OSZ-Arc International

Location:

Russia

Project number:

42123

Business sector:

Manufacturing and Services

Notice type:

Private

Environmental category:

B

Approval date:

01 Jun 2011

Status:

Complete

PSD disclosed:

14 Dec 2011

Translated version of this PSD: Russian

Project Description

The EBRD is considering a long-term corporate loan to OOO “Opitny Stekolny Zavod” (“OSZ” or the “Company”). The EBRD loan will finance a wide-scale modernization and capacity expansion program (the “Project”).

The Project will allow the Company to install a new furnace, modern production lines, and to conduct numerous general capacity, efficiency, and IT systems upgrades. The modernization program will also increase the energy efficiency of the plant.

Transition Impact

The Project will:

  • Allow the transfer of the latest state-of-the-art technology and respective skills for glass production to the Company;
  • enable the Company to diversify its product range, produce higher quality and value-added products; and
  • significantly improve energy efficiency and environmental management at the plant.

The Client

OSZ is a leading Russian glass tableware producer located in Gusy-Khrustalny (Vladimir Region).
Arc International (the “Sponsor”) has acquired 75% of OSZ shares. Arc International is a global leader in glass tableware.

EBRD Finance

The EBRD will provide senior loan of €25 million equivalent. The loan will be disbursed in EUR and RUB.

Project Cost

€54 million.

Environmental Impact

Category B. Environmental and Social (E&S) issues associated with glass tableware manufacturing are site specific and can be mitigated through implementation of the E&S Action Plan (ESAP).

The E&S Due Diligence (ESDD) consisted of the review of corporate E&S policies and management systems of the Sponsor (Arc International) and of the Company (OSZ) to assess whether they are adequate to ensure compliance with the Bank’s Performance Requirements (PR’s). The ESDD was undertaken through a detailed review of the Company’s answers to the ESDD questionnaires, relevant E&S documents and internal policies, as well as a site visits by Bank’s environmental specialist to the Sponsor’s plant in Arques, France and the OSZ, Russia. Prior to acquisition decision Arc carried out an extensive environmental due diligence of the target company OSZ, including Phase 1 Environmental, Health and Safety Assessment, Phase 2 Soil and Groundwater Investigations, Asbestos Survey, and Air Emissions Compliance Assessment. Reports for all of the above studies were provided and reviewed for the purposes of the Bank’s ESDD.

The environmental impacts of current operations at OSZ plant are mainly associated with air emissions from glass production and fuel combustion processes (dust, NOx, COx, fluorides, heavy metals, SOx etc.). OSZ meets national requirements for air emissions values; however, the concentrations of dust are exceeding 100mg/m3 standard per IFC EHS Guidelines, and 30mg/m3 standard per EU IPPC BREF. The Company agreed to implement regular air quality monitoring, and install abatement systems (ESP) by 2016 if EU BAT levels are not achieved on a continuous basis. Given that the plant has a long history of glass production, and based on investigation results, soil contamination with hydrocarbons and heavy metals is present on the site. Arc is planning remediation measures as part of the investment programme. Additionally, the programme will include measures on disposal and replacement of currently used asbestos-containing materials in total amount of 100 tonnes. All improvement measures will be required for implementation as part of the Environmental and Social Action Plan (ESAP).

The social issues are mainly related to the lack of labour management system with required written procedures for hiring process, redundancies, collective bargaining, non-discrimination, etc. Due to the acquisition and planned restructuring of the OSZ, there is a potential for redundancies in workforce. If the latter goes ahead, the Company will be required as part of the ESAP to development a retrenchment policy and detailed plan, the provisions of which will be communicated to the employees of OSZ. Health and safety risks related to workers exposure to noise, dust and high temperatures can be minimised through appropriate risk evaluation for each position, provision of PPE and training of the staff.

The involvement of a global leading company as a Sponsor provides additional guarantees that the Project will be structured to meet relevant EU standards and Bank’s Performance Requirements. Arc has already developed its environmental investments programme in OSZ after acquisition, and currently in the process of approving some additional improvement measures as part of the Bank’s ESAP.

The Company will provide the Bank with Annual Environmental and Social Reports (AESR) and notify on any material accidents or incidents. The Bank will evaluate the Project’s environmental and social performance in accordance with the Bank’s PR’s through reviewing the Client reporting and undertake periodic monitoring visits.

Technical Cooperation

None.

Company Contact

François Bonneville
Tel:+7 495 626 50 68
Email: francois.bonneville@arc-intl.com

 

Business opportunities

For business opportunities or procurement, contact the client company.

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Email: procurement@ebrd.com

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Email: projectenquiries@ebrd.com

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