Report No. 1071-A i L tE ur Togo/Ivory Coast/Ghana F ... · modern large-scale plants with throughputs of 1,500 to 4,000 tpd. MILL Raw Mill: Grinds raw materials. The types employed

Report No. 1071-A i L tE urTogo/Ivory Coast/Ghana F gAppraisal of CIMAO Regional Clinker Project(In Two Volumes)

Volume 11: AnnexesJune 14, 1976

Industrial Projects Department

FOR OFFICIAL USE ONLY

Document of the World Bank

This document has a restricted distribution and may be used by recipientsonly in the performance of their official duties. Its contents may nototherwise be disclosed without World Bank authorization.

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TOGO/IVORY COAST/GHANA

CIMAO REGIONAL CLINKER PROJECT

CURRENCY EQUIVALENTS WEIGHTS AND MEASURES

Except where noted otherwise, all All weights and measures are metricfigures are quoted in Francs CFA units, if not stated otherwise

US$ = CFAF 225 1 metric ton (ton) = 1,000 kilogram (kg)CFAF 1,000 = US$ 4.444 1 metric ton (ton) = 2,205 poundsCFAF 100 = US$ 0.444 1 kilometer (km) = 0.62 milesCFAF 10 = US$ 0.044 1 meter (m) = 39.3 inches

FF 1 = CFAF 50 1 hectare (ha) = 2.47 acres

CFAF I = FF 0.02 1 kilo calorie (kcal) = 3.9685 BTU

ABBREVIATIONS AND ACRONYMS

ADB: African Development Bank (Abidjan)APCM: Associated Portland Cement Manufacturers Ltd. (London)BADEA: Banque Arabe de Developpement Economique en Afrique (Khartoum)CCCE: Caisse Centrale de Cooporation Economique (Paris)CEB: Communaute Electrique du Benin (Lome)CEET: Compagnie Energie Electrique du Togo (Lome)CFT: Chemins de Fer Togolais (Lome)CIDA: Canadian International Development Agency (Ottawa)CIMAO: Ciments de l'Afrique de l'Ouest (Lome)CIMTOGO: Ciments du Togo (Lome)CTMB: Compagnie Togolaise des Mines du BeninEDF: European Development Fund (Brussels)EIB: European Investment Bank (Luxemburg)KfW: Kreditanstalt fuer Wiederaufbau (Frankfurt)MPWM: Ministry of Public Works and Mines of TogoOCAM: Organisation Communaute Africaine et MalgacheORIGNY: Origny-Desvroise (Paris)PAL: Port Autonome de Lome, TogoPEG: Prospective Engineering Gestion (Switzerland)SCA: Societe des Ciments d'Abidjan (Abidjan)SICM: Societe Ivoirienne de Ciments et Materiaux (Abidjan)TPD: Metric Tons Per DayTPY: Metric Tons Per YearVRA: Volta River Authority (Ghana)

FISCAL YEAR

January 1 to December 31

TOGO/IVO1EY COAST/GHANA FOR OFFICIAL USE ONLYAPPRAISAL OF CIMAO R3TOAL CLINKER PROJET

TABLE OF CONTENTSVOLTE II

ANNEXES

I Technical Terms and Process Description

2-1 The Industrial Sector in the Region2-2 CIMAO - History2-3 CIMAO - Legal and Organizational Framework2-4 CIMAO - Organization Chart (during Project Implementation)2-5 CIMAO - Organization Chart (Operation)

3-1 World Clinker/Cement Trade3-2 The Market in Western Africa3-3 The Regional Market of CIMAO3-4 Distribution and Pricing of Clinker

4-1 The Project - Summary Cost Estimates4-2 The Project - Summary Disbursement Schedule

5-1 Industrial Complex - Plant Description5-2 Industrial Complex - Raw Material Availability and Analysis5-3 Industrial Complex - Utilities5-4 Industrial Complex - IManpower and Training5-5 Industrial Complex - Plant Implementation, Management and

Technical Assistance5-6 Industrial Complex - Implementation Schedule

6-1 CIMAO Power Supply6-2 Township6-3 Railway Transport of Clinker6-4 Port of Lome and Rail/Port Terminal for CIMAO

7-1 Capital Cost Estimates - Industrial Complex7-2 CIMAO's Working Capital Requirements7-3 Capital Cost Estimates - Infrastructure Components7-4 Overall Financing Plan and Terms and Conditions of Loans7-5 Disbursement Schedule for Equity7-6 Financing Plan - Allocation of Funds7-7 Disbursement Schedule of IBRD Loan

8-1 CIMAO - Production Plan8-2 CIMAO - Revenue Projections8-3 CIMAO - Operating Cost Projections8-4 CIMAO - Notes to Financial Projections8-5 CIMAO - Income Statement Projections8-6 CIIIAO - Fund Flow Projections8-7 CItAO - Balance Sheet Projections8-8 CImAO - Break Even Analysis8-9 CIMAO - Financial Rate of Return and Sensitivity

9-1 Economic Rate of Return and Sensitivity9-2 Foreign Exchange Effects

This document has a restricted distribution and may be used by recipients only in the petformanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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MAPS

IBRD 11921 - Western Africa and the RegionIBRD 11685 - Region; Location of Grinding Plants, Clinker Plant and TerminalIBRD 11686 - Southern Togo; Location of Clinker Plant and Rail/Port TerminalIBRD 12056 - Plant and Quarry Location

ANNEX 1Page 1



TECHNICAL TERMS AND PROCESS DESCRIPTION

A. Technical Terms

The following is a list of the most common technical terms used inthe cement industry:

CEMENT A hydraulic binding material in the form of an amorphouspowder consisting of tri- and bicalcium silicates, tricalciumaluminates and tetracalcium alumino-ferrites. Cement is pro-duced by heating a mix of raw materials (limestone, clay andsand) which transforms into cement clinker through incompletefusion at a temperature of about 1450'C. Clinker is groundtogether with small quantities of gypsum, which acts as aretarder, controlling the setting time of the resulting cement.

The most common cement types are:Ordinary Portland Cement used in ordinary concretestructures.Rapid Hardening Cement used in structures requiring earlystrength which is achieved by quick setting of the cement.Sulphate Resisting Cement used in structures exposed to seawater or sulfurous materials.Low Heat Cement used in structures of massive concrete blocks(e.g., dams) to avoid overheating during setting.Superfine Cement used for special structures requiring highstrengths and for prestressed concrete.Portland Blast Furnace Cement prepared, in part, from blastfurnace slag and used in ordinary cement structures.Oil Well Cement used in the construction of oil wells (forlining).Mixed Cement used for masonry work (mortar) and small concretestructures.

CLINKER Clinkerization is the process of burning to produce incompletefusion in the material heated. Less than one-third of thematerial heated becomes fluid. The output of this process isa rocky material called clinker. Clinker is ground with smalladditions of gypsum to produce cement.

ANNEX 1Page 2

COMBUSTION AIR Used with fuel to fire the kiln.Primary Air is the small amount of air injected into thekiln together with fuel under high pressure.Secondary Air, which constitutes the major part of combus-tion air, is provided by fans and is heated up to about800°C in the cooler prior to flowing into the kiln.

COOLER Vessel in which hot clinker leaving the kiln is cooled.The cooler is designed as beat exchanger heating thesecondary combustion air. Three major types of coolersare in use:Air Quenching Grate Cooler: a moving grate, slightlyinclined on which the clinker falls from the kiln to becooled by fans under the grate.Planetary Cooler: this consists of 8 to 14 cylindricaltubes (incorporated into the shell of the kiln) into whichthe clinker to be cooled falls.Rotary Cooler: (Internal Cooler) cylinder of same con-struction as the rotary kiln and located under the firinghood. It rotates on tires.

CRUSHING Raw materials are normally quarried in the form of largelumps and blocks and must be subjected to a reduction insize before being further processed into a slurry or rawmeal which in turn is fed to the kiln. The reduction ofraw materials from a maximum admissible size to an aggre-gate of a specified size is achieved in a crusher. Majorknown types are:Roll crusher: which mills the materials particularlysuited for moist material liable to cause clogging.Jaw crusher: which knocks into pieces the materialparticularly suited for large size lumps.Impact crusher: such as hammer crusher and hammer millideally suited for raw materials of cement manufacture ifthese are not too moist or too abrasive. This type allowsdrying during the crushing process.Impeller crusher: which hits the materials against thebars of a gull and overcomes impact resistance ofmaterial.Gyratory crusher: which rotates the materials arounda cone in a continuously reduced space suitable for hardmaterials which are not too moist, and therefore, liableto clogging.

DUST COLLECTION Dust pollution has been a serious environmental problemposed by cement plants as dust is generated at nearlyevery stage of the production process. Furthermore, largequantities of emitted dust also represent lost production.Appropriate filters have been developed:Bag filter: A series of chambers with bags of nylon orother material installed, which dedust the airstream loaded

ANNEX 1Page 3

with dust particles. A system of valves permits reversalof the air stream in a particular chamber to clean the bagand collect the accumulated dust. Only suitable if tem-peratures of the airstream and particles do not exceed1000 to 1500C.Cyclone: It consists of an upper cylindrical portion anda lower funnel shaped portion. The airstream enters thecyclonic chamber tangentially at the upper portion. Throughcentrifugal force, dust particles strike the wall of thechamber and slide down to the discharge opening of thefunnel. The cleaned airstream leaves the cyclone througha central outlet pipe. Cyclone's efficiency can be en-hanced by arranging several units in line (multicyclonebatteries).Gravel filter: A filter consisting of a series of chambersfilled with gravel. The dust-laden airstream flows throughthe filter pockets thereby unloading the dust particles.Cleaning of the filter is by reversal of airstream andsimultaneous stirring of the gravel bed. This filter issuitable for temperatures above 500°C and, therefore, oftenused for waste gases of clinker cooler and kiln.Electrostatic filter: Electrostatic dust precipitationmakes use of the forces generated in electrically chargedbodies while the dust laden gas passes between two elec-trodes connected to high tension (30,000 to 80,000 V).The positive electrode collects the dust particles whichhave received a negative charge, thereby neutralizing them.Dust must be removed from time to time from the electrode.Optimum operation is achieved at temperatures of 90° to180%C and 15-30% moisture. Therefore, a spraying towerfor cooling the gas and moistening the particles is oftenemployed with the electrostatic filter.

GRINDING Raw Grinding: Reduction of raw material size to specifiedfineness by means of a mill.Wet Process: The hard materials (limestone) are subjectedto preliminary crushing and soft materials (clay) arestirred with water to form a slurry. Then both materials,mixed in the correct proportions, are ground to fine slurry.Dry Process: Crushed raw materials are dried and groundinto fine raw meal powder.Cement Grinding: The preparation of cement powder fromclinker and gypsum by means of a mill. The fineness ofgrinding (Blaine value) has a significant influence on theproperties of the resulting cement.Grindability of a material depends on its properties, suchas structure, cleavability, brittleness and hardness.

ANNEX 1Page 4

HOMOGENIZATION The thorough and complete blending of various raw materialsto prepare a homogenous mixture. This can be achieved in

storage silos in which the pre-homogenized mix is stirredand mised by a blower (dry process). Wet process plantsuse slurry tanks with installed rotating arms to achievehomogenization. The tanks serve simultaneously as storagefacilities.

KILN A vessel in which the raw meal is burnt to be chemicallytransformed into clinker (clinkering) at temperatures of

around 1450°C. A Shaft kiln typically with a throughputof between 50 and 250 metric tons per day, formerlyoperated on a discontinuous basis using the dry process.New developments, using pelletization techniques, operatecontinuously. A Rotary kiln, a large cylindrical steeltube inclined from the horizontal by 1 to 3 degrees, slowlyrevolves, supported by tires and rollers. It is suitablefor wet as well as dry processes and is typically used inmodern large-scale plants with throughputs of 1,500 to4,000 tpd.

MILL Raw Mill: Grinds raw materials. The types employed inmodern cement plants require prior crushing of raw mate-rials. The most common type is the tube mill, a horizontalcylindrical steel shell, equipped with lining and grindingmedia (e.g., cast steel balls - Ball mill) and which rotatesat between 14 and 20 r.p.m. The free fall (tumbling) of the

grinding media provides for the impact by which the materialis ground. Suitable both for wet and dry processes.Compound Tube Mills: (or combination mills, compartmentmills) have two or more compartments, separated by slotteddiaphragms and filled with different types of grinding media,to achieve successively finer grinding.Closed Circuit Mill with centrifugal separator and bucketelevators. The material ground in this tube mill is con-veyed in a steady flow by a bucket elevator to a separator,within which oversize particles are rejected by centrifugalaction and returned to the millfeed.Air-swept Mill: Tube mill or ring mill, the output of whichis continuously assorted by an air separator. Oversizeparticles are returned to the millfeed.Ring Mill: Grinding elements (balls or rollers) roll underpressure on a circular path (the grinding ring). Variationsof this type are spring pressure or spring-loaded mills,centrifugal ring ball mills, centrifugal suspended rollermills, edge mills.Cement Mill: (or Clinker Mill), a tube mill which refinesthe mix of clinker and gypsum to cement powder. Compoundmills with centrifugal separator are commonly in use.Wash Mill: A concrete tank with installed rotating arms tobreak up and stir a soft raw material (clay). The resulting

ANNEX 1Page 5

slurry is screened to remove stones or other impuritiesprior to grinding. It is used in dry as well as wet pro-cess plants.

PREHEATING SYSTEM is a heat exchange system designed to recover the caloriccontent of the kiln exhaust gases with which to heat upthe raw meal.Grate Preheater: The preheating system of the semi-dryprocess, consisting of a traveling grate which moves rawmaterial pellets through a drying and a preheating chamber.Suspension Preheater: The preheating system of the dryprocess consisting of one to four stages of simple or twincyclones on top of each other. The lower cyclones are usedas heat exchangers, the top cyclones as dust collectors.

PREHOMOGENIZATION, Storage facility which is also used for prehomogenizationPLANT or blending of raw material.

RAW MEAL A homogeneous powder consisting of the ground raw mix. Itis used to feed the kiln to produce clinker (using the dryprocess).

RAW SLURRY Kiln-feed for the wet process kiln.

B. Process Description

1. The cement production process is based on three basic raw materials--limestone, clay or shale, and sand. These raw materials with a maximumspecified block size (blasting) are reduced to aggregates of pre-specifiedmaximum dimensions in the crushing department and stored; pre-homogenizationis achieved through intermediate storage. After proportioning according toweight and volume, the raw materials are ground to a fine raw meal powder inthe raw mill. The raw meal is homogenized and then transported, via conveyors,to the kiln department. Within the kiln, heat induces a clinkering process,in which an incomplete fusion of the raw meal takes place. This clinker isthen ground together with a small percentage of gypsum to produce cement,which is shipped either in bulk or in bags.

2. Three types of processes have been developed; the wet, dry andsemi-dry processes.

The Wet Process

3. The raw materials, being wet in the natural state, are mixed withwater to create a slurry, whose titration (quantity ratio) can be controlledeasily. By means of pumps and ducts the slurry is introduced into the kiln,

ANNEX 1Page 6

where the clinkering takes place. Energy consumption of the process is high(between 1350 to 2200 kcal/kg of clinker), since more than a liter of watermust be vaporized within the kiln per kg of clinker.

4. The main advantage of the process is its simplicity, easy operat-ional control and maintenance. However, for raw materials with a naturalhumidity of below 10 to 15%, the dry or semi-dry process usually operates moreeconomically because of lower energy consumption, even though investment costsfor the wet process are normally lower than for the comparable dry processequipment. The sharp increases in fuel prices have increased the upper limitof humidity for the dry process applicability to about 15%.

The Dry Process

5. This process leaves the raw material in its natural state of humidityup to the raw mill stage; within the rawmill the material is ground and simul-taneously dried to a specified limit. The dry raw meal powder is homogenizedmechanically or by means of blowers, then introduced at the top stage of a pre-heating system. Working as a heat exchanger, the system preheats the materialby recovering the caloric value of the kiln exhaust gases whose flow is counterto that of the material (Counter flow system). Thus, part of the calcinationtakes place in the preheater, with the final clinkerization taking place in thekiln. Within the cooler, the secondary air recovers heat from the clinker,thereby cooling it down.

6. The intricate thermic equilibrium stage in the raw mill - preheater- kiln - cooler section allows a total thermic consumption for the dry processplants of 750 to 950 kcal/kg of clinker. Nevertheless, the savings in fuelare, in part, outweighed by disadvantages such as a more complicated processflow, which is sometimes difficult to control and to maintain. Continuousand automated sampling for control is necessary. Investment costs are usuallyhigher than for the wet process, despite the use of a short kiln (about halfthe length of the wet process kiln).

7. The industry has developed several variations of the dry process,using long or short kilns, cyclonic preheaters of one to four stages with simpleor twin/type cyclones within the stages. The decision as to the type of dryprocess to be selected is a function of: (i) the supplier (some of the varia-tions are patented); (ii) the chemical components of the raw materials andfuel (particularly their level of harmful alkalies and chlorides); (iii) fueleconomy; and (iv) initial investment costs and operating costs, particularlycontrol and maintenance.

The Semi-Dry Process

8. In this process the raw material is pelletized in a balling drum bymeans of between 12 to 20% of water. The wet pellets with a diameter of about1.5 cm discharge from the drum directly into a hopper on the feed end of a tra-velling grate preheater. The grate conveys the pellets through a drying zone

ANNEX 1Page 7

of about 300°C, then through a preheating zone of about 875°C. Kiln exhaustgases flow partly via a bypass through the drying zone, partly directly throughthe preheating zone. After passing through the preheating chamber, the hotpellets are stripped from the travelling grate and cascade into the short kilnwhere they are heated further to clinkerize at about 1450°C. The pelletizedclinker is then cooled over a grate cooler.

9. The thermic consumption of this process is about 850 kcal/kg ofclinker, thus comparable to the dry process. However, the process is moreexpensive both in initial investment and operating costs, as it contains manymoving parts. Its suitability is confined to raw materials which lend them-selves to pelletization. Its advantage lies in the stability of the process,the accuracy with which it can be adjusted and controlled, and the removalof harmful alkalies and chlorides from the raw material in process, which isachieved by collecting the dust from the bypass in a cyclone dust collector.The resulting cement has, therefore, a lower alkali content than can beobtained with dry process equipment.

Industrial Projects DepartmentMay 1976

ANNEX 2-1Page 1


CIMAO REGIONAL PROJECT

THE INDUSTRIAL SECTOR IN THE REGION -

1. Since their independence, each of the three CIMAO countries haspromoted the development of the industrial sector, in order to diversifv theireconomy and to increase their GNP. As a result, the development of the indus-trial sector in all the three countries has been rapid, and its share in GDPhas increased continuously.

A. The Industrial Sector in Togo

2. In Togo, the industrial sector is still small in macro-economicterms; its value added (including that of mining) was CFAF 16.7 billion(US$72.6 million) in 1973 compared to CFAF 9.1 billion (US$35.5 million) in1966. Its yearly growth rate was about 9% between 1966-73 and its share intotal GDP increased from 17.1% in 1966 to 18.1% in 1973. Total employmentin the industrial sector was 5,400 in 1973. The mining and processing ofphosphate, with a turnover of CFAF 5.2 billion in 1972 has been the main largesqale industrial unit. Its production capacity was recently expanded to 2.4million tons. Only about 40 medium scale industrial tuits exist; they in-clude electric power generation, food processing, textiles plastics andbuilding materials. Among these industries, some with an inelastic demand areflourishing (breweries),and some were able to overcome initial difficulties(textiles). Other industries are encountering marketing problems (marbleprocessing) and raw material supply shortages (food processing industries).A flour mill started operating in 1974.

1/ This annex is based on Bank reports on the three CIMAO countries andon information locally collected. No industrial sector study on theindustrial sector in Togo exists. The data relate to the modern indus-trial sector, and do not include the artisans sector.

ANNEX 2-1Page 2

Main Features of Industrial Development in Togo

1966 1973

Value added at current market prices

in million CFAF 9.1 16.7in million US$ 35.5 72.6

Annual growth rate 9%

Share in GDP (in %) 17.1 18.1

EmploymentNumber of employees .. 5,400

3. The Government's industrialization policy is directed towards threeprincipal objectives: promotion of small- and medium-sized indigenous enter-

prises; processing of domestic agricultural products and exploitation of

mineral resources; and import substitution for local consumption goods. In

the past few years, the Government established various institutions to promote

small and medium-sized local businesses.

ANNEX 2-1Page3

LIST OF FIRMS IN INDUSTRIAL SECTOR IN TOGO

Initial T u r n o v e r Number of EmployeesF i r m Product Investent 1971 1972 1973 1971 1972 1973

in million CFAF in million CFAF

Mining Subsector

Cie Togoloisc des Mines du Benie (C.T.M.B.) Phosphate 6,300 5,070 5,277 ... 1,269 1,395 1,560

Textile and Leather Subsector

Industrie Textile Togolaise (I.T.T.) Textile 1,270 1,400 2,000 2,650 724 760 840

BATA S.A. - Togolaise Shoes 82 276 235 570 151 118 135Societe de recuperation et de confection de

Vetements et textiles (ROMEX - TOGO) Textiles 36 - 16 60 - 48 68

Utilities Subsector

Cie D'Fnergie Electrique Togolaise (C.E.E.T.) Electricity 666 799 1,145 1,517 633 739 822

Compagnie du Benin Electricity 635 274 158 385 135 135 135Regie Nationale des Eaum du Togo (R.N.E.T.) Water Supply 252 151 180 195 140 150 217

Food Subsector

Brasserie du Benin (B,B.) Beer 450 803 934 1,090 223 227 200Societe Togulaise de Boissons (S.T.B.) Beverages 275 - 505 610 - 81 100

Huileries du Benin Arachide Oil 54 - 5 160 - 90 90

Societe nationale pour le developpement de lapaimeraie et des huileries (SONAPH) Palm Oil 100 64 22 51 134 141 142

Societe Generale des Moslines du Togo (GMT) Flour - - - - - - -

Building Materials Subsector

Societe des ciments du Togo (CIMTOGO) Cement 500 500 1,000 1,100 50 50 50

Societe togolaise de marbrerie et de matericum (SOTOMA) Marble 1,300 105 190 300 336 246 256Initiative togelaise (INITO) Road pavement 30 90 50 100 119 136 116

materialsSociete togolaise de beton (TOBETON) Concrete 1O0 - 25 100 - 40 40Societe togolaise do materiaux (SOTOMARIAUX) Paints 52 _ 24 80 - 40 40

Cie d'entreprise de beton vibre togolais (CEBEVITO) Prefabricated ,,, 35 36 30 42 42 41Concrete

AGGLO-TOGO Aglomerates 2,500 16 13 15 300 102 135

Chemicals Subsector

Societe Togolaise d'Entreposage (S.T,E.) Hydrocarbon 148 90 103 115 18 20 20Farfumerie JAZZAR Rodolphe Perfume 4 28 40 50 31 31 40Societe togolaise des gaz industriels (TOGO-GAZ) Industrial Gas 76 23 41 43 17 17 17

Chimique Africaine Perfume 9 34 25 20 35 35 35Societe des Allumettes du Benin (S.A.B.) Matches 142 _ 17 25 _ 25 42

Wood Subsector and Others

Societe d'Emb6llage du Benin (S,E.B.) Bottle Racks ... _ 16 128 - 5 5TOGO-METAL Furniture 12 41 42 45 86 77 77Entreprise Togelaise de Menuiserie (E.T.M.) Furniture 6 27 25 20 72 72 36Menuiserie-ebenisterie D. ANIAKU Furniture ... 13 25 18 31 32 33Menuiserie-ebenisterie SANVEE Furniture 5 8 14 21 18 43 43

Plastic and Rubber Subsector

Manufacture Togolaise des Plastiques (M.T.P.) Plastics 13 16 18 21 29 29 29Nouvelle societe de rechapage de pneus (NOSORSP) Retreading of tires 17 - 5 70 - 6 6

Source: Banque CentraIe des Etats de 1 'Afrique de 1'Quest

ANNEX 2-1Page 4

B. The Industrial Sector in the Ivory Coast

4. In Ivory Coast, the annual growth rate of the industrial sector was15%0 during 1960-74. The share of the industrial sector in GDP rose from only

4% in 1960 to 13% in 1972. Total industrial output in 1974, however, was still

relatively modest and was CFAF 254 billion (US$1,129 million) and total value

added CFAF 104 billion (US$462 million). Employment increased from 10,000

persons in 1960 to 46,000 in 1974, but was still less than 2% of the total

labor force in that year. The accumulated investment in the industrial

sector was at the end of 1972, CFAF 74 billion (US$289 million).

Main Features of Industrial Development in Ivory boast

1960 1965 1972

Value added at 1971 market prices

in billion CFAF 8.8 23.2 62.1in million US$ 34.4 90.6 242.6

Annual growth rate % 21% 15%Share in GDP 4.0 6.9 13.0

EmploymentNumber of Employees 10,000 21,000 (1966) 46,000 (1974)

Annual Growth Rate 13% 10% 8%

5. Sixty percent of the value added came from the Abidjan region, which

accounted for 11% of the Ivorian population. Another 18% came from a region

close to Abidjan. Altogether, the Abidjan area produced about 78% of indus-

trial valued added. The only other region where industry is developed is in

the central district at Bouake (about 200 km north of Abidjan), which accounted

for about 15% of value added. The San Pedro area in the southwest, in which

important infrastructure and construction activities are taking place, andwhere the Government plans to establish a cement grinding plant, still

accounted for only 1% of value added in 1970. The Five-Year development plan

of Ivory Coast forecasts, however, that 12% of industrial value added would

come from the San Pedro area by 1980.

6. All industrial subsectors except for wood products participated in

the rapid development of the industrial sector. From 1965 to 1972, traditionalindustries were the most important contributors to growth in manufacturing.

Among traditional industries, food products, textiles and footwear alone

contributed together about 50 percent to the absolute 1965-72 growth in

manufacturing value added. Food products, beverages and tobacco contributedmore to growth in manufacturing (30 percent) than any other industrial activity.

ANNEX 2-1Page 5

On the other hand, the output of wood products increased slowly showing adecrease in its share in total value added from 23.7 percent in 1965 to 8.2percent in 1972. Non traditional industries, such as basic metals products,mechanical and electrical industries, also evidenced a decline in their share.However, chemicals and petroleum products showed one of the highest growthrates among industrial subsectors. Transport equipment also grew rapidly,but this sector includes repair of transport equipment for which nationalaccount data are very dubious.

Development Patterns in Manufacturing in Ivory Coast

Share (%) Share (%) Annualin in Growth rates (%)

value added value added 1965-721965 1972

Food, beverages, tobacco 25.5 28.5 21.8Textiles 14.4 18.4 22.9Leather, footwear 1.7 1.5 17.0Wood products 23.7 8.2 1.9Petroleum products 1.7 2.6 29.1Chemicals 5.1 7.6 26.0Rubber products 1.7 0.8 6.0Building materials 0.8 3.3 44.5Basic metal products 1.7 0.3Transport equipment 13.6 18.4 24.0Mechanical and electrical

industries 7.6 6.6 16.4Others 2.5 3.8 26.0

Total 100.0 100.0 18.7

Source: National Accounts of Ivory Coast.

7. The size of enterprises vary very widely in the 408 medium andlarger scale industrial enterprises operating in Ivory Coast in January 1973.The turnover ranged from CFAF 15 million to several billion; twenty-six enter-prises had a turnover exceeding CFAF 1 billion in 1971, and their total turn-over was CFAF 62 billion (48% of industry as a whole).

8. A survey undertaken by the Chamber of Industry and covering about200 enterprises indicates that 26 firms, i.e., 13 percent of the number offirms, represent 69 percent of the turnover. Fifty-nine firms or 29 percent

ANNEX 2-1Page 6

employ 78 percent of the labor force in industry. Industry in the Ivory Coastis therefore already quite highly concentrated. However, despite the existenceof large units, enterprises are for the most part of modest size. The reasonfor this situation is that these enterprises were often initially intendedsolely to satisfy the needs of a domestic market which is limited both withrespect to the number of consumers and to its purchasing power. On theaverage, industrial enterprises in the Ivory Coast are becoming larger; in1974, industries had an average turnover of CFAF 614 million and employedon average 112 workers. In 1967, industrial enterprises had an averageturnover of CFAF 235 million and on average 102 employees. Unfortunately,the data available do not allow for the checking of changes in the degreeof concentration in the course of time and for determining, in particular,whether this concentration is due mainly to the growth of larger units.

C. The Industrial Sector in Ghana

9. In Ghana, the annual growth rate of the larger enterprises (morethan 30 employees) increased by 14% per year between 1962 and 1970, and itsshare in GDP rose from 3.8% in 1962 to 6.3% in 1970. No recent survey onsmall scale industry exists, but it has been estimated that small scale indus-try might increase the share of the industrial sector to 8-9% in that year.Total industrial employment was about 500,000 persons in 1972, which impliesthat about one out of every seven workers was employed in the industrialsector. In the small scale industries about 440,000 persons were employedand in the large scale industries about 60,000 persons in 1972.

Main Features of Industrial Development in Ghana -

1962 1966 1971

Value added at 1971 pricesin million cedis 62.5 103.3 175.4in million US$ 54.4 89.9 152.6

Annual growth rate 13% 14%Share in GDP 3.8% 6.3 (1970)EmploymentNumber of Fmployees 29,200 37,200 58,700Annual growth rate 6% 10%

1/ Data for large-scale units with more than 30 employees.

10. About 50% percent of industrial production is concentrated in theAccra capital district, although its share of total population was only 9.9%in 1970. Relatively to its share in the total population (9.0% in 1970) thewestern region also shows a significant concentration in industrial activities.Its share of value added was 27.5% in 1969. Since then, however, this area hasexperienced a decline in its value added share. Also in the AshantiRegion,

ANNEX 2-1Page 7

northwest of Accra is a concentration, of industry and its value added sharewas about 15.2% in 1969, similar to its share in total population.

