Announcement of Philippine Cement Plant to Triple its Capacity on December 17, 1981

IFC Press Release No. 82/21 Thursday, December 17, 1981 Philippine Cement Plant To Triple its Capacity The only cement plant in southern Mindanao, Philippines, will triple its present capacity of approximately 150,000 metric tons a year by adding an $83.6 million coal fired, dry-process cement plant. The existing small, wet-process plant will eventually be phased out. The project will be implemented by a new company, Davao Union Cement Corporation. Financing is being provided by Philippine, Danish, and Japanese investors and by the International Finance Corporation (IFC), an international institution which supports economic development by assisting private enter- prise ventures in developing countries. Bacnotan Consolidated Industries, Inc., a widely owned private Philippine company, is the principal sponsor. Bacnotan is transferring the assets of the existing plant to the project and investing an additional $6.2 million in equity. Other equity investors are F. L. Smidth of Denmark and F. L. Smidth of Japan, the technical partners in the venture, and the Danish Industrialization Fund for Developing Countries (IFU), who will subscribe to $3 million each, or a total of $9 million of Davao Union's equity. IFC will lend $16 million. A $40.8 million supplier's credit is being provided by the Japanese and Danish export-import banks and $4.5 million will be from internal cash generation during the construction period. A Eurodollar loan from Fuji Bank completes the financing package. The new plant will be located on the existing plant site in Davao City. It will be built by F. L. Smidth and Mitsui & Co. Ltd. of Japan. Lafarge con- sultants of Canada provided technical advice during evaluation of bids and drafting of contracts. - 2 - The Davao Union project is in line with the Government's efforts to rehabilitate and expand the cement industry including encouraging the building of larger, energy-efficient, economic sized plants. The project will benefit The Philippines by utilizing locally produced coal for fuel, thereby helping to reduce the dependence on imported fuel oil. It will assure an economic source of cement for the relatively undeveloped, but rapidly growing, southern Mindanao region. The project will result in estimated total net foreign exchange savings of $149 million. - 0 - [Any inquiries strictly relating to IFC's participation in this project should be directed to the IFC Information Office, 1818 H Street, N.W., Washington, D.C. 20433, Telephone (202) 676-0394.]