
28

ANNEX - 1
IFCs Focus on Sustainable Development & the Environment

Presentation Title

29

Sustainable and Climate Friendly Development is Key


The World Bank President, Dr. Jim Kim .
I have to tell you that

the data that Im seeing


about changes that are
happening today that we
didnt think would
happen for three or four
years ... this is extremely
disturbing to me, and I
think we have to put the
science of climate change
in front of all of our
member countries,
And I guarantee you that
I will do that.

The private sector is


crucial in testing and taking
to market green, clean
alternatives on a massive
scale
I commit the World Bank to
continue to be everyones
partner in taking the agenda
forward.

Note: Comments were made in September 2012.


30

Sustainability is one of IFCs Strategic Focus Areas

1. Strengthening the focus on frontier markets (IDA countries, fragile situations,


and frontier regions in non-IDA countries)

2. Addressing climate change, and ensuring environmental


and social sustainability
3. Addressing constraints to private sector growth in infrastructure, including
water; health, education and food supply chain
4. Developing local financial markets through institution-building, the use of
innovative financial products and mobilization, focusing on micro, small and
medium enterprises
5. Building and maintaining long-term client relationships with firms in
developing countries, using the full range of IFCs products and services, and
assisting their cross-border growth

How does IFC define Sustainability?


Solutions for Climate Mitigation / Adaptation and Sustainable Development

ENERGY: Low carbon generation,


energy efficiency, storage, smart
grids, sustainable energy access

TRANSPORTATION: Energy
efficient components, fuels and
logistics

WATER: Capture, treatment,


conservation, wastewater
treatment, access

AIR & ENVIRONMENT: Carbon


credits, trading and offsets

BUILDINGS: Low carbon strategy,


energy efficiency, sustainable
materials.

MANUFACTURING: Green chemicals,


RE/EE supply chain, cleaner
production.

AGRICULTURE & FORESTRY: Land


mgmt, low carbon and adaptation
strategies, biomass.

RECYCLING & WASTE: Recycling


and waste treatment services

Climate business will scale up and have impact only with significant private
sector participation that is where IFC has an important role to play
IFC Chemicals

32

Resource Efficiency Has Become A Business Imperative

3 billion
more middle class
consumers by 2030

80%
rise in steel
demand by 2030

40%

global water demand


exceeding supply by 2030

147%

increase in real commodity


prices since 2000

Source: McKinsey: Resource Revolution


33

IFC has a Climate Change Department


To coordinate its work to address climate change, IFC established in 2010 a
dedicated department, focused on helping to grow climate related business to 20% of
annual commitments by 2015.
Thought
Leadership

Methodologies for setting and monitoring climate goals and standards across all sectors
GHG intensity accounting, impact assessment and efficiency guidelines
Capacity building for private and public clients related to climate business/policy
Engagement with DFIs, institutional investors, academia and civil society

Support IFC investments with global knowledge and technical expertise

Business
Opportunities

Develop scalable climate business models


Invest in new and transferable technologies
Develop relations with global and local climate technology companies
Stay abreast with climate-related business solutions and markets

Leverage and adapt existing financial products (e.g., CDG)

Financial
Innovation

Develop new innovative financial products


Develop efficient mechanisms to leverage public funds with private investment: tap into new
climate finance
Scale up through intermediation with financial institutions and funds

34

Act Differently:
Increase The Pace Of Innovation And Penetration
Many climate smart technologies are already financially viable

Source: World Development Report 2010

35
35

Recent Climate Projects in Manufacturing


Serbia:
Vino Zupa (Energy
Efficient Biomass
boiler) - US$1.3M

Bulgaria:
Stomana III (energy
efficient electric arc
furnace) - US$10M

Jordan:
JIFCO (steam
generation based on
sulfur combustion)
US$5.6M

Russia:
ZAO Energomera
(new generation
meters) - US$6.6M
Idavang (energy
savings) - US$8.7M

