AIR LIQUIDE - HUTA KATOWICE

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ALKAT, a joint venture between Air Liquide and Huta Katowice, will construct and operate an on-site air-separation facility to provide industrial gases primarily to Huta Katowice for use in its steel mill. Project objectives: To construct a new air separation unit to provide high-quality gases to Huta Katowice needed for its new product range, and to reduce energy consumption and air pollution. The ALKAT project is part of Huta Katowice's modernisation programme. (i) Restructuring of an important heavy industry in Poland and preparing it for the accession of Poland to the EU; (ii) contributing to modernisation and subsequent privatisation of the most important steelworks in Poland; (iii) improvement of productivity and quality (e.g. control of the gas consumption) through Air Liquide's involvement; and (iv) improvement of the environmental compliance by reducing coal consumption. ALKAT is a joint venture between Air Liquide and Huta Katowice. Air Liquide is a world leader in the industrial gases sector, operating in more than 60 countries, with 1996 sales of FF 34,382 million (US$ 6,706 million). Huta Katowice is the largest and most modern Polish steel plant, with 1996 sales of PLN 3,345 (US$ 1,241 million), and liquid steel production above 4.5 million tonnes. A term loan to ALKAT of FF 120 million (ECU 18.2 million), of which FF 32.3 million (ECU 4.9 million) was syndicated to commercial banks Crédit Lyonnais and Société Générale. FF 200 million (ECU 30.4 million). The project was screened in category B/1. An environmental analysis and audit has been conducted on the project. Potential environmental and health and safety issues associated with the project include construction impact, waste disposal, fire hazards and use of ozone-depleting substances in refrigeration. The environmental analysis and audit showed that the client is aware of the environmental issues and will address any significant environmental issues during construction and operation of the facility. All necessary environmental permits, including fire certificates, air emission permits and waste disposal licences, will be obtained prior to the commencement of the construction and operation. The construction and operation of the air separation unit will be carried out in accordance with applicable Polish and European Union standards and regulations. Key mitigation measures Design: The air separation unit to be imported from Luxembourg currently uses freon as a cooling agent, which is a chlorofluorocarbon (CFC) and banned according to the Montreal Protocol on Substances that Deplete the Ozone Layer. Air Liquide has confirmed that the cooling system will be converted to tetra-fluoro-ethane use, which is a recommended replacement compound for CFCs prior to shipping to Poland. Construction: ALKAT will need to conduct an environmental assessment, in accordance with Polish requirements, prior to the construction of the new buildings which will accommodate the air separation units. Operation: ALKAT will be required to develop an Environmental Action Plan to address the issues identified during environmental due diligence. These include the need to replace degreasing solvents and to develop an Environmental Management System and emergency response programme. Monitoring: The Bank will receive annual reports on environmental, health and safety issues, and notification of any emergencies, significant incidents and accidents with likely adverse effect on the environment and health and safety. None