EBRD to Provide SeverGal with USD 90 Million Loan

The board of directors of the European Bank for Reconstruction and Development (EBRD) has confirmed the decision of its credit committee to grant a USD 90 million loan to SeverGal, a joint enterprise created by Severstal and Arcelor. According to Severstal's press office, the money will be spent on acquiring and assembling a production line for applying hot zinc coating to steel for the automobile industry.

According to Igor Timofeev, the head of the project, the agreement with the EBRD will be signed at the end of 2002. Timofeev noted that by this time ground level work should be complete and work should begin on the concrete foundations and the assembly of metalwork. This work will be carried out using financing from SeverGal's shareholders. According to Timofeev, the first segment of the EBRD loan will be received in spring 2003, when work will start on the technological equipment needed for the zinc coating line.

SeverGal is registered in the town of Cherepovets in the Vologda Region. The company is 75% owned by Severstal and 25% owned by Arcelor. SeverGal will produce zinc-coated automobile body-sheet with an ExtragaITM coating for exterior and interior car body panels. In August Severstal signed a contract with Belgian firm CMI to deliver a production line for hot zinc-coated rolled metal for the automobile industry. The production line is intended to produce 400 thousand tonnes a year. The contract with CMI includes the provision of basic engineering work, the delivery of equipment (from May to November 2003), start-up work, testing, ensuring the production line meets working requirements, and service guarantees.

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