11. The development of the industrial sector was not uniform since somesubsectors were more easily fostered than others. In 1962, the compositionof the industrial sector was dominated by the traditional subsector of woodproducts and by the basic import substituting activities of beverages andtobacco. Since then, the composition of value added in industry changedconsiderably and by 1973, for example, the share of value added of the woodproducts subsector had declined to 9.7% from 18.7% in 1965. On the otherhand, the share of value added of the textiles and wearing apparel subsectorin total industrial output increased from 8.9% to 16.6%. High average annualgrowth rates of output occurred in several other subsectors such as petroleumproducts, rubber products and electrical products (68.3%).

DEVELOPMENT PATTERNS IN MANUFACTURING IN GHANAShare in Value Added

1965 1973

Food 7.9 11.1Beverages 15.6 11.2Tobacco 15.9 10.7Textiles and Wearing Apparel 8.9 16.6Wood Products 18.7 9.7Furniture 2.7 1.1Pulp Paper and Printing 4.2 4.4Chemical Products 8.6 3.7Petroleum Products 3.5 10.8Rubber Products 1.7 4.1Building Materials 1.3 1.0Metal Manufacturing 6.1 12.4Electrical Products - 1.3Transportation Equipment 3.5 1.6Miscellaneous Manufacturing 1.4 0.3

100.0 100.0

ANNEX 2-1Page 8

D. Future Industrial Development in the Region

12. The industrial sector in the Region is expected to continue itsrapid growth. Some large scale industrial projects are being currentlyexecuted or studied. In Togo, an oil refinery with an annual throughputof about 1.0 million,.oi crude oil is currently under construction which isexpected to become operative by 1977. A further expansion of the miningand processing of phosphate is being studied, as is the establishment of aphosphate based fertilizer industry. In Ivory Coast. a large project toexploit the Bangalo iron ore deposit and to produce 6 to 12 million tons ofpellets is being studied, as is a project to erect a large export-orientedpaper pulp plant. In Ghana, an expansion of the alumintm smelting plantfrom 150,000 to 200,000 tons is being appraised. Moreover, production ofalumina based on local bauxite deposits is being studied.

E. The Building Materials Industry

13. The building materials industrv. not including wood, is as yetrather undeveloped in the CDIAO region. The princinal activity in thissuibsector in each of the CIMAO countries is represented by cement grindingplants, one in Togo and two each in Ivory Coast and Ghana. In Togo, onlya few plants produce building materials including bricks, marble, prefabricatedconcrete and concrete products. In Ivory Coast, 80% of the turnover of thebuilding materials industry is in the grinding plants. About 15 plants inthis subsector, which employs about 850 workers, produce bricks, prefabricatedconcrete, insulation products, cement and marble tiles. In Ghana, besides thecement produced by the grinding plants, bricks and plastic building materialsare manufactured. The share of this subsector in terms of value added wasonly about 1% in 1973.


ANNEX 2-2Page 1

TOGO/ IVORY COAST/GHANA


CIMAO - HISTORY

1. In early 1969 a proposal for a clinker project in Togo, which wouldbe sufficient to provide the clinker needs of Togo, the Ivory Coast andpossibly other West African countries, was submitted to the Bank group forreview together with a request to participate in the financing. The project,with a suggested production capacity of 1.2 million TPY of clinker, was toobtain its raw materials from a large limestone deposit near Aveta, about20 km from Lome ((Map IBRD 11686). The Governments of Togo and Ivory Coasttogether with the project's promoter, Lambert Freres, a French buildingmaterial firm, formed a company, called Ciments de L'Afrique de l'Ouest(CIMAO) to realize and operate the project. Upon review of the proposaland the limestone deposit by Bank staff and Consultants it was concluded,that because of excessive harmful components in the limestone and otherdifficulties with the deposit, as well as an inadequate market in the twoparticipating countries (Togo and Ivory Coast), the project was not likelyto be viable.

2. The search for better deposits however continued and in 1972, ahigh quality deposit of limestone, clay and sand was discovered near Tabligbo,about 80 km northeast of Lome (IBRD Map 11686). This deposit was investigatedand analyzed in detail under the promotership of Lambert Freres and the helpof Prospective Engineering Gestion (PEG), a Swiss consulting firm. Based onthe investigations of these firms, including a feasibility study and somepreliminary engineering, CIMAO decided to pursue the project further.

3. In December 1974, because of divergences of opinion on how to pro-ceed quickest with the implementation of the project, the Governments of Togoand Ivory Coast relieved Lambert Freres of its promotional role within CIMAOand took over the project's promotion themselves. Lambert Freres was, however,invited to remain in CIMAO as a shareholder in the amount of its past contri-butions of CFAF 0.33 billion. Subsequently, CIMAO chose the French cementproducer Origny Desvroise (ORIGNY) as technical assistance firm, to providecertain services during project execution and startup, including training ofpersonnel, and to extend technical and general management assistance duringthe initial five years of operations. ORIGNY also became a shareholder ofCIMAO. In Spring 1975, CIMAO called for bids to provide plant design andengineering, assistance in procurement of goods and services, and supervisionof erection, installation and commissioning of the project. It selected inaccordance with the Bank's guidelines, the UK-based cement producer and con-sultant Associated Portland Cement Manufacturers Ltd. (APCM) to provide these

ANNEX 2-2Page 2

services. Contracts between CIMAO and APCM, and between CIMAO and ORIGNYwere signed in May 1975. A second drilling campaign for optimal selectionof the process type and plant site was carried out from January to June 1975under the supervision of APCM. These tests formed the basis for the pre-paration of (i) a detailed project study, (ii) complete preliminary engineering,and (iii) tender documents for procurement of goods and services.

4. In April 1975, the ozoverrnment of Ghana joined CIMAO as a share-holder and the Company's pledged equity was increased to CFAF 10.5 billion(US%b6.5 rillion equivalent), divided according to the Statutes, as follows:

CIMAO Shareholdings

Shareholder CFAF Billion % of Shares

(i) Public

Ghana 3.222 30.7Ivory Coast 3.222 30.7Togo 3.222 30.7

Subtotal (i) g.666 91.1

(ii) "rivate

OR7IGNY 0.500 4.7Lambert Freres 0.334 3.2

Subtotal (ii) C.834 7.9

Grand total 10.500 100.0

5. In December 1975 a revised treaty was signed by the heads of thethree states and the Governments agreed to increase the Company's authorized-2pital to CFAF 19.3 billion. With the concurrence of the co-lenders interestedin the project, the Governments furthermore decided that CFNP 13.5 billionof this capital would be provided in the form of coT-mon shares while thererrainn- l'; 5.8 would be in the formr of preferred shares. It was furtherannounced that the three Governments would acquire the shares of Lambertirer . an,d that t.>e TIrori?,n grinding firr, SrA and possibly the Ghanaean grind-ing Lirn. Ghana Cerent WTorks, Ltd. wvere interested to acquire, each CiF!,' 500mil_ion -- rt;: .- o ;ic shares. With these changes the capital distributionwould become as follows:

ANNEX 2-2Page 3

Tentative Plan of CIMAO Shareholdings

Shareholder CFAF Billion % of Shares

(i) Common shares

Ghana 4.00 20.73Ivory Coast 4.00 20.73Ghana 4.00 20.73

Subtotal public 12.00 62.20

ORIGNY 0.50 2.60SCA 0.50 2.60Ghana Cement Works Ltd. 0.50 2.60Subtotal private 1.50 7.80

Total Common Shares 13.50 70.00

(ii) Preferred Shares

Togo 1.93 10.00Ivory Coast 1.93 10.00Ghana 1.93 10.00Total Preferred Shares (rounded) 5.80 30.00

TOTAL EQUITY 19.3 100.00

Industrial Projects DepartmentFebruary 1976

ANNEX 2-3Page 1



CIMIAO - LEGAL AND ORGANIZATIONAL FRAMEWORK

A. General

1. CIMAO is an industrial corporation inscribed in Togo and isgoverned by:

(i) the Regional Treaty between the Governments of Togo, IvoryCoast and Ghana, drawn up specifically for the purpose of theCI4AO project;

(ii) the Statutes of CIMAO containing its corporate by-laws; and

(iii) the Togolese Law, to the extent not inconsistent with eitherTreaty or Statutes.

Since the joining of Ghana and ORIGNY as additional shareholders, the oldTreaty between Togo and Ivory Coast and the related Statutes, both from 1970,were revised and the new versions have been signed in December 1975.

B. The Regional Treatv

2. The Regional Treaty defines the legal, organizational and fiscalframework of the Company and stipulates in particular that:

(i) the Company (CIMAO) has as principal objective to supply theentirety of the clinker needs of the participating countriesand to enable these countries' Governments to regulate theircement markets and control prices;

(ii) participation in the Company is left open to other AfricanStates;

(iii) a clinker plant of a rated capacity of 1.2 million TPY andrelated infrastructure will be established in Togo;

(iv) the participating Governments shall provide the Company withthe necessary utilities on conditions still to be determined;

(v) the Company may recruit without hindrance or limitationtechnical personnel, employees or workers, being citizens ofthe participating countries;

ANNEX 2-3Page 2

(vi) the participating States shall set up a commisssion with thetask of setting clinker prices CIF port of a participatingcountry, based inter alia, on production costs of CIMAOclinker, debt service, freight rates, and a fair return oncapital invested;

(vii) the participating Governments will grant the Company alladvantages accorded to similar enterprises and in particularrimport licenses for goods and services required, free choiceof suppliers, priority concerning the allocation of foreignexchange, and "priority status", which calls for exemptionfrom all duties and taxes during project execution and duringthe first 10 years of operation;

(viii) upon expiration of the exemption period mentioned above, acorporate tax of 35% shall be levied on the Company's pre-taxprofits. Income tax on securities shall be 10% of dividendspaid out;

(ix) depreciation, not effectively charged during the period of taxexemption as a consequence of operating losses may be deductedin relief of corporate tax over a period of 7 years, startingfrom the end of the tax exemption period; and

(x) a royalty of CFAF 100 per ton (US$0.44/ton) of the clinkerproduced in the territories of the participating states shallbe paid by the Company for the mining concession.

C. The Statutes (Company's By-Laws)

3. The statutes of CIMAO are appended to the Regional Treaty and definein detail the organizational and administrative structure of the Company. Thecharts in Annex 2-i4 and 2-5 give the-Company's organizational setup. The Companyis a mixed capital corporation in the torm of a stock corporation, set up for99 years from the date of its establishment. In particular, the statutes ofCIMAO state that:

(i) the Company shall be administered by a Board of Directors (theBoard) with a minimum number of eleven members, and with seatsin proportion to the number of shares held;

(ii) the Directors shall hold office for six years, but will beeligible for re-election.

(iii) the Board shall elect from its members a Chairman and twoVice Chairmen. These officers will be selected from amongthe directors representing the respective Governments.

ANNEX 2-3Page 3

(iv) the Board shall meet as frequently as the interests of theCompany require and whenever the Board considers it necessary.At least one-third of the Directors shall be present andresolutions shall be adopted by majority vote of memberspresent;

(v) the Board shall have the broadest powers to act on behalf ofthe Company vis-a-vis both third parties and shareholders.These powers shall include among others:

- consideration of all operations affecting the Company;

- representation of the Company;

- appointment and removal of all managers, employees,representatives and agents;

- approval and acceptance of all agreements, contracts, bids,undertakings, leases, etc.;

- establishment of annual and long term investment and opera-tional plans;

(vi) The Board shall appoint a General Manager, responsible for day-to-day management of the Company, within the limits set by the Board.The General Manager shall be assisted by a Technical Committeecomposed of at least three members, responsible for following thedevelopment of operations and making recommendations as deemednecessary for executing the Company's objectives. The GeneralManager shall submit from time to time a budget and program ofactivity to the Board for approval;

(vii) All shareholders shall be called each year by the Board to theAnnual Regular General Meeting within 5 months of the close ofthe fiscal year (January 1 to December 31). Furthermore theBoard may call Regular or Special General Meetings. RegularGeneral Meetings require a simple majority of votes, of share-holders present whereas Special General Meetings can adoptresolutions only by a two-thirds majority. Special GeneralMeetings may make amendments of any nature to the Statutesof CIMAO;

(viii) Upon recommendation of the associated States, three auditorsshall be elected for three years by the Regular General Meetings.The auditors shall verify the books, the cash position, theportfolio and the securities of the Company. Such verificationmay be performed at any time. For urgent cases, the auditorsmay call a General Meeting of the shareholders; and

ANNEX 2-3Page 4

(ix) Five percent of the Company's net profit shall be taken to forma legal reserve, which shall accumulate up to one-tenth of thecapital stock. The General Meeting, upon a motion by the Board,may decide upon the remaining sums to be carried forward or tobe transferred to reserves. The then remaining profit would beavailable for distribution among the shareholders.

4. Given the broad powers of the Board of Directors and powers of theManagement Committee, which are subject to rather wide interpretation, theefficiency of CIMAO's operations will depend to a large degree on a clearcutdelegation of authority from the Board to the General Manager and his manage-ment team, while the Management Committee should be strictly limited to assist-ing the Managing Director and his management team, without usurping theirduties. The Governments have adopted these recommendations. Effective co-operation between the Board and the Managing Director and his managementteam, is particularly important since the management team will be composedto a large extent of foreign nationls in the beginning. However, all threeparticipating countries have existing joint ventures, in which foreign man-agement teams operate successfully and at the same time responsibly trainlocal nationals to gradually succeed them. The process of reconcilingdifferences of opinion among Governments regarding the interpretation orapplication of the Regional Treaty may be somewhat lengthy particularly, ifamicable settlement by the special group of State representatives to be ap-pointed in this event fails to obtain within the specified time of threemonths. In such a case certain arbitration procedures are stipulated forsettlement in court in Geneva, Switzerland.


TOGO/IVORY COAST/GHANACIMAO - ORGANIZATION CHART (DURING PROJECT IMPLEMENTATION)

LIAISON WITH COORDINATOR FORBOARD OF DIRECTORS r GOVERNMENT INFRASTRUCTURES

| INSTITUTIONS

ADVISOR & MNGMN

COORDINATOR GENEALIMNAGE

PROJECT MANAGER

FINNC MARR K E-N ACONIG DIISO DIISO PUCASN

LOANS ADMINISTRATION MARKET RESEARCH BUDGET ACCOUNTING LINE GROUPS: LINE GROUPS: PROGRAMMINGTREASURY IMPORTS INDUSTRIAL COMPLEX CONSTRUCTION ZONES PROCUREMENTFINANCIAL PLANNING TERMINAL COST CONTROL FOLLOW-UPFINANCIAL TRANSACTIONS

STAFF GROUPS: STAFF GROUPS:ENGINEERING SPECIAL ADMINISTRATIONCIVIL/STRUCTURAL SERVICESMECHANICAL/ELECTRICAL PURCHASESCOSTS SECURITYPLANNING

World Bank-15760(R)

TOGO/IVORY COAST/GHANACIMAO ORGANIZATION CHART (OPERATION)

BOARD OF DIRECTORS

GENERAL MANAGER MANAGEMENT COMMITTEE

ADMINISTRATIVE MANAGER ~~~~~~PLANT MANAGER

F INNEMARKETN ACUTNG OEAINTNSRTADMNSRTO

LOANS ADMINISTRATION MARKET RESEARCH BUDGET ACCOUNTINGTREASURY IMPORTSFINANCIAL PLANNINGFINANCIAL TRANSACTIONS RAIL/ROAD TERMINAL SHIPPING

I I I I QUARRY PLANT MAINTENANCE LABORATORIES PERSONNEL ACCOUNTING SERVICES

World Bank-1 5759(R)

ANNEX 3-1Page 1



WORLD CLINKER/CEMENT TRADE

A. General Considerations

1. World production and consumption of cement have increased at arapid rate since the 1950s. Total world production was 130 million tons in1950 and reached 699 million tons in 1974. A particularly large increase(9% per year) took place between 1950 and 1960, the years of Europe'sreconstruction after the second world war. Since then, the pace of theincrease slowed to about 6% between 1960 and 1974. Average per capitaconsumption in the world has also risen considerably, from 50 kg in 1950 to172 kg in 1974. In Africa (not including South Africa) cement productionincreased from about 2 million tons in 1949 to 15.3 million tons in 1973and consumption from 3.6 million tons to 20.8 million tons. During the period,Africa's share in world production increased from 1.7% to 2.2% while its sharein world consumption decreased slightly from 3.1% to 3.0%. Its per capitaconsumption of cement at 54 kg is still very low.

2. The intermediate commodity, clinker, and the final product, cement,are both low value commodities which are expensive to handle and to trans-port. The typical raw materials, limestone, clay and sand, are abundant inmost parts of the world. Therefore, cement production facilities havenormally been established as close as possible to major consumption centersand cement and clinker have historically not been traded in large quan-tities across national boundaries. The following table indicates the rela-tionship between total world cement production and quantities traded inter-nationally.

World Production and International Trade of Cement(in million tons)

Total International International TradeWorld Cement Trade as % of Total World

Region Production (Exports) Production1950 1960 1974 1950 1960 1974 1950 1960 1974

Europe excl. USSR 57.7 122.3 265.6 6.8 6.6 17.6 11.8 5.4 6.6USSR 10.2 45.5 115.0 - 0.3 3.6 - 0.7 3.1Africa 4.1 8.8 22.6 0.1 0.8 1.7 2.4 9.1 7.5Western Hemisphere 48.3 76.6 128.6 0.6 0.7 4.1 1.2 0.9 3.2Asia 11.2 57.4 161.0 0.6 2.8 9.0 5.4 4.9 5.6Oceania 1.5 3.4 6.5 - - 0.2 - - -

Total World 133.0 314.0 699.3 8.1 11.2 36.2 6.10 3.6 5.2

ANNEX 3-1Page2

3. A typical European cement factory, for example, supplies a marketwithin a radius of only about 100 to 200 km, depending on the proximity of thenext factory, and relatively few engage in exports. Those which do exportclinker or cement, usually base more than half of their capacity on more assuredlocal consumption and must normally have distinct natural advantages in orderto be competitive in export markets. Their advantage must include a locationclose to deep water facilities, low quarrying costs, subsidized utilities, etc.Thus, large European exporters of clinker to Western Africa and of cement andclinker to the United States operate plants which can charge directly intoocean-going vessels (e.g. Brevik, Norway; North Fleet, UK; Bayonne, France;Barcelona, Spain; Athens, Greece). Irregular exports (spot market deals) aresometimes made from less advantageously placed plants during times of stronglocal oversupply, but these are typically small lots of bagged cement whichneed no special handling equipment at the exporting or importing end.

4. Clinker and cement imports occur for the following major reasons:

(i) The main raw material, limestone, does either not existlocally or known deposits do not warrant commercialexpLoitation. Thlis is the case in many West Atricancountries, wnich accordingly nave to rely on importsto meet thelr cement demand.

(ii) rhe sudaen rapid economic development ot a country causesan unexpected growth ot demand tor cement, out-pacing thebuildup ot production capacity In that country. lypicalexamples are Nigeria, Algeria and Indonesia, which duringtne latter part ot the 1970s, will have to import severalmilion tons o± cement annually before local capacityincreases sutticiently. Also, it takes at least 4 yearstrom plant conception to startup, and often another yearor two to achieve full production.

(iii) The oujective ot exactly equating supply and demand willalmost never be achieved in a country. Forecasting demandaccurately is a difficult matter and to adjust productioncapacity according to actual demand is virtually Impossiblein the short run. Thus temporary imbalances result inexporu or import ot small quantities, typically as spotdeals.

(iv) Some international trade occurs between plants locatedclose to a national border with major consumption centersin the other country. Typical examples are plants alongnational borders in Western Europe, where import dutieshave been virtually removed within the framework of theEEC.

(v) Small quantities of cements with special characteristicsare traaed trequently. These include white cement, oil-

ANNEX 3-1Page 3

well cement and sulphur resistant cement. Productionof these is limited to plants with access to particularlysuitable raw materials or to plants with special know-how.

(vi) A fairly recent development has been the extensive importof large quantities of cement and clinker into the UnitedStates, where a partly obsolete industry is facing heavypenalties if it does not comply with stringent ecologicalregulations. Given U.S. cement standards, which are makingcompliance with these regulations particularly difficult,many companies refrained from investing in new facilitiesand shut down existing plants. As a result heavy importshave been required during the early seventies and areforecasted to recur as the economy recovers.

5. Three different basic types of clinker/cement movement are known:(i) bagged cement trade; (ii) bulk cement trade; and (iii) clinker trade.Historically, bagged cement has been the predominant type. However, withincreased labor, paper and handling costs and considerations of pilferageand spillage, bulk movements have seized an ever-increasing share of themarket since about 1960, particularly in industrialized countries. Clinkermovements have been rather limited, since normally plants incorporate bothclinker production and cement grinding facilities. Only in cases where longdistances had to be covered, or where no limestone was available at the givenconsumption area to produce cement locally, did transport economics favorclinker over bagged cement. This of course does also require installation ofa grinding plant at the receiving end, involving duplication of some of thefacilities and services normally existing in a cement plant, such as storage,workshops, laboratory, car parks, as well as maintenance and administrativeservices, etc. The additional investments, however, can normally be offsetby lower transport and handling costs and almost no losses from pilferageor spillage. Today the minimum distances from which clinker transport iseconomic have increased substantially due to the trend to ship cement inbulk. Bulk movements of cement are, however, precluded where normal climaticconditions cause clogging of handling and storage equipment. A typical casein point is Western Africa.

6. In international trade, bagged cement still predominates, evenwhere maritime shipping is involved. Major consumers are now, however, tobe found among developing countries of the OPEC group. Given their lack ofinfrastructure facilities such as specialized quays with bulk handling andstorage facilities, these countries are forced to receive cement imports inbags despite particularly high shipping and handling costs and very high paperbag prices (furthermore, for export 5 or even 6 ply bags are typically usedto withstand handling strain, whereas locally 3 or 4 ply bags are common).

7. Where labor is expensive, where investment capital is readily avail-able and where ports have sufficient capacity, the trend is, however, towardsbulk handling facilities. Thus, much of the cement imported into the US is in

ANNEX 3-1Page 4

the form of bulk shipments. However, to date bulk shipping space is expen-sive, as bulk cement requires specialized ships, few of which yet exist.With the shift from bagged to bulk cement movement bulk shipping rates arebound to decline, further favoring this mode.

8. International trans-oceanic clinker trade is basically confinedto regular long-term contracts as the importer needs to have appropriate portand grinding facilities. Classical clinker importers are most countriesalong the West African coast from Liberia to Cameroon. Spot trades arerare, and ozaly occur, for example, where cement plants close to a port havea sudden operating problem in the clinker production line, but want to operateexisting grinding facilities in order to satisfy local demand for cement.WIhere this problem is of a longer, foreseeable duration, the importer willattempt to enter into term contracts rather than spot deals, as both FOBclinker price and shipping rates will be more favorable. This actuallyoccurred in the United States, where some clinker production facilities wereshut down for the reasons cited above, but where grinding facilities remainedoperable.

9. There is some difference of opinion as to whether the favorableeconomics of cement trade will also gradually eliminate clinker trade. Com-paring the two trades, clinker has in its favor lower shipping costs, lessspecialized handling equipment, substantially lower storage costs and lastbut not least, local employment generation. On the other hand, in the caseof bulk cement shipment some duplication of facilities and services can beavoided so that investment costs as well as operating costs for the finishedproduct (excluding transport and handling costs) are lower. This kind ofcost benefit exercise would have to be carried out for each particular caseto take account of all locally important factors. Where grinding plantsalready exist, there is no question about the advantage of importing clinker.Finally in countries with an extremely humid climate, handling and storingof large bulk quantities of cement may be technically difficult to achieve.Examples are Western African countries and Middle America.

B. Domestic European Prices

10. The extent of Government regulations varies considerably from countryto country but particularly steep price rises were authorized after the many-fold increase in fuel and energy prices in 1973, in just about every country.The following table sets out price indices for cement in some European coun-tries since 1970 and gives 1975 prices:

ANNEX 3-1Page 5

Cement Price Indices (1970-75) and 1975 Cement Prices inSelected European Countries

1975 Prices(per ton, bulk, ex-works)

1970 1971 1972 1973 1974 1975 Local Currencies US$ Equivalent

France 100 111 119 121 146 180 FF 121.04 26.89 /1Germany 100 109 109 109 121 132 DM 90.60 35.53 /2Norway 100 111 111 111 136 171 KR 208.10 38.68 /3Spain 100 104 104 107 111 134 P 1,158.00 19.93 /4England 100 131 131 131 131 208 i 14.78 31.72 /5

Source: Syndicat National des Fabricants de Ciments et de Chaux, Paris.

/1 1 US$ = 4.50 FF/2 1 US$ = 2.55 DM/3 1 US$ = 5.38 KR/4 1 US$ =58.11 Ptas/5 1 US$ = 0.466 i

11. Depending on government regulations prices show wide variations asto their price bases (transport and handling not, partly or fully, included).Furthermore, different price levels reflect factors such as different taxes,subsidies on fuel, cost of labor, etc. Nevertheless the trends are similarand are upward. The current experience of low demand for cement in Europeand North America shows quite clearly that producers will rather cut produc-tion than prices. In fact some of the producers pointed to the dramaticincrease in prices for plant equipment and machinery over the last few yearsand indicated that these were not yet adequately reflected in current cementprices as these were mainly based on the costs of plants built in the 1960s.Eventually, increased capital charges resulting from the expensive new equipmentmust find their way into higher cement prices.

12. Domestic clinker prices are nonexistent as domestically clinkeris not traded.

C. European Export Prices

13. It is difficult to establish a "world market price" for cement(bagged or bulk) or clinker. Usually prices obtainable are CIF prices whichcontain four different elements:

(i) ex-plant export price;

(ii) transport charges up to and handling charges at exportingport;

ANNEX 3-1Page 6

(iii) maritime freight;

(iv) demurrage charges at receiving port, but not handlingcharges.

While ex-plant price, transport and handling charges at both ports depend onparticular local conditions and can vary considerably from place to place,freight charges are extremely volatile and depend on such factors as generalsituation of the price market, backhaul cargo availability, vessel type andsize, distance between ports, etc. Nevertheless, the CIF price must becompetitive to the various potential suppliers; therefore the sum of the fourelements is similar at a given place and time, although there may be consid-erable variations within each element between different suppliers.

14. Another important consideration for the export pricing is the typeof trade. Spot trading is much more prone to be dictated by pricing rulesof supply and demand; marginal pricing to cover just operating costs and somemargin to contribute towards fixed charges can be applied, particularly ifthis will rid the exporting plant of some surplus stock (dumping). Spottrading is, however, practically confined to bagged cement, as no particularfacilities are required to handle or ship it.

15. Long-term contracts which assure a steady supply to the consumer,typically involve suppliers specializing in exports, particularly when con-tracts are for large annual quantities. Thus prices under these contractstend to cover full costs of exporting plants (including depreciation andfinancial charges) and tend to remain stable. Shipping rates are more stable,because of long-term arrangement for shipping as well. This holds true forclinker and bulk cement shipments, and to some extent for large quantitiesof bagged cement imports. Nevertheless the CIF prices have to be very compe-titive as often procurement of the contracts is done by international compe-titive bidding, both on FOB and CIF basis.

16. In order to get a clearer idea about export prices it will helpto establish operating and exfactory costs for "typical" European plants, oldand new. The typical "old plant" is a dry process plant, built in the mid-1960s, with a kiln capacity of about 1,500 to 2,000 TPD. The typical "newplant" is being built now, with 3,000 or more TPD kiln capacity (dry process).The following table, expressing costs in mid-1975 US$, shows total operatingcosts (consisting basically of fuel oil, power, materials, spares and labor),selling and administrative costs and assumed charges for depreciation andfinancing of investment.

ANNEX 3-1Page 7

Average Production Costs for TypicalEuropean Cement Plants (1975 US$)

Cost per Metric TonOld Plant New Plant

Cement Clinker Cement Clinker

Total Operating Costs 16.5 to 17.0 14.5 to 15.0 12.5 to 13.5 10.5 to 11.5Selling and Admin. Costs 1.3 to 1.5 1.1 to 1.3 1.3 to 1.5 1.1 to 1.3Depreciation 2.7 to 3.3 2.5 to 3.0 9.2 to 9.8 8.5 to 9.0Financial Charges 1.7 to 2.2 1.5 to 2.0 5.0 to 5.5 4.5 to 5.0

Total 22.2 to 24.0 19.6 to 21.3 28.0 to 30.3 24.6 to 26.8

17. Current FOB-European export prices for clinker vary between US$22.00and 24.00 in 1975 dollars. If the ex-factory cost of a plant being builttoday were considered, however, one would arrive at a total cost of US$24to 27, to which profit would have to be added. This higher price is due todepreciation and financial charges for vastly more expensive new equipmentand machiLnery. Eventually, these increases will be reflected in currentprices. The European companies having at this moment a large proportion ofold plants, arrive at averages for plant costs which are definitely lowerthan those for new plants. However, this will be a temporary phenomenon duringthe next few years, until these firms will have replaced their old capacitiesby new equipment. Thus the forecasted clinker price, expressed in real 1975terms is assumed at US$25 for the first three years of operations and pricesare expected to increase by 1% per year in constant prices from then on as aresult of the coming onstream of new high capital cost cement and clinkerplants.

D. Maritime Freight Rates

18. Although normally only CIF prices are quoted by cement exportersand the exporting firm secures maritime transport capacity the cost of ship-ping depends on the type of shipping arrangement that is being chosen. Basic-ally three possibilities are in use if full ship loads are to be carried:(i) voyage charter; (ii) time charter; and (iii) own vessel. The voyagecharter provides the charterer with a vessel for a particular voyage from onedesignated port to another one. Delays from bad weather, navigational hazardsand the like are under the responsibility of the shipowner. However, waitingtime for a berth space in the loading or discharging port are to be paid bythe charterer in the form of demurrage. The time charter provides the chart-erer with a vessel for a specified time period, which could range even overseveral years. It may include a buy-option. Bad weather delays or the likeare the responsibility of the charterer. The shipowner is only responsiblefor the seaworthiness of his vessel. If the exporter has full use of a vesselbut does not want the burden of ownership, a time charter rate is recommended.The third possibility, ownership of the vessel, would require that the exporterhas sufficient use for the vessel, as well as experience in operation andmaintenance of vessels. The following paragraphs give some indication about

ANNEX 3-1Page 8

rates and various shipping arrangements. Obviously, for particularly ship-ping requirements, specific cost benefit analyses must be carried out to findthe optimum solution.

