Apollo 1,

University of Queensland
St Lucia, QLD, 4072
Australia

Date: 5/31/2018

Ms. Lakshmi Singh

CEO,
Apollo 1 Regional Headquarters,
EC-72, Sector I, Salt Lake City, Kolkata-700064, India

Dear Lakshmi,

Please find an enclosed copy of our Final Investment Decision Report for the newly
proposed cement plant in Vang Vieng, Laos. This report was compiled with reference
to well reputed research oriented sources. This report provides the following
information:

• A brief synopsis for the project.

• Three studies were undertaken for this project to evaluate its feasibility:
❖ The Initial Financial Assessment.
❖ The Preliminary Sustainability Plan.
❖ The Risk Management Plan.
• The effects of the Decree on the proposed project.
• Conclusion & Key recommendation for Apollo 1 enterprise.

Thank you for taking the time to read our report. Please feel free to contact me if you
have any questions.

Yours sincerely,

Gaurav Sood

Phone: +61414966387

Email: [email protected]
 Final Investment Decision:
5/31/2018
Cement Manufacturing Facility
Project, Vang Vieng, Laos

Submitted by

Marzouq Salman A Alresheedi

Meshari Thari M Alresheedi
Ayushi Mukesh Modh
Gaurav Sood
Dongyu Zhu
 Table of Contents

EXECUTIVE SUMMARY ................................................................................................... i

1. INTRODUCTION .............................................................................................................. 1

1.1. PROJECT SYNOPSIS..............................................................................................................................1

1.1. GUIDE TO THIS REPORT .................................................................................................................... 2

2. INITIAL FINANCIAL ASSESSMENT ................................................................. 2

3. SUSTAINABILITY ANALYSIS ............................................................................... 4

3.1. POSITIVE AND NEGATIVE IMPACT IDENTIFICATION .............................................................. 4

3.2. IMPACT ENGAGEMENT STRATEGIES ............................................................................................ 7

3.3. STAKEHOLDER ENGAGEMENT PLAN ..........................................................................................8

3.4. LAOS GOVERNMENT’S ETHICAL DILEMMAS ............................................................................8

4. RISK ASSESSMENT AND ITS MANAGEMENT ....................................... 8

4.1. RISK MANAGEMENT METHODOLOGY ......................................................................................... 9

4.2. RISK MATRIX ..................................................................................................................................... 10

4.3. RISK REGISTER ................................................................................................................................. 12

4.4. OUTLINES OF MAJOR RISKS ........................................................................................................ 13

5. THE DECREE AND ITS EFFECTS ..................................................................... 16

6. CONCLUSION & RECOMMENDATION ...................................................... 16

 Table of Contents

7. REFERENCES ............................................................................................................... 19

Appendix 1

Appendix 2
 EXECUTIVE SUMMARY

The Government of Laos is inclined towards foreign investment in the sector of cement
manufacturing for Ordinary Portland Cement(OPC) to boost its export economy along with
the aim to reduce the high unemployment in the region. This represents an opportunity for
our enterprise to invest in OPC plant and this final investment decision report has been
complied to evaluate the feasibility of this proposed OPC plant in terms of financially
profitability to Apollo 1 Enterprise and economic profitability to the people and the
government of Laos.

A preliminary investigation has shown that a site near Vang Vieng, 150 km north of Vientiane,
Laos is suitable for this OPC Plant. Limestone for cement production could be sourced from
many local quarries which eases the production process even more. The expected initial capex
for this project is $280 million USD with an operating life of 40 years. This plant is expected to
produce 3.5 million tons of OPC by the end of year 2022(planned operational date).

Apollo 1 team evaluated this opportunity from financial investment aspect with reference to
future cash flows as the initial capital investment of setting up this facility of $280 million USD
is substantial. For financial analysis we used discounted cash flow analysis by calculating net
present value(NPV) and internal rate of return(IRR) for next 11 years from year 2022. From this
analysis we obtained a high IRR of 63% and a favorable NPV of $883 million USD at 10% real
discount rate with the inclusion of 24% corporate tax.

We also conducted a sustainability analysis for this proposed OPC plant with the focus to
highlight the negative impacts on the Five Sustainability Capitals that affect the future cash
flows from this unit. The following Five Sustainability Capitals were identified:

❖ Natural Capital.
❖ Human Capital.
❖ Financial Capital.
❖ Social Capital.
❖ Manufactured Capital.

Mostly Natural Capital [due to Air Pollution] & Social Capital [as Local Tourism Activities will be
halted during the construction of this OPC plant] are affected adversely. Remedying these
impacts would result in extra capex of $5.1 million USD (Each year) which further result in a
reduced IRR of 61% & a reduced NPV of $864 million USD.

In continuation to our research, we found that the proposed OPC plant has a great number of
hazards associated which originate from different business process areas for this project. Those
areas can be summarized to four phases:

❖ Planning and Approval phase for this OPC plant.

❖ OPC plant Construction phase.
❖ OPC plant Operation phase.
❖ Closure and rehabilitation of this OPC plant after its last operational year.

[i]
 EXECUTIVE SUMMARY

Risk methodology adopted to mitigate risks arriving from various business process areas is as
followed in the given sequence:

1. Risk identification: We identified possible project, product, and business risks

which lead to identification of 50 risks.
2. Risk analysis: We assessed the likelihood and consequences of these risks using
Risk Matrix.
3. Risk planning: We were able to make plans to address the risk, either by avoiding
it or minimizing its effects on the project.
4. Risk monitoring: When project goes in operational phase, this area of risk
management can be activated to monitor the previously identified risk and
reevaluate their likelihood and consequences.

After considering the capex for mitigating major risks identified using the above-mentioned
methodology, IRR and NPV reduced even further and thus, bringing out the real cash flow
profitability from this project. IRR of 54% and NPV of $725 million USD were observed from
this risk analysis study.

On May 1st a Decree was released as part of Laos government’s “VISION 20-30” plan which had
a substantial effect on IRR and NPV values of this project as it requires Apollo 1 Enterprise to
award a 20 % free carried equity to the Government of Laos. We took these changes into
account and IRR further reduced to 46.1 % and NPV reduced to $624 million USD.

Apollo 1 team supports the thought of investing into this OPC plant as the values of NPV and
IRR still point to a great profitability for the investors and the people of Laos, but recommends
Lower Carried Equity Rate discussion to be conducted with Government of Laos as this project
is immensely beneficial to Laos’ community because it provides employment, improves living
standards, health & well-being with enhanced infrastructure with our Corporate Social
Responsibility Program.

[ii]
1. INTRODUCTION

1.1.PROJECT SYNOPSIS

Over the years, the economic development in the Greater Mekong Sub region (GMS) has
been effective in enhancing the reputation of the area as well as enabling it to be
economically sustainable. The area has been declared as one of the world’s best
biodiversity areas and consists of six states including Thailand, Laos, Myanmar, Vietnam,
Cambodia and the Yunnan Province of China (Krongkaew 2004, p. 978). Economic
development in the area has been facilitated by elements such as trade and investment as
well as industrial growth in different areas including the cement manufacturing industry
(Menon & Melendez 2011, p. 5). Cement is among the economic elements that are
responsible for shaping the private and public sector in GMS (Nam & Nam 2008, p. 328).
Although the cement industry is not common and effective in all countries in the region, it
is common in countries such as Laos. Vietnam is also a large producer of cement with over
91 million tons production every year while Myanmar produces approximately 3 million
tons of cement every year (News Desk 2018).

In Laos, cement industry produces over 4.4 million tons annually but this figure is expected
to rise to over 6 million tons (News Desk 2018). Currently, although the country meets over
80 percent of the cement demands, it also imports cement and other materials for
enhancing construction activities in the country (News Desk 2018). Laos exports to
countries such as Thailand in the GMS.

As of 2011, the population of Laos was around 6.75 million which is considered as the
smallest among the Lower Mekong countries (Open Development Initiative 2017). There
are around 55,503 populations in Vang Vieng and the average annual population growth
in Laos is 1.7% between 2010 and 2016. Most population in the Lower Mekong countries is
young people. Laos is one of the most poorly known Southeast Asian countries (Menon &
Melendez, 2011). However, over the years, the country has been improving and is currently
among the fastest-growing economies in the world and especially in the Greater Mekong
Sub region.

As the Government of Laos is constantly pushing for reducing imports and increasing
exports, construction boom and creating employment opportunities in the region to
reduce the high unemployment, the Government of Laos is inclined towards foreign
investment in the sector of cement manufacturing for Ordinary Portland Cement (OPC).
This represents a great opportunity for our enterprise to invest in this OPC project. A
preliminary investigation has shown that a site near Vang Vieng, 150 km north of Vientiane,
Laos is suitable for this development. This OPC plant is planned to be operational by the
year 2022. Expected initial capex for constructing this project is $280 million USD with an
operational life of 40 years. Production capacity is aimed to be 3.5 million tons.

