Mongolian cashmere and garment group Gobi JSC has secured a USD16 million injection to invest in the modernisation of its sewing equipment in a bid to improve quality and increase production, and to support the opening of a new flagship store in the country's capital, Ulaanbaatar.
The modernisation and retail programme is being funded with a loan from the European Bank for Reconstruction and Development (EBRD), which will also support an increase in the purchase of raw cashmere from herders in remote areas.
Established in 1981, Gobi is the largest vertically integrated cashmere and camel wool processor and garments manufacturer in Mongolia, with capabilities ranging from primary processing to manufacturing of cashmere and camel wool knitwear and woven products.
Cashmere is a key export commodity for Mongolia, second only to products from the mining industry. Developing a sustainable cashmere industry and value chains is one of the EBRD's strategic priorities in Mongolia, where the Bank supports diversification from the mining sector>"Firstly, we would like to express our appreciation to the EBRD team for contributing to the development of the manufacturing sector in Mongolia, specifically the cashmere industry," says Baatarsaikhan Tsagaach, CEO of Gobi JSC.
"We are pleased that Gobi JSC has been successfully cooperating with the EBRD since 2009. In this period we have become the largest cashmere producer in Mongolia and the face of Mongolian cashmere on the international arena. We believe that the long-standing relationship with the EBRD is one of the important factors that contributed to our success."
The company will obtain a total of USD 16 million in EBRD financing, comprising a USD 12 million six-year loan and a USD 4 million working capital facility for up to three years. The working capital facility will provide Gobi with more flexibility, allowing the company to access funds as necessary for seasonal purchases of raw material.
Mongolia produces about 50% of the global supply of raw cashmere, which is a reliable source of income for nomadic herders, bolstering a traditional lifestyle threatened by rapid urbanisation. The EBRD is planning a technical cooperation (TC) project, with additional contribution from Gobi aimed at developing a sustainable cashmere supply. With this TC the suppliers and cashmere goat herders in remote areas will get educated and trained on how to increase the quality and sustainability of the fibre.
We are proud to support Gobi JSC's expansion," adds Irina Kravchenko, EBRD head of Mongolia. "The company shows that Mongolia can produce not only raw cashmere for foreign garments manufacturers, but that it can itself make desirable, quality clothes. We are also working with other stakeholders in the cashmere industry to improve sustainability and quality standards."