China:
Lattice Power (LED chips) US$17.5M

Mexico:
Artha Capital
(green building) US$25M

Beijing Shenwu (HTAC) US$22.8M


Balkans:
Scholz Balkans (metal
scrap recycling) US$23.3M

Microvast (advanced
batteries/ energy storage) US$12.5M
Vietnam:
CCL Products
(biomass boiler)
US$0.4M

Ecuador:
Favorita WC
(biomass boiler)
US$0.4M

Note (*) financing for climate friendly project; was


part of a larger total IFC investment

Brazil:
Vonpar Alimentos
(energy and water
efficiency gains)
US$10.8M
South Africa:
Karsten Farms (solar water
heaters, EE lighting and
upgrading refrigeration
US$0.9M

India:
CPLF Himadri (high
efficient fire heaters;
waste heat recovery
units; economizer for
air pre-heaters and
water heat exchange)
- US$5M

Thailand:
Conti Auto (energy
efficient generation
diesel engines) US$47.1M

IFC Chemicals

36

Annex- 2

Increasing resource efficiency


(REF) in nitrogen industry
REF BENCHMARKING OF NITROGEN CHEMICALS AND
FERTILIZER PRODUCTION

ECA Resource Efficiency


Program

February 14, 2015

Resource efficiency in nitrogen industry:


value-add For the sector and climate change agenda
Importance:
Investment demand worldwide:
- nitrogen-based chemicals and fertilizer industry has significant investment
demand (~US$ 20 million per site)

Food Security:
-nitrogen-based chemicals and fertilizers are used extensively in agriculture
worldwide (~50% of agricultural produce)

Energy Efficiency and Climate Change:


One must measure REF performance to identify areas for improvements in a
-fertilizer
producers
consume
significant
volumes
of energy
(natural
gas) and
companys
operations
and to
support an
informed
investment
decision
generate significant volumes of greenhouse gas emissions (~ 2-3% globally)

BENCHMARKING
38

WHATS IN IT FOR COMPANIES?

Measure and
compare
- Measure
plants
performance
and compare
it to peers and
global
benchmarks
- Identify best
practice
standards
(Environmenta
l and Social)

Diagnose issues
- Identify areas
for
improvement
- Quantify
overall
performance
improvement
potential

Identify
possible
interventions
- Learn about a
range of
options for
improvement
- Quantify
improvement
potential from
specific
options

Receive
specifications
of intervention
- Learn about
options for
improvement
for your plant
- Assess
feasibility of
specific
options

Investment
decision and
support
- Decision to
implement
intervention
- Potential
funding
support from
IFC or partners
(to be
discussed
separately)

ENABLING INVESTMENTS INTO RESOURCE EFFICIENCY

TIMELINE

REF
benchmarking
methodology
development
and
stakeholders
engagement

Companies
engagement
(signing
Mandate
Letters) and
data collection
in ECA region

Sept-Dec
2014

Q1-Q2 2015

Individual
assessment
reports and
regional
benchmarking
report

Q3 2015

Rollout to other
regions globally

Q4 2015

TIME TO ENGAGE NOW NOT TO MISS THE OPPORTUNITY


40

HOW TO PARTICIPATE & BENEFIT FROMIN THE STUDY?


Please contact:
Viktoryia Menkova, Task Lead
vmenkova@ifc.org tel: +7 925 269 2014
Viera Feckova, Program Manager
vfeckova@ifc.org

tel: +7 916 815 4412

ANNEX- 3
Select IFC Investments in the Fertilizer Industry Worldwide
Select IFC Investments in Turkey & the region

Presentation Title

42

Select IFC Financed Fertilizer / Agrochem Projects


Ukraine

Jordan

China

Jordan Phosphate Mines Co


Bayer Ukraine Ltd.

