The proposed project is to support OOO Pfleiderer to establish a green-field chipboard production facility in Podberezie, Novgorod region. The project includes investment in raw chipboard and melamine faced chipboard production lines with annual design capacities of 500,000 m3 and 14,000,000 m2 respectively. In addition there will be an investment in decorative paper film line of 38,000,000 m2 capacity.
The transition impact potential of the project is derived from the positive influence of a reputable foreign investor on the modernisation of the Russian wood-based panel industry. Strengthening competition within the sector will stimulate domestic market participants towards more efficient utilisation of resources, innovative production processes and increased customer orientation according to international best practices.
The project is likely to contribute to increased market interaction and linkages in other related sub-sectors, such as furniture producers and construction companies. Significant local sourcing will have beneficial linkages with the local wood and chemical industries, including best practise procurement. The project will provide for a high quality supply of chipboard and impregnation paper products to local furniture producers at better terms than current imports.
OOO Pfleiderer, domiciled in Russia, is a 100 % subsidiary of Pfleiderer Grajewo SA, Poland. Pfleiderer Grajewo S.A. is a leading producer of wood-based panels in Central and Eastern Europe, and a 60% subsidiary of Pfleiderer AG (Germany), that is a global producer of wood-based panels in Western Europe.
EUR 35 million loan to be provided in an A/B loan structure and additional EUR 7 million in a form of equity. The A loan will be EUR 25 million and the remainder will be syndicated.
EUR 85 million.
Screening categories and rationale for classification
The construction and operation of a new chipboard production facility showed that the planned chipboard facility is typically associated with limited direct environmental, health and safety issues, which can be readily identified and assessed as well as efficiently mitigated with modern technology and project design. The project is located inside an industrial zone and surrounded by other industrial properties, that the distance to the closest permanent residential building is approximately 1.5 km and that there are no known environmentally valuable or sensitive areas in the vicinity of the site. The new facility will introduce state-of-the-art technology. Based on the above, the EBRD has classified the project B/0, requiring an Environmental Analysis.
Information reviewed during the environmental appraisal
The Environmental Analysis has been prepared in accordance with the EBRD's requirements by independent experts. Information contained in the report is based on the technical-economic assessment of the investment (TEO) and assessment of impacts on the environment (OVOS) prepared in accordance with the requirements of the Russian law, an environmental site assessment, a field survey of the project area and its surroundings, laboratory investigations as well as discussions with local authorities. Further assessment of the planned facility’s compliance with the Best Available Techniques (BAT) used in European Union was provided by Pfleiderer's internal experts.
Key environmental issues and mitigation
The investigations showed that the Project has been structured to meet Russian environmental, health and safety (EHS) requirements and EU environmental standards, including EU BAT standards for chip/particleboard manufacture, and that the direct environmental, health and safety impacts during the construction and the operation of the new particleboard plant will be insignificant and efficiently mitigated.
Geological and hydrological site investigations carried out prior to starting the construction did not identify any potential contamination and showed that the site is suitable for the project. There are no specific requirements for the use or disposal of the soil excavated from the site.
The new plant will introduce state-of-the-art technology and environmental protection measures have been fully incorporated in the project design. Dust and formaldehyde emissions to the atmosphere are below BAT emissions standards for particleboard manufacturing. All industrial and cooling water will be circulated in closed loops. Consequently, no industrial wastewater will be discharged. Fresh water is needed only to make up for the evaporation losses. Minor amount of household wastewater (50 m3/d) will be discharged to the municipal sewage network. Rain and storm water is collected, purified in sedimentation tanks and oil separators and discharged to the river Pit’ba. Bark and other wood wastes are used as a fuel for the plants heating and steam generation in addition to natural gas. Small amounts of waste oils and other hazardous waste will be collected by a licensed waste management company.
The particleboard products will be of classification E1, which can be safely used without causing elevated concentrations of formaldehyde in indoor air.
The Sawmill will use up to 600,000 m3/a, of round wood. A substantial part of that will consist of low grade round wood, which have little or no commercial value and which is currently mainly disposed of. In addition, saw dust and sawmill residues will be used reducing the amount of round wood needed. To mitigate the adverse impact of the wood procurement and to ensure the wood is of legal origin, the Company will use approved wood suppliers only. To support the selection of the wood suppliers, the Company commissioned an independent study on the legality of harvesting operations in Novgorod region. The Company is committed, as required by the Bank, to adopt and implement wood procurement procedures that are based on principles of sustainable forestry, ensuring that:
the wood does not originate from statutory protected forests, forest areas included in nature conservation programmes or sites which have been notified by the authorities to be excluded from felling;
the origin of the wood is monitored;
suppliers operate according to the principles of sustainable development, in compliance with the legislation currently in force and under the supervision of state authorities; and
- the biodiversity and the functions of the forest ecosystem are maintained in accordance with internationally and nationally approved principles.
OOO Pfleiderer has obtained an Ecological responsibility certification in accordance with standard SD 15-01-2004 from Lestest in April 2005.
Disclosure of information and consultation
In accordance with Russian law, the project has been subject of formal public disclosure and public consultation prior to obtaining the construction permit. The public meeting nearby the project site was attended by 140 members of public, which expressed their general support to the project. One objection was recorded. In the context of EBRD’s potential participation in the project, the Company released locally a summary similar to this describing the relevant environmental issues associated with the project and the mitigation measures.
The Company will systematically monitor and report its environmental and health and safety impacts to ensure it complies with Russian and EU environmental standards. The EBRD 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) prepared for the project.
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