The EBRD will provide long-term rouble funding for an energy efficient tyre plant to be built by Germany’s Continental group in central Russia to meet demand for quality tyres in one of the world’s fastest growing auto markets.
The eight-year EBRD rouble loan, equivalent to €90 million, will fund part of the costs of the plant, which will be constructed in the Kaluga automotive cluster 190 km southwest of Moscow. It will have an initial capacity of four million tyres a year.
In addition, the EBRD will actively support Continental and other leading tyre-makers pushing for improved Russian waste recycling legislation that would give producers the right to organise the collection and recycling of old tyres.
In 2011, the Russian tyre market was worth nearly €4 billion with 54 million units being sold. This Russian growth, however, also creates 1.1 million old tyres a year for which there is no further use – with Russia accounting for a third of all the so-called “End-of-Life” (ELT) tyres created in Europe.
Only 10 per cent of Russia’s ELT’s are currently being recycled. The rest are dumped in landfills, which is both wasteful and environmentally harmful.
The European recycling rate is 84 per cent, which includes the use of energy-intensive “tyre-derived fuel” in certain industrial uses, including cement kilns, steel mills, thermal power stations and pulp and paper mills.
This huge gap highlights the urgency of strengthening Russia’s draft law on industrial and consumer waste to ensure it gives tyre producers the responsibility for waste management rather than relying on financial incentives to solve this growing problem.
Continental is the third foreign tyre-maker to benefit from EBRD funding in localising production in Russia. The two previous ones were Michelin and Nokian.