Mongolia: Value-Added Cashmere Production and Export Project
The project will support the expansion of Gobi''s primary and secondary cashmere processing capacity. Gobi will increase its raw cashmere procurement capacity, ultimately benefitting herders, and the manufactured end-products will be sold domestically and exported to over 30 countries. The project is fully aligned with the Government of Mongolia''s goals to enhance agricultural productivity, increase local value addition, diversify exports, and create jobs.
Private Sector Operations Department
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- Agriculture, natural resources and rural development
|Project Name||Value-Added Cashmere Production and Export Project|
|Borrower / Company||Gobi Joint Stock Company
|Country / Economy||Mongolia
|Type or Modality of Assistance||
|Strategic Agendas||Environmentally sustainable growth
Inclusive economic growth
|Drivers of Change||Partnerships
Private sector development
|Sector / Subsector||
Agriculture, natural resources and rural development / Agro-industry, marketing, and trade
|Gender Equity and Mainstreaming||Effective gender mainstreaming|
|Responsible ADB Department||Private Sector Operations Department|
|Responsible ADB Division||Office of the Director General, PSOD|
|Responsible ADB Officer||Jeong, Juhyun|
|Description||The project will support the expansion of Gobi''s primary and secondary cashmere processing capacity. Gobi will increase its raw cashmere procurement capacity, ultimately benefitting herders, and the manufactured end-products will be sold domestically and exported to over 30 countries. The project is fully aligned with the Government of Mongolia''s goals to enhance agricultural productivity, increase local value addition, diversify exports, and create jobs.|
|Objectives and Scope||
The agriculture sector in Mongolia is considered the key in diversifying the economy away from its heavy reliance on the mining sector. Mongolia has a natural competitive advantage in cashmere production with its climate and terrain extremely well suited for cashmere goats. Mongolia is second largest producer of raw cashmere after the People's Republic of China (PRC) and produces a third of the global supply of raw cashmere. Despite this high level of raw cashmere production, only 10% of raw cashmere is fully processed domestically. There is much room for additional value-add through secondary processing of cashmere domestically.
Gobi is the largest cashmere manufacturer in Mongolia. As an integrated cashmere producer, Gobi manages its entire value chain from sourcing raw cashmere directly from herders to processing and manufacturing cashmere products at its primary and secondary processing facilities in Ulaanbaatar. The project will help Gobi expands its primary and secondary processing capacity, adding more value domestically and further integrating the cashmere value chain.
|Linkage to Country/Regional Strategy||
The project is aligned with the ADB Midterm Review of Strategy 2020, which emphasizes the need to invest in agriculture to increase productivity and strengthen links with global value chains. The project is aligned with all three strategic pillars of the Mongolia country partnership strategy: (i) promoting economic and social stability, (ii) developing infrastructure for economic diversification, and (iii) strengthening environmental sustainability. The project is also aligned with the IED validation of the country partnership strategy and its emphasis to _promote diversification of the economy with a focus on improving the productivity of agribusiness_. As Gobi''s exports reach the PRC, a DMC member, and non-DMC regional members (including Hong Kong, China, Japan, the Republic of Korea, Singapore, and Taipei,China), the project is aligned with ADB''s operational plan for regional cooperation and integration, which highlights the importance of raising competitiveness in connected markets including through promoting and facilitating the participation in global and regional value chains by small and medium-sized enterprises and smallholder farmers.
The project is aligned with ADB''s operational plan for agriculture and natural resources, 2015 to 2020, which recommends greater private sector agribusiness investment by ADB through working with strong agribusiness sponsors adopting best practices. The project will complement ADB' sovereign assistance program in Mongolia which aims to increase the value addition of the country' rich yet underutilized livestock and other agricultural resources through (i) value chain investments by agro-enterprises and cooperatives, (ii) capacity strengthening of primary producers and processors, (iii) improvement of marketing and technical capacity of agroenterprises and cooperatives, and (iv) development of Mongolian product brand(s). The project will also benefit from and complement the completed sovereign project that improved the livelihood of herders by ensuring sustainable pasture management in Bayanhongor aimag, a region where Gobi has extensive raw cashmere procurement activities.
|Summary of Environmental and Social Aspects|
|Environmental Aspects||In compliance with ADB SPS requirements for General Corporate Finance lending modalities, a Corporate Audit of the company''s environmental and social management system (ESMS) has been undertaken as well as a Compliance Audit of existing facilities. Compliance with national, international and ADB standards were assessed, and where any non-compliance was identified, a Corrective Action Plan (CAP) was prepared and agreed with the Gobi' management team. The plan includes necessary remedial actions, budget and resources, timeline and responsibilities for resolution of some partial compliance issues. No issues of non-compliance were identified.|
|Involuntary Resettlement||The company holds ownership rights to the lands below its main factory. The areas are used for offices, factories, and other facilities of the company, and has no residents. The project will also include the construction of two facilities. The location of the new primary processing facility is yet to be finalized. The land area for the new primary processing factory is expected to be 7.5 hectares and likely to be located in an industrial area in Sergelen soum, Tuv aimag. Gobi plans to build a new secondary processing facility in Ulaanbaatar on industrial land that is owned by Gobi, adjacent to its current factory. The design is being finalized but the new facility will include sewing, weaving, and knitting operations as well as a warehouse. The proposed project is not expected to have any impacts on involuntary resettlement.|
|Indigenous Peoples||There are no indigenous peoples in locations of Gobi factory sites.|
|Stakeholder Communication, Participation, and Consultation|
|Timetable for assistance design, processing and implementation|
|Concept Clearance||30 Jan 2018|
|Credit Committee Meeting||11 Jul 2018|
|Approval||27 Jul 2018|
|Last PDS Update||08 May 2018|
Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.
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|Title||Document Type||Document Date|
|Loan Gobi Joint Stock Company Value-Added Cashmere Production and Export Project: FAST Report||Faster Approach to Small Nonsovereign Transactions||Jul 2018|
|Value-Added Cashmere Production and Export Project: Initial Poverty and Social Analysis||Initial Poverty and Social Analysis||May 2018|
Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.
None currently available.
Evaluation Documents See also: Independent Evaluation
None currently available.
None currently available.
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