19. Maritime freight rates for bagged cement vary considerably withthe overall freight market and may include a high percentage of demurrage,stevedoring, etc. As an example, the range, depending foremost on tonnageshipped and momentary freight market conditions, varies between US$20 and 30per ton of bagged cement between Europe and Lagos, Nigeria. To this ademurrage charge of US$3,000 to 3,500/day for a 10,000-ton vessel must beadded per waiting day in the ports which would add US$0.30 to 0.35 per metricton and per waiting day. Currently ships in Lagos can wait 100 days and more.

20. Bulk shipments for bulk cement and clinker, which are carried outin the context of large long-term contracts (regular supply of a deficitaryregion or a country without a clinker production possibility), are shippedunder long-term shipping contracts as well. They may be voyage or timecharters depending on the volume, route and backhaul cargo possibilities.The shipowners nowadays are large organizations owning a fleet of specializedbulk carriers sometimes with own handling gear (cranes for clinker unloading)on board. As an example, voyage charter rates between European and WesternAfrican ports for clinker vary, between US$8 and 12 per ton for vesselsbetween 18,000 and 25,000 tons. These rates are based on contracts whichwere concluded at the end of 1974. Despite the current oversupply in thegeneral maritime shipping market, there is a sustained demand for the smallspecialized bulk carrier which has access to virtually every important portin Western Africa and Middle and South America. Therefore the owners haveno problems to find backhaul cargo, such as iron ore, bauxite, phosphate,potash, etc. Carriers for bulk cement need special design because of thedusty nature of the cargo. It has been assumed that the average long-termfreight rate in 1975 terms for shipping clinker would be US$10 per ton. Theexpected CIF price West Africa of imported clinker would be US$35 per tonaccordingly during the first years of operations and increase slowly as men-tioned in paragraph 17.

21. Ownership of vessels for cement companies inexperienced in operatingand maintaining vessels, is a difficult venture. Unless a firm has duringsome time engaged in time charters, and unless it would employ the vesselson well defined regular services with backhaul possibilities, this firm willbe better off getting voyage or time charters instead of owning vessels.Only once the firm has reasonable experience gathered through the timecharter business it should, in a careful study, weigh the costs and benefitsof acquiring vessels alternatively to time chartering.


ANNEX 3-2Page 1


CIMAO REGIONAL CLINKER PROJErT

TIE MARKET IN WESTERN AFRICA

A. Supply of Cement in Western Africa

1. Production Facilities

1. Of the 21 coumtries belonging to Western Africa (Map IBRD 11921),only 8 have own cem.ent production facilJties frorm quarry to clinker to readycement. The follcwing table shows countries, plant locations, capacitiesand production in the last 5 years:

Complete Cement Plants in Western Africa

TheoreticalPlant Capacity Production

Country Location in 1974 1970 1971 1972 1973 1974…(000 TPY) -- - --------(000 Tons)- -------

1. Angola Lobito 130Luanda 600

Total Angola 730 446 530 624 768 780

2. Cameroon Figuil 50 - 28 35 68 70 /1

3. Congo Cidolou 80 92 102 84 69 70

4. Mali Diamou 50 36 37 42 49 55

5. Niger Malbaza 35 32 23 30 33 19

6. Nigeria Calabar 100Ewekoro 600Nkalagu 460Sokoto 100Ukpilla 150

Total Nigeria 1,410 630 675 1,124 1,222 1,208

7. Senegal Rufisque 300 240 241 336 296 330

8. Zaire Kinshasa 70Kinshasa 280Lobudi 290

Total Zaire 640 428 456 477 560 621

Total Western Africa 3,295 1,904 2,092 2,752 3,065 3,153

Source: Cembureau and local sources/1 Estimate.

ANNEX 3-2Page 2

2. Plant sizes in the different countries vary from very small 35,000TPY in Niger to modern large-sized 600,000 TPY in Nigeria and Angola. Plantefficiency varies considerably but shows an improving trend over the period.Given the huge area covered by Western Africa, production capacity appearsvery small, particularly if compared to a country like Egypt, which currentlyhas a production capacity of about 3.9 million TPY.

2. Clinker Grinding Plants

3. A major reason for the small number of integrated production plantsin Western Africa is the lack of suitable limestone deposits. The next bestalternative for many of the countries was therefore to install clinker grind-ing plants. The following table shows grinding plants (location and capacity)in the different countries and cement quantities produced in these plantsduring the last five years. Obviously ease of importing clinker was importantand thus all grinding plants (except for those in Zaire) are located adjacentto deep sea ports.

Clinker Grinding Plants in Western Africa

TheoreticalPlant Capacity

Country Location 1975 1970 1971 1972 1973 1974

(000 TPY) ------------(000 Tons)----------

1. Cameroon Douala 120 40 120 130 125 142 /3

2. Benin Cotonou 200 16 103 112 122 130

3. Gabon Libreville 50 30 42 53 63 57

4. Ghana Takoradi 400Tema 400

Total Ghana 800 435 504 412 374 513

5. Ivory Coast Abidjan 2 x 500 438 445 600 662 665

6. Liberia Monrovia 80 91 91 90 112 84

7. Nigeria Apapa 60 /I - - - - -

8. Togo Lome 130 - 48 117 118 128

9. Zaire Kinshasa 60 /2 - - - - -Kakontwe 14 77 - - - - -

Kisangasi 180 7T - - - - -Total Zaire 254

Total Western Africa 2,694 1,050 1,353 1,514 1,576 1,719

Source: Cembureau and local sources.

/1 Stopped operating./2 Clinker Locally supplied./3 Estimate

ANNEX 3-2Page 3

3. Clinker and Cement Imports

4. In order to satisfy the excess demand over local production ofcement from local limestone, large quantities of clinker (for supply of thegrinding plants) or finished cement had to be imported. Import figures werenot available other than lumped for both clinker and cement. Although oneton of cement is equivalent to only 0.95 ton of clinker, the following tablewhich shows import quantities into Western Africa is sufficiently accuratefor this purpose.

Imports of Cement and Clinker into Western Africa

Country 1970 1971 1972 1973 1974-------- (000 Tons)------------

1. Angola n.a. 6 6 6 52. Cameroon A 136 137 170 158 2133. Central African Republic n.a. 23 15 15 124. Chad n.a. 11 12 16 105. Congo 17 22 6 15 206. Benin /1 33 100 110 110 967. Gabon 71? n.a. 60 70 29 408. Gambia n.a. 11 26 16 199. Ghana /1 433 530 383 376 52310. Guinea n.a. 50 60 65 7011. Ivory Coast /1 449 396 525 609 66612. Liberia /1 73 105 74 111 7013. Mali n.a. 21 18 3 314. Mauritania n.a. 15 18 20 2315. Niger n.a. - - 1 116. Nigeria 458 930 680 701 1,01317. Senegal n.a. 3 45 24 118. Sierra Leone n.a. 59 71 93 6319. Togo /1 86 100 164 90 9120. Upper Volta 22 33 35 18 1421. Zaire n.a. 45 14 - -22. Others /2 n.a. 71 80 80 70

Total Western Africa n.a. 2,728 2,582 2,556 3,023


/1 Mostly clinker imports./2 Guinea-Bissau, Equatorial Guinea, Former Spanish Sahara.

ANNEX 3-2Page 4

4. Clinker and Cement Exports

5. Only very few Western African countries were able to export surplusproduction. Again statistics were only available on a basis of lumped clinkerand cement quantities.

Exports of Clinker and Cement from West African Countries

Country 1970 1971 1972 1973 1974

1. Angola n.a. 86 148 272 2052. Ivory Coast 26 27 31 47 683. Senegal 68 59 85 63 924. Zaire n.a. 16 27 43 53

Total Western Africa n.a. 188 291 425 418


6. It is to be noted that only the exports of Angola, Senegal andZaire are based on complete clinker/cement production, whereas Ivory Coastexports are based on imported European clinker, ground to cement in Abidjan.Minor quantities of cement were furthermore shipped from Cameroon to theneighboring landlocked countries and from Ghana, Togo and Benin to UpperVolta, Niger and Nigeria. Accurate statistics are difficult to obtain.These quantities were also based on locally ground imported clinker. Allexports of cement, however, remained in Western Africa.

B. Apparent Consumption

7. Based on the above statistics, the apparent consumption of theWestern African Countries was computed for the last five years. Correctionswere made to account for the clinker/cement weight ratio and for changes instocks. Therefore some of the figures will be found not to coincide exactlywith given figures for production, imports and exports.

ANNEX 3-2Page 5

Apparent Cement Consumption in Western Africa

Country 1970 1971 1972 1973 1974

1. Angola 372 471 522 570 5802. Cameroon 142 132 187 225 2133. Central African Republic 15 27 30 15 124. Chad 11 12 16 105. Congo 24 104 90 84 906. Benin 83 100 115 123 1307. Gabon 61 62 73 84 978. Gambia 15 11 26 16 199. Ghana 443 508 412 374 520

10. Guinea 35 50 60 65 7011. Ivory Coast 427 418 586 624 62912. Liberia 94 93 91 92 8813. Mali 40 58 60 52 5814. Mauritania 12 /2 15 18 20 2315. Niger 32 23 30 31 2016. Nigeria 1,111 1,624 1,814 1,923 2,22217. Senegal 174 185 250 233 24118. Sierra Leone 64 59 71 23 6319. Togo 86 95 116 118 12920. Upper Volta 22 32 30 18 1421. Zaire 422 486 464 517 56822. Others /i 16 /2 71 80 80 70

Total Western Africa 3,690 4,635 5,137 5,303 5,866

Source: Cembureau and local sources

/1 Guinea-Bissau, Equatorial Guinea, Former Spanish Sahara.77 Estimate.

8. From these statistics it can be seen that the percentage of localproduction in complete clinker/cement plants amounted to only 52% in 1970 andgrew to 54% in 1974. Clinker imports and resulting cement production accountedfor 28% of total consumption in 1970 and 29% in 1974 respectively. The re-mainder (20% of total consumption in 1970, 17% in 1974) had to be importedin the form of finished cement (bagged) at rapidly rising prices.

ANNEX 3-2Page 6

C. Demand for Cement in Western Africa

1. Historic Demand

9. Paragraph 8 shows the actual consumption of cement in WesternAfrica during the past five years. The table on the next page shows, forthe year 1972, Western African cement consumption per capita and per unit ofGNP (tons of consumption per million US$ equivalent of GNP). That tablecontrasts the data for Western Africa with some Mediterranean and otherEuropean countries. Only two countries (Gabon and Ivory Coast) reached acement consumption per capita of over 100 kg per year while in industrialcountries, the consumption is between 500 and 950 kg/capita. The data showsfurthermore that countries with extremely low GNP per capita also have thelowest cement consumption per capita. Particularly the landlocked countriesof the Sahel region fall into that category. The average values of GNP percapita and cement consumption per capita for Western Africa (US$160 per capitaand 33 kg of cement per capita) are heavily influenced by the big country,Nigeria. However, while with the exception of Gabon there is relatively littlevariation around the average GNP/capita value (46% and 144% below and abovethe average), there is a much larger variation around the average cementconsumption per capita (479% and 349% below and above the average value).That relationship confirms the theory, that the elasticity of demand forcement is rather high for countries with low GNP per capita. (In countrieswith high GNP figures, on the other hand, the elasticity of demand forcement is around 1.0.) Expressed differently, growth rates of GNP in verypoor countries are by far exceeded by growth rates for cement demand.

ANNEX 3-2Page 7

Cement Consumption in 1972 in Relation toPopulation and GNP in Western Africa

/1GNP-' Cement Consumption

At MarketPrices Per Per Per Per Unit

Country Population /1 Capita Capita Total Capita of GNP(000) (US$ Million)(US$) (000 Tons) (kg/ (Tons/

capita) $ Million)

1. Angola 5,644 2,210 390 522 93 2362. Cameroon 6,084 1,230 200 187 31 1523. Central African

Republic 1,673 260 160 30 18 1154. Chad 3,780 320 80 12 3 385. Congo 1,151 340 300 90 78 2656. Benin 2,860 300 110 115 40 3837. Gabon 494 440 880 73 148 1668. Gambia 377 50 140 26 69 5209. Ghana 9,086 2,700 300 412 45 15610. Guinea 5,100 440 90 60 12 13611. Ivory Coast 5,400 1,840 340 586 108 31812. Liberia 1,617 410 250 91 56 22213. Mali 5,260 400 80 60 12 15014. Mauritania 1,210 210 180 18 15 8615. Niger 4,250 400 90 30 7 7516. Nigeria 69,524 9,350 130 1,814 26 19417. Senegal 3,990 1,050 260 250 63 23818. Sierra Leone 2,727 520 190 71 26 13719. Togo 2,052 330 160 116 56 35520. Upper Volta 5,613 400 70 30 5 8821. Zaire 19,091 1,920 100 464 24 24222. Others /1 869 200 230 80 92 400

TotalWestern Africa 157,852 25,320 160 5,137 33 203

/1 World Bank Atlas 1974.

As a comparison following are some ratios for countries with higher GNP/Capita, also for the year 1972:

ANNEX 3-2Page 8

Cement Consumption in 1972 in Relation to Populationand GNP in Selected Companies

Cement ConsumedCountry GNP per Capita Per Capita Per Million US$ GNP

(US$) (kg) (tons)

Egypt 240 87 362Turkey 370 196 530Algeria 430 123 286Yugoslavia 810 305 376Spain 1,210 548 457Greece 1,460 625 428Switzerland 3,940 943 239

10. In most of the West African countries the existence of black marketprices for cement, far exceeding the regulated price, indicates that theactual demand is much higher than the apparent consumption. Import restric-tions due to problems in foreign exchange (Ghana) or simply due to physicalconstraints, such as sufficient port infrastructure (Nigeria) have held actualcement consumption artificially low.

2. Future Demand

11. The above table and considerations suggest a strong demand potentialfor cement in Western Africa with rising GNP. Even, if only moderate growthrates of GNP were achieved, cement consumption will grow rapidly. Particulargrowth will occur in the large countries such as Nigeria and Zaire. It isexpected that over at least the next 10 years, demand in these countrieswill grow at rates around 15%. Other countries willachieve moremodest growth rates, which can, however, be expected to be about 10% onthe average.

3. Future Demand/Supply Balance

12. It is difficult to obtain information regarding the planned cementproduction capacities (integrated plants and grinding plants) in the variousWestern African Countries for the next 10 years. Nevertheless an attemptto find out about future capacities up to 1980 yielded the following table:

ANNEX 3a2Page 9

Planned Production Capacity in Western Africaup to 1980

(a) Complete Plants:

Country Existing in 1974 Planned (000 TPY) Total by 1980

1. Angola 730 400 (Extension) 1,1302. Cameroon 50 - 503. Congo 80 - 80 1/4. Benin - 500 (Onigbolo) 5005. Mali 50 - 50 1/6. Niger 35 - 35 I/7. Nigeria 1,410 730 Ashaka

640 Shagamu600 Yandev300 Calabar Ext.240 Ewekoro Ext.290 Nkalagu Ext.

2,800 4,210

8. Senegal 300 1,000 for exports 1,300mainly

9. Zaire 640 300 Kinshasa 94010. Others - - -

Total Western Africa 3,295 5,000 8,295

Togo-CIMAO clinker plant (capacity 1.2 million) has not been included as itwould supply some of the following grinding plants.

(b) Grinding Plants:

Country Existing in 1974 Planned (000 TPY) Total by 1980

1. Cameroon 120 120 (Extension) 2402. Benin 200 - 200 1/3. Gabon 50 - 50 Ti4. Ghana 800 200 + 400 (Extsn.)

1,000 + 1,2005. Ivory Coast 1,000 150 + 250 (San 1,150 * 1,250

Pedro)6. Liberia 80 - 80 1/7. Nigeria 60 - 60 T/8. Togo 130 130 (Extension) 1309. Zaire 254 - 25410. Others - _ _

Total 2,694 600 + 900 3,164 + 3,464

(c) Grand Total"Production"Capacity 6,000 5,600 + 5,900 11,500 + 11,800

Source: Cembureau, Cement Manufacturers, local sources.1/ Estimate

ANNEX 3-2Page 10

13. On the other hand, demand for Western Africa has been forecast,conservatively, as follows:

Cement Demand Forecast until 1980 in Western Africa

Country Consumption Estimate Estimate Growth Rate1974 1975 1980 1974 to 1980

Nigeria 2,222 2,590 5,210 15%

Zaire 568 635 1,120 12%

Others 3,076 3,400 5,450 10%

TotalWestern Africa 5,866 6,625 11,780 12%

The shown growth rates for Nigeria and Zaire take into account the heavyinvestments into infrastructure and industry. The growth rate of 10% forthe remaining countries is conservatively based on a low expectation forgrowth rate developments in cement consumption, from 1975 to 1980. The con-sumption growth rate has been 11% on the average in these countries duringthe past four years (1970 to 1974).

14. Provided that all the forecast projects would realize until 1980and reach full production capacity in that year, Western Africa would stillhave to import substantial amounts of clinker and even bagged cement. Clinkerimports would have to amount to about 2 million tons (taking into account 0.9million tons production in CIMAO, and use of gypsum and pozzolana by grindingplants). According to the conservative forecasts that would still leave ashortfall of 500,000 tons to be covered by imports of bagged cement. Actuallythis quantity can be expected to be higher, as not all production and grindingplants will work at full capacity.

Industrial Project DepartmentMay 1976

ANNEX 3-3Page 1



THE REGIONAL MARKET OF CIMAO

A. The General Market Data

1. As discussed previously, within Western Africa the CIMAO plant inTogo will provide for the needs of clinker of the three shareholding countries:Togo, Ivory Coast, and Ghana. The three countries, using their own grindingplants located in the major ports 1/ will grind the clinker to cement forlocal consumption.

2. Benin, which also has its own grinding plant in Cotonou, could bea potential customer; however, it has plans to build a cement plant inOnigbolo, with a capacity of 0.3 to 0.5 million TPY and with Nigerian parti-cipation. Nigeria for the next 10 years is expected to have a demand forcement far outpacing its own supply. This could be another potential marketfor the CIMAO plant. Finally CIMAO clinker might be able to provide grindingplants in Liberia or Cameroon in spot deals of small quantities. However,the demand of the basic regional market, as defined above is expected tooutpace CIMAO's supply from the first stage of operations; therefore, thepotential markets provide only a further guarantee that CIMAO in all circum-stances will be able to market its clinker.

2. Some Data of the Region

3. The following table provides some data regarding the three coun-tries forming part of the regional market.

Population in 1973 DensityArea Total Number Growth Rate 2 Per km' of

(000 kmL) (million) (%) Per km Arable Land

Togo 56.8 2.1 2.7 (1960-73) 36 55Ivory Coast 323.8 5.9 3.8 (1960-73) 19 n.a.Ghana 238.6 9.3 2.6 (1960-73) 39 n.a.

Total 619.2 17.3

1/ Lome, Abidjan, Tema, Takoradi.

ANNEX 3-3Page 2

B. Supply ot Cement

1. Integrated Cement Plants

4. As mentioned previously, up till now none of the four countriesinciuaed in the basic regional market, has integrated cement tactories;insteaa clinker is imported and witn additions of small quantities of gypsum,ground to cement.

2. Clinker Grinding Plants

5. The grinding plant of Togo is located some 1.5 km from the port ofLome. The company, operating there since 19/1, CIMENT du TOGO (CIMTOGO),with a share capital ot CFAF 140 mlliion is owned 50% by the Government and50% by the French firm LamDert Freres & Cie. Its capacity is nominally108,000 TPY t1J tons per hour). But the plant currently grinds a mix ofclinker (797.), pozzolana (17%) and gypsum (4%), which, coupled with a higherplant utilization than 30U days/year, permits an output of about 130,000 TPY.Its production capacity will be doubled during 1976.

6. In the Ivory Coast, there are two grinding plants, both at Abidjanclose to the port and both have a production capacity of 500,000 tons cementper year:

(i) Societe Ivoirienne des Ciments et Materiaux (SICM),which is currently 100% owned by the French firmCiments d'Origny, although the Government is nego-tiating to acquire about one-third of SICM sharesin the near future.

(ii) Societe des Ciments d'Abidjan (SCA) the shares ofwhich are distributed as follows:

Government of Ivory Coast 49

Compagnie Foncieres des Charbonnagesde Dakar (CFDC - French and Senegalese) 25

Lafarge (French) 7

Societe Ouest Africaine des Ciments(Sococim - French and West African) 7

Vicat (French) 7

Societe Commerciale Ouest Africaine(SCOA - French and West African) 5

100

ANNEX 3-3Page 3

The Government ot Ivory Coast is planning the erection of a grinding plantwith an initial annual production capacity of 150,000 ton cement to be locatedin San Pedro, 600 km east of Abidjan.

7. In Ghana there are two grinding plants, one near the port of Temaand the other near the port of Takoradi; both are owned by the Ghana CementCo., Ltd, and both have a production capacity of 400,000 tons cement per year.The company is owned 75% by the Ghanaian Government and 25% by NORCEM, aNorwegian cement producer with three large plants in Norway.

3. Government Regulations and Pricing System

8. CIMTOGO, the grinding plant at Lome in Togo, is free to importclinker. No special import license is required for clinker imported fromEEC countries, but imports from countries outside the EEC do require alicense. CIMTOGO cannot import cement. Local cement prices are establishedon a cost plus basis by a Government commission consisting of representativesof the Ministries of Finance and Commerce. This commission reviews CIMTOGO'sclinker import prices, operating and overhead expenses and cost projections.Upon request by CIMTOGO it considers price adjustments if some of the compo-nents have substantially changed. The following table shows the developmentof the CIF clinker price and the final retail price of cement for the lastfew years:

Lome, Togo: Clinker and Cement Price Development(in CFAF and US$/ton)

CIF Clinker Price Cement Retail Price---- (CFAF/ton)----------------

1970 n.o. n.a.1971 3,750 9,3001972 3,750 9,300Up to September 1973 3,750 9,300Up to January 1974 4,798 9,300Up to July 1974 6,532 11,000Up to January 1975 7,286 11,000After January 1975 7,286 12,000

n.o.: Clinker plant not operational.n.a.: Not available.

The data series indicates the dramatic rise in the CIF price of clinkermainly due to increased fuel oil prices, which hit both clinker productionand shipping. The difference between CIF clinker cost and cement retailprice is to cover the cost of other raw materials (gypsum, pozzolana) port-handling charges, production costs of the plant, including depreciation and

ANNEX 3-3Page 4

financial charges, plants' profit, distribution costs and taxes. Accordingto an agreement between the Togolese Government and CIMTOGO, the companyshould obtain a profit of CFAF 1,000 over production cost. Following is thecomposition of the retail prices for the last two years.

Togo Price Composition of Cement (Bagged)

1974 /1 1975CFAF/ton US/ton CFAF/ton US$fton

Ex-plant price before taxes 9,500 42.22 10,250 45.55

Ex-plant price after taxes 10,150 45.11 10,900 48.44

Wholesale price 10,750 47.77 11,650 51.77

Retail price 11,000 48.88 12,000 53.33

/1 US$ = CFAF 225

These prices are applicable in the Lome Region. Transport charges to otherregions in Togo must be added according to distance and transport mode. Theseprices compare with current CIF import price for bagged cement in Lagos atUS$65/ton and more depending on waiting time in the Lagos port. The grindingplant in Lome, as a priority project, is exempted from corporate income taxuntil 1981. Management hopes to obtain a further carryback of tax exemptionthrough the expansion project of the plant which will double its capacityby 1976.

9. The two grinding plants in the Ivo:y_ Coast. SICM and SCA, requireonly an import license, if the clinker to be imported originates in non-EECcountries, but there are no real restrictions on importing clinker withinreasonable limits. At the beginning of each year, the firms submit a budgetfor clinker imports to the Foreign Trade and Customs Commission only for thepurpose of obtaining exoneration from import taxes and duties. C&F clinkerprices are obtained through international competitive bidding. As quantitiesare substantially larger than for Togo, and as contracts are for periods ofup to two years, pricess obtained are more favorable than for Togo. The salesprice of cement is fixed by Government (Ministry of Finance) on a cost plusbasis, at the ex-factory level. The following table shows clinker and cementprice development in Abidjan:

ANNEX 3-3Page 5

Abidjan, Ivory Coast: Average Clinker and cement Price Development(in CkAF aiza ubt/ton)

CeF Clinker Price cement Ex-tactory PriceUrA1 /1 usQ CFAF US$ /I

-IYsU 3,u40 I .- I t,90u 3U.6719/ ,// lo.-/ 1,100 3I.JbIV/2 J'tsUO 16.89 /"Izu ji.64

Up to ina 1V/o J,?,uU lb.89 7,1bU .sl.82

Up to Early 19/4 4,JUU Zu.UO 7,800 34.6-/

Remaiilaer 19/4 b,4uU Lb.44 11,300 50.226,)uO 28.89 I ,.Juu U.zz

/I Us1 = CFAF 225.

C6F prices excluae insurance wnich amounts to about u.47Z of the C&F price.

Protit margin is seL by law at bz on total operating costs inclusive ofValue Added Tax (VANl) which amounts to about 13% on 'lrnover. In the Abldjan

region, tne retaiier margin aads CPAF JuU/ton to the above ex-tactory price.

In regions outside Abidjan tne retail price consists ot the above ex-factory

price plus Ck'AF' Zuu/ton tor handling and CFAF 8.12/ton km tor transport and

2% on the resulting suD-total to cover losses. Thus the delivered price at

San Pedro is CFAe lb,4uU, at Tabou in the extreme West is CFAF 19,IUU and

is maxima.Lly CJ•A' 19,750/ton (Ub>b/.// equivalent) at Tienko, at the extreme

North-West ot the country.

1u. The Ghana cement Co., Ltd., the owner and operator ot the grinding

plants at 'fema and Takoradi, must obtain import licenses tor its clinkerimports. These were kept low Detween 1972 and 1974 for reasons of shortage

of foreign excnange. The Company may not import cement directly. However,

several ministries basea on tneir foreign exchange allocations, were aDle

to ootain cement by directly importing twithout necessity of a license)

during tne period of scarce cement supply. Cement prices are set by the

Government on a cost plus basis. The following table shows the development

of C&F clinker prices and local ex-tacrory prices over the last few years:

ANNEX 3-3Page 6

Tema and LVakoradi, Ghana: Clinker and Cement Price Developmentkin Cecis and US$/ton)

C&i Clinker Price /i Ex-factory Cement PriceCedi USA /2 Cedi US$ /2

19/0 12.06 lu.67 25.60 22.6619/1 13.51 11.96 25.60 22.6619X2 16.58 14.6/ n.a. n.a.19/3 25.Zb 2Z.35 46.80 41.4219/4 3S.15 31.11 n.a. n.a.1975 4U.77 3b.08 60.40 53.45

/1 Annual average./2 US$1 = Cedi 1.13

The cement prices for the retail level are arrived at as follows:

Ghana Price Composition of Cement (Bagged)(in Cedi/ton)

1973 1975

Ex-works cost 41.60 n.a.Producers' profit 1.80 n.a.

Ex-works price betore tax 43.40 57.60Sales tax 3.40 2.80

Ex-works price after tax 46.80 60.40

Wholesalers' margin 1.60 3.00Wholesalers' price 48.40 63.40Retailers' margin 0.80 1.20Retail price 49.20 64.60

These prices are applicable in the regions of Tema and Takoradi. Transportcharges to other regions in Ghana are to be added according to distance andtransport mode.

ANNEX 3-3Page 7

4. Clinker and Cement Supply

11. CIMTOGO, Togo's clinker grinding plant, has been in operation since1971. Since then it has received clinker shipments from France, Spain andthe United Kingdom. Quantities per contract have not been exceeding 55,000tons with the duration of these contracts of up to one year. Since the begin-ning of 1974, pozzolana has been imported from the Canary Islands togetherwith clinker to cut cement costs (price for pozzolana CIF is about 2/3 theprice of clinker).

12. The two grinding plants in Ivory Coast, SCA and SICM, which havebeen operating since the late 1950s import their clinker predominantly fromFrance. Other steady suppliers are the UK, Norway, Spain and Belgium. Con-tracted quantities are large, sometimes exceeding 300,000 tons. Contractduration is, on the average, one year. For actual clinker quantities importedas well as cement quantities produced since 1970, see the table on the previouspages.

13. The Ghana Cement Co., Ltd.,which has been operating the two grindingplants at Tema and Takoradi since the late 1960s, imports its clinker require-ments predominantly from Norway. In fact, NORCEM, the largest Norwegian cementsupplier, contracted to supply all the requirements of clinker and gypsum.When foreign exchange restrictions in Ghana led to a disruption of steadyclinker imports, the Norwegian supplier attempted to spread the supply sourcesand entered into agreements with Sweden, Germany and the UK. Delivery con-tracts with NORCEM are of long-term duration, the present contract of threeyears became effective early 1975 and shall cease in early 1978.

14. In all cases as described above, maritime shipment of clinker isarranged for by the clinker supplier. Presently, most shipments are carriedout by Bulk Handling (headquarters at Oslo, Norway), a ship-owning and operatingorganization established by four international shipowners who offer worldwideshipping services with self-discharging bulk carriers. Their fleet consistsof more than 30 bulk carriers ranging from 16,600 to 26,800 dwt.

C. Distribution of Cement

15. The CIMTOGO plant in Togo does not engage in cement distribution.Instead there are about 4 or 5 large wholesalers, government- or foreign-owned, and about 15 smaller private or foreign-owned wholesalers which mustall register as official cement wholesalers with the Government and CIMTOGO,and deliver directly to sites or sell to small retailers. One of the majorwholesalers is SOCIMAT, a company fully held by ORIGNY. No statistics arekept on actual cement distribution by transport mode, region, economic sectoror type of customer. However, the following data was gathered:

ANNEX 3-3Page 8

(i) There is only one bulk truck in Togo, thus nearly allshipments are sent bagged.

(ii) Hardly any traffic goes by railroad; truck is thepredominant mode.

(iii) About 50% of annual production is consumed in theLome region, and of the remainder about 30% goes toother urban centers and 20% to rural areas.

