PLM BEVERAGE CAN MANUFACTURING ZAO

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The project entails the establishment of a state-of-the-art aluminium beverage can manufacturing plant in the Moscow region. The objective of the project is to establish a state-of-the-art can manufacturing plant in Naro-Faminsk, Russia. The project will create over 200 jobs and will result in a substantial transfer of skills, particularly in the areas of can manufacturing as well as management, marketing, quality control and accounting. It is anticipated that by providing a new packaging form, the project will introduce further competition into the beer and soft drinks industry and will enable Russian beverage companies to expand their market reach. The client is PLM Beverage Can Manufacturer (PBCM), a company established to manufacture aluminium beverage can bodies for the Russian market. The sponsor for the proposed project is PLM AB, one of the leading European packaging manufacturers. PLM AB will have a 54 per cent ownership interest in the project company. Other investors, who will invest through a Swedish holding company, include Ball Corporation, Swedfund, IØ and the International Finance Corporation. A loan of US$ 40 million (ECU 32 million), of which US$ 15 million (ECU 12 million) will be syndicated to commercial banks. An equity investment of US$ 5.5 million (ECU 4.4 million). US$ 148.4 million (ECU 118.7 million). Background: The project consists of a greenfield plant which will manufacture two-piece aluminium beverage cans in Naro-Faminsk, approximately 70 kilometres from Moscow. The plant will have a production capacity of 1.75 billion cans per year and will consist of two lines for aluminium cans. Plant operations are estimated to commence in the third quarter of 1998 and reach full capacity by the year 2000. Screening: The operation was screened 'B/O', requiring an environmental analysis of the proposed development and of the adequacy of mitigation measures and a detailed programme on recycling. The analysis also covered the review of the sponsors' corporate procedures utilised for environmental management, environmental programmes, and occupational health and safety standards and procedures. Summary of findings: The new plant and equipment are being imported from the United States, the United Kingdom and Sweden, and are designed to meet their respective standards. The company plans to implement an environmental management system similar to other PLM operations in the European Union at start-up and to work towards ISO 9001 and ISO 14001 certification. The waste-water discharge of the facility following treatment at the municipal waste-water treatment plant will meet the 1995 proposed World Bank guidelines. The company will install an afterburner to eliminate solvent emissions from the ovens which dry the lacquer coating on cans. The most significant health and safety issue is noise exposure, and all workers in the can plant will be required to wear protective equipment and be part of a Hearing Conservation Programme, with annual medical monitoring. The TEO (Russian Environmental Impact Assessment) for the project has been prepared, and the environmental authorities, health and safety authorities, and planning authorities have agreed to the project design and construction. Several additional requirements in the area of air emissions, fire safety and noise have been included as conditions of approval. Monitoring: The company will develop environmental and health and safety programmes, which will be submitted to the Bank for review prior to start-up of operations. These programmes include an Environmental Programme, Health and Safety Programme, Hearing Conservation Programme and Safety Management Plan. The Bank will receive annual reports on environmental, health and safety, and recycling initiatives. Recycling issue: Aluminium cans are currently imported into Russia, and the proposed project would be the first manufacturing plant for aluminium beverage cans in the country. Because of environmental issues associated with aluminium (mining, smelting, energy requirements) as well as the high value of the used packaging and the lack of appropriate waste management systems or infrastructure in place for recycling in Russia, due diligence on the project included a review of the company's activities and initiatives in recycling programmes. PLM has joined with other packaging companies and packers to form the Russian equivalent of the European Organisation for Packaging and Environment (EUROPEN) in Russia, known as RICPEN. RICPEN has planned pilot projects to increase public awareness on recycling issues, including public information, training, and educational materials. RICPEN has a variety of initiatives on recycling, including providing recycling bins in Moscow and St Petersburg, and identifying local recycling companies. They have also identified well-recognised companies in Moscow and St Petersburg with which they will work to initiate a pilot system for can recovery. They are helping these companies to procure cleaning and baling equipment and to increase quality (separation of steel from aluminium cans), monitor collection efficiency and sell the used beverage containers at the best possible international rate. The EBRD will receive an annual update on the progress of this programme and PLM's commitment to it. None