Project number:


Business sector:

Manufacturing and Services

Notice type:


Environmental category:


Approval date:

22 Oct 2002



PSD disclosed:

20 Sep 2002

Project Description

A proposed senior loan to the JV to co-finance the construction of a Hot Dip Galvanised Steel facility in Cherepovets, 400 km north of Moscow.
The EBRD would provide financing for the construction and operation of a Hot Dip Galvanising (HDG) line for the production of high quality zinc-coated galvanised steel primarily for the automotive industry. The proceeds of the loan would be used for capital investment and working capital requirements.
The JV would be the first major steel venture in Russia involving the largest western steel manufacturer and a leading local producer known for high level of restructuring and good corporate governance. Arcelor will provide the JV with its patented technology for production of "Extragal", special quality automotive steel while Severstal will supply the Company with feedstock. Both partners will be actively involved in managing the operations of JV.

Transition Impact

As a substantial brown-field operation, the project success would demonstrate the opportunities for direct foreign investment in the Russia’s metal sector. Arcelor would be actively assisting in implementing its highly proprietary technology and operating procedures within the JV. Close co-operation with Arcelor specialists would ensure technological and managerial skills transfer to Severstal managers and to Russian staff of the new JV.
Availability of a high quality steel product would also encourage potential customers to switch from regular to coated steel resulting in quality improvement in a number of industry sectors. This upgrade would have the greatest impact on the automotive sector and this project would make Russia a potentially more attractive place for other automotive Joint Ventures.

The Client

ZAO Severgal, a joint venture (JV) established by Severstal, a major Russian steel producer and Arcelor, the leading international steel company, to produce high quality hot dip galvanised steel predominantly for the automotive market. Severstal holds 75% of the JV capital and Arcelor owns the remaining 25%.

EBRD Finance

The facility would consist of a senior loan to the Company in the amount of USD 90 million (EUR 92 million). The loan would comprise an "A Loan" portion of USD 59 million (EUR 60 million equivalent) for the Bank’s own account, and a "B Loan" portion of USD 31 million (EURO 32 million) for the account of participants.

Project Cost


Environmental Impact

The project is screened B/0. An international consultancy firm performed an environmental appraisal of the project. The JV undertakes to comply with all appropriate Russian and EU environmental requirements. The company is progressing in obtaining approvals from the relevant environmental authorities for the project. The JV will adopt environmental management guidelines and standards conforming to the applicable law and are consistent with the Arcelor Environmental Performance Criteria.

Technical Cooperation


Company Contact


Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168

Public Information Policy (PIP)

The PIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

Share this page: