Summary of Investment Information (SII) – Shwe Taung Group

Summary of Investment Information (SII)

Shwe Taung Cement Company Limited (“STC” or the “Company”) is part of the Shwe Taung Group (‘STG’ or the ‘Group’) of Myanmar. The Group has presence across diverse businesses including real estate, construction, retail and financial services.

STG expanded into the cement business in 2010 by setting up STC, to meet the rapidly growing demand of concrete and cement in Myanmar. STC is an integrated cement manufacturer with current clinker manufacturing capacity of 1,500 tons per day (”TPD”) and cement grinding capacity of 2,800 TPD. The Company distributes its cement all over Myanmar under the brand name “Apache Portland Cement (“Apache”)”. Through its wholly owned subsidiary, Shwe Taung Mining (“STM”), STC has mining concessions providing captive sources for limestone and coal.

High Tech Concrete Company Limited (‘HTC’), a subsidiary of STC, is one of the leading manufacturers of Ready Mix Concrete (‘RMC’) in Myanmar. HTC has been in been in business for more than two decades and has a network of batching plants across the country.

The Project envisages brownfield expansion of STC’s cement plant at Pyi Nyaung Village, Thazi through expansion of clinker capacity to 5,500 tpd and cement grinding capacity to 7,200 tpd. The Project also involves construction of a Waste Heat Recovery System (‘WHRS’) and improvement in emission control systems.

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Project Sponsor and Shareholders of Project Company

STC is a closely held entity with majority stake held by family of Mr. Aik Htun, and his son Mr. Aung Zaw Naing (‘the Sponsors’). STG was founded in 1990 by Mr. Htun and the Group has been present in the building material business for more than two decades.

Total Project Cost and Nature of IFCs Investment

The total Project cost is estimated at US$110 million. The proposed IFC investment in STC comprises of investment in common equity for up to US$15 million and providing an A Loan of up to US$20 million. IFC is also looking to mobilize upto US$20 million through syndication of Parallel Loans and upto US$20 million investment in common equity from IFC AMC Emerging Asia Fund (“EAF”).

The balance portion of the Project cost will be financed through internal accruals, fresh equity infusion from Sponsors and other loans.

Project Location

STC’s cement plant is located in the Thazi District, Mandalay region of Myanmar, 330 miles from Yangon.

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Expected Development Impact

  1. Private sector development in a FCS: IFC’s proposed investment will contribute to private sector development and support increase in economic activity in Myanmar, an IDA and FCS country.
  2. Increase local supply of cement: The Project will support Government of Myanmar’s initiative of reducing import dependency, preserving foreign exchange and providing access to affordable construction materials by increasing the role of private sector in cement manufacturing. Improved supply of cement in turn, will provide a boost to the development of key sectors like infrastructure, housing etc.
  3. Employment generation and local economic activities: The Project is expected to create about 200-300 new direct jobs and about 500-700 indirect jobs. Besides, the Project will also create more than 1000 temporary jobs during the construction period. The Project will also create new business opportunities in the local economy due to increased demand for ancillary services. In particular, it will benefit those small and medium enterprises engaged in providing logistic, maintenance and general services to the Company. In addition, the communities close to the plant sites will benefit by the way of induced job creation effects as they will provide local services and supplies to the plant and its employees.
  4. Demonstration effect: IFC’s investment in the sector will send a positive signal to other investors considering investments in the country and attract future capital flow into the sector. IFC’s involvement with the client will also help showcase E&S best practices, resource efficiency and cleaner production norms alongside serving as a catalyst for other firms to raise their standards such areas.

IFC’s Expected Role and Additionality

  1. Long term financing: STC requires long term capital commensurate with the project requirements and the intrinsic cyclicality of the cement sector. The proposed IFC investment and mobilizations will bridge this gap and provide the necessary financing to the Company.
  2. E&S Management: Association with IFC will help STC to upgrade its environmental, health, and safety (EHS) standards by improving its environment & social management system. This in turn should enhance the group’s reputation by reducing the risk of adverse impacts on issues like local community relationship, clean production and help in its delivery of corporate social responsibility.
  3. Global sector expertise: In its next phase of growth, STC is looking to be competitive with international cement producers and create a long term sustainable business model. IFC’s global knowledge of the cement and construction material sector is likely to benefit the company in their endeavor.
  4. Corporate Governance standard setting: IFC is also advising STG on improving its corporate governance standards. IFC’s Corporate Governance unit is engaged with the client to conduct diagnostic assessment of existing corporate governance structure, develop a corporate governance roadmap and provide support in implementing such roadmap.

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Environment and Social Categorization Rationale – A

The project is defined as a category A project according to IFC’s Policy on Environmental and Social Sustainability as it has the potential for significant adverse environmental and social impacts. These impacts relate primarily to biodiversity given the land where the limestone quarry for the cement plant and the area where the coal mine are located are defined as “critical habitat” in accordance with PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources.

Other than the issue outlined above, other key environmental and social (E&S) issues associated with the project include; i) the need to enhance existing environmental and occupational health and safety management systems allied to capacity to ensure effective implementation thereof; ii) need for strengthening the approach to human resource management to ensure alignment with Performance Standard 2: Labor and Working Conditions; iii) management of point source and fugitive dust emissions; iv) solid and liquid waste management including the storage of hazardous materials aligned with accepted practices; v) storm-water management; vi) effective management of traffic and transportation in the vicinity of the plant and on public roads; and vi) focused and sustained stakeholder engagement, notably with the communities in the vicinity of the cement plant and the coal mine. In addition, there is a need to further assess specific aspects related to water management and biodiversity so as to inform the project.

Main Environment & Social Risks and Impacts of the Project:

Aside from issues related to biodiversity as described above, other key potential risks and impacts that will need to be managed relate to; i) occupational health and safety during construction and operations; ii) labor and working conditions during construction; iii) disposal of solid and liquid waste during operations; iv) air quality aspects as a result of point source and fugitive emission during operations v) stormwater disposal from the cement plant, quarrying activities and the mine, vi) traffic and transportation in the vicinity of the plant and on public roads; and vii) interactions with the stakeholders and communities to ensure effective administration and resolution of grievances. These impacts and risks allied to those associated with biodiversity will be managed via effective implementation of the project’s Environmental and Social Action Plan.

Environmental & Social Action Plan

Please refer to the project’s ESRS for further information.

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For Inquiries About the Project, Contact

Shwe Taung Cement Co. Ltd.
Kyaw Naing Soe
Deputy Managing Director

For Inquiries and Comments About IFC, Contact

General IFC Inquiries
IFC Communications
2121 Pennsylvania Avenue, NW Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384

Local Access for Project Documentation

  1. Shwe Taung Cement Company Limited- Plant Pyinyaung Village, Tharsi Township, Mandalay Division, Myanmar.
  2. Shwe Taung Cement Company Limited – Corporate office Union Business Center No.94, Nat Mauk Street, Bo Cho Ward, Bahan Township, Yangon, Myanmar
  3. Shwe Taung Development Company Limited Ahlone Tower, Strand Road, River View Garden Housing, Ahlone Township, Yangon, Myanmar

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