OREANDA-NEWS. July 09, 2010. The EBRD is raising EUR125 million, in long-term funding, to finance key components of energy efficiency programme at leading Russian steelmaker NLMK. The programme aims to cut NLMK’s energy consumption by over 15 percent by 2015 thanks to cutting edge technology to be used in Russian iron and steelmaking for the first time and increase self-sufficiency in energy of its main production site in Lipetsk, reported the press-centre of EBRD.

Under the terms of the loan agreement signed on 2 July 2010, the EBRD will take EUR100 million of the transaction onto its own books, providing a five-year “A” loan of €100 million to NLMK.

An additional EUR25 million “B” loan has been syndicated to UniCredit Bank Austria AG, with a three-year maturity. The EBRD remains the lender of record for the full amount of EUR125 million.

The project, will, once implemented, cut NLMK’s greenhouse gas emissions at basic level by 1.5 million tonnes a year.

It will thrust NLMK at the forefront of the country’s efforts to fight climate change and is particularly important as the iron and steel industry is estimated to be responsible for some 6.7 percent of GHG emissions in Russia. The largest such emissions are produced by the operation of blast furnaces for iron-making.

NLMK, already one of the world’s lowest cost steel producers, is focusing on energy efficiency to achieve even greater cost savings during the current crisis and thus improve its position in an increasingly competitive sector, both domestically and on a global scale.

“The EBRD strongly welcomes NLMK’s strategic commitment to energy efficiency which sends an important signal to other intensive energy consumers about the benefits of such investments in current difficult market conditions,” Natasha Khanjenkova, the EBRD’s Managing Director for Russia, said at the signing.

The EBRD funding will be earmarked mainly for the construction of a 150 megawatt combined heat and power plant to be fired by waste gases from the steel plant’s blast furnaces at its Novolipetsk works. This power plant will boost the share of in-house generated electricity at the steelworks to 56 percent.

In a pioneering move with far-reaching implications for the rest of the industry in Russia, NLMK plans to certify its energy management system under new international ISO 50001 standard now being developed, once it becomes available.

This project forms part of a broader EBRD initiative to promote energy efficiency in Russian industry – with the Bank’s first major energy efficiency project in the Russian steel sector being signed in December 2007.