Sisecam Sode Lukavac

completed

Turkey based Türkiye Sise ve Cam Fabrikalari A.S. (Sisecam or the company) has acquired in August 2006 through privatization Fabrika Sode Lukavac (FSL), a state owned synthetic soda ash producer located in the northern part of Bosnia and Herzegovina (BiH). Sisecam has been IFC’s client since the 1970s and is the largest glass producer in Turkey with a 90% market share. Soda Sanayii A.S. (Soda Sanayii) is the chemicals arm of Sisecam, managing inter alias soda ash production, a key raw material for glass manufacturing. The government of the Tuzla Canton, which currently owns 100% of FSL’s equity, has carried out the privatization by forming Sisecam Sode Lukavac (SSL), a new company to which FSL is transferring its soda ash assets. 80% of SSL’s shares have been sold to Soda Sanayii while the balance 20% shares are with FSL. SSL plant is located in the Tuzla Canton of the Federation Bosnia Herzegovina on the outskirt of the city of Lukavac (140 km north of the capital Sarajevo and 14 km west of Tuzla). Both Tuzla and Lukavac are established along the banks of the Spreca River, a tributary of the Bosnia River which flows into the Sava and Danube, an international waterway. At the time of privatization FSL had 885 staff and today SSL employs about 792. When privatization was signed in July 2006 SSL committed to maintain current staff level for a period of three years.Created in 1893 FSL is a producer of soda ash using the Solvay process. The design capacity of the plant was 10,000 tons per annum or “tpa”. During 1950-1956 the plant increased its capacity up to 144,000 tpa. Between 1967-1973 the plant achieved 219,000 tpa reaching even 250,000 tpa. At privatization production was 150,000 tpa with current production capacity at180,000 tpa. The plant currently produces light soda ash and refined sodium bicarbonate. It was designed to have caustic soda as by product but Sisecam recently closed down its production.All raw materials except ammoniac are available within a 20km radius around the plant. Coal comes from an underground mine, limestone is supplied from a quarry 17km south of Lukavac and brine is pumped in salt mines located 23km away under the city of Tuzla. Due to ground subsidence combined with slow depletion of the resource a new mine named "Tetima" using only pumping wells is being opened in 2007. A cable car takes the limestone to the plant and the brine is pumped through a 27km pipeline. Limestone (Rudnik Krecnjaka Vijenac) and brine (Rudnik Soli Tusanj Tuzla) production facilities are owned and operated by the Tuzla Cantonal government. Coal facilities are under the administration of the Federation of BiH. The plant is disposing solid waste inside the plant (carbonate and black sea) and outside the plant (white seas covering an area of 56ha). Exports take place by truck or railway, mainly thru the port of Ploce located on the Adriatic Sea near Dubrovnik in Croatia. Soda Sanayii is currently executing an investment program aimed at refurbishing, upgrading and expanding SSL production facilities. The total project cost is estimated to be about $30 million. IFC has been requested to provide a €24 million project finance loan to fund the Company’s 5-year capital expenditure program. SSL plans to complete its expansion program by end of 2009 with full production of 250,000tpa by 2011.