(iv) Private housing accounts for most of the consumptionoutside the Lome region, depending, of course, greatlyon the predominantly rural conditions of the economy.

(v) Over the past two years, some of the wholesalers havestarted to sell across the border via Benin to Nigeria;what quantities are being shipped, however, is unknown.

16. The two grinding plants in the Ivory Coast, SCA and SICG, are bothlocated in Abidjan. Although both participate in physical distribution,particularly in bulk cement-shipments, they are not authorized dealers.About 15 wholesalers of varying size buy directly from the plants and deliverto site or sell to retailers, if they do not have their own retail network.Again, no statistical data is available on distribution details; however,the following statements can be made:

(i) Bulk shipments account for about 5% of total production(SICM has 3 and SCA has 1 bullk truck).

(ii) All but exports to Upper Volta are trucked. Upper Voltareceives early shipments of between 25,000 and 40,000 TPYby rail. The capacity of the rail (number of wagons) isreported to De a constralnt.

kiii) 'ine two mubi important distributors, SMiMAT towned byOK1iGNY) ana .ampagnie Foncieres de Charbonnages ae uakar(uk'CD) share among tnemselves aDout ouJ. ot the totalcement aistribution.

kiv) About JU% ot the annual production is sold in the largerAbidjan area, the remainder throughout the country,mostly in UrDan centers.

(v) Private housing accounts tor the Diggest consumption inthe areas outside ADidjan, whereas commercial buildingsana municipal construction dominate in the Abidjanregion.

ANNEX 3-3Page 9

17. The Ghana Cement Works do not engage in cement distribution exceptfor bulk deliveries, which currently amount to less than 2% of annual pro-duction. The firm has no wholesale outlets. There are basically threegroups of wholesalers:

(i) About 40 specialized and accredited cement wholesalers,dispersed throughout the country, private firms, whollyGhanaian-owned, delivering in own trucks to retailers orconstruction sites.

(ii) Large trading houses, government- or foreign-owned, whichhave outlets in all parts of Ghana.

(iii) Government institutions or municipalities which directlyreceive shipments at the plant and deliver to their properconstruction sites.

(iv) Direct customers, such as ready mix, concrete blockfactories, etc. These receive shipments in bulk.

Statistics of distribution of cement among these wholesalers is difficultto obtain, however, groups (i) and (iii) are the predominant customers.The breakdown of consumption by region has been derived from some samplesand is reliable in its order of magnitude:

Cement Consumption in Ghana by Region

Region

Ashanti 19Brong Ahafo 7Central 7Northern 3Upper 5Western 13Eastern 9Greater Accra 29Volta 8

100

Furthermore, it is estimated that about 60% of cement is consumed in Ghana'surban areas, the remainder in rural areas. Consumption of cement by economicsector is in descending order:

- Housing and residential construction;- Public buildings;- Agriculture (storage, irrigation);- Industry- Transportation

ANNEX 3-3Page 10

The existing distribution channels for cement in the Region have proven to beefficient and have grown gradually with the increase in consumption. Theywill be able to cope with the expected larger future consumption.

D. Demand for Cement in the CIMAO Region

1. Historic Consumption Pattern of Cement

18. Over the years the consumption of cement has gone up considerablyin the CIMAO Region - rising from 660,000 tons in 1960 to 1,464,000 tons in1975, or by 98% (5% per year) as shown in the following table:

The Apparent Consumption of Cement in the CIMAO Region: 1960-1975(in tons)

Year Togo Ivory Coast Ghana Total

1960 40,000 150,000 466,000 656,0001965 42,000 264,000 525,000 831,0001966 59,000 266,000 540,000 865,0001967 54,000 330,000 440,000 824,0001968 62,000 341,000 340,000 743,0001969 85,000 356,000 406,000 847,0001970 86,000 427,000 443,000 956,0001971 95,000 418,000 508,000 1,021,0001972 116,000 586,000 412,000 1,114,0001973 118,000 624,000 374,000 1,116,0001974 129,000 629,000 508,000 1,266,0001975 150,000 650,000 664,000 1,464,000

Source: Cembureau and local information.

This increase, however, was not spread evenly among the different countries.In Togo, the consumption increased by 275% (9.4% per year) and in Ivory Coast,by 330% (10.3% per year) and in both countries rose continuously. In Ghana,on the other hand, cement consumption decreased for several years and onlyin 1974 did it regain the level of the early 1960's. This came about prima-rily as a result of the completion of the construction activities around theAkobo Akossombo dam and the country's severe foreign exchange problems.

ANNEX 3-3Page 11

19. The per capita consumption of cement is a good indicator of thelevel of a country's economic development, with a strong correlation betweenan increase in cement consumption and per capita GNP growth. This theoryseems also to hold for the CIMAO countries. The GNP of both Ivory Coast andTogo increased considerably and with it the demand for cement. Within theperiod 1965-72, a yearly 7.3% increase of GNP in the Ivory Coast went t, ge-ther with a yearly increase of 13% in the consumption off clinker. For thesame period, a yearly 6.1% increase of GNP in Togo went together with ayearly increase of 15% in the consumption of clinker. In Ghana, on the otherhand, where there was a very low increase in GNP, there was no increase inthe consumption of cement.

The Apparent Consumption per Capita of Cement in the CIMAO Region /1(in kg)

Year Togo Ivory Coast Ghana

1960 28 46 691965 26 61 681966 35 60 681967 31 72 541968 35 71 411969 47 72 471970 44 83 511971 48 79 571972 56 108 451973 56 111 401974 57 109 531975 65 110 68

/1 Source: Cembureau, local information and World Bank Atlas.

2. Projected Demand - Methodology

20. In cement market studies, there are normally three major techniquesused to forecast future demand - sectoral analysis, correlation with macro-economic indicators and extrapolation of previous consumption data. Becauseof lack of data, the sectoral analysis could not be used here, while the twoother techniques could be applied only to Togo and Ivory Coast. As theCIMAO plant, like any other new clinker plant, is highly capital intensive,it is very important that no capital and production capacity is being leftidle. Hence, this market study is based on a conservative growth approachof clinker consumption in the CIMAO region. The 1974 consumption in therespective countries have been taken as basis for the projections.

3. Projected Demand for Togo

21. As stated above, there exists a correlation between the consumptionof cement and economic growth in many developing countries. Between 1960and 1972, for every 1 percentage growth of GNP cement consumption increased

ANNEX 3-3Page 12

by 1.3%, or in other words the consumption elasticity relative to the GNPwas 1.3. During the latter part of this period (1965 to 1972), thecement consumption elasticity relative to GNP was 2.4.

22. As a basis for a low estimate of future demand for cement, it seemsthat the elasticity of 1.3 which existed between 1960-72 could be used, sincethis period included a time span of five years (1960-1965) in which thereactually was no growth in cement consumption. On the other hand, for a highestimate, the consumption elasticity of 2.4 could be applied. This elasticitylevel and even a higher one is found in a world-wide cross-section analysis,recently prepared by Holderbank, Switzerland and summarized in the followingtable. According to this analysis, for a country like Togo which, in 1974,had an average per capita income of US$180, the elasticity would be around2.7.

Consumption Elasticity according to GNP Per Capita

Consumption Elasticity RelativeGNP Per Capita to GNP Growth(1973 US$)

50 4.0100 3.2200 2.5400 1.9800 1.4

1,600 1.03,200 0.7

Source: Holderbank

23. The GNP of Togo has grown continuously between 1960-1970, which wasdue mainly to booming exports and improved terms of trade as a result of highcocoa prices. During 1971-73 the estimated real GNP increases dropped toabout 1-2% per year, because of declining terms of trade, agricultural cropshortfalls due to bad weather, and decreasing export trade. However, since1974, the terms of trade have again improved, mainly ensuing from the largeincrease in phosphate prices. While it may not be possible to maintain theseprices, a higher phosphate output is planned in the future, and an accelerationin GNP growth is expected. In the second half of the 1970s and the early1980s, GNP is projected by the Bank to expand by an average of 4% per year.

24. Assuming the projected 4% increase in the GNP and elasticities of1.3 for the low estimate and of 2.4 for the high estimate, the projectedconsumption of cement in Togo will be as follows:

ANNEX 3-3Page 13

Togo - Projected Demand for Cement - Macro-Economic Method(in tons)

Year Low Estimate Average Estimate High Estimate

1979 166,000 184,000 203,0001980 175,000 199,000 223,0001981 184,000 214,000 244,0001982 194,000 230,000 266,000

25. The extrapolation method using past trends is a rather simplisticone, but in a relatively stable economy like Togo, it can be used for estab-lishing an order of magnitude. Between 1960-74 the consumption of cementincreased from 40,000 to 109,000 tons, or by an average yearly rate of 8.7%.When a shorter period is examined - 1965-1974 - the average yearly growthwas still faster at 13%. These two growth rates, 8.5% and 13%, havebeen used in arriving at the lower and higher estimate ranges below.

Togo - Projected Demand for Cement - Extrapolation Method(in tons)


1979 194,000 215,000 237,0001980 211,000 239,000 268,0001981 228,000 265,000 303,0001982 248,000 295,000 342,000

26. Since this market analysis is to use a conservative approach, thelower of the "low estimates" and the lower of the "average estimates" of thetwo techniques has been used in the following table for the range of expectedcement demand in Togo.

Estimate of Cement Demand in Togo(in tons)

Year Lower Limit Upper Limit

1979 166,000 184,0001980 175,000 199,0001981 184,000 214,0001982 194,000 230,000

4. Projected Demand For Ivory Coast

27. Between 1960 and 1972 the GNP of Ivory Coast increased by anaverage of 7.7% per year (the same increase as in Togo). The consumption ofcement increased in this period by 12% per year, and the apparent consumptionelasticity was 1.55. This relationship has been stable over the years and,

ANNEX 3-3Page 14

therefore, the same elasticity was assumed in the forecast of the averagefuture demand. As the world-wide cross-section analysis of Holderbank hasarrived at a higher elasticity - 1.9 - for a country with the income levelof Ivory Coast, this consumption elasticity has been assumed for the highestimate. For the low estimate, a consumption elasticity of 1.3 has beenassumed.

28. Ivory Coast's economic growth has somewhat slowed down in the earlyseventies due to a decline in the terms of trade. Cocoa prices droppeddrastically and imports prices soared. But even in these years, a real growthof 6% occurred. In the longer run, the Bank foresees a growth rate of about6% per year. Assuming this projected increase in GNP and the abovementionedelasticities, the projected demand of cement in Ivory Coast will be asfollows:

Ivory Coast - Projected Demand for Cement - Macro-Economic Method(in tons)


1979 915,000 997,000 1,080,0001980 986,000 1,093,000 1,201,0001981 1,062,000 1,200,000 1,338,0001982 1,146,000 1,318,000 1,491,000

29. Between 1960 and 1974 cement consumption rose from 150,000 tons to629,000 tons or by an average yearly rate of 10.8%. In the latter part ofthis period (1965-1974) this rate was 10%. Because of the continuing stablegrowth over time, the low or high estimate according to the extrapolationmethod would nearly coincide and, hence, only one average estimate has beenmade on the basis of a 10% per year increase as shown below:

Ivory Coast - Projected Demand for Cement - Extrapolation Method(in tons)

1979 1,012,0001980 1,124,0001981 1,247,0001982 1,384,000

30. Since also for Ivory Coast the extrapolation method has providedan overall higher forecast, the "low" and "average" estimates of the macro-economic method have, as in the case of Togo, been taken as the lower andupper limits respectively of the estimated cement demand, as summarized below:

Estimate of Cement Demand in Ivory Coast(in tons)

Year Lower Limit Upper Limit

1979 915,000 997,0001980 986,000 1,093,0001981 1,062,000 1,200,0001982 1,146,000 1,318,000

ANNEX 3-3Page 15

5. Projected Demand for Ghana

31. The consumption of cement in Ghana has fluctuated substantially overthe past 15 years, and although there was an upswing in 1974, the consumptionin that year (508,000 tons) was still lower than in the mid-sixties (540,000

tons). This situation has made it impossible to use past data and trendsboth for the macro-economic approach as well as for the extrapolation approach.

32. According to the Ghanaian authorities, if import restrictions couldbe removed, the consumption of clinker is expected to increase considerablyto about 900,000-1,000,000 tons in 1980. However, the extent to which importrestrictions will be lifted will depend on the future of foreign exchangeposition of Ghana (and thus its terms of trade).

33. It appears therefore that the estimate of the Ghanian authoritiesmust be considered as optimistic at this stage and the Bank has instead usedas lower and upper limit of cement demand in 1980 of 675,000 and 775,000 tonsrespectively and a 25,000 ton annual increase thereafter. This upper limitrepreserts a per capita cement consumption of 70 kg, a level which is lowcompared to that of other developing countries with the same level of income.

6. Summary of Projected Demand

34. The following table gives a summary of the above country-by-countryestimates of cement demand in the CIMAO countries.

Projected Demand for Cement in CIMAO Countries(in 1,000 tons)

1975 1979 1980 1981 1982ApparentActual Lower Upper Lower Upper Lower Upper Lower UpperConsump. Est. Est. Est. Est. Est. Est. Est. Est.

Togo 150 166 184 175 199 184 214 194 230Ivory Coast 650 915 997 986 1,093 1,062 1,200 1,146 1,318Ghana 664 650 750 675 775 700 800 725 825TotalDemand /1 1,464 71 ,931 1,836 2,067 1,946 2,214 2,065 2,373

/1 The figures don't include a projected demand of 40-60,000 tons of cementin Upper Volta which is traditionally met by the grinding plants of theRegion.

ANNEX 3-3Page 16

36. Above data on demand for cement are the basis for the projecteddemand for clinker in the CIMAO region. It has been assumed that one tonof cement would be produced by using 800 kg clinker, 150 kg pozzolana and50 kg gypsum. Based on these forecasts as well as on CIMAO's productionschedule for the initial years of operation, the following table gives theprojected demand/supply balance for clinker in the CIMAO region through 1982.

Projected Demand/Supply Balance for Clinker in the CIMAO Region

1975 1979 1980 1981 1982ApparentActual Lower Upper Lower Upper Lower Upper Lower UpperConsump. Est. Est. Est. Est. Est. Est. Est. Est.

Demand 1,360 1,385 1,545 1,469 1,653 1,558 1,771 1,652 1,898Supply fromCIMAO - 250 900 1,200 1,200

Supply fromImports 1,360 1,135 1,295 569 753 358 571 452 698

The above table indicates that even after the completion of the proposedCIMAO project, the region will have to continue importing sizeable quantitiesof clinker, even on the basis of the lower estimate of the clinker/cementdemand growth in the region.


ANNEX 3-4Page 1


CIMAO REGIONAL CLINKLR PROJECT

DISTRIBUTION AND PRICING OF CLINKER

A. Distribution of Clinker

1. The treaty between the CIMAO countries includes the followingcommitment on the distribution of CIMAO's clinker.

Article 21 - "In order to ensure the sale of the Company'sentire production in the national markets of the participatingStates, the Governments will take the necessary measures par-ticularly to limit, as and when necessary, the importationof clinker and cement into their territories to the extentthe Company will be in a position to supply the quantitiesof clinker and cement (including cement for special usage)required by these national markets."

Article 22 - "The participating States agree to take the neces-sary steps to ensure that clinker users established in theirterritories inform the Company of their estimated requirementssix months before the beginning of the calendar year to whichthe estimates relate."

Article 23 - "In the event that the Company's production overany given period is insufficient to meet the whole of the needsof the participating States, the latter may entrust to theCompany such importations of additional clinker as shall benecessary to meet such needs in full."

2. These articles of the Treaty will require from the Governments to

alter their domestic system of clinker imports in order to restrict the useof clinker from non-CIMAO sources. This will have to be done well beforethe startup of the plant in order to prevent that long term buying commit-ments from non-CIMAO sources impede the countries from living up to theircommitment to buy CIMAO clinker from the very outset of operations.

3. The above articles provide a general marketing framework, whichmust, however, be translated into a specific operational program assuring themarketing of all of CIMAO's clinker production, in particular, since the pro-duction of CIMAO is expected to be insufficient from the very beginning tomeet the total demand for clinker in the participating countries. Therefore,discussions have been held with the Governments to ensure a controlled supplyof clinker from outside the region, which would not interfere with the mar-keting of CIMAO's clinker. As a consequence of these discussions, the Gov-ernments have reached agreement on:

ANNEX 3-4Page 2

(a) the distribution of CIMAO clinker, namely that:

(i) Togo's needs will be met in totality by clinkerproduced by CIMAO, on condition that her re-quirements do not exceed one third of the esti-mated production;

(ii) The remainder of CIMAO's production will be dis-tributed between the other two countries in equalportions or according to any other distributionratio agreed by these two countries;

(iii) The price of clinker established by the PricingCommittee (Articles 25 and 26 of the Treaty)will be the same at every port of unloading ofIvory Coast, Ghana or Togo; and

(iv) The currency in which the payment for the clinkeris to be made will be a convertible currency,which, at the present time, could be the CFAFranc;

(b) the importation of clinker from sources other thanCIMAO, namely that:

(i) The States give powers to the CIMAO MarketingCommission to act as representatives of IvoryCoast, Ghana and Togo, to carry out a study ofthe international market, to invite tenders andafter having chosen the lowest offer, to makerecommendations enabling the States to sign con-tracts and ensure their application;

(ii) The FOB price of the imported clinker will bethe same for all three States;

(iii) This price, recommended by the Marketing Com-mission, shall not be higher than the pricethat one of the States could obtain from othersources of supply.

4. None of the grinding plants in the Region engages in direct cementdistribution (except for small bulk deliveries in Ghana). The distributionis done through private or foreign-owned wholesalers of varying size. Nearlyall the cement is sold in bags and only a few bulk trucks are operating.Statistics are not available on actual cement distribution by transport mode,region or economic sector. Such statistics will be vital for preparingfuture cement and clinker demand estimates. Well based estimates will benecessary to ensure a smooth marketing of CIMAO's clinker and to ensure atthe same time that the clinker needs of the Region will at all times be pro-vided for by the necessary imports. These estimates should be used by CIMAO

ANNEX 3-4Page 3

and the governments to establish the quantities of clinker to be imported inthe Region. To prepare these estimates, it will be necessary to establish asmall market research unit which will have to collect and analyze all theessential data on phenomena that influence the demand for cement and clinkerin the Region. To set up this unit, CIMAO will need assistance from a qual-ified marketing consultant.

B. Clinker Pricing

5. The Treaty includes the following articles on the pricing of CIMAOclinker.

Article 25 - "The participating States shall set up a Commissionwith the task of fixing a uniform base price of CIM4AO clinkerdelivered to any port of unloading of any of the sponsor. ThisCommission shall be composed of one representative of each parti-cipating State with the right of vote and a representative ofCIMAO with a consultative voice.... The Chairman of the Commis-sion shall hold office for one year only. A Chairman may not bereelected until all other members of the Commission have heldoffice as chairman at least once. The Chairman shall convenethe Commission whenever he considers it necessary or wheneverrequested to do so by another member, and in any event at leastonce a year....."

Article 26 - "The uniform base price of CIMAO clinker cifreceiving port of entry of each participating country shallbe fixed each year, three months before the start of theCompany's financial year ..... The Commission shall alsolay down the method of payment for clinker."

6. Differing interests of the countries could lead the Commissioninto lengthy discussions and difficulties in finding a compromise price.These differing interests would be mainly between Togo on the one hand andIvory Coast and Ghana on the other; since Togo's consumption of clinkerwill be less than the approximately one third of its ownership in CIMAO,it could be more interested in higher profits of CIMAO than in lowerclinker prices. Conversely, Ivory Coast and Ghana which will buy ahigher percentage in production than their ownership must be expectedto attempt to purchase CIMAO's clinker at as low a price as possible.The Governments have agreed on the principles which will govern CIMAO'sprice (recovery of (i) operating costs, (ii) debt service, (iii) rein-vestments for maintenance and renewal, (iv) transport and distributioncosts and a fair return on capital invested). They also have agreed toestablish this price as a cif price, equal in all ports of the three coun-tries. This price will be established unanimously at least three monthsprior to each fiscal year of CIMAO.

ANNEX 3-4Page 4

7. It is expected that the CIMAO clinker price will be about thesame as the long-term import price of clinker of the Region. In recent years,the domestic clinker price in Europe has risen steeply, and so have exportprices. The imported clinker price in Lome rose from CFAF 3,750 in 1971 to7,300 in end-1975. Current FOB-European export prices for clinker vary be-tween US$22.00 and 24.00 in 1975 dollars. If the investment costs for newplants were considered, however, one would arrive at a total cost of US$24to 27, to which profit would have to be added. This higher price is dueto depreciation and financial charges for vastly more expensive new equip-ment prices. The European companies having at this moment a large propor-tion of old plants, arrive at averages for plant costs which are definitelylower than those for new plants. However, this will be a temporary phenomenonduring the next few years, until these firms will have replaced their oldcapacities by new equipment. Thus, the export price (FOB Europe) per tonof clinker expressed in 1975 terms is expected to be about US$24-25. Toarrive at estimated CIF import prices, maritime freight rates have to beadded. These rates fluctuate depending on market conditions betweenUS$8-12 per ton. An average freight rate of US$10 per ton has beenassumed. This would yield an import price, CIF Regional Ports of US$34-35 per ton expressed in 1975 terms or CFAF 7,600-7,875. From 1981 on,this price is expected to increase by 1% per year, in 1975 terms, sincean increasing number of new high capital cost plants will come on streamwhich will continuously push the price of clinker upwards due to increaseddepreciation and financial charges.


ANNEX 4-1



SUMMARY OF CAPITAL COST ESTIMATE FOR CIMAO PROJECT

CFAF Million US$ MillionLocal Foreign Total Local Foreign Total

Industrial Complex

Civil Works and Services 4,607 11,147 15,754 20.3 49.5 69.8Equipment and Materials 150 i4.649 14,799 0.7 65.1 65.8

Total Base Cost 4,757 25,796 30,553 21.0 114.6 135.6

Physical Contingencies 475 2,574 3,049 2.1 11.5 13.6Price Contingencies 2,165 8,289 10,454 9.6 36.8 46.4

Total Fixed Assets 7,397 36,659 44,o56 32.7 162.9 195.6

Interest during Construction 325 3,134 3,459 1.4 14.0 15.4Working Capital 993 992 1,985 4.5 4.5 9.0

Total FinAncing Requiredfor Industrial Complex 8,715 40,785 49,500 38.6 181.4 220.0

Infrastructure Components

Power Link-Civil Works and Services 68 23 91 0.3 0.1 0.4Power Link-Equipment and Materials - 472 472 - 2.1 2.1Township-Civil Works and Services 472 203 675 2.1 0.9 3.0Township-Equipment and Materials 46 179 225 0.2 0.8 1.0Railway-Civil Works and Services 832 1,418 2,250 3.7 6.3 10.0Railway-Equipment and Materials - 2,498 2,498 -_ 11.1 11.1Terminal-Civil Works and Services 495 1,417 1,912 2.2 6.3 8.5Terminal-Equipment and Materials 90 1,553 1,643 0.4 6.9 7.3

Total Base Cost 2,003 7,763 9,766 8.9 34.5 43.4

Contingency 202 764 966 0.9 3.4 4.3Price Escalation 675 2,678 3,353 3.0 11.9 14.9

Total Fixed Assets 2,880 11,205 14,085 12.8 49.8 62.6

Interest during Construction - 315 315 - 1.4 1.4

Total Financing Required forInfrastructure Components 2,880 11,520 14,400 12.8 51.2 64.0

Total Financing Requiredfor CIMAO Project 11 595 52.305 63,900 51.4 232.6 284.0

Industrial ProjectsMay, 1976

TOCOIVORY COAST/G,HANA

CIMAO MEGIONAL CLINKER PROJECT

SUMARY DISBIURSINIENT SCHEDULE(CFAF Million in Current Tems)

Total Total1976 1978 1979 1980 CFAF Million US$ Million

Investments

1. Industrial Complex 4,050 13,600 19,550 10,045 2,255 49,500 220.0

2. Infrastructure:

a. Township 170 430 470 245 1,315 5.8b. Powerline 70 300 325 42 50 787 3.5c. Railway 595 2,280 2,500 810 790 6,975 31.0d. Terminal 225 1.700 1.870 928 600 5,323 23.7

Total 5,110 18,310 24l,715 12,070 3,695 63,900 284.0

Disbursements L21. Equity 4,050 8,435 6,815 - - 19,300 85.8

2. Loans

a. IBRD - 745 5,815 3,825 765 11,150 49.5b. Others 1.060 9,130 12,085 8,2145 2,930 33,450 148.7

Total 5,110 18,31 24,715 12,070 3,695 63,900 284.0

/1 The data include working capital and interest during construction.75 The data does not include direct loans to Governments for acquisition of preferred shares.75 Advance payments by the Goverment of Togo on account of infrastructure investments.

Industrial Projects DepartmentMay, 1976

ANNEX 5-1Page 1



PLANT DESCRIPTION

A. Plant Concept and Process Choice

1. The envisaged plant concept is classical using well proven andeconmical technology, standard size capacities and well known equipment types,the reason being the limited experience of the participating countries incement production technology. Quarry operations, after overburden removalby dragline, will use drilling and blasting for exploitation of the limestoneand backhoe for extraction, whereas clayey and sandy shale will be extractedby backhoe and dragline. Limestone and clay will be crushed in mobile crushersto yield a relatively coarse feed. The humidity of the clay will createsome handling problems, particularly during the rainy season; this can howeverbe overcome through appropriate scheduling of quarry operations. Given therelatively low average humidity of the limestone (mean humidity 3.5%) andhigh prices for energy, the process choice is obviously dry process. Harmfulcomponents such as chlorides and alkalis which might interfere with thesmooth operation of the classical four-stage suspension preheater dry processsystem are rather limited. Limestone and clay will be blended without priorclay drying, as the blending proportion only calls for a rather low percentageof clay, so that the mix will still have a low enough average humidity whichcan be driven out by the hot kiln gases to be used in a combined crusher/grinder unit. During the rainy season, additional drying will be providedby means of auxiliary burners. The kiln will be fired by fuel oil (bunker C).Two identical production lines of 600,000 TPY capacity each, have beenselected. Although one single production line of the double capacity wouldpermit economies of scale, it would also increase the risk of a temporaryshutdown due to operational problems and would thereby more than doublepotential production losses. Furthermore the chosen kiln size will permita quick expansion of facilities by a third line as increased cement demandand a sufficient level of experience in cement production in the participatingcountries warrant such expansion.

B. Description of the Clinker Plant

2. General: Chart 1 at the end of this annex shows the layout forthe clinker plant by main department and Charts 2, 3 and 4 show flowsheets,illustrating the material flow from quarry to rail/port terminal. Thefollowing paragraphs give details about the plant.

3. Quarry and Crushing: The deposit, a rare case, offers the opportu-nity to exploit all raw materials required for the clinker production fromone single quarry. Overburden will be removed by dragline and bulldozer

ANNEX 5-1Page 2

while clay and stratified shale and limestone will be extracted by backhoe

or dragline. Shale and Limestone will be loaded into dump trucks to be

transported to a mobile crusher, then transferred by conveyor belt to thestorage, since the deposit is very narrow and long. The belt system willhave to be extended by about 200 m per year. Owing to the stickiness of the

shale it will be difficult to produce a finely crushed product during allseasons of the year. The raw grinding plant, equipped with a secondarycrusher, will therefore be designed to accept a relatively coarse feedmaterial, which can be obtained from the mobile crushers even in wet weather.

4. Prehomogenization and Storage: This department is fed by conveyorbelt with the raw materials coming from the crusher. The department consists

of a sampling unit, a storage facility for the raw mix, including dischargeand reclaiming equipment and transport equipment to the subsequent department.It also includes a storage facility for pure limestone which will be used for

proportioning (to adjust the ratio of components in the raw mix). It may be

necessary to protect the storage area by a roof as the rain during the wetseason might increase the humidity of the stockpiled materials sufficiently towarrant this expense. This question is presently studied in detail by APCM.

5. Proportiong an4 d Raw Grindin&: Starting from this department, two

production lines will be working side by side in the plant. Thus the depart-

ments up to clinker transport and storage are twin departments which will,however, be interconnected at some stages. The prehomogenized raw materials,

still of rather coarse consistency, will be crushed to a fine grain in asecondary crusher, then are fed into the grinding mill; to achieve the exactblending ratio, pure limestone in precalculated quantities is added througha separate limestone hopper. The mill, a conventional compartment mill witha precrusher-dryer will grind the raw mix to a prespecified fineness whileat the same time drying the raw mix below 1% of residual humidity by makinguse of the kiln exit gases withdrawn from the preheater. Auxiliary heatersmay have to provide additional calories during the rainy season, and will be

also used for startup of the kiln.

6. Homogenization and Storae: The ground and dry raw mix will be dis-charged from the air swept mill by means of preumatic conveyors and he trans-ported to the homogenizing and storage facility. This consists of two two-

storey concrete silos of which the upper stories serve as blending silos, andtwo further storage silos. This department will also include sampling units

to allow determination of the chemical comnosition of a given silo charge.

7. Kiln Plant: This department comprises preheater (four stage suspen-

sion tvye), kiln, cooler (grate or planetary cooler) and electrostatic preci-

pitator. The homoRenized raw meal, conveyed from the storage silo by anappropriate system (pneumatic system, screw convevor or elevator) will be

introduced into the uipper stage of the preheater through a dosing valve coupledwith a weigh feeder. A bvoass to control harmful components in the raw mate-rial, is not required, as these components were shown to be very small in the

ANNEX 5-1Page 3

samples taken during both drilling campaigns. The kiln will be fueled by oil(bunker C); tender documents ask for an alternative which would call for 20to 25% of the fuel to be introduced in the lowest cyclone of the preheatersystem. This would improve operating conditions, particularly, when the rawmaterial should obtain higher chloride and alkali levels. Exit gases,if not used for the raw griding and drying, are to be cleaned by electrostaticprecipitator down to a level of below 150 mg of particles per Nm3 of gas.

8. Clinker Transport, Storage and Rail Loading: The cooled clinkerwill leave the kiln department by chain conveyor or similar method to bestored in silos with a combined capacity of 20,000 t. Extraction equipmentwill convey the clinker from there to the train loading equipment.

