The EBRD is considering a USD 25 mn financing to the JV of Ruetgers of Germany and Severstal of Russia for the construction and operation of a new coal tar distillation facility on the premises of Severstal’s Metallurgical Plant in Cherepovets, Russian Federation. Ruetgers will provide managerial and technical know-how to the JV and Severstal will ensure a long-term supply of coal tar to the new facility. The project replicates a successful on-site co-operation model applied by Severstal in projects with other partners that were financed by the EBRD.
Application of best industry practices through the outsourcing model in the commercialisation of a by-product in the steel production. The project may also have the potential to set standards in terms of environmental management if the new facility for tar distillation meets EU BAT standards.
The proposed project will introduce the advanced technology of Ruetgers for coal tar distillation, providing a high-profile model for the transfer of modern technology and know-how into a major Russian industry. There will also be significant associated skill transfers in terms of quality management, energy efficiency and environmental performance from the strategic investor.
OOO Rütgers Severtar, a JV between Ruetgers GmbH and OAO Severstal. Ruetgers is one of the world’s largest coal tar distillers. Severstal is Russia’s largest steel maker.
USD 25 mn, including USD 10 mn to be syndicated to commercial banks.
USD 40 million.
Environmental classification and rationale
The project is categorised B. The refurbishment and reconstruction of a tar distillation plant is associated with a number of site specific issues, which can be readily identified, assessed and mitigated through measures as defined in the Environmental and Social Action Plan.
Key environmental issues and mitigation
Due diligence has been carried out on the Company operations by means of a site visit and discussions with management around policies, procedures and performance against environmental and health and safety regulations; and the corporate activities undertaken with regard to stakeholder engagement. Additionally, recent environmental site assessments carried out by international consultant's were reviewed and assessed.
The German JV Partner plans to introduce plant and processes that are aligned with their operations throughout the EU and therefore the refurbished plant will meet both Russian and EU requirements in terms of environmental performance. Additionally, it is proposed that environmental and health and safety management systems accredited to international standards be implemented specifically for the JV operations.
Certain areas were identified that require to be addressed to bring the operations into compliance with the Bank’s Environmental and Social Performance Requirements (PRs) and these issues have been addressed via the drafting of an Environmental and Social Action Plan (ESAP) which has been being agreed with the Company.
Summary of Environmental Action Plan
The Company will be required to adhere to the Bank’s PRs. Specific actions include confirmation of the implementation of an Environmental Management System in line with the requirements of ISO 14001; the drafting of a Stakeholder Engagement Plan in line with the Bank’s PR10; and the implementation of a Contractor Management Plan to ensure that the actions of contractor’s meet the requirements of the various management plans outlined above and the Bank’s PRs.
Monitoring and reporting
The Company will monitor the environmental impact of its operations in accordance with national law and regulations. 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 prepared for the project.
Poul Jorgensen, General Director
OOO Ruetgers Severtar
Mira street 30
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