Dazhou Koyo
A-Loan US$30mm, B-Loan US$60mm
Project Loan-$20mm
Equity Investment-$10mm

Relocation of Phosphate Rock


Export Terminal

US$70m Risk Sharing Facility

Greenfield ammonia/urea plant


Mandated Lead
Arranger
Phosphate Rock/DAP

Crop protection

Brazil

Equity Investor and


Senior Lender

Egypt

India

Itafos / MBAC

Orascom (OCI)

Paradeep

A Loan US$40m, Equity US$35 (MBAC)

A Loan $200MM, B Loan $125mm


Equity $50MM

A Loan US$50MM

Development and growth of an integrated


SSP produce

Senior Lender and Investor


Single Superphosphate (SSP)

DAP, NPK Expansion


Refinancing

Senior Lender and Investor


Ammonia, Urea

Senior Lender
Phosphate

43

Select IFC Financed Fertilizer/Agrochem Projects (contd.)

Abonos Colombianos S.A.

Jordan

Algeria

Colombia

Indo Jordan

Fertial

Project Loan-$30mm

Equity Investment $24mm

A Loan US$30m, B Loan US$42.2m

Corporate loan to finance the

Privatization of state owned


fertilizer plant

Construction of a 224,000 tpa phosphoric acid


plant and decicated sulfuric acid plant at a cost
of US$189 m

Companys ongoing capital


expenditure program

Pakistan

Engro Chemical
Various Financing Rounds
Naturalgas based

Mandated Lead Arranger


Phosphoric Acid

Equity Investor
Ammonia

Senior Lender

Jordan

Jordan India Fertilizer


Company
A-Loan US$125mm, B-Loan
US$105mm

ammonia and urea plant

Russia

KuibyshevAzot JSC
Senior Corporate Loan-$15mm; Equity
$20mm; Energy Efficiency Loans of $30mm

Project Finance
Mandated Lead Arranger
Ammonia/Urea

Mandated Lead Arranger


Petrochemicals

Senior Lender and Investor


Ammonia, Urea

44

Select Investments along the Value Chain

Mining

Ahafo

Oil & Gas

Mozambique

South Africa

Lonmin

Simandou/RioTinto

Mozal

$10,000,000
Syndicated Loan

$35,000,000
Equity
$150,000,000
Equity

$145,000,000
Senior and
Subordinated Loan

$100,000,000
Senior Term Loan
$50,000,000
Equity

Equity Investor

Mandated Lead Arranger

Equity Investor

Lender

Equity Investor & Lender

2011

2006

2006, 2012

1998 and 2002

2006

Dallol

$75,000,000
Senior Term Loan

$10,000,000
Equity

Gabon

VAALCO
$65,000,000
Reserve-based Loan Facility

Lender

Cote
dIvoire

Egypt, Algeria

Petroceltic
$100,000,000
Senior Loan
Mandated Lead Arranger

January 2014

April 2013

Kosmos Energy
$100,000,000

Equity Investment

Senior Loan

Investor (with AMC)

Mandated Lead Arranger

2009, 2012

January 2012
Zambia

Tunisia

Ghana

Rialto Energy
$20,000,000

Liberia

Kenya

Agribusiness

Guinea

Ghana

Ethiopia

Candax Energy
$10,000,000
Equity Investment
Lender & Investor

January 2012

South Africa

Ghana

Vegpro

Salala Rubber

Zambeef II

Hans Merensky

Lonmin

$7,000,000
Senior Loan

$10,000,000
Loan

$25,000,000
Loan

$35,000,000
Equity

$12,500,000
Loan

Lender

Lender

Lender

Investor

Lender

2012

2008

2012

2012

2007

45

IFC Project - Dazhou Koyo, China


Company name: Dazhou Koyo,

Approved: April 9, 2009

Description of company and purpose of project


The project involved the construction and operation of a 400,000 tons per annum (tpa) and 450,000 tpa
ammonia/urea complex in Dazhou city, Sichuan, China. The company is located in Dazhou, 400 km away from
Chengdu City, a poor region of China with rich natural gas reserves. This project uses gas as the primary
feedstock.
Project sponsor and major shareholders of project company
Koyo is a fully owned subsidiary of Koyo Ecological Agrotech Group Ltd. (the sponsor), which is a chemical fertilizer
company based in China with operations in Chengdu, Sichuan province. It is listed on the Hong Kong GEM

Total project cost and proposed IFC investment


Project cost $150 million. IFCs investment $20 million equity and $20 million A loan on IFCs own account.