[1]
 1.2. GUIDE TO THIS REPORT

This report is structured in 5 sections as follows:

• Initial Financial Assessment.

• Sustainability Analysis.
• Risk Assessment and its Management Plan.
• The Decree and its effects on the project.
• Conclusions and Recommendations.

These mentioned sections would clearly explain the following questions about this
project:

• To show why proposed Ordinary Portland Cement (OPC) cement facility is a viable
project in Laos financially for Apollo 1 Enterprise and its investors.
• How this OPC plant can help the Government of Laos’s vision of boosted exports
and diversify the local economy, creating substantial employment opportunities in
a region that has high unemployment.

2. INITIAL FINANCIAL ASSESSMENT

To analyze the future gains from this project to our enterprise, the following tools and major
assumptions are being used(UQ7901, 2018):

• DCF (Discounted Cash Flows) Analysis on real discount rates for the first 11 years of
operation from year 2022.
o IRR (Internal Rate of Return to Investors).
o NPV (Net Present Value of the Project).
o SENSITIVITY ANALYSIS for the variables involved in the future cash flows of
this cement unit.
• DEPRECIATION aspect for capital investment is not considered for tax benefits on
cash flows.
• INFLATION for this assessment has not been considered either.

There are certain pre-requisite assumptions which have been considered for DCF Analysis
and are mentioned as below:

• US 1 dollar = 8000 kip.

• Corporate Tax in Laos = 24% (PWC, 2017).
• Operational Years: 2022 to 2032 (Sample for DCF ANALYSIS).
• Discount Rate: 10 % (Before Tax).

DCF ANALYSIS:

For this analysis we have prepared an excel sheet with detailed calculations of future
cashflows which could be referred while reading this report. Before this OPC unit starts
producing any cement it needs a substantial investment for its own establishment. It will
require $250 million USD for the base plant and an additional US $30 million will be

[2]
 required to establish Tire Derived Fuels facility to use tire as fuel for clinker production
which will help in long run to cut down cost of production. US$1 million will be needed to
be dispensed to local landowners for using their lands each year along with US$1.1 million
each year as a part of corporate social responsibility program to community tourism
operators as construction activities might disrupt tourism in Vang Vieng(UQ7901, 2018).

Starting with production capacity for this proposed cement plant in Laos, it has an annual
capacity of 3.5 MTPA (Metric Tons Per Annum). Looking at the current Laos’s market for
cement consumption which is approximately around 2 MT(Metric Tons), this facility is
capable of meeting 30% of that total demand as other competitors are providing the rest
of the percentage(UQ7901, 2018). It is expected that Laos’s cement requirement will
increase in coming years as there are a lot of dam projects planned in coming
years(Wikipedia, 2017). While looking at the rest of 2.375 MTPA from this new plant can be
exported to other neighboring countries of Laos especially to Thailand(ANN, 2018). Sales
from this project are primarily focused on export as they can fetch higher value in revenue
than domestic market (UQ7901, 2018). It is not possible to run this production unit at 100%
of capacity; hence we will only consider 85% of efficiency. With that in mind we are looking
at US$333 million revenue for one year starting from year 2022 till year 2032 with no further
capital investment apart from the following costs each year mentioned in Table (1):

Table 1. Cost Structure

Cost Factor Amount

Fixed cost for each year $ 8 million USD(Approx.).
Variable cost for each year $ 84.1 million USD(Approx.)
Total Shipping cost for each year $ 2 million USD(Approx.)
Corporate Tax for each year $ 57 million USD (Approx.)
Corporate Social Responsibility Program $ 1.1 million USD (Starting from year 2019)
cost for each year
Landowners Rent cost for each year $ 1 million USD (Starting from year 2019)

Sensitivity Analysis for NPV was also carried out by changing one cost factor at one time
and recording that NPV to look for the most vulnerable factor of cash flows and below are
the findings in Table (2). The Pessimistic NPV column refers to the effect of the most
unfavorable factor on NPV. The Optimistic NPV column refers to the effect of the most
favorable factor on NPV. NPVoptimistic – NPVpessimistic column shows us the factor
which changes NPV by a great amount.

Table 2. Sensitivity Analysis

Variables Pessimistic - NPV Expected NPV Variables Optimistic- NPV NPVopt - NPVpess
@85% Production
rate
Production $594,205,040.00 $883,903,467.00 Production $1,101,177,287.00 $506,972,247.00
rate @ 65% rate @ 100%
Fixed cost @ $851,595,735.00 $883,903,467.00 Fixed Cost @ $910,337,066.00 $58,741,331.00
$5 $1
Variable cost $829,127,175.00 $883,903,467.00 Variable Cost $931,924,506.00 $102,797,331.00
@ $32 @ $25

[3]
 As it is clear from the Sensitivity Analysis’s Table (2) “NPVopt -NPVpess” column that this
project is the most vulnerable to the rate at which this cement unit is operated i.e. the
operational production capacity rate.

3. SUSTAINABILITY ANALYSIS

3.1.POSITIVE AND NEGATIVE IMPACT IDENTIFICATION

Table (3) outlines positive and negative impacts on each of the five capitals of capitals of
sustainability. This allowed key stakeholders (as given in Figure 1) to be identified to
develop engagement strategies for a successful project. Apollo 1 Enterprise must address
the potential impacts to this group of stakeholders as these stakeholders hold the key to
the success of the project. Key stakeholders are directly influenced if any of the capitals
are impacted due to our proposed OPC plant as they coexist.

Influence - Interest Matrix

12
Government

10

8 State Government

LandHolders
Influence

6
Local Businesses

Public
2

0
0 1 2 3 4 5 6 7 8 9 10
Interests

Figure (1) Major Stakeholder Recognition Matrix

[4]
 Table 3 Positive and Negative Impacts

CAPITALS POSITIVE IMPACTS NEGATIVE IMPACTS

• Environmental reclamation programs will • Cement manufacture results in carbon
enhance environmental sustainability in the particulate emission which are responsible
area. for global warming (Chen et al. 2010).
NATURAL • Using Dry-process kilns have consequently • Air pollution is also increased because of
reduced energy consumption by 40% and smoke and dust emissions during cement
CAPITAL carbon dioxide emissions by 20%(Boyer, 2011). manufacture (Oss & Padovani 2003).
• Using Tire Derived Fuel will for clinker • Landscape and environmental degradation
production reduces dependency on coal, thus will be experienced because of the cement
reducing carbon foot print. production activities resulting in the loss of
biodiversity in the area (Oss & Padovani 2003).
• Increased employment opportunities for • Respiratory health issues are experienced by
people in the area due to the establishment of the local community based on the increased
this cement plant. air pollution (Schumacher et al. 2011)
• Local cement distribution chains can be • The use of machines may also lead to injuries
HUMAN started, and thus providing more cashflow for to the people which may affect their way of
the local community of Vang Vieng. life and living conditions.
CAPITAL • Residents of the area will benefit from the • Noise pollution due to this OPC plant can
growth of the cement industry via training cause severe hearing loss in the local
centers (Schneider et al. 2011) community.

• Local cement sale and export of cement will • High costs of investment in building the
provide financial revenue to Apollo 1 company cement plant with over US$250 million for the
(Schneider et al. 2011) project.
• Increased trade activities will be experienced
• High health costs will be incurred because of
in the area because of this OPC plant.
the health issues being experienced by the
FINANCIAL • Landholders will be compensated generously
as this OPC plant will be constructed on their local people.
CAPITAL
lands. • The costs of compensation to local tourism
authorities will be high due to disruptive
construction activities for this OPC plant.

[5]
 • Profits from the cement plan sales can be • The cement plant will increase economic
used for corporate social responsibility activities in the area which may result in
programs. (Schneider et al. 2011) higher degree of crimes and social disputes.
• Social amenities such as parks, social halls, (Placet et al. 2005).
hospitals and schools will be developed for
enhancing the well-being of the people in • There may be protests during the
the area. construction of this OPC plant by the local
• This OPC plant will enhance unity and community, since tourism activities in this
SOCIAL
increased social support for local activities. area could get reduced due to dust during its
CAPITAL (Placet et al. 2005) construction and after the OPC plant starts
operating.
• Social issues such as inequalities may also
increase because of increased economic
development activities (Placet et al. 2005).