9. Power Supply: The power supply from outside is described in Annex6-1. However CIMAO also will operate an auxiliary power station with twogenerating diesel units of 500 kVA capacity each.

10. Workshops. This department comprises electrical and mechanicalworkshops which will be able to handle routine maintenance and repair ofelectrical and mechanical equipment in the quarry and on the plant. Theywill also include the stores of spare parts and sundry supplies.

11. Laboratory: The laboratory will be able to carry out raw materialanalyses of quarry samples for efficient quarry operations as well as qualitycontrol of raw mix, raw meal and clinker. Thus it will be equipped to executethe required physical, mineralogical and chemical analyses.

12. Support Services: This will include a fire fighting station, guardservices, training facility, offices, canteen and infirmary.


TOGO/IVORY COAST/GHANACIMAO REGIONAL CLINKER PROJECT

PLANT LAYOUT

. X ..... ____M E 3 l P 4A________PODUCTION L NES __AND Z RAW MATERIAL STOCKS

_..... THE CUARRY

WIND OIRE TION T[2§O\2\t CDISFE2EARY ANt MA N L EWF iEOTRO TATIC l~~~~~~~~RI - T- L ST S T- - R.

SE -for PClan E CE sp t ITY1 R ENCE

11 ~ ~ ~ ~ ~ ~ .1 Al N1.i1T.-

TOGO/IVORY COAST/GHANA A2- 5-1 Chair 2

CIMAO REGIONAL CLINKER PROJECTFLOWSHEET QUARRY AND RAW MATERIAL STORAGE

Undisturbed Deposit

05.0 mrr i/Sgy%\bXz2>W>{%\b$g> Overburden & Clay

1.5 to 8 m X4X4X4S4g4<$ Shale

4 to te \A \' ' \ Limst-one

Overburden Mee-rial to Refill Ecavared Ouarrv___ _____________ -------- - -_

Overburden Dep-sit (Cort.-sol1 & Clay)

1. Overbarde- Q 0

Sulidoterwith Ripper Grader Excearteg Scra.per

100 T/h Shale

// | Backhoe

Xfr~ ~ ~ ~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~C ev Eob Itvto ume

Shale Depoeie Conyoret

MonileCruseher

Quarr 3 800 Th Limestone

&/ | Bakhoe) E-toavto Dumper

U /(Cushl.n Blasl,ng)

/Limeerorre Gepesie

100 T/h Sand

Unit

Sand

i i |, B~t lended flaw Malerial T Seenkp lee b150 T/h 7 z Correction Sevek-t Reclaimer /\. ' piles /

Prehomogeni atin 30000 T \30,S0T \2 T \ /450 T

Storage | I

ievirirai yieeriets DeoDiien TO RAW GRINDING DEPARTMENTrriruar 1970

wor d te,rk-i5601


FLOISHEET CLINKER HANDLING & TRANSPORT

1-O CLI-KE. -. OlE FROM -NIER COt

'MM T:l 8 h

CI KE1l.RTf v 9 85t t I

HANDE NC x 4,

STORAGE~~~~~~~~77eD butQun Dlsbrlb9t~~~~~~~~~~~~~~~Tl

t~~~~~~~~~~~T -1 3

| r - - -~~~-- - -- i

C

I O

ANNEX 5-2Page 1



RAW MATERIAL AVAILABILITY AND ANALYSIS

1. Background: Principal raw materials for the clinker manufacture,limestone, shale and sand will be extracted from a single quarry to be operatedwithin a deposit in the region between Sika Kondji and Tabligbo (Map 11686).This deposit, also known as the Mono deposit, is part of a large paleoceneband which outcrops in Nigeria and Benin, and has also been proven in IvoryCoast albeit at economically unexploitable depths. Several attempts have beenmade to discover economically exploitable deposits in Togo at locations moreamenable to evacuation of clinker along existing transport facilities, however,only the Mono deposit was found to be suitable. Another promising depositnear Aveta, about 20 km northeast of Lome (map) had to be abandoned becauseof a very high content of P 0 in limestone. This high phosphatic contentwould have led to inadmissably low values of the cement's compressive strength.

2. The Mono deposit stretches as a long, narrow band perpendicular tothe Mono River from its west shore in a southeastward direction, passingTabligbo in the South. Access from Lome by road is possible either via Anecho(total distance Lome-Tabligbo: 81 km) or via Tsevie (77 km). There is nodirect rail connection, the closest access to the rail network being at Tsevieand Anecho. The terrain between Tabligbo and Sika-Kondji is rather flat andmostly covered with low but dense bush vegetation. It climbs from a lowaltitude of about 10 m above sea level near the Mono River to nearly 40 m atthe road to Tabligbo.

3. Investigations. The Mono deposit was investigated over a width ofabout 1000 m and a length of about 16 km, with Tabligbo at its northwesterncorner, from October 1971 to September 1972, based on a 400 m grid of bore-holes along the band. CIMAO carried out the topographical and geologicalinvestigations, assisted by J.P. Burri & Associates, Switzerland, which didgeophysical analyses in cooperation with E. Rochat, Switzerland, responsiblefor the drilling campaign. Subsequent laboratory analyses of samples werecarried out by CIMAO and SODEMI, Ivory Coast. From February to July, 1975a second drilling campaign was undertaken to establish in more detail and witha sufficient degree of reliability the variability of the chemical compositionin the raw materials, which is an important element for the specific processchoice. This drilling campaign, executed under the supervision of APCM bySASIF, Ivory Coast, included 20 boreholes reducing the grid width to 200 m.Lab results confirmed the findings of the previous campaign and also provideddata for the optimal location of plant and quarry.

ANNEX 5-2Page 2

4. Stratigraphy: Underneath the overburden the deposit contains 4different layers of materials which are all useful for the clinker production:(i) Plastic clay, (ii) Stratified clayey shale (Upper Paleocene), (iii) Lime-stone (Lower Paleocene), and (iv) Sandy shale (Maestrichtian). The overburdenis an insignificantly thin layer of humus (20 to 40 cm). The plastic clay lieshorizontally with a thickness of one to two meters. The stratified shale formsa wedge starting from zero thickness in the north of the band and growing toabout 15 to 16 m thickness at the south of the investigated area. The under-lying limestone layer is therefore tilted downwards by about 1.5 degrees fromnorth to south; it is tapered, too, with a thickness of about 4 m at the northand 8 to 10 m at the south end of the investigated band. The limestone layerrests on a layer of fine sandy shale, which is at various spots a littleclayey.

5. Hydrogeology: The limestone deposit gives evidence of carsticactivity, particularly in the zones of contact of hard and soft layers.Cavities and holes of a size of up to 1 m in diameter can be found. Never-theless most of the limestone is not aquiferous. Only at the southeasternpart of the band, close to the Mono River the limestone deposit dips into thewater table. Few of the drillings have encountered water within the limestonelayer even in the rainy season. This is because the covering layers areimpermeable clayey materials, whereas the sand layer under the limestone actsas a drain. For the operations of the future quarry, the water collectingduring the rainy season will be pumped out without great difficulty. However,in the southeastern part of the deposit close to the Mono River particularcaution with regard to the water level is required and may call for heavierpumping in that area.

6. Limestone: Characteristics and Reserves: The deposit consists ofa band of rather hard, homogeneous limestone with abundant faunal content.The upper part of the band, (0.3 - 1 m) heavily fissured, consists mostly oflarge blocks separated by clayey material. This zone is followed by a veryhard zone (3 to 7 m) with less frequent fissuration and many crystallizations.Thereunder follows a softer limestone material, chalky and whitish in nature,with embedded hard blocks here and there (1 to 4 m). It is in the latter zonethat carstic evidence is predominant. The average chemical and physicalcomposition of the limestone deposit is shown in Table 1. It shows a suffi-ciently high CaO content, only little traces of harmful components, such asalkalis and chlorides, and a relatively elevated though acceptable level ofP 205. The stones' density is between 2.00 and 2.20 t/m3. It fracturesirregularly, with a tendency to sharpedged splintering. Its natural humidityvaries considerably, but the average across the band is a low 3.4% humidity.

7. The investigated limestone reserves are considerable, althoughextended over a long, thin bed, with average dimensiqns of about 14,000 m x900 m x 7 m. This is equivalent to about 90 million m3 of deposit. With afissuration factor of 0.85 and a density, conservatively set at 2.1 t/m3this amounts to about 160 million tons of limestone. Given a requirement of1.39 kg of limestone per kg of clinker, this quantity is equivalent to about75 million tons of clinker which is plentiful for the planned factory capa-city and would allow operation for more than 90 years. Even at an extended

ANNEX 5-2Page 3

capacity of 1.8 million TPY, a factory would be able to operate more than

60 years from that deposit. Beyond the investigated area, the depositstretches further to west and south and may yield further usable reserves.

8. Shale: Characteristics and Reserves: The more important of the

two clayey deposits for the clinker production is the stratified shale on

top of the limestone. The chemical and physical characteristics of the

stratified shale are shown on Table 2. Its humidity (27%) is about twiceas high as that of the plastic clay (13%), but during the dry season it tendsto be only little sticky and breaks well. During the rainy season handling

will create some difficulty which will be overcome by appropriate equipmentand quarry operation. Reserves are even bigger than those of the limestone

and therefore do not constitute a constraint for the size of the plant. The

physical quality of the stratified clay is rather homogeneous; its densityis about 2.0 tlm3 in the humid state.

9. Sandy Shale: Characteristics & Reserves: The sandy shale layerunder the limestone is of fine, homogeneous, clayey quality. Its chemical

and physical characteristics are shown on Table 3. Its density is about2.0 t/m3 and quantities are vast and therefore do not constitute a limiting

factor. The average humidity in the northern part of the deposit, where it

would be exploited, varies between 7 and 12 percent.

10. Raw Material Composition: The raw materials as above described,offer a host of different blending possibilities. Binary and ternary blend-ings have been investigated by different institutions to establish a good

blend which would allow production of a high quality clinker. With desiredvalues for the lime standard according to Kuehl at between 90 and 100, with

a silica modulus of between 2.5 and 2.8 and an alumina-iron ratio of between

1.2 and 2.4 for ordinary Portland Cements, various blends can be achievedwithout any need to add further raw materials. Examples of possible rawmixes are shown on Table 4.1/ It is clear from there, that the relatively

low alumina-iron ratio of the limestone can well be improved by the high

alumina content of the clay. Thus, the investigated deposit offers the

unique Dossibility to Provide adequate raw materials for the Production of,high quality clinker from within one quarryl For the exploitation of thequarry it should be noted, that the variability of chlorides, particularly

in the clayey shale, is substantial. Chlorides can in combination with alkalis,

form self-reinforcing circuits within the kiln and preheater system whichcould effectively hamper operations. As the clay quantities needed for theraw mix are relatively small, care should be taken to exploit the quarry in a

manner which avoids making use of the shales rich in chloride. This is simplya question of good quarry operation and raw meal supervision and should not cre-ate a problem.

1/ The Engineering firm has executed blending tests to confirm and, ifnecessary, modify above results of mix design. It has also carried outphysical tests on grindability, burnability and volatility.


TOGO/IVORY COAST/GHANA ANNEX 5-2Table 1


ANALYSIS OF RAW MATERIALS: LIMESTONE

A. Chemical Analysis

Weighted Minimum MaximumAverage in CaCO3 in CaCO3

SiO2 7.94 10.98 4.17A1203 2.58 3.20 1.77Fe2O3 1.95 1.85 0.87CaO 48.26 45.00 51.30MgO T/3 1.60 TLoss on Ignition 38-36 36-57 40.75

Subtotal 99.09 99.20 9FF

TiO2 o.o6 o.o8 0.10P205 0.42 0.43 0.22Na2O 0.07 0.07 0.09K? 00.23 0.17 0.12SO3 0.00 0. 0.Cl 0.013 - 0-004

Subtotal 0.793 00.534

TOTAL 99.88 99-95 99-39

CaCO3 86.18 80.36 91.61Silica Ratio- 1.75 2.17 1.58Alumina RatioL 1.32 1.73 2.03

B. Physical AnalysisDensity 2.16 (humid) 2.00 (dry)

Average Minimum MaximumHumidity 3.4 0.06 11.8Hardness Brittle, very hard; splintering with

sharp edgesSurface IrregularStructure Full of faunal content, compact, denseColor Whitish, yellowish to brownish grey

S iO2/1 Silica Fatio: A1203 + Fe203

/2 Alumina Ratio: A1203/Fe203

/3 T = Trace


ANNEX 5-2Table ?



ANALYSIS OF RAW MATERIALS: SHALE (STPATIFIDJ)


Weighted Minimusm MaximumAverage in SiO2 in SiO2

SiO2 48.49 43.78 52.5&A1203 14.70 13.96 15.86Fe 2 03 6.o6 4.75 6.24CaO 8.341 12.22 5.5oMgO 44.93 44.76 4.95Loss on Ignition 15.31 18.12 13.13

Subtotal 97.83 97.59

TiO2 0.74 o.6o 0.73P20C 0.28 0.18 0.26Na2O 0.16 0.22 0.13K2 0 o.65 o.58 o.65S03 0.06 _Cl 0.052 0.020

Subtotal 1.942 1.79

TOTAL 99-77 99-17 100.05

CaCO3 14.89 21.82 9.82Silica Ratio 2.33 2.34 2.38Alumina Ratio 2.42 2.914 2.54

B. Physical AnalysisDensity 2.00 (Humid) 1.145 (Dry)

Average Minimum MaximumHumidity 27.50 24.10 30.26Hardness Medium softSurface SoftStructure Fine, laminatedColor Grey


TOGO/IVORY COAST/GHANA ANNEX 5..2Table 3


ANALYSIS OF RAW MATERIALS: SANDY SHALE


Weighted Minimum MaximumAverage in SiO2 in SiO2

SiO2 76.o5 66.24 85.03A1203 5.83 7.54 3.39Fe2Q3 5.49 6.62 4.05CaO 5444 8.77 3.23MgO T T TLoss on Ignition 5.86 9.42 3.48

Subtotal 98.67 98.59 99.18

TiO2 o.8o o.50 o.55P2 05 0o.22 0.29 0.20Na2 O o.o8 o.o8 o.o6K2 0 0.20 0.18 0.18SO3 0.03 - -Cl 0.030 0.020 0.006

Subtotal 1.36 1.070 o.896

TOTAL 100.01 99.66 100.08

CaCO3 9.71 15.66 5.76Silica Ratio 6.72 8.04 11.43Alumina Ratio 1.o6 1.14 o.84

B. Physical Analysis

Density 2.00 (Humid) 1.80 (Dry)Humidity 7.2Hardness n.a.Surface n.a.Structure n.a.Color n.a.

n.a. = not available


TOGO/IVORY COAST/GHANA ANNEX 5- 2Table 4


FXAMPLE FOR RAW MIXES AND RESULTING CLINKKR QUALITY

A. Blending Ratio:

Limestone 1 .390 parts 89.8%Clay 0.038 "2.5%

Sand 0.120 7.7%

TOTAL 1.548 100.0%

B. Potential Chemical Composition

SiO2 21.96A1203 4.84Fe 2 O3 3-59CaO 68.03MgO 0.18

Subtotal 98.60

TiO2 0.21P20C 0.63Na2t 0.12K20 0.38SO3 0.0o6012 0.024

Subtotal 1-37

TOTAL 99.97

C. Potential Mineralogical Composition (according to Bogue)

C3S 73%C2S 8%C A 6.8%CUAF 11 .0%

98.g

Silica ratio 2.60Alumina ratio 1.35Limestandard 97.3


ANNEX 5-3



UITILITIES

1. Electricity. Details are contained in Annex 6-1.

2. Fuel: Bunker C, Grade 2 heavy fuel oil will be provided from therefinery near Lome, which is currently under construction and scheduled tostart up in late 1977. The fuel oil will be transported in special tank railcars to the plant site and stored in subterranean silos. Its caloric valuewill be about 9600 cal./kg. An exact chemical analysis of this fuel oil isnot yet available but no problems are expected from its chemical composition.A quantity of about 100,000 TPY will be required for kiln firing and dryingof raw materials. The estimated price of fuel oil, CIF plant, will be aboutCFAF 17,500/ton.

3. Water: The CIMAO plant, would require water for two purposes only:(i) cooling of machines and spraying of hot kiln exit gases, when these arenot led through the mills; (ii) tap water (drinking water, sanitary purposes).W4ith the open circuit cooling svstem 1/, the water consumption would be about250 m3/h. 2/ In 1974, CIMAO carried out a drilling of 116 m depth to establishthe water supply of the ground water under the limestone deposit. This groundwater body is enclosed in the sandy shale deposit and is under pressure in thesouthern part of the limestone deposit. CTMAO's drilling confirmed the resultsof a previous dri ling campaign carried out by the UN in 1971: one well wouldvield about 100 m /h without lowering the water level by more than 6 m at thelocation of the well. Thtis three wells reasonably spaced apart from each othercould furnish sufficient water for the plant. The chemical analysis of thewater, obtained from the TU drilling test shows a low ph-value (only 6, acid-ity); it will therefore he necessarv to add an anticorrosion component. Thewater is adequate for drinking.


1/ Except for spraying of cooler tubes (closed system).

2/ Total consumption 650 m 3/h of which about 400 m /h will be recycled.

ANNEX 5-4Page 1



MANPOWER AND TRAINING

A. Labor Force Prolections

1. Traditionally, cement factories are not labor intensive. Thus forthe total plant and the Lome terminal, a work force of only about 450 personswill be required. The estimated labor force by department is shown in Table1.

2. This labor force can be grouped into the following categories, whichreflect levels of responsibility and remuneration.

Labor Categories and Remuneration

AverageGroyp Job Category Annual Salary /1

(Million CFAF)

A Expatriate Experts, including Managers 6.3

B Local Experts; including Managers 2.4

C Equipment Operators and Employees 0.7

D Specialized Workers and Employees 0.5

E General Labor 0.3

/1 Including fringe benefits and travel for expatriates; amounts are in1975 terms.

The estimated distribution of the work force into these groups is shown be-low:

ANNEX 5-4Page 2

Distribution of Labor into Catepories

A B C D E Total

Direct Labor 10 15 20 60 70 175

Indirect 12 20 20 68 50 170

Administration 8 15 15 27 40 105

Total Work Force 30 50 55 155 160 450

4. In addition, a management assistance team of 4 people (1 director,3 engineers) will be provided by ORIGNY during testing, startup and firstyear of operation of the plant. CIMAO has the option to extend the duration

of stay of this team or part of it, if required. Category A, as well as the

expatriate management team, will gradually be replaced by personnel inCategory B, the number of which reflects the necessary duplication. The tech-nical assistance firm will prepare by January 1977 a program of "Africaniza-tion" of jobs which, for reasons of quick project imnlementation and a speedy

and smooth startup period, will initially be held by expatriates. The indi-genization program will be updated at plant startup to reflect experiencesmade during the training period.

B. Training

5. Training is one of the crucial aspects for the success of this pro-ject, particularly since the Western Africa Region, except for Nigeria, hashad no cement plants from which experienced staff could be recruited. Given

the importance of training, this function will be centrally planned andexecuted by the technical assistance firm. ORIGNY is responsible for thepreparation and execution of a complete training program as follows:

(a) Detailed identification of personnel requirements bv jobcategory and education level required

(b) Preparation of detailed job description for each position

(c) Preparation of planning and execution of personnel sel-ection

(d) Preparation of planning and execution of trainingabroad and/or locally

(e) Introduction into CIMAO position with on-the-job trainingif required

(f) Indigenization program with related on-the-job training

ANNEX 5-4

Page 3

6. ORIGNY estimates to train about 95 persons in France (includingexpatriate staff) and the remainder in Togo. The personnel trained in Franceinclude a plant manager, three operational managers (production, maintenance,laboratory) and 11 technicians (for quarry, production, electric--, mechanic--,electronic--, x-ray--, and operational work). ORIGNY operates, in its ownproduction facilities in France, different types of equipment, which will

permit broad general training as well as specialized training on particularequipment. Training of other technical personnel, of administrative staff,including accountants, sales personnel, personnel managers, and support ser-vice personnel will be carried out in local training facilities in Lome,some of which will have to be enlarged to accommodate CDMAO's requirements.Although overall responsibility for training is under ORIGNY, it can sub-contract special training to Holderbank, a Swiss cement producer and consul-tant, who owns a substantial amount of equity of ORIGNY. It could also sub-contract special training jobs to the engineering firm APCM or to equipmentsuppliers, if desirable. The proposed training arrangements are satisfactory.


ANNEX 5-4Table 1



EXPECTED LABOR FORCE BY DEPARTMENT

CATEGORY AND DEPARTMENT NUMBER

(i) Direct Labor

Quarry 50Crusher 6Prehomogenization 10Grinding and Raw Meal Preparation 27Fuel Preparation (oil) 7Kiln Department, Process control 20Clinker Loading, Plant 15Clinker Discharge and Loading

at Lome terminal 40

Total Direct Labor 175

(ii) Indirect Labor

Maintenance Quarry 30Maintenance Plant 65Maintenance Terminal 15Laboratory 14Support Services 46

Total Indirect Labor 170

(iii) Administration & Miscellaneous

Management 17Office Staff 39Miscellaneous 49

Total Administration 105

Total Labor Force 450

Industrial Projects DepartmentFebruary, 1976

ANNEX 5-5Page 1



PLANT IMPLEMENTATION, MANAGEMENT & TECHNICAL ASSISTANCE

A. General

1. Presently CIMAO does not have the personnel to implement the Clinkercomplex by itself. Therefore, it has engaged in contracts with specializedexpatriate firms for the provision of assistance in various disciplinesrequired for a successful project implementation.

B. Contract with APCM

2. The engineering responsibility for the Industrial Complex from thepreliminary study to the final acceptance of the production facilities willbe undertaken by APCM according to the contract signed in May 1975. Thescope of work included in this contract is sumarized as follows:

PHASE I

1. Limestone deposits survey:

- raw materials analysis

- supervision of the drilling campaigns:

- end of Phase 1 campaign- Phase 2 campaign

2. Hydrologic survey

3. Preliminary study and general report covering selection of the site,selection of the process, implementation schedule, cost estimates,operating costs

4. Final study:

- raw materials analysis, definition of the blendingto be used;

- optimal process to be selected for the operation ofthe limestone, clay and sand quarries;

- raw materials flow sheet and process flow chart;

- technical definitions of the facilities of the com-plex;

ANNEX 5-5Page 2

- civil works studies;

- plant layout: quarries, plant and terminal;

- organization during the implementation of theproject.

PHASE II

1. Implementation Schedule of the Complex and Infrastructure (PERTProgram)

2. Procurement:

- general conditions for tendering;

- preparation of tender documents;

- bid evaluation;

- contract preparation.

3. Follow up of the suppliers design and fabrication;

4. Expediting and control of the equipment and structures (throughKennedy, Donkins & Partners);

5. Transportation supervision from supplier's works to CIMAO plant;

6. Erection supervision: coordination, follow-up, quality control;

7. Civil works: basic and detailed engineering, tendering, con-struction supervision;

8. Structures: basic drawings, tendering, erection supervision;

9. Commissioning: test definitions, coordination, sequential tests,final tests, taking over of the engineering;

10. Taking Over: assistance to CIMAO to operate the plant by a man-agement staff of three engineers, one chemist, oneburner;

11. Acceptance: supervision of final performance tests;

12. Checking of the invoices;

13. Cost control follow up (full cost control at extra cost).

ANNEX 5-5Page 3

C. Contract with ORIGNY

3. Prior to the selection of APGM, CIMAO has been advised by ORIGNYand a contract defining the role to be played by ORIGNY was signed in May 1975.The contract covers the engineering, the recruitment and training, the com-missioning of the Industrial Complex and terminal and the technical assis-tance, the scope of which is detailed as follows:

A. ENGINEERING

(a) Implementation of the Project:

- Selection of engineering consultant firm

- Supervision of APCM performance

- Follow-up of Infrastructure progress - roads,railway, electricity, telecommunications

- Monitor time schedule of the project includinginfrastructure

- Supervision of construction works' progress

- Checking of invoices

- Accounting system definition

- Clinker sea transport study - selection betweenpurchasing, leasing, chartering.

(b) Start-up:

- Supervision of tests

- Taking over

- Final acceptance.

B. RECRUITMENT AND TRAINING

- Labor force requirements

- Organization chart - tasks definition

- Training Program - foreign- local

ANNEX 5-5Page 4

- Africanization program

- Selection of the management staff according toORIGNY definitions

- Training - management staff- labor staff

- Training during the commissioning period.

C. COMMISSIONING OF THE INDUSTRIAL COMPLEX

- One year full responsibility of operation.

D. TECHNICAL ASSISTANCE

- 5 years of technical assistance in all productionand maintenance areas

- Management assistance during same period if CIMAOso requests.

D. Other Arrangements

4. CIMAO will be responsible for the execution of the project's In-dustrial Complex, assisted by its engineering firm APCM and its technicalassistance firm ORIGNY. The design for the CIMAO organization (Charts,Annex 2-4 and 2-5) is being discussed in detail, based on the ORIGN4Yprepared organizational program of CIMAD for the periods of project execu-tion and after startup. To assist the Governments in discussing and decid-ing upon a suitable organizational structure, Mr. Clifford Martin, a Britishnational, experienced in both managing a cement plant and planning and execut-ing cement plant projects in Africa, acts as a project coordinator, liaisingbetween the three Governments and private partners. Mr. Martin, whose ser-vices are financed by the UNDP, will also coordinate project preparationand communications between CIMAO, shareholders, lending institutions, tech-nical assistance firm and engineering firm during a period of one year upto September 1976. By that time, the Togolese Director General, Mr. Katamna,who was appointed in December 1975, will manage the firm, assisted by anexpatriate, experienced in plant management and to be provided by ORIGNY inlate summer 1976. The organizational structure will be filled by personnelto be trained according to an agreed-upon program. Mr. Martin will devotehis services from September 1976 to September 1977 more exclusively to thecoordination of infrastructure components (Chapter 6 of the AppraisalReport).

ANNEX 5-5Page 5

E. Cost Control

5. It is necessary that the cost control for the plant execution behandled by an experienced firm well familiar with the project. APCM hasoffered to provide these services, at additional costs, in the frameworkof the existing contract and CIMAO considers to retain APCM for this job.CIMAO has agreed to implement, during project execution, a cost controlsystem satisfactory to the Bank.



IMPLEMENTATION SCHEDULE

PERIOD 1975 1976 1_77 1979 197B 1960

ACTIVITIES J=_FM A IM XJ JXA i N i i FJN M J J Ao X j N DiE M A

SECOND DRILLING CAMPAIGN i _

SAMPLE TESTING

FINAL STUDY (OUARRY, PROCESS, LOCATIOM

REVIEW BY CIMAO & ORIGNY

PREPARATION OF TENDER DOCUMENTS (EQUIPMENT)

RELEASE OF TENDER DOCUMENTS tEQUIPMENT)

PREPARATION OF OFFERS BY EQUIPMENT SUPPLIERS

ANALYSIS OF TECHNICAL BIDS (EQUIPMENT) & MODIFICATIONS _

ANALYSIS OF PRICE BIDS (EQUIPMENT)

CONTRACT NEGOTIATIONS (EOUIPMENTI _

PREPARATION OF TENDER DOCUMENTS (CIVIL WORKS) MiLlionPREPARATION OF OFFERS BY CIVIL CONTRACTORS '

BID EVALUATION OF CIVIL WORKs 1f _

CONTRACT NEGOTIATION ICIVIL WORKS) " _

DETAILED ENGINEERING OF EOUIPMENT, SUBMISSION OF DRAWINGS

DELIVERY OF EQUIPMENT _

CIVIL WORKS _

ERECTION OF EQUIPMENT -

TEST AND START-UP OF FIRST LINE

TEST AND START-UP OF SECOND LINE _ 0

STAFF OF ENGINEERING FIRM lAPCMi ON SITE -

MANAGEMENT ASSISTANCE (ORIGNY) _

- Civil works miht possblY be split into two separate contracts, one for ste preparation, roads and utility networks and one f-r Iundatlonsbuildings and structures

0 Releae .f tender documentsA Order plecement World k-9E9BR)* Start up date of production lineo Estimated protect completion

Industrial Proleots DepartmertFebruary 1976

ANNEX 6-1Page 1



CIMAO POWER SUPPLY

A. Local Power Companies

1. The CIMAO project's power needs are to be met by two companies: theCommunaute Electrique de Benin (CEB) and the Compagnie d'Energie Electriquedu Togo (CEET). A regional body including the Governments of Ghana, Togo andBenin, CEB contractually buys up to 50 MW of power from the hydroelectricpower plant in Akossombo, Ghana (IBRD Map 11685) which is owned by the VoltaRiver Authority (VRA) of Ghana. The VRA, a public enterprise, in 1969 enteredinto a contract with CEB, to supply for 15 years, starting from January 1973, upto 50 MW of hydropower to the two countries. The contract, guaranteed by theGovernment of Ghana, is renewable for periods of 5 years after 1988, uponwritten request by the two Governments. CEB is responsible for purchase anddistribution of that electricity to the two national distributors and directlyto large industrial enterprises like CIMAO. CEB owns the double circuit trans-mission lines of 161 kV, which supply substations at Lome-Tokoin and Cotonou.The Togolese distributor, Compagnie d'Energie Electrique du Togo (CEET) sellspower to smaller industrial consumers and households and sets prices in accord-ance with Government guidelines and based on the purchase price of CEB andVRA.

2. Since from 1978 the two countries' electricity requirements areexpected to exceed, during peak hours, the 50 MW delivered from Ghana, existingand new thermal power plants at Lome and Cotonou (capacities 17 MW and 12 MWrespectively) and in the Togolese phosphate mine CTMB (capacity 10 MW) will beutilized to shave peak demand. Presently a study by Electroconsult, Italy, isunder way to assess what modifications will be required to hook these threepower plants into CEB's system. The study will also assess power demandfor CEB until 1985 and supply facilities to meet forecast demand. A draft ofthe study has been received by the Bank in March, and recommends an expansionprogram to cover the forecast demand of the next ten years. Togo has guaran-teed to provide the full requirements of power of CIMAO during the life of theProject.

