Long-term senior loan of up to EUR 350 million to ArcelorMittal Group, the world's leading integrated steel and mining company, to finance capital investments at its Ukrainian plant ArcelorMittal Kryvyi Rih, or AMKR.
The proposed facility will support part of a USD 1.1 billion investment programme by ArcelorMittal at its Ukrainian subsidiary AMKR. The proceeds from the EBRD loan will be allocated towards capex focusing on improvement of competitiveness, energy efficiency and environmental performance.
The transition impact of the proposed project will be derived from:
- Environmental and energy improvements
- Demonstration of successful restructuring
- Significant reduction of CO2 emissions
ArcelorMittal S.A., or the borrower, a company registered in Luxembourg and the top holding company for ArcelorMittal Group of companies, the world's leading integrated mining and steel company with revenues of USD 57 billion in 2016. The loan will be provided to ArcelorMittal S.A. and will then be on-lent to the group's Ukrainian subsidiary PubJSC ArcelorMittal Kryvyi Rih, a public joint stock company majority owned by the borrower (95.13 per cent) and established in Kryvyi Rih, Ukraine.
EBRD Finance Summary
Senior unsecured loan to the borrower in the amount of approximately EUR 350 million, of which EUR 200 million will be provided by the EBRD and up to EUR 150 million will be syndicated to commercial lenders or risk participated through unfunded risk participations.
Total Project Cost
Environmental and Social Summary
Categorised B (2014 ESP). Environmental and social issues of the Project are site specific and can be readily assessed and mitigated based on an Environmental and Social Due Diligence (ESDD). An independent ESDD is being undertaken of the Project as well as the integrated steel plant and the mine facilities to fully assess risks and opportunities. The Project will allow for significant environmental and community health & safety improvements at the site.
Due diligence has been undertaken of the Project and this has confirmed that the planned investment programme will allow for significant environmental improvement at the plant and these investments are in line with a long term road map for attaining EU compliance. AMKR, as part of the Bank's past investments had undertaken an independent Best Available Techniques Assessment (BAT) in 2012-13, aimed at addressing environmental legacy issues and attaining EU standards. Among others, a number of recommendations from this study are being currently implemented by AMKR as part of current and future investment plans. A key aspect of the investment programme is to upgrade the sinter plant and construct new facilities with the closure of the old metallurgical sinter line. An Environmental and Social Action Plan (ESAP) has been developed with the Company. Additional EHS investments at the Steel plant (additional de-dusting on the BOF plant) and Blast Furnaces are planned to be undertaken within the next 5 years as part of overall modernization of the plant in line with Ukrainian, EU and corporate requirements. The Company will undertake a BAT assessment in 2020 to further align investments needs by 2023 and 2026.
Overall, the investment Project will be structured in line with EU BAT requirements and the Bank's PRs and a road map is being developed to allow for long term attainment of EU standards and addressing historic environmental, health and safety legacies. However, in the short term the Bank’s financing (the Project) will not allow for attainment of EU environmental standards and full BAT compliance within the short to medium term across the whole plant due to the magnitude of environmental legacy issues. Therefore a derogation from the Bank's Environmental and Social Policy will be requested from the Board. The Company will develop investment plans post 2023 to allow for further investments and upgrade to attain EU compliance in the medium to long term.
It should be noted that AMKR has made significant progress in addressing EHS management issues and improving stakeholder engagement.
Based on the ESDD, a new ESAP has been developed with the Company and a Non-Technical Summary (NTS) of the Project is available below
The Bank will monitor the Project implementation with visits undertaken jointly by EBRD staff and ArcelorMittal on an annual basis at a minimum.
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