Senegal - Phosphate Industry Development Engineering Project

Document of F LE PY The World Bank FOR OFFICIAL USE ONLY Report No. P-3489-SE REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 7.1 MILLION TO THE REPUBLIC OF SENEGAL FOR A PHOSPHATE INDUSTRY DEVELOPMENT ENGINEERING PROJECT April 18, 1983 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit = CFA Franc (CFAF) Calendar 1982 US$ 1.0 = CFAF 340 CFAF 1 million = US$2,940 The CFA Franc is pegged to the French Franc at the fixed rate of CFAF 1.00 = FF 0.02 and floats vis-a-vis the US dollar. FISCAL YEAR Government of Senegal July 1 - June 30 CSPT and ICS January 1 - December 31 ABBREVIATIONS AND ACRONYMS BRGM Bureau de Recherches Geologiques et Minieres CPSP Caisse de Perequation et de Stabilisation des Prix CSPT Compagnie Senegalaise des Phosphates de Taiba EFF Extended Fund Facility EMC Entreprise Miniere et Chimique ICS Industries Chimiques du Senegal MDPA Mines de Potasse d'Alsace OMVS Organisation Pour la Mise en Valeur de Fleuve Senegal ONCAD Office National de Cooperation et d'Assistance au Developpement SEFICS Societe d'Exploitation Ferroviaire des Industries Chimiques du Senegal PROMOPHOS Societe de Promotion des Phosphates du Senegal SIES Societe Industrielle d'Engrais au Senegal SOFISEDIT Societe Financiere Senegalaise pour le Developpement de l'Industrie et du Tourisme SONAR Societe Nationale d'Approvisionnement du Monde Rural P205 Phosphoric Pentoxide - Nutrient Element in Phosphatic Fertilizers tpy Metric tons per year tpd Metric tons per day tph Metric tons per hour  FOR OFFICIAL USE ONLY REPUBLIC OF SENEGAL PHOSPHATE INDUSTRY DEVELOPMENT ENGINEERING PROJECT CREDIT AND PROJECT SUMMARY Borrower: Republic of Senegal. Amount: SDR 7.1 million (US$7.7 million equivalent). Terms: Standard IDA terms. Beneficiaries: Government of Senegal, Compagnie Senegalaise des Phosphates de Taiba (CSPT), and Industries Chimiques du Sen6gal (ICS). On-lending Terms: The Government would on-lend US$7.4 million equivalent of the proceeds of the Credit to the Soci6t6 de Promotion des Phosphates du Senegal (PROMOPHOS), the promotional company, which in turn would on-lend US$6.0 million equivalent to ICS and US$1.4 million equivalent to CSPT to finance the studies and tests they would undertake under the project processing and mining/beneficiation components, respec- tively. ICS and CSPT would reimburse PROMOPHOS, and PROMOPHOS would, in turn, reimburse the Government on the following terms: (i) if the project's studies and tests are not successful and do not lead to industrial operations, ICS and CSPT would repay the funds borrowed at 0.75% interest rate over 20 years including 7 years of grace; and (ii) if the studies and tests are successful and do lead to industrial operations, the funds borrowed would be repaid at 12.7% 1/ interest rate over 15 years including 3 years of grace, the amortization period starting when the commercial viability of slimes recovery is established. Project Description: The objectives of the project would be to: (i) help maximize the overall efficiency of the phosphate mining and processing operations in Senegal and (ii) help orient Senegal development efforts for exploiting its phosphate resources in the most promising direction. The project would consist of three components: 1/ This rate represents the rate at which Bank funds are currently charged to revenue earnings borrowers (12.1%), plus a risk premium (0.6%) to compensate the Government for having alleviated the companies' financial risks in case (i) above. This document has a-restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - (i) processing component to help establish the commercial scale viability of upgrading the phosphate slimes currently rejected by CSPT into feed material for ICS's phosphoric acid plant. This component would be executed in two phases, with the major second phase works to be carried out after the first phase has confirmed their techno-economic justification; (ii) mining/beneficiation component to help optimize the long-term phosphate recovery of CSPT mining and beneficiation operations, taking into account ICS's future phosphoric acid and phosphate fertilizer production capacity; and (iii) planning component to help define an overall integrated long-term development plan for exploiting Senegal's phosphate resources. Project Risks: The major risk facing the proposed engineering project would be that, were the studies to conclude that a full- scale slime recovery plant is not technically and economically justified, the investments made in the project's processing component would not be recovered. This risk is considered minimal and is further minimized by executing the processing component in two phases, and by initiating the investments in the slime recovery pilot plant only after preliminary feasibility studies are completed and show satisfactory results.  - iii - Estimated Cost: The estimated cost of the project, exclusive of taxes a/, is as follows: Foreign Local Total --( Us$ million)