Sugarcane will be converted into bioethanol to meet demand in European and domestic markets. The power plant will provide renewable electricity for the ethanol refinery and will supply approximately 20% of Sierra Leone’s national grid. In addition, the Project incorporates measures to contribute to food security and socio-economic development in one of the poorest regions in the country.

Under the agreement, the African Development Bank (AfDB), the Emerging Africa Infrastructure Fund (EAIF), the Netherlands Development Finance Company (FMO), the German Development Finance Institution (DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH), the South African Industrial Development Corporation (IDC), the Belgian Development Bank (BIO), together with Cordiant managed ICF Debt Pool, are providing debt financing of €133 million (US$191 million). The Swedish Development Fund (Swedfund) and FMO are to join AOG as equity partners. The total size of the investment is estimated at €258 million (US$370 million).

The agreement follows more than three years of evaluations of the potential social, environmental and economic impacts of this project which aims to become a model for sustainable investment in Africa. In addition to the independent studies that have already been conducted and are publicly available, the financing partners will perform on-going monitoring to ensure that the project fully meets its commitments.

The location of the fields and irrigation systems within the sugarcane plantations has been selected to protect biodiversity and existing farmland. This has been achieved through dialogue with local communities, by scientific investigations and an aerial survey of the area. Less than one-third of the leased area will actually be used by the project, keeping impacts to a minimum, Addax claims. Two hamlets with a population of about 80 people may have to be physically resettled and will in that case be compensated in accordance with IFC Performance Standards. In addition, where a village has any existing farmland affected, a number of mitigation measures will be taken, including the provision, ploughing and planting of alternative land as close as reasonably possible to the village.

Construction of the ethanol refinery and power plant will begin later this year, with production becoming operational in 2013. The Project already employs over 700 people and will create more than 2,000 jobs in steady operations.

In accordance with Sierra Leone law, the land for the Project was leased from traditional landowners through the local chiefdoms, who were represented by a law firm they engaged throughout the negotiations. To ensure that the landowners will receive their contractual share of the annual rent, landholdings have been mapped in collaboration with local communities, giving official physical land title and ensuring direct lease payments to the local landowners for the first time.

Addax Bioenergy is also committed to food security and improvements in the livelihoods of local communities; a dedicated Farmer Development Program has started to develop more than 2,000 hectares of land to produce food for the local communities. This is complemented by a farmer training programme developed together with the United Nations Food and Agriculture Organization (FAO). This program offers practical courses to 2,000 farmers to improve the productivity and efficiency of their subsistence farming practices as well as introducing concepts of safety, hygiene and healthcare. The first 118 farmers graduated from the “Addax Farmer Field and Life School” in January 2011, and training is ongoing.

The project has committed to comply with social and environmental standards, including: AfDB’s Environmental and Social Safeguard policies, the World Bank’s International Finance Corporation (IFC) Performance Standards, the EU bioenergy environmental and social sustainability standards, and the industry guidelines developed by the Roundtable for Sustainable Biofuels and the Bonsucro Better Sugarcane Initiative; and local environmental and social laws.

Addax Bioenergy is a wholly-owned subsidiary of The Addax and Oryx Group Limited (AOG), formed in 2008 to develop a sustainable investment model for biofuels in Africa.