OAO URALKALY

Location:

Russia

Project number:

35660

Business sector:

Manufacturing and Services

Notice type:

Private

Environmental category:

C

Target board date:

30 Nov 2004

Status:

Completed

PSD disclosed:

27 Oct 2004

Project Description

The proposed project consists of an increase of the corporate loan to OAO Uralkaly, a potassium salt producer located in the city of Berezniki, Perm Region, in the Urals.
The additional funding will be provided to Uralkaly to continue further development of the Baltic Bulk Terminal (BBT) and increase the efficiency of its operations . The project will allow Uralkaly to enhance reliability of its export oriented logistical chain and improve efficiency of operations at the terminal.

Transition Impact

The transition impact potential derives from the demonstration effects associated with the continued restructuring process of the Company and setting up good corporate governance standards and business procedures at the Baltic Bulk Terminal. Uralkaly provides a good example of the practical implementation of the Corporate Governance Code. It has demonstrated transparent organisational structure, financial soundness, and dedication to further developing and maintaining corporate ethics.

The Client

Open joint stock company Uralkaly is Russia’s largest potassium salt (fertiliser) producer (4.4 million tons in 2003). It contributed an estimated 11% of the world’s potash production. The Company’s other products are magnesium sulphate (karnalite) and table salt. More than 85% of the Uralkaly’s output is exported.
The Baltic Bulk Terminal is a joint venture project between Uralkaly and Saint Petersburg Sea Port built in 2001 to tranship and store up to 5.5 million tons of mineral fertilisers to international markets.

EBRD Finance

A 4 years senior corporate loan in the amount of up to $65 million. The Bank aims to syndicate up to $20 million to commercial banks.

Project Cost

$65 million (€54 million).

Environmental Impact

Uralkaly is an existing client of EBRD. A 7-year senior corporate loan in an amount of up to $75 million was granted in December 2003 for equipment modernisation, purchase of rolling stock and construction of its own power plant at its potassium salt production plant, which is located in the city of Berezniki, Perm Region, in the Urals. That project was screened B/1.  Environmental due diligence on that existing loan revealed various environmental issues and an Environmental Action Plan is being implemented.  Environmental issues associated with Uralkaly operations at Berezniki are related to air emissions, effluent control and water management, disposal of tailings and site reclamation. Part of the investments financed by the first EBRD loan to Uralkaly will result in reduction in fuel use and associated emissions. Uralkaly has obtained ISO 14,001 certification of its Environmental Management System in September 2003.  
In the frame of this second project EBRD will provide another corporate loan for Uralkaly to further develop the Baltic Bulk Terminal, a modern port terminal near St Petersburg for Uralkaly’s exports. It has been classified as C/1 requiring an environmental audit of the port facilities in order to review whether the new terminal is in line with best international practice in environmental, health and safety management, and is being carried out by an independent environmental consultant. In November an independent Environmental Audit will be conducted of the production facilities of Uralkaly at Berezniki. Once these studies are completed, an updated PSD Annex will be made available. 
 

Technical Cooperation

None.

Company Contact

 

Business opportunities

For business opportunities or procurement, contact the client company.

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