IFC mulls $60m financing for Indorama’s Uzbekistan cotton farm project

IFC/World Bank HQ. Photo: IFC

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).

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.