WASHINGTON, D.C., August 5, 2004 — The
International Finance Corporation, the private-sector arm of the World
Bank Group and the European Bank for Reconstruction and Development, have
each signed a $75 million loan agreement that will provide Russia’s privately-owned
SUAL group a total of $150 million to boost Russian production of bauxite,
the raw material for the aluminum industry.
IFC and the EBRD will each provide a nine-year loan of $45 million, making
it the longest credit ever obtained by the Russian metal sector. The remaining
$30 million portion of each organization’s $75 million facility is syndicated
to international banks under an A/B loan structure. The term of the syndicated
portion will be seven years.
The plan is to increase annual bauxite output at SUAL’s Middle-Timan mine,
situated 250 km south of the Arctic Circle, to 6 million tonnes from the
current 1 million tonnes over the next four years. This will help overcome
a major shortage in domestic supplies of bauxite and improve the competitiveness
of the Russian aluminum industry as a whole.
This financing supports the first phase of SUAL’s Komi Aluminum project,
an integrated bauxite mine, alumina refinery and aluminum smelter complex
located in Russia’s northern Komi region.
Peter Woicke, IFC’s Executive Vice President and Managing Director of
the World Bank Group for Private Sector Development, noted that the project
could be a milestone in modernizing Russian industry, transforming Komi’s
development and employment prospects, and generating important supply opportunities
for local businesses. He also noted with pleasure the extensive public
consultation on the project being carried out by SUAL.
For the EBRD, the logic of this deal is using Russia’s natural resources
as a catalyst to develop the economy and reduce bottlenecks, while at the
same time setting high standards of business conduct and improving environmental
protection, said Noreen Doyle, the EBRD’s First Vice President.
The IFC-EBRD loan is split into two portions: $100 million for the expansion
of the Middle-Timan bauxite mine and $50 million to fund feasibility studies
and preparatory works for an alumina refinery at Sosnogorsk, 245 km southeast
of the Middle-Timan mine, and feasibility studies for an aluminum smelter
at Pechora, 250 km northeast of Sosnogorsk. (Alumina is refined from bauxite
and then smelted into primary aluminum.)
The refinery and smelter represent phases two and three of SUAL’s Komi
Aluminum Project. IFC and the EBRD are prepared to consider participating
in the next phases of the project once the necessary conditions are met.
IFC’s mission (www.ifc.org)
is to promote sustainable private sector investment in developing countries,
helping to reduce poverty and improve people’s lives. IFC finances private
sector investments in the developing world, mobilizes capital in the international
financial markets, helps clients improve social and environmental sustainability,
and provides technical assistance and advice to governments and businesses.
The EBRD (www.ebrd.com),
owned by 60 governments and two intergovernmental institutions, aims to
foster the transition from centrally planned to market economies in central
and eastern Europe and the Commonwealth of Independent States.
SUAL Group (www.sual.com),
a vertically integrated business, is among the world’s 10 largest aluminum
producers. Its annual production includes mining some 4.4 million tonnes
of bauxite, refining more than 2 million tonnes of alumina, producing over
890,000 tonnes of primary aluminum, producing more than 50,000 tonnes of
silicon, and manufacturing more than 110,000 tonnes of aluminum products.