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Ivory Coast unrest makes cocoa grinders rethink investments

* Country seen as post-war success story

* Weeks of unrest have shaken companies' confidence

* Govt seeking to boost processing output

By Ange Aboa

ABIDJAN, Jan 30 (Reuters) - Cocoa grinders in Ivory Coast are holding off on new investments after military and social unrest this month, potentially denting government plans to boost processing of the commodity in the world's top grower.

Ivory Coast has emerged from a 2002-2011 political crisis as one the world's fastest growing economies, attracting foreign investment into everything from the cocoa industry to breweries and shopping malls.

But soldiers, mostly former rebels, seized control of the country's second biggest city, Bouake, this month, sparking a series of smaller mutinies across Ivory Coast and exposing cracks in its post-war success story.

The revolts coincided with a strike by civil servants demanding around $400 million in back wages.

"The security, social and political situation these last weeks has indeed opened our eyes to the fact that there is still instability and a lack of visibility in the short to mid-term," the director of an international processing firm told Reuters.

Cocoa firms largely remained in Ivory Coast, which has roughly 40 percent of the world's production, during a decade of unrest and armed conflict. However, many companies in other sectors either shuttered operations or relocated.

The end of the crisis brought a renewed enthusiasm to invest, allowing Ivory Coast to overtake the Netherlands as the world's leading processing hub.

The government aims to process half of Ivory Coast's cocoa output by 2020 - up from around a third currently - and is planning to offer tax breaks and fiscal advantages to companies that help it achieve its goal.

However, three companies told Reuters they would now hold off on planned investments.

"We're not going to sign for the moment, because we can't invest. The current situation won't allow it. So we're going to take the time to reflect on what we will do after 2020," said the director of another company with grinding operations.

The main companies with grinding operations in Ivory Coast include Cargill, Swiss firm Barry Callebaut, France's Cemoi and Singapore-based Olam International. Ivorian companies include Choco Ivoire and Ivory Cocoa Products.

Many in the country are concerned that the incidents this month foreshadow more instability.

The government was forced to pay bonuses to end the military unrest, while the striking workers agreed to suspend their walkout for a month to allow negotiations.

"I can understand cocoa investors who don't want to invest millions in their factories now because, in my opinion, the crisis isn't over," said an agricultural commodities analyst, who asked not to be named.

"The situation has just been postponed until later." (Writing by Joe Bavier; Editing by Alexander Smith)

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