Severstal Energy Efficiency
Policy measure

“JSC Severstal is one of the Russia’s largest vertically integrated producers of flat steel products with 2006 raw steel production of 17.6 million tones, [and was in 2010] accounting for roughly 16% of country steel production and supplying 19% of the domestic market’s steel needs”. (EBRD, 2010)


Initially, the EBRD agreed to provide a 12 year unsecured loan for an amount of up to EUR 500 million to JSC Severstal, of which up to EUR 350 million will be syndicated to commercial bank(s). However, as a result of strong demand, the loan was increased in size to EUR 600 million from the originally planned EUR 500 million, only three months after it was launched on the market. (EBRD, 2009)


“The highly successful syndication of the loan’s B portion was heavily oversubscribed, allowing the amount sold to 18 commercial banks to be increased to €450 million from the original target of €350 million. The EBRD itself last December committed to a separate €150 million A loan with a 10-year maturity and this portion remains unchanged. The EBRD also remains the lender of record for the full €600 million amount.” (EBRD, 2009)

Implementation

“The loan will finance a number of important energy efficiency projects, including rehabilitation and enhancement of the company’s on-site energy generation capacity, modernisation of its oxygen plants and implementation of modern energy management systems.” (EBRD, 2010)

Challenges
No identified challenges.
Outcomes

The “impact potential of the project is derived from fostering greater energy efficiency of Severstal operations and promoting new environmental standards for the Russian steel industry. It is estimated that the investments program would reduce Severstal’s primary energy consumption by 5 - 10% compared to existing operations with environmental benefits through CO2 emissions reduction in the order of 600,000 ton per annum.” (EBRD, 2010).

References

EBRD (European Bank for Reconstruction and Development), 2010. OAO Severstal – Energy Efficiency Loan. Available at: www.ebrd.com/english/pages/project/psd/2007/37199.shtml.


EBRD (European Bank for Reconstruction and Development), 2009. Severstal Energy Efficiency. Available at: www.ebrd.com/english/pages/news/press/2008/080407c.shtml.