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The International Finance Corporation, the private sector arm of the World Bank Group, today agreed to provide a US$75mn loan facility to global forest products company Stora Enso Oyj. The financing will be used to support company’s investments in China, which are aimed at meeting increased demand for forest products.

The facility makes available US$50mn in IFC loans and US$25mn in B-loans syndicated to Nordea Bank of Finland.

Stora Enso’s investment plans include expanding its eucalyptus plantation in the Guangxi province and expanding its paper mill in Suzhou, both part of a broader strategy to create an integrated forest products business in China.
The Guangxi project will employ global industry best practices in environmental and social standards and has the potential to create up to 7,000 jobs directly and 20,000 indirectly through links to customers and suppliers. The project will also promote development and opportunity in Guangxi province.

Stora Enso is an integrated forest company based in Finland. IFC has worked with Stora Enso previously in Russia, where it financed the company’s packaging subsidiary, ZAO Stora Enso Packaging.

“Stora Enso consistently demonstrates international best practices for the global forest products sector. IFC wants to support its efforts to transfer world-class sustainable business practices to China’s forestry sector,” says Dimitris Tsitsiragos, director of IFC’s Global Manufacturing and Services department.

“China has a critical need for plantation-based wood products to meet its shortage of fiber and wood products and the continuing growth in demand,” adds IFC associate director Karin Finkelston.

Markku Pentikinen, head of Stora Enso Asia Pacific, comments, “Our aim is to increase the company’s profitability through targeted investments in the fast-growing Chinese market. We are pleased to see that investors like IFC appreciate our sustainable approach in both forestry operations and paper production. IFC sets a good example for other investors in the region through its emphasis on socially responsible investment.”

The investment will be IFC’s fifth in the country’s forest products sector, a key sector for IFC in China. Since 1985, IFC has financed US$1.8bn in 81 projects in China. The investments have been aimed at building on the country’s domestic production capacity, improving efficiency, expanding production, developing the banking sector, and reducing its reliance on imports.