• Ensure adequate levels of investment, • Technological advancements may be too

research and maintenance of costly for the cement plant to implement in
infrastructure(Project, 2006). its practices (Oss & Padovani 2003)
• Locally available cement will enhance • Increased pressure on locally-built buildings
improving roads and other buildings in the to adopt use of products from cement factory
region.
MANUFACTURED • Use of more land from the local landowners
• Improvement in skills and capabilities of the
hence displacing the people residing over
CAPITAL local community because of enhancement
of technology. (Schneider et al. 2011) those lands (Oss & Padovani 2003).

[6]
3.2.IMPACT ENGAGEMENT STRATEGIES

Potential positive and negative impacts were selected according to major stakeholders
that have been identified in Figure 1 and how they are affected by the Five Capitals is as
described in section 3.1. The main selection criteria for these impacts also included the way
the natural surrounding and local community are affected as this place is a famous for
tourism. Strategies have been developed to enhance the positive impacts and mitigate the
negative impacts.

POSITIVE IMPACTS:

GREATEST BENEFITS ENGAGEMENT STRATEGY

Using Dry-process kilns have Multistage preheaters and pre-calciners make use of
consequently reduced energy the waste heat from the kiln and clinker cooler to pre-
consumption by 40% and carbon dioxide heat and pre-process the kiln feed, and thereby allow
emissions by 20%. for considerable energy savings and reducing
dependence on coal. (http://ietd.iipnetwork.org, 2017)

Increased employment opportunities for The most effective engagement strategy is to enhance
people in the area due to the the development of knowledge and skills of people
establishment of this cement plant. employed in the cement plant (Schneider et al. 2011).
Through enhancing the development of knowledge
and skills, people from the area can use these skills to
be self-sufficient and improve their living standards.

Profits from the cement plant sales can Corporate social responsibility should be aimed at
be used for corporate social responsibility working with community groups and community
programs. leaders so that community-based projects are
enhanced for the community (Ismail,2009).

NEGATIVE IMPACTS:

GREATEST CONSEQUENCES ENGAGEMENT STRATEGY

Air pollution is also increased because of Ensuring that pollution mitigation buffers are
smoke and dust emissions during enhanced in the cement plant (Schneider et al. 2011).
cement manufacture. This means that the plant should engage in processes
that are effective in minimize harmful smoke as well as
ensuring that trees are planted around the plant to
trap dust particles (Schneider et al. 2011).

The costs of compensation to local Ensuring that there is a limit for compensation and
tourism authorities will be high due to choose these compensations carefully.
disruptive construction activities for this
OPC plant.

There may be protests during the We need to outline the importance of this OPC plant in
construction of this OPC plant by the local case of providing job opportunities to the local
community, since tourism activities in this communities by giving presentation during group
meetings with local community representatives.
area could get reduced due to dust
during its construction and after the OPC
plant starts operating.
.

[7]
 3.3. STAKEHOLDER ENGAGEMENT PLAN

The Appendix 1 outlines the key messages and engagement activities for each of the major
stakeholders, along with a timeline of when Apollo 1 Enterprise should engage with them
for each strategy.

3.4. LAOS GOVERNMENT’S ETHICAL DILEMMAS

The government might have to face major dilemmas as convincing public for a project that
might harm their livelihood would not be easy. Being an industry small scale or large scale,
it does require a huge amount of water for operation. The government must have right
balance between the water usage for its public and supplying to the industry as well. There
might be chances of community riots or rallies opposing the project proposal. The
government needs to be keen to handle such situations and assure the people that there
are going to be more benefits rather than downsides.

4. RISK ASSESSMENT AND ITS MANAGEMENT

There are always risks associated with substantial investments of this size. We developed a
Risk Assessment for this OPC plant. Risk assessment involves identifying threats and
assessing the probability of the occurrence of these threats. Risk management is about
managing what would happen if these threats materialize including disaster recovery
plans, crisis management and emergency procedures. It is also about minimizing the
probability of the threat leading to undesired effects by designing, implementing and
operating internal controls that mitigate, avoid or transfer risks.

Following are the project phases which are prone to risks:

• Planning and Approval phase.

• OPC plant Construction phase.
• OPC plant Operation phase.
• Closure and Rehabilitation of this OPC plant after its last operational year.

Following are the types of risks categories associated with each of the above-mentioned
project phases(business.qld.gov 2018):

• Natural disasters, such as floods, storms, bushfires and drought

• Legality, such as insurance issues, resolving disputes, contractual breaches,
noncompliance with regulations, and liabilities
• Technology, such as computer network failures and problems associated with
using outdated equipment
• Regulatory and government policy changes, such as water restrictions,
quarantine restrictions, carbon emission restrictions and tax

[8]
 • Environmental, such as climate change, chemical spills and pollution
• Work health and safety, such as accidents caused by materials, equipment, or
location of your work
• Property and equipment, such as damage from natural disasters, burst water
pipes, robbery and vandalism
• Security, such as theft, fraud, loss of intellectual property, terrorism, extortion and
online security and fraud
• Economic and financial, such as global financial events, interest rate increases,
cash flow shortages, customers not paying, rapid growth and rising costs
• Staffing, such as industrial relations issues, human error, conflict management and
difficulty filling vacancies
• Suppliers, such as issues within their business or industry resulting in failure or
interruptions to the supply chain of products or raw materials
• Market, such as changes in consumer preference and increased competition
• Utilities and services, such as failures or interruptions to the delivery of your power,
water, transport and telecommunications.

4.1. RISK MANAGEMENT METHODOLOGY

Figure (2) The Risk Management Methodology

Figure 2 describes the methodology adopted for this report to mitigate and monitor risks
arriving from various risk areas as described in the previous section. Principles which are
followed during this risk assessment along with the above methodology diagram
are(Sadykov 2011):

1. To structure the assessment to ensure that all relevant hazards and risks are
addressed (e.g. not to overlook tasks, such as cleaning, that might take place out of
‘normal’ working hours, or ancillary departments such as waste compacting) in the
risk identification phase.

2. During the risk analysis phase, we considered each identified risk and made
a judgment about the probability and seriousness of that risk. We relied on our
judgment and experience of previous projects and the problems that arose in them.

[9]
 We assigned the risk bands using the below mentioned criteria and we have
outlined these in the Risk Matrix (Table [6]) & Risk Table (Table [8] in Appendix 2):

• The probability of the occurrence of risks was assessed as COMMON, LIKELY,

POSSIBLE, REMOTELY POSSIBLE, IMPROBABLE (Table [4]).
• The effects of the risk might be assessed as CATASTROPHIC (threaten the
survival of the project), MAJOR (would cause major delays), MODERATE,
MINOR (delays are within allowed contingency), and INSIGNIFICANT.

3. In the risk planning phase, we developed strategies to manage the key risks that
threaten the project adversely. For each risk, we thought of actions that we as an
enterprise might take to minimize the disruption to the project if the problem
identified in the risk occurs. Strategies for managing the risks fall into two
categories:
• Avoidance strategies: following these strategies mean that the probability
that the risk will arise is reduced.
• Minimization strategies: following these strategies mean that the impact of
the risk is reduced.

4. As we move forward with this project operational initiation the Risk Monitoring
Phase can kick in to ensure our assumptions about the product, process, and
business risks have not been changed. We will regularly assess each of the
identified risks to decide if that risk is becoming probable in terms of risk severity
and risk occurrence probability.

4.2. RISK MATRIX

Risk Matrix is composed of two components as defined in the Risk analysis phase:

• Risk Likelihood.
• Risk Impact.

Risk Probability defines the likelihood for that risk to occur characterized by different levels
of likelihood as shown in Table (4).

Table (4) Risk Probability

Level of
Descriptor Definition
Likelihood
5 Common Hazard is likely to occur in 12 months.
4 Likely Hazard is likely to occur in 36 months.
3 Possible Hazard is likely to occur in 5 years.
Remotely Hazard is likely to occur during the life of the
2
Possible project.
Hazard is unlikely to occur during the life of the
1 Improbable
project.

[10]
 Risk Impact (Consequences) defines the degree of an adverse effect that a selected risk
could have on the whole progress of the project as shown in Table (5).

