June 30, 2006, Vyksa, Russia
—The International Finance Corporation, the private sector arm of the World Bank Group, is providing an eight-year loan in the amount of $60 million to Vyksa Steel Works. The loan is part of the $70 million financing package to United Metallurgical Company (OMK Group), a leading Russian producer of steel pipe, railway wheels, metallurgical coke, and other steel related products.
Vyksa will use IFC’s loan to expand, diversify and modernize its production capacity and upgrade its environmental and social performance. IFC has assisted the OMK Group to develop a comprehensive environmental and social action plan to be implemented over the next six years. A cornerstone of the plan is the phase-out of Vyksa’s outdated and polluting open-hearth furnaces by 2012. The plan also includes environmental and social improvements for two more plants within the OMK Group, Gubakha Coke Plant and Chusovskoy Steel Works.
Natalia Yeremina, Vice-President of the OMK Group, said “We are very positive about our cooperation with IFC and greatlyappreciate having them as our long-term financing partner. We see this loan as recognition by leading world financial institutions of OMK's efficient performance and huge potential, comprehensibility and transparency of its business and strategy.”
“IFC’s partnership with the OMK Group is a good example of our strategy in Russia to support locally owned and operated businesses and assist them in reaching their potential,” said Edward Nassim, IFC’s director for Central and Eastern Europe. “OMK is a dynamic group with significant growth prospects in an area critical to Russia’s further economic development.”
Dimitris Tsitsiragos, IFC’s director for Global Manufacturing and Services added, “IFC is pleased to support the OMK Group, a competitive player in the steel sector in Russia that is committed to improving its operations and business practices, including its environmental and social standards.”
About the OMK Group
Established in 1992, United Metallurgical Company (OMK Group) comprises six metallurgical plants: Vyksa Steel Works (the Nizhny Novgorod Region), Almetyevsk Pipe Plant (the Republic of Tatarstan), Chusovoy Steel Works and Gubakha Coke Plant (Perm Region), Trubodetal (Chelyabinsk Region), and Shchelkovo Steel Works (the Moscow Region). For more information, visit www.omk.ru.
Vyksa was founded in 1757 and privatized in 1993. The plant, with about 14,000 employees, is the key employer in the town of Vyksa, which has a population of about 60,000 people, and plays an important role in local economic development. It is the largest manufacturer of pipe in Russia and accounts for about 1.3 percent of world output. It is also one of the world’s largest producers of railway wheels. Its main market is the oil and gas sector and its customers include Gazprom, Transneft, and Russian Railways.Vyksa’s pipe shop has recently introduced new coating technology and installed a new large-diameter pipe production line to produce single- and double-welded large-diameter pipes used in long-distance oil and gas trunk lines. As a result, Vyksa became the first Russian producer of single-welded 1,420 mm pipes capable of meeting the requirements of major oil and gas companies. The single-welded 1420 mm pipe complements its comprehensive range of pipes for the oil and gas industry.
The International Finance Corporation is the private sector arm of the World Bank Group and is headquartered in Washington, D.C. IFC coordinates its activities with the other institutions of the World Bank Group but is legally and financially independent. Its 178 member countries provide its share capital and collectively determine its policies.
The mission of IFC is to promote sustainable private sector investment in developing and transition 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. From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. For more information, visit www.ifc.org.
IFC manages environmental and social risks associated with the projects it finances through standards that its clients companies are required to apply. In collaboration with client companies, IFC looks at business opportunities arising from the protection of the environment and from social development. IFC also explores and develops new financial products that create new business opportunities linked with the environment and social development.
IFC in Russia
Russia became a member and a shareholder of IFC in 1993. Since then IFC has invested $2.9 billion in the country, including $527 million in syndicated loans, in over 110 projects across a variety of sectors. In FY05 (July 2004–June 2005) IFC’s investments reached $832 million. IFC’s investment portfolio in Russia currently stands at $1.8 billion, making it the largest country exposure for IFC globally. IFC has invested in key sectors including banking, leasing, housing finance, infrastructure, mining, agribusiness, pulp and paper, construction materials, oil and gas, telecommunications, information technologies, retail, and health care. For more information, visit www.ifc.org/europe.