46

IFC Project OAO ToAz, Russia

Sponsors

ToAz is the largest Russian producer of ammonia and one of the largest global producers of
trade ammonia (supplying about 7.6% of the world market). It is also among the largest Russian
producers of nitrogenous fertilizers, producing mostly methanol, urea and urea formaldehyde
resin.

Project Description:

The project consists of the construction of a second methanol line, which will increase ToAzs
capacity to 1 million t/y, as well as the upgrading of the existing methanol facility. This strategic
move will enable the company to further diversify its operations into higher value-added products
where margins are higher. This second line will enable the company to serve the needs of its
domestic clients better and to increase it export earnings.

Location of project

OAO ToAzs administrative headquarters, its seven ammonia plants and its two methanol plants
are all located in the city of Togliatti on the Volga river in the Samara Oblast in the southwest
region of the Russian Federation.

Project Cost

US$ 150 million

IFC Investment:

US$ 30 million A Loan and US$ 45 million B Loan

Commitment Date:

May, 2005

47

JIFCO, Jordan

Sponsors

IFFCO, the largest producer of fertilizers in India. IFFCO owns and operates five fertilizer plants
in India with a combined annual capacity of 8.58 million tons of fertilizers, including over 4 million
tons of phosphatic fertilizers.
JPMC is a Jordan based company listed on the Amman Stock Exchange. JPMC operates three
mines, producing phosphate rock and downstream fertilizers, and a chemicals plant at Aqaba,
Jordan producing phosphoric acid, DAP, sulfuric acid and aluminum fluoride.

Project Description:

The project envisages the construction and operation of a 475,500 metric tons P2O5 per annum
phosphoric acid plant in Jordan. The bulk of the phosphoric acid will be exported to India to be
used as feedstock for IFFCOs Kandla fertilizer plant in Gujarat state. The Project will include a
greenfield phosphoric acid manufacturing complex in Eshidiya and a storage tank farm in Aqaba
to facilitate export of phosphoric acid via Aqaba port.

Location of project

The chemical complex and associated infrastructure and utilities will be located adjacent to the
existing JPMC mining facility in Eshidiya, Maan, approximately 250 km south of Amman, and
120 km north east of Aqaba Port, from which phosphoric acid will be exported.

Project Cost

US$ 680 million

IFC Investment:

US$ 125 million A Loan

Commitment Date:

May, 2011

48

Eleme Fertilizer- An Asian Investor in Nigeria

Sponsor

Project Description:

Location of project

The project sponsor is Indorama Corporation, an Indonesia based multinational

The project involves construction and operation of a 1.4 million metric tons per annum
nitrogenous fertilizer plant within the clients existing petrochemicals complex in Nigeria. On
completion, the plant will produce granulated urea that will both be sold domestically and
exported. An 84km pipeline from the gas suppliers facility to the plant will be developed in
conjunction. The plant will consist of a 2,300 metric tons per day ammonia plant and a 4,000 tpd
urea production plant. The investment is expected to help improve farm yields and agricultural
productivity in Nigeria, and address the strong domestic demand for urea, estimated to grow at
8% per annum over the next 20 years
The project is located in Port Harcourt, the capital city of Rivers State, Nigeria

IFC Investment:

The total project cost : over US$1.2 billion. IFC investment is up to US$150 million in long-term
project loans and up to an additional US$200 million in parallel loans/syndication

Commitment Date:

December 2012

49

Corporate Project Orascom, Egypt & Netherlands

Sponsors

Orascom and its wholly owned subsidiary, the Egyptian Fertilizer Company (EFC), is one of
the largest fertilizers and construction groups in the Middle East and Africa region and is present
in over 25 countries across the world.

Nameplate Capacity

EFC manufactures granulated Urea with a total production capacity of 1.3mm tpa

Project Description:

IFC provided a US$50 million equity investment and US$200 million debt financing to support
the Groups long term investment needs and replacing existing shorter term debt financing,
previously raised in to partially fund the acquisition costs related to the Groups fertilizers assets.