B. The Project's Power Component

3. Power for the CIMAO Industrial Complex will be supplied directly byCEB, while the rail/port terminal will be supplied by CEET. The CIMAO plantwill require the extension of a substation (161/63 kV, 2 x 12 MW) to be builtfor the Compagnie Togolese des Mines du Benin (CTMB) and surrounding villagesand cities and to be located near Dagbati at the main network of CEB. The

ANNEX 6-1Page 2

power line from the substation to the plant (about 10 km) will carry 63 kV.Both, substation and powerline, will be procured, built and owned by theMinistry of Public Works and Mines of Togo which will designate CEB toexecute the component. CEB has retained CHECO Consultants Ltd.--a Canadianfirm--to carry out preliminary studies, engineering and supervision of theCIMAO Power Link. CHECO was also selected by CIDA for providing similarservices to CTMB's project. CIMAO will pay for these investments indirectlyby means of the electricity tariff. The CEET hookup at the terminal willonly require small expenditures.

C. Tariffs

4. CEB tariffs are based on (i) the purchase price of VRA's hydropower;(ii) CEB's operating and maintenance costs; (iii) CEB's loan amortization anddepreciation of equipment and facilities. VRA's present sales price has beenin effect since the beginning of the contract between CEB and VRA, i.e., 1973and will have to be increased soon to reflect inflation. Based on the expectedrevised prices, and taking account of the necessity to include thermal powerin CEB's overall power supply, the expected overall tariff for CIMAO has beencomputed at CFAF 4.94/kWh (US$0.022) expressed in 1975 terms. The CEET tar-iffs are estimated to amount to CFAF 9.0 kWh (US$0.04).


ANNEX 6-2



TOWNSHIP

A. Description

1. It will be necessary to build accommodation for about 90 of theenvisaged 450 employees of CIMAO. The other employees are expected to bedrawn from nearby villages and towns where they have housing already and theGovernment of Togo is asking EDF to finance improvements of the infrastructurein these villages and towns in order to assure adequate living conditionsfor all employees of CIMAO. The township, located near the plant, will pro-vide housing for the management personnel and their families; it will includea medical center, a school, a supermarket, and other public facilities.ORIGNY, who has been contracted by CIMAO (see Annex 5-5) has already issuedthe basic data in order to allow two local architect firms (in Lome andAbidjan) to carry out the study which is expected to be completed by mid-May1976. Part of the housing program will be achieved by end 1977 to accommodatethe management staff during the implementation of the construction of theplant while the entire program is expected to be completed by mid-1978. TheMinistry of Public Works and Mines will finance and own the township and rentit to CIMAO. Capital Cost estimates are detailed in Annex 7-3 and amount to atotal of US$5.8 million equivalent. Construction will be carried out underthe responsibility of the Ministry of Public Works and Mines, with the archi-tect firms and ORIGNY supervising execution of works to be undertaken by asuitable Civil Contractor.

B. Rent

2. CIMAO will operate and maintain the township and be responsible forrepairs and replacements. Thus the rent to the owner would only cover amortiza-tion of initial investment costs. Since financing would be achieved throughone of the concessionary financing sources interested in financing infrastruc-ture requirements of the CIMAO project, the benefits from such concessionaryfinancing should accrue to the three Governments owning CIMAO. This can bestbe achieved by passing on the concessionary financing directly to the owningentity and covering appropriate amortization of this financing through anappropriate rent. With this rationale, and based on capital costs as shown inAnnex 7-3, the rent for the township has been worked out to CFAF 17 millionper year from 1980 to 1986 and to CFAF 42 million thereafter. Except foran administrative charge of about CFAF 5 million per year, included in aboveamounts, these figures would be fixed payments not subject to inflation.


ANNEX 6-3Page 1



RAILWAY TRANSPORT OF CLINKER

A. The CFT Railway

1. The Chemins de Fer du Togo (CFT) are operated as a department ofTogo's Ministry of Transport, employ about 1,300 persons, including twoFrench technical assistants and operate a meter-gauge, single-line railwaysystem of a total length of 442 km (IBRD Map 1186). Most of the system isequipped with rather light and comparatively old material. CFT's trafficdecreased between its peak year 1969 and 1973 by 65% for freight and 40% forpassengers. In 1973, only about 35,000 tons of goods and I million passen-gers were carried, both over rather short distances. The loss of traffic, duemainly to the construction of asphalt roads parallel to all of CFT's lines, isexpected to continue, as no captive railway traffic presently exists and hasresulted in increasing operation losses. In 1973, the railway's operatingrevenue covered only 52% of its working expenses, necessitating a Governmentsubsidy of CFAF 220 million.

2. The need for subsidies to cover operating expenses for the railway'spresent operations is expected to increase further in the absence of appropriateaction by the Government, which must probably consist of successively phasingout a substantial part of the railway's present operations. The Bank agreedwith the Government on the occasion of the First Highway Credit of 1968 (131-TO) that under certain conditions, which are now fulfilled, the branch lineLome-Palime (IRRD Map 11686), would be phased out by 1981. This is beingdiscussed between the Togolese Government and the Bank in the context ofBank-financed other transport projects.

3. Presently, the railway's only bulk traffic is the temporary trans-port of rockfill for the ongoing Lome port extension at a rate of about 1,400tons per day. This transport is now, after some initial difficulties, beingexecuted properly and at reasonable cost. It can, therefore, be expected thatthe railway will be operationally capable of carrying the clinker with suffi-cient reliability and at acceptable operating costs.

B. CIMAO Project's Railway Component

4. The railway component of the CIMAO project includes:

(i) a railway extension of 50 km from PK 19(PK = Point kilometrique; 19 km from Lome)of the Central line of the CFT system

ANNEX 6-3Page 2

to Tabligbo, in the vicinity of which the clinker plant willbe established;

(ii) the renewal and upgrading as necessary, of about 16 km oftrack;

(iii) a partial ballasting of 9 km of the Anecho line;

(iv) hookup to the rail terminal facilities at the Clinker Plantand at the Port, crossing loops on the railway extension andadditional crossing loops on the existing lines.

(v) the normal fixed installations of the line: buildings,signalling and telecommunication equipments;

(vi) the necessary mechanical track maintenance equipment;

(vii) the necessary motive power: (3);

(viii) the required clinker and tanker wagons: (92 + 12);

(ix) the basic set of major spare parts for locomotives androlling stock and additional workshop equipment;

(x) the appropriation of the workshops;

(xi) some improvements for the operation's supervisory service; and

(xi) a link between the northern part of the Central line (beyondPK 19) and the new railway extension, mainly for the ballasttraffic.

5. The characteristics of the chosen route are:

(i) PK 19 of Central Line to the Clinker Plant:- gradient: 5 per mil maximum- curve radii: 1,000 m minimum

(ii) Central Line, from Junction to PK 19:- gradient: 10 per mil maximum for southbound trains

(loaded clinker wagons) - 16.5 per mil maximumfor northbound trains

- curve radii: 600 m minimum

(iii) Anecho Line:- gradient: 7 per mil maximum for loaded trains,

near Lome (Junction)- curve radii: 400 m minimum (one curve of 200 m radius)

ANNEX 6-3Page 3

6. The proposed standards for track material are:

(i) on the Railway extension and the Central Line:- 36 kg rails;

- 1,500 steel sleepers per km;

(ii) on the Anecho line, between Junction and Akodessewa and betweenthis latter station and the port, the Bank's estimate is basedon a status quo. The weight of the rails is respectively of33 kg and 36 kg on those two sections;

(iii) in the yards at the terminals and for the crossing loops, aswell as for the link to the north of the Central line and therailway extension, second hand rails and sleepers, if available,will be used.

7. The proposed equipment for the railway is as provided for in the CFT'sestimate, as far as basic set of major spare parts, buildings, maintenanceand operation facilities are concerned.

8. The Capital Cost Estimate is detailed in Annex 7-3, and amounts toUS$31 million equivalent. The numbers of locomotives and wagons have beenassessed with the assumption of light equipment (13.5 ton axle load). Thiswill allow to keep the three existing bridges of the Central line, which CFTintended to replace for the utilization of heavier equipment (17.5 ton axleload), and will provide much more flexibility in the railway operations.

C. Execution of the Railway Component

9. The Togolese Government, namely the Ministry of Public Works andMines, will finance and own the component. The Ministry will entrust CFTwith its execution. Thus CFT will be responsible for design, procurementof goods and services and execution. The design for the infrastructure, in-cluding preparation of technical specifications and tender documents, hasbeen carried out by Afrique Promotion, a local consulting firm. Design andchoice of equipment and rolling stock, based on an agreed investment programand recommendations of Canadian Pacific Consulting report of May 1976, willbe carried out by a consultant firm to be chosen and to be acceptable toCIDA, who is financing these equipments, and to the Bank. That firm wouldalso assist CFT in the supervision of production, delivery, installation andstart-up of equipment and rolling stock. Responsibility of supervision ofthe infrastructure works will be with CFT, assisted by a consulting firmacceptable to EDF and to the Bank. The Togolese Government has agreed thatCFT will engage a suitable level of technical assistance and will prepareand implement a personnel training program, both acceptable to the Bank andthe financing colenders, as required to assure an efficient and reliableclinker traffic at reasonable costs.

ANNEX 6-3Page 4

D. Railway Tariff

10. The forthcoming negotiations of a railway tariff for clinker andfuel transport, between CIMAO and CFT should be based on the following con-siderations:

(i) no significant benefits, additional to the revenue fromthe CIMAO traffic is expected to accrue to CFT from theproject. The CIMAO tariff should, therefore,cover,in addition to CFT's CIMAO related working expenses, allof CFT's corresponding debt service. This assumes thatthe costs of the railway component, will be financedentirely through loans and/or foreign grants;

(ii) in order to cover CFT against unforeseen risks and to giveCFT a commercial interest in carrying CIMAO's traffic, thistraffic, considered independently from CFT's present opera-tions, should generate a small positive cash flow to therailway after payment of debt service.

(iii) renewals of equipment or line infrastructure are not tobe covered until actually incurred; only then the tariffwill be increased to reflect service of additional debtto cover additional investment related to CIMAO.

11. CFT's working expenses to carry the CIMAO traffic have been esti-mated by the railway and the Bank largely concurrently at CFAF 230 millionper year in 1975 prices, consisting of the following elements:

Working Expenses for CIMAO Traffic

CFAF Million __

(a) Staff costs and overheads 83 36.1(b) Fuel and lubricants 89 38.7(c) Spare parts and other material 58 25.2

230 100.0

This amount should be increased by, say, 20% bringing it to CFAF 275 mil-lion, to cover risks and provide for a small cash flow for CFT. It mustadditionally be increased to cover wage and price increases beyond 1975.

12. The tariff portion, resulting from debt service, is a functionof the conditions of financing of the railway component. According to thefinancing plan of the railway component (CIDA, EDF and ADB) and taking intoaccount the respective interest rates, maturities and grace periods, thefollowing railway transport costs to be borne by CIMAO have been derived:

ANNEX 6-3Page 5

Estimated CFT Transport Costs to be born by CIMAO(CFAF million)

Debt Service /1 Operating Costs /2 Total

1979 - 140 1401980 90 240 3301981 90 275 3651982 220 /3 275 4951983 220 275 4951984 220 275 4951985 220 275 4951986 220 275 4951987-1991 295 /3 275 5701992 and thereafter 205 275 480

/1 In current terms, not subject to inflation (constant debt servicepayments).

/2 In constant 1975 terms, subject to inflation.

/3 The jumps in debt service result from end of grace periods of thedifferent loans.


ANNEX 6-4Page 1



PORT OF LOME AND RAIL/PORT TERMINAL FOR CIMAO

A. The Port

1. The Port of Lome is organized as an autonomous authority of the Gov-ernment. Management and operation of the Port, which are satisfactory, arepresently substantially dependent on foreign technical assistance and the needfor this assistance will probably continue at least through the early years ofCIMAO's operation. The Port is protected on the west side by a breakwater witha length of 1,720 m and on the east side by a counterjetty with a length of300 m. The pier has a length of 320 m and a width of 72 m. Four berths areavailable with a total length of 720 m.

B. The Port Expansion Project

2. A major expansion of the Port of Lome is presently under way. Itincludes an extension of the existing breakwater, establishment of a fishingport and the construction of a mineral berth for imports of crude oil, forexport/import bulk commodities, including CIMAO clinker. This mineral berthis more than adequate for the handling of about 1.0 million tons of clinkerproduced yearly by CIMIAO for shipment to Ghana and the Ivory Coast. The Portexpansion which is being financed by concessionary funds from EDF and KfW, isexecuted by a German contractor, supervised by a German engineering firmand is expected to be ready on schedule by the end of 1976.

C. The Rail/Port Terminal for CIMAO

3. The Rail/Port Terminal required to evacuate the CIMAO clinker throughthe Port will include rail unloading, clinker storage, handling, and shipload-ing facilities (Annex 6-4, Chart 1). Its installations are designed to handle1,000 t/h, and to store up to 50,000 tons. The bulk clinker rail wagons willdischarge into an under-rail receiving hopper; alternatively, for the case ofexceptional difficulties in rail transport, facilities are provided for thereception of clinker by road. From the receiving hoppers the clinker will beconveyed to the main clinker store or alternatively directly to the ship.Via a separate hopper, clinker can be discharged into lorries for road trans-port to the nearby existing CIMTOGO grinding plant.

ANNEX 6-4Page 2

D. The Execution of the Rail/Port Terminal Project

4. The rail/port terminal is expected to be financed by concessionaryfunds from KfW to be channeled through the Ministry of Public Works and Mineswhich will own it. The Ministry will entrust the Port Authority with theexecution of the component which will be assisted by the German Consultingfirm Dr. Lackner and Partners. The terminal will be designed by APCM whichwill also execute international tendering, evaluate offers and assist in con-tract preparation. Supervision of equipment production, delivery, installa-tion and start-up will be carried out by APCM, while civil works' executionwill be supervised by Lackner, each firm working in close coordination withthe other, with CIMAO, and the Port Authority. Lackner will also be respon-sible for the overall cost control of the terminal. The Togolese Governmenthas agreed that the Port Authority will engage a sufficiently high level oftechnical assistance acceptable to KfW and the Bank to assure an efficientand reliable clinker vessel transfer through the port at reasonable costs.However, the terminal itself will be operated and maintained by CIMAO.

E. Port Charges

5. CIMAO will pay for the services and investments provided by the portin the form of three different categories of charges (all expressed in 1975terms):

(i) Vessel Charges: vessels, shipping clinker for CIMAO, will becharged passage-, anchorage-, pilot-, berthing-, and quay feesto cover the appropriate services rendered by the port; thesecharges are not included in the maritime freight charges(para 6.13 of Main Report) and will have to be borne by CIMAO.Given the vessels' size and duration of stay in the port, thesecharges amount to about CFAF 24 million per year, equivalent toabout CFAF 24 per ton, basing calculations on 1.0 million tonsof clinker to be shipped to Ghana and Ivory Coast per year.These charges would be subject to inflation.

(ii) Port Investment Charges: Of the ongoing Port expansion project,about 24% of the related investment, or about CFAF 1.0 billion,is considered attributable to the CIMAO project. Since thisinvestment has been financed by program funds of EDF and KfW toTogo, benefits accruing from this investment should entirely flowto Togo. Thus it has been assumed that this investment shouldyield a financial return similar to the CIMAO project. The re-sulting annual charges would be about CFAF 97 million (or CFAF 97per ton) resulting from calculations using a return of about 8.5%over a period of 25 years. This charge has been increased by about20% to CFAF 116 million to account for administrative and insurancecosts. Accordingly, the Port Authority has proposed equivalentcharges consisting of "tax sur marchandise" (CFAF 100 per ton),"droit de Manutention" (CFAF 15 per ton), "droit de passage

ANNEX 6-4Page 3

sur quai" (CFAF 500 per linear meter of belt conveyor) and"taxe domaniale". The charges to cover the investment willnot be subject to inflation.

(iii) Rail/Port Terminal Charges: The rail/port terminal for CIMAOwill be financed through, and owned by the Ministry of PublicWorks and Mines, who will charge the Port authority with thecomponent's execution. The Terminal will be operated andmaintained by CIMAO. Thus the main cost accruing to the portfrom the terminal is the debt service on the concessionaryfinancing obtained from KfW in the frame of the CIMAO projectfor this Infrastructure Component. To cover insurance andadministrative costs and to give the port an incentive to serveCIMAO, the initial debt service charges of CFAF 335 million peryear have been increased by about CFAF 23 million per year.While the portion covering debt service would not be subjectto inflation, the remainder would.

6. The table below indicates, as a result of above assumptions, pro-posed charges to be paid by CIMAO to the port authority, grouped into portcharges (items (i) and (ii)), and terminal charges (item (iii)).

ANNEX 6-4Page 4

Port and Terminal Charges

(CFAF Million - Constant 1975 terms)

Port Charges Terminal Charges

Debt Operating Debt OperatingService /1 Costs /2 Total Service /1 Costs /2 Total

1979 - 25 25 - 12 121980 80 35 115 132 /3 23 1551981 100 40 140 335 23 3581982 100 40 140 335 23 3581983 100 40 140 335 23 3581984 100 40 140 335 23 3581985 100 40 140 335 23 3581986 100 40 140 335 23 3581987 100 40 140 448 /4 23 471

same payment until same payment untilyear 2005 year 2006

/1 In current terms, not subject to inflation (constant debt servicepayments).

/2 In constant 1975 terms, subject to inflation.

/3 The debt service payment is based on an onlending rate of 6%(= 2% + 4%) of the KfW loan from 1981 on.

/4 The jump in debt service results from end of grace period of theloan.


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TOG0/IVORY COAST/GHANA

CIMA0 REGIONAL CLINKER PLANT

INDUSTRIAL COMPLEX - COST ESTIMATE(CFAF million)

Contingencies Local / Foreign /4

Base Cost Erection Physical Prices - Total Cost Cost Total

A. Equipment and Spares /5

- Dragline, Excavators- Bulldozer, Scrapers, Grader- Backhoes- Dump Trucks ) 1,456.8 37.2 149.4 407.9 2,051.3 41.0 2,010.3 2,051.3

- Drill Equipment- Water and Fuel Bowsers, Explosives and Maintenance

Vehicles, Mobile CranesCrushing Plants 487.6 66.6 55.4 146.7 756.3 35.8 720.5 756.3

- Crusher/Dryer, Blending and Storage, Preheaters, Kilns,Cooler, Conveyor, Dus Plants, Saspling Plants, Oil Storageand Firing 8,143.4 1,273.8 941.7 2,577.0 12,935.9 546.8 12,389.1 12,935.9

- Clinker Wagon Loading 207.6 59.3 20.8 71.1 358.8 35.8 323.0 358.8

- Stocking out and Reclaiming 668.0 129.3 79.7 213.1 1,090.1 55.0 1,035.1 1,090.1

- Workshop Equipment 185.1 18.2 20.3 52.0 275.6 2.7 272.9 275.6

- Laboratory Equipment 59.3 - 5.9 14.2 79.4 0.8 78.6 79.4

- Office Stores and Kitchen Equipment 64.5 4.5 6.9 14.3 90.2 18.4 71.8 90.2

- Electrical Equipment 1,932.5 885.5 281.8 777.6 3,877.4 193.8 3,683.6 3,877.4

- Process Control 342.2 124.0 46.6 123.1 635.9 31.7 604.2 635.9

- Spares/k 1,252.4 - 125.2 336.9 1.714.5 17.1 1,697.4 1,714.5

Subtotal 14,799.4 2,598.4 1,733.7 4,733.9 23,865.4 978.0 22,886.5 23,865.4

A. Civil Construction /6

- Civil Engineering, Site Preparation 333.0 33.3 175.8 542.1 180.7 361.4 542.1

- Civil Engineering, Main Contract 8,395.7 839.6 4,480.5 13,715.8 4,572.5 9,143.3 13,715.8

- Civil Enginering, Railways and Sidings 168.9 16.9 94.6 280.4 93.4 187.0 280.4

Subtotal 8,897.6 889.8 4,750.9 14,538.3 4,846.6 9,691.7 14,538.3

C. Other

Engineering, T.A. and Training 2,070.0 207.0 472.3 2,749.3 412.3 2,337.0 2,749.3

Subtotal Preoperative Expenses 2.187.5 _ _218.1 497.5 2,903.1 1,159.6 1,743.5 2.903.1

Total Plant 27,954.5 2,598.4 3,048.6 10,454.6 44,056.1 7,397.4 36,658.7 44,056.1

Interest During Construction 3,458.9 325.1 3,133.8 3,458.9

Working Capital 1,985.0 992.5 992.5 1.985.0

TOTAL 4M,59Q02 8,715.0 40,785.0 495_00.0

Ll Base cost estimates in mid 1975 prices./2 All physical contingencies - 107 of base cost estimates./3 Price contingencies in %:

1975 1976 1977-79 1980

Civil Works 16 14 12 10Equipment, sparcs and others 12 10 8 7

/4 Foreign exchange costs include direct and indirect components./5 Cost estimates of civil construction, equipment and erection based on detailed APCM report dated November 1975. They include freight and insurance costs.

/6 Cost of spares - 8-1/2% of equipiiicnt cost./7 Engineering, Technical Assistance and Training costs are based on contracts with APCM and Origny.


TOGO/IVORY COAST/GHANA ANNEx 7-2

CIMAO REGIONAL CLINGER PROJECTTh

PROJECTED WORKING CAPITAL. REQUIREMENTS

(CFAF MILLION-CURRENT T'ERMS)

YEAR 1976 1977 1978 1979 1980 1981 1982 1983 1984 1.985 1986 1987

CURRENT ASSETS

CASH - - 717/2 38 109 119 125 134 143 153 164

RECEIVABLES - -- - 337 1153 1644 1649 1765 1888 2021. 2162 2313

I NVENTOR I ESFUEL OIL - -- - 364 390 417 446 477 511 547 585 626

MATER.SPARESv SUPPL.... - - 17 41 54 58 62 66 71 76 81

WORhK 'IN PROGRESS - -- - 125 142 159 163 164 165 168 172 176

FINISHED GOODS PL AN'T - - -- 70 225 190 194 196 197 20:1 205 210

FINISHED GOODS TELRM - - -- 175 563 474 485 490 492 501 511 525

TOTAL INVEN'TORIES -- - 751 1361 1294 1346 1389 1431 1488 1549 1618

TO TAL CURRF:'NT ASSETS. - - 1805 2552 3047 311:4 3279 3453 3652 3864 4095

LESS ACCOUNTS 1AYABLE - - 205 567 744 800 856 915 979 1047 1122

WORK ING CAP ITAL - - - 1600 1985 2303 2314 2423 2538 2673 2817 2973

CHANGE IN WORKING CAP. - - - 1600 385 318 11 109 115 135 144 156

/1 Basic Assumptions: 1. Cash: 1 month of total costs of goods sold.

2. Receivables: 1.5 months of total gross sales.3. Inventories:

a) Fuel Oil: 15,000 tons (45 days' supply at rated capacity) at CFAF 17,500 per ton (1975 terms).b) Materials, Spares, Supplies: 1.0 months' worth of total annual requirements. Spare parts of CFAF million are already

included in the capital costs.c) Work in Progress: 25,000 tons (6.3 days of production at rated capacity) at full production costs.d) Finished Goods, Plant: 20,000 tons (5 days of production) at full production cost.e) Finished Goods, Terminal: 50,000 tons (12.5 days of production) at full production cost.

4. Accounts Payable: 2.5 months' payment delay on power bills.

/2 During year 1 of operation (1979) cash has been kept high in order to meet initial startup problems.


ANNEX 7-3Table 1



SUMMARIES OF CAPITAL COST ESTIMATE FOR INFRASTRUCTURE COMPONENTS


1. CEB POWER LINK

Civil Works and Services - Base Cost 68 23 91 0.3 0.1 0.4Equipment and Materials - Base Cost - 472 472 - 2.1 2.1Contingencies 7 49 56 - 0.2 0.2Price Contingencies 17 151 168 0.1 0.7 0.8

Total Fixed Assets 92 695 787 0.4 3.1 3.5Interest during Construction - - - - - -

Total Financing for CEB 92 695 787 0.4 3.1 3.5

2. TOWNSHIP

Civil Works and Services - Base Cost 472 203 675 2.1 0.9 3.0Equipment and Materials - Base Cost 46 179 225 0.2 0.8 1.0Contingencies 52 37 89 0.2 0.2 0.4Price Contingencies 177 127 304 0.8 0.5 1.3

Total Fixed Assets 747 546 1,293 3.3 2.4 5.7Interest during Construction - 22 22 - 0.1 0.1

Total Financing for Township 747 568 1,315 3.3 2.5 5.8

3. CFT RAILWAY COMPONENT

Roadbed and Civil Works - Base Cost 832 1,418 2,250 3.7 6.3 10.0Track-equipment, Materials,

Spares - Base Cost - 2,498 2,498 - 11.1 11.1Contingencies 90 382 472 0.4 1.7 2.1Price Contingencies 292 1,350 1,642 1.3 6.0 7.3

Total Fixed Assets 1,214 5,648 6,862 5.4 25.1 30.5Interest during Construction - 113 113 - 0.5 0.5

Total Financing for CFT 1,214 5.761 6,975 5.4 25.6 31.0

4. RAIL/PORT TERMINALS

Civil Works and Services - Base Cost 495 1,417 1,912 2.2 6.3 8.5Equipment and Materials - Base Cost 90 1,553 1,643 0.4 6.9 7.3Contingencies 53 296 349 0.2 1.4 1.6Price Contingencies 189 1,050 1,239 0.9 4.6 5.5

Total Fixed Assets 827 4,316 5,143 3.7 19.2 22.9Interest during Construction - 180 180 - 0.8 0.8

Total Financing for Terminal 827 4,496 5,323 3.7 20.0 23.7

Industrial Projects DepartmentMarch 1976

ANNEX 7-3Table 2



CAPITAL COST ESTIMATE FOR POWER SUPPLY L


Power Line - 47 47 - 0.2 0.2

Power Transformer and Reactor - 425 425 - 1.9 1.9

Civil Works and Engineering 68 23 91 0.3 0.1 0.4

Total Base Cost 68 495 563 0.3 2.2 2.5

Physical Contingenci7 /2 7 49 56 - 0.2 0.2Price Contingencies - 17 151 168 0.1 0.7 0.8Interest during Construction - - - - - -

Total Financing for Power Supply 92 695 787 0.4 3.1 3.5

/1 Based on estimate by CHECO Consultants Ltd./2 10% of base cost/3 Price Contingencies: 1975 1976 1977-79 1980

Civil Works 16% 14% 12% 10%

Equipment & Others 12% 10% 8% 7%

CAPITAL COST ESTIMATE FOR TOWNSHIP

CFAF Million us$ MillionLocal Foreign Total Local Foreign Total

Housing 288 287 575 1.3 1.3 2.6Public Facilities 50 50 100 0.2 0.2 0.4

Infrastructure 90 45 135 0.4 0.2 0.6

Engineering and Administration 90 - 90 0.4 - 0.4

Total Base Cost 518 382 900 2.3 1.7 4.0

Physcial Contingenci3 - 52 37 89 0.2 0.2 0.4

Price Contingencies - 177 127 304 0.8 0.5 1.3

747 546 1,293 3.3 2.4 5.7

Interest during Construction - 22 22 - 0.1 0.1

Total Financing for Township 747 568 1,315 3.3 2.5 5.8

/1 Based on estimates by Origny and local sources./2 Physical Contingencies - 10% of base cost./3 Price Contingencies: 1975 1976 1977-79

Civil Works 16% 14% 12%Equipment and Others 12% 10% 8%


ANNEX 7-3Table 3



CAPITAL COST ESTIMATE FOR RAILWAY

CFAF Million US$ Million /1Local Foreign Total Local Foreign Total -

a) Rolling Stock and MotivePower- Wagons: Clinker (92) - 932 932 - 4.14 4.14

Fuel (12) - 124 124 - 0.55 0.55- Locomotives (3) - 337 337 - 1.50 1.50

b) Spare parts, workshopEquipment - 234 234 - 1.04 1.04

c) Telecommunications - Signalling - 56 56 _ 0.25 0.25

Sub Total - 1,683 1,683 - 7.48 7.48

d) Track Materials and Track Laying 337 1,497 1,834 1.50 6.65 8.15

e) Construction Works 405 587 992 1.80 2.61 4.41

f) Engineering - Supervision 45 59 104 0.20 0.26 0.46

g) Training & Pre-operating Expenses 45 90 135 0.20 0.40 0.60

Total Base Cost 832 3,916 4,748 3.70 17.40 21.10

Physical Contingenci.2 /2 90 382 472 0.40 1.70 2.10Price Contingencies 292 1,350 1,642 1.30 6.00 7.30

Total Fixed Assets 1-214 5,648 6,862 5.40 25.10 30.50Interest during Construction - 113 113 - 0.50 0.50

Total Financing for Railway 1,214 7 6, 975 5.40 25.60 31.00

/1 Exchange rate: US$1 = CFAF 225./2 Contingency Assumptions:

Physical: 10%Price: 1975 1976 1977-79Civil Works 16% 14% i2%Equipment 12% 10% 8%


ANNEX 7-3Table 4



CAPITAL COST ESTIMATE FOR TERMIINA /

CFAF Million US$ Millionlocal Foreign Total Local Foreign Total

Clinker Hsndling 150 1,630 1,780 0.7 7.2 7.9Silos 260 5o4 764 1.2 2.2 3.4Electrical Equipment - 135 135 - o.6 o.6Roil Terminal 8 59 67 - 0.3 0.3Wharf 10 440 150 - 2.0 2.0

Roads 67 45 112 0.3 0.2 0.5

Buildings 45 90 135 0.2 0.4 o.6

Others 45 67 112 0.2 0.3 0.5

Total Base Cost 585 2,970 3,555 2.6 13.2 15.8

Physical Contingencies - 53 296 349 0.2 1.4 1.6

Price Contingencies /3 189 1,050 1,239 0.9 4.6 5.5

Total Fixed Assets 827 4,316 5,i43 3.7 19.2 22.9Interest during Construction - 180 180 - 0.8 0.8

Total Financingfor Terminsl 827 4,496 5,323 3.7 20.0 23.7

/1 Bpsed on estimates by APCM - November 1975 report.72 Physical Contingencies - 10% of Base Cost7T Price Contingencies: 1975 1976 1977-79

Civil Works 1 112%Equipment, Sparesand Others 12% lOo 8%

Industrial Projects DepartmentMerch 1976

ANNEX 7-4Table 1

TOGO/IVO0Y COAST/GHANA


OVERALL FINANCING PLAN

Amount %

CFAF US$INDUSTRIAL COMPLEX Billion Million

Equity:

1. Cormion SharesTogo, Ivory Coast, Ghana (equal shares) 12.00 53.4 24.24ORIGNY 0.50 2.2 1.01Other Grinders (SCA, Ghana Cement Works) 1.00 4.4 2.02

Sub Total 13.50 60.0 27.27

2. Preferred SharesTogo, Ivory Coast, Ghana (equal shares) 5.80 25.8 11.71

Total Equity 19.30 85.8 38.98

Loans: LiIBRD 11.15 49.5 22.50ABEDIA 2.25 10.0 4.56ADB 2.20 9.8 4.45CCCE 2.25 10.0 4.56EIB 5.40 24.0 10.91Export Credits 6.95 30.9 14.04

Sub Total 30.20 134.2 61.02

TOTAL 49.50 220.0 100.00

INFRASTRUJCTURE

Togo:Interest During Construction 0.32 1.4 2.20

Loans:

ADB 0.49 2.2 3.40CIDA 3.83 17.0 26.60EDF 4.61 20.5 32.00KfI' 5.15 22.9 35.80

TOTAL 14.40 64.0 100.00

/1 Does not include direct loans to Governments.


