Armco Project Headquartered in the city of Sao Paulo, Armco do Brasil S.A (Armco or the company) is a mid-sized manufacturer of steel products, such as coated and re-rolled steel; low-, medium- and high-carbon steel alloys; galvanized and stainless steel.   In 1900, The American Rolling Mill Company was founded in the USA, establishing a commercial office in Rio de Janeiro in 1913. In 1993, all subsidiaries outside the US were sold, including the Brazilian units.  In that year, through a management buy-out operation, Armco do Brasil S.A. became 100%-owned by its key managers.  Armco is owned by Mr. Gilberto Fedi, Mr. Levon Kessadjikian, and Mr. Roberto Gallo, who are all well-reputed in the Brazilian business community.  Armcos headquarters and principal site is in Vila Prudente, near Sao Paulo city.  The company also operates two smaller service center sites in São Bernardo do Campo and Vila Nova Plant as well as  a  plant in the free trade zone of Manaus, providing metal parts for the motorcycle and other industries in the region.  Armco produces:  - steel with high strength low alloy (auto parts, items for  passive safety, and parts for bicycles, motorcycles and tubes);  - flat wire (umbrella frame stock, lumbar supports, flexible hoses and furniture hinge spring);  - high speed steel (jigsaws, hacksaws, power saws, circular saws, pump vanes, tissue cutting knives and textile knives);  - high carbon (springs, horn diaphragms, bicycle, agricultural and industrial chains, shoe reinforcement / toe caps, tire scraper blades and machetes among others);  - high carbon hardened & tempered  (measuring tapes, hacksaws, springs, elevator contact strips, knives and other); - stainless steel (turbine buckets, industrial knives, dental equipment, hinges, electronic contacts, flexible cables, electrical appliances and hypodermic needles);  - pre-coated, steel mill (auto parts, electric components, automotive industry, white goods panels and fuel tanks),  - pre coated, cold rolled (electro-electronic components, hardware, home appliances, alkaline batteries, automotive components, decorative parts and tubing); and  - low carbon (auto parts,  electronic components, coins, broom handles, bicycle and motorcycle parts).   The company exports 5 to 7% of the steels produced to Latin America, USA, Mexico, Australia, Iran, Thailand, South Africa, Germany, England and Italy.   The project consists of the installation of a new plant at the edge of Jacareí, about 80km from Sao Paulo city.  The new plant will modernize and upgrade Armcos production capabilities, most notably giving it capacity to process 20kg/mm steel coils whereas it is currently has capacity for only 10kg/mm coils, increasing efficiencies.  The project will be implemented in 2008-2009 and is estimated to cost $68 million equivalent.  The primary investments include:   - 31 ha of land,  - civil works and erection of about 55,000m2 of production and warehouse facilities,  - acquisition and installation of state of the art equipment; and  renovating existing equipment.  IFC is considering extending a loan of approximately $25 million to fund the project. Strengthens a segment in which there is value addition: Brazils economy is known for its competitiveness in commodities, including steel. However, in most cases, the initial production stages remain in the country, whereas other stages, in which value is added to the product, are conducted in other countries. Typical examples are soybean and coffee, which are produced very competitively in the country, but are most frequently industrialized abroad. Since Armco manufactures steel products out of raw steel, it is an example of value addition that remains in the country and helps develop the local expertise and technology.   Strengthens a segment which will be important to support other fast growing sectors: As Brazil achieves improved macroeconomic conditions, with sustainable GDP growth, lower interest rates, and improved credit conditions, the sales of durable goods will continue to thrive. Since Armco is an important supplier for durable goods producers, it is important that the company secures a strong footprint and continues to deliver high-quality products, so that the steel products segment does not become a bottleneck for the fast growing Automotive and Capital Goods industries.  A preliminary list of development impacts that will be tracked annually during supervision includes the following:  - Financial indicators: The companys net sales and return on invested capital; - Economic indicators: Operating income, taxes, number of employees and wages;  - Environmental and social performance.