Table (5) Risk Impacts

CONSEQUENCE

Level of Personnel
Business Financial
Interruption Loss or Legal &
consequence Health &
or Time Material
Reputation
Regulatory
Environment
Safety
Delay Damage
HS BT F R L E
Major
Loss of permanent
Customers Criminal effect on
(>20 % target Charges / ecosystem or air/
CATASTROPHIC
Fatality > 6 months > $1,000,000 Sales) or Business Rectification
5
Major License difficult and
product Revoked unlikely to result
recall in recovery

Temporary but
localized effect
on ecosystem or
Loss of Sales air/
MAJOR Permanent $500,000 - Prosecution
3-6 months 10-20% of Rectification and
4 Disability $1,000,000 for Breach
target Sales rehabilitation
required over the
medium-term

Major temporary
effect on
ecosystem or air/
Loss of Sales
MODERATE Serious $200,000 - Infringement Rectification
1-3 months 5 - 10% of
3 Injury $500,000 Notice difficult but may
target Sales
be possible in
the long term

Nil or minor
localized impacts
on ecosystem or
Reportable
Loss of Sales air/
MINOR Lost Time 1 week to 1 $100,000 - Breach /
2 - 5% of Impact does not
2 Injury month $200,000 Noncomplia
target Sales require specific
nce
management or
rehabilitation

Minor impacts on
ecosystem or air/
Damage is
Medical Loss of Sales Incident (not
INSIGNIFICANT recoverable
Treatment < 1 week < $100,000 < 2% of reportable to through short-term
1
Only target Sales regulator) management and
rehabilitation

[11]
 Risk Matrix Table (6) is the combination of Risk Impact and Risk Probability Table that
marks the selected risk to a degree of importance (Risk Rank) which can be used to specify
appropriate risk planning sequentially for the list of risks.

Table (6) Risk Matrix

RISK PROBABILITY
RISK IMPACT COMMON LIKELY POSSIBLE REMOTE POSSIBLE IMPROBABLE
5 4 3 2 1
CATASTROPHIC MODERATE
EXTREME EXTREME HIGH HIGH
5
MAJOR MODERATE
EXTREME HIGH HIGH HIGH
4
MODERATE
HIGH HIGH MODERATE MODERATE LOW
3
MINOR
2 MODERATE MODERATE MODERATE LOW LOW
INSIGNIFICANT
1 MODERATE MODERATE LOW LOW LOW

The following table describes each rank and their effects on the project that we have
established in the Risk Matrix as described in Table (6).

Table (7) Risk Rank Descriptions

Risk Ranking Relevance to Project Conclusion

Extreme Project does not proceed without mitigation or executive decision
High Mitigation mandatory
Moderate Monitor and mitigation
Low Accept

4.3. RISK REGISTER

A list of 50 risks has been derived after following risking management methodology in the
form of Risk Register Table. The Risk Register Table can be referred from the Appendix of
this report which lists all the risks with their rankings, Mitigation & Avoidance Strategies,
Residual Risk, i.e. Table 8 in Appendix 2.

[12]
 4.4. OUTLINES OF MAJOR RISKS

Table (9) MAJOR RISKS

Major Risks Comments Risk Avoidance Strategy Risk Mitigation Residual Risk
EXTREME Strategy

1. The design of the During the pre-construction period, a firm is designated Functional OPC plant designs Regular meetings
OPC plant is faulty to design the overall infrastructure of the upcoming should be taken into should be conducted
from architectural project. The design is made to keep in mind every small consideration for the between the
point of view. attribute regarding the machines, i.e. the space required construction of this plant. If management and the
to store the machines, the need of sound proof walls to many designs are taken for designers of the OPC
absorb the sound created from the machines that are to reference, only confusion will be plant to discuss the
be used. Once the design is ready, and later the created instead of curbing it. design issues.
construction is almost done, the plant is ready to be set
up. It is quite possible that there can be an architectural
fault which comes in light after the construction is
complete. For example, there is a possibility that the
storage space required to keep a certain machinery
might not be adequate. There can be minor changes in
the machine selection at the last moment which can be
due to any unforeseen circumstances and then the
architecture proves to be faulty. There are also bleak
chances of changes in raw material for construction,
initially the design approved might promise sound proof
building walls because the heavy machinery required to
manufacture cement create a lot of noise and that might
disturb the neighborhood people.
2. Change in law: When the project is initially approved, it is made sure that For each operational year, there Obtain local Even after
Local government’s the design of the project is made by abiding with all the is a need to maintain a government government
inconsistent rules and regulations made by the government. But there contingency monetary backup guarantee to adjust guarantees
application of new are chances that the local government can change in case of such events when tariff or extend constructions cost
regulations and certain laws and regulations during due course of the government suddenly decided concession period. could be higher.
laws which might construction of the cement plant. For instance, the to increase the taxes or any such
increase the government might decide to increase the taxes levied on event. This kind of strategy
construction cost. import goods and increase the excise duties. If some might help to avoid losses to a
machineries raw material for construction must be large extent.
imported from outside of the state, the construction cost
will increase incredibly.
3. Site safety: High The construction of any project can begin only if it is The only way to avoid the Get Third Party
rate of accidents approved by the government officials. To get an approval, accidents is to adopt a proper Insurance for
during the project peers need to prove that all the safety safety program, a proper compensation to
construction measures are in place and the construction can be management system, public and staff.
carried out safely. But, once the construction begins, and supervision, zero negligence,

[13]
 if the safety rules are violated deliberately or incentives as well as preventive
unknowingly, it can be a huge risk to the laborers working measures. Also, there should be
for the project. For example, if some laborers do not wear third party insurance for every
adequate safety gears and they get subject to a heavy worker which can help mitigate
construction machinery, they might injure themselves the risk to some extent.
and risk their lives as well. Above all, if the safety rules are
violated, it should not be tolerated at any cost and if any
such dangerous accidents take place, the construction
can be halted permanently and the approvals can get
cancelled due to negligence.
4. Cost overrun Before the construction of the plant commences, usually To curb this issue, it is safe to Adopt as much as
during there is a fixed cost dealing of the raw materials with the employ domestic labor and the possible domestic
construction of suppliers. The construction phase of the plant can go on raw materials to be used as product/labor to
OPC plant for some years, so it is quite possible that there can be much as possible to avoid reduce cost
changes in the cost of raw materials. Sudden increase in paying extra costs on for import
these materials can give a cost overrun which will disturb duty and other taxes. If foreign
the overall budget. labor is employed, project cost
increase.
5. Legal Risks(TRIA): For a huge project like that of a cement plant, there are The internal working Internal control
These risks relate to going to be a great number of people involved ensuring committee of the company systems for proper
the following: the proper running of the project right from pre- should work in co-ordinance for control on the
• Contract Risks construction phase to final closure. If many people are proper control on the overall operations of the
• Contractual involved at every step, there can always be a room for operations of the plant and in company and to
Liability frauds (for extra income in their own pockets). The legal this way, it is easier to detect any detect any frauds
• Frauds policies should be in place during the approval itself so frauds if they take place.
• Judicial Risks that there is minimal space for scams and frauds. Scams
• Insurance committed by the officials itself can cause heavy losses to
Risks the project and disturb the budget in the long run.
6. Bagging and The proposed cement plant is aimed to use high-end The areas where bagging and Restricted access
loading for delivery technology for each process. Hence, the heavy loading must be done, it should areas.
of Cement machineries would do the bagging and loading of the be labelled as “restricted access” • Use of PPEs
cement once it is ready. There are going to be a certain as there are heavy moving parts
number of operations officials present all the time to keep in the machinery which can
a check. Due to unforeseen circumstances, it is quite cause injury. Also, the workers
possible that the moving parts of the machines might having access to this region
entrap someone if a person is exposed very close to the should have their personal
moving parts and might injure themselves. If a life is lost protective equipment in place
in such a case, the company officials might have to 7 face which will ensure their safety
a great number of legal issues as well as monetary issues
because it is the responsibility of the company to
compensate for the losses to the labourer’s kin.
7. Fuel Storage The cement plant plans to use coal for various operations. The authorization procedures
Facilities There is a possibility that while using coal for piping should be perfectly done for
systems, due to negligence by any worker, electric spark working on the coal
can take place and cause multiple deaths. Every worker transportation system.
should be extremely vigil and safely guarded while
working with such systems. Loss of lives can affect any

[14]
 kind of industry in extreme ways, not just by monetary
ways but legal issues can also play their parts and the
successful running of the plant might take a toll.
8. Air pollution from The plant will be using many fuels for its efficient running Setting up of bag filters to arrest Even after setting up
the Kiln & Raw mill, one of them being coal. During the operation phase, the polluted particles and dust filters pollutions does
Clinker Cooler, Coal there will be high level of air pollution due to the kilns is the best possible way to curb occur but in a
Mill which might affect the neighborhood people. Increased the pollution. controlled range.
levels of pollution can cause breathing problems to
residents nearby. Also, high levels of dust from the plant
can cause dust allergies. Air pollution is one of the major
risk for any industry which deserves prime importance
and should be curbed to the best level possible.
9. Water pollution The waste water generated during the production of the Set up a sewage treatment
caused during the cement, would be typically led to the nearby water and plant for the treatment of
production of pollute it. Since the waste is from a cement plant, it would sewage/effluent and it is further
cement. consist of lot of chemicals and these chemical rich waste used for gardening and
water can affect the organisms in the water body. Also, plantation and the industrial
the aesthetic value of the water body will drop down waste water generated from the
which would affect tourism too. plant can be re-circulated into
the process.
10. Use of outside For a cement plant, the deliveries of the cement Company should have a Exploring possibility
transport sources produced is also one of the major tasks. If for every batch dedicated transport group to of an in-house logistic
increase of produced cement, a different firm is contacted for the handle all requirements relating mechanism if the
dependencies and deliveries, it will just increase the overall cost of to movement of goods, coal, situation demands.
cost. transportation which can disturb the budget of the clinker, cement including
project. capital equipment, domestic
and imported, as and when
necessary with a well-defined
system of allocation of vehicles
based on priorities and time
aspects.