ANNEX 7-4Tabl e 2

TOGO/IVORY OOAST/GHANA


TERMS AND CONDITIONS OF LOANS

Amount Interest Maturity GraceINDUSTRIAL Source US$Million Rate Years Period ProcurementCOMPLEX

IBRD 49.5 8.85 + 1.15 15 5 ICBABEDIA 10.0 6.75 25 5 ICBADB /2 10.0 8.5 + 1.5 15 5 ICBCCCE 10.0 6.50 15 5 ICx 6

EIB /3 24.0 7.5 15 4.5. ICBE.C.714 30.9 7.5 - 8.5 11 3.5 International

Competition /5

TOTAL 134.2

INFRASTRUCTURE

ADB /2 2.2 8.5 15 5 ICBCIDA71 17.0 0 50 10 TiedEDF 20.5 1.0 40 10 ICBKfW 22.9 2.0 30 10Togo 1.4 (for interest during construction)

TOTAL 64.0

/1 US$13 million confirmed; an additional US$4 million under consideration. CIDA's

contribution is tied to Canadian supplies and to infrastructure items.

/2 ADB would provide a total of US$12 million equivalent for either industrial complexor infrastructure requirements.

/3 EIB overall contribution would consist of about US$7.0 million loan at about 9.5%under the Yaounde Convention and about US$17.0 million loan at about 6.5% under theLome Convention.

/4 Export Credits. Expected terms are based on discussions with prospective equipmentsuppliers and Government export-credit agencies.

/5 Competition between prequalified suppliers, with export financing taken intoconsideration.

/6 See para. 7.18 of main text.


ANNEX 7-5


CIMAO RESIONAL CLINKER PROJ3CT

TIMLETABLE FOR PAYING IN CIKAO'S FQUITY CAPITAL-/(in CFAF Million)

Cumulative CumulativeCommon Common Preferred 2referred Cumulative

Dates Shares Shares Shares Shares Total Total

1976 June 30 1915 1915 - - 1915 1915September 30 1335 3250 - - 1335 3250December 31 800 4050 - - 800 4050

1977 March 31 1950 6000 - - 1950 6000June 30 2270 8270 1125 1125 3395 9395September 30 420 8690 1125 Ž'250 15L5 10940December 31 425 9115 1125 3375 1550 12490

1978 March 31 1095 10210 600 3975 1695 14185June 30 1095 11305 610 4585 1705 15890September 30 1100 12405 605 5190 1705 17595December 31 1095 13500 610 5800 1705 19300

TOTAL 13500 5800 19300

1/ Based on agreements between CIMAO, Bank and co-lenders that all disbursements forthe CIKAO Industrial Complex in 1976 will be made by paid-in common shares,that the loans to the CIKAO project wi.l1. become effective after the share-holders have paid in at least CFAF 6 billion, and that total equity will bepaid in before the end of 1978.

Industrial Projects DepartmentYay 1976

TO.-O/IVoTr CO1 sr/c MTA

CL \.O tvW.5IEIYYL CL(T1TK-7 P7?JECT

FIsa^cF!CP PLArM - LOT pALT LOCATlO?JS

A T IMDIAST2LAL PLAE.T /1Lots IEt'cD EIB CCCE S.C. ABE,DIA ADB CIDA TOTAL

Civil Construction 36.0 16.5 6.9 59.L4Ecuiprent: Cuarry A 9 5 9.5

Crushing Plants B 2.2 1.0 0.4 3.6Conveyors r 3.9 1.8 0.7 6.4law Mills, Kilns D 37.8 30.9 68.7Clinker Uandling E 1.3 o.6 C.2 2.1Electrical F 5.3 9.8 15.1Process Contro'l F2 1.8 0.8 o.L 3.0Laboratory G 0.2 0.2 0.4Workshops H-I 0.8 0.3 0.2 1.3Mobile Cranes 0.5 0.5Misc. Office, Kitchen 0.3 0.1 0.1 0.5

Sub-Total 170.5

Technical Assistance G.4 2.T 2.5Engineering, Training 5.9 2.7 1.1 9.7Pre-Operating 7:pecnseo 12.9 12.9-Torking Capital S. 9.0Interest During Construction 9.9 5.5 15.4

TOTAL 75.3 60.C 21h.0 10.0 30.9 10.0 9.8 220.0

:'3 . rTI F >ST7 TJ T ETOC-O EDF Kf7'I P DF CIDA TOTAL

Power Link 3.3 3.5Township 5.7 5.7'?ailway 14.8 2.2 13.5 3C.5Terminal 22.9 22.9Interest cluring Construction 1.4 1.4

TOTAL 1.4 20.5 22.9 2.2 17.0 64.0

/1 E.C. - Export Credits/2 Equity includes US$15.3 million preferred shares from EIB and CCCE Loans.Industrial Projects Department - May 1976 O

ANNEX 7-7Table 1



DISBURSEMENT SCHEDULE OF IBRD LOAN(US$ Million)

Loan to I DirectCIMAO Loan

Industrial to Total Amount UndisbursedComplex Government Disbursement Outstanding Amount

1977 I Quarter - - 54.5II Quarter - 5.0 5.0 5.0 49.5III Quarter - 5.0 5.0 10.0 44.5IV Quarter 3.3 0.5 3.8 13.8 40.7

1978 I Quarter 6.2 - 6.2 20.0 34.5II Quarter 6.3 - 6.3 26.3 28.2III Quarter 5.1 - 5.1 31.4 23.1IV Quarter 6.0 - 6.o 37.4 17.1

1979 I Quarter 5.6 - 5.6 43.0 11.5II Quarter 7.5 - 7.5 50.5 4.0III Quarter o.6 - 0.6 51.1 3.4IV Quarter - 51.1 3.4

1980 I Quarter - - 51.1 3.4II Quarter 3.4 - 3.4 54.5 -

/1 The amounts exclude the interest during construction.

Industrial Projects Department

May 1976

ANNEX 7-7Table 2


CIMAO REGIONAL CLINKER PROJECTPROJECTIONS OF LOAN DISBURSEMENT SCHEDULE

(US$ MILLION)

1977 1978 1979 1980 Total

A. Industrial Complex

IBRD 3.7 25.4 17.0 3.4 49.5EIB 5.5 10.3 6.8 1.4 24.0CCCE 2.3 4.2 2.7 0.8 10.0ADB 2.2 3.1 3.7 0.8 9.8ABEDIA 2.3 3.1 3.9 0.7 10.0Suppliers Credit 7.1 1o.3 11.5 2.0 30.9

Total Disbursements 23.1 56.4 45.6 9.1 134.2Industrial Complex

B. Infrastructure Components -/

CIDA 6.9 6.1 2.0 2.0 17.0KFW 9.2 8.3 2.7 2.7 22.9EFD 8.3 7.5 2.3 2.4 20.5ADB 0.9 0.8 0.3 0.2 2.2

Total DisbursementsInfrastructure Components 25.3 22.7 7.3 7.3 62.6

C. Direct Loans to Governments

IBRD 10.5 - - - 10.5EIB 4.5 1.3 - - 5.8CCCE - 9.5 - - 9.5

Total Disbursements of DirectLoans to Government 15.0 10.8 - - 25.8

Total Disbursements forCIMAO Project 63.4 89.9 52.9 16.4 222.6

1/ The data does not include interest during construction to be paid by theTogolese Government.

Industrial Project DepartmentMay, 1976

ANNEX 8-1



PRODUCTION PLAN

1. According to the general planning (Annex 5-6) established by APCMin coordination with CIMAO and ORIGNY, the first production line would startup (kiln firing) in April, 1979, the second line three months thereafter. Therated capacity of the plant is 2 x 2000 = 4000 TPD; the normal operational timeat annual rated capacity is estimated at 300 days per year (operation factorof 0.82) yielding a production, at rated capacity, of 1.2 million TYP of clin-ker. This is a conservative estimate, which accounts for the lack of expe-rience of CIMAO personnel and potential delays in spare parts supply. However,given good technical assistance and well designed stores, CIMAO should withoutproblems obtain an operating time of 330 days per year (operation factor of0.9), as is common in cement plants elsewhere. This would yield a productionof 1.32 million TPY, 10% higher than rated capacity. For the purpose offinancial projections it was assumed that the plant will reach productionlevels at annual rated capacity only from the third year of operations. Theprojected buildup of production is shown in the following table and is reason-able.

Projected Clinker Production

1979 1980 1981 etc.

Number of Available Days 225 /1 365 365Theoretical Number of Operational Days 185 300 300Projected Operational Days 62 225 300Clinker Production (000 tons) 250 900 1200Utilization of Rated Capacity (%) 33 75 100

/1 Average for two production lines.


ANNEX 8-2



REVENUE PROJECTIONS

1. Regarding price setting, two opposite objectives will govern theCIMAO clinker prices:

(i) The price should cover production and transport costs,debt service and "a fair return on capital invested"(CIMAO Treaty, Article 26).

(ii) The price should be as low as possible so that theresultant cement price does not represent an impedimentto building activity and development in a broader sense.

2. Every CIMAO clinker price, negotiated by the three-state pricingcommission (para 3.12) will therefore represent a compromise between theseconflicting objectives. Initially, the committee will attemptto set the price as close as possible to the CIF import price obtainablefor European clinker, if this price is feasible for CIMAO's financialviability. Thus, CIMAO clinker would sell within the range of CFAF 7,500 and8,000 per ton, projected as long term average CIF import price, in 1975 terms,as derived in para 3.13. During the first three years of operation a price ofCFAF 8,000/ton has been assumed to overcome CIMAO's initially very tightfinancial position. Thereafter a lower price of CFAF 7,500/ton has been usedconsistently during the remainder of the projection period for CIMAO's finan-cial statements.


ANNEX 8-3Page 1



OPERATING COST PROJECTIONS

1. Operating Cost estimates in constant 1975 terms, are based on thestudies and investigations undertaken by APCM, which were reviewed and ac-cepted by ORIGNY. They are reasonable and compare well with similar plantsin North African and Nigeria. A detailed breakdown of operating costs (annualas well as unit costs) is shown on table 1, while projections, in current termsare shown on table 2.

2. Labor: Details contained in Annex 5-4-

3. Fuel: A specific heat consumption of 830 kcal/kg of clinker producedhas been taken into account. With a specific heat value of 9,600 kcal per kgof fuel oil, the resulting consumption is 86.5 kg of fuel per ton of clinker.The estimated fuel oil price (bunker C), ex refinery Lome, is CFAF 16,860 perton of fuel (US$74.93) resulting thus in a cost of CFAF 1,458 per ton ofclinker (US$64.8) in constant 1975 terms.

4. Electricity: Given the dry process, specific consumption of electri-city is about 79.5 kWh/ton of clinker, with production at rated capacityincluding 1.5 kWh/ton for operations of the terminal. With a tariff averagingabout CFAF 4.72 per kWh (US$0.022) this results in CFAF 375 (US$1.7) per tonof clinker produced at full capacity and expressed in constant 1975 terms.

5. Material, Spares and Supplies: The CIF price for grinding media,in constant 1975 terms, will result in a cost of about CFAF 25 (US$0.11) perton of clinker. Although the media must be imported, CIMAO will be exemptfrom all taxes and import duties during the first 10 years of operations. Thusthe price is exclusive of duties and taxes. The same is true for other materials,spares and supplies. Spare parts, costing the equivalent of about 3.5 percentof total equipment costs (in constant 1975 prices) are required for maintenanceand repair. Their costs will amount to a total of about CFAF 430 million(US$1.92 million) per year or CFAF 360 (US$1.59) per ton of clinker. Thislevel of spare part consumption is estimated to be reached gradually after 3years of operations. Other materials and supplies include explosives for thequarry, fuel, lubrication and grease for mobile equipment, and miscellaneoussupplies for workshops and laboratories. Most of these items will have to beimported; total cost per year is estimated at CFAF 110 million (US$0.49 million)equivalent to about CFAF 92 (US$0.41) per ton at full production level.

ANNEX 8-3Page 2

6. Miscellaneous: Various overhead items have been included under thisheading: The ORIGNY contract provides for technical assistance during fiveyears of operations after startup of the plant. Fees are geared to output bymeans of an increasing step function and will gradually decline over theperiod from an average of about CFAF 125 per ton of clinker in year one ofoperation to CFAF 75 per ton of clinker produced in year five of operation.The ORIGNY contract further provides for four men years during the first yearof operations after startup date and contains a renewal option for the periodthereafter. A gradually declining curve has been assumed to reflect a gradualexchange of this management against local personnel. Costs are included inthe labor cost. Township rent is discussed in detail in Annex 6-2. Usualadministrative overhead (except labor) is estimated to amount to CFAF 60 perton of clinker (US$0.26/ton). The project having priority project statusis exempted from all duties and taxes during project execution and the first10 years of operation. Thus no payments are due prior to 1989, thereafterimport duties at Togolese rates and a profit tax of 35% on net profit beforetax. A royalty payment to Togo of CFAF 100 per ton of clinker (US$0.44) hasbeen agreed between the Governments as compensation for the use of the plantarea and consumption of raw materials.

7. Distribution Costs: Operating costs (labor, utilities, spares andsupplies) of the terminal facilities in Lome are included in above operationcosts. However, rail transport, port and terminal charges and shipping chargesfrom Lome to importing ports must be accounted for and are to be covered bythe CIF delivered price of clinker. Chapter VI shows proposed tariffs forrails, port and shipping. Based on these data, the resulting annual distributioncosts, at production levels of rated capacity, would be as follows:

Annual Distribution Costs (1982 - in 1975 terms)

Total Cost Cost per Ton Cost per Ton(CFAF million) (CFAF) (US$)

(i) Rail Charge 42di 350 1.56(ii) Terminal Charge 358 358/2 1.59

(iii) Port Charge 140 14077 0.62(iv) Shipping Charge 870 870J. 3.87

Total Distribution Costs 1,788 1, 18 7.64

L Excluding portion attributed to CIKAO's fuel transport.

/2 Based on 1.0 million tons only.

Indu.strial Projects DepartmentMay 1976

ANNEX 8-3

TOGO/IVORY COAST/GHANA Table 1


OPERATING COSTS (PRODUCTION AT 100% CAPACITY LEVEL, YEAR 1981)(1975 Terms)

TOTAL COST COST/TON TOTAL COST COST/TONCFAF MILLION CFAF US$ MILLION US$

Labor

Direct 190 158 o.84 0.70Indirect 200 167 0.89 0.74Administration 85 71 0.38 0.32Subtotal 7 Ti9 2.11

Utilities

Fuel 1,825 1,520 8.11 6.76Electricity 450 375 2.00 1.67Subtotal 2=75 1,895 10.11 8.43

Material, Spares, Supplies

Grinding Media 30 25 0.13 0.11Refractories 130 108 0.58 o.48Spares 345 288 1.53 1.28Other 110 92 0.49 0.41Subtotal 77 3 2.73 2.28

Miscellaneous

Techl Assist & Management 145 120 o.64 o.53Township Rent 17 15 o.o8 o.07Administration 72 60 0.32 0.27Duties & Taxes Royalty 120 100 0.53 0.44Subtotal 354 297 $5 =

TOTAL 3,719 3,099 16.52 13.78


o17T/VF77WrTOGO / IVORY COAST/ GHANA ANEXU 8-3

------- ~~~~~~~~~~~~~~~~~~Table 2CIMAO REGIONAl CLINKER PROJECT

OP'ERATING COST PROJECTIONS

(OFAF MfLLIONS - CURRENlT TERM~)

1976 197/ 19 /6 1979 1980 ¶981. 1982 1983 1984 1985 1986 19871

E,RIL) II:C I OEN

CLI NKER(I BNS 000) 25O 900 1200 1200 11200 1200 1200 1200 1200

OPE~RATIRG COSTS

L-ADORIiTRFCT LABOR 109 2/4 293 289 283 302 324 346 371MAINT. + SUPPORT 202 28B 1309 297 283 302 324 346 371ASM1N [SERiFrON 88 ¶ 23 11 1; 24 1135 23~ 131 141 1711

TOTAL LABOR 479 685 233 710 681 ?27 779 833 893

LJT Li.11 IFSFIJFL 797 2145 2878 3098 333 3543 3788 4051j 4344ElFCIERICI EY 189 5/7 694 743 795 851 910 9714 1042

JOTAo ff11L ITTES 986 2722 3572 3841 4108 4-394 4698 5020, 5386

MAIIPRIALS, SPARES, SUPPFLIESGREIND'ING ME700A TO 35 46 50 503 5 7 61 65 69REF~RACTORIES 5,4 1219 201 215 230 246 263 281 301SPARES 135 375 532 71.0 /60 813 870o 931 996OT1HCR' 51/ ¶30 170 182 194 208 222 238 255

JillI. MAT.. REA..UPEE, 27 699 949 tiC? 13 7 1324 1416, 1515 1621

MISC) L LANDIIISETCH. ONE' MNOT.OOSIST 18", 224 224 218 216 85l 81 16 81ITOWNSH1P RE,NT 4 ¶9 2 0 20 21 J 21 22 2.3 49AI'MINISTRAJION ,7 87 J.111 J19 127 136e 146 12~6 167IIUTIL S + TAXESROYAl fT 25b 90 12-0 1210 120 1 20 1 20 120 120

IEll 8 T SCIEL. 268 42,0 475 42/ 484 3e&2 369 370 417

L OTI, OFE.R T. COSTS 1990 4226 57129 61 85 6510 6807 7262 /2148 831/

OF -. CORE/I ION II ClEA) 7960 029 4774 51,54 9,425 573 6052 6457 6931016, COST/lIoN 1L1581 35.38i 22,.35 21, 22 22.91 24,11 25,2:11 26.90 28.70 30.80

DS'STRIIlIJEION COSTS

RATE CHARGE 161 370 441 5/ 600 6219 660 693 796JERMINAI CHARGES 16 165 3 70 3723 376 378 381 384 501I IRT CHARlIE 34 130 1 62 166 1 71 .176 51l 087 193SH IEL INHC CHjAROF 20:1 1 024 1342 1436 157 16A45 1/60 18R83 2010

TOTAl OLDER. COSTS 4 13 1689 2315, 2548 2684 202-8 298V2 3147 31,00

101T1k . COST /T ON Il-Cl A, 1,652 187' 0.929 21:1 3 22L.3/ 257 24835 2 6 23 21917luiSTS. CURT/EON 111181$ 7,34 tl-34 1,2 ~7 9.44 9.94 10.48 L1104 11.+66, 12 .96

Industrial ProJects DepartmetM.ay, 1976

ANNEX 8-4Page 1



NOTES TO FINANCIAL PROJECTIONS

1. The financial projections are based on the production plan, out-lined in Annex 8-1. Accordingly, production will start in April 1979, andis expected to reach 100 percent of rated capacity in 1981. From therefinancial statements have been projected for a period of 5 years operatingat full capacity. To adequately reflect CIMAO's future cash position andfinancial situation, projections are shown in nominal terms or current prices.This is in conformity with fully inflated investment costs.

Gross Sales

2. Clinker is sold CIF-delivered to grinding plants in Ivory Coast,Ghana and Togo so that gross sales include transport costs. Details ofassumptions for revenue calculations are contained in Annex 8-2. To convertthe constant 1975 figures into current price terms, an inflation rate similarto that of operating costs has been assumed (i.e. 9% in 1976, 8% in 1977and 7% per annum thereafter). These rates appear justified in the lightof substantial increases of investment costs over the last few years, whichwill eventually be reflected in increased cement prices throughout the world.Accordingly, clinker prices are expected to rise internationally during thenext five years. Prices for clinker, imported from Europe to Western Africaare expected to show a further upward trend due to an expected demand increasein small bulk vessel space.

Distribution Costs

3. Projections of distribution costs, expressed in constant mid-1975terms, are shown in Annex 8-3. They include railway transport costs, terminaland port charges and shipping costs to importing ports. Projections have beeninflated at annual rates of 9, 8 and 7 percent respectively for the yearsof 1976, 1977 and thereafter. The inflation rates have been assumed basedon projected average domestic inflation as well as average world inflationaffecting prices of imported material and equipment.

Operating Costs

4. Projections of operating costs, expressed in current terms, areshown in Annex 8-3, Table 2. Base costs have been inflated to current termsat annual rates as shown in previous paragraphs. Given the uncertainties

ANNEX 8-4Page 2

of price developments, a differentiation of inflation for different costitems was not attempted except for fuel oil which was inflated at slightlyhigher rates (11, 9, 8, 7 percent for 1976, 1977, 1978 and thereafter,respec-tively).

Depreciation

5. Depreciation is calculated on the CIF-plant-site and installedvalue, including contingency and price escalation. Depreciation periodshave been taken into account based on economic life of investment and havebeen averaged, in order to arrive at an average uniform depreciation. Theaverage period used comes to about 20 years.

Long-term Debt and Financial Charges

6. Whereas interest during construction (up to end 1979) is capitalized,financial charges during operation (from January 1980) are reflected as a costin the income statement. Financial charges include interest, commitment--and any other fees--on loans.

7. For the IBRD loan financial charges have been computed, assuming10% interest, a grace period of 5 years, a repayment period of 10 yearsthereafter and using equal sums of principal and interest (annuity). Thismethod would ease the company's debt burden in the initial phase of operations.Terms and conditions of other colenders loans for the Industrial Complex,as listed in Table 2 of Annex 7-4. For ABEDIA and CCCE, repayment has beencalculated, based on the annuity type, whereas for ADB and EIB on constantprincipal repayment. A certain amount of suppliers credits (US$30.9 million)has been taken into account at 8% interest and 11 years maturity including3.5 years of grace. Repayment of principal has been assumed in equal install-ments.

Equity

8. Equity (both common and preferred) will be provided in the amount ofCFAF 19.3 billion (US$85.8 million) as shown on Table 1 of Annex 7-4 and isexpected to be disbursed as estimated in the equity disbursement schedule(Annex 7-5) under the following conditions: All necessary disbursements during1976 will be met out of equity (about 18% of overall equity): during 1977 aboutUS$37.5 million will be covered by equity (about 43% of total equity), whilethe remainder will be disbursed during 1978. This will keep interest duringconstruction low. Financial statements in Annexes 8-5 to 8-7 show results onthe assumption that no dividends are being paid. Alternatively, Tables 2 ofAnnex 8-6 and 6-7 show cash flow and balance sheet projections assuming paymentsof dividends (9%) on preferred shares only. They indicate that such dividendscould be paid frau year 5 of operations, given the conditions for payment ofdividends spelled out in para. 8.06 of the main report.

ANNEX 8-4Page 3

Taxes

9. As a project with priority status, CIMAO will not be required topay duties and taxes during the construction period and 10 years of operation.Thus the projections show no tax payments.


05/21/76 AN= 8-5TOGO/IVORY COAST/GHANA


PRO-FORMA INCOME STATEMENT

(CFAF MIL_LION-CURRENT TERMS)

1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987

CLINKER PRODtUCTION (rONS 000) - - 250 900 1200 1200 1200 1200 1200 1200 1200

GROSS SALES - - - 2696 10383 14813 14860 15900 17013 18204 19478 20842D OISIRIF)I1ION COSTS - - 413 1689 2315 2548 2684 2828 2982 3147 3500

NEr SALES - - - 2283 8694 12498 12312 13216 14185 15222 16331 17342COST or- oooris SOLLD

tAFOR (DL[RECT + MAIN) -- - - 391 562 602 586 566 604 648 692 742)rILITIITEi - - - 986 2722 3572 3841 4108 4394 4698 5025 5386

MAIFRIAL S,SFARtS,SUPFI - - - 257 699 949 1157 1237 1324 1416 1515 1621ROYALTY _ ____ 25 90 120 120 120 120 120 120 120

TOT.COS1S GOODS S)OLD - - - 1659 4073 5243 5704 6031 6442 6882 7352 7869

GROSS FRtF[I - - - 624 462L 7255 6608 7185 774?i 8340 8979 9473

OVEhHFAD EXPENSESADMIN.EXPENSES - - - 145 210 242 243 242 259 277 297 318SERVI CES - - - 1tR 224 224 218 216 85 81 76 8trOWNSHIP RENTS - - -- 4 19 20 20 21 21 22 23 49DUrIES AND l AXES - - - - - - - - - -DEPRECIArrlN - - - 1584 3168 3168 3168 3168 3168 3168 3168 3168

TOT.OVERHO.EXF, - - - 1915 3621 3654 3649 3647 3533 3548 3564 3616

OPERATING PROFIT - - - t1291) 1000 3601 2959 3538 4210 4792 5415 5857

FINANCIAI CHARGES - - - - 2416 2466 2282 2061 1829 1593 1338 1098

NFT FROFI - - - (1291) (1416) 1135 677 1477 2381 3199 4077 4759


TOGO1/IVORY COASUD/GANA... ~~~~~~~~~~~~~~ANNEX 8-6

CIMAO RF:('IFiONA[L CLINKER PRF(J1FLL Table 1

11(0 -1 H MA so iir:rsAND APFL TCol £1J3 or N s s

LEFMILl 11:13N- CUIFFFONT1 FILMS)

YEAR 1976 F 97 7 1 970 1.979 1980 1 981 i912 1 933 I 91134 19110 :19116 19137

LASH F-ROM OPELRATIO1NSNEI P'ROFIT 11 79J F J1 4146 1 :1 3 30 61? 1 4? 7 38 1 3199 40,'? 47059'EPREC [AVFMN - . 1 AF)4 :3 68 316 8 3 .6116F 316EL 1 MI 3 1 611 3168 31613

10T. LASH FROM OP'ERATION 0111Y3 .1/1,2 4:1(3 .3 1341, 4645 549I 6367 7245 792 7

PREF'ERRFD 8SHARk S -. 3371)' 24215 --. -

COM MON 5FH6FR1.1 40511 165 43 8 5 - - . .

1 0 rlL E.LFU F IY 4011 114411 6111 J.

L.OANS(

OTHEIFII 44 15t 69 L9 64 A21, 129 0

loTAL. i.OANS 516(1 ).2734 1[0248 20513

TOTAL. SOCURCES 4050, 156(10 F 95J44 1.05,41J 38 10 4303 3040 4 6 45511'49 6367 7245 7921

A0F1FFI~ )T IA 1 OHS

INVESTMFNIS 4004 1.3291, .1f134/1 641 0 :1.7135'f Ni RI FE. 11 I iIJ1R I NOG CO N SI T 46 '3015 F 073 2(F36 .. ..-

R F TN VEST M IN Ts .. - .- . .. 441 579REPAYMENI OF'- L.OANS

T 141( . -.D W .4( 711 (01 13139 919 111FF) 1 1911OTHERwS. - 769 1 433 1940 F.Y55 1 97.1. 1916 20(29 12058

101I ,HEFAYMEN f OF LOJANS - .769 1/73 ;67) 2 7 67 21E: 60 2965 310(9 2.448

CHANGE IN SlORK I NCl CA I riAL - 16,1 1385 3(11 F L 10(9 1 IS I 135 144 1 56

1' FOlDS. ON F'Ru F01SHAR:51' FOlDS ON CFOMM. SHARES8 .

