Project description
and objectives:
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The proposed project is for energy efficiency investments and working capital
at Mittal Steel Zenica. This will enable the client to implement crucial
energy efficiency measures in restarting integrated steel making operations
and will provide working capital needed to increase production levels. Most of
the company’s products will be exported, leading to a significant increase in
BiH’s total industrial exports. This will help further integrating the BiH
economy in the European economy and earn export revenues for the country.
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Transition impact:
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Mittal Steel’s investment in the Company is the largest FDI in BiH since the
1992-1995 war. As a result, the transition impact of the project will be
significant for the country as a whole. Specific sources of transition impact
would be:
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Restructuring
The Company’s operations, including the early
stages of commissioning new electric arc steelmaking, will be managed by
Mittal Steel who has a proven track record of significantly improving within a
short period of time the operational practices at plants which it acquires,
and developing new markets for them. Mittal Steel maintains for all its
operations a Knowledge Integration Programme which enables Mittal Steel
managers to share best practice management experience between plants belonging
to the group. This will facilitate knowledge transfer to the local economy. A
further element would be the energy efficiency measures which would help to
reduce the energy intensity of the operations
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Market expansion
Under the purchase agreement, Mittal Steel has
agreed to restart integrated steel making at the site over the next 2 years.
This will mean a significant increase in output. Local suppliers to the
Company such as utilities and railways, as well as the local iron ore mines
that are being reopened near Ljubija, will benefit from increased business on
commercial terms;
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Private ownership
The acquisition of the BH Steel by Mittal
Steel has transferred a major asset of the BiH economy to the private sector.
The Bank’s participation in the operation will contribute to the success of
this privatisation and provide a demonstration effect for other potential
investors in BiH.
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The client:
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Mittal Steel Zenica, a Bosnia and Herzegovina steel maker which is majority
owned by Mittal Steel Company N.V. which has recently become the largest steel
company in the world with sales of USD 31.2 billion and steel shipments of 58
million tonnes in 2004.
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EBRD finance:
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Loan, EUR 25 million.
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Total project cost:
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EUR 160 million.
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Environmental impact:
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Screened B/1.
The project involves the restarting of an integrated steel mill, which was
temporarily closed down in 1992, without any increase of its previous
production capacity, and the modernisation of a scrap-based electric steel
mill. A significant part of the project is financing energy efficiency
investments. Environmental issues may be associated with the project in
relation to compliance with EU environmental standards, including emission
standards; liability issues as a result of potentially existing soil and
ground water contamination, effluent discharge into rivers; occupational
health and safety. Environmental due diligence will be conducted in parallel
with the Bank’s technical due diligence on the energy efficiency projects.
The PSD will be updated once the due diligence is completed and an
Environmental Action Plan is agreed with Mittal Steel.
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Technical
cooperation:
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An energy efficiency audit has been performed which was financed under an
existing framework contract, funded by the CEI, Central European Initiative
(Italy).
For consultant opportunities for projects financed by technical cooperation
funds, visit procurement
of consultants.
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Company contact:
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Mr Sunil Chopra
Mittal Steel Zenica
Tel: +387 3240 6269.
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EBRD contact:
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Holger Muent, Operation Leader: muenth@ebrd.com
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Business opportunities:
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For business opportunities or procurement, contact the client company.
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General enquiries:
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EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168; Fax: +44 20 7338 7380
Email: projectenquiries@ebrd.com
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