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EBRD loan supports €700 million Severstal energy efficiency drive
Project expected to cut Russian steelmaker’s CO2 emissions by 900,000 tonnes a year
The European Bank for Reconstruction and Development is, through a €300 million long-term loan, supporting a major drive by Severstal to cut the energy consumption of its Russian steelmaking operations. The project, which has a total estimated cost of €700 million, will have the added environmental benefit of reducing the group’s CO2 emissions by around 900,000 tonnes a year.
The EBRD loan, the largest energy efficiency transaction undertaken in Russia, will help the country’s leading steelmaker to reduce its annual primary energy consumption by 5-10 percent. Severstal is one of Russia’s biggest energy consumers.
The Bank remains the lender of record for the full €300 million under an EBRD A/B loan structure, syndicating €150 million for a 7-year facility. The mandated lead arrangers of this B loan are ING Bank N.V., CALYON and Raiffeisen Zentralbank Oesterreich AG. The EBRD has kept the remaining €150 million on its own books as the A portion of the loan, which has a 10-year maturity.
This is one of the largest energy efficiency investment programmes ever undertaken by an industrial company anywhere and the EBRD hopes it will send a clear signal to other Russian energy-intensive companies industry that this is not only a crucial issue CEOs should focus on, but also that accelerating energy efficiency measures has a high return and is commercially viable, EBRD President Jean Lemierre said at a Moscow loan-signing ceremony.
Alexey Mordashov, Severstal CEO, said "I am delighted that Severstal is working closely with the ERBD to increase its investments in energy efficiency. The ERBD loan recognises our efforts in these key areas and provides us with the impetus to reduce our energy consumption."
Projects to be financed by the EBRD loan include the enhancement of Severstal’s own electricity-generating capacity, the modernisation of the group’s oxygen plants and the implementation of sophisticated energy management systems.
SeverStal is an international steel producer with a listing on the Russian Trading System and the London Stock Exchange. Incorporated in 1993, the company focuses on high value-added and unique niche products and has a successful track record of acquiring and integrating high-quality assets in North America and Europe. SeverStal owns mining assets in Russia, thus securing its supplies of raw materials. In 2006 SeverStal produced 17.6 million tonnes of steel and had revenues of $12.4bn, PBT of $1.8bn and EPS of $1.27 dollars. www.severstal.ru
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