Scholz Group, headquartered in Essingen, Germany, is one of the leading metal waste management and recycling player in Europe and in the Balkan countries with developing presence in Asia, Central America, Middle East and North Africa.

The Project cost is estimated at $120 million. The IFC investment will consist of a loan of up to $60 million in Euro equivalent.

68.35 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	68.35
Equity

* These investment figures are indicative

The Project will be focused (but may not be limited to) on the Group subsidiaries’ plants in Croatia, Serbia, Bosnia and Herzegovina, Montenegro, Albania and Romania.

An important aspect of this investment lies in the climate change element related to recovery of resources and creation of scrap as a raw material for steel making out of metal waste. Production of steel out of scrap significantly reduces CO2 emission and lowers energy and water consumption as compared to the traditional method. In addition to the environmental impact, metal waste management is vital for growth and sustainability of the Balkan economies, many of which are struggling with high unemployment and with management metal waste. The Group''s operations and the Project address both issues by providing direct and indirect employment for collecting the waste metal and cleaning up the areas from the waste     An important aspect of this investment lies in the climate change element related to recovery of resources and creation of scrap as a raw material for steel making out of metal waste. Production of steel out of scrap significantly reduces CO2 emission and lowers energy and water consumption as compared to the traditional method. In addition to the environmental impact, metal waste management is vital for growth and sustainability of the Balkan economies, many of which are struggling with high unemployment and with management metal waste. The Group’s operations and the Project address both issues by providing direct and indirect employment for collecting the waste metal and cleaning up the areas from the waste

Provision of long-term financing and counter cyclical support for the aftermath of the steel sector downturn experienced in 2008-early 2010. Tenor of the proposed IFC financing is expected to improve the risk profile of the Group''s balance sheet.
Long-term partnership. IFC, as a strategic partner may support the Group''s new business activities in the new regions.
IFC will ensure compliance of the Group''s Balkan operations with the IFC''s environmental and social standards. IFC''s standards will also help validate the Group''s existing practices and procedures.     
Provision of long-term financing and counter cyclical support for the aftermath of the steel sector downturn experienced in 2008-early 2010. Tenor of the proposed IFC financing is expected to improve the risk profile of the Group’s balance sheet.
Long-term partnership. IFC, as a strategic partner may support the Group’s new business activities in the new regions.
IFC will ensure compliance of the Group’s Balkan operations with the IFC’s environmental and social standards. IFC’s standards will also help validate the Group’s existing practices and procedures.

The Project has limited potential adverse environmental and social impacts which can readily be addressed through effective implementation of good international industry practices in line with the requirements of IFC’s Performance Standards as well as Environmental, Health and Safety (EHS) guidelines. This proposed investment is therefore a Category B project according to IFC’s Environmental and Social Review Procedures.

The key environmental and social issues reviewed with this investment include: Labor and working conditions including occupational health and safety considerations relating to Scholz’ employees and within the supply chain, relevant treatment of vulnerable groups which may include underage workers, management of storm-water run-off from scrap metal collection and processing centers, soil and groundwater pollution control, handling and storage of hazardous materials, transportation safety, expansion of collection and processing capacity that may require land acquisition, avoidance of involuntary resettlement, community, health, safety and security.

While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment can have impacts which must be managed in a manner consistent with the following Performance Standards:

PS1 – Social and Environmental Assessment and Management Systems;
PS2 – Labor and Working Conditions;
PS3 – Pollution Prevention and Abatement;
PS4 – Community Health Safety and Security;
PS5 – Land Acquisition and Resettlement

Further information can be found in the Environmental and Social Review Summary and the relevant action plan.