NOKIAN TYRES RUSSIA

Location:

Russia

Project number:

34900

Business sector:

Manufacturing and Services

Notice type:

Private

Environmental category:

B

Target board date:

06 Jul 2004

Status:

Completed

PSD disclosed:

15 Apr 2004

Project Description

The proposed project consists of a loan to finance construction and the capital expenditures of a tyre manufacturing plant owned by Nokian Tyres plc. The plant will be located in Vsevolozhsk, Leningrad region. The Bank's proceeds will be used for financing the first phase of the plant, manufacturing up to 2 million car tyres per year.

Transition Impact

Nokian Tyres Russia will be one of the few Foreign Direct Investments in the tyre-manufacturing sector in Russia and in its North West region.  The company is expected to play a major role in setting new technological, environmental, and corporate governance standards for the tyre manufacturing industry.
The transaction will also strengthen the competitive pressure within the industry in terms of efficiency, product quality and delivery.  The Company will also send an important signal to the market that a leading international player is now changing its strategy from only exporting its products to setting production facilities to Russia.

The Client

Nokian Tyres is the largest tyre manufacturer in the Nordic region.  The company produces tyres for passenger cars and heavy machinery vehicles.   It also operates the Vianor tyre chain of 170 retail outlets in the Nordic countries and the Baltics providing tyre services and related products directly to customers.  Most of the production capacities are located at the Sponsor’s plant in Nokia, Finland, but the company has also contract manufacturing in Indonesia, Poland, Russia, and the US.  Nokian Tyres also has its own sales companies in Germany, Norway, Russia, Sweden, Switzerland, and the US.  

EBRD Finance

A 9-year senior loan of up to € 50 million.

