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| Summary of Project Information (SPI) |
| This Summary of Project Information is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
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| Project number | 11227 |
| Project name | Stomana Pernik |
| Country | Bulgaria |
| Sector | Primary Metals |
| Department | Global Manufacturing & Services |
| Company name | Stomana Industry A.D. |
| Environmental category | B |
| Date SPI disclosed | May 29, 2003 |
| Projected board date | June 30, 2003 |
| Status | Active |
| Previous Events | Invested: August 20, 2004
Signed: October 17, 2003
Approved: August 1, 2003 |
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| Description of company and purpose of project |
The proposed Euros 73.8 million project represents a post privatization restructuring of a Bulgarian steel mini-mill, Stomana Industry A.D. (Stomana, or the company). Headquartered in the Pernik industrial area, Stomana is the largest employer in a depressed region, notorious with the unsuccessful privatizations of a number of big state-owned companies. Moreover, with production of about 600,000 tpy of long and flat steel products and more than 1,300 employees, Stomana is the second largest steel producer in Bulgaria and one of the most important enterprises in the country.
The project will be implemented by Sidenor Steel Products Manufacturing Company S.A. (Sidenor or the Sponsor). As part of the project, Sidenor will refurbish the plant, improve production methods and environmental performance, and facilitate transition to higher value-added products. After the completion of the overall investment program, Stomana's production is not expected to divert significantly from current levels as planned investment is in cost reduction and quality improvements, and not in capacity increases. |
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| Project sponsor and major shareholders of project company |
| The project sponsor, Sidenor (with 75% shareholding in Stomana), is based in Greece and is the largest long steel products manufacturer in the country. It operates two steel mini-mills in Greece and has holdings in several companies which manufacture and market a wide variety of steel products. Established in 1962, Sidenor has been continuously profitable without a single year of financial loss. Sidenor is listed on the Athens Stock Exchange. |
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| Total project cost and proposed IFC investment |
The total project cost is estimated at about Euros 73.8 million. IFC is considering a financial package of approximately Euros 30 million comprised of:
- an A Loan for IFC’s own account of about Euros 20 million, and,
- an equity or quasi-equity investment of about Euros 10 million. |
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| Location of project and description of site |
| The project will be implemented in Stomana’s existing production facilities, located in the industrial zone of the town of Pernik, Bulgaria. Pernik is situated about 30 kilometers southwest of Bulgaria’s capital, Sofia. |
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| Project Development Impact and IFC's Role |
The project is expected to reduce costs and improve quality and competitiveness. It should result in more efficient use of raw material inputs and labor, and a better overall productivity, due to implementation of new, better technology, and improved management practices. Moreover, the project is expected to have a significant environmental impact as the sponsor is planning to invest about Euros 13 million in environmental improvements.
The project will benefit from the management expertise of a strong sponsor, who has significant technological know-how for both investment and production. In addition, the sponsor will bring into the project advanced marketing and sales techniques and a proven quality control system. An important part of sponsor's support will be on-the job training provided by Sidenor, including employee training in Sidenor's plants in Greece. Last but not least, as Stomana is one of the largest employers in the town of Pernik, the successful turnaround of the mini mill is critical for Pernik’s community and its surroundings.
IFC has a major role to play in this project by providing long term financing which is scarce in Bulgaria. IFC will play a critical developmental role by ensuring that the project meets World Bank environmental and safety guidelines and hence serve as a model in pollution and dust emission control in Bulgaria. IFC is also playing an important role in structuring the financial plan and bringing other lenders into the transaction while also helping sustain major productive asset and a key employer in the region. |
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| Environmental and social issues - Category B |
This is a category B project according to IFC’s Procedure for Environmental and Social Review of projects. This project involves several environmental upgrades and approximately € 13 million of the project’s total cost is related to environmental upgrades:
- slag cooling and crystallization;
- revamping the EAF off gas system;
- EAF energy reduction program;
- plate mill reheat furnace energy reduction;
- long products mill reheat furnace energy reduction;
- additional water treatment;
- further site cleanup of waste debris and slag and demolition of old buildings; and
- other environmentally related expenditures.
Since the 24 months that Sidenor has been operating the plant, the sponsor has made huge strides in their modernization and revamping of the entire operation. Employee morale is high, progress has been dramatic, and future plans are very ambitious.
To view the environmental documents for this project, click here |
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| Location of environmental documents in locally affected community |
| The ERS will be disclosed on Stomana’s factory gate in Pernik. |
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| To contact the project company, please write to: |
Stomana Industry
1, Vladaisko Vastanie St.
2304 Pernik, Bulgaria |
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