Vyksa and Gubhaka (“the IFC Borrowers”) as well as other OMK operating entities are managed and controlled by OMK, which is owned by a group of leading Russian businessmen. Employees also own a small share of Vyksa.

The proposed IFC investment consists of two loans totaling $70 million. The Borrowers will use the loan proceeds to fund part of their on-going capital expenditure program as well as the capital expenditure requirements under an Environmental and Social Action Plan (ESAP – see below).

70.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	70.0
Equity

* These investment figures are indicative

The project will be implemented on Vyksa’s and Gubakha’s production sites. The first one is located in Vyksa town in Nizhegorodskaya Oblast (186 km from Nizhniy Novgorod, the regional capital). The plant is conveniently located close by railway, automobile and waterway transportation routes. Gubakha is located in Perm Region, in western slopes of the Middle Urals, within the Kosva river valley and in-between mountains near the Chusovoy-Solikamsk railway.

Development Impact:

The project will allow OMK to upgrade the technology of old previously state-owned steel assets and expand its production and breadth of steel products. IFC’s investment will primarily support OMK’s efforts to improve its environmental and social performance. Working closely with local and international environmental consultants, IFC developed for OMK’s three main operating entities – including Vyksa and Gubakha - an ESAP, which will be implemented within the life of the IFC loans. It is part of the group’s initiatives to upgrade gradually the key equipment and operating practices of these companies. The three entities are located in remote small towns, where they account for an important part of the local economy activity and jobs as well as regional development. OMK’s efforts to improve its environmental practices are expected to benefit the working conditions of its employees as well as local communities. Moreover, the project is expected to establish a model for other Russian steelmakers, many of which also face environmental problems.

IFC Role:

In addition to providing long-term financing that will address part of OMK’s capital needs, IFC will assist OMK in its efforts to improve significantly its environmental approach and standards. This will include strengthening OMK environmental management systems as well as increased communication with local communities living in proximity of the production facilities. IFC will also work with OMK to determine if IFC’s technical assistance is needed to support the implementation of the ESAP. Finally, IFC will work with OMK to upgrade some of its business practices to follow international standards.

Major environmental, social, health and safety impacts of this project concern:

- Environmental management at OMK corporate level and at the three plants;
- Ambient air quality and point source air emissions
- Abatement of air emissions, process and waste water effluents;
- Management of discharge to water bodies;
- Solid waste management;
- Hazardous materials management;
- Occupational health and safety throughout all operations; and
- Sustainable community relations and development initiatives.

OMK has undertaken a comprehensive Environmental, Social, Health and Safety Audit of the main entities of OMK. The recommendations and suggested improvements to ensure the Borrowers’ compliance with Russian laws and regulations as well as the IFC requirements are included in an ESAP, which will be disclosed to the public.

The costs and schedules associated with the actions listed under the ESAP can be updated or revised in line with their time of implementation. The indicated actions and plans are applicable to the two main plants included in IFC loan and this plan also includes a third company within the OMK group, Chusovskoy Steel Works (“Chusovskoy”).

Accordingly, IFC concludes that the proposed Project will meet, upon successful implementation of the agreed mitigation measures included in the ESAP, applicable World Bank/IFC environment and social policies and the environmental, health and safety guidelines.
Location of environmental documents In locally affected community
OMK plans to publish the announcement of the public disclosure of the ERS in Vyksa in the “Vyksunsky metallurg” newspaper and in Chusovoy, where Gubakha is located, in the “Chusovskoy metallurg” and “Ural’skiy shakhter” newspapers. These papers have the widest circulation in Vyksa (5800 copies) and Gubakha (9500 copies and 3000 copies) respectively.

The ERS and the ESAP will be available for public disclosure at the following locations:

Vyksa plant,
Ulyanova str. 10,
City of Vyksa.

Gubakha, Central City Library,
Environmental Data Centre (1 floor),
Degtyarova str. 9,
City of Chusovoy.

OMK corporate headquarter,
2, Volgogradsky avenue,
Moscow, 109316.