The project with Nasicecement has two main components:
(i) Boiler conversion: to install additional burners to use gas, coal and selected waste (high caloric value waste) as source of fuel for the boiler/kiln, which will enable the company to achieve significant unit cost reduction and to respond adequately to change of fuel prices on the global market; and
(ii) Acquisitions: to support Nasicecement's participation in the consolidation/privatisation of cement and related businesses in both Croatia and the Balkan region.
€10 million is to be applied to the fuel conversion programme, which is expected to reduce production costs and further enhance the company’s competitiveness. Further funding will be made available to support the company’s involvement in the ongoing privatisation and consolidation of the industry in the region.
The project is expected to have an impact on the transition process in the following key areas:
- demonstration effect of post-privatisation restructuring; and
- further enhancement of competition in the building materials sector.
Nasicecement, a locally owned company, is the second-largest cement factory in Croatia. It is located in the Slavonia region. Annual cement production is ca. 700,000 tonnes. The company has significant on-site proven raw material reserves and operates the plant with dry process technology.
A senior debt facility of €20 million. A further €5 million may be provided by a Croatian bank under a parallel facility.
The project has been screened B/1, requiring an environmental audit of the existing cement production facility and an environmental analysis of the proposed investment project.
The current level of environmental, health and safety in the company, based on the evidence provided by Nasicecement (NC) and on a visit by an EAU specialist, shows that the environmental conditions associated with NC's production and auxiliary processes have improved since 1998 and that NC has made considerable efforts to comply with Croatian environmental standards. NC's quarry and cement facilities are certified under the ISO 9002 quality management system. NC has agreed to comply with EU standards. This has been incorporated in the Environmental Action Plan (EAP). In addition, the EAP includes specific actions, which will contribute to the company's efforts to improve Total Quality Management, overall environmental management, public interaction and environmental due diligence for major acquisition programmes. In 2001, NC will prepare a programme of public information and a quick-response procedure to address public questions.
The use of proceeds is earmarked primarily to finance additional burners to be able to use gas, coal and selected high caloric wastes which will enable NasiceCement to achieve a significant reduction in fuel costs. Use of waste as a supplemental fuel in the cement industry is considered good practice, including in western Europe and the United States, due to favorable conditions of alkaline medium and long gas residence time.
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