A senior secured loan of up to $4.2 million, consisting of three elements: (i) $1 million to refinance existing indebtedness, (ii) $1.9 million for capital expenditure to increase the recycling capacity and improve energy efficiency, and (iii) $1.3 million to procure scrap batteries ("Project").
The Project will finance the Company's increase in secondary lead production capacity from 7.2ktpa to 17.3ktpa, increase lead recovery rates and improve the overall environmental and energy efficiency performance of Azlead. Furthermore, the Bank's engagement has introduced ESG undertakings that represent best practice for SMEs in the EBRD region.
ETI score: 80
The DFF SME framework primarily targets the "Competitive" quality by helping SMEs to restructure and become more efficient. Sub-projects can target any of the other transition qualities as a secondary objective. The Project supports framework objectives by supporting an SME in the areas of "Competitive" and "Green" given the circular economy nature of its operations.
Az-Lead LLC ("Azlead" or the "Company"), incorporated in Azerbaijan, engages in the production of secondary refined lead via the recycling of end-of-life lead-acid batteries.
EBRD Finance Summary
Total Project Cost
Additionality stems from the longer tenor and grace period that are necessary to structure the Project as local banks mostly provide shorter tenor loans with restrictive repayment schedules. The Bank's engagement will introduce significant ESG undertakings and improvements that exceed national regulatory requirements.
Environmental and Social Summary
Category B (ESP 2019). Environmental and social issues associated with the modernization and expansion of a lead battery recycler and smelter and be readily assessed and mitigated based on an ESDD. The Bank commissioned an independent consultant to undertake an ESDD of the plant and provide strategic advice on ESG management systems and reporting. The ESDD confirmed that the Company is adequately managing EHS issues and has the capacity to implement the Bank's PRs. The Project will result in substantial environmental improvements. The Project qualifies for GET 76% and is Paris Aligned allowing for the recycling of substantial resources i.e. in line with EU circular economy policies and EU Taxonomy.
The ESDD confirmed that the Project enables the significant re-purposing and re-manufacturing of domestic end-of-life LABs that would have otherwise ended up in landfills. The capex Loan proceeds will also retrofit the existing furnaces improving energy efficacy and environmental abetment through the insulation of new bag filters. These will reduce dust, organic compounds and SOx emissions in line with EU requirements and enable fuel switch from mazut to natural gas that will lead to Scope 1 emission savings per tonne of lead. The Company will also monitoring emissions and the improvement will enable better worker health and safety. The ESDD confirmed that the Company has a robust HR system and H&S systems, with no reported cases of lead poisoning.
The Project included the piloting of a draft ESG reporting guideline being developed by the Bank for SMEs, which is aimed take into account EU reporting requirements under the EU CSRD. Based on the assessment by the independent consultant an ESG strategy has been developed for the Company and agreed with Azlead that has robust action plans in line with international standards. To follow through on these commitments, a management system has been set up to enable the ongoing identification of ESG risks and impacts. This will ensure the correct and continuous data collection that will in turn be reported for which templates have also been created.
Based on the ESDD an ESAP has been agreed which will allow for the Company to comply with the Bank's PRs. An NTS of the Project will be disclosed in English and Azeri. The Bank will monitor the implementation of the Project through review of annual reports provided by the Company.
Technical Cooperation and Grant Financing
The Project benefits from a first loss risk cover and TC for project preparation from the European Fund for Sustainable Development (EFSD).
- Legal Due Diligence to assist with preparation of the legal documentation (EUR 38,500);
- Environmental Due Diligence to asses Azlead's compliance to EHS standards and the Bank's PRs, preparation of tailored ESAP, SEP and NTS (EUR 30,000).
Company Contact Information
Mr. Rauf Rustamov
Insaatclar Street No. 58, Sumgayit Industrial Zone, Azerbaijan
PSD last updated
12 Dec 2022
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