Sibur Russian Tyres

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The EBRD is considering financing the expansion of the existing manufacturing capacity of all-steel tyres located in Yaroslavl Tyre Plant, owned by Sibur Russian Tyres, for the annual production capacity of 1.02m all-steel tyres. The Project’s transition impact is likely to derive from facilitating corporate governance improvements via the appointment of an independent director for BoD, and setting standards in the areas of energy efficiency and carbon reductions in the tyre manufacturing industry. OAO Sibur Russian Tyres a leading Russian manufacturer of tyres, wholly owned by OAO Sibur Holding. Sibur Holding will provide support via the conversion of shareholder loans into the equity of the Client, and provide additional financing for the Project. Senior loan of EUR 60 million, including A loan of EUR 40 million and B loan of EUR 20 million. EUR 174 million. Categorised B (2008). Potential significant adverse environmental and social impacts associated with the project are site specific and can be readily identified and addressed through mitigation measures. In accordance with the Bank’s Environmental and Social Policy (2008), the Project has been categorised as B. The Bank's due diligence included an integrated environmental, health and safety and social (EHSS) audit of i) the Company's corporate policies and procedures ii) existing operations, baseline conditions and potential environmental liabilities associated with the Yaroslavl Tyre Plant (YTP) and iii) environmental and social impacts associated with the proposed investment programme and its overall compliance with the Bank's Performance Requirements (PRs). Results of the Bank’s due diligence confirmed that Sibur Russian Tyres (SRT) have an established management system to effectively address environmental, health and safety (EHS) issues that arise at their production and commercial units. This system is committed to providing environmentally safe and sound long-term sustainability of SRT’s operations in Russia. This system has been strengthened through the certification of SRT production units, and its Yaroslavl Tyre Plant, under the international standards of environmental and quality management (ISO 14001 and ISO 9001). Overall, the performance of SRT and YTP in Yaroslavl are in material compliance with national and international environmental requirements associated with tyre production. SRT labour procedures are also compliant with RF legislation and applicable international guidelines, including those of the International Labour Organization (ILO). At the site level, implementation of the investment programme at YTP is anticipated to improve the environmental performance of the facility through decreases in air emissions, wastewater discharges, generated waste, and levels of ambient noise generated by the YTP facilities. This will be achieved through the installation of modern technology for tyre production, implementation of a recycled water system, replacement of obsolete ventilation equipment as well as the implementation of effective EHSS management plans. In cooperation with the Bank, an Environmental and Social Action plan (ESAP) has been developed in order to enhance the environmental, health, safety and social performance associated with the investment programme. The key actions identified in the action plan include, but are note limited to: At the SRT corporate level: At the YTP level: EBRD and the Company are currently finalising the ESAP with the goal of coming to an agreement prior to EBRD Board submission. A stakeholder Engagement Plan has also been developed in accordance with the Bank’s PRs and will be implemented as part of the proposed investment programme. Energy Efficiency: The Project will also result in sizeable reduction of energy consumption per produced tyre due to installation of cutting-edge production equipment and automation systems (15 per cent reduction in energy consumption per kilogram of tyre produced resulting from process line upgrade). Furthermore, following the energy audit arranged by EBRD, the Company will commit to the implementation of an Energy Efficiency Action Plan. This incremental capex for both the existing facilities and the expansion project goes beyond the technical modernisation originally anticipated by the Company as part of the expansion project and brings the Company closer to international best practice in the tyre sector. An energy audit at YTP was undertaken to identify energy efficiency opportunities for the current and future operations. This activity has been funded by Germany as a part of the Energy Efficiency Programme for the Corporate Sector of the EBRD. Mr. Ilya Sosnov, CFO 117218 Moscow, Krzhizhanovskogo Street 18/4 Phone +7-495-980-5534 Fax +7-495-933-3865