The EBRD is considering providing a senior loan in the amount up to USD 79 mln to OJSC EnergoMashSpetsStal to finance the completion of its extensive investment programme. The EBRD financing will allow OJSC EnergoMashSpetsStal to improve production processes and to increase its competitive position in the European market.
The transition impact of the Project is expected to be achieved through the following:
Demonstration effects of new processes and products
The investment programme will significantly improve the efficiency and competitiveness of the Company’s operations through a comprehensive upgrade of all major production facilities and processes. This will set a new benchmark and have a strong demonstration effect in Ukraine’s energy-intensive manufacturing sectors.
Greater competition in the Project sector
The Project has direct impact on improvement of competitiveness of EMSS and will benefit the company in strengthening positions on local and external markets. The efficiency gains and product diversification will put competitive pressure on other companies in the sector in Ukraine and neighbouring countries.
Improvement of corporate governance
The Bank’s participation in EMSS financing will strengthen the Company’s corporate governance through implementation of the Corporate Governance Action Plan.
Demonstration effects of new instruments to finance activities
The Project is expected to generate substantial greenhouse gas emission reductions.
OJSC EnergoMashSpetsStal is a full cycle Ukrainian producer of rough and mechanically treated castings and forgings for energy, steelmaking and machine building sectors located in Kramatorsk, eastern Ukraine.
Senior loan in the amount up to USD 79 million.
Up to USD 273 million.
Screening category and justification
The project was categorized as B (2008), requiring an Environmental and Social Due Diligence (ESDD), consisting of an environmental analysis of the proposed investment programme and an environmental audit of the existing production facilities.
Due diligence undertaken and outcomes
The ESDD was undertaken by independent consultant and site visits by ESD. The ESDD has confirmed that the Company has a good environmental and social management system and has the capacity to fully implement the Bank’s Performance Requirements (PRs) of Environmental & Social Policy.
EMSS current and planned operations are in general compliance with national legislation and the planned investment programme is structured to meet both national and EU environmental standards. The Company has an Environmental, Health and Safety Management systems, although this will need to be further strengthened and certification sought to attain an international standards such as ISO 14001 and OHSAS 18001. The new investments, notably energy efficiency measures and the replacement of the old Electrics Arc Furnaces (EAF) with a state of the art new EAF will have significant environmental benefits, through reduced emissions and lower energy use. The new EAF is to be equipped with a dust abatement equipment in line with EU Best Available Techniques (BAT) requirements. The Company will also install continuous emission monitoring equipment.
In terms of social aspects, the Company has good Human Resource management system and is addressing social and labour issues in line with national requirements as well as corporate standards that meet the Bank’s PRs of Environmental & Social Policy. This is still being further reviewed as part of the ESDD.
An Environmental and Social Action Plan (ESAP) is being developed as part of the ESDD and will be agreed prior to the Bank’s final management review. This will require among others, further strengthening of existing management systems, notably in terms of developing and implementing ISO 14001 and OHSAS 18001 complaint management systems. The ESAP will also include specific performance standards for the new investments in compliance with EU IPPC BREF Note BAT guidance, notably in terms of energy efficiency measure and emission abatement on the new EAF.
A stakeholder Engagement Plan (SEP) is being developed by the Company in line with PR10 and will be agreed with the Company as part of the due diligence.
The PSD will be updated once the ESDD is complete and the ESAP has been fully agreed.
- The Company will implement the ESAP (as agreed with the Company) and improve Environmental and Health & Safety Management Systems.
- The Company will develop and implement a Stakeholder Engagement Plan;
- The Company will provide the Bank with an Annual Environmental and Social Report, including updates on the ESAP, and notification on any material accidents or incidents.
- The Company will facilitate periodic monitoring visits by the Bank’s staff or appointed representatives when deemed necessary.
An energy audit under EBRD Energy Audits Programme has been commissioned to assist the Company in identifying and analysing energy saving project opportunities.
2-B, Ordzhonikidze St., Kramatorsk
Donetsk region, 84306, Ukraine
Tel. 38 06264 8 55 71
Fax. 38 06264 6 55 84
Maxim Efimov, General Director
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