Albchrome loan to Yildirim Holding

Location:

Albania

Project number:

53212

Business sector:

Natural resources

Notice type:

Private

Environmental category:

B

Approval date:

27 Apr 2022

Status:

Disbursing

PSD disclosed:

07 Mar 2022

Project Description

Senior secured loan of up to US$ 28m to Yildirim Albanian Mining Investments Sh.p.k. and Albchrome Sh.p.k. for the purpose of the acquisition of Albchrome Holding Sh.p.k. by Yildirim Holding A.S.. The loan will consist of two facilities: Facility A of up to US$ 8,400,000 will be provided to refinance the debt of Albchrome outstanding at the date of the acquisition, and Facility B of up to US$ 19,600,000 will be to partially refinance the Group's funding of advance for the acquisition.

Project Objectives

The new ownership will bring to Albchrome a possibility to distribute its products to a wider and more diversified customer base while Albchrome will benefit from Yildirim's managerial and technical expertise in terms of operation optimisation and transfer of skills. The Bank's participation will result in the development of a Low-Carbon and Climate- Resilient Roadmap for Albchrome.

The Project is fully in line with the Bank's Strategy for Albania (2020-2025) which identifies promoting energy efficiency and enhancing private sector competitiveness as strategic priorities in the country, and with the Strategy for Extractive Mining Industries (2018-2022), which supports improvement of operational efficiencies in mining projects and key metal extraction for construction and renewable energy industry. Additionally, the Project is fully in line with the Bank's Green Economy Transition Approach 2021-2025 (BDS20-082/F).

 

Transition Impact

ETI score: 73

Well-Governed: 

The Project will support Albchrome in its efforts to develop a climate change roadmap with the focus on implementing corporate climate governance (CCG) and adopt climate technologies. Albchrome will develop and adopt a roadmap towards improving its CCG structure and processes for effective climate action. 

Inclusive:

Albchrome will promote access to skills and employment opportunities for local blue collar workers across its mines, plants and factories in underserved regions of Albania. This will be achieved by introducing a new certified programme that will allow local workers, including a large majority of older workers, to gain market-relevant skills such as digital skills. The Project will generate learning opportunities for at least 120 local workers, including at least 20 percent of female participants, and entail cooperation with a local vocational centre or technical college. 

Client Information

YILDIRIM ALBANIAN MINING INVESTMENTS SHPK

Yildirim Albanian Mining Investments Sh.p.k, is an Albanian company, which is ultimately 100% owned by Yildirim International Investment Holding BV, a subsidiary of Yildirim Holding A.S., a vertically integrated Turkish industrial conglomerate; and 

Albchrome Sh.p.k., an Albanian mining company.

EBRD Finance Summary

USD 28,000,000.00

Senior secured loan of up to USD 28m.

Total Project Cost

USD 97,670,500.00

Additionality

The Bank's additionality is derived from i) provision of missing long-term financing in the country to match the life of investments in local mining sector; ii) the Bank's support to achieve higher standards through development and implementation of an Environmental and Social Action Plan (ESAP); iii) the Bank's support to develop a corporate climate governance plan (climate change roadmap). 

Environmental and Social Summary

Categorised B (2019 ESP). The environmental and social due diligence (ESDD) was carried out by ESD and included a review of the ESDD documents prepared for the transaction with Albchrome in 2021, as well as interviews with Yildirim management. The Environmental and Social (E&S) risks and impacts associated with acquisition of a mining company and operation of two existing ferrochrome plants and a mine, are readily identified and will be managed by the implementation of a robust Environmental and Social Action Plan (ESAP). The main E&S risks are related to air emissions from the smelters (and overall alignment with Best Available Techniques) and occupational health and safety (especially for the underground operations). These risks will be managed through the ESAP. Yildirim confirmed their commitment to implement the ESAP agreed in 2021 with Albchrome.

