The European Investment Bank (EIB) is lending EUR 54 million (approximately CFAF 35 billion(1)) from its own resources(2) to Industries Chimiques du Sénégal (ICS) for doubling its phosphoric acid production capacity and working a new phosphate deposit. The contract was signed by Mr Pierre Babacar Kama, ICS's Managing Director, and Mr Tassilo Hendus, Head of the EIB's Division for Lending Operations in West Africa and the Sahel.

The EIB`s first loan to ICS, for EUR 20 million, was granted in the early 1980s when the company was set up. A second loan, advanced in 1986 for EUR 7 million, enabled the Senegalese State to participate in ICS's capital increase and, in 1997, the EIB provided financing for a technical study on various mining aspects of the current project which thus constitutes the EIB's fourth operation in favour of ICS. The phosphate industry in Senegal also received substantial funds, totalling EUR 25.5 million, in 1992 and 1993 from the European Union under the SYSMIN facility.

ICS produces phosphoric acid and phosphatic fertilisers from phosphate ore extracted in the Taïba region. The project financed comprises a chemicals production component, involving the establishment of new plants to double production capacity for phosphoric acid, and a mining component relating to relocation of phosphate extraction activities to the deposit at Tobène, also located in the Taïba region. The Indian company IFFCO - the leading producer and distributor of fertilisers in India, a shareholder in ICS and its main client - has undertaken to purchase all the extra phosphoric acid produced.

Costed at over EUR 250 million in all, the project will be financed by the EIB, Agence Française de Développement (AFD), Banque Ouest Africaine de Développement (BOAD) and a pool of Senegalese banks, topping up ICS's contribution from self-generated funds.

The project will make it possible to boost the efficiency of mining operations and ensure continuity of mining of phosphate, a crucial natural resource for Senegal. It will help to increase Senegal's value added in terms of phosphate industry exports, the country's prime source of foreign exchange, and to safeguard employment. At the same time, it will contribute towards protecting the environment by lessening the adverse effects of mining and chemicals production, an aspect which has been the focus of an in-depth impact assessment.

The EIB, established in 1958 by the Treaty of Rome, finances capital projects furthering European Union (EU) policy objectives. It also participates in implementing the EU's co-operation policy towards third countries that have signed co-operation agreements with the Union. The Fourth Lomé Convention was concluded in 1989 for duration of 10 years and is accompanied by two Financial Protocols spanning the periods 1991-1995 and 1996-2000. The total financial package available under the second Protocol amounts to EUR 14.6 billion, consisting of EUR 12 billion in grant aid from EU Member States, EUR 1 billion in risk capital from the European Development Fund (EDF) and managed by the EIB, and up to EUR 1.6 billion in the form of loans from the EIB's own resources.

(1) The conversion rates used by the EIB : 1 EUR  =0.666300 GBP, 0.787564 IEP, 1.07420 USD, 655.957 XOF.

(2) The Bank's own resources consist of funds raised by the EIB on international capital markets.