International Finance Corporation (IFC), a member of the World Bank Group, has proposed to extend a $60-million loan to Thai chemicals company Indorama Group to finance its cotton farming initiatives in Uzbekistan.
According to IFC’s disclosure, Indorama Group, through its wholly-owned subsidiary Indorama Agro, is developing cotton farm clusters covering a total area of approximately 50,000 hectares in two regions of Uzbekistan.
The firm is also engaging with local farmers through contract farming in approximately 22,000 hectares in Qashqadaryo and Sirdaryo regions.
Indorama, a long-standing IFC client in several countries, said the endeavor would cost $285 million, including $185 million in capital expenditures and $60-100 million in working capital.
“The project will address some of the country’s systemic development challenges by eliminating the use of forced labor in Indorama’s local value chain and significantly increase production efficiency at project farms,” IFC said.
Aside from introducing to the country modern technologies of cotton production, developing cotton farms in Uzbekistan is also essential to Indorama as its textile plant – Indorama Kokand Textile – depends on machine picked cotton fibre for its raw materials.
Additionally, the IFC said the project will allow Indorama to strengthen its cotton supply chain in Uzbekistan through backward integration into cotton production, therefore addressing the risks of cotton availability, quality, and supply chain reputational risk.
“The project will also source cotton from local contract-farmers, helping them integrate into a modernized value chain on commercial terms and reduce off-take uncertainties on both sides,” according to the IFC.
Additionally, the initiative is expected to create an estimated 1,000 farm jobs and 700 non-farm new jobs.
Indorama is one of the world’s fastest-growing groups in the petrochemical and fibres business. It has a presence in 35 countries in Asia, Africa, Europe, and the Americas and more than 37,000 employees.
In addition to textile production, the company has large capacities in the oil and gas chemical sectors, the production of polyester and synthetic fabrics, and chemical fertilizers.
It has 39 production facilities in 22 countries located in four continents, including Indonesia, Thailand, India, China, Sri Lanka, the Netherlands, the United Kingdom, Lithuania, Italy, Turkey, the United States, Mexico, Egypt, and Nigeria.
In 2016, IFC invested in Indorama’s urea fertiliser facility in Nigeria, which is operated by Indorama Eleme Fertilizer & Chemicals Ltd. (IEFCL).