China Eximbank provides RMB 352.5 million government concessional loan for Gedem Cement Factory Construction Project

Project narrative

In February 2005, President Isayas Afewerki traveled to China and his counterparts in this Chinese Government agreed in principle to provide an RMB 350 million loan for the the construction of a cement factory in Eritrea. Then, on August 15, 2006, President Isayas Afewerki held talks with a visiting delegation from China Eximbank headed by its Vice President Zhu Hongjie. The Chinese delegation evaluated the possibility of extending a loan for the establishment of a cement factory in Gedem. On November 30, 2006, China Eximbank and the Government of Eritrea signed an RMB 350 million concessional loan framework agreement for the Gedem Cement Factory Construction Project. Then, in 2007, China Eximbank and the Government of Eritrea signed an RMB 352.5 million government concessional loan (GCL) agreement for the Gedem Cement Factory Construction Project. The borrowing terms are unknown. The proceeds of the loan were used to finance a commercial contract with China New Era Group, which was signed on October 19, 2006. The contract went into effect on June 25, 2007, and its expected duration was 36 months. The Gedem Cement Factory Construction Project involved the construction of a cement factory — with a production capacity of 1,000 tons of cement a day — in Gedem, which is close to Massawa. It also involved the installation of supporting infrastructure (e.g. electricity and roads) for the operation of the factory. It was expected to directly and indirectly create 3,000 jobs. The project commenced in May 2007. However, a formal groundbreaking ceremony did not take place until February 14, 2009. The plant began cement production on April 18, 2011. The project was officially completed and handed over to the Eritrean authorities on November 21, 2011.