[15]
5. THE DECREE AND ITS EFFECTS

According to the Decree (Friday 1st May 2020) which is the part of Laos government
“Vision 20-30” plan:

• All projects developed by Foreign Investors must be transferred to the government,

unencumbered by debt THIRTY (30) years after the commencement of operation.
➢ This condition can be accepted as it will not have a drastic effect on the NPV
value of the project in the coming years.
• 10 percent tax on imported equipment and materials for foreign investors’ projects.
➢ Will be sourcing only local vendors for equipment and materials only which
has no impact on the future cash flows.
• 20 percent free carried equity for the Government of Laos.
➢ Open for further discussion with the Government of Laos as IRR is reduced
to 46.1 % from 54 % along with a decreased NPV of $ 624 million USD. This
reduction in NPV and IRR are calculated after considering the inflations of
2.5% and depreciation value of $10 million USD (Each year) for this project.

6. CONCLUSIONS AND RECOMMENDATIONS

6.1. CONCLUSIONS
Following are the conclusions from the investigative studies:

INITIAL FINAL ASSESSMENT:

• Sensitivity analysis – the NPV of the project is the most vulnerable to the rate at
which this unit is operated i.e. the operational production capacity rate.

SUSTAINABILITY ASSESSMENT:

This report has presented an in-depth investigation into understanding all the
potential stakeholder positions of this project. The investigation found five key
stakeholders:

• Landholders
• State Government
• Government of Laos
• The public
• Local business (tourism)

[16]
Most affected Sustainability Capitals were Natural Capital [Air Pollution] & Social
Capital [Local Tourism Activities]. Three positive and negative impacts affecting these
stakeholders were also identified and stakeholder engagement strategies were
presented. But to mitigate 3 negative impacts, it required some extra costs and thus,
causing a reduction in cashflow for this OPC plant for each operational year. Following
are the reduction costs:

• Compensation for local tourism authorities: $2 million USD (For each year)
• Reducing pollution using pollution mitigation buffers: $2 million USD (For
each year)
• Corporate Social Responsibility Program: $1.1 million USD (For each year)

RISK ASSESSMENT:

This report has presented an in-depth investigation into understanding of the all the
risks encountered from planning, construction, operation and closure & rehabilitation
phase for this OPC plant. After marking out 10 major risks, avoidance and mitigation
strategies were presented and discussed in this report. Most of the strategies which are
discussed are to not only mitigate the risk factors for this project, but also increase the
capital investment for each year. Following are the costs of reducing these major risks
that were identified during the analysis:

• Legal firm hired for this OPC plant for avoiding legal issues: $1 million USD (For
each year)
• Contingency monetary fund for construction cost overrun: $5 million USD (For
each year)
• Water Treatment Plant installation: $5 million USD
• Water Treatment Plant maintenance: $0.25 million USD (For each year)
• Equipment and Human Capital Insurance against Natural and Work hazards:
$10 million USD (For each year)
• Contingency monetary fund for tax rate fluctuation: $5 million USD (For each
year)
• PPE and other safety equipment purchasing fund: $2 million USD (For each
year)

The above-mentioned costs are substantial when considered with reference to the
operational life of this OPC plant.

Looking at the IRR and NPV Progression from each phase of studies as mentioned in
Figure 3 , the IRR of 46.1% and NPV of $ 624 million USD are very promising and Apollo
1 team stand by the decision of investing into this project as we have taken most of the
crucial factors which if not considered could have derailed this project in its operational
life.

[17]
 6.2. RECOMMENDATIONS

Following are the recommendations from the investigative studies:

• This cement unit is always operated at 85% of operational production capacity

or higher rates for maximum cashflow value for each year.
• Strict Financial and Legal procedures are always followed for this project. Any
deviations from one of these categorical procedures can lead to catastrophic
financial losses and legal cases against the enterprise. They may even lead to
revocation of project by the Government of Laos if legal procedures were not
followed (wlemekong.cgiar.org). Above all, human safety should be given a top
most priority as this OPC plant requires a lot of man power to operate and without
human capital this project cannot proceed.
• If stakeholder engagement strategies are followed rigorously, it will ensure
project success provided constant feedback is collected from these key
stakeholders regularly.
• Lower Carried Equity Rate discussion to be conducted as this project is
immensely beneficial to Laos community as it provides employment, improved
living standards, health & well-being with enhanced infrastructure with our
Corporate Social Responsibility Program.

Figure (3). NPV - IRR Progression

1000
NPV – IRR Progression 100%
883 864
900 90%

800 80%
725
700 70%
624
600 60%

500 50%

400 40%

300 63% 61% 30%

54%
46%
200 20%

100 10%

0 0%
Initial Financial Assessment Sustainability Analysis Risk Managed After Decree
NPV IRR

[18]
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wle-mekong.cgiar.org. (2017). "Govt revokes agreement with Russian company on dam

development." from https://wle-mekong.cgiar.org/govt-revokes-agreement-with-russian-
company-on-dam-development/.

Cement, J. (2014). "Risk Management Policy."

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f2000000/Risk-management-framework-for-construction-project-in-developing-
countries.pdf.

ANN. 2018. Laos to focus on cement exports, environmental protection [Online]. Available:
http://annx.asianews.network/content/laos-focus-cement-exports-environmental-
protection-64367 [Accessed].
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UQ7901 2018. Project Brief 1 ENGG7901 2018.pdf.

WIKIPEDIA. 2017. Dams and reservoirs in Laos [Online]. Available:

https://en.wikipedia.org/wiki/Dams_and_reservoirs_in_Laos [Accessed].

Krongkaew, M 2004,’The development of the Greater Mekong Sub region (GMS): real
promise or false hope? Journal of Asian Economics, vol. 15, no. 5, pp.977-998.

Menon, J & Melendez, A 2011, Trade and Investment in the Greater Mekong Subregion:
Remaining Challenges and the Unfinished Policy Agenda, Asian Development Bank, viewed
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investment-greater-mekong-subregion.pdf

Nam, CW & Nam, KY 2008,’Economic factors shaping private sector development in the
Greater Mekong Sub region’, International Quarterly for Asian Studies, vol. 39, no. 3/4, pp. 325-
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cement-exports-environmental-protection-64367

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Chen, C, Habert, G, Bouzidi, Y & Jullien, A 2010, ‘Environmental impact of cement production:
detail of the different processes and cement plant variability evaluation’, Journal of Cleaner
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Gür, TM 2013,’Critical review of carbon conversion in “carbon fuel cells”. Chemical Reviews, vol.
113, no. 8, pp.6179-6206.

Ismail, M 2009, ‘Corporate Social Responsibility and its role in community development: An
international perspective’, Journal of International Social Research, vol. 2, no. 9.

Oss, HG & Padovani, AC 2003, ‘Cement manufacture and the environment part II:
environmental challenges and opportunities’, Journal of Industrial ecology, vol. 7, no.1, pp.93-
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Schneider, M, Romer, M., Tschudin, M & Bolio, H 2011, ‘Sustainable cement production—
present and future’, Cement and Concrete Research, vol. 41, no. 7, pp.642-650.

Schuhmacher, M, Domingo, JL & Garreta, J 2004, ‘Pollutants emitted by a cement plant:

health risks for the population living in the neighborhood’, Environmental Research, vol. 95,
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BOYER, P.-O. 2011. Available: https://blog.private-sector-and-
development.com/2011/07/04/the-positive-impacts-of-a-responsible-cement-industry/
[Accessed].

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multistage-pre-heaters-and-pre-calcination [Accessed].

PROJECT, T. S. 2006. Available:

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[Accessed].

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issues-manufacturing-companies-74890.html [Accessed].

