Erdemir Steel Energy Efficiency

Location:

Turkey

Project number:

47210

Business sector:

Manufacturing and Services

Notice type:

Private

Environmental category:

B

Target board date:

14 Oct 2015

Status:

Repaying

PSD disclosed:

16 Oct 2015

Translated version of this PSD: Turkish

Project Description

The EBRD is considering a long-term loan of up to €115 million (or US$ equivalent) to Eregli Demir ve Çelik Fabrikaları T.A.Ş. (“Erdemir” or “the Group”) and İskenderun Demir ve Çelik A.Ş. (“Isdemir” - together with Erdemir, the “borrowers”).

The proceeds of the EBRD loan will be used to support Erdemir and Isdemir to implement a series of energy efficiency measures at their production facilities located in Ereğli, in the Black Sea region, and İskenderun, in the country’s south east. The improvements are part of the borrowers’ investment programme which will lead to significant savings in terms of greenhouse gas emissions and energy costs (the “project”).

Transition Impact

The expected transition impact of the project will be achieved through: (i) the demonstration effect on other Turkish steel producers and industrial players of Erdemir’s integrated approach to energy and resource efficiency as a key source of industrial competitiveness, and (ii) the contribution of Erdemir in defining strategic priorities for energy efficiency in the Turkish iron and steel sector, as part of a wider policy effort that EBRD is leading together with the Turkish Ministry of Energy and Natural Resources for the development of a National Energy Efficiency Action Plan.

The Client

Eregli Demir ve Çelik Fabrikaları T.A.Ş. (“Erdemir” or “the group”) is the largest integrated steel producer in Turkey. With a total production of 8.5m tonnes of crude steel in 2014, Erdemir accounted for approximately 25 per cent of Turkey's crude steel production.

The group was incorporated in Turkey in 1960 and runs steel production facilities in Ereğli and Iskenderun. The subsidiary İskenderun Demir ve Çelik A.Ş. (“Isdemir”) is 95.07 per cent owned by Erdemir.

EBRD Finance

Up to €115 million (or US$ equivalent) long-term senior loan.

Project Cost

Confidential.

Environmental and social categorisation, impact, and mitigation

Categorised B. The planned investments in energy and resource efficiency will result in significant environmental benefits. Reductions in fuel and external electricity consumption will lead directly to lower emissions of greenhouse gases and other air pollutants.

Environmental and social due diligence has included a site visit to the Eregli plant and discussions with the company’s environment, health and safety (EHS) staff undertaken by the EBRD’s Environment and Sustainability Department (ESD), and audits of both of the integrated steel mills by independent environmental and social consultants. The consultants have reviewed the proposed investment plans and carried out a high-level assessment of Erdemir’s operation against Turkish and EU best available technologies. The consultants found that both plants are operating to good EHS standards.

The company has environmental and health and safety management systems that are certified to the ISO 14001 and OSHAS 18001. Erdemir management have a proactive and forward-looking approach to environmental and safety performance, as evidenced by the investment programme for this project. The due diligence has produced some best practice recommendations related to labour management, data collection and reporting. Erdemir will provide the Bank with annual environmental and social reports and ESD will undertake occasional monitoring visits to review project implementation.

Technical Cooperation

None.

Company Contact

Erdemir Group Credit Department

E-Mail: investorrelations@erdemir.com.tr

Tel: +90-216-578 80 61

Website: www.erdemir.com.tr

 

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

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

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Text of the PIP

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Please visit the Project Complaint Mechanism page to find information about how to submit a complaint. The PCM Officer (pcm@ebrd.com) is available to answer any questions you may have regarding the submission of a complaint and criteria for registration and eligibility, in accordance with the PCM Rules of Procedure.