Duferco - Viz Stahl

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An EBRD equity investment in VIZ Stahl, a specialist Russian steel plant located in Yekaterinburg, to support modernisation of the existing production facilities, to restore a part of its original capacity, and to improve product quality and energy efficiency. In addition to its own financing of VIZ Stahl’s operations, Duferco has asked the Bank to participate in upgrading production facilities, which will enable the company to restore capacity and to improve product quality and energy efficiency. Transition impact will be achieved through assisting Duferco in post-privatisation restructuring based on a solid long-term business strategy. The process has already resulted in increased transparency by the company and improved management practices. The EBRD's participation in the company will contribute to further strengthening of the company’s organisational and financial transparency and corporate governance standards. New investment will help the Russian company to enhance its reputation with prime international customers and to improve its competitive position vis-à-vis other suppliers. The investee company is one of only 15 producers worldwide of grain-oriented steel used for transformers in power generation and distribution. The company is controlled and managed by Duferco, a major steel trader and an important European producer with a clear strategic view on the steel sector and proven ability with acquiring and turning around steel plants. US$ 5 million (€5.75 million) equity investment. US$ 5 million (€5.75 million). This operation has been screened B/1, requiring an environmental audit of the existing facilities and an environmental analysis of environmental impact associated with the proposed development and the adequacy of mitigation measures. The environmental audit of the existing facilities was carried out by independent consultants according to terms of reference prepared by the EBRD. It revealed that the separation of the Verkh Izetski Metallurgical Works into several independent companies and the subsequent privatisation was prepared carefully and that responsibilities are well-defined concerning usage of the common sewage system and responsibilities for waste water and air emissions monitoring. The company's air emission sources are operated in compliance with the local prescribed limits. Due to the operation of a close cycle of process water, the site has no problems with waste-water discharge except for the discharge of storm water and excessive water from the cooling cycle. An additional waste-water treatment facility will be built by the end of 2003, in accordance with the agreement between VIZ Stahl and the State Environmental Protection Committee of the Sverdlovsk Region. At present, most hazardous material storage facilities are operated in compliance with Russian and European Union standards. Waste management in the company is well-organised and considerable attention is paid to waste recycling. The company's occupational health and safety management is at a very good level. The system of supervision and schedules for regular monitoring of working conditions is implemented and is fully functional. The company keeps an open working relationship with the controlling environmental and health and safety authorities. Communications with the company's employees and the general public are well-maintained through the company's newspapers. Based on the findings of the environmental due diligence, an Environmental Action Plan (EAP) has been developed to address the identified issues, which would bring the company into compliance with Russian and EU/World Bank standards. None.