Aditya Birla Group's Birla Carbon China SPV to raise equity and debt from IFC

Fund raising to support company's $200 mn green field facility in China

Aditya Birla Group's Birla Carbon to raise equity and debt from the International Finance Corporation (IFC) for the proposed $200 million carbon black manufacturing facility in China. The carbon black production plant, Columbian Chemicals (Jining), to come in Shandong province, China.

According to World Bank's investment arm disclosure, total Project cost is around $200 million and proposed IFC investment package consists of an equity investment of upto $10 million, a senior loan of up to $40 million from its own accounts, a syndicated loan of up to $35 million and potentially up to S$30 million from IFC acting in its capacity as implementing entity for the Managed Co-Lending Portfolio Program.

IFC said that it will mobilise financing from international banks and thus help the project company to expand its future access to the financial markets.

The plant will be constructed in two phases -- Phase I with a capacity of 120,000 tonne per year expected to become operational by end of 2016, and Phase II with an incremental capacity of 120,000 tonnes expected to come into operation 2-3 years after completion of Phase I. IFC's investment of both debt and equity in Columbian Chemicals (Jining) for Phase I.

The plant will adopt established technology from Columbian Chemicals (USA), which is also a subsidiary of Birla Carbon.

Columbian Chemicals (Jining) will be built within an existing chemical industrial park in Jining, adjacent to an existing plant of the Jining Carbon Group which will supply most of the raw materials for Columbian Chemicals (Jining).

The production process involves the controlled oxidation of creosote oil and other heavy oils. In this instance, the tail gas from the oxidation process which consists of carbon monoxide and hydrogen will be used for co-generation to produce steam and generate electricity, according to IFC's disclosure.

It was further stated, preliminary engineering design for the project is complete and the engineering/procurement/construction (EPC) model will be adopted for the project. The shortlisting of EPC contractors has been completed with the associated companies being major contractors in the chemical industry; the final EPC contractor will be selected in early 2015.

Birla Carbon is one of the largest manufacturers and suppliers of carbon black globally. It operates 17 manufacturing facilities and setups in 15 countries with a combined annual production capacity of over 2 million tonnes.