[20]
 APPENDIX 1
STAKEHOLDER ENGAGEMENT PLAN

1.1. POSITIVE 1: USING DRY-PROCESS KILNS

KEY KEY MESSAGE SPECIFIC TIMELINE

STAKEHOLDERS ENGAGEMENT
ACTIVITIES
Government of Laos Using dry process 1. Give a September 2018:
kilns promise to presentation and Presentations to
Mr. Sommat reduce the energy explain how the explain the positive
usage approximately usage of dry- outcomes of using dry
Pholsena
by 40% and Co2 process kilns can process kilns
emissions by 20%. This reduce energy
Minister of Natural proves to be a big consumption and
Resources and advantage for the CO2 emission
Environment environment. levels. July 2022 - July 2062:
Submit reports every
Ban Dongnasok 2. When the industry 6 months as energy
Sikhottabong District is in full swing usage and emission
operation, submit levels are an
T: (021) 26 4543 a report after every important issue.
6 months to
inform the
ministry of the
progress.

Government of Laos Reduced levels of 1. Hold meetings September 2018:

energy usage and Co2 with other Official meetings with
Ms. Khemmany emissions should be stakeholders and other stakeholders
Pholsena the top priority for any assure them the
industry. The profits of dry-
Minister of Industry proposed project process skills.
and Commerce promises to do that.
2. Engage in
104/4-5 Phonesay feedback sessions
Road, Ban Phonesay, once a year to be
at par with the July 2022 - July 2062:
Vientiane. Feedback sessions
expectations from
the stakeholders. and submitting
T: (21) 453490/1/3/5
F: (21) 412-434 reports once a year.
 APPENDIX 1
STAKEHOLDER ENGAGEMENT PLAN
1.2. POSITIVE 2: CORPORATE SOCIAL RESPONSIBILITY PROGRAMS

KEY KEY MESSAGE SPECIFIC TIMELINE

STAKEHOLDERS ENGAGEMENT
ACTIVITIES
Government of Laos A full swing operation 1. Give a detailed September 2018:
of this OPC plant is presentation on Hold Presentation
Mr Khampheng expected to begin in how an upcoming Meeting 1.
late 2022. The industry can help
Saysompheng
monetary funds in the
received from the development of November 2018:
Minister of Labor company every year the society
and Social Welfare Hold Presentation
can be used for
society development 2. Send letters
Meeting 2 and
Pangkham St., Ban projects and welfare periodically discuss further
Sisaket, of the community. mentioning the issues if any.
Chanthaboury pros of the project
District, Vientiane, and detailing on January 2019:
what progress has Sending out first
Lao PDR P.O Box:
this OPC Plant official report.
347 made in the sector
of social welfare.
T: (856-20) 21219450 July 2022 - July 2062:
Send the progress
reports to the ministry
yearly.

Government of Laos Vang Vieng is a tourist 1. Give a September 2018:

spot and construction presentation and Hold a meeting along
Mr. Bosengkham of a new OPC Plant conduct a prior with the social welfare
might affect the meeting minister and explain
Vongdara
number of tourists explaining how the details of the
visiting the town. the new proposed outcomes of this
Minister of OPC plant will help project.
Information culture in making the
and Tourism environment even February 2019:
more progressive. Hold a general
T: (856-20) 21219455 meeting with the
Minister of Tourism for
discussing
enhancements.

July 2022 - July 2062:

Submit reports every
four years.

Public of Vang The funds from the 1. Conducting March 2019:

Vieng industry will enhance workshops and Conduct workshops
the facilities for the community to make the people
local people by meeting to ensure understand the
establishing society that people benefits of the project
 APPENDIX 1
STAKEHOLDER ENGAGEMENT PLAN
halls and refurbishing understand the June 2019:
deteriorated positive values of Conduct more
structures. enhancing the workshops and
environment. community meetings
to be assured that
2. Gathering everything is in place.
feedback after
specific amount of July 2022 - July 2062:
time to be sure Gather feedbacks and
whether the opinions from the
public agrees with public.
the improvements
occurred in the
surroundings.

1.3. POSITIVE 3: INCREASED EMPLOYMENT OPPORTUNITIES.

KEY KEY MESSAGE SPECIFIC TIMELINE

STAKEHOLDERS ENGAGEMENT
ACTIVITIES
Government of Laos Opening of a cement 1. Give a detailed August 2018:
plant will increase presentation on Hold Presentation
Mr Khampheng employment how the proposed Meeting 1.
opportunities as more cement industry
Saysompheng
laborers could be will increase October 2018:
engaged while the employment Hold Presentation
Minister of Labor construction is on and opportunities. Meeting 2 and discuss
and Social Welfare skilled labor can be 2. Send out reports further issues if any.
employed when the about this OPC
Pangkham St., Ban plant is in operation. plant progress in January 2019:
Sisaket, employing local Sending out first
Chanthaboury workforce. official report.
District, Vientiane,
Lao PDR P.O Box: July 2022 - July 2062:
347 Send the progress
reports to the ministry
T: (856-20) 21219450 yearly.

Vientiane The proposed cement 1. Give a detailed on August 2018:

Mayor industry will how the proposed Hold Presentation
guarantee improved cement industry Meeting 1.
livelihood of the local will increase the
 APPENDIX 1
STAKEHOLDER ENGAGEMENT PLAN
M Sinlavong people by offering labor October 2018:
Khoutphaythoune jobs. opportunities Hold Presentation
along with the Meeting 2 and discuss
Minister of Labor further issues if any.
T: (856-20) 21219555
and Social Welfare
2. Conduct group January 2019:
meetings with the Sending out first
project heads and official report.
discuss the
prospects.
July 2022 - July 2062:
Send the progress
reports to the ministry
yearly.

Public of Vang Assuring of increased 1. Conduct March 2019:

Vieng work opportunities workshops and Conduct workshops
and in turn better community to make the people
lifestyle for the local meetings understand the
people. including the benefits of the project.
town’s mayor as
well and June 2019:
explaining how Conduct community
the cement meetings to assure
industry will be the local community
benefiting every that hiring process is
person in one or in place and active.
the other way.
July 2022 - July 2062:
2. Gather feedback Gather feedback and
from the people opinions from the
after a certain public.
designated time.

1.4. Negative 1: AIR POLLUTION.

KEY KEY MESSAGE SPECIFIC TIMELINE

STAKEHOLDERS ENGAGEMENT
ACTIVITIES
Government of Laos 1. The impacts on 1. Organize August 2018:
the local meetings with Hold Presentation
Mr. Sommat environment local community Meeting 1.
caused by air councilors to get
Pholsena
pollution due to approval for
this OPC plant will construction.
 APPENDIX 1
STAKEHOLDER ENGAGEMENT PLAN
Minister of Natural be controlled January 2019:
Resources and within the 2. To issue relevant Sending out first
Environment prescribed limits. policies to ensure official air quality
the smooth report after installing
2. State-of-the-art progress of this the smoke filters.
Ban Dongnasok
infrastructure will project.
Sikhottabong District
be utilized to
eliminate or
T: (021) 26 4543
reduce the
emission of
smoke and dust.

Vientiane Will make a specific 1. Provide air February 2019:

Mayor plan on controlling indicator reports Hold Meeting 1 with
the emission of smoke on the emission of residents.
and dust. smoke and dust
M Sinlavong
when the cement
Khoutphaythoune plant is under
construction.
T: (856-20) 21219555
May 2019:
Hold Meeting 1 with
residents.

July 2022 - July 2062:

Annually report on the
emission of smoke
and dust.

Public of Vang Assuring air pollution 1. Organize February 2019:

Vieng from this OPC plant meetings with Hold Meeting 1 with
will not affect the daily local resident residents.
life of the residents in representatives to
any way after smoke discuss the
and dust potential impacts July 2022 - July 2062:
management on the local Gather feedback
systems are in place . environment. forms from the
representatives of the
2. Distribute and public.
retrieve feedback
forms from the July 2022- July 2062:
representatives of Gather the general
the public. public’s opinions on
the air level.
3. Set up a special
website or online
forum for the
public to express
their opinions.
 APPENDIX 1
STAKEHOLDER ENGAGEMENT PLAN

1.5. Negative 2: THE COMPENSATION COST TO COMPANY

KEY KEY MESSAGE SPECIFIC TIMELINE

STAKEHOLDERS ENGAGEMENT
ACTIVITIES
Government of Laos A certain amount of 1. Compensation of July 2022 - July 2062:
compensation will be US $2 million per Annually US $2 million
Mr. Somdy paid to the affected year will be paid to compensation will be
tourism industry in the tourism industry in paid to tourism
Douangdy
Vang Vieng area. the Vang Vieng industry.
area to make up for
Deputy Prime the financial loss January 2020:
Minister and caused by the Organize meeting 1
Minister of Finance construction of the with Ministry of
new cement plant. Tourism Industry to
Thatluang Rd., Ban discuss about
Phonxay, Xiasettha 2. Organize meetings compensation
District, Vientiane, P.O with Ministry of scheme.
Box 46, Tourism Industry
to discuss about July 2020:
T: (856) 21-412409 compensation. Organize meeting 2
with Ministry of
3. All possible Tourism Industry to
disputes must be further discuss about
settled compensation
immediately. scheme.