Project Cost

€ 95.5 million

Environmental Impact

Screening categories and rationale for classification
EBRD’s environmental specialist conducted an Initial Environmental Examination, which verified that the environmental issues associated with the project can be readily identified, assessed and mitigated. The new plant will be constructed in industrial zone, where a number of other industrial plants are already in operation. There are no protected areas or other known environmentally sensitive areas within the range of potential impact from the plant. No residential areas are located in the vicinity of the site. The project has been designed to high standards of energy and resource efficiency and to meet Russian and European Union environmental standards. For the above mentioned reasons the project is not expected to result in significant adverse environmental impacts and EBRD has classified the project B/0, requiring an environmental analysis of the project.
Information reviewed during the environmental appraisal
The environmental appraisal has been based on the assessment of the environmental impacts (OVOS) and the technical-economic substantiation of the investment (TEO) prepared in accordance with the requirements of the Russian law. This documentation has been prepared for the complete manufacturing plant with capacity of 8 million tyres per year, which Nokian Tyres Plc plans to achieve with further investments by 2018. EBRD’s environmental specialist also visited the project site and observed the public hearing held in accordance with Russian environmental impact assessment procedure.
Environmental issues
The possible environmental issues arising from tyre manufacturing operations include emissions of curing fumes into the air and waste, as well as local noise and odour problems. In new plants like this, these issues can be efficiently mitigated with plant design and technology. The chosen technology conforms to EU and international environmental and safety standards of tyre manufacturing. Products and functions are designed to minimise environmental impacts of production, use and disposal. The contractors will be required to adhere to international standards and work practices and will be closely supervised. The environmental impacts of the project have been assessed to be insignificant and efficiently mitigated. Nokian Tyres Plc was the first tyre manufacturer in the world to obtain certification of its environmental management system to British Standard BS 7750 (previous to ISO 14001) and is committed to adopt and implement ISO 14001 Environmental Management System in Vsevolozhsk Plant.
Project Site
The project site is located in Kirpichyj zavod industrial zone about 10 km from the centre of the town of Vsevolozhsk. Soil analysis conducted as part of the geological study did not show any elevated concentrations of radioactive substances, heavy metals or hydrocarbons and verified that the site is suitable for the construction and operation of the plant.
Resource utilisation 
The Plant will use up to 12,750 tonnes rubber (60%), carbon black and other fillers (30%) and additional chemicals (10%). In the first phase of manufacturing, the plant will not involve rubber mixing operations, but will be supplied with rubber compounds as raw materials from Nokian Tyres Finland. Other raw materials are sourced from various suppliers in Europe, in Far East and in Russia.
Fresh water will be supplied through a water inlet from the Lake Ladoga. Due to closed cooling water system, the process water demand of the plant is very low.
The plant will purchase electricity from the national grid and produce heat and steam with boilers using natural gas as fuel. Light fuel oil serves as reserve fuel for gas.
Coolants used in cooling water system and air conditioning are ozone-free and comply with the requirements of international conventions for the protection of the ozone layer.
Air emissions
The air emissions from the plant consist of dust, vulcanisation and emissions from the steam boiler. Dust emissions will be efficiently mitigated and controlled through ventilation and filtration systems. Solvent fume (Volatile Organic Compound) emissions will be negligible due to minimised use of solvents. Fugitive emissions from tyre vulcanisation will be limited, but foul-smelling. However, because there are no permanent residential areas within close range to the plant, this will not cause significant nuisance to local population. The emissions from the steam boiler will be insignificant due to use of natural gas as fuel. The plant is not expected to have a significant impact on the ambient air quality in the surrounding areas. The combined effect of air pollution with other sources located in Kirpichyj zavod industrial zone will also remain within regulatory limits.
Wastewater discharge
Due to closed cooling water system, the amount of wastewater is minimised. The overflow water from the cooling system flows through a pre-treatment system consisting of filtration and oil separation before it is discharged together with the domestic wastewater into the municipal sewage network. Rain and storm water will be collected through a separate drainage system in a sedimentation lagoon before it is discharged to the municipal sewage network. Pre-treated wastewater is designed to meet the applicable regulations with regard to all parameters.
Waste Management
The plant will generate significant amount of waste. Solid waste management will be organised in accordance with the principles of waste minimisation and recycling. The majority of the waste is non-vulcanised rubber waste, which can be to large extent recycled within the plant. Scrap rubber tyres will be delivered to specialised companies to be re-used as construction material. Household waste and production waste that is not suitable for recycling will be disposed of in accordance with regulatory requirements. Hazardous waste management will be outsourced to licensed companies. Used oils will be collected into the waste storage facility located in the garage complex. Waste storage or handling will not have a significant effect on the environment outside the plant's territory.
Chemical storage and handling
Chemicals will be stored in steel, plastic containers surrounded by a concrete secondary containment preventing any leakage of chemicals from contaminating soil or groundwater.
Noise 
Noise abatement has been taken into consideration in the project design and the plant layout. Significant noise sources, such as compressor plant, steam boiler, manufacturing equipment and cooling system condensers will be installed in noise suppressing enclosures ensuring that noise levels at the perimeter of the plant will meet regulatory limits.
Traffic
Transportation to and from the plant will be carried out by both rail (60%) and road (40%). The increase of road and rail traffic has been assessed to be negligible and not to cause significant disturbance to the surroundings.
Occupational health and safety
The plant will adhere to Nokian Tyres Plc’s corporate occupational health and safety standards and Russian worker health and safety regulations. All necessary measures will be implemented to achieve healthy working conditions. All those working on the Company’s premises are required to observe its protection instructions. The Company will provide training and guidance and supervise the instructions are followed. Employees´ health is also taken care of by means of education and guidance and regular independent workplace surveys.
Fire safety
Due to the presence of dust in the manufacturing process the fire safety precautions have been carefully taken into consideration in the project design. Fire detectors will be installed at all process equipment where fire hazard is present. Sprinkler systems will be installed in all production buildings. Staff will be trained in fire prevention and fire-fighting.
Socio-economic impacts
The plant will have a positive socio-economic impact by creating direct jobs for 300 (by 2006) and indirect employment for approximately 100 persons.
Community issues
In accordance with its corporate policies, Nokian Tyres Plc is committed to operate as a good corporate citizen and maintain open dialogue and close relationship with the surrounding community and local population. It will keep the community informed via its website and other forms of communication.
Monitoring 
Nokian Tyres Plc will monitor and report the environmental impact of the project and its operation in accordance with Russian environmental law and with Nokian Tyres corporate environmental reporting standards, based on ISO 14001 and EMAS environmental and safety management systems. The Bank will evaluate the project's compliance with the applicable environmental and social requirements during the lifetime of the project by reviewing annual environmental reports (AERs) covering: (i) ongoing environmental, health and safety performance; and (ii) the status of implementation of environmental mitigation and improvement measures. The Bank’s representatives will also conduct periodic site supervision visits when deemed appropriate.
Public Consultation and Disclosure of Information
The project has undergone an environmental impact assessment and public consultation in accordance with Russian OVOS law. As part of this procedure, environmental information of the project was disclosed to public 30 days prior to a public meeting on the environmental impacts of a project. The competent Russian environmental authorities will take the public comments into consideration when defining the conditions and requirements for the project design and implementation in the planning, construction and operation permits. No significant issues of concern on the project have been raised by the public to date

Technical Cooperation

None.

Company Contact

 

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

Public Information Policy (PIP)

The PIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

Project Complaint Mechanism (PCM)

The Project Complaint Mechanism (PCM) is the EBRD's accountability mechanism. It provides an opportunity for an independent review of complaints from individuals and organisations concerning EBRD-financed projects which are alleged to have caused, or are likely to cause, environmental and/or social harm.

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.