Fenglin III

completed

The proposed IFC investment is a US$40 million A-loan for construction of a Particle Board (PB) factory, for the Guangxi Fenglin Wood Industry Group Co., Ltd., (“Fenglin” or the “Group”) located in Nanning, Guangxi Province, the Peoples Republic of China (PRC). The group has four facilities, three located in Guangxi Province, and one located in Guangdong Province, with over one hundred separate plantations (with a total forest estate of 14,897 hectares) in Guangxi Province. The current production demand is 800,000 m 3  per annum, of raw waste wood (comprising of timber harvest residues, chips, and offcuts from the wood processing sector) for production inputs. Following this investment group raw waste wood demand is anticipated to rise to over 1.1 million m 3  per annum.  The group subsidiaries rely on a network of approximately 792 suppliers and aggregators within an average 150 km radius from each facility.    The loan proceeds will be used to construct a new factory on an existing brown field site, of the Medium Density Fiberboard (MDF) factory (formerly operated by the group, “Parent” the Guangxi Fenglin Wood Industry Group Co.,), and for working capital. The construction phases include: (i) decommissioning, and equipment removal from existing factory; (ii) demolition of existing buildings; (iii) leveling and foundation preparation; followed by, (iv) construction of the new PB facility. All actions will be conducted on the former MDF factory site foot print and have a duration of 18 months.   By adopting modern technologies, the new PB factory will become one of the largest PB manufacturing facilities in the PRC with the capability to manufacture formaldehyde emission free PB.   The production process of MDF and PB involves blending chipped raw wood fiber with adhesives and bonding agents, drying, pressing and extruding. The MDF and PB manufacturing line is automated, with manual labor required at the front end (handling of raw waste wood fiber inputs) and at the back end (handling of finished panels).   The group is an existing International Finance Corporation (IFC) client with loans provided to Fenglin under project numbers #35042, #26490, #25299, and #22165. Operations covered under #35042 IFC loan have been subject to ongoing monitoring since 2014, and to date have demonstrated satisfactory ESAP implementation and overall EHS performance.