Government of Laos $2 million USD 1. Allocate July 2022- July 2062:

compensation will be compensation to Annually organize
Mr. Bosengkham paid to the affected local tourism meetings with local
tourism industry in the authorities in the tourism authorities to
Vongdara
Vang Vieng area for Vang Vieng area. discuss about
making up for the loss 2. Organize meetings compensation
Minister of of income. with Ministry of schemes and allocate
Information, Culture Finance to discuss compensation.
and Tourism about
compensation
T: (856-20) 21219455 limit.
3. All possible
disputes must be
settled
immediately.
 APPENDIX 1
STAKEHOLDER ENGAGEMENT PLAN
Local Businesses All local businesses 1. Provide contact July 2022 - July 2062:
(Tourism) that are affected by information with Gather feedback and
the construction of the local businesses to opinions from local
new cement plant will answer their business and quarterly
be made up for the questions and organize meetings.
loss of income. solve their issues.

2. Set up a special
website or online
forum to gather
feedback from
local businesses.

1.6. Negative 3: PROTESTS DURING THE CONSTRUCTION

KEY KEY MESSAGE SPECIFIC TIMELINE

STAKEHOLDERS ENGAGEMENT
ACTIVITIES
Government of Laos Social security and 1. Implement August 2018-
stability are two critical practices that are December 2022:
Mr. Thongbanh factors to the success internationally Quarterly organize
of the project. This kind recognized as a meetings and provide
Sengaphone
of issue must be highly means of reducing reports on residents’
valued. such cases. attitudes towards the
Minister of Public construction of the
Security 2. Organize sufficient cement plant.
force (e.g. the August 2018-
Nongbone Rd, police) to stop or December 2022:
Vientiane timely deal with Send armed forces (i.e.
the potential the police) to stop
T: (856) 21-412409 occurrence of large-scale protest
protests. activities whenever
happened

Vientiane The potential 1. Manage and August 2018-

Mayor occurrence of the organize meetings December 2022:
protest would be a with local resident
serious issue. Effective representatives to Manage monthly
M Sinlavong
measures must be discuss organized meetings
Khoutphaythoune taken to placate the constructive with local resident
public mitigation representatives.
T: (856-20) 21219555 strategies.
August 2018-
2. Effective measures December 2022:
must be taken to
prevent social riots Take timely and
and large-scale effective actions to
people’s injury. prevent or avoid
protest activities
whenever happened
 APPENDIX 1
STAKEHOLDER ENGAGEMENT PLAN
Public of Vang Any protest activity is 1. Organize meetings August 2018-
Vieng not desirable and with December 2022:
reasonable measures representatives of Monthly organize
should be taken to local public to meetings with
express thoughts or discuss about the representatives of
opinions. issue of affecting residents to discuss
local tourism the incurred issues of
activities the construction of the
cement plan
2. Gather and analyze
feedback forms
from the August 2018-
representatives of December 2022:
the public.
Gather and analyze
3. Set up a special residents’ feedback in
website or online a timely manner to
forum for the local understand their
public to express thoughts and
their thoughts and opinions.
opinions
 APPENDIX 2
Risk Register
➢ Risk Identified during the analysis
➢ Risk Importance: 25 > 16>15>12>9 >6>5>4 >2 [ Risks with higher ranks should be dealt with highest priority ]

Table (8) Risk Register

RISK RISK RISK RISK

RISK BUSINESS RISK MITIGATION
RISK DESCRIPTION IMPACT PROBABILITY RANK AVOIDANCE RESIDUAL RISK
NO. AREA STRATEGY
CATEGORY CATEGORY STRATEGY
Prepare a briefing document for Budget will be released
senior management showing how after the briefing
Organizational financial problems Planning & the project is making very important document review with
MODERATE
1 force reductions in the project Approvals 3(BT) 2 contribution to the goals of the senior management might
6
budget drastically Phase business and presenting reasons be still less than the
why cutting to the project budget originally proposed budget.
would not be cost-effective.
Picking up display equipment and Tender offer for equipment and
Planning &
The time required to construct the HIGH materials rather than waiting for materials order should be
2 Approvals 4(F & BT) 4
OPC Plant is underestimated. 16 fresh stock of supplies from the released well in time before the
Phase
suppliers. construction starts.
Prepare a briefing document for
The organization is restructured so Project might not be still
Planning & senior management showing how
that different management are LOW considered with top most
3 Approvals 2(BT) 2 the project is making very important
responsible for the project which 4 priority by the new
Phase contribution to the goals of the
might have different priorities. management.
business.
The residents of the town might not
Even after repeated
approve of a cement industry in the Make sure that the local people
Conduct workshops with the help workshops and meetings,
neighborhood as they might Planning & are aware of the benefits of the
3(BT & L & HIGH of local government to spread there might be some
4 believe upcoming of such plants can Approvals 4 project and lure them by
HS) 12 awareness of the positives of the people who would be
damage their surroundings and Phase explaining the positives
project. agitated and against the
affect their health which can stall the well in advance.
project.
projects progress
Approval from state government is
Prepare a briefing document for
not given for the construction of this
Planning & state government showing how the Ensure the project is complying
projects as the area considered for LOW
5 Approvals 2(BT & F & L) 2 project is making very important with local planning commission’s
the construction of this OPC plant is 4
Phase contribution to the goals of development plan(WANG 2004).
the biggest revenue spot as it is a
Government of Laos.
tourist spot
Obtain all necessary approvals in
Corruption: Corrupt local Planning & Enter into contract with local
HIGH timely manner to minimize chance
6 government officials demand bribes Approvals 4(F &BT) 3 government authorities to
12 for corrupt individual to obstruct
for Approvals Phase prevent corruption
work
Regular meetings should be
Already active OPC plant designs
The design of OPC plant might be conducted between the
Construction EXTREME should be taken into
7 faulty from architectural point of 5(BT & F) 5 management and the designers of
Phase 25 consideration for constructing
view the OPC plant to discuss the design
this plant.
issues.
Change in law: Local government’s
Obtain local government guarantee Keep a contingency monetary Even after government
inconsistent application of new Construction EXTREME
8 5(BT & F & L) 5 to adjust tariff or extend concession back up for these kinds of events guarantees constructions
regulations and laws which might Phase 25
period. for each operational year. cost could be higher.
increase the construction cost.
Adopt proper safety control
program, management system,
Site safety: High rate of accidents Construction EXTREME Get Third Party Insurance for
9 5(HS & F) 5 supervision, incentives and
during construction Phase 25 compensation to public and staff
preventive measures
Mitigation measures for risk
 APPENDIX 2
Risk Register
Low construction productivity:
Obsolete technology and practices
by local partner or low labor Construction HIGH Organize site properly for maximum Benchmark and monitor
10 4(BT & F) 4
productivity of local workforce owing Phase 16 productivity construction activities properly
to poor skills or inadequate
supervision
Sign fixed or pre-determined
Cost overrun during construction of Construction EXTREME Adopt as much as possible domestic
11 5(F) 4 prices with material and facilities
OPC plant Phase 25 product/labor to reduce cost
suppliers
Implement ISO9000 procedures
Improper quality control for the
Construction Review plans jointly with local with the help of local vendors in
12 construction material used in 4(BT) 4 HIGH
Phase partner to determine changes. the construction process of this
construction of this plant
OPC plant
Legal Risks(TRIA):
These risks relate to the following:
Planning & Internal control systems for proper
• Contract Risks 4(F & BT & L EXTREME Set aside a budget for
13 Approvals 5 control on the operations of the
• Contractual Liability & R) 25 unavoidable expenditure.
Phase company and to detect any frauds
• Frauds
• Judicial Risks
• Insurance Risks
Quarrying Operations Risks:
• In Appropriate Storage of
• Periodic checks and trained
explosives leading to
personnel
explosions and deaths Operation HIGH
14 5(HS) 3 • Implementation of the FIFO
• Use of Unauthorized Phase 15
principle and stock control
explosives leading to
explosions and deaths

Grinding and Milling of Raw

Materials and Cement:
Operation HIGH
15 • Airborne dust in the milling 5(HS) 3 Dust suction systems
Phase 15
area can cause suffocation

Grinding and Milling of Raw

Materials and Cement: Operation HIGH Proper guarding, safety and
16 4(HS) 4
• Operators falling from height Phase 16 signage

