Lafarge Mykolaiv

complete

The EBRD is considering providing financing to Lafarge for the replacement of Lafarge’s existing wet process cement plant at Mykolaiv in western Ukraine (about 25km south-east of Lviv) with a new 2.1 megatonnes dry line cement plant during 2012-2015. The Project will reduce the plant’s production costs as well as energy and water usage, increase use of alternative fuels and ensure compliance with the EU environmental standards. Lafarge Holding Ukraine which controls 99.6% of Mykolaiv Cement plant and quarry near Lviv in western Ukraine. Equity financing of up to EUR 40 million and a loan of up to EUR 170 million of which part will be syndicated to commercial banks and/or provided by parallel lenders. Further co-financing to be provided by other equity investors. Approximately EUR 300 million. Category A. The construction of a large dry cement plant is associated with a number of environmental and social impacts which need to be fully assessed as part of an Environmental and Social Impact Assessment (ESIA). The project falls under the Multi Project Facility (MPF) agreement with Lafarge, whereby the environmental and social due diligence for each specific sub-project is delegated to the Sponsor. The MPF has been updated to comply with the Bank's Environmental and Social Policy (2008). The Company is undertaking an ESIA in line with Bank requirements under the MPF framework, and has disclosed an ESIA of the project in Ukraine in October 2011. The Company has a robust Environmental Health and Safety (EHS) management system at both corporate level as well as the Mykolaiv site level. The Company has the full capacity to implement the Bank's Performance Requirements and has made significant progress in improving EHS management and house keeping at the existing wet cement plant. The existing plant has been progressively modernised, with the introduction of new ESPs, fugitive dust suppression projects and primary Nitrous Oxides (NOx) reduction measures. However, current wet lines will not meet the future EU Integrated Pollution Prevention and Control Directive Best Available Techniques (IPPC BAT) or future Industrial Emissions Directive Best Available Techniques (IED BAT) standards due to the age of the plant and old technology. The age of the plant results in frequent stoppages, which affects the operations of the ESPs resulting in elevated dust emissions above the EU thresholds. If approved, the new line would apply dry-process technology, which has lower energy consumption, contributing towards a smaller environmental footprint when compared to wet-process lines. The new plant will utilize the existing quarry operational and employ state-of-art technology, which is compliant with the EU Best Available Techniques (BAT) requirements set out in the EU BREF Notes. An environmental and social due diligence (ESDD) has been undertaken by an independent consultant, and this has confirmed that the project is in compliance with the National, the EU and Bank Performance Requirements (PRs) and environmental and social impacts are well managed and mitigated. Based on the results of the due diligence an Environmental Management and Monitoring Plan (EMMP) has been developed and agreed with the Company. This includes monitoring and reporting obligations. The Existing ESAP will be updated as part of this project to take account of the EMMP requirements. The Bank will monitor the implementation of the Project and the implementation of the ESAP. None.