Guinea Alumina Project The Guinea Alumina Project (the "Project") is comprised of a bauxite mine, alumina refinery, power plant and a port facility, located in the northwest quadrant of the Republic of Guinea in West Africa. IFC has an opportunity to participate in a landmark and pioneering project in Guinea by investing in the first new alumina refinery and resource downstream project in the country in 54 years. The Government of Guinea (the Government) and the general populace are particularly interested in the employment, vocational training and SME development potential of the project, which will be implemented through the Guinea Alumina Corporation (the Project Company) by the shareholders (the Sponsors), with the assistance of IFC. In addition, there is a strong commitment by the sponsors to achieve demonstrable socio-economic improvements in the communities to be impacted by the Project.  The estimated total project cost (excluding financing costs) is $5.2 billion. The project has been granted a mining concession by the Government with an estimated 1.4 billion tonnes of bauxite. The refinery will process approximately 10 million tonnes of wet bauxite per year to produce approximately 3.3 million tonnes per annum (mtpa) of alumina for over 50 years. Process optimization over the years could result in an upsize capacity approaching 4 Mtpa. The refinery has been designed to allow for a 50% capacity increase in alumina production.   Project infrastructure includes:     (i) a coal fired power plant producing 90 MW of electric power and between 500-700 tonnes of steam per hour. The refinerys calciners will use heavy fuel oil, with the potential to switch in part to biofuels if reliable and economic supplies can be procured; (ii) port facilities including a dedicated alumina terminal and container quay at the existing port of Kamsar;    (iii) a new 14 km railway spur from the refinery site to the existing main railway line  and short spur connecting the main railway line to the alumina terminal;    (iv) water reservoir and red mud (waste by-product of alumina production) dam disposal facilities; and    (v) an employee housing camp.    Alumina is an intermediate product in the conversion of bauxite to aluminum. The majority of alumina produced globally is sold to aluminum producers on the basis of long term contracts priced off the aluminum London Metals Exchange (LME). The project company offtake agreements will be of a long-term nature, priced in reference to the LME high grade Aluminum 3-month price. The project will establish the first bauxite processing facility in Guinea in 54 years, as well as lead to the creation and improvement of various infrastructure facilities. As such, the expected development impacts from the project are substantial and diverse, and may include:  (i) Generation of Direct and Indirect Employment: The Project is expected to create approximately 12,000 direct jobs (refinery and port sites) for local Guineans during construction and approximately 2,000 direct jobs (refinery and port sites) during the operations phase. Additionally, the creation of three to five secondary and tertiary jobs for each wage-paying job is anticipated. The project company is currently implementing some vocational and health/safety training to maximizing the sourcing of local skilled labor. The Boké Technical Training School will produce job-ready workers for the Project construction phase. The school is partly funded by the Governments Education Department which provides some training budget, power, equipment and materials. The project company has planned significant investment in providing additional resources and improving the facilities. About 1,000 Guineans attend classes in trade skill development.  (ii) Fiscal Contributions: The project is expected to generate between $5-12.5 million per year in lump sum taxes to the Guinean government for the first 15 years of its operations. Beginning in the 16th year, tax on profits of 35% will be paid to the Government, averaging $418 million per year In addition, there will be a mining royalty tax averaging $22 million per year based on bauxite consumption. In total, the project is estimated to generate $8.2 billion of new tax revenue through 2044. The project company has agreed to publicly disclose all revenue payments made to the Government over the life of the project.    (iii) Community Development: The company has committed $2.5 million per year during construction. During operations, a compulsory contribution of $0.5 million per annum (for years 1 through 15) and $1.0 million per annum (from year 16 thereafter) is required.  In addition to this, the company has proposed a voluntary contribution of $3.5 million per annum for the duration of operations to fund community development programs, in the region and at the national level. The project company has also entered into a partnership with the African Development Foundation to implement a program for a school and health center in the main relocated village. Training initiatives for the community include training for village elementary school teachers, adult French literacy programs, environmental management, health and hygiene, understanding of national law, HIV/AIDS awareness and malaria prevention knowledge. In addition, the project company is planning to establish a community development foundation at the commencement of production, similar to the Mozal Community Development Trust in Mozambique.   (iv) Support to Local SMEs:  Procurement of an estimated $150 million worth of goods and services in Guinea is expected during Project construction. Once built, an estimated $40 million worth of procurement is expected annually from within Guinea for continuing operations.   (v) Public Infrastructure: The project is currently developing infrastructure projects that will benefit the broader population, including road and bridge upgrades from Kamsar port to the Sangarédi refinery site, construction of the container terminal at Kamsar and improvements in the Government owned railway operations. In addition, the project is expected to lead to improvements in the social infrastructure in Boke and Sangarédi where housing will be built and employees will be supported to own their own homes.  Key indicators that are proposed to be used to monitor the development impact of the project during its life are: (i) taxes and royalties paid to the Government; (ii) direct and indirect jobs created during the construction and operational phases; (iii) number of employees having received vocational training by the project company; (iv) number and total value of contracting arrangements with domestic businesses; and (v) total expenditures incurred by the project company on community development activities. The project company has commissioned a socio-economic impact assessment study for the project based on a scope of work agreed with the DFIs. This study will be publicly disclosed when completed and form the basis of agreeing key performance indicators on socio-economic impacts for the Project.    Fit with World Bank Group Strategy:  The World Bank Group is at an early stage of revising its Country Assistance Strategy for Guinea, which is likely to focus on support to the Government for the implementation of further measures to improve economic governance, urgent investments in water and electricity and capacity building for better governance of the mining sector. Within this overall framework, the recent focus of IFCs activities in Guinea has been the mining sector. In 2006, IFC approved its first investment project in Guinea: support for a locally incorporated subsidiary for Rio Tintos Simandou iron ore project in eastern Guinea. Looking forward, IFCs priorities in the sector in Guinea will be supporting companies that play an important role in promoting governance and transparency, as well as working closely with mining companies to broaden and deepen the socio-economic impacts of their projects. The proposed investment is consistent with these priorities.