Cleaning of storage silos:

• Exposure to noise inside the
silo due to the use of Operation MODERATE PPEs (Personal protective
17 3(HS) 3
the work equipment can Phase 9 equipment)
cause permanent hearing
loss.
Clinker production: • Maintenance and check of
• Use of the high-pressure the high-pressure line so that
water pump to clean the Operation HIGH the pressure does not leak
18 4(HS) 4
linings can cause serious Phase 16 and cause harm to the
injury to operators due to operators.
leakage in pressure pipes • Use of PPEs
Clinker production:
• Exposure to thermal load in
Operation HIGH PPEs (Personal protective
19 the clinker furnace area can 4(HS) 4
Phase 16 equipment)
cause Thermal stress on the
operators
 APPENDIX 2
Risk Register
Filtering operations:
• Static electricity can be
Static electricity can be created if
created if the filter is not Operation MODERATE
20 3(HS) 3 the filter is not earthed properly,
earthed properly, can be a Phase 9
can be a source of ignition
source of ignition and can
harm the operators
Bagging and loading for delivery of
Cement:
• The Mechanical movement of
machinery can be a source of • Existence of the
hazard particularly when the Operation EXTREME • Restricted access areas. necessary guards
21 5(HS) 5
operatives work near the Phase 25 • Use of PPEs • Safety labelling
machine and they might get
entrapped in the moving
parts.

Fuel Storage Facilities:

• Electrical spark during Authorization procedures for
Operation 5(HS & BT & EXTREME
22 maintenance work on the 4 working on the coal transportation
Phase F) 20
coal dust piping system can system
cause multiple deaths.
Even after setting up filters
Air pollution from the Kiln & Operation EXTREME Set up the bag filters to arrest the
23 5(HS & E) 5 pollutions does occur but in
Raw mill, Clinker Cooler, Coal Mill Phase 25 air pollution
a controlled range.
Set up a sewage treatment plant
at for the treatment of
sewage/effluent and it is further
Water pollution caused during the Operation EXTREME used for gardening and
24 5(HS & E) 5
production of cement. Phase 25 plantation and the industrial
wastewater generated
from the plant is re-circulated
into the process
Company has a dedicated
transport group to handle all
requirements relating to
movement of goods, coal, clinker,
cement including capital
Exploring possibility of an in-house
Use of outside transport sources Operation EXTREME equipment, domestic and
25 5(F) 4 logistic mechanism if the situation
increase dependencies and cost. Phase 20 imported, as and when necessary
demands.
with a
well defined system of
allocation of vehicles based on
priorities and time
aspects.
The properties of the company
are insured against natural risks,
Disaster Risks:
Planning & like fire, flood, earthquakes, etc.
• Natural risks like Fire, Floods, 5(HS & BT & EXTREME
26 Approvals 4 with periodical review of
Earthquakes, etc.(Cement F & E) 20
Phase adequacy, rates and risks
2014).
covered under professional
advice.
Working in closed space may lead to Operation MODERATE Working Alone in OPC field site is
27 3(HS) 2
lack of air and poisoning Phase 6 prohibited.
 APPENDIX 2
Risk Register
Firms face difficulties in hiring and Offer better
Operation HIGH Sign formal employment contract
28 keeping suitable and valuable 4(BT & F) 4 remuneration/incentive
Phase 16 with every staff
employees packages to staff
Gain accurate financial and other
Operation HIGH information from international and Pay careful attention to contract
29 Local partner’s creditworthiness 4(L & R & BT) 3
Phase 12 independent security and risk translation
evaluation agencies
Obtain support from enterprise’s
home government and
Quota allocation: Failure in obtaining Planning &
MODERATE Prepare and submit all necessary international monetary
30 fair import/export quota allocation Approvals 4(BT & F) 1
4 reports and feasibility study on time institutions like World Bank and
from local government Phase
ADB against unfair quota
allocation.
Closure costs will be iteratively
Closure & Perhaps lead to the
Insufficient funds for closure HIGH developed throughout the
31 Rehabilitation 4 (R & L & F) 3 increase in the investment
activities 12 operational life of the cement plant
Phase cost still.
and reviewed annually.
A waste management plan will
Closure & be developed prior to closure to
Waste management facilities unable MODERATE
32 Rehabilitation 3(BT & HS) 3 determine the waste stream,
to manage waste during closure. 9
Phase proposed treatment and disposal
destination.
Lack of appropriate
Incomplete removal of OPC Closure & Investigate options for reuse,
MODERATE equipment and
33 infrastructure, thus creating hazards Rehabilitation 3(HS) 3 recycling and waste disposal for
9 resettlement sites for
for future land owners Phase used plant.
removal of infrastructure
A continuous stakeholder
engagement and communications
plan will be developed for informing
local and regional communities and
Closure &
Failure to achieve approved post LOW other stakeholders of closure
34 Rehabilitation 2(R & L) 2
closure land use. 4 planning processes. This will include
Phase
agreeing on post-mining land uses,
closure objectives, completion
criteria and implementation
strategies.
• In addition to stakeholder
and community
engagement during
closure, necessary access
Public access to harmful areas of Closure & Provide emergency response
HIGH restrictions and security
35 OPC plant site during and post- Rehabilitation 4(HS) 4 procedures, team and equipment
16 management should be
closure can cause harm to public. Phase during closure.
undertaken.
• Extensive publicity to the
public about the hazards
in this harmful area.
Market demand: Inadequate
Planning &
forecast about market demand. may HIGH Employ more third-party consultant
36 Approvals 5(BT) 2
lead to excessive production of 10 to forecast market demand
Phase
cement
Intellectual property protection:
Former local employees, partners Intellectual property rights training
Operation HIGH
37 and/or third parties steal company’s 4(BT & L) 4 to all key employees by sending
Phase 16
intellectual property, commercial them to seminars
secrets or patent formulae
 APPENDIX 2
Risk Register
Obtain support from home
Expropriation: Due to political, social
government and international
or economic pressures, the local Develop contingency plans and
Operation MODERATE monetary institutions like World
38 government takes over the facility 5(BT & F & R) 1 obtain insurance for expropriation
Phase 5 Bank against expropriation by
without giving reasonable possibility
local government or its agencies
compensation
Operation
Government influence on disputes:
Phase
Unnecessary and unjust influence by Maintain good relations with
& MODERATE Provide dispute settlement
39 local government on court 3(L & R) 3 concerned local government officials
Planning & 9 clauses in the contracts
proceedings regarding project and concerned authorities
Approvals
disputes.
Phase
Government policies:
Government policies on foreign
Planning &
firms, e.g. mandatory joint venture HIGH Transfer ordinary technology
40 Approvals 4(BF) 3
(JV); mandatory technology transfer 12 only but keep the key ones
Phase
will thus lead to sharing of trade
secrets.
Decrease in sales [export and Operation
MODERATE • Increase Advertisement
41 locally] due to reduction in Phase 2(F & R) 2
4 • Price OPC competitively
construction projects.
Operation
HIGH • Train workers and
42 Low OPC Quality Phase 3(F& R) 4
12 supervisors for quality control
Planning & Pre- apply for permit well in
HIGH
43 Business licenses & permits Approvals 4(BT & F) 3 advance and keep checking with
12
Phase govt on the approval status.
• Hire Third Party
transportation vendor
Planning &
HIGH with approved permits
44 Transportation permits Approvals 4(F& BT) 3
12 • Pre- apply for
Phase
transportation permit
before production starts
Pre- apply for work visa for EXPAT
Planning &
MODERATE with specialized knowledge of Visa for few members are
45 Employment Permits Approvals 3(F & BT) 3
9 OPC Production and Plant not approved
Phase
constructions
Operation Construct and use storage silos,
Sufficient raw material not available HIGH Might need to import
46 Phase 4(F) 4 they can store up to 3 months of
to meet production targets 16 gypsum and limestone
production back up
Planning &
MODERATE Pre- authorized local Distributors Cement not reaching some
47 Distribution channels are not ready Approvals 3(F & BT) 3
9 with binding contracts of the remote areas
Phase
Schedule a meeting with the newly
Aborting OPC Plant construction due Construction 2(BT & F & R LOW
48 2 elected Government to explain the
to new Governments Oppression Phase & L) 4
benefits of this project.
Operation Schedule a meeting with
New Tax percentage causing a HIGH Tax percentage still higher
49 Phase 4(F & BT) 3 Government officials to negotiate
slump in local sales profit 12 after negotiation
custom lower tax percentage
Operation
Accidents during transportation of 4(F & BT & L HIGH Purchase insurance cover for Loss not covered even after
50 Phase 4
cement & HS) 16 accidental scenarios taking insurance cover