Location of project and


description of site

OCI is headquartered in Cairo, Egypt. EFC is located in the Suez Industrial Development
Company, in Ain Sokhna, Suez Governorate on the Red Sea in Egypt. The Group includes
fertilizers distribution channels in Western Europe, Dubai, Brazil and the United States.

IFC Investment:

US$50 million equity & US$200 million debt

Investment Date:

January 13, 2012

50

Example: Securitization Copeval (Chile)


Transaction

Company
Compaia Agropecuaria Copeval is Chiles
leading
agricultural
input
distributor,
reaching more than 30,000 farmers through
its 27 branches across the country.

IFC Investment:

Copeval offers a one-stop shop to farmers,


providing agrochemicals, fertilizers, seeds,
agricultural machinery, irrigation equipment,
intermediation and logistics services, fuel,
animal feed, technical assistance and
training.

Approved Investment Product: Securitization

The Company offers pre-harvest financing for


the acquisition of agricultural inputs
(between 100-200 days of financing) as well
as up to 3-year financing for the acquisition
of agricultural machinery and irrigation
equipment.

Up to US$70 million (or its equivalent in


local currency)

Objective:
Expand its operations geographically and
reach a total of around 30 stores by the end
of
2013,
throughout
Chiles
main
agricultural regions.
Expand its range of services and products,

51

IFC Projects: KuibyshevAzot, Russia

Sponsors

The project sponsor is Kuibyshevazot Open Joint Stock Company, existing IFC client. Located in
Togliatti, Samara region, KuAz is the leading Russian manufacturer of caprolactam (the raw
material for synthetic fibers, engineering plastics, automotive and other downstream products) and
one of the top Russian producers of nitrogenous fertilizers.

IFC Engagements:

2002

Owned by management and employees, KuAz is identified by IFC as one of the few
independent players in Russia's Chemicals industry

2003

IFC engages KuAz through IFC Russia Corporate Governance Project (RCGP); KuAz
management is receptive to the RCGP recommendations and proceeds with
implementation

2005

First IFC $15mm senior loan approved

2008

IFC approves $20mm equity investment in KuAz to support the Company's upcoming
IPO planned for 2008 (equity negotiated with a put and a reset)

2009

In the midst of the financial crisis, which started in late 2008 and severely impacted
Russian economy, IFC extends $20mm Energy Efficiency loan to support the costcutting measures planned by KuAz and targeting improvements in its competitiveness

2012

IFC extends a second EE loan ($10mm) under the Cleaner Production Lending Facility

2013

IFC signs a mandate for $100mm A-Loan and $50mm B-Loan for the construction and
operation of the new ammonia plant, as well as the cyclohexanone modernization
(appraisal just completed in March 2013)

Location of project

Togliatti, Samara region, Russian Federation.

52

Project Finance PT Panca Amara Utama, Indonesia

Sponsors

The Project Sponsor is PT Surya Esa Perkasa Tbk. (SEP), a company that is listed on the
Indonesian stock exchange. Mr. Theodore Rachmat, Mr. Garibaldi Thohir and Mr. Vinod Laroya
(through their shareholding in SEP) and SEP are the key Sponsors of this Project.

Project Description:

PT Panca Amara Utama (PAU) is a private limited company that has set up a 2,000 metric
tonnes per day greenfield ammonia production plant. The gas will be sourced from the SenoroToili gas fields in Central Sulawesi province of Indonesia. Key associated infrastructure for this
project includes a pipeline to transport the gas to the plant and a jetty to supply the ammonia to
buyers

Location of project

The Project is located Central Sulawesi Province. The plants site is approximately 40 km away
from the nearest airport which is at Luwuk the Capital of Banggai Regency.

Project Cost

The Project cost is US$750 million and has been financed by US$500 million of senior debt and
US$250 million of equity. IFC has invested US$125 million in the form of debt and equity, to
finance part of the Project. In addition to the above investment, IFC has mobilized US$400 million
of senior debt from other banks.

