The FINANCIAL -- European Bank for Reconstruction and Development will review the project that aims construction and operation of a steel mini-mill of 175 k ton capacity in Georgia. The plant will use local scrap (which is currently exported). The main product of the steel mill would be reinforcement bar. It is envisaged that the annual production would be sold principally in Georgia and neighbouring Armenia.
If EBRD approves, up to USD 29 million senior loans will be syndicated to commercial banks.
Total project cost is USD 42 million.
The Company is located in the industrial area Rustavi, circa 40 km from Tbilisi.
The proposed project will have a significant demonstration effect as a large industrial foreign direct investment in the country, marking an increasing confidence of foreign investors in the country. One of the most efficient Indian steel producers is supporting this project and will facilitate know-how transfer to the Borrower. The Project would be the first steel-making operation in Georgia since the closure of the integrated steelworks in its vicinity and it will enhance the ability of customers to source reinforcement bar locally, thus increasing their efficiency.
EBRD client is Geosteel, a limited liability company in Georgia. The project is supported by JSW Steel (Netherlands) B.V., which is part of one of the largest producers of steel in India.
According to project authors, the project was screened as B/1 requiring an Environmental Audit of the existing site and Company and an Environmental Analysis of the proposed investment plan to ascertain future compliance with Georgian and EU environmental standards.
The due diligence confirmed that the plant is designed to meet both national and applicable EU environmental standards and, given the industrial setting of the proposed plant, impacts will be limited. The Company is implementing best practice and will for instance include dust abatement equipment and continuous monitoring of emission from the arc furnace.
The Company will be required to provide the Bank with an annual environmental report, including updates on the ESAP, and notification on any material accidents or incidents.