Caustic Soda

cancelled

The EBRD is considering providing a USD 25 million term loan to JSC Caustic, Pavlodar, Kazakhstan, to partially finance the establishment of a new chlor-alkali production plant. The project will produce caustic soda, chlorine and hydrochloric acid for sale to metallurgical, oil and gas and water treatment companies in Kazakhstan and neighbouring countries. The project would support a company, majority-owned by private shareholders, in the fledgling value-added segment of the otherwise predominantly commodity-based Kazakh economy. The project will set environmental, health and safety standards through the use of state-of-the-art EU-compliant technology, adoption of the relevant ISO and OHSAS standards, and regular independent environmental audits. Further, the Project will support transfer of skills from an internationally renowned contractor to local contractors involved in the construction of the plant, as well as skills transfer via training of Company’s personnel to operate the advanced chemical plant technology. In addition, the proposed financing will facilitate improved corporate governance and setting standards of business conduct, including IFRS reporting and audit. JSC Caustic was established in 2002 on the basis of the former Pavlodar Chemical Plant. To-date, the company has operated in industrial water supply, chlorine import, refilling and sales as well as in production of insulation materials. The new project will materially change the scope and scale of the business. EBRD will provide a term loan of up to $25 million to the Client. $87 million The project has been screened A/1 (2003), requiring environmental and social due diligence (ESDD), consisting of an environmental audit of the existing site and an environmental and social impact assessment (ESIA) of the planned investment in line with the Bank’s Environmental Policy 2003. The Project is also subject to Kazakh EIA requirements (OVOS). The Bank’s ESDD has confirmed that the project will utilize state-of-the-art membrane technology and will meet National and EU standards such as the guidelines outlined in EU IPPC BAT requirements. The new chlorine plant will be constructed on part of the site of a former major Soviet chemical plant that is no longer operational. Among other issues, the former chemical plant was the source of significant mercury contamination from an old chlorine plant which used mercury based technologies and that has now been demolished. Consequently, one of the main environmental issues and risks is associated with the nearby historic contamination from the former Pavlodar chemical plant. The contamination has been subject to many studies and an US EPA (Environment Protection Agency) funded remedial program was implemented in the 1990s, aimed at containing historic contamination and developing on-site a secure landfill for disposal of most of the highly contaminated materials and building debris. The industrial site and the landfill are currently monitored by the Kazakh authorities and this landfill was not acquired by the Company. The proposed site for the new chlorine plant is located away from the contaminated areas of the old chemical plant. Nevertheless, the facility will use some of the assets of the old chemical plant and among others will use an artificial reservoir/lake that has been contaminated in the past. A management program has been developed by the Company and this included in the Environmental Monitoring and Management Plan (EMMP) disclosed with the ESIA. Environmental and Social Impact Assessment TC for €79,600, funded from the EBRD Special Shareholder Fund, has been provided to the Client to assist in undertaking the ESIA and conducting the public awareness and consultations campaign. Mr. Erlan Orymbekov, CEO Tel. +7727 2583563 Fax. +7727 2584942 Almaty, Kazakhstan Email: e.orymbekov@energy.kz