Sodrugestvo Working Capital Loan

Location:

Russia

Project number:

40720

Business sector:

Agribusiness

Notice type:

Private

Environmental category:

B

Target board date:

25 Nov 2009

Status:

Cancelled

PSD disclosed:

16 Oct 2009

Project Description

The EBRD is considering providing a long-term secured loan to finance selected investments aimed at improving the Company’s operations and competitiveness.

Transition Impact

Transition impact potential will derive mainly from improvements to agricultural transportation infrastructure and energy efficiency investments.

The Client

Sodrugestvo Group is a leading producer and supplier in Russia and the CIS of animal feed products, mainly soy meal.

EBRD Finance

Up to USD 40 million secured corporate loan to Sodrugestvo and its subsidiaries.

Project Cost

USD 40 million.

Environmental Impact

1. Screened B (2008). Environmental and social issues can be readily identified, addressed and mitigated through an environmental and social analysis and action plan.

2. An integrated corporate environmental and social audit was conducted by independent third party environmental consultants in August 2009.

3. Current activities of the Company are not associated with any significant environmental or social issues. There are some minor environmental and occupational health and safety issues that can be easily rectified and some corporate actions needed to strengthen environmental and social management. An Environmental and Social Action Plan has been developed to address these issues.

  • PR1: The audit found that the Group and Sodrugestvo Soy have generally robust environmental and social management systems
    The Company's environmental management system is due to undergo ISO14001 certification by the end of 2009. At this stage there is no available information on the proposed biomass boiler that EBRD may finance with tranche II of the loan as it is in a very early stage of planning. The Company will need to conduct appropriate environmental and social due diligence in accordance with the PRs which will be reviewed by EBRD
     
  • PR2: At the Group level there is ongoing development of the corporate OHS Policy, standards and procedures
    The audit findings were that at the company level Sodrugestvo Soy practices robust management of OHS issues. Their OHS management systems will undergo the ISO 18001 certification process beginning in December 2009. The company have assessed their potential fire and accident risks and have a comprehensive Emergency Management System and Emergency Response Plan. There is an HR management function at both corporate and company level and a well-functioning HR management system. Labour inspection results for the past two years have been satisfactory and it is the opinion of the auditors that the Group and company are fully compliant with the requirement of PR2 and the Russian Labour Code. There is an employee grievance mechanism which is well-communicated.
     
  • PR3: Pollution Prevention and Abatement
    After analysis of the Company's air emissions, waste management, noise, odour, water consumption and waste water treatment data the auditors concluded there the Company have a high level of compliance with Russian Federation environmental requirements and a medium-high level of compliance with EU IPPC requirements. The biomass boiler planned in the future will use soybean shells and/or waste wood as fuel. Impacts are not expected to be significant and will go though detailed analysis prior to tranche II of the loan.
     
  • PR4: Community Health, Safety and Security
    The Company's facilities air and noise emissions are in-line with EU and Russian requirements and have no discernible impact on the community. There is an odour emanating from the plant which may constitute a minor nuisance although the Company have only received one complaint to date. The authorities conducted a special investigation following the complaint and no violations were identified.
     
  • PR6: Biodiversity Conservation and Sustainable Management of Living Natural Resources
    The auditors noted that there has been minimal impact from the Company's facilities on local biodiversity and no future impacts as a result of the project are foreseen. Currently the Company sources most of its soy from South America, notably Brazil, which would undoubtedly have some biodiversity impacts albeit indirectly associated with the project. The Company have stated they are keen to improve the sustainability of their supply chain and are investigating ways to achieve that. The Company import both genetically modified (GM) soy and non-GM soy. All soy is tested for the presence of GM soy. Only GM commodities approved by the Russian Federation are imported and processed. The company do not produce food stuffs containing GM soy destined for human consumption - it is limited to animal feedstuffs only.
     
  • PR10: Information Disclosure and Stakeholder Engagement
    The Company has conducted appropriate public consultations in the construction of its plant. The Group and the Company have developed Social Policies which aim to provide positive community support such as providing aid to schools, children's music groups and veterans. Upon finalisation of the ESAP, a summary of impacts and a non-technical summary of the ESAP will be released locally by the Group.

4. An Environmental and Social Action Plan has been developed and will be agreed with the Client prior to Board review of the project. The action plan will address some minor environmental. occupational health and safety issues identified by the audit and includes some corporate actions to strengthen environmental and social management.

 

Technical Cooperation

None.

Company Contact

Stephane Frappat, CEO
65 Gagarina Str
238340 Svetliy, Kaliningrad region, Russia

Tel: +74012 (30) 55 00

Business opportunities

For business opportunities or procurement, contact the client company.

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Text of the PIP

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