The proposed project consists of the restart of pulp production line and overall renovation of facilities of an integrated pulp and paper mill located in Maglaj, owned by Kastamonu Entegre Agac Sanayi ve Ticaret (the “Sponsor”), a Turkish producer of particleboard, MDF, laminated flooring, veneer, timber, plywood and door skin/panels. The investment programme will focus on the rehabilitation of existing equipment, rebuilding and restarting of the pulp plant and sack paper machine, substantial improvements to the corrugated cardboard facilities and substantial improvements and upgrading of the energy, water and waste water treatment facilities. Approximately EUR 19 million of these investments (53% of total amount excluding the contingency) are planned either for outright environmental improvements or for environmentally beneficial process improvements.
The EBRD is considering a follow up investment Natron Hayat, the only local pulp and paper mill located in Maglaj. The funding will be used for permanent working capital needs of Natron Hayat in view of increased production and sales of kraft paper.
The main transition impact of the project will derive from the demonstration effect of a successful turnaround and the setting of standards of corporate governance and business conduct. In addition, the project will increase regional competition and will facilitate the development of the forestry sector in Bosnia and Herzegovina, including Implementation of principles of sustainable wood procurement.
In the context of the new working capital loan, two TC projects are being planned to help the Company i) optimise its energy generation and consumption by substituting fossil fuels with biomass based energy and ii) improve its health and safety management to the level of EU standards and good international industry practice.
In addition, the Bank is intends to continue its policy dialogue with the BiH Government in the forestry sector, focusing on combating illegal logging and developing new forestry law that would allow for increasing the wood supply whilst ensuring sustainable forest management and forest conservation.
Natron Hayat d.o.o., a subsidiary of the Sponsor.
Tranche I: EUR 11 million senior debt.
Tranche II: EUR 11 million senior debt.
EUR 54 million.
Categorised B under the EBRD Environmental and Social Policy 2008. The proposed working capital loan does not result in additional adverse environmental or social impacts to the modernisation programme that has been completed with the EBRD loan signed in 2007. However, given that the existing project was subject to the Bank's Environmental Policy 2003, an environmental and social review of the Company has been undertaken to assess the Company’s compliance with the Bank's Performance Requirements (2008) as well as with the ESAP and other environmental and social conditions of the existing loan.
The completed modernisation project comprised a number of environmental investments, including both process improvements and end-of-the-pipe technology. These have reduced the mill’s air emissions as well as both water consumption and wastewater discharges to levels achievable with the use of EU Best Available Techniques and significantly below the Plant’s historical levels. Specifically, a new, EU compliant waste water treatment plant has been constructed and air emissions of sulphur, dust and malodorous gases have been reduced by upgrading of the process, installing electrostatic precipitators for the recovery boiler and the lime kiln, and improving the recovery of malodorous gases.
The Plant consumes a considerable amount, up to 480,000 m3/a, of round wood at full production. To ensure the wood is of legal and sustainable origin, the Company has adopted and is implementing wood procurement procedures that comply with the principles of sustainable forest management. It is tracking the origin of all logs supplied to the mill and controlling its wood suppliers through documentation and filed audits. The Company gives preference to certified wood when it is available and is currently sourcing around 50% of its wood from FSC certified domestic forests.
The Company has complied with the Environmental Action Plan (EAP) agreed as a condition of the first loan, addressing corrective measures needed at the existing facilities and guiding the Company to full EU BAT-level environmental performance. Some further improvements are still needed to address energy-efficiency, waste management and occupational health and safety.
The proposed working capital loan will not have environmental or social impacts, but the EAP will be updated and amended to guide the Company into full compliance with the Bank’s requirements and optimise its energy and resource use.
EUR 25,800 for performing an energy efficiency audit. The amount was financed under an existing framework contract, financed by the CEI, Central European Initiative (Italy).
EUR 95,000 for an energy and water efficiency audit funded by the EBRD-Western Balkans Fund.The audit will identify efficiency opportunities for both energy and water that could be implemented in connection with the company’s investment plan. Furthermore, other production/tehcnological issues are to be identified as related to energy and water, and are needed be considered as part of the investment program in order to remain competitive considering also risks to the security of water resources (current and forecast).
Mr. Taneja Avinash, General Manager
Natron Hayat d.o.o
Bosnia and Herzegovina
Fax: +387 32603405
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