FCS RE MALI SHI

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The proposed investment consists of a €2 million A-loan to support the investment plan of Mali Shi (the Company), a greenfield shea butter processing company established in April 2018 that will be located in the suburbs of Bamako, in Mali. The proposed financing may also be made available under the Private Sector Window of the Global Agriculture and Food Security Program (“GAFSP”), a multilateral mechanism launched by the G20 with the purpose of scaling-up support to help less developed countries alleviate poverty and improve food security, a program implemented by IFC.The shareholders of Mali Shi are (i) Omnium Mali (58.5% of the shares), a Malian industrial group, which has been producing and distributing batteries since 1996 and is majority-owned by Omnium Invest; (ii) ECODEV (35% of the shares), a trust fund of a mining company (Endeavor mining), established in 2018 to invest in high social impact projects in areas close to their mining operations; (iii) SOATAF (6.5% of the shares), a shea trader in Mali, which was founded in 2004 and has been exporting shea nuts, in addition to sesame, Arabic gum, and peanuts to India, Denmark, and the Netherlands (the Sponsors).In order to address the increased demand for shea butter from global producers (off-takers) of premium quality oils and fats, the Sponsors will build an industrial shea butter processing plant, for which the Sponsors have signed (i) a turnkey contract with the Indian company, Kumar Metal Industries (a reputable contractor for the construction of shea butter processing plants and with a long track record across the region) for the provision of the equipment, and (ii) a contract with EDT, a Malian construction company, for the construction of the building and metallic infrastructure. The construction contract with Kumar Metal Industries includes technical assistance and training provisions for six months (and renewable) of operation of the plant. Shea butter processing entails the following steps: 1) sorting of shea nuts from impurities upon delivery to the processing plant; 2) steam treatment; 3) mechanical press to extract shea butter; 4) chemical extraction process (using hexane as a solvent) to extract remaining shea butter content from the oilcake (from 20-22% down to less than 2% of oil content); 5) filtering and drying of shea butter; and 6) storage in 20-foot (21 tons) tanks for export. There will also be an on-site warehouse for shea nuts with a total storage capacity of 3,000 tons. The processing plant will be equipped with a laboratory to analyze the quality of shea nuts and raw shea butter. Flexitanks of finished product will be transported by truck to export ports in Abidjan or Dakar and/or via the railway line from Bamako to Dakar, once fully operational.The processing plant will be designed to have a capacity to process up to 30,000 tons of shea nuts per year to produce up to 13,000 tons of shea butter (at a rate of 100 tons of shea nuts per day) at full production capacity, and will start operations at 25% capacity (at a rate of 50 tons of shea nuts per day or 15,000 tons annually), according to the Company’s assumptions. Raw shea butter production will be exclusively for wholesale to export markets (to Europe, India, and Southeast Asia) and target traders or food processors/producers of cocoa butter equivalents (CBEs). The company is already in discussions with Bunge Loders Croklaan, which plans to sign an off-take agreement for procuring shea butter from Mali Shi.The minority shareholder, SOATAF, has developed a national network of 25,000 women who collect shea nuts and owns 10 storage warehouses to export high-quality shea nuts. SOATAF plans to increase the number of warehouses to 25 and expand the number of women in its network of suppliers to 40,000 (organized in 200 cooperatives) by 2020. Omnium Mali plans to develop its own network for collecting shea nuts in areas where SOATAF is absent. The company plans to rent or build three warehouses to aggregate shea nuts in each region from which these will be procured.The investment will help support the Company’s investment plan, which comprises (i) the construction of the shea nut processing plant and the acquisition of the equipment, (ii) the construction of a shea nut storage warehouse at the processing plant as well as in the shea nut production basin, and (iii) the acquisition of vehicles (pick-up trucks and motorcycles), and (iv) working capital. The site of the proposed processing plant and warehouse is on a 2-hectare land-parcel that was recently acquired by the Sponsor (Omnium Invest). The site is located in an area that has been designated for industrial use in Banankoro in the Commune of Sanankoroba (in the Kati Circle of the Koulikoro Region) along national route 7, approximately 35 km from Bamako. The industrial activities of neighboring properties entail a brewery and a flour mill. During the construction phase, it is estimated that 30-60 workers will be employed through a subcontractor for a duration of 9 months. Once fully operational, it is estimated that the Company will employ 83 people.