IFC Investment:

A Loan of US$130 million.

Commitment Date:

May, 2013

53

Omnia CDG (South Africa)

Sponsor

The Omnia Group, in business since 1953, is a diversified specialist chemical services company
providing customized solutions in the chemicals, mining and agriculture markets. The Group has
also diversified outside of South Africa, becoming a pan-African presence in Mauritius, Malawi,
Mozambique, Swaziland, Zimbabwe, Zambia, Namibia, Botswana, Mali, Tanzania, Kenya as well
as Australia, France, Canada, New Zealand and Brazil.
Omnia Group is listed on the JSE in the specialty chemicals sector

Project Description:

The project provided a Carbon Delivery Guarantee for Certified Emissions Reduction credits
(CERs) that were expected to be generated by Omnia Fertilizer Limited via the installation of a
nitrous oxide (N2O) destruction facility at its nitric acid plant in Sasolburg, South Africa.

Location of project

South Africa

IFC Investment:

$39 million

Commitment Date:

June 2007

54

Corporate Finance: Paradeep (India)


Company name: Paradeep Phosphates Limited (Paradeep") Approved: June 2011
Description of company and purpose of project
Paradeep embarked on a capital expenditure program which, by 2015, will increase its production capacity of diammonium phosphate (DAP) and nitrogen-phosphate-potash (NPK) by approximately 25 percent, and more than
double its production capacity of intermediary raw materials
Paradeep will also set up a new captive power plant which will harness the waste heat from the new SAP and
retrofit the waste heat recovery system in the existing SAP to enhance recovery efficiency. This will reduce the
amount of power PPL purchases from the state grid by 83 percent
Project sponsor and major shareholders of project company
Paradeep is one of the largest producers of complex phosphatic fertilizers such as di-ammonium phosphate (DAP)
and nitrogen-phosphate-potash (NPK or Complex Fertilizers) in India
Total project cost and proposed IFC investment
Total project cost is over US$120 million. IFC investment is up to US$50 million in long-term project loans
Location of project and description of site
The project site in in Orissa, on the eastern coast of India

55

Fosfertil (Brazil)
Company name: Fertilizantes Fosfatados S.A. ("Fosfertil") Approved: August 2001
Description of company and purpose of project
Cost reductions and the expansion of Fosfertil's "high concentrate", i.e. high phosphate concentrate fertilizers such
as triple superphosphate (TSP) and monoammonium phosphate (MAP), were necessary to allow the Company to
enhance its international competitiveness and to grow in line with demand growth
An investment program was developed to increase the output of "high concentrate" fertilizers by 22% by revamping
and debottlenecking the Tapira phosphate mine and the MAP/TSP production plant in Uberaba. Furthermore, a
new MAP granulator and a warehouse would be built
Project sponsor and major shareholders of project company
At the time of project approval, The Fosfertil Group was Brazil's leading producer of phosphate and nitrogen
fertilizers with a market share of 34% and 17%, respectively
Total project cost and proposed IFC investment
The total project cost : over US$85 million. IFC investment is up to US$25 million in long-term project loans, and
US$15 million in syndications
Location of project and description of site
The phosphate mine is located in Tapira, Minas Gerais province in Brazil. The production plant is located in
Uberaba, in the western part of Minas Gerais

56

IFC Project OPET Petrolculuk, Turkey

Sponsors

Opet Petrolclk A.S. is a retail distributor of petroleum products in Turkey, owned 50% by the
Ko Group of Turkey and 50% by Opets founding shareholders, the Ozturk family. The project is
aimed at strengthening the companys position in the Turkish petroleum products distribution
industry and enhancing its competitiveness in advance of further liberalization.

Project Description:

The project is comprised of : (i) the construction of a greenfield marine terminal and tank storage
facility which will increase the companys oil products storage capacity from 320,000 m3 to
766,000 m3; and, (ii) expansion of the companys existing retail distribution network, with new
stations primarily located in the larger cities of Turkey.

