- Efficiency (both energy and operational) improvements in the Company's existing operations, representing approximately 20% of development plan.
- Balance Sheet restructuring through the reduction of short term debt, representing approx 20% of development plan. The Bank's financing will also enhance KO financial standing and resources for the development of a second mining pit (Korpanga) located in the vicinity of the Company's existing operations.
- Restructuring of the company. Facility will assist KO in its restructuring to focus on its core business and divesting its non-core assets.
- Transparency and corporate governance. Severstal will adopt a corporate governance charter during the KO facility availability period, which will further strengthen Severstal's corporate governance. KO is also in the process of preparing IAS statements specifically to satisfy Bank requirements.
- Regional effects - KO is the leading enterprise in the area and contributes 25% of the local budget of the Republic of Karelia. The Project will help improve efficiency, thus ensuring long term survival of this regionally important industry.
- Greater competition in the Russian mining sector: Development of the mine will reduce KO's costs and will help raise both KO and Severstal competitiveness in this sector in Russia.
- Export generation: As KO exports approx. 40% of its output this investment will allow KO to maintain its export competitiveness in an area where the country has a good comparative advantage as one of the main iron pellet exporters.
- Environmental effect: The Bank will create a strong incentive for further environmental improvements to fulfil the EAP satisfactory to the Bank. KO is in the process of implementing an Environmental Management System (ESM) obtaining an ISO 14001 certificate by the end of 2004.
- Severstal support: The sponsor in the project (Severstal) has been a frontrunner in terms of corporate governance in the metal sector. Continued support for the company can be seen as a reward for this track record
29 Zvezdnaya St.,
Republic of Karelia ,
Tel.: +7 (81459) 22511
Fax: +7 (81459) 22713
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Tel: +44 20 7338 7168
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