DFF - Ferronikeli

Location:

Regional

Project number:

50978

Business sector:

Natural resources

Notice type:

Private

Environmental category:

B

Approval date:

25 Jun 2019

Status:

Disbursing

PSD disclosed:

29 Jul 2019

Translated version of this PSD: Albanian

Project Description

Provision of a senior secured loan of EUR 25 million in favour of Ferronikeli Complex LLC (the "Company" or "NFN") to support EUR 15 million energy efficiency capital expenditures and EUR 10 million working capital financing to increase operational efficiency and improve environmental standards (i.e. reduce CO2, SO2, NOX and particulates emissions).

Project Objectives

The purpose of the transaction is to support the turnaround of NFN, the largest exporter and one of the largest private employers in Kosovo by reducing cost and increasing competitiveness and environmental performance through energy efficiency investments.

Transition Impact

The transition impacts of the project will stem from the following qualities:

Primary quality - Green: the project will support climate mitigation through investments delivering improved energy efficiency, reduced emissions of particulate matter and Greenhouse Gases (GHG) and higher environmental standards at the nickel processing facilities. 47 per cent of EBRD financing will be used for investments supporting Green Economy Transition (GET). 

Secondary quality - Competitiveness: The project introduces new operational approaches that will significantly improve the efficiency of the client's operations. NFN is showing leadership in the mining sector in the region by implementing a set of measures to modernise the company and demonstrate the sustainable turnaround of a mining company.

Client Information

FERRONIKELI COMPLEX LLC

Established in 1989 and privatised in 2006, NFN is a ferronickel producing company based in Drenas, Kosovo. It produces high quality nickel with all production destined for exports averaging 7,000 t annually at full capacity. NFN is the largest exporter in Kosovo, accounting for about 40% of the country's exports and is one of the largest private employers.

In August 2018, Balfin, the largest private conglomerate group in Albania, acquired 90% of the Company's shares via a UK-entity NKL Ltd., with the remainder owned by a privately held Clearglass Investment Limited (Cyprus).

EBRD Finance Summary

EUR 25,000,000.00

Total Project Cost

EUR 25,000,000.00

Environmental and Social Summary

The Project has been categorised B under the 2014 Environmental and Social Policy. In-house environmental and social due diligence (ESDD) was carried out by means of a site visit of the two mines in Kosovo and the smelter plant and review of the information package supplied by the Client. The environmental and social impacts associated with the implementation of the Energy Efficiency Capex Programme are readily identified and will be managed through an Environmental and Social Action Plan (ESAP), to be finalised before signing. The main E&S risks are health and safety issues (for workers and communities) due to dust emissions and illegal users on NFN's land.

NFN has a team and structure in place to ensure compliance with the national regulation. NFN has ISO9001 and ISO14001 certifications for Nickel processing (smelter only). NFN includes a systematic clause in contracts requiring contractors, subcontractors and principal suppliers to respect ILO Conventions C138 and 182. There is a workers' Union in place. A formal employee grievance mechanism will be developed as requested in the ESAP. In terms of air emissions, the main units are equipped with an abatement system (electrostatic precipitator after rotary kiln, scrubber after converter and furnace) that comply with NFN IPPC permit; however a benchmark study against best available techniques (BAT) is also requested in the ESAP to check compliance with European standards. Current CO2 emissions are estimated to 750kt/year. The Project is expected to reduce emissions by 5% for GHG, 40% for SOx, 35% for NOx and 50% for dust, and increase energy efficiency of 15%. 100% of the industrial wastewater is recycled after treatment. In terms of volume, the main waste generated is the slag from the electric furnace (300,000 tons in 2018), which is disposed in the mines pits. Chemical analyses on slag composition and leaching test carried out by external laboratories in 2008concluded that the slag is inert. The ESAP requests an updated analysis and exploration of possibilities for recycling. Medical check-ups are completed every year for NFN employees. An Industrial Hygiene Exposure Assessment (for workers) is requested in the ESAP, as well as a Health Risk Assessment to assess impact on local community health from NFN emissions. The ESAP requests the recruitment of a Community Liaison Officer and the establishment of a grievance mechanism for communities. NFN's unfenced property extending over an area of around 22ha to the South of the facility is currently illegally occupied by approximately 20 families and by local businesses; EBRD will provide advisory support to try to find a resolution to this issue. NFN agreed to publish yearly summary results of environmental and social performance on their website.

The Bank will monitor implementation of the ESAP through review of annual Environmental and Social Reports (AESR) and communications with the Company as necessary.

Technical Cooperation

EUR 100,000 to contribute towards external technical and market due diligence and EUR 23,000 for an independent assessment of the GET component of the project. In addition, EBRD is considering to provide a EUR 20,000 grant to support the development of an accredited H&S management system (ISO45001 standards) and a EUR 20,000 grant for an independent audit of occupational health and safety.

Company Contact Information

Mr. Steven Grunerud
s.grunerud@balfin.al
+355 4 2389252
Besim Mala Street no.227, 13000 Gllogoc, Republic of Kosovo

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
Email: procurement@ebrd.com

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Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

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