Location of project

The marine terminal and storage facilities are located north of the Marmara Sea in Thrace

Project Cost

US$ 150 million

IFC Investment:

US$ 25 million A Loan and US$ 50 million B Loan

Commitment Date:

April, 2004

57

Petrotel-Lukoil (Romania)

Sponsors

The project sponsor and guarantor is OAO Lukoil, Russias largest integrated oil company.
Lukoil's shares are publicly traded on the Russian stock exchanges

Project Description:

The project involves the modernization and revamping program of S.C. Petrotel-Lukoil S.A., its
Romanian refinery. The project is aimed at: (i) providing high quality petroleum products to
Romanian consumers that comply with European Euro-3 and Euro-4 standards, (ii) improving
refinery operations by increasing the output of higher value petroleum products and (iii) reduce
emissions and energy consumption

Location of project

The Petrotel refinery is located in Ploesti, a city with 300,000 inhabitants in central Romania. The
city is dominated by the Romanian oil industry, there are 4 refineries in the immediate area.
Lukoil has 300 gas stations and 8 storage tank farms across the country.

Project Cost

US$ 370 million

IFC Investment:

US$ 35 million A Loan and US$ 50 million B Loan

Commitment Date:

October, 2005

58

Corporate Finance: Mapei, Italy

Sponsors

Project Description:

Mapei is a private company owned largely by the Squinzi family. The Mapei producers and
develops adhesives, sealants, waterproofing agents, concrete additives and other specialty
chemicals for the construction industry

The proposed investment consists of an IFC senior loan to Mapei SpA to finance its capital
investment program in emerging markets, including facilities in Turkey, Mexico, Egypt, Panama,
India, Russian Federation and other emerging countries.

Turkey, Mexico, Egypt, Panama, India, Russian Federation and other emerging countries
Location of project

Project Cost

Euro 63 million

IFC Investment:

Euro 50 million A Loan

Commitment Date:

May 2014

59

Equity Investment: Soda Sanayii, Turkey

Sponsors

The project is sponsored by Turkiye Sise ve Cam Fabrikalari A.S. (or Sisecam) and its
subsidiaries, Anadolu Cam in glass packaging and Trakya Cam in float glass, all of which are
listed on the Istanbul Stock Exchange (BIST). Sisecam is a leading Turkish producer of flat
glass, tableware, glass containers, glass fibers and associated products worldwide. 89.7% of
Sodas shares are directly owned by Sisecam group companies and the remaining portion of the
shares are listed on BIST

Project Description:

Sisecam has invited IFC to become a shareholder in Soda, as part of the Groups program of
eliminating cross-ownership in the Group. The project entails an IFC equity investment in Soda, a
Turkey synthetic soda and chromium producer. IFC will buy shares from two subsidiaries of the
Sisecam group, which in turn are expected to use the proceeds in energy efficiency investments.

Location of project

Turkey

Project Cost

IFCs proposed secondary purchase of US$25 million worth of Soda shares corresponds to less
than a 5% shareholding in the company.

IFC Investment:

Commitment Date:

US$ 25m

November 2014

60

Finding Solutions for farmers: Bayer, Ukraine

Sponsor

Bayer AG is Germany-based pharmaceuticals, polymers and agrochemicals conglomerate with


sales of about 40 billion and EBITDA of about 8.3 billion in 2012. The groups structure
consists of three divisions: Bayer Healthcare, Bayer CropScience and Bayer MateriaScience.
Bayer CropScience manufactures herbicides, insecticides, fungicides, seed treatment and seeds.

Project Description:

Risk sharing facilities with Raiffeisen Bank Aval and Credit Agricole Bank of up to US$87.5
million on the portfolio of receivables generated by Bayer Ltd. Ukraine on the sales of cropprotection products to private sector farmers in Ukraine. The RSF covers a portfolio of seasonal
receivables (with maturities less than 1 year) with a total portfolio amount of up to US$175 million
equivalent in local currency.

Location of project

IFC Investment:

Commitment Date:

Bayer Ltd. covers the entire territory of Ukraine via the chain of local distributors.

$87.5 million risk sharing facility

April, 2011; March, 2012

61