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Borrower/Equity Investment Name LAFARGE SURMA CEMENT LTD.
Country Bangladesh
Project Number 31911-01
Approval Number 7142
Type of ADB Assistance / Amount
7142 Private Sector Loan USD 40.00  million Fully Disbursed
Responsible ADB Department Private Sector Operations Department
Responsible ADB Division Infrastructure Finance Division 1
Responsible ADB Officer Hayato Hoshi
Project Sponsor(s) Lafarge S.A.
Cementos Molins S.A.
Description The Project is to establish a new cement plant with an annual production capacity of 1.2 million ton of gray portland cement. It will be located in Chhatak in Sunamganj district. Based on a modern, energy-efficient dry process, the Project will be the largest and most modern cement plant in Bangladesh. The limestone required for the manufacture of cement will be purchased and transported from quarries in Meghalaya, India, to the plant by a 2-kilometer (km) road and an 18-km elevated conveyor to be established under the Project.
Objectives and Scope The Project envisages the establishment of a new cement plant of 3,600 t per day or 1.2 million tpa capacity. The principal components of the Project include (i) an 18-km elevated conveyor system to transport limestone from the Indian border to the plant; (ii) cement plant machinery and equipment (kiln, mills, material handling equipment, and computer control system) complete with ancillaries and facilities such as electricity distribution, water supply, treatment, and storage, pollution control facilities, laboratory facilities, and maintenance workshop; (iii) a standby power plant; (iv) office building and staff housing colony together with a clinic and recreational facilities; (v) a jetty for shipment of cement through the river; (vi) a bridge over the river; and (vii) 22 barges for cement transportation.
Linkage to Country/Regional Strategy The overall objective of ADB's operational strategy for Bangladesh is to reduce poverty. To achieve this objective, the strategy underscores the need for promoting a faster rate of efficient economic growth through greater market orientation, augmentation of domestic resource mobilization, acceleration of human resource development, and improvement in physical infrastructure. The strategy also emphasizes the need to support private sector initiatives through new investments and privatization. The main industrial need in Bangladesh over the coming years is an efficient manufacturing base for job creation and exports. ADB's private sector operations in Bangladesh aim to help expand private sector industrial investment selectively. Given the limited scope that exists in Bangladesh for the development of domestic industries, the private sector should be given opportunities to participate in industries that are economically viable. Cement manufacture can be competitive if it uses a proven technology and is located correctly in relation to raw materials and the market. The proposed Project is a logical component of the Government's efforts to promote foreign investment and ADB's strategy for the industry sector in Bangladesh to promote market-oriented and private-sector-led growth.
Safeguard Categories Safeguard Categories explained (Launches new browser window)
Environment A
Summary of Environmental and Social Aspects A mission of the ADB visited Meghalaya, India in March 2008 to review the environmental, social safeguard and legal aspects of the Project.

The Mission did not find any environmental non-compliance issues of significance related to the exploitation of the Limestone Mine and operation of the conveyor belt. The Mine is still in early stage of operation however, and the Mission has recommended improvements to allow LSC to further strengthen its Environmental Management System for the Mine.

In relation to the Involuntary Resettlement, the Mission recommended that LSC address the following issues: (i) maintain the schedule of reviews of the RP implementation; (ii) ensure full compliance with the requirements of the livelihood restoration plan; and (iii) improve internal documentation to ensure adherence to the grievance redress mechanism.

Regarding the indigenous peoples policy, the Mission acknowledges that despite the absence of a formal IPDP, all stakeholders confirmed that LSC/LUMPL employed for its communication and interaction with the Khasi a culturally appropriate avenue. The documents and work that LSC/LUMPL is doing is substantively adequate.

From the legal perspective, the Mission found no indications that any of the transactions related to transfer or lease of land were in noncompliance with existing laws and procedures. Representatives of the local communities confirmed to the Mission that they were consulted and involved in the land transfer. In addition, local authorities verified to the Mission that the Government approved the said transfer and mortgage as provided under the Meghalaya Land Transfer Act and issued the necessary permissions.

It was agreed between the Mission and LSC/LUMPL to further enhance its annual monitoring reports to cover all technical, financial, safeguard and legal aspects of the Project covering both the Bangladesh and India sites of the Project.
Stakeholder Communication, Participation and Consultation In March 2008, ADB visited Meghalaya, India to review the safeguard and legal aspects of the Project. The Mission held discussions with Government officials of Meghalaya, including the Chief Minister, Finance Minister, Chief Secretary and Principal Secretary. The Mission also met with NGOs, action groups and affected people, the Durbars (Council of men) of the two affected villages (Tynger and Shella), and representatives of Lafarge Surma Cement Ltd. (LSC) and Lafarge Umiam Mining Pvt. Ltd (LUMPL). For further details, please refer to the summary of environmental and social issues above.
Timetable for assistance design, processing and implementation
2008 Asian Development Bank

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