Eti Aluminium Modernization Project

Location:

Turkey

Project number:

44174

Business sector:

Manufacturing and Services

Notice type:

Private

Environmental category:

B

Approval date:

16 Apr 2013

Status:

Repaying

PSD disclosed:

27 Mar 2013

Translated version of this PSD: Turkish

Project Description

The EBRD is considering USD 50 million long-term loan to Eti Aluminyum A.S. (“Eti Aluminyum”) to finance the modernization of its aluminium smelter plant located in Konya, in the Central Anatolia region of Turkey, by conversion of the existing Soderberg electrolysis technology to the proven prebaked anode technology.

Transition Impact

Through this project, the Bank aims to achieve a strong transition impact in Turkey, particularly by setting standards in energy efficiency, environment and health and safety and demonstrating carbon financing in metal processing industry. Transition impact of the project is foreseen to be realized in the following way:

1. Setting standards for corporate governance and business conduct

a) Corporate Social Responsibility (CSR): The Company has committed to develop advanced CSR practices and start publicly reporting on all the major aspects of CSR from 2015.

b) Energy Efficiency: The installation of the new electrolysis unit with the prebaked technology will bring substantial energy efficiency and environmental improvements which have a strong demonstration potential to other industrial companies in the country, in the Bank’s countries of operation and in the global aluminium industry. The new electrolysis unit to be employed by Eti Aluminium will be in line with the EU standards and best available technologies.

c) Integrated Energy and Carbon Management Systems (ECMS): The Company has agreed to develop and implement an integrated Energy and Carbon Management Systems according to ISO 50001 standards.

2. Demonstration of new financing methods

EBRD and Eti Aluminium have agreed to work together to exploit the optimal possibilities to develop and register the project within the relevant carbon markets.

The Client

Eti Aluminyum is the sole liquid aluminium manufacturer in Turkey and one of the world’s few integrated aluminium facilities capable of manufacturing from ore to the end product. Specifically, Eti Aluminyum produces alumina, hydrate, liquid aluminium and other alumina products from the bauxite mine.

Eti Aluminyum is owned 100% by Cengiz Family, which stepped into the business primarily via Cengiz Insaat holding by providing infrastructure services (motorways, bridges, dams, ports, etc.). Currently, the group has three core business segments: construction, energy and mining.

EBRD Finance

The facility will comprise USD 50 million long-term loan.

Project Cost

USD 232 million.

Environmental Impact

The replacement of old Soviet designed open cell electrolysis cells with state-of-the-art prebaked closed electrolysis cells, has been categorised as B in accordance with the EBRD Environmental and Social Policy, requiring an Environmental and Social Due Diligence (ESDD). The ESDD has confirmed that potential adverse environmental and social impacts of the Project are site specific, readily identified and addressed through mitigation measures. The company has undertaken an Environmental Impact Assessment (EIA) of the project in accordance to national requirements.

An independent international consultant has been retained to undertake ESDD of the project and associated facilities. The ESDD also included a review of the corporate operations of Eti Aluminium, inclusive of the alumina refining, coal and bauxite mining operations and power generation. The ESDD has confirmed that the company is well managed and in compliance with national environmental standards and has the capacity to implement the Bank’s performance requirements. The company has an environmental and social policy, an accredited environmental and social management systems (ISO 14001 and OHSAS 18001 certified) and an adequately resourced management team.
The ESDD has confirmed that the project (new electrolysis lines) is designed to comply with the EU’s Best Available Techniques (BAT) requirements as defined by the IPPC BRef Note for the Sector. The new lines will be equipped with appropriate environmental abatement technology as specified in the EU BAT BRefs.

The company has committed through the Environmental and Special Action Plan (ESAP) to a number of voluntary environmental and social management and performance enhancement incentives to achieve best practice with regard to information disclosure, environmental management and process safety.

Until the investment is completed, the company will continue to operate two old open cell lines, which are to be mothballed or modernized once the new line is operational. As part of the ESAP implementation, the company will review all operations within a year of commissioning of the new line. Based on this review, the old lines will either be fully mothballed or upgraded in accordance to IPPC BReF Note.

Overall, the ESAP has been structured to allow the company to comply with the Bank’s performance requirements, and includes, inter alia: reduction of water content of tailings, with an initial target of 50% solid content by 2014 (from current 30+%); commission an independent review of tailing dam stability and development of major accident risk emergency preparedness and communications plan to meet various EU requirements for mine waste management and industrial accidents; development of a corporate Social Responsibility reporting (CSR) strategy and information disclosure process to meet EBRD requirements and internationally accepted best practice.

The implementation of the above measure will enable the company to comply with the Banks performance requirements, and goes beyond the current national legislative requirements. The Bank will monitor the project and the implementation of its ESAP through the annual reports to be provided by the company as well as site visits, notably once the best available technologies assessment/commissioning audit is completed.

Technical Cooperation

Eti Aluminium energy audit was supported by the Turkey and the Caucasus Sustainable Energy Programme (TCSEP), an EBRD technical assistance programme funded by the Spain-EBRD ODA -Sustainable Energy Cooperation Fund.

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Company Contact

Murat ERGONUL
Deputy General Manager, Cengiz Enerji San. Ve Tic. A.Ş.
murat.ergonul@cengiz.com.tr
Phone: (+90) 216 554 53 00
Fax: (+90) 216 474 11 22

 

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

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Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

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Text of the PIP

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