I1.(I 11 V.OI.V1'L:(NI'1S

TOTAL.. APFLIF:ATIONS 4051? 134,001 F 95,44 I '1(41 31(,.29 209Y I 61 2 FF/U2I.'/t. ZY(0 374 311113

ANNIFAL FFJFFL'FAJColSH 49F /M1 221 I2 Ij6.3 F /I'3 252,-/4 3 26/ 34sF 4 /44

CASH Al D17111N3 FIF YEAR --40 12 6 141313 4 o! 6 424 FF79?8 22611 15"/ L6CASH Al E1J1' 01 YEAR . - 490 12~/6 34131 4 65 F. o4,/4 01399 .226, 1516" . .10460

/I Excluding Dividends on Preferred Shares

Industrial Projects Departmentmay, 1976


ANTNEX 8-6CIMAO R3IEGIONAL- MI. ININER PROJECT Table 2

PRO-PORMA SOURCES ONE' APP). ]CATIONS OF I'-UNDS-1

(GFAF MTI) .)ON-cuiRRENTr TERMS)

YEAR 1976 1977 19718 1979 [980 198] 198:' 198:3 1984 [985 1966 198/

SOUR CES

GASH FPROM OPERAT IONS4NET PROF.T I (1291 (141.6) 1135 677 14/7 2138.1 3199 4077 4/59D EF,R E G IAT TOL)N 1 - 534 31 66 3168 3168 3168 31J.6 11 3J6168 31 68- 3 16A8

TOT.CASH FROM OPERATIONS - 9 -- 293 1752 4303 3845 4645 5549 6367 72.4 5 7927

('REFERRET' SHARES - 3375 2425 - - - - --- -

COMMON SHARES 40O5S0 0065 4 38 -* - - -

IOTA) EQUl~ITY 4050 8440 68.10 - -- -

L~OANSI1E4 1al 745 58e1 5 38a2 3 76(8 -. OTHERS - 4415, 69.19 6425 1.290 - ---

T OT AL. .LA N S ,J160 12/34 .10248 2.058 - - .

torAL SOURCES1 4050 13600 19544 10541 38(0 4303 3845 4645 5549 6367 7245 7927

REE'L ICAFtIONS

INVESTMENTS 4004 13295 18471 6410 1870 - - -

INTEREST DURING CONST. 46 305 1.073 20:356 - - -REINvEstMENTS -- - - - - 41 579REPAYMENT1 OP L-OANS

IBRr' -- 340 7,31 808) 889 979 1060 11.90o THERS -3 - 69 1433 1940 1 955 1971 19816 21029 1259

TOt.REFFRYMFNT OPI O-ANS1 769 1 /73 2671 276,3 2860 2965 3109 24411

CHANGE IN WORKING CAFEITAL - - 1.600 38a5 318 11 109 115 t3 144 15 6

DrI V IliE NE'SDIVIDS. OIN PREF.SHARES 5-- - - - -23 52.3 523 523 523DTIiDS ON COMM. SHARES. - - - -- - ----

TOl ,DIVIDE-NDS -. - ~ - - - 23 5.23 523 523 523

TOlIAI APPL.ICATIONS 4050 113600 1.9544 10046 302)9 209.1 2682. 3 35 K 498 3623 43T 7 3706

ANNUAL SURP11I TU CASH -- 495 78 1 22121 1.163 1250 2051 2'/44 2928 4221-J

GASH AT BEGIIN. OF YEAR- 495 ' 12/6 :1488 4651 5901 7952 1.0696 13624CASH Atr END, lP YEAR 495 -1276 3488 4651 5901 7952 .10696. 1 362-4 J 7845

/1 Includes dividends on preferred shares.

indutssrial P'rojecEs DepartmlentMay, 1976

ANNEX 8-7Table 1

T1060/1VO)(Y 0008 1/GHRNA

CIMAO REGSIONAL CLINKER PRKOJI U I

PRO-F IRMA BALANCE TSR.EE

(CFAl: M116.1ON-CURRRENT TILRMSI

YEAR .1976 1.977 1978 .1979 .981) J 198 R 19821 1 983 194 .178 1986 1.987

ASSETS

CURREN'T ASSETSCASHi IN SANK -.- 1212 13 14 32tJ9/ 4770 6549) 91321 1 2408 13806Y 20424AccouNTS RECE IVANL-ES -33 7 112.3 1.644 1.649 1 765 8811 20211 216, (I2 231 3INVENTORIES -751 [361 1294 1.346 1389 1.431 1 488 :12,4 9 161A.8

TOT.C)JRRENT ASSETS- 2300 3828 65:55 7765 970)3 1.2 421 1. L5917 :I1921)1 2 452

FIXEDt ASSETSGROSS FIXED. ASSETS 4020 17650 37194 456401 47515 47519i 47512t 4/515~. 47515 472,1-5 401056 48632LESS ACCUJM. LIEPREC. - 1.584 4752 792.0 11088 1 4 22,.6 17424 2 051;92 23760 26928

NET FIXED AS1SETS 4020 17620 37194 44056 42763 39595 364271 332159 3009 1 26923 24296 :1 L707

TOTAL- ASSETS 4050 17650 37194 46356 46591 46:130 4419:1 4:2962 47542 428:40 43):)74 4 6262

LI ABIL ITI18

CURFRUNf TLIABILITIE.SACCTS. PAYABLE 7 02 267 744 800 85,6 912. 979 104. 112CUJR. FORTf. i .r.0 D 169 :1773 2671 21763 286(12962, 30 9 2448 2486

TOTI.CUK, LIAI'.P . - 974 2340 3412 3563 32/16 3880 401)8 3492 3600

LONG TERM DEBTIBSRD 7 45 6560 10383 1081.1 1.0080 92/12 11333 .74 04 65.24 51 1.3 4 35)20aOrNERS 441.5 11334 16990 16847 14907' (295:1 10981 11l992 e' 696 500 4,576

TOT.) .5.0. 1 60 J17894 2773 27658 2498/ 22224 19364 1.6399 132V90 108342 8326E7QUIT y

FREF.*SNARES 3 3/ El11 ((51`100 51500 t58 0( 2800 51)100 9( 21100'J 5)1,0t4(1 21)00COM. *SHARES 405(1 9 15 1J35)10 135(10 113:1)1 1 3.0(1 1 35(10 1 3:1500 t13011 I 35-0(1 .1 350(1 3$35510RESERVES - - 112911) (27071 1J15721 (8921 582 2963' 61L62 10239 14998

TO .E-OuLTY 4 02'0 :12490 1930(1 18009 16593 17728 1 840., 19082 ' 2763 :462 292359 34298:

TOT. LIASITI ITIES 4050 17650 37194 463:16 46591 4613.0 44:192 42 962 425"42 421840 430 '6 4 62)6.2

CURZRENT RATIO 2.4 1L.6 1,9 22 2.6 3.2 3. 9 .6 6,1.3'EB T/(DEPBT +EOU ITFY 2 9 48 6)L 64 61 58 23 47 .39 31 2'

E-QUI TY/ IDEB'T+EQU1 TyI 100 7 1 22 7 9 36 39 42 4 7 (.3 6 1 e6') 76DEBTS SERVIC'E COVERAGE - - 1.3 1 .6 1.2 1.4 1,.6 1.' 19 .5

/1 Excluding Dividends on Preferred stock.

Industrial Projects Departmentmlay, 1976

ANNEX 8-7Table 2

TBGO/IVORY COASr/GHANA

CIMACn REGIONAL CLINKER FROJECT

FRO-FORMA BALANCE SHEET/l

(CFAF MILLION-CIJRRRENT rERMSI

YEAR 1976 1977 1978 1979 t980 t981 1982 1983 1984 1985 1986 1987

ASSET S

CURRENT ASSETSCASH IN BANK - - - 1212 1314 3597 4770 6026 8086 10839 13777 18009ACCOUNTS RECEIVABL.ES - - 337 1153 1644 1649 1765 tt388 2021 2162 2313INVENrORIES - - - 751 1361 1294 1346 1389 1431 148B 1549 1618

TOTJ.CURRENT ASSETS - - - 2300 3828 6535 7765 9180 11405 14348 17488 21940

FIXED ASSETSGROSS FIXED ASSETS 4050 17650 37194 45640 47515 47515 47515 47515 47515 47515 48056 48635LESS ACCUM. DFPREC. - - - 1584 4752 7920 11088 14256 17424 20592 23760 26928

NET FIXED ASSETS 4050 17650 37194 44056 42763 39595 36427 33259 30091 26923 24296 21707

TOTAL ASSETS 4050 17650 37194 46356 46591 46130 44192 42439 41496 41271 41784 43647

LIABIL ITIES

CURRENT LIABIL1ITIESACCTS. F'AYABL1E - - - 205 567 744 800 856 915 979 1047 1122CUR. POR1. L.T.D - - - 769 1773 2671 2763 2860 2965 3109 2448 2486

TOT.CUJR. LIAB. - - - 974 2340 3415 3563 3716 3880 4088 3495 3608

LONG TERM DEBrIBRD - 745 6560 10383 10811 10080 9272 8383 7404 6324 5134 3820OTHERS - 4415 11334 16990 16847 14907 12952 10981 8995 6966 5708 4536

TOr.L.T.C, - 5160 17894 27373 22658 24987 22224 19364 16399 13290 10842 8356180UT rY

PREF.SHARES - 3375 5800 5800 5800 5800 5800 5800 5800 5800 5800 5800COM. SHARES 4050 9115 13500 13500 13500 13500 13500 13500 13500 13500 13500 13500RESERVES - - - (1291) (2701) (1572) (B95) 59 191/ 4593 8147 [2383

TOl .CDUIY 4050 12490 19300 18009 16593 17728 18405 19359 21217 23893 27447 31683

TOT.LIABILI IES 4050 17650 37194 46356 46591 46130 44192 42439 41496 41271 41784 43647

CURRENI RATIO - - 2.4 J.6 t.9 2.2 2.5 2.9 3.5 5.0 6.1DEBT/(DEBT+EQUITY) - 29 48 61 64 61 58 53 48 41 33 25=EQIITY/(DEDT+EDUITY) 100 71 52 39 36 39 42 47 52 59 67 75DEBr SERVICF COVERAGE - - - 1.3 1.6 1.2 1.4 1.6 J.7 1.9 2.5

/1 Includes Dividends on Preferred Shares.


ANNEX 8-8Page 1



BREAK-EVEN POINT ANALYSIS

1. The break-even point of CIMAO plant has been derived for the years 1981to 1983 on total costs, expressed in current terms, when the plant is assumed tooperate at 100 percent of rated capacity.

The following basic data were used to determine the break-even point forthe CIMAO plant:

1981 1982 1983Vari- Vari- Vari-

Fixed able Total Fixed able Total Fixed able TotalCosts Costs Costs Costs Costs Costs Costs Costs Costs

a) Total Costs - - - - - - - - - - - - (CFAF Million) - - - - - - - - - - - -

Labor 623 110 733 603 107 710 580 101 681Fuel 288 2,590 2,878 310 2,788 3,098 331 2,982 3,313Electricity 139 555 694 149 594 743 159 636 795Grinding Media 14 32 46 15 35 50 16 37 53Refractories 161 40 201 172 43 215 184 46 230Spares 160 372 532 213 497 710 228 532 760Other Supplies 34 136 170 37 145 182 39 155 194Technical Assistance ) 150 74 224 150 68 218 150 66 216Management Assistance)Administration & Rent 110 21 131 115 24 139 123 25 148Royalty - 120 120 0 120 120 - 120 120Depreciation 3,168 - 3,168 3,168 0 3,168 3,168 - 3,168Financial Charges 2,_66 - 2,466 2 282 0 2,282 2,061 - 2,061

Total 7,313 4,050 11,363 7,214 4 111,635 7,039 4,700 11,739

Percentage 64-4 35.6 100.0 62.0 38.0 100.0 60.0 40.0 100o.0

b) REVENUE NET OFDISTRIBUTION COST 12,498 12,312 13,216

c) DEBT REPAYMENT 1,773 2,671 2,763

2. The resulting break-even points are:

1981 1982 1983(i) PROFIT BREAK-EVEN POINT

(Percentage Capacity): 86.6 91.4 82.7

(ii) CASH BREAK-EVEN POINT(Percentage Capacity): 70.1 85.1 77.9


ANNEX 8-8Page 2



PROFIT BREAK-EVEN POINT YEAR 1983

15,000

13,216

Break-even Point ^.

10,00/

Fixed Costs

5,000 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~,3

000,~~~~

H /

0 20 ho 60 80 100

Percentage of' Capacity

Thduutrial Projects DepartmentMay, 1976

ANNEX 8-9Page 1

TO GC/IVCORY COAST/GH.ANA

CIILVIA REGIONAL CLINKER PROJTECT

FINANCIAL RATE OF RETURN AND SENSITIVITY ANALYSIS

A. Initial Stage

The following assumrqtions have been made:

1. All cost and revenue strearns are in 1575 prices.

2. The investment costs are those of the Industri1 Coniolex andare estLriated tc core to CFAF 33.6 billion (US$11[9 milliicn).

3. 11.cr1King Capital is estirated ac CFPY' 1,4150 million(US$6.L4 mi?ll.on).

4L. The constructicn period and the irves tment schedule are 3-'/2years. L-:fe of ,he project will be 20 years from first yearin which plant operates 12 continuous mconths (1950). From thefifth year of full production (198.6) CFAF 250 million per yearis reinvested fcr the upkeop of the pl.ant. At the end of 20years, a residual value of 30 of the original investment hasbeen taken into account.

5. Since the Governirientshave decided that CIMAO's clinker willbe sold at prJices delivered to the ports in Ivory Coast andGhana and the CIMTOG0 grinding plant in Lome, revenue streamshave taken into account such delivered prices; consequently,cperational cosq streams include distribution charges.

6. The distribution charges include (Annexes 6-3 and 6-4):

(i) A railway tariff whiich covers all cperational charges ofthe CIDA=G t-raffic, a small profit to CFT, and actual debtservice payments by CFT for the loans incurred in connec-tion with tha project. After 1987, the tariff includesalso paymrents tc allow CFT to acquire new rolling stcck.

(ii) Pcrt charges which cover operating cost of the non-specialized port facilities, depreciation and financialcharges allocated to the project.

(iii) Terminal charges which cover all operating ccst and arent eouivalent to actual debt service payment by the por-ton account cf the investment in the terminal.

ANNEX 8-9Page 2

(iv) Sea transport charges as estimated by Origny and otherconsulting firns.

7. The debt service taken into account for establishing the tarifffor the use of the terminal is based on the assunption that KfWwill fix an onlending interest rate of 6% (2+4) for its loan.

8. The Operational Cost strears are based on the use of oil asfuel for kiln firing and raw raterial drying. If during lateryears, CINPO would be able to get a reliable supply of coalfrom lNigeria at present market prices (in 1975 terms), the opera-tional cost strean would be reduced by 5-1C%.

9. The revenue strean is based on a sales price of CFAF 8,000/tondelivered ports for the first three years of operations and ofCFPF 7,500/ton thereafter; these prices fall into the rangeof expected CIF price of clinker imported to the three countriesfron elsewhere.

B. After 50'1 Expansion

The following adjustments have been made to the assumptions for thefinancial rate of return calculations in the initial stage:

1. Investment cost in 1984s-85 for expanding the productioncapacity of the Industrial Complex to 1.8 million TPY(based on estimates by APCM), have been added to thecapital cost stream.

2. Higher investment costs for the upkeep of the plant havebeen assured from 1990 on (increase from CFPF 250 to 370rilion.).

3. Estimated investrent costs in 1999-2000, again in 1975 terns,to replace initial equipment and to renew initial buildings,have been added to the cost strearm.

4. The residual value of the CIMAO project in 2005 (last yearfor which cost and benefit streamrs have been calculated)hastaken no value for the initial investrent and the full valueof those investments nade in 1999-2000.

5. The Operational Cost strearr has been increased from the firstyear after expansion by 40% and the Working Capital streamby 50%.

Industrial ProjectsMay, 1976

ANNEX 8-9-Table 1



FINANCIAL RATE OF RETURN AT INITIAL STAGE

SENSITIVITY TESTS

1C r

10 O0perating Co ts

0

0 Rvenue

_20 -10 0 +10 +20

% Variation in Input

Capital Cost Operating Cost Revenue Rate of Return

Base Case 100 100 100 8 1

Case 2 110 100 100 7.1

Case 3 95 100 100

Case 4 100 110 100 0.7

Case 5 100 95 100 8.7

Case 6 100 100 95 6.8

Case 7 100 100 i05 °.3

Case 8 Delay one year in startup and 10% 65-increase in capital cost


ANNEX 8-9Table 2


CIMAO REGIObIAL CLINKER PROJECT

FINANCIAL RATE Of RETURN AT INITIAL STAGE

COST AND BENEFIT STREAMS(CFAF Million in 1975 terms)

Capital Working OperatingYear Cost Capital Cost Revenue

1976 3,6291977 10,8551978 13,680 - -1979 4,270 1,190 1,782 2,0001980 1,160 190 4,310 7,2001981 - 70 5,213 9,6001982 - - 5,290 9,0001983 - - 5,206 9,0001984 _ _ 5,098 9,0001985 - - 5,069 9,0001986 250 - 5,037 9,0001987 250 - 5,105 9,0001988 250 - 5,010 9,0001989 250 - 5,010 9,0001990 250 - 5,010 9,0001991 250 - 5,010 9,0001992 250 - 5,010 9,0001993 250 _ 5,010 9,0001994 250 _ 5,010 9,0001995 250 - 5,010 9,0001996 250 - 5,010 9,0001997 250 - 5,010 9,0001998 250 - 5,010 9,0001999 -10,080 -1,450 5,010 9,000

Financial Rate of Return; 8.1%


ANNEX 8-9Table 3



FINANCIAL RATE OF RETURN AFTER EXPANSION

COST AND BENEFIT STREAMS

Capital Working OperatingYear cost Capital Cost Revenue

1976 3,6291977 10,8551978 13,680 - - -1979 4,270 1,190 1,782 2,0001980 1,160 190 4,310 7,2001981 70 5,213 9,6001982 - 5,290 9,ooo1983 _ 5,206 9,0001984 6,600 - 5,098 9,0001985 6,600 - 5,069 9,0001986 250 700 7,010 13,5001987 250 _ 7,010 13,5001988 250 - 7,010 13,5001989 250 - 7,010 13,5001990 370 - 7,010 13,5001991 370 - 7,010 13,5001992 370 - 7,010 13,5001993 370 - 7,010 13,5001994 370 - 7,010 13,5001995 370 - 7,010 13,5001996 370 - 7,010 13,5001997 370 - 7,010 13,5001998 370 - 7,010 13,5001999 8,500 - 7,010 13,5002000 8,500 - 7,010 13,5002001 370 - 7,010 13,5002002 370 - 7,010 13,5002003 370 - 7,010 13,5002004 370 - 7,010 13,5002005 -17,000 -2,150 7,010 13,500

Financial Rate of Return: 9.5%


APPENDIX 9-1Page 1

TOG(/IVORY COAST/GKJN.

CIN4AO REGIONAL CLINKER FROJECT

ECONOQIC RATE OF RETURN AND SENSITIVITY ANALYSIS

A. Initial Stage

1. The following adjustments have been made to the assumotions of thefinancial rate of return calculations:

(i) Because of the sericus unemployment in Toeo, semi- and umskilledlabor have been shadow pr,ced at an average of 50% of their cost.

(ii) The investment costs in the Township, Powerline, Railroad andTerminal have been added in full to the investment cost streamsince these investments are done for the CTIMAO projec-t andCIXAO will be virtually their only user. The operating coststreams include the operating charges for the use of theinfrastructure items but exclude the tariff portions relatingto debt service on these components.

(iii) Part of the funds (US$)45 million) that will be provided bythe multilateral and bilateral financing institutions havebeen considered to be "tied resources" as these funds wouldnot be available to the Region if the CIMAO projezt was not'being executed. The opportunity cost of these funds is,therefore, their actual debt service. Thus, the investmentcost stream has been reduced, by the amount of the tied funds(US$45 million), while the operating cost stream has beenincreased by the debt service for these tied funds. The equityinvestment of ORIGIN and 50% of the equity investment of the0,rinding plants (altogether CFAF 1 billion), which are partlyowned by local aushcrities and groups, have also been consideredto be tied funds and have been deducted fromi the investment coststream. hxpected dividend payments to these partners in fullhave been added to the operating cost streams.

(iv) Since the project is an import substitution project, therevenue stream is based on the forecast CIF import price ofclinker in the Region during the life of the project (economicaccounting price). For the first three years of operations, aregional CIF import price expressed in 1975 terms, of CFAF 7,500has been assumed. From then on, the CIF import price,again in1975 terms1 has been assumed to increase by 1%G per year, toreflect the coming-on-stream of new high capital ccst cementand clinker plants in exporting countries, which will continuouslypush the price of clinker upwards due to increased depreciationand financial charges.

APPE1NDIX 9-1Page 2

B. After 50% ExDpansion

2. The following adjustments have been made to the assumptiors for theeconomic rate of return calculations in the initial stage:

(i) Inves-tment cost in 1984-85 for expanding the production capacityto 1.8 million TPY have been added to the capital cost stream(in 1975 terms). These investment costs are mainly in theIndustrial Complex (estimated by APCM). The investment costsin Infrastructure (estimated by the Bank) are relatively small,since main investments in Infrastructure in initial stage aresufficient for the expanded plant.

(ii) Higher reinvestment cost for the upkeep of the plant has beenassumed from 1990 on (increase from CFAF 238 to 350 million).

(iii) Investment cost in 1999 and 2000 (again in 1975 terms) toreplace initial equipment and to renew initial buildings havebeen added to the cost stream.

(iv) The residual value of the CIMAO project in 2005 (last yearfor which cost and benefit streams have been calculated) hastaken no value for the initial investment and the full valueof those investments made in 1999-2000.

(v) The Operational Cost stream has been increased from the firstyear after expansion by 40% and Wcrking Capital stream by 50%/.


ANNEX 9-1Table T

TOGO/IVCRY COAST/GHANA


ECONOMIC RATE OF RETURN AT INITIAL STAGE

SENSITIVITY TESTS

C aita Tst 0~ 0~

10

0o 00 <t vnuel

;E -L00+1 20

% Variation in Input

Tied Money Resources OperatingCase Capital Cost and their Debt Service Cost Revenue Rate of Returr

Base Case 100 100 100 100 10.2Case 2 110 100 100 100 9.1Case 3 95100 100 100 10.8Case 4 100 100 110 100 9-3Case 5 100 100 100 10.7Case 6 100 100 100 95 9.2Case 7 100 100 100 105 11.2Case 8 Delay of one year in startup and 10% increase in capital cost8.2Case 9 Base Case - Without using tied money streams. 9.5Case 10 Base Case - Foreign Exchange shadow priced by 20, 10.4


ANNEX 9-1Table 2



ECONOMIC RATE OF RETURN AT INITIAL STAGE

COST AND BENEFIT STREAMS(CFAF million in 1975 terms)

Capital Tied Money Debt Service Working OperatingYear Cost Resources on Tied Money Capital Cost Revenue

1976 4,330 - 275 -1977 13,910 -1,767 641978 16,6h0 -3,304 195 - - _1979 5,280 -2,179 280 1,190 1,453 1,6871980 1,950 - 401 560 190 3,486 6,7501981 - - 520 70 4,156 9,0001982 - - 590 - 4,230 9,0901983 - - 550 - 4,150 9,1801984 - - 515 - 4,123 9,2701985 - - 530 - 4,118 9,3601986 238 - 495 - 4,113 9,4501987 238 - 475 4,113 9,5401988 238 - 445 - 4,113 9,6501989 238 - 415 - 4,113 9,7501990 238 - 390 - 4,113 9,8501991 238 - 360 4,113 9,9501992 238 - 145- 4,113 10,0501993 238 - 135 - 4,113 10,1501994 238 - 125 - 4,113 10,2501995 238 - 120 - 4,113 10,3501996 238 - 110 - 4,113 10,4501997 238 - 105 - 4,113 10,5601998 238 - ;95 - 4,113 10,6701999 -12,589 - 660 -1,450 4,113 10,770

Economic Rate of Return: 1O.2%

Industrial Projects DepartnentMay, 1976

ANNEX 9-1Table 3


CII4AO REGIONAL CLINKER PROJECT

ECONOMIC RATE OF RETURN AFTER EXPANSION

COST AND BENEFIT STREAMS(CFAF Million in 1975 terms)

Capital Working OperatingYear Cost "Tied M4ney" Debt Service Capital Cost Revenue

1976 4,330 - 275 -

1977 13,910 -1,767 641978 16,640 -3,304 195 - - -

1979 5,280 -2,179 280 1,190 1,453 1,6871980 1,950 - 401 560 190 3,486 6,7501981 - - 520 70 4,156 9,0001982 - - 590 - 4,230 9,0901983 - - 55° - 4,150 9,1801984 7,150 - 515 - 4,123 9,2701985 7,150 - 530 - 4,118 9,3601986 238 - 495 700 5,750 14,1751987 238 - 475 - 5,750 14,3251988 238 - 445 - 5,750 14,4751989 238 - '415 - 5,750 14,6251990 350 - 390 - 5,750 14,7751991 350 - 365 - 5,750 14,9251992 350 - 145 - 5,750 15,0751993 350 - 135 - 5,750 15,2251994 350 - 125 - 5,750 15,3751995 350 - 120 - 5,750 15,5251996 350 - 110 - 5,750 15,6751997 350 - 105 - 5,750 15,8401998 350 - 95 - 5,750 16,0051999 10,000 - 90 - 5,750 16,1552000 10,000 _ 85 - 5,750 16,1552001 350 - 80 - 5,750 16,1552002 350 - 75 - 5,750 16,1552003 350 - 70 - 5,750 16,1552004 350 - S5 - 5,750 16,1552005 -20,000 - l;00 -2,150 5,750 16,155

Economic Rate of Return' 11.7%.




ECONOMIC OPERATION COST PROJECTIONSCFAF million - 1975 terms)

1979 1980 1981 1982 1983 1984 1985 1986 1987

Production of Clinker (tons 000) 250 900 1,200 1,200 1,200 1,200 1,200 1,200 1,200

Operating Costs

LaborDirect Labor 85 130 130 120 110 110 110 110 110

Maintenance and Support 120 150 150 165 115 115 115 115 115

Administration 50 70 70 65 55 55 55 55 55

Total Labor 260 350 350 350 280 280 280 280 280

Utilities

Fuel 507 1,277 1,610 1,610 1,610 1,610 1,610 1,610 1,610

Electricity 125 360 405 405 405 405 405 405 405

Total Utilities 632 1,637 2,015 2,015 2,015 2,015 2,015 2,015 2,015

Materials, Spares and Supplies

Grinding Machine 8 24 30 30 30 30 30 30 30

Refractories 40 110 130 130 130 130 130 130 130

Spares 100 260 345 430 430 430 430 430 430

Others 42 90 110 110 110 110 110 110 110

Total Materials, Spares, Supplies 190 484 615 700 700 700 700 700 700

Miscellaneous

Technical and Management Assistance 85 105 95 82 72 45 40 35 35

Township Rent 3 4 4 4 4 4 4 4 4

Adninistrative 37 54 63 65 65 65 65 65 65

Duties and Taxes - - - - - - - - -

Rovalties - _ _ _ _ _

Total Miscellaneous 135 163 162 151 141 114 109 104 104

Distribution Cost

Rail Charge 68 163 170 170 170 170 170 170 170 a

Terminal Charge 8 20 20 20 20 20 20 20 20 =-o

Port Charge 25 30 35 35 35 35 35 35 35

Shipping Charge 135 639 789 789 789 789 789 789 789

Total Distribution Cost 236 852 1,014 1,014 1,014 1,014 1,Q14 1,014 1,014

Total Cost 1_,_453 3,486 4,156 4,230 4,150 4,123 4,118 4,113 4,113




FOREIGN EXCIANGE EPFECTSL/(CFAF million in Current Toers)

1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987

1, Foreign Exchange InflowEquity Private Partners/ 210 425 355 - - - - - - - - -IBRD - Fur CIMAO Plant - 745 5,815 3,825 765 - - - - - - -Other Lenders for CINAO Complex - 10,185 12,090 8,245 2,835 - - - _ _ _ _IBRD - direct to Governmeets - 2,360 - - -Other Lenders - direct to Governments - 1.O0 2.430 - - -

Total Iflow 210 14,735 20,690 12,070 3,695 -

2. F-ign Ei .hS0 g. outflow

Capital ExpenditureX.L3 4,150 14,500 18,870 7,405 2,950 - - - - 445 480Change in Working Capital - - - 800 190 - - -Itnereot during construction for CIMAO Complex 45 340 1,000 2,040 - - - -Interest on Direct Loan to Government - 120 330 435 435 380 250 210 210 210 210 210

8ubtotal 4,195 14,960 20,200 10,680 3,575 380 210 210 210 210 655 690

Operating Expense 4

- - -Labor - 135 205 220 185 150 130 140 150 160Fuel - - - 640 1,715 2,300 2,480 2,650 2,835 3,030 3,240 3,475Electricity - 45 145 175 185 200 215 230 245 260Naterial, Spare Parts - - - 255 700 950 1,155 1,235 1,325 1,415 1,515 1,620Miscellaneoua - - - 160 250 285 285 290 215 220 225 250Rail Charge _ - - 95 170 185 200 210 225 240 260 280Port and Terminal Charge 15 50 60 65 70 75 80 85 90Shipping Charge - - - 180 920 1,220 1.305 15 1.495 1.600 1.710 1.830Subtotal _ _ _ 1,525 4,155 5,395 5,860 6,200 6,515 6,955 7,430 7,965

Debt Service - - 3.385 4,960 5,700 5,570 5,4: 5,305 5,190 4,705

Total Outflow 4,195 14,960 20,290 12,205 11,115 10,735 11,770 11,380 12,160 12,470 13,275 13,360

3. Foreign Exchange Surplus (Deficit) (3,985) (225) 490 (135) (7,420) (10,735) (11,770) '(11,980) (12,160) (12,470) (13,275) (13,360)

4. Foreign Exchange Cost of Imported Clinker/5 - _ 2,280 9,735 13,885 15,010 16,210 17,520 18,915 20,440 21,950

5 Foreign Exchange Sarplus (Deficit) due to Project (3,985) (225) 490 2,145 2,315 3,150 3,240 4,230 5,360 6,445 7,165 8,590

6. Accumulated Foreign Exnhange surplus (3,985) (4,210) (3,720) (1,575) 740 3,890 7,130 11,360 16,720 23,165 30,330 38,9ZO

7. Accumulated Foreign Exchange surplus (Deficit) (17.7) (18.7) (16.5) ( 7.0) (3.3) (17.3) 31.7 50.5 74.3 103.0 134,8 173.0due to the Project in us$ millios

/1 The data reflect direct and indirect foreign exchange coot./2 Equity private partnern - Origny, equity investment of CFAF 0.5 billion and 50 of investment by grinding plants in the Region.73 Capital expenditures in foreign exchange include foreign exchange i-veatments in plant asd infrastructure (Annex 7-1, 7-3)./4 Foreign Exchange as b of total cost

Materiala and apare parts 1007.Shipping charge 90%Fuel 80bRainveetment 80%Working Capital 50%Miscellaneou6 6027Rail Charge 502 of operating costPort Charge 30%Electricity 25% of total costLabor - -ctal pay.uent. to expatriatee

in foreign exchange

/S Price assumptions are the same sa those used for economic rate of return.

Industrial Projects Departme-tmay 1976

IBRD 11921

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PROJECT RAILROAD /LC A

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