Saint Gobain Construction Products Russia

Location:

Russia

Project number:

42659

Business sector:

Manufacturing and Services

Notice type:

Private

Environmental category:

B

Target board date:

12 Nov 2013

Status:

Disbursing

PSD disclosed:

16 Nov 2012

Translated version of this PSD: Russian

Project Description

The Project will finance the planned investment programme of Saint-Gobain in Russia to be implemented in 2014-2016.

The investment program includes inter alia a greenfield development of gypsum quarry and a plasterboard plant in Ufa region, as well as construction of new and expansion and modernization of existing facilities for production of dry mixes, mortars and insulation materials.

The Project includes investments in various regions and cities of Russia such as Ufa, Arzamas, Ekaterinburg, and Chelyabinsk.

Transition Impact

The Project’s main transition impact is expected to be in terms of setting standards of corporate governance and business conduct via the following:

(i) the Company is setting new standards in environmental performance and will develop and operate new facilities in accordance to the highest environmental standards, implementing EU Best Available Techniques (BAT) requirements, which go beyond National requirements;

(ii) increased competition in the market by supporting a new player in the gypsum market;

(iii) policy dialogue initiatives with the Russian authorities on the development of energy efficiency legislation.

The Client

Saint-Gobain was established in 1665 as the Royal Glass Works. Saint-Gobain and Pont-à-Mousson merged in 1970, initiating the process that made the Group a leading worldwide company in the building material sector, with operations in more than 60 countries. Saint-Gobain is organised around 4 main business sectors: distribution of building materials representing 44% of 2012 sales, innovative materials (22%), construction products (25%), and packaging (9%).

The investee company is Saint-Gobain Construction Products RUS, a limited liability company, located in Yegoryevsk town, Moscow Region (the “Company”).

At the moment the Company operates three production entities: a glasswool plant in Yegoryevsk, a mortars plant in Arzamas, Nizhny Novgorod Region, and a newly commissioned plant for dry mixes in Nizhny Novgorod Region.

At the moment EBRD owns 11.19% of the Company.

EBRD Finance

The EBRD is considering providing additional equity investment into the charter capital of the Company in amount of c.a. RUB 976 million and increase its current stake in the Company up to max. 33%.

Project Cost

About EUR 120 million for the period of 2014-2016.

Environmental Impact

Category B. In line with the Bank’s Environmental and Social Policy (2008), the project, a multi-site operation seeking equity investment, has been screened as B, requiring a corporate Environmental and Social Due Diligence (ESDD).

An independent Company ESDD was performed, and this confirmed that Saint-Gobain has the institutional capacity to comply with the Bank’s Performance Requirements (PRs). It has been clearly acknowledged that the ESDD operation highlighted that Saint-Gobain has made steady EHS (Environmental, Health and Safety) works and improvements following Saint-Gobain standards and above country average, and that the Saint-Gobain Group constantly strives to enhance all safety and EHS standards at all sites and to integrate new acquired business as soon as possible into this strategy.

As potential areas of improvements, the ESDD has identified the need to strengthen the existing EHS management structure in Russian and to develop a more formalized EHS management system to account for expansion programs.

The ESDD has confirmed that all operations are currently compliant with Russian Federal requirements and that the Company employs high EHS operational standards. However, regarding additional investment over the project period the Company is advised to ensure on-going compliance with both corporate and EU environmental standards. The corporate Environmental and Social Action Plan (ESAP) has been structured to allow the Company’s operations in Russia to comply with National and Bank Performance Requirements (PRs).

In terms of new developments, the ESDD has confirmed that the Company has undertaken appropriate assessment as part of the OVOS (EIA, Environmental Impact Assessment) process. All new operations are being developed using best international practices. Non Technical Summaries (NTS) are to be disclosed by the Company regarding all major new projects under development, notably the Gozmovo quarry in Nizhny Novgorod.

Information on the Gozmovo quarry.

A comprehensive ESAP has been agreed with the Company, with a new environmental manager appointed for Russia. The Bank will continue to work with the Company on EHS issues, and monitor the implementation of the ESAP.

Technical Cooperation

None.

 

Business opportunities

For business opportunities or procurement, contact the client company.

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