 An Environmental and Social (E&S) Due Diligence conducted in Q1 2021 by an independent consultant (including a site visit by a local team) indicated that Albchrome operate in line with the Albanian requirements but need to  align their corporate E&S management systems with the Bank's Performance Requirements. The Company confirmed that all Yilmaden subsidiaries are supposed to develop their own procedures, hence Albchrome shall develop all required procedures considering risk assessments, legal requirements and EBRD requirements. Yildirim conducted their own ESDD during the acquisition phase and their findings were aligned with the EBRD ESAP.

Albchrome has a structure in place to ensure compliance with the national regulation. All permits have been obtained for the current activities in Albania. The ESAP requires the development of an integrated health, safety, social and environmental (HSSE) management system (including risk management for suppliers and contractors) and appointment of HSSE officers at Corporate and site levels.  An EHS manager from Yilmaden will hold the Corporate HSE manager position until a permanent manager is employed. This position shall be advertised as soon as possible and posting of such advert is a CP to first disbursement. Albchrome has written human resources policies to manage the workforce in accordance with national requirements. A collective agreement is in place in the three production units and 96% of the total employees are reported to be members of the Union. Random worker interviews conducted during ESDD site visit showed that workers were satisfied with salary and the long-term nature of the job. A formal employee grievance mechanism will be developed as required in the ESAP.  The review of the COVID-19 questionnaire confirmed that Albchrome is not planning salary cuts nor dismissals, and that measures are in place to limit the spread of COVID-19 (as per national guidelines). During the ESDD interview, Yildirim confirmed there is no plan at the moment for collective dismissals. Should significant labour restructuring take place, the Company would be required to ensure that any such measures be conducted in accordance with PR2 and with advance notification to the EBRD.

The two smelters are currently not equipped with a working air emission abatement system and a gap analysis (conducted during the 2021 ESDD) against the Best Available Techniques showed that the smelters are currently not aligned with the BAT as described in the European Reference Document (BREF) for the Non-Ferrous Metal Industry (2017). The ESAP therefore requires i) the installation of dust abatement systems at both smelters , ii) the development and implementation of an Action Plan to ensure alignment with the BAT, iii) reinforcement of monitoring protocols (air, health, noise, water), iv) assessment of greenhouse gas emissions, v) leaching tests of the slag. In relation to occupational health and safety, several improvements are needed as captured in the ESAP, such as carrying out an industrial hygiene assessment at the main working areas and improving the conditions of the emergency underground mine rescue stations (refuge chambers), as well as conducting an external audit on Occupational Health and Safety for both smelter units and the mine. There is no need to acquire additional land for the Project. Albchrome operations are not located close to any recognized archaeological site nor protected area for biodiversity. The ESAP requires the recruitment of a Community Liaison Officer and the implementation of the Stakeholder Engagement Plan (including a community grievance mechanism). The Company agreed to publish yearly summary results of environmental and social performance on their website.

The project is considered aligned with the objectives of the Paris Agreement for climate mitigation. The project is considered aligned with the Paris Agreement for climate adaptation. The PC risk score is 1, since the CART is diversified and is not considered to be materially exposed to physical climate risk.

Due to the sector and risks identified during ESDD for the Project, the Bank will monitor closely the implementation of the ESAP, through review of annual Environmental and Social Reports (AESR) as well communications with the Company and site visits as necessary.

Technical Cooperation and Grant Financing

Preparation of Low-Carbon and Climate-Resilient Roadmap. The main objective of the assignment is to assist Albchrome in developing a roadmap with a detailed action plan to achieve best practice Corporate Climate Governance and develop a climate strategy. Funding source is EBRD Shareholder Special Fund. 

 

Company Contact Information

Serdar Ateş, Structured Finance Manager Yildirim Holding A.S.
serdar.ates@yildirimgroup.com
+90 212 290 30 80
YILDIRIM Tower, Maslak Mahallesi, Tasyoncasi Sok. No:1C B2 Blok, 34485 Sariyer / Istanbul Turkey

Implementation summary


PSD last updated

07 Apr 2022

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

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Environmental and Social Policy (ESP)

The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”.  The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and Compliance

The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.

OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP 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 following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD Enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.

 

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