Project summary document

Project description
and objectives:

MST is a major producer of flat steel located at Termitau, Kazakhstan.

The EBRD project, first approved by EBRD in 1997, was designed to:

(i) restore productive capacity and improve efficiency in the steel mill

(ii) improve efficiency in the coal mines

(iii) develop value added, higher quality steel by way of investments in galvanising, pickling lines, control procedures and other areas; and

(iv) implement environmental action plans that would improve environmental and health & safety impacts and bring the company into compliance with World Bank environmental guidelines.

Transition impact:

The project has a high demonstration effect as the first turn-around and privatisation of a large fully integrated former monopoly in Kazakhstan. It introduces environmental awareness in the region, stabilises employment and encourages the establishment of small and medium-sized enterprises.

The client:

MST is part of the Mittal Steel Group. Mittal Steel is the world’s largest and most global steel company. The company has operations in sixteen countries, covering four continents. Mittal Steel encompasses all aspects of modern steel making, to produce a comprehensive portfolio of both flat and long steel products to meet a wide range of customer needs. It serves all the major steel consuming sectors, including automotive, appliance, machinery and construction. In 2004, Mittal Steel had revenues of US$ 31.2 billion and steel shipments of 57.6 million tons (pro-forma inc. ISG), employing 164,000 employees. The shares of the company trade on the New York Stock Exchange and Euronext Amsterdam under the ticker symbol “MT”.

EBRD finance:

EBRD has provided a long-term loan of US$ 54 million (EUR 44 million), which will be repaid on or before November 2006.

Total project cost:

US$ 293 million (EUR 234 million).

Environmental impact:

The project was screened in category A/1, requiring an Environmental Audit and Environmental Impact Assessment (EIA). In 1997 three separate Environmental, Health and Safety Audit and Assessments were prepared for the iron & steel works, for the power plant and for the coal mines. Three Environmental Action Plans (EAPs) - for the steel works, the power plant and the coal mines - were developed and agreed with Mittal Steel. The implementation of these EAPs was covenanted in the Loan Agreement and monitored closely by the lenders. The implementation of the EAPs will gradually bring the facilities in full compliance with Kazakh environmental standards and with World Bank pollution abatement guidelines.

Most of the actions were implemented ahead or on schedule, e. g. the Open Hearth Furnaces were closed down and decommissioned in 1998, the new pickling line was commissioned and the old polluting line decommissioned in 1999.  The specific air emission of pollutants in the steel plant and power plant has been reduced from 107 to 64 kg per ton of steel over the last eight years.  Combined iron and steel production and power plant dust emissions are down to  9.4 kg/t from 27.8 kg/t of steel. The amount of effluent discharge into Samarkandsky Water Pond has been reduced by 52%, into the Nura river by 26%.  The efficiency of ammonia removal has increased from 25% to 97.7% and the oil removals from 90% to 94.8% and water discharges are within EU, WB and Kazakh norms. About 62% of the solid wastes is recycled, but still about 4,800 tpa is disposed of on the slag heaps around the plant.

However, there are a few actions which are behind schedule:

• The converter gas cleaning station has not been installed yet, due to unexpected technical problems and delays in the selection of an adequate technology.
  
  
• The gas cleaning station of power plant TEC-1 is completed after considerable delay and emissions are reduced from 2,150 g/m³ to 271 g/m³; however, further adjustment is needed to meet the 100 g/m³ target.
  
  
• Only half of the gas cleaning units is installed for TEC-2; completion is expected only by the middle of 2006, three years behind schedule.

Occupational health and safety has improved significantly and accident rates at the steel plant and power plant are close to international industrial average; however, in the coal mines after six years of steady decline the accident frequency and fatalities have increased in 2004 and 2005. With the involvement of international experts the mines have developed a Health and Safety Action Plan and started to implement it. The Bank is monitoring this programme closely.

A specific feature of the Karaganda mines is the presence of methane, which represents a major safety hazard, but also a potential for utilisation of a green house gas for energy generation. With the help of the IFIs, Mittal Steel has developed a methane drainage programme and last year it resulted in collection and utilisation of 56 million m³ of methane.

There is an Environmental Impact Assesment available for this project.

Technical
cooperation:

None.

For consultant opportunities for projects financed by technical cooperation funds, visit procurement of consultants.

Company contact:

 Mr. Sanjay Verma, GM (Finance)

EBRD contact:

Mark Webber, Operation Leader: webberm@ebrd.com

Business opportunities:

For business opportunities or procurement, contact the client company.

General enquiries:

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168; Fax: +44 20 7338 7380
Email: projectenquiries@ebrd.com